Text of the 2017 Canada–Ukraine Free Trade Agreement – Chapter 5: Emergency action and trade remedies

Section A - Definitions

Article 5.1: Definitions

For the purposes of this Chapter:

Agreement on Safeguards means the WTO Agreement on Safeguards, contained in Annex 1A to the WTO Agreement;

Anti-Dumping Agreement means the WTO Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994, contained in Annex 1A to the WTO Agreement;

competent investigating authority means:

• (a) in the case of Canada, the Canadian International Trade Tribunal, or its successor; and
• (b) in the case of Ukraine, the Ministry of Economic Development and Trade, or its successor;

domestic industry means, with respect to an imported good, the producers as a whole of the like or directly competitive good operating in the territory of a Party or those whose collective production of the like or directly competitive good constitutes a major proportion of the total domestic production of that good;

emergency action means an emergency action described in Article 5.3;

SCM Agreement means the WTO Agreement on Subsidies and Countervailing Measures, contained in Annex 1A to the WTO Agreement;

serious injury means a significant overall impairment of a domestic industry;

substantial cause means a cause that is important and not less important than any other cause;

threat of serious injury means serious injury that is clearly imminent based on facts and not based on allegation, conjecture or remote possibility; and

transition period means the 7-year period beginning on the entry into force of this Agreement, except where the tariff elimination for the good against which the action is taken occurs over a longer period of time, in which case the transition period is the period of the staged tariff elimination for that good.

Section B – Emergency Action

Article 5.2: Article XIX of the GATT 1994 and the Agreement on Safeguards

1. Each Party retains its rights and obligations under Article XIX of the GATT 1994 and the Agreement on Safeguards, which exclusively govern global safeguard actions including the resolution of a dispute with respect to those matters.

2. A Party shall not adopt or maintain, with respect to the same good, at the same time:

• (a)  an emergency action; and
• (b)  a measure under Article XIX of the GATT 1994 and the Agreement on Safeguards.

Article 5.3: Bilateral Emergency Actions

1. A Party may adopt an emergency action described in paragraph 2:

• (a)  only during the transition period; and
• (b)  if as a result of the reduction or elimination of a duty pursuant to this Agreement, an originating good is being imported into the Party’s territory in such increased quantities, in absolute terms or relative to domestic production, and under such conditions as to constitute a substantial cause of serious injury, or threat thereof, to a domestic industry producing a like or directly competitive good.

2. If the conditions set out in paragraph 1 and Article 5.4 and 5.5 are met, a Party may, to the extent necessary to prevent or remedy serious injury, or threat of serious injury:

• (a)  suspend the further reduction of a rate of duty provided for under this Agreement on the good; or
• (b)  increase the rate of duty on the good to a level not exceeding the lesser of:
  • (i) the most-favoured-nation (MFN) applied rate of customs duty in effect at the time the emergency action is taken, and
  • (ii)  the base rate of customs duty as provided in the Party’s schedule to Annex 2-B (Tariff Elimination); or
• (c)  in the case of a customs duty applied to a good on a seasonal basis, increase the rate of customs duty to a level not to exceed the lesser of:
  • (i) the MFN applied rate of customs duty on the good in effect for the corresponding season immediately preceding the date of application of an emergency action, or
  • (ii) the MFN applied rate of customs duty on the good in effect for the corresponding season immediately preceding the date of entry into force of this Agreement, or
  • (iii) the base rate of customs duty provided for in the Party’s schedule to Annex 2-B (Tariff Elimination).

3. Any emergency action shall be adopted no later than one year after the date the proceeding is instituted.

Article 5.4: Notification and Discussions

1. A Party shall, in writing, promptly notify and invite the other Party for discussions with respect to:

• (a)  initiating an emergency action proceeding;
• (b)  making a finding of serious injury or threat of serious injury under the conditions set out in Article 5.3.1; or
• (c)  applying an emergency action.

