【摘要】Product-specific Safeguard Measures （PSM）， as a result of strategic advancement and tactical compromise in trade negotiations， integrated into the Protocol on China's Accession， are specifically aimed at products originating in China and feature strong discrimination against China. The application of PSM must be based on the formulated rules， but usually at the discretion of the applying WTO member， which exerts positive and negative effects upon China. To protect its trade interests， China shall take effective measures from macroscopic and microscopic perspectives.

　　【关键词】Product-specific Safeguard Mechanism Features Effects Countermeasures

　　【正文】

　　With the rapid development of its foreign trade， China is faced up with an increasing number of trade frictions with other countries. In addition to anti-dumping and countervailing measures imposed on Chinese products， more countries in the world are starting to take safeguard measures against products originating in China. By October 2004， eleven cases concerning product-specific safeguard measures （hereinafter referred to as PSSMs） have been initiated and investigated by the European Union， the U.S.A.， Canada， India， Indonesia and Brazil.It is therefore practically significant to conduct a careful study of PSSMs.

　　I. The Background and Content of PSSMs

　　The provision of PSSMs refers to the restrictive trade measures adopted by any WTO member， for the purpose of protection of its domestic industry， under the WTO transitional product-specific mechanism within the specific period of time to prevent the increase of imported products originating in a specific country. PSSMs were first applied against Japan when it applied for the membership of the General Agreement on Tariffs and Trade （GATT） in 1953. （Yu Fei， 2004） Under the provisions agreed between Japan and the GATT contracting parties， any other GATT member country had the right to unilaterally adopt measures to protect its domestic industry from the damage incurred by the market disruption as a consequence of an increase in import of textile products originating in Japan. This article mainly focuses on the PSSMs adopted against China.

　　The PSSMs against China are generally considered as “a result of the perception of China as a non-market economy from the standpoint of some developed countries”。 （Wu Lihong， 2003） The Republic of China （ROC） was a contracting party to the GATT 1947.But after the establishment of the People's Republic of China （PRC） in 1949， as the sole legal representative of China， the PRC was long kept outside of the United Nations， needless to say its succession to the membership of the ROC to the GATT according to the international rule of governmental succession.In 1986， China officially presented its application to resume its membership in the GATT， but various reasons led to the failure to reach agreement between China and other negotiating members headed by the USA before the end of 1994. When the WTO came into operation in 1995， China turned to negotiations for accession to the WTO， which has proved another lengthy negotiation process， in which some western countries headed by the U.S.A. demanded too much on China and “unanimously pressured China to agree to the provisions of Product-specific Safeguard Measures”，（Chen Weidong， 2002） which complicated the whole negotiation. Too many vicissitudes and failures drove China to adopt a pragmatic and flexible attitude towards the negotiation for the long-term trade relations with the outside world. In November 1999， an agreement was reached between China and the United States on the terms of China's accession to the WTO， in which the PSSMs provision was included. When China acceded to the WTO in 2001， the PSSM provision was integrated in the Protocol on the Accession of the People's Republic of China. Therefore， in a sense， the provision of PSSMs is the direct reflection of the trade interests of the United States and some western countries and is also a result of balancing trade interests and political compromise between China and the United States.

　　The PSSMs directed against China's products are mainly contained in Article XVI of the Protocol on the Accession of the People's Republic of China （Hereinafter referred to as the Accession Protocol） and Paragraphs242， 245 to 250 of the Report of the Working Party on the Accession of China （hereinafter referred to as the Working Party Report）。 According to Article XVI of the Accession Protocol， within the 12 years after China's accession to the WTO， in cases where products of Chinese origin are being imported into the territory of any WTO Member in such increased quantities or under such conditions as to cause or threaten to cause market disruption to the domestic producers of like or directly competitive products， the WTO Member so affected may request consultations with China with a view to seeking a mutually satisfactory solution， including whether the affected WTO Member should pursue application of a measure under the Agreement on Safeguards. If consultations do not lead to an agreement between China and the WTO Member concerned within 60 days of the receipt of a request for consultations， the WTO Member affected shall be free， in respect of such products， to withdraw concessions or otherwise to limit imports only to the extent necessary to prevent or remedy such market disruption. Paragraph 242 of the Working Party Report stipulates that a WTO member may restrict the import of textiles or textile products from China when imports of Chinese origin of textiles and apparel products cause market disruption and threaten to impede the orderly development of trade in these products. The application of the restrictive measures expires by December 31， 2008. Paragraphs 245 to 250 provide the procedure and rules for the application of PSSMs. Appendix 7 presents a list of products that the WTO members may adopt PSSMs against and what measures they can take.[page]

