NAFTA - Emergency Action

                               Chapter Eight

                             Emergency Action



Article 801:  Bilateral Actions

1.   Subject to paragraphs 2, 3 and 4 and Annex 801, and during
the transition period only, if a good originating in the
territory of a Party, as a result of the reduction or elimination
of a duty provided for in this Agreement, is being imported into
the territory of another Party in such increased quantities, in
absolute terms, and under such conditions so that the imports of
such good from that Party alone constitute a substantial cause of
serious injury, or threat thereof, to a domestic industry
producing a like or directly competitive good, the Party into
whose territory the good is being imported may, to the minimum
extent necessary to remedy or prevent the injury:

     (a) suspend the further reduction of any rate of duty
 provided for under this Agreement on such good;

     (b) increase the rate of duty on such good to a level not
 to exceed the lesser of

     (i) the most-favored-nation (MFN) applied rate of duty
 in effect at the time the action is taken, or

     (ii) the MFN applied rate of duty in effect on the day
 immediately preceding the date of entry into force
 of this Agreement; or

     (c) in the case of a duty applied to a good on a seasonal
 basis, increase the rate of duty to a level not to
 exceed the MFN applied rate of duty that was in effect
 on such good for the corresponding season immediately
 preceding the date of entry into force of this
 Agreement.

2.   The following conditions and limitations shall apply to a
proceeding that may result in emergency action under paragraph 1:

     (a) a Party shall, without delay, deliver to any Party that
 may be affected written notice of, and a request for
 consultations regarding, the institution of a
 proceeding that could result in emergency action
 against a good originating in the territory of a  Party;

     (b) any such action shall commence not later than one year
 from the date of institution of the proceeding;

     (c) no action shall be maintained

     (i) for a period exceeding three years, except where
 the good against which the action is taken is
 provided for in the items in staging category C+
 of the Tariff Schedule of the Party taking the
 action, and that Party determines that the
 affected industry has undertaken adjustment and
 requires an extension of the period of relief, in
 which case the period of relief may be extended
 for one year provided that the duty applied during
 the initial period of relief is substantially
 reduced at the commencement of the extension
 period, or

     (ii) beyond the expiration of the transition period,
 except with the consent of the Party against whose
 good the action is taken;

     (d) no action shall be taken by a Party against any
 particular good originating in the territory of another
 Party more than once during the transition period; and

     (e) upon the termination of the action, the rate of duty
 shall be the rate that, according to the original
 Schedule for the staged elimination of the tariff,
 would have been in effect a year after the commencement
 of the action, and commencing January 1 of the year
 following the termination of the action, at the option
 of the Party that has taken the action

     (i) the rate of duty shall conform to the schedule in
 the Tariff Schedule of the Party, or

     (ii) the tariff shall be eliminated in equal annual
 stages ending on the date set forth in the Tariff
 Schedule of the Party for the elimination of the
 tariff.

3.   A Party may take a bilateral emergency action after the
expiration of the transition period to deal with cases of
serious injury, or threat thereof, to a domestic industry arising
from the operation of this Agreement only with the consent of the
Party against whose good the action would be taken.

4.   The Party taking an action pursuant to this Article shall
provide to the Party against whose good the action is taken
mutually agreed trade liberalizing compensation in the form of
concessions having substantially equivalent trade effects to the
other Party, or equivalent to the value of the additional duties
expected to result from the action.  If the Parties are unable to
agree upon compensation, the Party against whose good the action
is taken may take tariff action having trade effects
substantially equivalent to the action taken under paragraph 1.
The Party taking such tariff action shall apply the action only
for the minimum period necessary to achieve such substantially
equivalent effects.

5.   This Article does not apply to emergency actions respecting
goods covered by Annex 300-B (Textile and Apparel Goods).

