WORLD TRADE
ORGANIZATIONG/SG/N/8/SVK/1
G/SG/N/10/SVK/1G/SG/N/11/SVK/1
2 May 2001
(01-2231)
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
SLOVAK REPUBLIC
The following communication, dated 25 April 2001, has been received from the Permanent
Mission of the Slovak Republic.
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As indicated in the notification of the Slovak Republic contained in document
G/SG/N/6/SVK/2, dated 6 November 2000, the Mini stry of the Economy of the Slovak Republic
decided to initiate an investigation on imports of sugar on 20 October 2000.
Based on the results of this investigation, the Slovak authorities wish to notify as follows:
1. EVIDENCE OF SERIOUS INJURY OR  THREAT THEREOF CAUSED BY
INCREASED IMPORTS
In accordance with the domestic legislation, the Ministry of Economy, responsible body for
conducting respective investigation based on petition of domestic producers, concluded that the
domestic sugar industry has suffered a serious injury which is attributable to a significant increase in
imports and that further threat exist in the absence of a safeguard measure.  The investigation has
taken into account data based on the period from 1997 to 1999, which should be further read as“investigation period”.
1. Definition of the domestic industry
The Slovak Sugar Union is a voluntary association of legal entities dealing with sugar
production within the territory of the Slovak Republic and covering 100 per cent of domestic sugar
producers. Slovak sugar companies are as follows: Juhocukor, j.s.c. Dunajská Streda, Sugar Company
Nova, j.s.c. Sered', Trnava Sugar Company, j.s.c. Trnava, Šurany sugar company,  j.s.c. Šurany,
Považský Sugar Company, j.s.c. Tren čianska Teplá, Sugar Company Sládkovi čovo, j.s.c.
Sládkovičovo, Gemercukor, j.s.c. Rimavská Sobota.G/SG/N/8/SVK/1
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The product concerned is produced by companies with various capacity:  the biggest sugar
factory is situated in Dunajská Streda with nominal capacity of 5 800 tons per day. The other sugar
factories have the following capacities:  Trnava  3,300,  Tren čianska Teplá  2,400,  Sered'  2,100 and
Rimavská Sobota  2,500 tons per day.
The Association of Slovak Sugar Beet Grower s is a voluntary association of 212 growers
growing sugar beet on 62 per cent of total land sown  with sugar beet in the Slovak Republic.  The
sugar factories are closely cooperating with growers of sugar beet.
The complainants represent 100 per cent of  sugar producers and 62 per cent of sugar  beet
growers.  The co-operating complainants, therefore, constitute the domestic industry.
2. Slovak consumption
The total Slovak consumption of the product concerned expressed in tons amounted to
201,815 tons in 1997, 192,599 tons in 1998 and 188,940 tons in 1999.
Year 1997 1998 1999
Sugar imports 8,315 2,599 13,940
Sugar Factory
Sales193,000 185,000 147,000
Total consumption 201,815 192,599 188,940
For the purpose of the assessment of the domestic sugar consumption, the Ministry of
Economy relied on sales volume data and imports of the product concerned provided by the domestic
industry and the national statistical and customs offices.
3. Price evolution
Import prices
The average c.i.f. price of the imports in the Slovak Crown (Sk) per kg at the Slovak border,
duty unpaid, evolved as follows: 10.98 in 1997 and 12.91 in 1998.  During the investigation period theimport prices were dramatically slumped in 1999 to their lowest level of 6.40 Sk per kg.  The quantity
of imports from the third countries and the import prices have caused a drop in the Slovak sugar
prices and blocked an upward trend in the Slovak industrial producers' prices that has began in the
first half of 1998 as a reaction to higher prices for sugar beet and sugar production inputs, and an
increase in domestic inflation.  Sugar industry producers should have been able to pass on thisincrease in the cost of goods sold in their sale prices, at least to make up the difference. Instead, prices
remained low in comparison to production costs and this has had a serious impact on the profitability
of the domestic industry.