　　II. The Nature and Features of PSSMs

　　I） The Nature of PSSMs

　　The provision of PSSMs violates the rule of non-discrimination of the WTO system and was adopted “under the circumstances where China had its will under strict limitation and coercion， therefore its declaration of will is defective.”（Han Xiuli， 2004a） Accordingly， PSSMs are as a matter of fact an unfair provision adopted by China under pressure and coercion to some extent and a set of discriminatory trade measures against the products from China. It is therefore “China-specific”， as even the Trade Representative of the United States admitted.It should be pointed out， however， that the acceptance of the provision was also a strategic option that China made in the process of trade negotiations in exchange for the concessions of other WTO members in other fields， like the intellectual property rights， where China met strong setbacks， and a result of combining strategic advancement and tactical compromise in tackling the balance of its trade conflicts with other trading countries.

　　II） Features of PSSMs

　　1. The application of the PSSMs is selective and discriminatory. In sharp contrast with the principle of non-discrimination of safeguards， the application of PSSMs features strong discrimination against China. The safeguards are the embodiment of the principle of change of circumstances applying to all the WTO members and are “a safety valve ensuring domestic economic security of the WTO members and trade liberalization”。 （Cai Fang， 2004） The safeguards conform to and are themselves part of the set of WTO rules， thus are lawful and non-discriminatory. The PSSMs， however， were designed only to aim at the products originating in China. Any WTO member can initiate the application of limits to the import of Chinese products if it can show that the import has caused the existence or threat of market disruption. Worse than that， against what products and when PSSMs will be adopted are purely at the discretion of the importing country， thus it has a feature of selection and discrimination.

　　2. The conditions for the application of PSSMs are not well clarified and defined. According to Article XVI of the Accession Protocol， the preconditions for the application of PSSMs are the occurrence of an absolute or relative increase of the import of products originating in China， which has brought about market disruption or threat of market disruption or significant diversion of trade. Market disruption is constituted if the import of a Chinese product increases， either absolutely or relatively， to constitute a significant cause of a material injury or a threat of material injury to the domestic industry of the importing country that produces like or directly competitive products.The problem is that there is no clear-cut definition or clarification of what may constitute significant diversion of trade， material injury or threat of material injury in the Accession Protocol. Furthermore， the standards set for the application of PSSMs and the determination of material injury or threat of material injury are much lower that those set for serious injury or threat of serious injury to the domestic industry in the case of investigations for safeguards. Additionally， that the material injury or threat of material injury is a significant cause rather than a major cause of injury to the domestic industry has in fact lowered the baselines for the application of PSSMs as the importing country only has to prove that a product from China has increased in large numbers to apply PSSMs.

　　3. China is given limited power to remedy the adoption of PSSMs. Article XVI of the Accession Protocol provides that China has the right to suspend the application of substantially equivalent concessions or obligations under the GATT 1994 under two circumstances： when a measure is taken as a result of a relative increase in the level of imports that remains in effect more than two years and when a measure is taken as a result of an absolute increase in imports that remains in effect more than three years. According to the Agreement on Safeguards， the WTO member can adopt measures for retaliation at any time after the safeguard measures come into effect. Therefore the provision of PSSMs has in fact limited the right of China to adopt retaliation.

　　4. The term of application is limited. In contrast with the unlimited term of the application of the Agreement on Safeguards， the application of PSSMs clause expires 12 years after the date of China's accession to the WTO. So the application of PSSMs is transitional.

　　III. The Application Procedure of PSSMs

　　According to the provisions of Article XVI of the Accession Protocol and Paragraph 246 of the Working Party Report， the application of PSSMs must observe the formulated procedure.