Article 802: Global Actions

1.   Each Party shall retain its rights and obligations under
Article XIX of the GATT or any safeguard agreement pursuant
thereto except those regarding compensation or retaliation and
exclusion from an action to the extent that such rights or
obligations are inconsistent with this Article.  Any Party taking
an emergency action under Article XIX or any such agreement shall
exclude imports of a good from each other Party from such action
unless:

     (a) imports from a Party, considered individually, account
 for a substantial share of total imports; and

     (b) imports from a Party, considered individually, or in
 exceptional circumstances imports from Parties
 considered collectively, contribute importantly to the
 serious injury, or threat thereof, caused by imports.

2.   In determining whether:

     (a) imports from a Party, considered individually, account
 for a substantial share of total imports, such imports
 normally shall not be considered to account for a
 substantial share of total imports if such Party is not
 among the top five suppliers of the good subject to the
 proceeding, measured in terms of import share during
 the most recent three-year period; and

     (b) imports from a Party or Parties contribute importantly
 to the serious injury, or threat thereof, the competent
 investigating authority shall consider such factors as
 the change in the import share of each Party, and the
 level and change in the level of imports of each Party.
 In this regard, imports from a Party normally shall not
 be deemed to contribute importantly to serious injury,
 or the threat thereof, if the growth rate of imports
 from a Party during the period in which the injurious
 surge in imports occurred is appreciably lower than the
 growth rate of total imports from all sources over the
 same period.

3.   A Party taking such action, from which a good from another
Party or Parties is initially excluded pursuant to paragraph 1,
shall have the right subsequently to include that good of the
other Party or Parties in the action in the event that the
competent investigating authority determines that a surge in
imports of such good of the other Party or Parties undermines the
effectiveness of such action.

4.   A Party shall, without delay, deliver written notice to the
other Parties of the institution of a proceeding that may result
in emergency action under paragraph 1 or 3.

5.   In no case shall a Party impose restrictions on a good in an
action under paragraph 1 or 3:

     (a) without delivery of prior written notice to the
 Commission, and without adequate opportunity for
 consultation with the Party or Parties against whose
 good the action is proposed to be taken, as far in
 advance of taking the action as practicable; and

     (b) that would have the effect of reducing imports of such
 good from a Party below the trend of imports of such
 good from that Party over a recent representative base
 period with allowance for reasonable growth.

6.   The Party taking an action pursuant to this Article shall
provide to the Party or Parties against whose good the action is
taken mutually agreed trade liberalizing compensation in the form
of concessions having substantially equivalent trade effects to
that Party or Parties or equivalent to the value of the
additional duties expected to result from the action.  If such
Parties are unable to agree upon compensation, the Party against
whose good the action is taken may take action having trade
effects substantially equivalent to the action taken under
paragraph 1 or 3.


Article 803: Administration of Emergency Action Proceedings

1.   Each Party shall ensure the consistent, impartial and
reasonable administration of its respective laws, regulations,
decisions and rulings governing all emergency action proceedings.

2.   Each Party shall entrust determinations of serious injury,
or threat thereof, in emergency action proceedings to a competent
investigating authority, subject to review by judicial or
administrative tribunals, to the extent provided by domestic law.
Negative injury determinations shall not be subject to
modification, except by such review.  The competent investigating
authority empowered under domestic law to conduct such
proceedings should be provided with the necessary resources to
enable it to fulfill its duties.

3.   Each Party shall adopt or maintain equitable, timely,
transparent and effective procedures for emergency action
proceedings, in accordance with the requirements set out in Annex
803.

4.   This Article does not apply to emergency actions respecting
goods covered by Annex 300-B (Textile and Apparel Goods).


Article 804: Dispute Settlement in Emergency Action Matters

     No party may request the establishment of an arbitral panel
under Article 2008 regarding any proposed emergency action.


