RESTRICTED
WORLD TRADE G/SG/N/7/BRA/1
12July1996
ORGANIZATION(96-2720)
Original: English Committee onSafeguards
NOTIFICATION TOTHE COMMITTEE ONSAFEGUARDS
BEFORE TAKING APROVISIONAL SAFEGUARD MEASURE
REFERRED TOINARTICLE 6
BRAZIL
Thefollowingcommunication,dated4July1996,hasbeenreceivedfromthePermanentMission
ofBrazil.
_______________
With reference tothenotification contained indocument G/SG/N/6/BRA/1 andtoArticles 6
and12oftheWTO Agreement onSafeguards, please findattached herewith copies ofthefollowing
documents:
(a) SECEX Circular No.33of17June1996, concerning theinitiation oftheinvestigatory
process; and
(b) Interministerial Order No.9of21June1996, published intheOfficial Gazette ofBrazil
on4July1996, regarding theapplication ofaprovisional safeguard measure.G/SG/N/7/BRA/1
Page2
MINISTRY OFINDUSTRY, TRADE AND TOURISM
SECRETARIAT OFFOREIGN TRADE
SECEX CIRCULAR NO.33,17JUNE 1996
TheSECRETARY OFFOREIGN TRADE, OFTHEMINISTRY OFINDUSTRY, TRADE
AND TOURISM, using thepowers bestowed onhimbyparagraph 2ofArticle 3ofDecree No.1488,
dated 11May1995; taking intoaccount theprovisions oftheAgreement onSafeguards, approved
byLegislative Decree No.30,dated 15December 1994, andpromulgated byDecree No.1355, dated
30December 1994; andtaking intoaccount what iscontained inFileMICT/SAA/CGSG 52100-
000001/96-36 andtheOpinion No.8,dated 7June1996, andconsidering thatthereissufficient evidence
thattheincrease inBrazilian imports oftheproduct which istheobject ofthisCircular, inabsolute
terms andinproportion tonational production, causes serious injury tothedomestic industry,
DECIDES:
1. Toinitiate aninvestigation todetermine whether itisnecessary toapply safeguard measures
totheBrazilian imports oftoysclassified intheMercosur Common Nomenclature ("NCM") under
thecodes listed asfollows:
9501.00.00;
9502.10.10; 9502.10.90; 9502.91.00; 9502.99.00;
9503.10.00; 9503.20.00; 9503.30.00; 9503.41.00;
9503.49.00; 9503.50.00; 9503.60.00; 9503.70.00;
9503.80.10; 9503.80.90; 9503.90.10 9503.90.90;
9504.10.10; 9504.10.91; 9504.10.99
1.1 Thedateoftheinitiation oftheinvestigation shallbethedateofthepublication of
thisCircular intheOfficial Gazette.
2. Tomake public thefactsthatjustify thedecision toopentheinvestigation.
2.1 TheProduct
Thousands ofdifferent kinds oftoysareproduced inBrazil andabroad. They areincluded
inalltheabove-mentioned tariff items, andaremade forallagebrackets, allkinds ofuses, andall
different incomes.
This implies that, although toyswhich areclassified inthesame tariff item aremore
homogeneous among themselves andtherefore maybesubstituted onebytheother, thispossibility
ofsubstitution alsoexists among different tariffitems, sincealltoyscompete witheachother according
totheirprices, ageleveltargeted andapplication.
Forthisreason andforthepurpose oftheinvestigation, allnational toyswere considered
independently oftheirintrinsic characteristics asdirectly competitive products withtheimported toys.
