WORLD TRADE
ORGANIZATIONG/SG/N/8/MAR/1
G/SG/N/10/MAR/1
22 May 2001
(01-2609)
Committee on Safeguards Original:  French
NOTIFICATION UNDER ARTICLE 12.1(B) OF THE AGREEMENT
ON SAFEGUARDS, OF A FINDING OF SERIOUS
INJURY OR THREAT OF SERIOUS INJURY
 CAUSED BY INCREASED IMPORTS
NOTIFICATION UNDER ARTICLE 12.1(C) OF
THE AGREEMENT ON SAFEGUARDS
MOROCCO
The following communication, dated 26 April 2001, has been received from the Permanent
Mission of Morocco.
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The Permanent Mission of the Kingdom of Morocco to the United Nations Office at Geneva
and Other International Organizations in Switzerland presents its compliments to the Secretariat of the
World Trade Organization, and further to its note, No. 2516, of 17 October 2000 has the honour to
attach hereto Morocco's notification under Articles 12.1(b) and 12.1(c) of the Agreement on
Safeguards of a finding of serious injury or threat thereof caused by a massive increase in imports,
and of its decision to apply a safeguard measure.
The Permanent Mission further points out that the safeguard measure to be applied to imports
of bananas will take effect upon publication of the decree for its implementation, in accordance with
the regulations on the modification of customs duties.G/SG/N/8/MAR/1
G/SG/N/10/MAR/1
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NOTIFICATION UNDER ARTICLE 12.1(B) OF THE AGREEMENT
ON SAFEGUARDS, OF A FINDING OF SERIOUS
INJURY OR THREAT OF SERIOUS INJURY
 CAUSED BY INCREASED IMPORTS
NOTIFICATION UNDER ARTICLE 12.1(C) OF
THE AGREEMENT ON SAFEGUARDS
KINGDOM OF MOROCCO
I. PROCEDURE
The Ministry of Industry, Trade, Energy and Mines decided, pursuant to an opinion issued by
the Advisory Commission on Imports at its meeting of 21 June 2000, to open an investigation as from
26 June 2000, in accordance with the Agreement on Safeguards.
The proceedings were initiated as the result of a complaint filed on behalf of the banana
industry by the Association of Banana Producer s (APROBA) and the Asso ciation of Fruit and
Vegetable Producers (APEFEL), with a view to the application of safeguard measures against imports
of fresh bananas.
The complaint contained evidence to show a substantial increase in imports of bananas, both
relative to domestic production and in absolute terms, causing or threatening to cause serious injury to
domestic production.
In view of the critical situation facing producers, the Ministry of Industry, Trade, Energy and
Mines deemed the conditions for the application of a provisional measure to have been met.
Accordingly, pursuant to Order No. 956.00 of 9 Jumada I 1421 (10 August 2000), a provisional
additional duty of 150 per cent was applied to im ports of bananas as from 10 August 2000 and for a
period of 200 days.
The Ministry of Industry, Trade, Energy and Mines published notices of the opening of the
investigation and the application of provisional measures, and the parties concerned were invited tosubmit their comments to the Ministry.
Morocco also notified to the Committee on Safeguards its decision to open the investigation
and its reasons for doing so, in accordance with Article 12.1 of the Agreement on Safeguards
(G/SG/N/6/MAR/1), and its decisi on to apply provisional safeguard measures, in accordance with
Article 12.4 of the Agreement on Safeguards (G/SG/N/7/MAR/1).
II. PRODUCT SUBJECT TO INVESTIGATION
Fresh bananas come under tariff heading 0803.00.00.10 of the harmonized customs tariff of
the Kingdom of Morocco and are subject to a customs duty of 54.5 per cent to be gradually reducedby 2.4 per cent a year in accordance with Morocco's commitment under the Agreement on
Agriculture.
