WORLD TRADE
ORGANIZATIONG/SG/N/8/BRA/3
G/SG/N/10/BRA/3
G/SG/N/11/BRA/2
6 August 2002
(02-4326)
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
NOTIFICATIONS PURSUANT TO ARTICLE 12.1(c) AND ARTICLE 9,
FOOTNOTE 2, OF THE AGREEMENT ON SAFEGUARDS
BRAZIL
The following communication, dated 5 August 2002, has been received from the Permanent
Mission of Brazil.
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The Permanent Mission of Brazil to the United Nations Office and other International
Organizations in Geneva presents its compliments to the WTO Secretariat and, in its capacity as pro-
tempore coordinator of MERCOSUR, has the honour to notify the Committee on Safeguards of the
imposition, by MERCOSUR, on behalf of Brazil, of a safeguard measure on imports of coconuts,
classified under the NCM/HS tariff line 0801.11.10.  The measure will have effect in the customs
territory of Brazil.  This notification is submitted in compliance with the “Regulation on the
Application of Safeguard Measures to Imports from Non-Member Countries of MERCOSUR” and
pursuant to Articles 12.1(b), 12.1(c) and footnote 2 to article 9 of the Agreement on Safeguards,following the agreed format for notifi cations contained in document G/SG/W/1.
Reference is made to the notification for initiation of investigation for the imposition of
safeguard measures, contained in document G/SG/N/6/BRA/2, dated 12 September 2001.
1. Provide evidence of serious injury or th reat thereof caused by increased imports
Periods considered in the investigation: P1 - from November 1997 to October 1998; P2 - from
November 1998 to October 1999; and P3 - from November 1999 to October 2000.
In P2, internal sales of the domestic industry dropped 5.2 per cent in quantity.  In the same
period, the internal market was reduced in 1.5 per cent and imports increased in 67.4 per cent in
relation to the previous period, resulting in a greater share of imports in the apparent consumption
(from 5.0 per cent to 8.5 per cent).  During the same period, the share of the domestic industry in the
apparent consumption decreased from 95.0 per cent to 91.5 per cent, production decreased 5.2 percent, direct employment decreased 8.0 per cent and domestic prices decreased 4.2 per cent.
In P3, internal sales of the domestic industry dropped 10.4 per cent in quantity and the
internal market decreased 5.1 per cent in relation to P2.  In the same period, there was an increase in
imports of 51.2 per cent, resulting in an increased share of imports in apparent consumption (from8.5 per cent in P2 to 13.6 per cent in P3).G/SG/N/8/BRA/3
G/SG/N/10/BRA/3
G/SG/N/11/BRA/2
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The decrease in sales of the domestic industry, caused by increased imports, resulted in the
following changes in the economic indicators of th e domestic industry, from P2 to P3, in quantity:
Decrease in production:  10.4 per cent;Decrease in sales and loss of participation of the domestic industry in the apparent
consumption: sales of coconuts fell 10.4 per cent. Participation of the domestic industry in the
apparent consumption fell from 91.5 per cent to 86.4 per cent;
Decrease in employment:  The number of jobs directly related to the production fell 8.9 per
cent;
Decrease in prices: the price of the product fe ll 6.1 per cent, resulting in a decrease in the
turnover of 15.8 per cent and in the gross margin of 6.3 percentage points;
The undercutting margin of imports price and internal price: the undercutting margin
increased from 3.39 per cent to 3.71 per cent.
It was finally determined that the situation of the domestic industry seriously deteriorated
while imports, in quantity, increased, absolute and relative to domestic production and consumption.
2. Provide Information on whether there is an absolute increase in imports or an increase
in imports relative to domestic production
From P1 to P2, total imports, in quantity, increased 67.4 per cent; from P2 to P3, imports
increased 51.2 per cent, a growth of 153.2 per cent from  P1 to P3.  In value, from P2 to P3, imports
increased 90.0 per cent and, from P2 to P3, the grow th rate was 24.1 per cent, resulting in an increase
of 135.9 in the period P1 - P3.
The increase in imports in relation to the domestic production, in terms of quantity, was 3.6
percentage points from P1 to P2 and, 5.8 percentage points from P2 to P3, resulting in an increase of9.4 percentage points from P1 to P3.
It was determined that imports from ME RCOSUR countries (Argentina, Paraguay and
Uruguay) amounted to nearly 0.5 per cent of total imports during the period of investigation.
As with imports from all origins, imports from WTO Member countries increased, in
quantity, 57.0 per cent from P1 to P2 and 32.8 per cent, from P2 to P3, experiencing a total increase of
108.5 per cent in the period of investigation.  In value, imports from WTO Member countries
increased 81.7 per cent from P1 to P2, and 7.5 per cent from P2 to P3 with a growth rate of 95.4 per
cent from P1 to P3.G/SG/N/8/BRA/3
G/SG/N/10/BRA/3
G/SG/N/11/BRA/2
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Total Brazilian Imports of Desiccated Coconuts
PERIOD Quantity Value
Metric
Tons% Index US$ 1,000 FOB % Index
P1 3,957 100,0 5,386.9 100,0
P2 6,624.4 67,4 167,4 10,234.4 90,0 190,0
P3 10,018.0 51,2 253,2 12,705.7 24,1 235,9
3. Description of the product involved
The product subject to the safeguard measure is coconuts, classified under the heading
0801.11.10 of the Mercosur Common Nomenclature based on the Harmonized System (NCM/SH).
