Analysis of the ‘Causal Link’ Requirement of WTO Safeguards: An ‘Unforeseen’ Solution to the Long Debates?

The ‘causal link’ requirement for the adoption of safeguard measures, under Article 4.2(b) of the Agreement on Safeguards, has been one of the most controversial disciplines under the WTO Agreement. Some critics, such as Alan O. Sykes, point out logical and practical defects in the WTO panels’ and the Appellate Body’s findings on this topic. This article attempts to clarify the requirements of the ‘causal link’, adopting a new microeconomic analytical model that accounts for the precise conditions of competition between imported and domestic products. The analysis reveals that the ‘causal link’ requirement calls for a demonstration that the factors falling into the category of ‘unforeseen developments’ under Article XIX:1(a) of the GATT 1994 have caused both increased imports and domestic injury.