GLOBAL SELLING BLOG
What is safeguard duty? Meaning, purpose, and application
Safeguard duty is imposed on imports from all nations to limit the import of a specific good and prevent harm to domestic industry. Learn more about it in the blog.
In some countries, a sudden surge in imports can pose significant challenges to domestic industries. When local producers find it difficult to compete with the sudden influx of cheaper or more abundant foreign goods, it can lead to job losses, reduced market share, and economic instability. To mitigate this damage, governments may impose safeguard duties — temporary measures designed to curb the flow of imports and provide relief to affected industries — that give domestic producers time to adjust and remain competitive.
What is safeguard duty?
A safeguard duty is a temporary measure used to limit the import of a specific good to prevent serious harm to a domestic industry. These duties typically have a deadline and are imposed on imports from all nations, not just one. These are considered an emergency action and are deemed necessary only when certain imports present serious injury or damage to domestic industries.1
Purpose of safeguard duty
Some key purposes of safeguard duties are as follows:
Ensures consumer benefits
Safeguard duty ensures that consumers have access to domestic products despite the influx of foreign goods.
Prevents market discrimination
A safeguard duty is applied non-selectively, which means that all importers, irrespective of their country, have to pay the duty. This prevents certain countries from getting an unfair advantage in the importing market.
Protects local industries
It allows governments to quickly respond to import surges without severely impacting domestic industries.2
When can safeguard duty be applied?
Safeguard duties can be applied under the following circumstances:
Safeguard duties can be imposed when a significant and rapid surge in imports disrupts the market and causes injury to domestic industries.
A serious injury is defined as a significant overall impairment in the position of a domestic industry. A threat is a clear and imminent danger of serious injury. If a government perceives serious threat or injury, it can apply safeguard duty.
Domestic industries may not have the capacity to immediately adapt to competitive pressures caused by increase in imports. Since safeguard duties are temporary restrictions, they can provide stability and short-term relief to affected sectors.
Did you know?
The WTO provides special safeguard duty exemptions to developing countries
Developing countries can be exempted from another country’s safeguard measures on low-volume imports if they meet specific exemption criteria. As users of safeguards, they are also allowed to extend the application of safeguard measures by up to two additional years. Additionally, the rules for reapplying safeguard measures on specific products are more flexible, giving developing countries greater leeway to protect their industries.
What is safeguard investigation?
A safeguard investigation is a procedure to identify whether an industry is experiencing serious injury or threat due to a sudden surge in imports. The process intends to strike a balance between protecting domestic industries and adhering to international trade rules.
The investigation typically includes:
The investigation typically includes:
Initiation of investigation
Examination of imports
Evaluation of unforseen circumstances
Submission of adjustment plan
Application of safeguards
Initiation of investigation
The investigation begins based on a petition from a domestic producer of a specific product or suo moto by the relevant authority.
Examination of imports
The investigation assesses whether increased imports of the product have caused or threaten to cause serious harm to the domestic industry. Key factors include changes in market share, profitability, sales, and production of the domestic industry compared to imported goods.
Evaluation of unforeseen circumstances
Next, the authority determines whether the increase in imports is linked to unforeseen developments not expected when setting import tariffs for the product.
Submission of the adjustment plan
Petitioners provide an adjustment plan explaining processes to enhance their competitiveness during the safeguard measure’s duration.
Application of safeguard duty
Depending on the findings of the investigation, the concerned authority applies relevant safeguard duties. These can include higher import tariffs, quantitative restrictions, or a combination of both. They are implemented without discrimination but exclude imports from developing countries contributing less than 3% of total imports (or collectively under 9%).
Duration and reductions
Safeguard duties are applied for a maximum of four years (six years for developing countries) but must be progressively reduced if exceeding one year. Extensions are possible following a new investigation, up to a maximum of eight years (ten years for developing countries).5
Key takeaways
Who can apply for safeguard investigation?
The trading authority of the importing country and any domestic producer of the specific product can petition for a safeguard investigation. Safeguard duties are imposed by the trading authority after the investigation is completed.
The trading authority of the importing country and any domestic producer of the specific product can petition for a safeguard investigation. Safeguard duties are imposed by the trading authority after the investigation is completed.
When can they apply for a safeguard investigation?
Domestic industries and trading authorities can apply for a safeguard investigation when they suspect that there is significant harm or risk of serious damage due to a rise in imports.
Domestic industries and trading authorities can apply for a safeguard investigation when they suspect that there is significant harm or risk of serious damage due to a rise in imports.
What information to include in the application for safeguard duty?
When applying for safeguard duty, certain key information needs to be included in the application. The main elements include:
• General information about the applicant(s)
• Product information
• Evidence of increased imports
• Domestic production data
• Evidence of injury
• Cause of injury
• Submissions and supporting documentation6
• General information about the applicant(s)
• Product information
• Evidence of increased imports
• Domestic production data
• Evidence of injury
• Cause of injury
• Submissions and supporting documentation6
Other types of duties
These are some other types of duties that governments may implement to protect their domestic industries from injury caused by imports. Some of these are as follows:
Basic customs duty (BCD)
A tax levied on imported goods in India, calculated based on the product type, country of origin, and material composition, aimed at regulating imports and supporting domestic industries.