The trend of the prices of the sugar imports (tariff heading 1701) is the following one for
period of the three last years:G/SG/N/8/SVK/1
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1997 (in Sk/kg)
Q1 Q2 Q3 Q4 Average
5.24 11.93 12.56 11.87 10.98
1998 (in Sk/kg)
Q1 Q2 Q3 Q4 Average
24.21 14.42 11.17 17.83 12.90
1999 (in Sk/kg)
Q1 Q2 Q3 Q4 Average
6.52 9.63 4.85 4.76 6.40
Domestic prices
The average sales prices per kg of the domestic producers decreased between 1997 and 1998
by 3.7 per cent.  The low undercutting margin in 1998 is explained by the fact that domestic prices
closely followed the low-priced increased imports, as domestic producers attempted to maintain their
market shares.  Hence, the low undercutting margin proves that price depression resulted insubstantial losses for the domestic producers. In 1999, the Ministry of Finance in an effort to stabilize
the prices of sugar on domestic market established a state regulated minimal selling price of 15 Sk per
kg of sugar for domestic producers.  Establishment of the minimal selling price only for the domestic
producers and not for the importers caused the enormous losses for domestic producers. They were
not able to compete with the importers of sugar.
Levels of market prices for Slovak sugar inSk/kg
1997 1998 1999
13.5 13 15
4. Situation of the domestic industry
(a) Production
The total production of the domestic industry in tons developed as follows:
Total production of the domestic industry in tons
1997 1998 1999
213,318 153,200 151,909
(b) Capacity utilization
As the table below shows, the capacity utilization rate in 1998 dropped compared to1997 and
in 1999 increased compared to 1998. Such an increas e was caused by the fact that two sugar factories
were closed in 1999.  This caused total production capacities to decrease from 230,000 tons in 1998 to
170,493 tons in 1999.G/SG/N/8/SVK/1
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Use of the production capacity of the Slovak sugar industry (in % of operating capacity)
1997 1998 1999
90.7 66.5 89.1
(c) Sales volume
The sales volumes of the domestic industry were significantly reduced between 1997 and
1999.  The total decrease of sales volume of domestic producers on domestic market in investigation
period amounted to 46,000 tons.
Volume of sales of Slovak sugar industry on the domestic  market (in tons)
Year 1997 1998 1999
Domestic Sales 193,000 185,000 147,000
Sales difference to previous year - -8,000 -38,000
(d) Employment
The domestic industry's labour force has constantly decreased during the investigation period.
In 1997, the number of employees in sugar factories was 2,500, in 1998 it has dropped to 2,200 and in
1999 only 2,000. In the period of investigation the number of employees decreased by 500.
Employment in production of sugar beet has been decreasing in a similar manner.  In 1997 the
number of employees in production of sugar beet was 3,200, in 1998 it decreased to 2,530 and in 1999
it reached 2,300.  During  the period of investigat ion the number of employees in production of sugar
beet decreased by 900.  The total decreasing of number of employees in the sugar industry during the
investigation period amounted to 1,400.
Employment in sugar factories (constan t employment, without campaign staff)
1997 1998 1999
2,500 2,200 2,000
Employment in beet production (consta nt employment, without campaign staff)
1997 1998 1999
3,200 2,530 2,300
(e) Investments
The foreign companies owning the sugar factories in the Slovak Republic invested about
3.0 bill. Sk to the restructuring and modernizati on of the sugar production during the investigation
period.  Investments reached a peak in 1997 and in 1999.  The direct investments to the new
technologies in 1997 amounted to 393.1 mill. Sk, in 1998 to 95.2 mill. Sk and in 1999 to 272.8 mill.
Sk.  Other investment projects have been prepared at the level of about  3–4 bill. Sk for the coming
years. These investment projects are endangered due to the unstable situation in the domestic sugar
market.G/SG/N/8/SVK/1
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(f) Profitability
The profitability of the Slovak sugar industry during the period of investigation was zero. The
losses in 1997 reached 133.6 mill. Sk, in 1998 it was 752.9 mill. Sk and in 1999 it was 254.0 mill. Sk.
