WORLD TRADE
ORGANIZATIONG/SG/N/8/MDA/1
G/SG/N/10/MDA/1G/SG/N/11/MDA/1
30 September 2003
(03-5132)
Committee on Safeguards Original:  English
NOTIFICATION UNDER ARTICLE 12.1(B) OF THE
AGREEMENT ON SAFEGUARDS ON FINDING A SERIOUS INJURY
OR THREAT THEREOF CAUSED BY INCREASED IMPORTS
NOTIFICATION PURSUANT TO ARTICLE 12.1(C)
OF THE AGREEMENT ON SAFEGUARDS
NOTIFICATION PURSUANT TO ARTICLE 9, FOOTNOTE 2
OF THE AGREEMENT ON SAFEGUARDS
REPUBLIC OF MOLDOVA
The following communication, dated 24 September 2003, has been received from the
Permanent Mission of Moldova.
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As indicated in the notification of the Republic of Moldova contained in document
G/SG/N/6/MDA/1, the Investigation Authority of the Republic of Moldova decided to initiate an
investigation on imports of sugar on 10 June 2003.
Based on the results of this investigation, the Moldovan authorities wish to notify as follows:
I. EVIDENCE OF SERIOUS INJURY OR THREAT THEREOF CAUSED BY
INCREASED IMPORTS
In accordance with the domestic legislation, the Investigation Authority, responsible body for
conducting respective investigation based on petition of domestic producers, concluded that the
domestic sugar industry has suffered a serious injury and which is attributable to a significant increase
in imports and that further threat exist in the absence of a safeguard measure.  The investigation hastaken into account data based on the period from 2000 to 2002, which should be further read as
“investigation period”.
1. Definition of the domestic industry
The Union of Sugar Producers from Moldova is  voluntary associations of legal entities
dealing with sugar production within the territory of the Republic of Moldova and covering 100 per
cent of domestic sugar producers, which are listed below:
- Joint Venture „SÜDZUCKER-MOLDOVA” SA, Drochia, jud. Soroca
- Joint Venture „CUPCINI-CRISTAL”, Cupcini, jud. Edine ţG/SG/N/8/MDA/1
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- Joint Venture „COMBINATUL DE ZAH ĂR DIN ALEXANDRENI” SA, Biruin ţa, jud.
Bălţi
- Joint Venture „GLODENI-ZAH ĂR”, Glodeni, jud. B ălţi
-„CODAPUN” LTD, Chi şinău
The Union of Associations of Agricultural Producers is a voluntary association covering the
majority of large farmers associations countrywide and it represents the beet growers which produce
about 80 per cent of beets in the Republic of Moldova.
The complainants represent 100 per cent of sugar producers and 80 per cent of sugar beet
growers.  The co-operating complainants, therefore, constitute the domestic industry.
2. Sugar imports
Imports have increased during the investigation period from 8,500 tons in the year 2000 to
82,427 tons in the year 2002, which is a 9.7 times increase.  It is remarkable, that in 2002 imports of
sugar were almost as high as internal consumption, which is estimated at 90,000 tons by Moldovan
Department of Statistics.
1999 2000 2001 2002
Raw sugar tons 0 0 15,500 81,117
White sugar tons 300 8,500 14,700 1,310
Total tons 300 8,500 30,200 82,427
Growth % 2,733% 255% 173%Sugar imports 1999-2003
010,00020,00030,00040,00050,00060,00070,00080,00090,000
1999 2000 2001 2002White sugar
Raw sugarG/SG/N/8/MDA/1
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3. Price evolution
Import prices
2000 2001 2002
White sugar (DAF price USD/t) 234 267 258
Raw sugar (DAF price USD/t) - 194 175
At present, 15 per cent import tariff is applied to all sugar imports in Moldova.  When raw
sugar is imported it is further processed into white sugar at a cost of 30 US$ per tone.  The tablebelow presents the total cost of the imported sugar on the basis comparable to domestic prices.
DAF price in
2002Import duties
15%Processing
costsTotal cost
White sugar $258 $39 - $297
Raw sugar $175 $26 $30 $231
Imports reached the pick in 2003 and mainly consisted of raw sugar.  The purchase price,
import duties and processing costs amounted to $231 per tone, which is 30 per cent lower than the
domestic market price in 2002.  Low import prices led to significant decline in the domestic prices.
Domestic prices
Increasing imports during 2000–2002 at decreasing prices have destabilized the domestic
market.  The average price in 2002 has fallen to the level of $294, which is 8.1 per cent lower than in
the year 2001.