It was determined that the imported product is directly competitive with domestic coconuts.
Although physical characteristics may differ, both domestic and imported products are destined to the
same markets and are near substitutes, one being subject to displacement by the other in the market.
4. Description of the proposed measure
The safeguard measure will be applied as a quantitative restriction and will remain in place
for four years.  The global quota will be 3,957 tons in the first year; 4,154.9 tons in the second;
4,352.7 tons in the third; and 4,550.6 tons in the fourth year.  Under Article 5.1 of the Agreement on
Safeguards, the volume levels of imports are lower than the average of imports in the last three
representative years (P1, P2 and P3), due to the fact that the increase in imports in P2 were already
causing injury to the domestic industry; a return to import levels of P1 thus seems necessary toeliminate injury.  The quota will be allocated to importers in the chronological order of the dates on
which declarations of release for free circulation are accepted.
Based on the determination that imports from Mercosur countries did not cause serious injury
to the domestic industry, those countries will be excluded from the safeguard measure.
Consistent with Article 9.1 of the Safeguards Agreement, the measure will not affect imports
originating in WTO developing country Members that exported amounts not exceeding 3 per cent of
the total imports (Annex I).
In relation to the required adjustment of the domestic industry, the investigating authorities
assessed the pertinent programme proposed by the industry and determined that its implementation,
which shall be permanently verified by competent authorities, will help the domestic industry to
increase competitiveness.
5. Proposed date of the introduction of the measure
The measure is expected enter into force on 1 September 2002.
6. Expected duration of the measure
The measure is expected to be in force from 1 September 2002 to 31 August 2006.G/SG/N/8/BRA/3
G/SG/N/10/BRA/3
G/SG/N/11/BRA/2
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7. Proposed date for the review
The mid-term review will be initiated in July 2004.
8. Expected time for progressive liberalization
The measure will be progressively liberalized at regular intervals (every twelve months).  The
quota applicable in the years following the first one will be increased in 5 per cent of the quota
applicable in the previous period, as follows:
Period Quota
01.09.02  to 31.08.03 3,957    metric tons
01.09.03  to 31.08.04 4,154.9 metric tons
01.09.04  to 31.08.05 4,352.7 metric tons
01.09.05  to 31.08.06 4,550.6 metric tons
Consultations
Brazil is prepared to consult with all Members having a substantial interest in supplying the
product concerned.  Taking into account the date in which the measure is expected to enter into force,
the Brazilian Government will be prepared to hold the consultations in Geneva in the week starting12 August 2002, if necessary.G/SG/N/8/BRA/3
G/SG/N/10/BRA/3
G/SG/N/11/BRA/2
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ANNEX I
List of developing countries exempted from the measure
ANGOLA MADAGASCAR
ANTIGUA AND BARBUDA MALAWI
BAHRAIN MALAYSIA
BANGLADESH MALDIVES
BARBADOS MALI
BELIZE MALTA
BENIN MAURITANIA
BOLIVIA MAURITIUS
BOTSWANA MOLDOVA
BRUNEI DARUSSALAM MONGOLIA
BURKINA FASO MOROCCO
BURUNDI MOZAMBIQUE
CAMEROON MYANMAR
CENTRAL AFRICAN REPUBLIC NAMIBIA
CHAD NICARAGUA
CHILE NIGER
CHINA NIGERIA
CHINESE TAIPEI OMAN
COLOMBIA PAKISTAN
CONGO PANAMA
COSTA RICA PAPUA NEW GUINEA
COTE D'IVOIRE PERU
CUBA PHILIPPINES
CYPRUS QATAR
DEMOCRATIC REPUBLIC OF THE CONGO RWANDA
DJIBOUTI SAINT KITTS AND NEVIS
DOMINICA SAINT LUCIA
ECUADOR SAINT VINCENT & THE GRENADINES
EGYPT SENEGAL
EL SALVADOR SIERRA LEONE
FIJI SOLOMON ISLANDS
GABON SOUTH AFRICA
THE GAMBIA SURINAME
GRENADA SWAZILAND
GUATEMALA TANZANIA
GUINEA BISSAU THAILAND
GUINEA TOGO
GUYANA TRINIDAD AND TOBAGO
HAITI TUNISIA
HONDURAS TURKEY
INDONESIA UGANDA
JAMAICA UNITED ARAB EMIRATES
JORDAN VENEZUELA
KENYA ZAMBIA
KUWAIT ZIMBABWE
LESOTHO
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