2.2 Tariff Treatment
Theevolution oftheimport duties, forthetariffitems considered, established bytheregulations
MEFP No.58dated 31January 1991; No.131dated 18February 1992; andNo.261datedG/SG/N/7/BRA/1
Page3
27March 1992 aswellastheMFregulations No.288dated 19May 1994 andNo.492dated
15September 1994, wasthefollowing:
1991 1to9/92 10/92 to
6/937/93to
2/943to5/94 6to9/94 10/94 to
12/941995
9501.00.00 85% 65% 55% 40% 20% 30% 20% 20%
9502 85% 65% 55% 40% 20% 30/20% 20% 20%
9503.10.00 70% 50% 55% 40% 20% 20% 20% 20%
9503.20.00 85% 65% 55% 40% 20% 30% 20% 20%
9503.30.00 85% 65% 55% 40% 20% 30% 20% 20%
9503.4 85% 65% 55% 40% 20% 30% 20% 20%
9503.50.00 85% 65% 55% 40% 20% 30% 20% 20%
9503.60.00 85% 65% 55% 40% 20% 30% 20% 20%
9503.70.00 70/85% 50/65% 55% 40% 20% 30% 20% 20%
9503.8 85% 65% 55% 40% 20% 30% 20% 20%
9503.9 70/85% 50/65% 55% 40% 20% 30/20% 20% 20%
9504.10.10 70% 50% 40% 30% 30% 30% 20% 20%
9504.10.91 50% 45% 40% 30% 30% 30% 20% 20%
9504.10.99 70% 50% 40% 30% 30% 30% 20% 20%
2.3 Domestic Industry
Forthepurposes ofdetermining theexistence ofserious injury orthreat thereof, theproducers
ofnational toysassociated withtheBrazilian Association ofToyManufacturers ("ABRINQ"), which
areresponsible for97percentofthenational production oftoys, were considered asthedomestic
industry.
2.4 Serious Injury
Forthepurposes ofanalysis ofserious injury orthreat thereof, theperiod considered wasfrom
January 1991 toDecember 1995.
2.4.1 Evolution ofImports
Thegrowth ofalltoysimports wassignificant. Iffrom 1991 to1992 thevalue ofimports
fell17.6percent, from 1992 to1995 itgrew 884.1 percent. Interms ofquantity, thegrowth was
evenmore accentuated, imports grew during theentire period, resulting inagrowth of2,778.6 per
centfrom 1992 to1995.
2.4.2 Share ofImports inApparent Consumption
Itwasverified thatthemarket share ofimports grew: from10.52 percentin1991to14.58 per
centin1993 and35.76 percentin1995.G/SG/N/7/BRA/1
Page4
2.4.3 Analysis oftheDomestic Industry
2.4.3.1 EvolutionofProduction,InstalledCapacity,DegreeofUtilizationofCapacity
andNumber ofFirms.
Itwasverified that,during theperiod analyzed, production grewclose to13percent,inspite
ofsome oscillations. After having declined 11.4percentfrom 1991 to1992, itincreased 34.6per
centfrom1992 to1993, which represented ariseof19.3percentintheperiod 1991to1993. From
1993to1994, production fell4.3percent,having yetfallen 1.1percentfrom1994to1995, resulting
inatotaldecline inproduction of5.4percentintheperiod 1993/1995.
Suchvariation wasaccompanied byanincrease intheidlecapacity ofdomestic industry, which
afterhaving risen from 17.52 percentto37.36 percentfrom 1991 to1992, fellto15.66 percent
in1993, rising again to37.22 percentin1994, to44.13 percentin1995, inspiteoftheincrease
inproduction observed intheperiod 1991/1995. Thisfactisexplained bya66.6percentincrease
ininstalled capacity, verified during theentire period analyzed.
Thenumber offirms thatceased activity issignificant. In1989, nearly 450companies operated
inthissector, butby1994, thisnumber hadreduced to340.Itwasverified that501firms wentbankrupt
orchanged activities inthisperiod. There was,infact,agreat dealofmovement inandoutofthis
sector.
2.4.3.2 Evolution ofSales inInternal Market andShare oftheDomestic Industry
inApparent Consumption.
Ithasbeenverified thatsalesofthedomestic industry ontheinternal market declined 12.2per
centfrom 1991 to1992, grew 25.2percentfrom 1992 to1993, 10.6percentfrom 1993 to1994,
anddeclined 24.5percentfrom1994to1995, inspiteofareduction of14.3percentoftheapparent
consumption from1991to1992, followed byagrowth of34.4percent(92/93), 14.1percent(93/94)
and2.6percent(94/95). Therefore, thedomestic industry which accounted for89.48 percentof
themarket in1991, and91.66 percentin1992, haditsmarket share reduced to85.42 percentin
1993, 82.82 percentin1994, and64.24 percentin1995. Theimports absorbed notonlytheexpanded
share ofthemarket, butalsodisplaced thedomestic industry in1995.