2000 2001 2002
Import (tons) 8,500 30,200 82,427
Domestic market prices
(US$/t)$310 $320 $294
The actual 15 per cent import duty on sugar import is not sufficient to prevent prices to fall
below the production cost of domestically produced sugar.  The sugar industry accounted for about
47.7 millions lei losses in 2002 driving the industry into a severe crisis.
4. Situation of the domestic industry
 
(a) Production
Sugar industry’s production volumes depend upon the amount of sugar beets produced in the
country.  The best indicator of the trend in production volume development is the area under beetcultivation.G/SG/N/8/MDA/1
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2000 2001 2002 2003
estimated
Area under sugar beets cultivation 1000 ha 62,8 57,4 52,6 45,0
Growth of the area under cultivation % -9% -8% -14%
Harvested beets 1000 tons beets 975 1.114 1.141 1.075
Sugar production 1000 tons sugar 102 115 114 108
Sugar extraction % 10,5% 10,3% 10,0% 10,0%
Area under beet cultivation reflects the farmers’ expectations about future beet prices.  Due to
increasing imports since year 2000 the area under beet cultivation is constantly shrinking, and
accounted for a major reduction of 14 per cent in 2003, as a result of high amount of imports and low
market prices in 2002. Although farmers improved the efficiency during these years and increased the
yield per hectare, this was not sufficient to compensate for reduction in the area under cultivation
resulting in further decline in the amount of beet harvested and sugar production.  If import regime
remains unchanged the area under beet cultivation is expected to decline further so that in few years
beets will no longer be cultivated in Moldova.
Without sugar beet supply, the Moldovan sugar industry will be reduced to one sugar factory,
which is enough to process raw sugar for domestic consumption.  That would mean five more
factories to be closed.
(b) Capacity utilization
There are 9 sugar factories in Moldova, of which 7 were operational until 2001 and only 6
were operational in 2002.  The sugar plant form Donduseni was closed in 2002, due to the expected
decrease in supply of sugar beets, low market prices and severe financial crisis in the industry.
Use of the production capacity of the Moldovan sugar industry (in % of operating capacity)
2000 2001 2002
62 65 80
The use of capacity increased by 2 per cent in 2001 due to increasing efficiency in beets
growing sector and therefore a slightly higher raw material supply.  The use of capacity increased in
2002 only because Donduseni factory was closed.
(c) EmploymentThe number of jobs in the domestic sugar industry has constantly declined throughout the
investigation period.  The reduction of jobs was especially high in 2002, when Donduseni sugar
factory was closed.  The reduction in 2002 presented in the table below does not represent the full
picture of the problem, because it does not include the number of people who lost their jobs butlegally are still on the payroll of the sugar company until all social obligations are fulfilled.  It is
expected that some additional 250 jobs cutting will be reported in the year 2003.G/SG/N/8/MDA/1
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Employment in sugar factories
Year 2000 2001 2002
Employment 4,349 4,086 3,726
Reduction - 263 - 360
The situation is even more severe in the beet production.  Sugar beet is the most labour
intensive crop in the North of Moldova and requires in average about 1 person per hectare.  With
reducing area under beet cultivation about 10,000 people lost their employment during the
investigation period with hardly any other possibilities to find an alternative job.  For the same reasonadditional 8,000 people will loose their jobs in beet growing sector in 2003.
Beet production
Year 2000 2001 2002 2003
Estimated
Employment 63,000 57,000 53,000 45,000
Reduction -6,000 -4,000 -8,000
Without safeguard measures the beet cultivation in Moldova will no longer be possible, which
will result in serious social problems for the entire country.  After closing other five sugar factories,
the industry will further cut about 3,300 jobs and about 45,000 people in the rural area will lose animportant employment opportunity in beet cultivation.
(d) ProfitabilityThe Moldovan sugar industry had increasing losses during the investigation period, which
reached 47.7 million lei in 2002.  The total loss during the investigation period amounts to
70.4 million lei.  Economic losses combined with expectations of low amount of beets made
impossible further operations of Donduseni sugar factory, which was shut down in 2003.  In absence
of safeguard measures Alexandreni sugar factory might be closed as well already in the year 2003.
Other three to four factories are under the threat of being shut down in 2004.