Article 805: Definitions

For purposes of this Chapter:

competent investigating authority means the "competent
investigating authority" of a Party as defined in Annex 804;

contribute importantly means an important cause, but not
necessarily the most important cause;

critical circumstances means circumstances where delay would
cause damage that would be difficult to repair;

domestic industry means the producers as a whole of the like or
directly competitive good operating within the territory of a
Party;

emergency action means any emergency action proceeding instituted
after the date of entry into force of this Agreement;

serious injury means a significant overall impairment of a
domestic industry;

surge means a significant increase in imports over the trend for
a recent representative base period;

threat of serious injury means serious injury that, on the basis
of facts and not merely on allegation, conjecture or remote
possibility, is clearly imminent; and

transition period means the 10-year period commencing on the date
of the entry into force of this Agreement, except where the good
against which the action is taken is provided for in the items in
staging category C+ of the Tariff Schedule of the Party taking
the action, in which case the transition period shall be the
period of staged tariff elimination for that good.

=============================================================================
                                 ANNEX 801

                             Bilateral Actions


     Notwithstanding Article 801, bilateral emergency actions
between Canada and the United States on goods originating in the
territory of either Party shall be governed in accordance with
the terms of Article 1101 of the Canada-U.S. Free Trade
Agreement, which is hereby incorporated into and made a part of
this Agreement for such purpose.

=============================================================================

                                 ANNEX 803

              Administration of Emergency Action Proceedings


1.   Institution of a Proceeding:

     (a) An emergency action proceeding may be instituted by a
 petition or complaint by entities specified in domestic
 law.  The entity filing the petition or complaint shall
 demonstrate that it is representative of the domestic
 industry producing a good like or directly competitive
 with the imported good.

     (b) A Party may institute a proceeding on its own motion or
 request the competent investigating authority to
 conduct a proceeding.

2.   Contents of a petition or complaint.  When the basis for an
   investigation is a petition or complaint filed by an entity
   representative of a domestic industry, the petitioning
   entity shall, in its petition or complaint, provide the
   following information to the extent that such information is
   publicly available from governmental and other sources, and
   best estimates and the basis therefore if such information
   is not available:

     (a) Product description.  The name and description of the
 imported good concerned, the tariff subheading under
 which such good is classified, its current tariff
 treatment, and the  name and description of the like or
 directly competitive domestic good concerned,

     (b) Representativeness:

     (i) The names and addresses of the entities filing the
 petition or complaint, and the locations of the
 establishments in which they produce the domestic
 good,

     (ii) the percentage of domestic production of the like
 or directly competitive good that such entities
 account for and the basis for claiming that they
 are representative of an industry, and

     (iii) the names and locations of all other domestic
 establishments in which the like or directly
 competitive good is produced;

     (c) Import data. Import data for each of the five most
 recent full years that form the basis of the claim that
 the good concerned is being imported in increased
 quantities, either in absolute terms or relative to
 domestic production;

     (d) Domestic production data. Data on total domestic
 production of the like or directly competitive good for
 each of the five most recent full years;

     (e) Data showing injury.  Quantitative and objective data
 indicating the nature and extent of injury to the
 concerned industry, such as data showing changes in the
 level of sales, prices, production, productivity,
 capacity utilization, market share, profits and losses,
 and employment;

     (f) Cause of injury.  An enumeration and description of the
 alleged causes of the injury, or threat thereof, and a
 summary of the basis for the assertion that increased
 imports, either actual or relative to domestic
 production, of the imported good are causing or
 threatening to cause serious injury, supported by
 pertinent data; and

     (g) Criteria for inclusion.  Quantitative and objective
 data indicating the share of imports accounted for by
 imports from the territory of each other Party and the
 petitioner's views on the extent to which such imports
 are contributing importantly to the serious injury, or
 threat thereof, caused by imports of that good.

3.   Petitions or complaints, except to the extent they contain
confidential business information, shall promptly be made
available for public inspection upon being filed.

4.   With respect to an emergency action proceeding instituted on
the basis of a petition or complaint filed by an entity asserting
that it is representative of the domestic industry, the competent
investigating authority shall not publish the notice required by
paragraph 6 without first assessing carefully that the petition
or complaint meets the requirements of paragraph 4, including
representativeness.