2.4.3.3 Evolution ofBrazilian Exports
Exports oftoysrepresent areduced share ofthedomestic production. Itwasobserved that
theexports fell6.7percentbetween 1991and1992, grew 20.1percentbetween 1992and1993, and
fell29.9percentbetween 1993 and1995, presenting adecrease of21.4percentinthe1991/1995
period.
2.4.3.4 Evolution ofStocks
Ananalysis ofstocks demonstrated thattheypresented significant fluctuations. Stocks fell
3.4percentbetween 1991and1992, andgrew94.8percentbetween 1992and1993. In1994, stocks
again fell42.2percentinrelation totheprevious year, butgrew 212.5 percentbetween 1994 and
1995, which represents agrowth of240percentinthe1991/1995 period.
2.4.3.5 Evolution ofEmployment
In1995, theproducers employed 44.4percentfewer thanthatverified for1991. Considering
jobsgenerated bythesector, which include theservices ofthirdparties aswellasdirect employees,G/SG/N/7/BRA/1
Page5
theimpact wasthesame: therewasareduction of45.3percentinterms ofoccupied personnel between
1991 and1995.
However, theincrease inproductivity during theentire analyzed period should beregistered,
duetotheinvestments made bytheindustry. With theexception oftheyear1994, ariseintheratio
production/number ofemployees wasobserved inallother years.
2.4.3.6 Evolution ofTotal Sales
Intheperiod 1991/1995, earnings ofthetoysector declined nearly 9percent. However, while
theincrease inquantities soldwas8percent, thecorresponding value increased 10percentinthe
period 1991/1993. Intheperiod from1993to1995, thesector 'searnings declined 17percent,while
thequantities soldreduced 25.9percent,demonstrating inbothcases, thatprices, orsalesofproducts
ofgreater value, increased.
2.4.3.7 Conclusion regarding Serious Injury orThreat Thereof
Ananalysis oftheevolution ofimports andofthesituation ofthedomestic industry indicated
thatfrom 1991 to1993, theincrease inimports didnotprevent theincrease inproduction, intotal
sales, norintheutilization ofcapacity ofthedomestic industry, eventhough there hadbeenobserved
adecline inthedomestic industry share intheapparent consumption andanincrease instocks. The
decrease inemployment wasaccompanied byanincrease inproductivity. From 1993to1995, however,
significant import growth wasaccompanied byadecrease inproduction, intotalsales, intheutilization
ofinstalled capacity, inthenumber ofemployees directly orindirectly connected withthissector (even
ifincreased productivity wasregistered), andinthedomestic industry share ofapparent consumption,
aswellasanincrease instocks.
2.5 Causality
Datareferring totheevolution ofimports andtothesituation ofthedomestic industry during
theperiod ofinvestigation show thatimports increased fromUS$20 million in1991toUS$44 million
in1993, asaresult ofthedecrease intheimport duties from 85percentformostitems, 70percent
forfiveitems and50percentforoneitemin1991 to40percentformostitems and30percentfor
three items attheendof1993. Asaresult oftheincrease inimports during thisperiod, domestic
industry reduced itsshare inapparent consumption (from 89.48 percentto85.42 percent), stocks
increased (from US$44 million toUS$83 million). Inspiteofsmall increases inthelevels ofproduction,
sales, andutilized capacity, employment fell(from 27.4thousand employees in1991to22.5thousand
in1993) andproductivity increased.