2000 2001 2002
Profit/Loss of the year
(million MDL)-2.8 -19.9 -47.7
(e) Sales, stocks, market share of imports
2002 2001 2002 2003
Estimated
Domestic consumption 1000 tons 90.0 90.0 90.0 90.0
Estimated consumption inTransnistria1000 tons 20.0 20.0 20.0 20.0
Domestic consumption
including Transnistria1000 tons 110.0 110.0 110.0 110.0G/SG/N/8/MDA/1
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The Moldovan Department of Statistics assesses the domestic consumption at 90,000 tons.
This estimation does not cover the consumption in Transnistria, a eastern region of Moldova upon
which Moldovan authorities do not have control.  The estimated consumption there is 20.000 tons.
2002 2001 2002 2003
Estimated
Domestic production 1000 tons 102.4 114.7 113.8 107.5
Import sugar 1000 tons 8.5 29.8 71,5* 45.0
Export 1000 tons 4.6 24.1 38.8 30.0
      of which re-export 1000 tons 0 0 32,5 0
Sales to domestic market 1000 tons 106.0 121.0 150.0 110.0
        Inclusive:
       Domestically produced       Sugar1000 tons 97.5 91.2 111.0 65.0
       Import sugar 1000 tons 8.5 29.8 39.0 45.0
Market share of the domestic
product%9 2 7 5 7 4 5 9
Market share of imports % 8 25 26 41
Domestic producers stocks at the
end of the year1000 tons 66.6 66.0 63.0 75.5
(*) Out of imported raw sugar in 2002 in amount of 81.1 thousand tons, 4.5 thousand tons
were used for syrup production, which was exported.  The remaining 76.6 thousand tons
were processed into 70.2 thousand tons of white sugar, of which 32.5 thousand tons were
exported.
Domestic producers faced severe liquidity problems due to low prices and increasing losses.
In order to overcome the crisis domestic producers had to sell more in the local market at low price,
thus producers stocks din not increase.  Sales of sugar in domestic market reached the level of
150 thousand tons, which is approximately 30 thousand more than domestic demand including
Transnistrian region.  Sales in excess of domestic consumption partly ended up in the stocks of local
traders.  The country stocks (including traders) are increasing, and are estimated between 80 to100 thousand tons at the end of 2002.  High traders’ stocks by the end of the year will continue to
depress prices in the year 2003.
The re-exports of processed raw sugar damaged the trade relations between Moldova and
Ukraine, which has withdrawn sugar from the free trad e agreement.  Romania intends to apply similar
measures.  Due to re-exports of processed raw sugar, Moldovan sugar industry lost its major export
markets, which resulted in further pressure on the prices in the domestic market.
The negative effects of increasing imports resulted in a substantial decline of the domestic
product market share, which was 92 per cent in 2000 and is expected at 59 per cent in 2003.
Without safeguard measures applied, further imports will maintain the domestic prices low,
thus increasing losses of the domestic industry.  Further decline of beet cultivation will make
impossible further operations for most of domestic sugar producers.  Those that will remain will have
to reorient their business to raw sugar processing.  Without export markets the domestic industry will
process raw sugar for domestic consumption only, for which the capacity of one sugar factory is
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II.  VOLUME AND SHARE OF IMPORTS
Imports of sugar into Moldova in 2002
Tons %
Brazil 45,335 55.0
Cuba 35,721 43.3
Ukraine 1,030 1.2
Austria 145 0.2
Others 196 0.2
Total 82,427 100.0
Two major exporting countries are Brazil (55%) and Cuba (43,3%), which together account
for 98.3 per cent of imports in 2002.
Imports of sugar into Moldova in 2001
Tons %
Brazil 15,517 51.4
Germany 5,853 19.4
Ukraine 4,647 15.4
Belgium 1,500 5.0
Poland 1,321 4.4
Czech Republic 850 2.8
Others 512 1.7
Total 30,200 100.0
Imports of sugar into Moldova in 2000
Tons %
Poland 3,437 40.4
Belgium 2,700 31.8
Ukraine 1,769 20.8
Czech Republic 300 3.5
Others 294 3.5
Total 8,500 100.0
III.  DESCRIPTION OF THE PRODUCT INVOLVED
Cane or beet sugar and chemically pure sucrose, in solid form are classified under the tariff
heading 1701.
• Raw sugar not containing added flavouring or colouring matter:
- Cane sugar
- Beet sugar-O t h e r
• Containing added flavouring or colouring matter
• Other:  white sugarG/SG/N/8/MDA/1
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Description of domestic product
The Moldovan sugar industry produces « beet sugar » classified under tariff position 1701.99.
