./.WORLD TRADE
ORGANIZATIONG/SG/N/14/BRA/1
8 November 1999
(99-4823)
Committee on Safeguards Original:  Spanish
NOTIFICATION UNDER ARTICLE 12.1(a) OF THE AGREEMENT
ON SAFEGUARDS ON INITIATION OF AN INVESTIGATION
(EXTENSION OF EXISTING MEASURE)
AND THE REASONS FOR IT
BRAZIL
The following communication, dated 2 November 1999, has been received from the
Permanent Mission of Uruguay, current Pres ident of MERCOSUR, on behalf of Brazil.
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I have the honour to write in my capacity as representative of the MERCOSUR pro-tempore
Presidency in order to notify the Committee on Safeguards, on behalf of the Federative Republic ofBrazil, of the initiation of the review of the safeguard measure applied to Brazilian imports of toys.
This notification is made under Article 12.1(a) of the Agreement on Safeguards.In this connection, the following documents are attached:- Note by the Trade Protection Department of the Brazilian Secretariat of Foreign
Trade concerning notification of the initiation of the review of the safeguard measure
in question;  and
- Circular No. 21 of the Secretariat of Foreign Trade of 24 September 1999, published
in Official Gazette No. 187 of 29 September 1999.G/SG/N/14/BRA/1
Page 2
INITIATION OF REVIEW OF THE SAFEGUARD MEASURE APPLIED
TO BRAZILIAN IMPORTS OF TOYS
1. Date of initiation of the review:  29 September 1999.
2. Products subject to review:  all types of  toys, classified under the following NCM/HS
headings:
9501.00.00/9502.10.10/9502.10.90/9502.91.00/9502.99.00
9503.10.00/9503.20.00/9503.30.00/9503.41.00/9503.49.00
9503.50.00/9503.60.00/9503.70.00/9503.80.10/9503.80.909503.90.10/9503.90.90/9504.10.10/9504.10.91/9504.10.99.
3. Reasons justifying the initiation of the review:
The review was initiated on the basis of an application submitted by the Brazilian Association
of Toy Manufacturers (APRINQ), which accounts for nearly 97 per cent of total domestic production.
To assess the serious injury or threat thereof to domestic industry, a sample of 21 companies in the
sector was chosen and they account for 57 per cent of the sector's invoicing.
There was an increase in the quantity of impor ts, along with a fall in production, of sales on
the domestic market, in quantity and value terms, a decrease in the average price of sales on the
domestic market, the number of jobs, overall and related to production, and net income, as well as an
increase in overall indebtedness.  Moreover, there was a fall in imports in value terms, a fall in stocks,
a rise in gross and operating margins, excluding fina ncial performance, and an increase in the index of
liquidity.
An assessment of the adjustment undertaking indicated that the plan submitted by the sector,
systematically backed by the government authorities, is being applied, as yet partially, by the industry.
The purpose of the review is to determine whether the safeguard measure is still needed in
order to remedy the serious injury caused by the imports and whether the industry is adjusting so as to
compete with imports by the end of the period specified.  The initiation of the review for the purposesof extending the safeguard measure will enable this Department to assess present needs so that the
sector can complete its restructuring process, bearing in mind the existence of scheduled investments,
not yet made, and/or new possible investments, so th at the industry will again compete with imports at
the rate level established by the Common External Tariff (AEC).
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