However, since 1994, asaresult ofthecontinual process ofliberalization, theimport duties
werereduced from40percentinFebruary 1994to20percentin1995andthesituation ofthedomestic
industry deteriorated. During theperiod 1994/1995, imports increased 272.9 percent(inf.o.b. value)
reaching US$164.7 million in1995; theshare ofthedomestic industry intheapparent consumption
fellto64.2percentin1995 andstocks hitrecord figures ofUS$150 million. There wasadecrease
inproduction (5.4percent), insales(17percentinvalue and26percentinquantities), andinutilized
capacity (11percent). Thenumber ofemployees fellfrom 22,500 to15,000 in1995.G/SG/N/7/BRA/1
Page6
2.6 OntheCommitment forAdjustment
Thetoysector presented aplanofaction tobeimplemented intheperiod 1996/2000, which
involves thefollowing aspects:
(a) increase inproductivity andquality;
(b) modernization ofproduction techniques;
(c) modernization oftheproducts;
(d) modernization ofmanagement techniques;
(e) investment inR&D, acquiring technology;
(f) qualification oftheproduct; quality, design packaging andsecurity;
(g) improvement indistribution andtechnical assistance;
(h) programme ofinvestments.
2.7 Conclusion
TheSecretariat ofForeign Trade received information thatwasconsidered sufficient tomake
apreliminary determination ofserious injury todomestic industry inthetoysector caused byarapid
increase inimports.
3. Inaccordance withtheprovisions ofparagraph 3ofArticle 3oftheDecree No.1488/95,
interested parties maybeheard inaudience, within 30days, inorder tohavetheopportunity topresent
elements ofproof andtoexpress theirviews ontheallegations ofother interested parties. Requests
foraudience should bemade inwriting andsenttothefollowing address:
Departamento deDefesa Comercial -DECOM
PraçaPioX,No.54/sala 502-Centro
CEP20071-040-RJ
Tel: (021) 2160250 and2160660
Fax: (021) 2337007
MAURICIO E.CORTES COSTAG/SG/N/7/BRA/1
Page7
MINISTRY OFINDUSTRY, COMMERCE AND TOURISM
MINISTRY OFFINANCE
INTERMINISTERIAL ORDER NO.9,21June 1996
THE MINISTERIAL OFTHE INDUSTRY, COMMERCE AND TOURISM, AND THE
MINISTRY OFFINANCE using thepowers bestowed onthembyArticle 87,SoleParagraph, Clause 2
oftheConstitution, andinaccordance withtheprovisions ofArticle 2ofDecree No.1488, dated
11May1995, altered byDecree No.1936, dated 20June1996, andtaking intoaccount theprovisions
oftheAgreement onSafeguards, approved byLegislative Decree No.30dated 15December 1994
andpromulgated byDecree No.1355 dated 30December 1994, which arecontained inFile
MICT/SAA/CGSG 52100-000001/96-36 andintheOpinion No.8,dated 7June1996, aswellasthe
preliminary determination indicating theexistence ofsufficient evidence thatimports oftheproduct
which istheobject ofthisOrder increased, inabsolute terms andinproportion tonational production,
arecausing serious injury tothedomestic industry;
Considering:
A. TheProcess:
On26April 1996, theBrazilian Association ofToyManufacturers -(ABRINQ) filedapetition
withtheSecretariat ofForeign Trade -SECEX toapply safeguard measures totheimports oftoys
classified intheMercosur Common Nomenclature ("NCM") under codes listed asfollows:
9501.00.00;
9502.10.10; 9502.10.90; 9502.91.00; 9502.99.00;
9503.10.00; 9503.20.00; 9503.30.00; 9503.41.00;
9503.49.00; 9503.50.00; 9503.60.00; 9503.70.00;
9503.80.10; 9503.80.90; 9503.90.10; 9503.90.90;
9504.10.10; 9504.10.91; 9504.10.99.
Inthepreliminary determination, SECEX confirmed theexistence ofsufficient evidence,
demonstrating theincrease inimports andtheserious injury caused thereby. Theinvestigation was
initiated bytheSECEX Circular No.33,dated 17June1996, andtheMinistry ofForeign Relations
hastransmitted thepertinent information totheCommittee onSafeguards oftheWorld Trade
Organization -WTO.
B. TheProduct
Thousands ofdifferent kinds oftoysareproduced inBrazil andabroad. They areincluded
inalltheabove-mentioned tariff items, andaremade forallagebrackets, allkinds ofusesandall
different incomes.