The beet sugar is derived from juices obtained by extraction from the root of the sugar beet.
Technical data, description of characteristics and form of use
Technical data :  White granulated beet sugar, GOST 21-94
Description of imported product
The imported product is a like product of the domestic product.The imported product is classified under the same tariff position 1701: « Cane or beet sugar
and chemically pure sucrose, in solid form » than the Moldovan product.
IV.  PRECISE DESCRIPTION OF THE PROPOSED MEASURE
(i) The proposed safeguard measure consists of additional duty to be paid on imports of products
classified within HS 1701.  The additional import duty will be applied for a period of 4 years,declining through the period of application as follows:
1-st year 2-nd year 3-rd year 4-th year
55% 50% 45% 40%
(ii) This measure will be applied to all imports of sugar.  Import of sugar, originating from
developing countries, except Brazil and Cuba w ill be exempted from additional import duties.
V. PROPOSED DATE OF INTRODUCTION OF THE MEASURE
The measure will be introduced on 1 January 2004.
VI. EXPECTED DURATION OF THE MEASURE
The safeguard measure is expected to apply for a period of 4 years.
VII. PROPOSED DATE FOR REVIEWING THE MEASURE
If it is decided that the measure will indeed remain effective for a period of 4 years, it will be
reviewed in each year.
VIII. EXPECTED TIMETABLE FOR PROGRESSIVE LIBERALIZATION
See above in item 4.
IX. INFORMATION RELATING TO THE EXTENSION OF THE MEASURE
Not applicable.G/SG/N/8/MDA/1
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NOTIFICATION UNDER ARTICLE 9, FOOTNOTE 2
I.   DESCRIPTION OF THE MEASURE
The proposed safeguard measure consists of additional duty to be paid on imports of products
classified within HS 1701.  The additional import duty will be applied for a period of 4 years,
declining through the period of application as follows:
1-st year 2nd year 3rd year 4th year
55% 50% 45% 40%
This measure will be applied to all imports of sugar.  Import of sugar, originating from
developing countries, except Brazil and Cuba w ill be exempted from additional import duties.
II. DESCRIPTION OF THE PRODUCT CONCERNED BY THE MEASURE
Cane or beet sugar and chemically pure sucrose, in solid form is classified under the tariff
heading 1701.
• Raw sugar not containing added flavouring or colouring matter:
Cane sugar
Beet sugarOther
• Containing added flavouring or colouring matter
• Other: White sugar
III. DEVELOPING COUNTRIES TO WHICH THE MEASURE DOES NOT APPLY
PURSUANT TO ARTICLE 9.1 OF THE AGREEMENT ON SAFEGUARDS, AND
THE IMPORT SHARES OF THESE COUNTRIES INDIVIDUALLY ANDCOLLECTIVELY
The list of developing countries to which the measure does not apply is attached to this
notification.
IV. CHANGE IN THE LIST OF DEVELOPING COUNTRIES EXEMPTED FROM THE
SAFEGUARD MEASURE PURSUANT TO ARTICLE 9.1
Not applicable.G/SG/N/8/MDA/1
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ANNEX
List of  developing countries exempted from the application of this measure
Albania Guatemala Pakistan
Angola Guyana Panama
Antigua and Barbuda Guinea Papua New Guinea
Argentina Guinea-Bissau ParaguayBahrain Haiti Peru
Bangladesh Honduras Philippines
Barbados Chile Qatar
Belize India Rwanda
Benin Indonesia Saint Kitts and Nevis
Bolivia Jamaica Saint Lucia
Botswana Jordan Saint Vincent and the  GrenadinesBrunei Darussalam Kenya Senegal
Burkina Faso Kuwait Sierra Leone
Burundi Kyrgyz Republic Solomon Islands
Cameroon Lesotho South Africa
Central African Republic Madagascar Sri LankaColombia Malawi Suriname
Congo Malaysia Swaziland
Costa Rica Maldives Tanzania
Côte d’Ivoire Mali Thailand
Croatia Malta The GambiaCyprus Mauritania Togo
Democratic Republic of Congo Mauritius Trinidad and Tobago
Djibouti Mexico Tunisia
Dominica Mongolia United Arab Emirates
Dominican Republic  Morocco UgandaEcuador Mozambique Uruguay
Egypt Myanmar Venezuela
El Salvador Namibia Zambia
Fiji Niger Zimbabwe
Gabon NigeriaGhana Nicaragua
Grenada Oman
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