During the investigation period, the total losses reached 1,140.5 mill. Sk.  In the second half of the
investigation period, two producers (sugar factories in Trebišov and in Sládkovi čovo) were unable to
overcome the crisis and had to shut down their factories.  In 2000, the sugar factory in Šurany was
closed as well.  Under such circumstances, it can be clearly assumed that, in the absence of safeguard
measures, the trend of losses would be even worse in the future.
(g) Stocks
The investigation showed that the closing balance of "stocks" in 1997 was 35.4 thousand tons,
in 1998 it was 33.1 thousand tons and in 1999 it was 20.9 thousand tons.  This decline has been
caused by efforts of the domestic producers to export the excesses of sugar to external marketswithout subsidies.  These efforts to equilibrate the demand and supply at the domestic market caused
indirect export losses during the investigation period in the amount of 226.1 mill. Sk.
2.  VOLUME AND MARKET SHARE OF IMPORTS OF SUGAR INTO SLOVAKIA
Imports
The imports in  tons developed as follows:  8,315 in 1997,  2,599 in 1998, and 13,940 in 1999
corresponding to an overall increase by 167.6 per cent since 1997.  There was a significant increase of
536.4 per cent from 1998 to 1999.
The market shares of imports have also significantly increased as follows:  4.1 per cent in
1997, 1.3 per cent in 1998, 7.4 per cent in 1999 corresponding to an overall increase of 179.1 per cent
since 1997.
Imports of sugar into Slovakia for direct domestic consumption in 1997
Tons Sk (in thousands)
Germany 6.5 329
Poland 0.1 0.5
Austria 0.01 0.4
Czech Republic 7,344 82,683
Slovakia 962 8,034
Great Britain 1 36
Belgium 0.3 18
United States 0.003 0.7
Holland 1.1 188
SR total 8,315 91,290G/SG/N/8/SVK/1
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Imports of sugar into Slovakia for direct domestic consumption in 1998
Tons Sk (in thousands)
Germany 3 242
Poland 0,003 7
Austria 0.3 24
Czech Republic 2,594 33,081
Great Britain 2 128
Belgium 0.008 8
United States 0.1 52
Holland 0.002 0.04
SR total 2,599 33,542
Imports of sugar into Slovakia for direct domestic consumption in 1999
Tons Sk (in thousands)
Germany 5 613
Poland 10,418 38,285
Austria 1 98
Czech Republic 3,513 50,119
Great Britain 2.2 156
France 0.002 0.5
SR total 13,940 89,272
Market share
The market share of the domestic industry during 1997 and 1998 shows that the domestic
industry suffered even more intensively from price depression due to the tremendous increase of low-
priced imports.  The sugar factories were obliged to sell sugar at a very low price.  The investigation
has identified that the price depression of the domestic industry followed closely the reduction of
import prices.  In 1999, the market share of the domestic industry decreased from 96 per cent in 1998
to 78 per cent.  The reason was the above-mentioned introduction of a minimal price for sugar of15 Sk per kg for the domestic producers, whose could not  compete with low prices of imported sugar.
Market share of sugar imports on total domestic consumption (%)
1997 1998 1999
4.10 1.35 7.38
Market share of Slovak producers on total consumption (%)
1997 1998 1999
95.60 96.05 77.80
Relation of imports to Slovak sugar factory sales
1997 1998 1999
4.30 1.40 9.50G/SG/N/8/SVK/1
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3.  DESCRIPTION OF THE PRODUCT INVOLVED
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 sugar
-O t h e r
• Containing added flavouring or colouring matter
• Other:  white sugar
Description of  domestic  product
The Slovak sugar industry produces « beet sugar » classified under tariff position 1701.12
(«Raw sugar not containing added flavouring or colouring matter  –  Beet sugar ») and other sugars
classified under tariff position 1701.91 (« Other raw sugar containing added flavouring or colouring
matter ») and other sugars. 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, STN 56 57 20
Form of use : As nutriment and sweetener for household direct use and in producing of chocolate,
fruits in sugar, confectionery, ice cream, non alcoholic beverages, biscuits, bakery products,medicaments, pharmaceutical products, bear, vine and alcoholic beverages for industrial use.