In Morocco bananas are grown under greenhouse shelters equipped for irrigation to maintain
the requisite humidity rate inside the greenhouses.G/SG/N/8/MAR/1
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Bananas are usually harvested at the mature green stage and ripening is completed in ripening
chambers.  The post-harvest storage period, during which the fruit remains firm and green and
undergoes no significant change in skin colour, texture or composition, depends on the temperature,
humidity and stage of maturity on harvesting (maximum three months).  The ripening process isaccelerated by increasing the temperature and relative humidity and exposing the fruit to ethylene.
The ripening process takes place in ripening facilities usually at the wholesale stage of
marketing.
Morocco's main marketing methods are farmgate  sales, enabling growers to avoid additional
harvest and post-harvest costs but limiting their profit margins, and to a lesser extent direct sales tothe wholesale market before or after the ripening process.  In this case, sales to the wholesale market
are carried out by an agent, who charges a commission on sales income.
III. INJURY OR THREAT OF INJURY
III.1. Domestic industry
Greenhouse banana production started in 1981/1982 in an area of 2 hectares, expanding to
3,000 hectares in 1993/1994 and subsequently to between 3,500 and 3,900 hectares in 1999/2000.
According to estimates, there are between 950 and 1,300 banana producers distributed in
three main production areas:  Souss Massa (64 per cent), Gharb (29 per cent), Doukkala (6 per cent),
and other regions (1 per cent).  Domestic production increased from 24,000 tonnes in 1984/1985 to
88,400 tonnes in 1995/1996, then to over 110,000 tonnes in 1999/2000.
The investigation involved 232 producers who replied to a questionnaire devised for the
purpose.  The respondents' production amounted to 67,751 tonnes (approximately 56.5 per cent of
domestic banana production) grown in an area of 1,712 hectares (about 43.9 per cent of the banana-
growing area).
The data obtained from the investigation cover the crop years from 1995-1996 to 1999-2000.
III.2. Banana imports
The decision to open an investigation was taken following the finding of a massive 179 per
cent increase between 1998 and 1999.  The share of imports in the domestic market rose from 4 per
cent to 11 per cent between 1998 and 1999.
Furthermore, the average import price declined steadily from 4671 DH/tonne in 1997 to
DH4182/tonne in 1998 and then to 3660 DH/tonne in 1999.
Banana imports
Year 1997 1998 1999
Quantity 4,849 4,374 12,211
Rate of increase - -9.8% 179%
Market share 5.2% 4.3% 11.1%
Average import price
DH/tonne4,671 4,182 3,660G/SG/N/8/MAR/1
G/SG/N/10/MAR/1
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III.3. Surface area, production and sales
In respect of the producers investigated the surface area planted with bananas rose from
1,220 hectares in the 1995-1996 crop year to 1381 hectares in 1996-1997, 1,542 hectares in1996-1997 and 1691 hectares in 1998-1999 reaching 1,712 hectares during the crop year 1999-2000.
Growth rates were 13.2 per cent in 1996-1997, 1.7 per cent in 1997-1998, 9.7 per cent in 1998-1999
and 1.2 per cent in 1999-2000.
Banana production amounted to 48,315 tonnes in 1995-1996, 55,048 tonnes in 1996-1997,
61,799 tonnes in 1997-1998, 67,438 tonnes in 1998- 1999 and 67,751 tonnes in the 1999-2000 crop
year.  Production growth rates were 13.9 per cent;  12.3 per cent;  9.1 per cent and 0.5 per centrespectively for the crop years 1996-1997, 1997-1998, 1998-1999 and 1999-2000.
Sales rose from 282.6 million DH in the 1995-1996 crop year to 308.3 million DH in 1996-
1997 and to 331.9 million DH in 1997-1998.  They fell in 1998-1999 to 320.3 million DH
and subsequently to 288.6 million DH in 1999-2000.  After growing by 9.1 per cent in 1996-1997and 7.7 per cent in 1997-1998, sales registered negative growth rates of -3.5 per cent in 1998-1999
and -9.9 per cent in 1999-2000.
Surface area and production volume followed virtually the same tendency:  an upward trend
followed by a significant drop in the growth rate, which fell steadily from 1995-1996 to 1998-1999,and then declined rapidly in 1999-2000.
