RESTRICTEDWORLD TRADE
ORGANIZATIONG/SG/M/16
18 January 2001
(01-0253)
Committee on Safeguards
MINUTES OF THE REGULAR MEETING
HELD ON 9 NOVEMBER 2000
Chairman:  Mr. J. Phoho Setipa (Lesotho)
1. The Committee on Safeguards (the "Committee") held a regular meeting on
9 November 2000.
2. The following agenda was adopted:
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A. ELECTION OF OF FICERS ……............................................................................... 3
B. NATIONAL LEGIS LATION….. ............................................................................... 3
1. Review of notifications of new or amended legislation or regulations
not previously reviewed by the Committee (including supplemental
notifications of existing provisi ons not previously reviewed) .......................... 3
(i) Ecuador (G/SG/N/1/ECU/3)
(ii) Latvia (G/SG/N/1/LVA/1/Suppl.2 + Corr.1)
(iii) Chad (G/SG/N/1/TCD/1)
2. Continuing review of previ ously reviewed notifica tions.................................. 3
C. NOTIFICATIONS OF ACTIONS RELATED TO SAFEGUARD MEASURES ..... 3
1. Notifications of initiati ons of invest igations..................................................... 4
(i) Argentina - Motorcycles (G/SG/N/6/ARG/ 3 + Suppl.1)
(ii) Chile - Liquid/powdere d milk (G/SG/N/6/CHL/4)
(iii) Egypt - Powdered milk (G/SG/N/6/EGY/3)
(iv) India - Gamma ferric oxide/magnetic iron oxide
(G/SG/N/6/IND/10)
(v) India - Methylene chloride (G/SG/N/6/IND/11 + Corr.1)
(vi) Morocco - Bananas (G/SG/N/6/MAR/1)
(vii) El Salvador - Rice (G/SG/N/6/SLV/2)
(viii) United States - Extruded r ubber thread (G/SG/N/6/USA/9)
2. Notifications of application of provisional safegu ard measures ....................... 8
(i) Chile - Liquid/powdered milk  (G/SG/N/7/CHL/3 + Suppl.1)
(ii) Chile - Socks (G/SG/N/7/CHL/4)G/SG/M/16
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(iii) Egypt - Powdered milk (G/SG/N/7/EGY/2)
3. Notifications of findings of serious injury or threat thereof caused by
increased im ports………. ................................................................................. 9
(i) Argentina - Footwear (G/SG/ N/8/ARG/1/Suppl.1 + Suppl.2)
(ii) Latvia - Swine meat (G/SG/N/8/LVA/1/Corr.1)
4. Notifications of termination of an investigation with no safeguard
measure impos ed…………............................................................................... 9
(i) Chile - Socks (G/SG/N/9/CHL/2)
(ii) United States - Crabmeat (G/SG/N/9/USA/2)
(iii) Venezuela - Cold-rolled steel (G/SG/N/9/VEN/1)
(iv) Venezuela - Hot-rolled steel (G/SG/N/9/VEN/2)
5. Notifications of a decision to  apply a safegu ard measure............................... 10
(i) Argentina - Footwear (G/SG/ N/10/ARG/1/Suppl.4 + Suppl.5)
(ii) India - phenol (G/SG/N/10/IND/5)(iii) Korea - Garlic (G/SG/N/10/KOR/2 + Suppl.1)
(iv) Latvia - Swine meat (G/SG/N/10/LVA/1/Corr.1) &
(G/SG/N/10/LVA/2)
(v) United States - Wheat glut en (G/SG/N/10/USA/2/Suppl.2)
6. Notifications regarding the non-application of a safeguard measure to
developing co untries……… ........................................................................... 12
(i) Argentina - Footwear (G/SG/ N/11/ARG/1/Suppl.4 + Suppl.5)
(ii) Korea - Garlic (G/SG/N/11/KOR/2 + Suppl.1)
(iii) United States - Wheat gl uten (G/SG/N/11/USA/2/Suppl.2)
7. Notifications regarding proposed suspension of concessions and other
obligations ……………………....................................................................... 12
(i) Argentina/Indonesia - Footwear
(G/SG/N/12/ARG/2 & G/SG/N/12/IDN/1)
(ii) Brazil/European Communities - Toys
(G/SG/N/12/BRA/1/Add.1 + Corr.1 &
G/SG/N/12/EEC/2/Add.1 + Corr.1)
(iii) United States/European Communities - Steel wire rod
(G/SG/N/12/USA/2 & G/SG/N/12/EEC/4)
(iv) United States/European Communities - Line pipe
(G/SG/N/12/USA/3 & G/SG/N/12/EEC/5)
(v) United States/Japan - Steel wire rod
(G/SG/N/12/USA/4 & G/SG/N/12/JPN/1)
(vi) United States/Japan - Line pipe
(G/SG/N/12/USA/5 & G/SG/N/12/JPN/2)
D. OTHER BUSI NESS…………………...................................................................... 14G/SG/M/16
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E. PROGRESS IN PHASING OUT MEASURES COVERED BY
ARTICLES 10 AND 11 OF  THE AGREEM ENT.................................................... 15
F. ANNUAL REPORT TO THE COUNC IL FOR TRADE IN GOODS..................... 16
G. DATE OF NEXT RE GULAR MEETING................................................................ 16
A. ELECTION OF OFFICERS
3. The Committee elected Mr. István Pokorádi of Hungary as Vice-Chairperson of the
Committee.