　　1. Investigation. Investigation is the base and main way of truth finding. An action to address market disruption would be taken only after an investigation by the importing WTO Member pursuant to procedures previously established and made available to the public. Investigation will be conducted on the import volume and market share of Chinese products and the effects of the imports on prices and the domestic industry of the importing country as well as the existence of causal link between the imports and market disruption.[page]

　　2. Public notice and notification. To make the whole procedure fair and transparent， the importing Member would publish notice of the commencement of any investigation， any measure proposed to be taken， the decision to apply a measure， commencement of any procession to consider the duration of the action. Any such action by China against the applying member or by the WTO member against China shall be notified immediately to the Committee on Safeguards.

　　3. Consultations. 1） Initiation of consultations. When products of Chinese origin are being imported into any WTO Member in such increased quantities or under such conditions as to cause or threaten to cause market disruption to the domestic producers of like or directly competitive products， the WTO Member so affected may request consultations with China. The affected WTO Member should pursue application of a measure under the Agreement on Safeguards. 2） An agreement is reached. If these bilateral consultations led to an agreement that imports of Chinese origin are a cause of market disruption and where necessary， China shall take an action to prevent or remedy the market disruption.3） If consultations do not lead to an agreement between China and the WTO Member concerned within 60 days of the receipt of a request for consultations， the WTO Member affected has the right， in respect of such products， to withdraw concessions or otherwise to limit imports， but only to the extent necessary to prevent or remedy such market disruption.

　　4. Provisional safeguard measures. In case that delay would cause a damage that would be difficult to repair， the WTO Member may take a provisional safeguard measure pursuant to a preliminary determination that imports have caused or threatened to cause market disruption.In this case， notification of the measures taken to the Committee on Safeguards and a request for bilateral consultations shall be effected immediately thereafter.The duration of the provisional measure shall not exceed 200 days and it shall be counted in the duration of the safeguard measures if the final determination is and affirmative and safeguard measures are necessary.

　　5. Retaliation. A WTO Member shall apply a measure only for such period of time as may be necessary to prevent or remedy the market disruption. China cannot retaliate in response to the application of PSSMs unless a measure is taken based on a relative increase in imports for more than two years or an absolute increase in imports for more than three years.

　　IV. Effects of PSSMs on China

　　In general， Chinese scholars have criticized the PSSMs and considered them as one of the four unfair provisions that China agreed to upon its accession to the WTO. （Han Xiuli， 2004b） Undoubtedly， the provision of PSSMs has rendered higher possibility and more conveniences for other WTO members to apply or even abuse safeguard measures against China and forced Chinese enterprises into unfavorable conditions facing more challenges. However， a careful study of the trade development after China's accession indicates that the PSSMs have not “extraordinarily enhanced their unfavorable effect upon China”。 Therefore， it is necessary to look at the issue from different perspectives.

　　The PSSMs distort the principle of free and fair trade and exert huge and far-reaching influence upon China. So far as the reach of the influence， the effect of PSSMs must be reviewed from microscopic and macroscopic perspectives. In terms of macroscopic consideration， China's trade policy and trade regime will be affected while the microscopic effect is reflected in the operation of enterprises and the development of domestic industry.

　　I） Positive Effects

　　1. The provision of PSSMs helps to drive China to reform its trade regime and adjust its trade policies. Chinese foreign trade experienced a rapid development after the implementation of reform and open policy and is playing a very important role in China's economic development. Market economy has been adopted as China's economic system. But on the other hand， the dependency ratio of economy on foreign trade has reached 60.3% and is becoming a controversial issue. （Liu Guangxi， 2004） This has fostered huge risks as any fluctuation of the world economy may undermine the driving force and the base of China's economic growth. In the past years， China has implemented an export-oriented economic policy， laying too much emphasis on the pulling force of export on economic growth and the increase of foreign reserve， which has in fact driven some enterprises to export products at lower prices rather than improve the quality of products for the refund of taxes on exports so that benefits from exports have been very small. The existence and application of PSSMs have constituted a precaution to the policy. At the end of 2004， China adjusted the rates of tax refund for some export products， which is a strong signal of readjustment of its trade policy， while the new Law on Foreign Trade marks the beginning of reform on China's trade regime.[page]

