WORLD TRADE
ORGANIZATIONG/SG/N/10/USA/2/Suppl.3
G/SG/N/11/USA/2/Suppl.3
11 April 2001
(01-1837)
Committee on Safeguards Original:  English
NOTIFICATIONS PURSUANT TO ARTICLE 12.1(C) AND ARTICLE 9,
FOOTNOTE 2, OF THE AGREEMENT ON SAFEGUARDS
UNITED STATES
Supplement
The following communication, dated 9 April 2001, has been received from the Permanent
Mission of the United States.
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In light of the agreed format for notifications (G/SG/W/1, 23 February 1995), the
United States provides the following supp lement to notification G/SG/N/10/USA/2-
G/SG/N/11/USA/2 to the Committee on Safeguards with regard to the United States’ consideration
whether to extend the safeguard measure on wheat gluten.
On 21 March 2001, the United States International Trade Commission (“USITC”) voted 6-0
that the safeguard measure continues to be necessary to prevent or remedy serious injury and that the
US wheat gluten industry is making a positive adjustment to import competition.  The USITC
forwarded the findings underlying these determinations to the President on 2 April 2001.  Thisnotification contains a summary of the USITC’s findings.  The United States will provide the
USITC’s report on this matter, excluding confidential business information, to the Committee shortly
after it becomes available.
Consistent with Article 12.3 of the Agreement on Safeguards, if the United States decides to
extend the safeguard measure on wheat gluten, it is prepared to consult with those Members having a
substantial interest as exporters of the product concerned, with a view to, inter alia , reviewing the
information provided in this notification, exchanging views on the measure and reaching an
understanding on ways to achieve the objective set out in Article 8.1 of the Agreement on Safeguards.
1. Evidence of serious injury or threat thereof caused by increased imports
This information was provided in previous notifications.  See G/SG/N/8/USA/2
(12 February 1998) and G/SG/N/8/USA/2/Rev.1 (27 March 1998).
2. This information was provided in previous notifications.  See G/SG/N/8/USA/2
(12 February 1998) and G/SG/N/8/USA/2/Rev.1 (27 March 1998).
3. Provide a precise description of the product involved .  Wheat gluten, provided for in
subheadings 1109.00.10 and 1109.00.90 of the Harmonized Tariff Schedule of the United States
(HTSUS).  The USITC recommended that the quota on wheat gluten be revised to “include wheat
gluten mixtures that retain the vitality of wheat gluten”.  It used as an example of this product aG/SG/N/10/USA/2/Suppl.3
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“90/10 blended” product consisting of 90 per cent vital wheat gluten and 10 per cent soy protein or
dried meat by-products.  The USITC explained that:
In describing the domestic product that is “like” the imported wheat gluten subject to
investigation, the Commission stated that it included “all forms of” basic or “vital”
wheat gluten as well as those forms of “modified” wheat gluten that are used by the
baking and pet food industries to add “vitality” to their products.
*     *     *     *     *
We find that the blended product retains the vitality of the subject wheat
gluten product.  We thus find that the product is covered by the Commission’s
description of the scope of the product at issue in the original determination.  The
potential exists for significant imports of this product in the future if the action is
extended.  Such imports could undermine the effectiveness of the action.1
4. Provide a precise description of the proposed measure .  As noted in G/SG/N/10/USA/2, the
measure is a quantitative limitation on imports of wheat gluten, for a period of just over three years.
The amount of the limitation represented the average of total imports for crop years ending 30 June
1994, and 30 June 1995 (including imports from countries, listed below, that are excluded from the
limitation).  Shares of the quantitative limitation were allocated based on relative import shares duringthe same three-year period.
As noted in G/SG/N/10/US A/2/Suppl.1-G/SG/N/11/USA/ 2/Suppl.1, the quantitative
limitation for the EC was reallocated between the first and second years of the three-year period to
account for shipments of EC wheat gluten in excess of the quota limits during the first year.  Since thedecrease in the second year was matched by an increase in the first year, there was no change in the
overall amount of the quantitative limitation on EC wheat gluten for the three-year period.
