Escape Clause

Summary of Escape Clause

A provision common to most international trade agreements under which an adhering nation is permitted to withdraw trade concessions under prescribed conditions, normally in those cases where such concessions are found to result in material injury to the domestic economy. Most major trading nations subscribe to the conditions contained in Article XIX of the General Agreement on Tariffs and Trade, as follows: If, as a result of unforeseen developments and of the effect of the obligations incurred by a contracting party under this Agreement, including tariff concessions, any product is being imported into the territory of that contracting party in such increased quantities and under such conditions as to cause or threaten serious injury to domestic producers in that territory of like or directly competitive products, the contracting party shall be free, in respect of such product, and to the extent and for such time as may be necessary to prevent or remedy injury, to suspend the obligation in whole or in part or to withdraw or modify the concession. The Trade Act of 1974 liberalized the conditions under which the United States might implement the escape clause, as provided in the Tariff Act of 1930.

In order to invoke the escape clause for any particular product, current U.S. law requires that an application for relief be submitted to the U.S. International Trade Commission (ITC); the petitioner may be the president, the U.S. trade representative, the Senate Finance Committee, the Ways and Means Committee of the House of Representatives, or an American firm, labor union, or trade association affected by the foreign import. The ITC will investigate the submission and determine whether imports of the item in question have increased; whether such imports have injured, or threaten to injure, domestic industry; and whether the target imports are a substantial or only a peripheral cause of injury. If the ITC finds that imports have increased and that such imports are a substantial cause of injury, or threaten to cause substantial injury, the iTC will recommend such corrective measures as it deems appropriate, including, inter alia, increased tariff rates, quotas, or compensatory assistance to affected American firms or workers.

The president is not bound to adopt the recommendations of the ITC. As a practical matter, the escape clause is infrequently used; most trade disputes are resolved through negotiations with the nation from which the offending import originates. In those cases where the escape clause is invoked, it limits protective measures to a period of five years, which may be extended for a period up to three years more.

(Main Author: William J. Miller)

Escape Clause and the GATT Policy Negotiations

In relation to the GATT Policy Negotiations, Christopher Mark (1993) provided the following explanation and/or definition of Escape Clause: A provision in a bilateral or multilateral commercial agreement permitting a signatory temporarily to suspend concessions it has granted when imports threaten harm to its domestic workers or firms producing competing goods or services (see safeguards). Also used in reference to procedures in the United States for applying for import relief.