B. NATIONAL LEGISLATION
1. Review of notifications of new or amended legislation or regulations not previously
reviewed
4. There were no comments regarding any of the legislative notifications on the agenda.
5. The Chairman recalled that the deadline for any written questions concerning the legislative
notifications reviewed by the Committee was 30 November 2000.  The deadline for providing written
answers to written questions submitted by that date was 21 December 2000.
6. The Chairman also reported on the status of legislative notifications received from Members,
noting that the following 37 Members had still not made the required legislative notification:
Albania, Angola, Antigua & Barbuda, Bangladesh, Barbados, Belize, Burkina Faso,
Burundi, Cameroon, Central African Republic, Congo, Democratic Republic of the
Congo, Djibouti, Gabon, the Gambia, Georgia, Grenada, Guinea Bissau, Guyana,
Jordan, Kuwait, Madagascar, Malawi, Mali, Mauritania, Mozambique, Niger, Oman,
Papua New Guinea, Rwanda, Saint Kitts & Nevis, Saint Vincent & Grenadines,
Sierra Leone, Solomon Islands, Swaziland, Tanzania and Togo.
7. The Chairman urged these Members to make the required notification.  The Chairman noted
that, in cases where no legislation exists, only a very simple "nil" notification is required.
8. The Committee took note of all statements made concerning the legislative notifications on
the agenda.
2. Continuing review of prev iously reviewed notifications
9. There were no comments under this agenda item.
C. NOTIFICATIONS OF ACTIONS RELATED TO SAFEGUARD MEASURES10. The Chairman encouraged Members intending to make remarks concerning different
notifications in respect of the same product/investigation to do so in one intervention.G/SG/M/16
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1. Notifications of initiation of an investigation and the reasons for it
11. The Chairman noted that, since the Committee's last meeting, notifications of initiation of
investigations have been received from Argen tina on motorcycles (G/SG/N/6/ARG/3 and Suppl.1),
from Chile on liquid and powdered milk (G/S G/N/6/CHL/4), from Egypt on powdered milk
(G/SG/N/6/EGY/3), from India on gamma ferric oxid e and magnetic iron oxide (G/SG/N/6/IND/10),
from India on methylene chloride (G/SG/N/6/IND/11 and Corr.1), from Morocco on bananas
(G/SG/N/6/MAR/1), from El Salvador on rice (G /SG/N/6/SLV/2), and from the United States on
extruded rubber thread (G/SG/N/6/USA/9).
(i) Argentina - motorcycles
12. Japan expressed concern regarding Argentina's investigation on motorcycles.  Japan asserted
that it has a significant trade interest in motorcycles.  Japan expressed doubts regarding the
consistency of Argentina's action with the Safeguards Agreement.  In this regard, Japan referred to theAppellate Body report on Argentina - Safeguard Measures on Imports of Footwear
(WT/DS121/AB/R), noting in particular that it addressed the application of safeguard measures within
Mercosur.
13. The United States noted that the Resolution attached to Argentina's notifications refer to a
causal link between increased imports and the serious injury or threat of serious injury.  According to
the United States, however, none of the import data submitted by Argentina supports this conclusion.
The United States asked Argentina to provide the import statistics used in its analysis.  In addition, the
United States asked Argentina to clarify the current applied rate and bound rate of duty for
motorcycles covered by Argentina's investigation.
14. India expressed concern regarding the absence of any import data in Argentina's notifications,
since Article 2 of the Safeguards Agreement requires imports "in such increased quantities".  Noting
that the relevant domestic industry's performance apparently deteriorated in 1999, India presumed that
the requisite causal link between increased imports and serious injury must have been based on
increased imports during 1999.  India asked Arge ntina to confirm whether or not imports had
increased during 1999.  Furthermore, India suggested that the current applied rate of duty (23 percent) is already extremely high, and provides sufficient protection to Argentina's domestic motorcycle
producers.