5.   Notice requirement. Upon instituting an emergency action
proceeding, the competent investigating authority shall publish
notice of the institution of the proceeding in the official
journal of the Party.  The notice shall identify: the petitioner
or other requester; the imported good that is the subject of the
proceeding and its tariff subheading; the nature and timing of
the determination to be made; the time and place of the public
hearing; dates of deadlines for filing briefs, statements, and
other documents; the place at which the petition and any other
documents filed in the course of the proceeding may be inspected;
and the name, address and telephone number of the office to be
contacted for more information.

6.   Public hearing.  In the course of each such proceeding,
the competent investigating authority shall:

     (a) hold a public hearing, after providing reasonable
 notice, to allow all interested parties, and any
 association whose purpose is to represent the interests
 of consumers in the territory of the Party instituting
 the proceeding, to appear in person or by counsel, to
 present evidence, and to be heard on the questions of
 serious injury, or threat thereof, and the appropriate
 remedy; and

     (b) provide an opportunity to all interested parties and
 any such association appearing at the hearing to
 cross-question interested parties making presentations
 at that hearing.

7.   Confidential information.  The competent investigating
authority shall adopt or maintain procedures for the treatment of
confidential information, protected under domestic law, that is
provided in the course of a proceeding, including a requirement
that interested parties and consumer associations providing such
information furnish non-confidential written summaries thereof,
or if they indicate that such information cannot be summarized,
the reasons why a summary cannot be provided.

8.   Evidence of injury and causation:

     (a) In conducting its proceeding the competent
 investigating authority shall gather, to the best of
 its ability, all relevant information appropriate to
 the determination it must make.  It shall evaluate all
 relevant factors of an objective and quantifiable
 nature having a bearing on the situation of that
 industry, in particular, the rate and amount of the
 increase in imports of the good concerned, in absolute
 and relative terms, the share of the domestic market
 taken by increased imports, and changes in the level of
 sales, production, productivity, capacity utilization,
 profits and losses, and employment.  In making its
 determination, the competent investigating authority
 may also consider other economic factors, such as
 changes in prices and inventories, and the ability of
 firms in the industry to generate capital;

     (b) The competent investigating authority shall not make an
 affirmative injury determination unless its
 investigation demonstrates, on the basis of objective
 evidence, the existence of a clear causal link between
 increased imports of the good concerned and serious
 injury, or threat thereof.  When factors other than
 increased imports are causing injury to the domestic
 industry at the same time, such injury shall not be
 attributed to increased imports;

9.   Time period for deliberation.  Except in critical
circumstances and in global actions involving perishable
agricultural products, the competent investigating authority,
before making an affirmative determination in an emergency action
proceeding, shall allow sufficient time to gather and consider
the relevant information, hold a public hearing, and provide an
opportunity for all interested parties and consumer associations
to prepare and submit their views.

10.  The competent investigating authority shall publish promptly
a report, including a summary thereof, in the official journal of
the Party setting forth its findings and reasoned conclusions on
all pertinent issues of law and fact.  The report shall describe
the imported good and its tariff  item number, the standard
applied and the finding made.  The statement of reasons shall set
forth the basis for the determination, including a description
of:  the domestic industry seriously injured or threatened with
serious injury; information supporting a finding that imports are
increasing, the domestic industry is seriously injured or
threatened with serious injury, and increasing imports are
causing or threatening serious injury; and, if provided for by
domestic law, any finding or recommendation regarding the
appropriate remedy and the basis therefor.  In its report, the
competent investigating authority shall not disclose any
confidential information provided pursuant to any undertakings
concerning confidential information that may have been made in
the course of the proceedings.

=============================================================================
                                 ANNEX 804

                       Country-Specific Definitions


For purposes of this Chapter:

competent investigating authority means:

     (a) in the case of Canada, the Canadian International Trade
 Tribunal, or its successor;

     (b) in the case of the Mexico, the designated authority
 within the Ministry of Trade and Industrial Development
 ("Secretar¡a de Comercio y Fomento Industrial"), or its
 successor; and

     (c) in the case of the United States, the U.S.
 International Trade Commission, or its successor.