Treaty Establishing a Common Market
between the Argentine Republic, the Federal Republic of Brazil, the Republic of Paraguay and the Eastern Republic of Uruguay

ANNEX IV

Safeguard Clauses

Article I

Each State Party may, up to 31 December 1994, apply safeguard clauses to imports of products benefiting from the trade liberalization programme established under the Treaty.

The States Parties hereby agree that they shall use these rules only in exceptional cases.

Article 2

If imports of a given product damage or threaten serious damage to its market as a result of a significant increase in imports of that product from the other States Parties over a short period of time, the importing country shall request the Common Market Group to hold consultations with a view to ending such a situation.

The importing country shall accompany its request with a detailed statement of the supporting facts, reasons and justifications.

The Common Market Group shall begin consultations within a maximum of 10 calendar days from the submission of the request by the importing country and shall conclude them, having taken a decision thereon, within 20 calendar days from the start of consultations.

Article 3

The existence or otherwise of damage or the threat of serious damage within the meaning of these rules shall be determined by each country, taking into account trends, inter alia, in the following aspects related to the product in question.

(a) Production level and capacity used;

(b) Employment level;

(c) Share of the market;

(d) Level of trade between the parties concerned or participating in the consultations;

(e) Performance of imports and exports in relation to third countries.

None of the above-mentioned factors shall, on its own, be decisive for determining the existence of damage or the threat of serious damage.

In determining the existence of damage or the threat of serious damage, factors such as technological changes or shifts in consumer preferences towards similar and/or directly competitive products in the same sector shall not be taken into account.

Application of the safeguard clause shall be subject, in each country, to the final approval of the national section of the Common Market Group.

Article 4

In order not to interrupt any trade flows which may have been generated, the importing country shall negotiate a quota for imports of the product in respect of which the safeguard clause has been invoked. This quota shall be governed by the same preferences and other conditions established in the trade liberalization programme.

The above-mentioned quota shall be negotiated with the State Party in which the imports originate, during the period of consultation referred to in Article 2. If the period of consultation ends without an agreement being reached, the importing country which considers itself affected may fix a quota which shall be maintained for one year.

In no event may a quota fixed unilaterally by the importing country be less than the average physical volume imported in the last three calendar years.

Article 5

Safeguard clauses shall apply for a year and may be extended for a further consecutive year on the terms established in this Annex. Such measures may be adopted only once for each product.

In no event may the application of safeguard clauses extend beyond 31 December 1994.

Article 6

The application of safeguard clauses shall not affect goods already loaded for shipment on the date of their adoption. Such goods shall be computed into the quota provided for in article 4.

Article 7

During the transition period, any State Party which considers itself affected by serious difficulties in its economic activities shall request the Common Market Group to hold consultations so that the necessary corrective measures can be taken.

Within the periods established in Article 2 of this Annex, the Common Market Group shall evaluate the situation and decide on the measures to be taken, according to the circumstances.

(The Spanish and Portuguese versions read: THIS IS A TRUE COPY OF THE ORIGINAL WHICH IS IN THE POSSESSION OF THE TREATY DEPARTMENT OF THE MINISTRY OF FOREIGN AFFAIRS.)

(Signed) Bernardino H. Saguier Caballero
Under-Secretary for Foreign Affairs