　　2. The provision of PSSMs is an important force propelling China's industrial structural adjustment. China's economy is at the stage of structural adjustment， when the external demand of upgrading of industry and the internal impulsion for short-term profits from foreign trade conflict and constitute strong contradiction. In fact， the structural contradictions and conflicts of interests incarnated in the process of reform and opening to the outside world has reduced the driving force of further reform. China's accession to the WTO has rendered an external propelling force for the resolution of the problem. So far as structural adjustment is concerned， the high possibility of the application of PSSMs against Chinese products exerts great pressure upon the Chinese government and enterprises， which is beneficial in propelling the process of industrial adjustment.

　　3. The provision of PSSMs is driving Chinese enterprises to speed up their technological innovation and increase the technical content of export products. China has depended on its advantageous labor cost in product export， which has made its exported products feature low added value and low technology thus less competitive in the international market. Therefore， not surprisingly， price competition has become an optional tactic， which resulted in a large number of anti-dumping investigations and measures from other WTO members. The quota for textiles expired on January 1， 2005， which makes some Chinese scholars so optimistic as to neglect the fact many interest groups in some countries， especially in the United States， one of the largest importers of Chinese textile products， are urging or pressuring their governments to resume or maintain quota or limitation to Chinese textiles or textile products In this sense， the existence and application may constantly warn the Chinese government and enterprises of the potential risks. Chinese enterprise should make full use of the opportunity to renovate their technologies， increase added values and technical content of their products in order to increase profits.

　　II） Negative Effects

　　1. The PSSMs may injure and threaten to injure Chinese domestic industry. The PSSMs were first designed to protect the importing （applying） countries' domestic industry， which， on the other hand， may threaten or injure China's domestic industry. The application of PSSMs will reduce the market share and production of Chinese products and thus a chain reaction may result so as to injure the whole industry. China has a competitive edge in exports of textiles， but the existence and application of PSSMs and quota limits have actually impeded the better development of its textile industry.

　　2. The export of relevant products may be affected which may result in reduction of the profits of enterprises. The application of PSSMs may directly lead to sharp limitations to the export of Chinese products， which may reduce the profits of the enterprise as a result. The enterprises will then be faced up with four options： to stop their exports to the applying country， to adopt measures to cope with the PSSMs， to seek to develop new markets or to increase the technical content and added values of the export products. Whatever measures adopted， the affected enterprises will directly or indirectly suffer heavy losses as a result of the huge increase of their production costs caused thereby.

　　3. The PSSMs constitute damage to fair competition and set back the process of economic development. Trade liberalization and fair competition have long been recognized as a major principle of international trade.The provision and the application of PSSMs have violated the above-mentioned principle and are no good in creating a fair and competitive context for international trade. On the other hand， the PSSMs are designed to aim at Chinese export of products and exert negative effects on China's economic growth， and with the increase of its economic influence on the world economy， affect the stability and development of the world economy.

　　V. China's Countermeasures

　　The PSSMs provision is very unfair to China and in a sense is “a complete implantation of Section 406 of the Trade Act of the United States”， （Han Xiuli， 2004b） a violation to the fair and liberal trade principle， yet it is also “an option made by China under the premise of balancing advantages and disadvantages”。 （Wu Yong， Zhao Baili， 2004） Also， China sought to accede to the WTO based on the consideration of a long-term strategy. Thus I do not think it is advisable to “to cancel or void” the provision of PSSMs only based on the presumption that the provision “was a commitment made under the condition of coerced and limited will”。 （Han Xiuli， 2004b） As a political power and a rising economic power， China should create an image of “self committed and rule observing” on the international arena. Under such a premise， China can take positive counter-measures to avoid or reduce the application of and to prevent the abuse of PSSMs in order to protect its trade interests.[page]

　　I） Macroscopic Measures

　　The WTO is an intergovernmental organization dealing with issues involving international trade， thus its rules are firstly binding upon governments. Therefore， the Chinese government should take positive measures from macroscopic perspectives to cope with PSSMs investigations against Chinese products.

