WORLD TRADE
ORGANIZATIONG/L/457
G/SG/N/13/KOR/21
23 July 2001
(01-3652)
Committee on Safeguards Original:  English
NOTIFICATION UNDER ARTICLE 12.5 OF THE
AGREEMENT ON SAFEGUARDS OF THE RESULTS
OF A MID-TERM REVIEW REFERRED TO IN ARTICLE 7.4
Communication from Korea
Pursuant to Article 7.4 of the Agreement on Sa feguards (SA), the Korean Trade Commission
(KTC) has reviewed the situation of its domestic industry before the mid-term of the safeguard
measure on garlic.  Pursuant to Article 12.5 of the SA, and in light of the agreed format for
notifications adopted by the Committee on Safeguards (G/SG/1, 1 July, 1996), the KoreanGovernment provides the following notification to the Committee on Safeguards.
1. Specify the measure and the product subject to the measure for which the mid-term
review was conducted, and provide reference to the WTO document that notified the
safeguard measure to the review.
As notified in G/SG/N/10/KOR/2 (5 June 2000) and G/SG/N/10/KOR/2/Suppl.1
(7 August 2000), the Korean Government has been applying an additional tariff rate on the imports of
“fresh or chilled garlic, peeled” that exceed the MMA amount, and on the imports of “frozen garlic
and prepared or preserved garlic by vinegar or acetic acid” that exceed the tariff rate quota.
Period
ProductsClassificatio
nThe first year
(1 June 2000 -
31 Dec. 2000)The second
year
(1 Jan. 2001 ~
31 Dec. 2001)The third year
(1 Jan. 2002 ~
31 Dec. 2002)HSK
Fresh or
Chilled
garlic,
PeeledAdditional
tariff rates
for Imports
exceeding
MMA60% or 300
won/kg,
whichever is
the greater58% or 288
won/kg,
whichever is
the greater56% or 276
won/kg,
whichever is
the greater0703.20.1000
Tariff rate
quota
(tariff rate)20,105 MT
(30%)21,190 MT
(30%)22,267 MT
(30%)0710.80.2000Frozen
garlic/
Prepared orPreserved
garlic by
Vinegar or
Acetic acidAdditional
tariff rate forImports
exceeding
the
Above tariff
Rate quota285% or 1,707
won/kg,whichever is
the greater274% or 1,639
won/kg,whichever is
the greater263% or 1,571
won/kg,whichever is
the greater2001.90.9060
                                                     
1 This document cancels and replaces, in English only document G/L/457-G/SG/N/12/KOR/1, dated 23
July 2001.G/L/457
G/SG/N/13/KOR/2
Page 2
The duration of the safeguard measure is 3 years and 45 days, including the provisional
safeguard measure applied since 18 November 1999.2
2. Provide the dates of the initiation and conclusion of the review
The KTC initiated the mid-term review on 10 February 2001, and concluded the review on
8 June 2001.
3. Describe the results of the review, providing some detail on the basis for reaching those
results
1. Situation of the domestic industry3
(a) Import trend: The import volume and increase rates of imported garlic have decreased
in both absolute and relative terms. The import volume of garlic was 35,996 tons in1998, and 37,252 tons in 1999, but it decreased to 10,530 tons in 2000. The annual
increase rate of garlic imports was 95.7 per cent in 1998, but it decreased to 3.5 per
cent in 1999, and –71.7 per cent in 2000.
The imports of garlic, including fresh or chilled, peeled, and frozen and
prepared/preserved, dropped sharply due to the introduction of the safeguard measure
and the fall of the wholesale price in 2000. However, in the case of frozen garlic and
prepared or preserved garlic by vinegar or acetic acid, due to the application of a
tariff rates quota and 30 per cent in-quota tariff rate, the monthly average import level
from August 2000 to March 2001 exceeded the import level of 1998 when thesafeguard measure was not applied. This suggests that the effect of the import
restriction has been relatively weak.
(b) Domestic market share of imported products: The market share of imported garlic
decreased to 5.9 per cent in 2000 from 11.0 per cent in 1998 and 11.4 per cent in
1999 after the safeguard application.
(c) Price
4:  The farmgate price and wholesale price of garlic decreased in 2000
(\1,122/kg, \1,507/kg respectively), compared to that in 1999 (\1,520/kg, \1,859/kg).
The price recovered slightly in the first quarter of 2001 (\1,504/kg, \1,644/kg), but did
                                                     
