Trade remedies or trade defence instruments are measures enacted to defend the local industry against unfair competition from imports. These are World Trade Organisation (WTO) measures domesticated through national regulations on Anti-dumping; Countervailing; and Safeguard Measures.
As the trade environments of countries like Botswana increasingly get liberalised, one of the key concerns of government is the survival of domestic industry and producers from foreign competition. In this regard, trade remedies can be important tools for preserving domestic industries, employment levels and stimulating economic development. Application of these measures has to be in strict adherence to the World Trade Organisation rules stipulated under their respective WTO Agreements as well as domestic rules and regulations on the same.
Dumping occurs when a product is exported to another country, at a price which is lower than the price at which the same product is sold in the country of origin.
Countervailing is an action against imported products which are subsidised by a foreign Government which causes injury to the SACU market.
For example, Country Y gives a financial contribution to producers of chickens. Chickens are then exported to Botswana at a lower price negatively affecting Botswana chicken producers.
Safeguard action is taken to protect the SACU industry against “unforeseen surges of imports” which causes serious injury. For example:
- SACU agrees to reduce tariffs on the importation of beans as a result of commitments under the Economic Partnership Agreement (EPA) with the EU.
- During the course of implementation, import of beans increases to the extent that it negatively affects SACU producers of beans.
- A safeguard measure can be imposed.
- The industry alleging dumping, subsidization or surges in imports lodges an application to the BOTC.
- The BOTC carries out an investigation to establish the genuineness of the allegation in line with the WTO principles pertaining to the measures.
- A report is prepared providing details on the cost structures of the industry.
- Where it is established that indeed there is unfair trade practice, remedial measures can be recommended.
Why Trade Remedies?
- To combat unfair trade practices by trading partners.
- Help to preserve a level playing field for domestic industry.
- Liberalised imports may cause injury to domestic industries.
- Part of Botswana National Trade Policy to protect domestic industries from the adverse consequences of trade liberalisation.
- Temporary tool(safeguards) to deal with the costs of adjustment due to trade liberalisation.