RESTRICTED
WORLD TRADE G/SG/Q2/ARG/1
20May1997
ORGANIZATION(97-2089)
Original: English Committee onSafeguards
NOTIFICATION UNDER ARTICLE 12.4OFTHE AGREEMENT ON
SAFEGUARDS BEFORE TAKING APROVISIONAL SAFEGUARD
MEASURE REFERRED TOINARTICLE 6
Questions posed bytheUNITED STATES toARGENTINA1
Thefollowing communication, dated 12May1997, hasbeenreceived from thePermanent
Mission oftheUnited States.
_______________
Please findattached thequestions concerning Argentina 'simposition ofprovisional safeguard
measures (G/SG/N/7/ARG/1 &Suppl.1) thatwereposed orally bytheUnited States 'delegation under
itemC(ii)oftheagenda oftheCommittee onSafeguards during itsmeeting heldon5May1997.
1. Thedataprovided byArgentina show thatalthough actual imports offootwear increased from
1991 to1993, imports declined inbothvalue (19.3%) andquantity (23.8%) from 1994 to1995 (the
mostrecent yearforwhich datawasprovided). Actual imports offootwear alsodeclined inquantity
(8.9%) from 1993 to1994.
(a) Please explain howadeclining trend inrecent imports could support adetermination
thatthere is"clear evidence thatincreased imports havecaused orarethreatening to
cause serious injury".
(b) Please explain howtherewould be"damage ...difficult torepair", without provisional
safeguard tariffs, when import quantities aredeclining inbothabsolute andrelative
amounts.
2. According tothedataprovided inthetechnical report prepared bytheArgentine Federal Trade
Commission, apparent domestic consumption offootwear, asestimated bythepetitioner, declined from
103million pairsin1992to75million pairsin1995. TheFederal Trade Commission noted thatthe
alleged decline inconsumption during theyears 1993 and1994 should beinvestigated, because it
coincided withyears ofstrong growth indemand forconsumer goods, totalindustrial production and
GDP. HowdoestheGovernment ofArgentina explain this25%dropinapparent consumption over
thatfour-year period?
3. TheSafeguards Agreement provides thatwhen factors otherthanincreased imports arecausing
injury tothedomestic industry atthesame time, suchinjury should notbeattributable toincreased
imports. Thetechnical report stated that"ifoneweretoaccept theproduction andapparent consumption
data, some ofthedecline inproduction would beattributed tothedecline inconsumption andonly
1G/SG/N/7/ARG/1 &Suppl.1.G/SG/Q2/ARG/1
Page2
some would beattributed toincreases inimports". Thereport further stated that"theevidence contained
intheDocket show thatatthisstage, injury might beattributable lesstocurrent imports thanto
consumption trends andindustrial reorganization, which weremajor, according tofigures forinvestment
innewcapital assets".
(a) WhydidtheUnder-Secretariat forForeign Trade, indeciding toimpose theprovisional
measures, failtoaddress dramatically falling consumption andindustrial reorganization
among thevariables, aslisted inG/SG/N/7/ARG/1, considered initsdetermination
oftheexistence ofcritical circumstances?
(b) Towhatextent doestheGovernment ofArgentina attribute thealleged threat ofserious
injury tothedomestic industry tofalling consumption andindustrial restructuring?
4. Inparagraph 6ofitsnotification totheCommittee, Argentina cited several variables (e.g.
production, capacity, employment) showing anoverall decline inthedomestic footwear industry from
1991to1995. However, itisnotclearhowdatathrough 1995support theneedforemergency measures
in1997. Imports alsodeclined inbothabsolute andrelative terms between 1993 and1995, which
makes itevenmore difficult tojustify anemergency safeguard action in1997.
(a) WhydidtheGovernment ofArgentina notinclude 1996 datainitsnotification?
(b) DidtheGovernment ofArgentina consider 1996 datainmaking itsdetermination?
5. Determinations ofthreat ofserious injury aretobebased onfactsandnotmerely onallegation,
conjecture orremote possibility.
(a) What factsdidtheArgentine authorities useinmaking thisdetermination when the
most recently available information wasfrom 1995?
(b) There isalsonoindication thattheArgentine authorities analysed criteria onwhich
determinations ofa"clearly imminent" threat aretypically based, suchassurging
imports, rapidly increasing import inventories, excess foreign factory capacity, and
thelike. What factors wereconsidered inorder todetermine whether thethreat was
clearly imminent? Foreachsuchfactor, please provide thedatawhich supported the
finding thatthethreat wasclearly imminent.
6. Theprovisional measures formosttariff items arenearly identical totheGATT-inconsistent
specific duties which were ineffect untiltheprovisional measures were imposed. Thus, itappears
thatArgentina hasemployed safeguard measures asanafter-the-fact means tolendlegitimacy totheir
GATT-inconsistentduties,ratherthanasanobjectiveendeavourtoaddressinjurytodomesticproducers.
Argentina 'snotification tothisCommittee (G/SG/N/7/ARG/1/Suppl.1), supports thisconclusion. The
notification states thattheprovisional measure, which waspromulgated on24February 1997, was
necessary because the"mere absence ofMinimum Specific Duties would recreate thecritical
circumstances required fortheadoption ofprovisional measures". Thenotification goesontoobserve
thatthe"Ministry ofEconomy advocates theremoval ofMinimum Specific Duties onfootwear, which
gives risetotheimminent possibility ofserious injury orthethreat ofserious injury tothedomestic
industry. Thus, itappears thattheGovernment ofArgentina created itsown"critical circumstances"
byremoving itsspecific duties. WhydidArgentina impose provisional safeguard measures intheplace
ofspecific duties onfootwear?
7. Since October 1996, theUnited States hasbeenengaged inconsultations withArgentina to
bring its"temporary duties" onfootwear intoconformity withWTO requirements.G/SG/Q2/ARG/1
Page3
(a) Whywereprovisional safeguard measures imposed when Argentina wasengaged in
discussions toendormodify thetemporary duties tobring themintoconformity with
WTO requirements?
(b) DidtheGovernment ofArgentina intend toimpose thesafeguard measures when it
firstengaged intheconsultations?
8. Thetimingofthesevariousactionsservestofurtherheightenourconcern.TheDecreeremoving
thespecific duties, issued on24February 1997, allegedly necessitated theimmediate imposition of
provisional safeguard measures, alsoaccomplished on24February. On25February, theDispute
Settlement Body agreed totheformation ofaWTO dispute settlement panel toreview Argentina 's
specific duties onthesame imported goods. WhydidtheGovernment ofArgentina waituntiltheday
priortotheformation oftheDispute Settlement Body panel tosuspend thespecific duties andimpose
provisional safeguard measures?