This implies that, although toyswhich areclassified inthesame tariff item aremore
homogeneous among themselves andtherefore maybesubstituted onebytheother, thispossibility
ofsubstitution alsoexists among different tariffitems, sincealltoyscompete witheachother according
totheirprices, ageleveltargeted andapplication.G/SG/N/7/BRA/1
Page8
Forthisreason andforthepurpose oftheinvestigation allnational toyswere considered
independently oftheirintrinsic characteristics asdirectly competitive products withtheimported toys.
B.1. Tariff Treatment
Theevolution oftheimport duties forthetariff items considered, established byregulations
MEFP No.58dated 31January 1991, No.131dated 18February 1992andNo.261dated 27March
1992aswellastheMFregulations No.288dated 19May1994andNo.492dated 15September 1994
wasthefollowing:
1991 1to9/92 10/92 to
6/937/93to
2/943to5/94 6to9/94 10/94 to
12/941995
9501.00.00 85% 65% 55% 40% 20% 30% 20% 20%
9502 85% 65% 55% 40% 20% 30/20% 20% 20%
9503.10.00 70% 50% 55% 40% 20% 20% 20% 20%
9503.20.00 85% 65% 55% 40% 20% 30% 20% 20%
9503.30.00 85% 65% 55% 40% 20% 30% 20% 20%
9503.4 85% 65% 55% 40% 20% 30% 20% 20%
9503.50.00 85% 65% 55% 40% 20% 30% 20% 20%
9503.60.00 85% 65% 55% 40% 20% 30% 20% 20%
9503.70.00 70/85% 50/65% 55% 40% 20% 30% 20% 20%
9503.8 85% 65% 55% 40% 20% 30% 20% 20%
9503.9 70/85% 50/65% 55% 40% 20% 30/20% 20% 20%
9504.10.10 70% 50% 40% 30% 30% 30% 20% 20%
9504.10.91 50% 45% 40% 30% 30% 30% 20% 20%
9504.10.99 70% 50% 40% 30% 30% 30% 20% 20%
C. Domestic Industry
Forthepurposes ofdetermining theexistence ofserious injury orthreat ofit,theproducers
ofnational toysassociated withtheBrazilian Association ofToyManufacturers ("ABRINQ"), which
areresponsible for97percentofthenational production oftoys, were considered asthedomestic
industry.
D. Serious Injury
Forthepurposes ofanalysis ofserious injury orthreat thereof, theperiod considered wasfrom
January 1991 toDecember 1995.
D.1. Evolution ofImports
Thegrowth ofalltoyimports wassignificant. Iffrom1991to1992 thevalue ofimports fell
17.6percent,from 1992 to1995 itgrew 884.1 percent. Interms ofquantity, thegrowth waseven
more accentuated, imports grew during theentire period, resulting inagrowth of2,778.6 percent
from 1992 to1995.G/SG/N/7/BRA/1
Page9
D.2 Share ofImports inApparent Consumption
Itwasverified thatthemarket share ofimports grew: from 10.52 percentin1991 to
14.58 percentin1993 and35.76 percentin1995.
D.3. Analysis oftheDomestic Industry
D.3.1. EvolutionofProduction,InstalledCapacity,DegreeofUtilizationofCapacity
andNumber ofFirms
Itwasverified that,during theperiod analyzed, production grew close to13percent,inspite
ofsome oscillations. After having declined 11.4percentfrom 1991 to1992, itincreased 34.6per
centfrom1992to1993, which represented agrowth of19.3percent,intheperiod from1991/1993.
From 1993 to1994, production fell4.3percent, having yetfallen 1.1percentfrom 1994 to1995,
resulting inatotaldecline inproduction of5.4percentintheperiod 1993/1995.
Suchvariation wasaccompanied byanincrease intheidlecapacity ofdomestic industry, which
afterhaving risen from 17.52 percentto37.36 percentfrom 1991 to1992, fellto15.66 percent
in1993, rising again to37.22 percentin1994, to44.13 percentin1995, inspiteoftheincrease
inproduction observed intheperiod 1991/1995. Thisfactisexplained bythe66.6percentincrease
ininstalled capacity, verified during theentire period analyzed.