　　1. China should improve its current legislation， reform its trade regime and adjust its trade policies. After more than twenty years of practice and exploration， China has established a trade regime and formulated a set of laws and regulations that basically conform to the WTO rules and Chinese situations， but there is still much to improve. At present， China should improve its rules on tax refund and foreign exchange regulation system so as to reduce the economic dependency ratio on foreign trade， change its export-oriented economic growth strategy to a comprehensive mode based on combining capital， investment and export， strengthen regulation on the export of enterprises and improve the quality of economic growth.

　　2. China should create a mechanism to increase the sensitivity of enterprises to PSSMs and encourage them to respond positively and actively. Under the old trade regime before 2004， exporting enterprises in China included production enterprises having the right to foreign trade， specialized foreign trade companies and foreign trade agencies.In many cases involving antidumping， countervailing and safeguards against Chinese products， conflicts of interests between production enterprises， foreign trade agencies and foreign trade agencies and foreign trade companies often led to lack of cooperation and harmonization， resulting in negligence or inactiveness in dealing with PSSMs so that unfavorable measures were imposed upon Chinese products， which in turn induced many more WTO members to apply trade remedial measures to Chinese products. Up till now， few cases of PSSMs have been successful in reaching their aims， yet it is early to say that no more such PSSMs will occur. China should create a mechanism to motivate and encourage enterprises within its territory to tackle the issue of PSSMs on the principle that “whoever responds to the PSSMs will benefit and whoever neglects or refuses to act positively will be punished”。

　　3. China should enhance its economic ties with the world and intensify its efforts to speed up the establishment of regional economic cooperation with its neighboring countries. The refusal of the western countries headed by the United States to acknowledge China as a market economy has worsened the global context for the Chinese foreign trade. Consequently more antidumping cases occurred against China after its accession to the WTO. Some WTO members are now making or modifying foreign trade laws on the basis of Article XVI of the Accession Protocol in an effort to legitimatize the adoption of PSSMs against products originating in China by means of domestic legislation. It is urgently indispensable for China to tighten its economic relation and cooperation with the neighboring countries and speed up negotiations for the establishment of customs unions and free trade areas. On the other hand， China should also seek more support from developing countries and those long in good relation and cooperation with it in recognizing China's market economy status so that cases of PSSMs investigations could decline.

　　4. China should make optimal use of the WTO dispute settlement mechanism and conduct consultations with relevant countries for better resolutions to trade disputes. Where there are interests， there are conflicts. It is also true of international trade. When a WTO member decides to initiate investigations for PSSMs， China should make no efforts to escape. Instead， it is more advisable for China to exploit the consultation mechanism to settle the trade disputes in the bud and， where necessary， resort to the dispute settlement mechanism shaped by the WTO. Negligence or inactiveness will only result in more serious injury to its trade interests.

　　5. China should speed up the bringing up of more talents and professionals skillful in applying the WTO rules for the protection of its trade interests. From 2005， China will be faced up with more challenges， as it will have to fulfill its commitments upon its accession to the WTO to open wider to the outside world.More talents and professionals expert at foreign languages， law， economics and the WTO rules are needed to tackle the increasing trade disputes. Moreover， China should not locate itself only as a WTO member that frequently has to deal with trade disputes in a passive manner. To get a position in the WTO consistent with its economic strength and trade volume， China should represent the interests of the vast majority of the developing world and shift itself from a passive acceptor of rules to a country expert at exploiting the WTO rules to protect its own trade interests and， at last， to a main force in the WTO to participate in making and modifying the WTO rules and upholding the principle of free and fair trade.[page]

　　II） Microscopic Measures

　　1. China should attach more importance to and make full use of the functions of trade associations. In the case of PSSMs， trade associations can at least perform their functions to facilitate responses to PSSMs investigations and reduce unfavorable measures against Chinese products.

　　1） To provide information. Many trade frictions resulted from the fact that Chinese enterprises lacked information and direct communication with their foreign counterparts.The trade associations should provide Chinese enterprises with timely and updated information including precautions and potential risks in the trade.