Protective duties
These are imposed on specific imports to shield domestic industries from foreign competition by making imports more expensive and local goods more attractive.
Anti-dumping duty (ADD)
Anti-dumping duty is imposed to make up for the difference between the exported price and the normal value of the goods. It is implemented to protect domestic markets from unfair trade practices.
Countervailing duty (CVD)
Countervailing duty is levied to counteract subsidies provided by exporting countries, assuring fair competition for domestic producers.
Special additional duty (SAD)
A tax levied on imports to counterbalance local taxes that domestic manufacturers pay. Its objective is to create a level playing field between imported goods and local goods.
Amazon Global Selling: Easy e-commerce exports and hassle-free shipping
If you are a business owner and you want to sell your products to the world, Amazon Global Selling enables you to list and sell ‘Made in India’ products on 18 Amazon global marketplaces. As an e-commerce export program, Amazon Global Selling provides support and guidance at every step of your export journey, connecting you to Amazon’s Service Provider Network for tailored compliance, payments, and logistics support.
Registered sellers can choose to ship their products by themselves through Merchant Fulfilled Network (MFN) or they can opt for fulfilment by Amazon (FBA) and outsource order fulfilment to Amazon including packing, storage, delivery, and returns. Amazon Global Selling simplifies the process of international shipping to the world, helping businesses navigate customs and reach a vast audience.
Registered sellers can choose to ship their products by themselves through Merchant Fulfilled Network (MFN) or they can opt for fulfilment by Amazon (FBA) and outsource order fulfilment to Amazon including packing, storage, delivery, and returns. Amazon Global Selling simplifies the process of international shipping to the world, helping businesses navigate customs and reach a vast audience.
Published on January 17, 2024.
Sources:
1. https://optimizeias.com/safeguard-duties/
2. https://www.eximguru.com/exim/indian-customs/safeguard-duty/about-safeguard-duty.aspx
3. https://www.wto.org/english/tratop_e/safeg_e/safeg_info_e.htm
4. https://www.wto.org/english/tratop_e/safeg_e/safeg_info_e.htm
5. https://www.ceew.in/sites/default/files/ceew-study-on-impact-of-safeguards-duty-on-solar-cells-modules-24Jun19.pdf
6. https://www.eximguru.com/exim/indian-customs/safeguard-duty/about-safeguard-duty.aspx
Sources:
1. https://optimizeias.com/safeguard-duties/
2. https://www.eximguru.com/exim/indian-customs/safeguard-duty/about-safeguard-duty.aspx
3. https://www.wto.org/english/tratop_e/safeg_e/safeg_info_e.htm
4. https://www.wto.org/english/tratop_e/safeg_e/safeg_info_e.htm
5. https://www.ceew.in/sites/default/files/ceew-study-on-impact-of-safeguards-duty-on-solar-cells-modules-24Jun19.pdf
6. https://www.eximguru.com/exim/indian-customs/safeguard-duty/about-safeguard-duty.aspx
Related blogs
Frequently Asked Questions
How long can safeguard duties remain in effect?
Safeguard duties remain in effect for up to four years.
When do safeguard measures get renewed?
Safeguard measures can be renewed if there is still a need to protect domestic industries from serious injury caused by increased imports. This renewal usually follows a review to confirm that the initial conditions for the measures are still present.
Sell across the world with Amazon Global Selling
Ready to start exporting from India?
Want to learn about Amazon Global Selling?
Disclaimer: Whilst Amazon Seller Services Private Limited ("Amazon") has used reasonable endeavours in compiling the information provided, Amazon provides no assurance as to its accuracy, completeness or usefulness or that such information is error-free. In certain cases, the blog is provided by a third-party seller and is made available on an "as-is" basis. Amazon hereby disclaims any and all liability and assumes no responsibility whatsoever for consequences resulting from use of such information. Information provided may be changed or updated at any time, without any prior notice. You agree to use the information, at your own risk and expressly waive any and all claims, rights of action and/or remedies (under law or otherwise) that you may have against Amazon arising out of or in connection with the use of such information. Any copying, redistribution or republication of the information, or any portion thereof, without prior written consent of Amazon is strictly prohibited.
*Map not to scale. The map has been used for design and representational purpose only, it does not depict the geographical boundaries of the country. These do not conform to the external boundaries of India recognized by the Survey of India.
*Map not to scale. The map has been used for design and representational purpose only, it does not depict the geographical boundaries of the country. These do not conform to the external boundaries of India recognized by the Survey of India.
© 2024 Amazon.com, Inc. or its affiliates. All rights reserved