Thenumber ofcompanies thatceased activity issignificant. In1989, nearly 450companies
operated inthissector, butby1995, thisnumber hadreduced to340. Itwasverified that501firms
went bankrupt orchanged activities intheperiod 1990/1995. There was,infact,agreat dealof
movement inandoutofthissector.
D.3.2. Evolution ofSales inInternal Market andShare oftheDomestic Industry
inApparent Consumption
Ithasbeen verified thatsales ofthedomestic industry ontheinternal market declined
12.2percentfrom 1991 to1992, grew 25.2percentfrom 1992 to1993, 10.6percentfrom 1993
to1994, anddeclined 24.5percentfrom 1994 to1995, inspiteofareduction of14.3percentof
theapparent consumption from1991to1992, followed byagrowth of34.4percent(92/93), 14.1per
cent(93/94) and2.6percent(94/95). Therefore, thedomestic industry which accounted for89.48 per
centofthemarket in1991, and91.66 percentin1992, haditsmarket share reduced to85.42 per
centin1993, 82.82 percentin1994, and64.24 percentin1995. Theimports absorbed notonly
theexpanded share ofthemarket, butalsodisplaced thedomestic industry in1995.
D.3.3. Evolution ofBrazilian Exports
Exports oftoysrepresent areduced share ofdomestic production. Itwasobserved thatexports
fell6.7percentbetween 1991and1992, grew20.1percentbetween 1992and1993, andfell29.9per
centbetween 1993and1995. Thisrepresents atotalreduction of21.4percentinthe1991/1995 period.
D.3.4. Evolution ofStocks
Ananalysis ofstocks demonstrated thattheypresented significant fluctuations. Stocks fell
3.4percentbetween 1991 and1992, andgrew 94.8percentbetween 1992 and1993. In1994, the
stocks again fell42.2percent,inrelation totheprevious year, butgrew significantly 212.5 percent
between 1994 and1995, which represents agrowth of240percentinthe1991/1995 period.G/SG/N/7/BRA/1
Page10
D.3.5. Evolution ofEmployment
In1995, theproducers employed 44.4percentfewer thanthatverified for1991. Considering
jobsgenerated bythesector, which includes theservices ofthirdparties aswellasdirect employees,
theimpact wasthesame: therewasareduction of45.3percentinterms ofoccupied personnel between
1991 and1995.
However, theincrease inproductivity during theentire analyzed period should beregistered,
duetotheinvestments made bytheindustry. With theexception ofthe1994 year, ariseintheratio
production/number ofdirect employees wasobserved inallother years.
D.3.6. Evolution ofTotal Sales
Intheperiod 1991/1995, earnings ofthetoysector declined nearly 9percent. However, while
theincrease inquantities soldwas8percent, thecorresponding value increased 10percentinthe
period 1991/1993. Intheperiod from1993to1995, thesector 'searnings declined 17percent,while
thequantities soldreduced 25.9percent,demonstrating, inbothcases, thatprices, orsalesofproducts
ofgreater value, increased.
D.3.7. Conclusion regarding Serious Injury orThreat Thereof
Ananalysis oftheevolution ofimports andofthesituation ofthedomestic industry indicated
that,from 1991 to1993, theincrease inimports didnotprevent theincrease inproduction, intotal
sales, norintheutilization ofcapacity ofthedomestic industry, eventhough there hadbeenobserved
adecline inthedomestic industry share intheapparent consumption andanincrease instocks. The
decrease inemployment inthesector wasaccompanied byanincrease inproductivity. From 1993
to1995, however, significant import growth wasaccompanied byadecrease inproduction, intotal
sales, inthedegree ofutilization ofinstalled capacity, inthenumber ofemployees directly orindirectly
connected withthissector, (even ifincreased productivity wasregistered), andinthedomestic industry
share ofapparent consumption, aswellasanincrease instocks.
E. Causality
Datareferring totheevolution ofimports andtothesituation ofthedomestic industry during
theperiodofinvestigationshowthatimportsincreasedfromUS$20.3millionin1991toUS$44.2million
in1993, asaresult ofthedecrease intheimport duties from 85percentformostitems, 70percent
forfiveitems and50percentforoneitemin1991 to40percentformostitems and30percentfor
three items attheendof1993. Asaresult oftheincrease inimports during thisperiod, domestic
industry reduced itsshare inapparent consumption (from 89.48 percentto85.42 percent) stocks
increased (from US$44 million toUS$83 million). Inspiteofsmall increases inthelevels ofproduction
sales, andutilized capacity, employment fell(from 27.4thousand employees in1991to22.5thousand
in1993) andproductivity increased.
