RESTRICTEDWORLD TRADE
ORGANIZATIONG/SG/Q1/PER/2
16 July 1999
(99-2954)
Committee on Safeguards Original:  Spanish
NOTIFICATION OF LAWS AND REGULATIONS UNDER
ARTICLE 12.6 OF THE AGREEMENT
Replies to Questions Posed by the United States1
Regarding the Notification of Peru2
The following communication, dated 7 July 1999, has been received from the Permanent
Mission of Peru.
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Article 20 of the Peruvian safeguard law lists certain factors to be taken into account in
determining whether increased imports of a specific product have caused or are threatening to cause
serious injury.
1. Why does Peruvian law omit certain of the factors set out in Article 8.1 of the
WTO Agreement on Safeguards, including “cha nges in the level of sales, production,
productivity, capacity utilization, profits and losses, and employment?”  Does Peru intend to
consider these factors in making determinations?  We note that Article 8 of the Peruvian law
requires petitioners to include this information in their applications.
Article 28 of the Peruvian safeguard law, wh ich allows for the application of safeguard
measures in the form of a quantitative restrictio n, requires that the quota not be lower than the
average level of imports “over the last three ca lendar years preceding the year in which the
investigation was initiated”, as opposed to  the average of imports “in the last three
representative  years for which statistics are available” (emphasis added), as required by Article
5.1 of the Safeguards Agreement.
Reply
It should be pointed out that in Legislative Resolution 26407 published on 18 December 1994
the Peruvian Congress approved the Agreement Establishing the World Trade Organization and the
Agreements contained in the Final Act of the Uruguay Round, thereby incorporating these provisions
in the Peruvian domestic legislation.  Accordingly, the Agreement on Safeguards entered into force on
1 January 1995 and ranks as domestic law and its provisions are directly applicable in Peru.  Supreme
Decree  No. 020-98-ITINCI was then adopted for the purpose of regulating the investigation process,procedurally and administratively.
                                                     
1 G/SG/Q1/PER/1
2 G/SG/N/1/PER/2G/SG/Q1/PER/2
Page 2
1. Article 20 of Supreme Decree No. 020-98-ITINCI does not omit the "changes in the level of
sales, production, productivity, capacity utilization, profits and losses, and employment"  set out in
Article 4.2(a) of the Agreement on Safeguards:3
(i) Article 20(iv) of Supreme Decree No. 020-98-ITI NCI states that in determining serious injury
it is necessary to take into account "the impact on the domestic industry of the like or directly
competitive products, as evidenced by changes in the economic factors identified in Article 8.7(a)"
(italics added). In Article 8.7(a) it is indicated that an application shall include quantitative data on
serious injury to the domestic industry, including:
"(i) a significant idling of installed production capacity in the domestic industry,
including data on the closure of plants or the under-utilization of productivecapacity ;
[this factor refers directly to "capacity utilization"]
(ii) the inability of a significant number of  domestic firms to carry out production
activities at a reasonable level of profit ;
[this factor refers directly to "profits and losses"]
(iii) substantial unemployment or a significant level of underemployment within the sector
of the domestic industry and the domestic industry as a whole ;
[this factor refers directly to "employment"]
(iv) changes in the level of prices, production, productivity and sales; and
[this factor refers directly to "changes in the level of sales, production and
productivity]
(v) any other data considered relevant  (emphasis and italics added).
(ii) In addition, it should be noted that Article 20 of Supreme Decree No. 020-98-ITINCI contains
a general analysis clause which includes "all factors of an objective and quantifiable nature having a
bearing on the situation of the domestic industry affected"  and, in particular, lists as a non-exclusive
guide some of the factors which should be considered (italics added).  Thus, indent (v) of this article
also mentions "other factors which, although not related to import trends, have a causal relationship
with the injury or threat of injury to the domestic industry concerned" .
(iii) Without prejudice to the above, it should be noted that under the Peruvian legal system, the
WTO Agreement on Safeguards ranks as law and is directly applicable and mandatory for the national
authorities, so that it is not a question of whether or not the Peruvian authorities intend to take theabove-mentioned factors into account in making determinations but of their being obliged to consider
them under the domestic legal system. Supreme Decree No. 020-98-ITINCI must be read in
conjunction with the Agreement on Safeguards which is tantamount to domestic law.
2. Please explain how Article 28 of the Peruvian  law is consistent with Article 5.1 of the
Safeguards Agreement.
Article 29 of the Peruvian safeguard law, which allows for provisional measures when critical
circumstances are found to exist, incorporates only one of the two prongs of the test in Article 6 of the
Safeguards Agreement.  Article 6 also requires a finding that "delay [in applying a measure] wouldcause damage which it would be difficult to repair".
                                                     
3 The United States mistakenly refers to Article 8.1 of the Agreement on Safeguards when it is in fact a
question of Article 4.2(a).G/SG/Q1/PER/2
Page 3
Reply
2. The Peruvian Government has up-to-date statistics on imports of every product entering the
country. Accordingly, Supreme D ecree No. 020-98-ITINCI understands by representative years the
last three years preceding the year in which the in vestigation was initiated, this being the period for
which an assessment must be made as to whether there has been a significant increase in imports
under conditions such as to merit the application of a safeguard measure.  In applying the Agreement
and its Regulations the Peruvian authorities will take into account the particularities of each case.
Therefore, we find no inconsistency with the scope of Article 5.1 of the Agreement on
Safeguards.
3. Does Peru plan to incorporate this second pron g into its test both in Article 29 and in the
list in Article 31?
Reply
3. Article 29 of Supreme Decree No. 020-98-ITINCI, which refers to "critical circumstances",
should be interpreted in the light of Article 4 of the same decree which defines "critical
circumstances" as "circumstances in which there is clear evidence that increased imports have caused
or are threatening to cause serious injury and any delay in the adoption of a measure by the
competent authorities would cause damage to the domestic industry, which it would be difficult torepair" (emphasis added)
4. As for Article 31 of Supreme Decree No. 020-98-ITINCI, indent 4
requires that  "… the existence of clear evidence that the increased imports are the cause of serious
injury or threat thereof …"  be determined and this determination must necessarily include the
existence of critical circumstances. In short, both Article 29 and Article 31 of Supreme Decree
No. 020-98-ITINCI reflect the concept of "critical circumstances" as established in the WTOAgreement on Safeguards.
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4 Article 4 of Supreme Decree No. 020-98-ITINCI give s various definitions, including that of "critical
circumstances", which apply to the entire decree.