2 The measure was applied to frozen garlic (HSK 0710.80.2000) and prepared or preserved garlic by
vinegar or acetic acid (HSK 2001.90.9060), G/SG/N/7/KOR/4 (11 Nov. 1999)
3 This is a review of the influence and impact of the safeguard measure for imported garlic on the
domestic industry. Products under review are those which are like or directly competitive with the domestic
garlic industry, defined as “domestic industry” at the time of the initiation of the safeguard measure. They arethe products provided under tariff heading numbers 0703.20.1000 and 0703.20.9000 (fresh or chilled garlic,including peeled), 0710.80.2000 (frozen garlic), 0711.90.1000 (provisionally preserved garlic), 0712.90.1000(dried garlic), and 2001.90.9060 (prepared or preserved garlic by vinegar or acetic acid) of the Harmonized
Tariff Schedule of Korea.
4 Garlic prices are available in farmgate prices and wholesale prices according to different marketing
stages. Farmgate prices, the price at which producers sell garlic to the collectors or storing merchants, are the
most appropriate indicator for determining injury to the domestic industry, considering that the domesticindustry is just a group of garlic producers. Wholesale prices, at which collectors and storing merchants sellgarlic at wholesale markets, are appropriate indicators of the price competitiveness of domestically produced
garlic when compared with imported garlic.G/L/457
G/SG/N/13/KOR/2
Page 3
not return to the pre-safeguard level (\2,719/kg, \3,097/kg in 1998) due to the
introduction of tariff rates quota on imports.
(d) Production:  Domestic garlic production slightly decreased by 1.9 per cent in 2000
(474,388 tons), following an increase rate of 22.8 per cent in 1999 (393,903 tons).
(e) Inventory:  The year-end inventory of domestically produced garlic increased by 59.3
per cent in 1999 (71,700 tons), but decreased by 8.5 per cent in 2000 (65,600 tons).
(f) Sales: Sales of domestically produced garlic increased at a steady pace (322,575 tons
in 1998, 348,228 tons in 1999, and 373,751 tons in 2000). The sales value ofdomestically produced garlic declined steadily (\877,081 million in 1998, \529,307
million in 1999, and \419,349 million in 2000), due to a decrease in farmgate price,
despite the increase of sales amounts.
(g) Profits:
5  The domestic garlic industry’s profits per hectare has been on a steady
decline from \14,790 thousand in 1998, \6,360 thousand in 1999 to \2,010 thousand in
2000, and recorded the lowest level in 2000 during the investigation period.
(h) Productivity: The productivity of the domestic garlic industry per hectare neared the
1998 level (10,550kg/hectare) in 2000 (10,560kg/hectare),6 after reaching the highest
level in 1999 (11,410kilograms per hectare).
(i) Capacity utilization:  The KTC determined7 that it is impossible to find any
meaningful indicator for measuring the capacity utilization of the garlic industry.
Therefore, capacity utilization cannot be an appropriate factor for evaluating theinjury caused to the domestic industry.
(j) Employment
8:  The number of garlic farm households has continued to decrease since
1996, and the number stands at 392,000 as of 2000.
2. The level of recovery of the domestic industry
The KTC conducted a comprehensive review including import trends, the market share of
imported products, and the status of production, inventory, sales, price, profits, productivity, capacity
utilization and employment in the domestic garlic industry.
                                                     
5 (i) Based on the marketing year (August through to the following July.)
  (ii) Profit is computed before extracting the marketing costs associated with post-harvest activities,
such as cutting, grading and packaging costs.
 (iii) In Korea, production costs do not include the labor costs associated with farm management
activities for machinery purchases, farm planning, and participation in meetings and education programs, thoughthose administrative labor costs are included in production costs in Japan.
6 As notified in G/SG/N/8/KOR/3 (21.Feb.2000), the Commission found that the land productivity of
the domestic garlic industry was not an appropriate factor in evaluating the injury caused to the domestic
industry on the grounds that the year-to-year changes of garlic yields are heavily influenced by weather
conditions.
7 G/SG/N/8/KOR/3(21.Feb.2000)
8 As notified in G/SG/N/8/KOR/3(21.Feb.2001), since small-scale family farms grow garlic together
with other crops in Korea, there is no meaningful data on employment in the domestic garlic industry.Therefore, the Commission referred instead to the number of garlic farm households as an indicator of
employment.G/L/457
G/SG/N/13/KOR/2
Page 4
Since the application of the provisional safeguard measures until the introduction of tariff
rates quota on imported garlic on 2 August 2000, the market share of domestically produced garlic has
increased the inventory of domestic product decreased. This suggests that injury to the domestic
industry had been partially remedied by the safeguard measures.
However, the domestically produced garlic price did not return to the pre-safeguard level
under the current tariff rate quota applied since August 2000, thus taking a heavy toll on the sales
value and profits of garlic per hectare.  In addition, imports of frozen garlic and prepared or preserved
garlic by vinegar or acetic acid have shown monthly average increases. In light of this, it is
inappropriate to assume that the overall inju ry to the domestic industry has been remedied.
3. The possibility of the recurrence of serious injury to the domestic industry
Considering the comparative advantage of China’s garlic industry in terms of its supply
capacity and price competitiveness, the KTC dete rmined that the withdrawal of the safeguard
measures would lead to an increase of imports of garlic, fresh peeled garlic in particular, and againcause serious injury to the domestic garlic industry.
Imports of frozen garlic and prepared or preserved garlic by vinegar or acetic acid decreased
in 2000, as a result of China’s imposition of a quota fee and minimum export price system, as well as
weak domestic market prices.
However, if the garlic price in the domestic market should increase and should China reduce
the incidental expenses, imports of this particular type of garlic may increase again.
4. Adjustment of the domestic industry
The Ministry of Agriculture and Forestry (MAF) and the National Agricultural Cooperatives
(NAC) are trying to improve productivity and reduce the production and distribution costs for garlic.
It is premature to evaluate the effect of the Comprehensive Plans for Restructuring the
Domestic Garlic Industry put forth by MAF, after only one year of its implementation, but consistent
and faithful restructuring of the domestic industry by the MAF will enhance the competitiveness ofdomestically produced garlic. The KTC recommended that the MAF further accelerate the
restructuring process to meet this end.
5. Conclusion
The KTC has conducted an extensive review on the status of the domestic industry and the
effect of the safeguards measures, and determined that the safeguard measures indeed help remedy the
serious injury caused to the domestic garlic industry, and that the withdrawal of the safeguard
measures could again inflict serious injury to the domestic industry.  Therefore, the additional tariff
rates will be maintained until Dec. 31, 200 2, as notified in G/SG/N/10/Kor/2/Suppl.1.
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