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 Slovak product.  Furthermore, the technical
characteristics and the forms of use are identical.
4.  PRECISE DESCRIPTION OF THE PROPOSED MEASURE
(i) The measure is in the form of annual quantitative quota originating from all the
countries (except Czech Republic) with exception of developing countries.  This
quantitative quota is allocated among supplying countries and will be liberalized as
follows:
Country Quantitative quota
2001 2002 2003 2004
Poland 3,500 tons 3,500 tons 4,000 tons 4,600 tons
Others   400 tons   400 tons   500 tons   600 tonsG/SG/N/8/SVK/1
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(ii) This measure will be applied to all imports of sugar, whatever their origin except
imports from the Czech Republic and developing countries. Imports of sugaroriginating from the Czech Republic are governed by the provisions of the agreement
establishing a customs union between the Czech Republic and the Slovak Republic.
Also, in accordance with Article 9.1 of the Agreement on Safeguards, developing
countries which are Members of the WTO are excluded from the application of
safeguard measures.
5. PROPOSED DATE OF INTRODUCTION OF THE MEASURE
The measure will be introduced on 1 May 2001.
6. EXPECTED DURATION OF THE MEASURE
The safeguard measure is expected to apply for a period of 4 years.
7. 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 February 2003.
8. EXPECTED TIMETABLE FOR PROGRESSIVE LIBERALIZATION
See above in item 4.
9. INFORMATION RELATING TO THE EXTENSION OF THE MEASURE
Not applicable.G/SG/N/8/SVK/1
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NOTIFICATION UNDER ARTICLE 9, FOOTNOTE 2
1.   DESCRIPTION OF THE MEASURE
The measure is in the form of annual quantitative quota originating from all the countries
(except the Czech Republic) with exception of developing countries.  This quantitative quota is
allocated among supplying countries and will be liberalized as follows:
Country Quantitative quota
2001 2002 2003 2004
Poland 3,500 tons 3,500 tons 4,000 tons 4,600 tons
Others   400 tons   400 tons   500 tons   600 tons
2. 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
3. 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 AND
COLLECTIVELY
The list of developing countries to which the measure does not apply is attached to this
notification.
4. CHANGE IN THE LIST OF DEVELOPING COUNTRIES EXEMPTED FROM THE
SAFEGUARD MEASURE PURSUANT TO ARTICLE 9.1
Not applicable.
ANNEX
List of  developing countries exempted from the application of this measure
Albania Ghana Nigeria
Angola Grenada NicaraguaG/SG/N/8/SVK/1
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Antigua and Barbuda Guatemala Oman
Argentina Guyana Pakistan
Bahrain Guinea PanamaBangladesh Guinea-Bissau Papua New Guinea
Barbados Haiti Paraguay
Belize Honduras Peru
Benin Chile Philippines
Bolivia India Qatar
Botswana Indonesia Rwanda
Brazil Jamaica Saint Kitts and NevisBrunei Darussalam Jordan Saint Lucia
Burkina Faso Kenya Saint Vincent and the  Grenadines
Burundi Kuwait Senegal
Cameroon Kyrgyz Republic Sierra Leone
Central African Republic Lesotho Solomon IslandsColombia Madagascar South Africa
Congo Malawi Sri Lanka
Costa Rica Malaysia Suriname
Côte d’Ivoire Maldives Swaziland
Croatia Mali TanzaniaCuba Malta Thailand
Cyprus Mauritania The Gambia
Democratic Republic of Congo Mauritius Togo
Djibouti Mexico Trinidad and Tobago
Dominica Mongolia TunisiaDominican Republic  Morocco United Arab Emirates
Ecuador Mozambique Uganda
Egypt Myanmar Uruguay
El Salvador Namibia Venezuela
Fiji Niger Zambia
Gabon Zimbabwe
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