Would Emergency Safeguard Measures Work for Services?

Abstract

Discussions in the WTO on Emergency Safeguards Measures (ESMs) for services are now stalemated. While possibly justified on political economy grounds if they resulted in WTO members making more liberal commitments, their main supporters (ASEAN minus Singapore) have not amply demonstrated their desirability or technical feasibility (legal and economic means). The GATS already has sufficient in-built flexibility, and several forms of de facto safeguard provisions and other measures exist. The economic case for ESMs is weak, and the efficiency costs from capture by protectionists and lost investment from restricting established foreign investors could be potentially large. The proposed ASEAN model essentially replicates the goods' ESM, and has a number of deficiencies, such as having no national interest or economic test. The paper suggests a number of ways that the ASEAN model could be improved if the case for ESM on services was accepted. It also examines, as an alternative to an ESM, the possibility of members introducing a waiver to temporarily withdraw services commitments should an emergency situation arise.