　　2） To create a mechanism for regulation and supervision for the sector. The ultimate objective of an enterprise is to seek profits， which often induces some enterprises to neglect or even break rules. In the case of foreign trade， the trade associations should undertake to formulate and implement rules and regulations for the sector to regulate the export of enterprises for fair competition in the trade.

　　3） To protect the interests of enterprises and the whole trade. Trade associations are the patron saint of enterprises. When the interests of one enterprise or more in the sector are injured as a result of PSSMs， the trade associations have the responsibility to exploit all resources and possible means within the limit of law and coordinate all forces to protect the affected enterprises.

　　4） To lobby foreign governments， parties， industrial societies and relevant interest groups. The application of PSSMs may benefit the domestic industry of the applying country， but at the same time it may also infringe the interests of other enterprises outside the industry and ultimate users in the country. The possibility of winning the investigation case on the side of China will very likely increase if the Chinese trade association succeeds in creating protests within the applying country by lobbying the foreign government， industrial societies and affected interest groups.

　　2. China should adopt measures to foster brokerage agencies. In many western countries， brokerage agencies are well developed and function well. Non-profit seeking agencies like law firms and accountant firms as well as profit seeking advisory and consulting companies perform extraordinary roles in dealing with antidumping， countervailing and safeguard cases. As China enters a new stage of development after its accession to the WTO， trade disputes are possibly increasing in large numbers in the near future. Making full use of the professional skills of the brokerage agencies to win PSSMs investigations is worth special attention.

　　3. Enterprises in China should be encouraged and motivated to respond to PSSMs. When PSSMs are applied， the affected enterprises will first suffer heavy losses. However， due to the lack of knowledge of the WTO rules and application skill in addition to conflict of interests， enterprises in China generally do not feel fully aware of the disadvantages and serious consequences likely caused by PSSMs， and some even risk injuring the interests of the country only for their own short-term interests and profits. In fact， there is more that enterprises in China can do than they have realized.

　　1） Adjusting their product structure， increasing the technical content of export products， giving up the export policy of “quantity prior to quality” and competing in the trade in quality and technology instead of price.

　　2） Expanding export channels and competing by diversifying products. Enterprises in China should seek to develop markets on the globe rather than focus on Europe and North America.They should develop new markets in South Asia， Africa and South America. Diversification of products may create them new competitive edges.

　　3） Seeking international cooperation and developing investment outside China. Establishing overseas subordinates， acquisition of foreign enterprises， overseas shareholding and transnational transfer of technology are good options to avoid or reduce the application of PSSMs but to procure stable profits.

　　4） Getting familiar with the WTO rules and responding actively to the application of PSSMs. When PSSMs are initiated， the affected Chinese enterprises should take a positive attitude， make a careful analysis of situations and make a positive response， under the assistance of trade associations and brokerage agencies and， where necessary and possible， seek cooperation of other companies in the trade in the form of coordinated forces to protect their own interests.

　　【参考文献】

　　Cai Fang. On the Nature and Application of the Product-specific Safeguard Measures. Henan Business College Journal， 2004 （2）： 38 Chen Weidong. Exceptions to the WTO. Beijing： Beijing University of Economy and Foreign Trade Press， 2002： 179 Han Xiuli. Application and Interpretation of the Product-specific Safeguard Measures Provision. Journal of Harbin University of Technology （Social science Ed.）， 2004 a （5）： 79 Han Xiuli. Interpreting the Provision of the Product-specific Safeguard Measures in a Scientific Manner. Journal of Beijing University of Technology （Social science Ed.）， 2004b （3）： 67， 69， 70 Liu Guangxi，Chen Taifeng. To Use Connotation of the Dependency Ratio of Foreign Trade Scientifically and China's Countermeasures Under the WTO. International Business Research， 2004 （4）：2 Wu Lihong.On Legal Issues Involved in the Product-specific Safeguard Measures. World Trade Organization Focus， 2003 （8）： 16 Wu Yong， Zhao Baili. On the Selective Safeguard Measures Against China. Journal of the China Youth University of Political Science， 2004 （1）： 111 Yu Fei. Some Issues on Product-specific Safeguard Measures Against China. World Trade Organization Focus， 2004（4）：19（金孝柏）[page]

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