EC wheat gluten imports sufficient to fill the entirety of the quantitative limitation for the
second year, 1 June 1999 - 31 May 2000, entered the United States in a single month, June 1999, and
disrupted the U.S. wheat gluten market.  In order to provide for the efficient and fair administration of
the quantitative limitation in the third year, the United States divided the annual quantitative limitationevenly among the quarters of that year as follows:
1 June-31 Aug.,
20001 Sept.-30 Nov.,
20001 Dec. 2000 -
28 Feb. 20011 Mar-31 May,
2001
Australia 7,953,500 kg 7,953,500 kg 7,953,500 kg 7,953,500 kg
EC 6,885,750 kg 6,885,750 kg 6,885,750 kg 6,885,750 kg
Other countries 1,318,250 kg 1,318,250 kg 1,318,250 kg 1,318,250 kg
Thus, each source received the same aggregate quantitative limitation for the third year as it did under
the original measure:  31,814,000 kg for Australia, 27,543,000 for the EC, and 5,273,000 for other
countries.  See G/SG/N/10/USA/2 (8 June 1998).
                                                     
1Wheat Gluten:  Extension of Action , TA-204-4, p. 16 (April 2001) (“Extension Report”).G/SG/N/10/USA/2/Suppl.3
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The USITC recommended that the United States continue the measure for two years,
liberalizing its application by increasing the amount subject to quota by 6 per cent each year from the
base quota in 2001.  It recommended further that the annual quota be allotted according to the sameproportions used in previous years, and that it be distributed evenly among the three-month periods
defined in the preceding table.  Th e allotments would be as follows:
Quarterly allotment,
1 June 2001-31 May 2002Quarterly allotment,
1 June 2002-1 June 2003
Australia 8,430,710 kg 8,936,550 kg
EC 7,298,895 kg 7,736,820 kg
Other countries 1,397,345 kg 1,481,180 kg
5. Provide the proposed date of the introduction of the measure .  The measure was introduced
on 1 June 1998.  The quarterly quota allocation was introduced on 1 June 2000.  If the measure isextended, the extension will take effect on 1 June 2001.
6. Provide the expected duration of the measure .  The measure is scheduled to last through
1 June 2001.  The USITC has proposed extending the measure through 1 June 2003.
7. Not applicable.
8. If the expected duration is over one year, provide the expected timetable for progressive
liberalization of the measure .
This information was provided in previous notifications.  See G/SG/N/10/USA/2-
G/SG/N/11/USA/2 (4 June 1998).
9. If the measure is being extended, also provide:
(i) evidence that the industry concerned is adjusting and that the safeguard measure
continues to be necessary to prevent or remedy serious injury
With regard to evidence that the domestic industry is adjusting, the USITC found:
Thus, the record shows that during the nearly 3 years that the remedy action has been
in place the domestic industry has made substantial new investments in the plant andequipment and product development and marketing areas proposed in its adjustment
plan.  As a result of these efforts, domestic shipments of modified wheat gluten and
starch products have increased, although, as described above, the industry remains
dependent mainly on  its revenues from the sale of wheat gluten rather than modified
products.  We discuss below in the remedy section the additional time for continuedrelief that we have found to be necessary.
2
With regard to whether the safeguard measure continues to be necessary, the USITC found that
                                                     
2 Extension Report, p.14.G/SG/N/10/USA/2/Suppl.3
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for the two main sources of exports to the United States, the EU and Australia, the
quotas have been ‘binding’ in the sense they have been filled, and in the case of the
EU, filled quickly.  This suggests that the termination or significant expansion of the
quotas will lead to a significant increase in imports in the near term, particularly fromthe EU.  Moreover, the effectiveness of the quota in the first 2 quota years was
weakened by over-quota EU imports during th e first year, the filling of the entire EU
second-year allotment in a single quarter, and the unexpected surge in imports from
Poland during the first 2 years of the quota.
*     *     *     *     *
In the original investigation, the Commission found that the low prices of imported
wheat gluten – particularly from the EU – helped to cause serious injury to the
domestic industry.  We find that recent price information – particularly with respect
to EU wheat gluten – further supports the conclusion that continued relief is
necessary.
3
(ii) reference to the WTO document that notified the initial application of the
measure;
G/SG/N/10/USA/2-G/SG/N/11/USA/2.(iii) duration of the measure from initial application till the date at which it will
be extended; and,
The measure was put in place on 1 June 1998.  The USITC has recommended that it be
extended on 1 June 2001, and remain in place until 1 June 2003.
(iv) precise description of the measure in place prior to the date of extension.
See item 4, above, for a description of the quota in place until 1 June 2001, the recommended date of
extension.  Wheat gluten originating in the developing country Members listed in
G/SG/N/10/USA/2/Suppl.2-G/SG/N/ 11/USA/2/Suppl.2 is excluded from  the measure, as is wheat
gluten originating in Canada, Mexico, and Israel.  The USITC has recommended that the measure be
liberalized by increasing the amount of the quota by 6 per cent each year from the base quota in 2001,
as described above in item 4.
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3 Extension Report, p. 9-10 (April 2001)