Sales values on the other hand, grew between the 1995-1996 and 1997-1998 crop years, then
registered a negative growth rate as from 1998-1999 with a marked decline in 1999-2000.
It is not possible to use surface area and production volume tends as a criterion to evaluate
injury given the characteristics of the banana supply, since production cannot be adjusted in the
middle of a crop year (which is longer than 12 m onths) or even after the crop year.  Production for
1999 and 2000 is the result of plantings made in 1997 and 1998.
The slowdown in the extension of surface area should nonetheless be noted. It marks the
hesitancy of producers with regard to banana production.
Sales trends do not reflect a drop in sales volume, in that the entire output has to be marketed
in a short space of time because bananas cannot remain long in storage.  They reflect, rather, a drop in
value due to the decline in farmgate prices.
III.4. Yield and productivity
During the period of the investigation and for the producers investigated, yields in terms of
volume remained stable at approximately 39.8 T/Ha.
Productivity rose in volume from 16.9 tonnes per employee during the 1995-1996 crop year
to 17.2 tonnes in 1996-1997, 17.95 tonnes in 1997-1998 and 18.24 tonnes in 1998-1999, reaching
18.56 tonnes per employee in 1999-2000.
In value terms, both yield per hectare and labour productivity declined.  A hectare which
brought in 230.5 thousand DH in the 1995-1996 crop year yielded only 189.2 thousand DH in
1998-1999 and 166 thousand DH in 1999-2000.G/SG/N/8/MAR/1
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Similarly, an employee who produced 98.5 thousand DH generated only 86.5 thousand DH in
1998-1999.  The figure dropped to 77.5 thousand DH in 1999-2000.
Given the characteristics of the supply, yield volume cannot be adjusted part way through the
crop year and producers cannot respond instantaneously.  In the present case, it takes at least two
years to adjust output.
The injury becomes more apparent, however, if one looks at the value trends of yields and
productivity.  Yield per hectare declined by 21.8 per cent between the 1995-1996 and 1998-1999 crop
years, and as much as 28 per cent in 1999-2000.  The value of output per employee also declined, by
12 per cent between 1995-1996 and 1998-1999 and by 21 per cent between 1995-1996 and 1999-2000.
III.5. Employment and wages
On the basis of the data submitted by the producers surveyed, the number of employees in the
sector rose between 1995-1996 and 1998-1999 from 2854 to 3698.  In the following crop year
employee numbers fell, job losses for 1999-2000 amounting to 1 per cent as compared to 1998-1999
and approximately 3 per cent as compared to 1995-1996.
After rising by 9.9 per cent from 47 to 51.7 million DH between 1987-1998 and 1998-1999,
wages declined by some 2 per cent – to approximately 50.5 million DH.
The average number of employees per hectare registered a steady decline, falling from 2.34 to
2.13 persons/Ha between 1995-1996 and 1999-2000.  The average wage remained relatively stable at
approximately 13.800 DH/year.
The slight drop in employee numbers in 2000 and the loss in income distributed in the form of
wages can be taken as a component of the injury incurred.
The point should be made that for the agricultural sector employment is a particularly
sensitive issue where rural job creation and wages are concerned.  The social effects of unemployment
and under-employment are more far-reaching in rural than in urban areas.
III.6. Unit prices and margins
Insofar as average production costs virtually stood still at approximately 4.73 DH/kg. between
the 1995-1996 and 1999-2000 crop years, and as a result of the steady decline in average farmgateunit prices (from 5.85 DH/kg. in 1995-1996 to 5.6 DH/kg. in 1996-1997, 5.37 DH/kg. in 1997-1998,
4.75 DH/kg. in 1998-1999 and 4.26 DH/kg. in 1999-2000), the average unit profit margin fell
significantly, from 1.18 DH/kg. in 1995-1996 to 0.92 DH/kg. in 1996/1997, 0.64 DH/kg. in 1997-
1998, 0.01 DH/kg. in 1998-1999 and finally to –0.59 DH/kg. in 1999-2000.