However, since 1994, asaresult ofthecontinual process ofliberalization, theimport duties
werereduced from40percentinFebruary 1994to20percentin1995andthesituation ofthedomestic
industry deteriorated. During theperiod 1994/1995, imports increased 272.9 percent(inf.o.b. value)
reaching US$164.7 million in1995; theshare ofthedomestic industry intheapparent consumption
fellto64.2percentin1995 andstocks hitrecord figures ofUS$150 million. There wasadecrease
inproduction (5.4percent), insales(17percentinvalue and26percentinquantities), andinutilized
capacity (11percent). Thenumber ofemployees fellfrom 22,500 to15,000 in1995.G/SG/N/7/BRA/1
Page11
F. OntheCommitment forAdjustment
Thetoysector presented aplanofaction tobeimplemented intheperiod 1996/2000, which
involves thefollowing aspects:
(a) increase inproductivity andquality;
(b) modernization ofproduction techniques;
(c) modernization oftheproducts;
(d) modernization ofmanagement techniques,
(e) investment inR&D, acquisition oftechnology;
(f) qualification oftheproduct: quality, design, packaging andsecurity;
(g) improvement indistribution andtechnical assistance;
(h) programme ofinvestments.
G. Provisional Safeguard Measure
Article 4ofDecree No.1488/95 foresees thepossibility ofapplying provisional safeguard
measures, incritical circumstances, where delay could cause damages which itwould bedifficult to
repair, andwhenever there isapreliminary determination oftheexistence ofclearevidence thatthe
increase inimports hascaused oristhreatening tocause serious injury todomestic industry.
TheSECEX 'sanalysis confirmed theexistence ofserious injury resulting from theincrease
inimports. Itwasobserved that,astheimport duties werereduced during theperiod 1991/1995, the
industrylostcompetitivity,whichledtodecreasingmarketshareandseriousinjurytotheentireindustrial
sector, injury thatwasconfirmed bytheeconomic indicators thatwere analyzed. Itwasalsonoted
adecrease of72.57 percentinindustry sales, which occurred during thefirsttrimester of1996, in
relation totheequivalent period oftheprevious year.
Since theperformance ofthedomestic toyindustry hasastrong seasonal component, because
oftheconcentration ofsalesinthesecond semester oftheyear(in1994, 83.9percentofsalesoccurred
intheperiod July/December, andin1995, 67.0percent), itisworth stating that,withtheinitiation
ofaninvestigation inthemonth ofJune, thesituation ofdomestic industry could deteriorate during
theinvestigation, withevengreater losses difficult toremedy.
According toArticle 12ofDecree 1488/95, safeguard measures willnotbeapplied against
products fromanydeveloping country when itsshare intheimports oftheproduct inquestion isnot
higher than3percent,provided thattheoverall share ofthedeveloping countries exports inthatmarket
isnothigher than9percent. Analyses haveshown that,inthecaseinquestion, imports fromdeveloping
countries, intheperiod fromJanuary 1996 toApril 1996, represented anoverall amount of9.08per
centofthetotalimports oftheproducts.G/SG/N/7/BRA/1
Page12
DECIDE:
Article 1-Toapply aprovisional safeguard measure byraising import duties by50percentage
points, inaddition totheCommon External Tariff (20percent), resulting inatotal"advalorem "duty
of70percentontheabove-mentioned products.
Article 2-Theprovision ofArticle 1doesnotapply togoods effectively shipped abroad before
thedateofpublication ofthisOrder.
Article 3-ThisOrder shalltakeeffect onthedateofPublication intheOfficial Gazette, and
shallremain inforce until31December 1996.
FRANCISCO DORNELLES PEDRO SAMPAIO MALAN
Minister ofState Minister ofState
ofIndustry, Commerce ofFinance
andTourism