2. A Party shall, without delay, provide the other Party with a copy of the public version of any notice or any report by a competent investigating authority issued in connection with matters notified pursuant to paragraph 1.

3. If a Party accepts an invitation for discussions made pursuant to paragraph 1, the Parties shall discuss the notification under paragraph 1, or the public version of a document issued by a competent investigating authority in connection with the emergency action proceeding.

Article 5.5: Standards for Emergency Actions

1. A Party shall not maintain an emergency action:

• (a)  to an extent or for a period that exceeds what is necessary to prevent or remedy serious injury and facilitate adjustment;
• (b)  for a period exceeding three years; or
• (c)  beyond the expiration of the transition period.

2. A Party shall not apply an emergency action against an originating good more than once.

3. In order to facilitate adjustment in a situation where the expected duration of an emergency action is greater than one year, the Party taking the action shall progressively liberalize the emergency action at annual intervals during the period of application.

4. On the termination of an emergency action, a Party shall set the rate of customs duty at the rate that would have been in effect but for the action according to the Party's Schedule to Annex 2-B (Tariff Elimination) for the staged elimination of the customs duty.

5. A Party taking an emergency action under Article 5.3 shall provide to the exporting Party mutually agreed trade liberalizing compensation in the form of concessions with substantially equivalent trade effects or equivalent to the value of the additional duties expected to result from the action. If the Parties are unable to agree on compensation, the Party whose goods are subject to the action may take tariff action with trade effects substantially equivalent to the emergency action taken under Article 5.3. The Party taking the tariff action shall apply the action only for the minimum period necessary to achieve the substantially equivalent effects and, in any event, only while the emergency action under Article 5.3 is in effect.

Article 5.6: Administration of Emergency Action Proceedings

1. Each Party shall ensure the consistent, impartial and reasonable administration of its legislation, decisions and rulings governing emergency action proceedings.

2. Each Party shall entrust determinations of serious injury, or threat of serious injury, in an emergency action proceeding, to a competent investigating authority. Each Party shall:

• (a)  ensure that those determinations are subject to review by judicial or administrative tribunals, to the extent provided by the Party’s legislation;
• (b)  ensure that negative injury determinations are not modified, except through a review referred to in sub-paragraph (a); and
• (c)  provide its competent investigating authority with the necessary resources to enable it to fulfill its duties.

3. Each Party shall adopt or maintain equitable, timely, transparent and effective procedures for emergency action proceedings in accordance with the requirements set out in paragraph 4.

4. A Party shall apply an emergency action only following an investigation by the Party’s competent investigating authority in accordance with Articles 3 and 4.2 of the Agreement on Safeguards. To this end, Articles 3 and 4.2 of the Agreement on Safeguards are incorporated into and made part of this Agreement.

Article 5.7: Dispute Settlement in Emergency Action Matters

1. A Party shall not request the establishment of a panel under Article 17.7 (Establishment of a Panel) regarding a proposed emergency action.

2. A Party may request the establishment of a panel under Article 17.7 (Establishment of a Panel) regarding an actual emergency action.

Section C – Anti-Dumping and Countervailing Measures

Article 5.8: Relation to Other Agreements

1. Each Party shall apply anti-dumping and countervailing measures in accordance with Article VI of the GATT 1994, the Anti-Dumping Agreement and the SCM Agreement.

2.   This Section is not subject to Chapter 17 (Dispute Settlement).

Article 5.9: Transparency

1. A Party shall ensure, after an imposition of provisional measures, and in any case, before a final determination is made, full and meaningful disclosure of all essential facts under consideration which form the basis for the decision whether to apply final measures. This is without prejudice to Article 6.5 of the Anti-Dumping Agreement and Article 12.4 of the SCM Agreement.

2. Provided that it does not unnecessarily delay the conduct of the investigation, each interested party in an anti-dumping or countervailing investigation^{Footnote 1} shall be granted a full opportunity to defend its interests.