The drop in average farmgate prices was at the root of the injury sustained by the national
banana industry.  In 1998-1999 the decline was due to the concentration of imports, which all but
saturated storage and ripening capacity during the period when domestic production was ready for
marketing.
In response, producers had to reduce sales prices to the advantage of intermediaries
particularly as imported bananas were being sold at a relatively low price owing to the drop in import
prices.G/SG/N/8/MAR/1
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III.7. Returns
The profits realized by the producers investigated fell between 1995-1996 and 1997-1998
from DH 57 million to DH 39.5 million.  During the 1998-1999 crop year they plummeted to DH 0.67million.  In 1999-2000, producers posted losses of nearly DH 40 million.
Average returns per hectare followed a similar trend:  from 46,730 DH/Ha in 1995-1996 they
fell to almost 400 DH/Ha in 1998-1999.  Negative returns were recorded for 1999-2000 with a loss of
23,000 DH/Ha.
Profitability, calculated as the ratio of profits to sales, registered a decline.  From nearly
20.17 per cent in 1995-1996 it fell to 0.21 per cent in 1998-1999 and to an estimated –13 per cent in
1999-2000. As a direct consequence of the drop in farmgate prices resulting from increased imports in
1999, bananas were sold at a loss since they cannot be held in stock pending better marketing
opportunities.
III.8. The importers' viewpoint
Importers expressed their views in the course of the investigation as an interested party.  Their
main point being the problem of the quality of domestic banana production, they asked that bananas
be subjected to standards as an incentive to improving the quality of the domestic product.
They also asked for the level of the safeguard measure – if it was decided to apply one – not
to be prohibitive, so as that a flow of import equivalent to 15 per cent could be maintained.
IV. CAUSAL LINK
According to all the producers questioned, imports are the cause of the difficulties in the
banana sector as the increase in bananas imported at relatively low prices in 1999 coincided with
periods when the domestic product was ready for marketing.
Because in 1999 imports were carried out during periods which were crucial for domestic
production and because of congestion in banana storage, ripening and disposal capacities, sales of
domestic bananas ready for marketing slumped.
Bananas are perishable and are not generally marketed directly by the producers, who in this
case had to lower farmgate prices owing to the effect that competition from banana imports had on
prices and volume in the local market.  The result was that in 1999 and early 2000, domestic
production was marketed at relatively low prices and in several instances at less than cost price.
V. CONCLUSIONS ON INJURY AND CAUSAL LINK
In the light of the foregoing evidence, which was submitted to the Advisory Commission on
Imports at its meeting of 26 January 2001, it was established that:
1. The injury is due to imports, the effects of which have persisted even since the
provisional duty has been in force, and the situation of producers has not improved
owing to a lack of visibility and the climate of uncertainty.  The members of the
Commission considered that any significant resumption of imports would make the
situation of the domestic industry worse.G/SG/N/8/MAR/1
G/SG/N/10/MAR/1
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2. Banana imports have caused injury and any substantial resumption of such imports
would therefore constitute a threat of serious injury for domestic production.
3. The existence of massive imports and a threat of serious injury warrants the
application of a safeguard measure.
VI. FORM AND LEVEL OF THE SAFEGUARD MEASURE
On the basis of the conclusions concerning injury and causal link, and following an opinion
issued by the Advisory Commission on Imports at its meeting of 21 February 2001, it was
recommended that safeguard measures be taken for a period of four years.  That period will be put to
best use to enable the domestic banana industry to implement a recovery programme in order toredress the balance in the sector.
The measure will take the form of an additional ad valorem  duty of 150 per cent to be
reduced by 10 points per year during the period for which it is in force, as follows:
Year 2001 2002 2003 2004 2005
Additional duty 150% 140% 130% 120% 0%
In order to maintain a minimum level of imports, it has further been proposed that a flow of
imports, within a tariff quota of 7,000 tonnes/year (e quivalent to half the average imports of the past
three years), will not be subject to the additional duty.
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