15. Indonesia asserted that it has a substantial trade interest as an exporter of motorcycles.
Indonesia stated that the applicant domestic producer only manufactures 50cc motorcycles, and not
51-100cc motorcycles.  However, the investigation covers all motorcycles up to 100cc.  Indonesia
stated that a significant volume of imported motorcycles are 51-100cc, which - because of their
different cylinder capacities - are not like or directly competitive with the applicant's 50cc product.Indonesia therefore urged Argentina not to take safeguard action against imported motorcycles.
16. Korea also registered concern regarding Arge ntina's investigation on motorcycles.  Korea
noted that the volume of imports rose from 1996 - 1998, consistent with an increase in domestic
consumption, and then fell slightly in 1999.  Korea asserted that it would study carefully any finding
by Argentina regarding the existence of a causal lin k between actual or threatened serious injury and
increased imports.
17. Argentina recalled that, for the time being, Argentina has simply initiated a safeguard
investigation on mopeds and motorcycles up to 100cc.  Argentina has not imposed any safeguard
measures, not even provisional, on imports of such mopeds and motorcycles.  Argentina has respected
the requirements of domestic law and of the Safeguards Agreement.  Argentina informed theCommittee that a public hearing took place in September 2000, and that the investigating authority isG/SG/M/16
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currently assessing the existence of serious injury or  threat thereof.  In this regard, hard facts will
become available in February or March 2001.  In response to some of the issues raised by Members
before the Committee, Argentina confirmed that the current applied rate for products covered by the
investigation is 23 per cent.  Argentina suggested that this should not be viewed as a high rate, when
compared to the rate applied by other WTO Members.  Although import statistics will be forthcomingin due course, Argentina asserted that there was a significant increase in imports over 1998/1999.
Imports in 1997 amounted to less than US$20 million, whereas imports in 1998 amounted to
US$54 million.  There was an increase in imports of almost 300 per cent over the period of
investigation.
(ii) Chile - liquid & powdered milk
18. The Chairman noted that Chile's notification of initiation concerning liquid and powdered
milk was followed by notifications concerning a provisional safeguard measure (G/SG/N/7/CHL/3
and Suppl.1).
19. Argentina expressed concern regarding both the initiation of the investigation, and the
imposition of a provisional safeguard measure.  According to Argentina, Chile has failed to respect
various provisions of Article XIX of the GATT 1994 and the Safeguards Agreement, and also of
Chile's domestic legislation.  First, it is unclear whether the alleged increase in imports is absolute orrelative to domestic production (Article 2 of the Safeguards Agreement).  Second, there is no
demonstration that the alleged increase in imports resulted from unforeseen developments
(Article XIX of the GATT 1994).  Third, there is no clear proof of causality between the alleged
increase in imports and the alleged serious injury (Article 4).  Fourth, there is no correct definition of
like or directly competitive product, and therefore no correct definition of the relevant domesticindustry (Article 4).  Fifth, there is no explanat ion of the critical circumstances justifying the
imposition of a provisional safeguard measure (Article 6).  Finally, there is no assessment of all
relevant factors of serious injury, contrary to Article 4.2(a) of the Safeguards Agreement.  For these
reasons, Argentina has requested consultations with Chile pursuant to Article 12.4 of the Safeguards
Agreement.
20. Uruguay expressed concern regarding the consistency of the initiation of the investigation,
and of the provisional measure, with Article XI X of the GATT 1994 and the Safeguards Agreement.
In this regard, Uruguay referred to an absence of proof regarding the existence of unforeseen
developments, and shortcomings regarding Chile's preliminary determination that increased imports
had caused serious injury.  Uruguay also referred to an absence of proof regarding critical
circumstances justifying the imposition of a provisional safeguard measure, and to Chile's failure to
examine other potential causes of injury to the domestic industry.  Uruguay also asserted that Chilehad failed to comply with the applicable pr ovisions regarding notification, publication and
consultation.  Finally, Uruguay also failed to understand why the Chilean authorities had initiated the
investigation ex officio , without any application or re-adjustment plan from the relevant domestic
industry.  For these reasons, Uruguay has requested consultations with Chile pursuant to Article 12.4
of the Safeguards Agreement.
21. The European Communities shared many of the concerns already expressed by Argentina and
Uruguay.  The European Communities raised additional points of procedure and substance.  The
European Communities asserted that the procedure followed by the Chilean authorities was highly
questionable, since the investigation was initiated ex officio , and the provisional measure was applied
just one day after a countervailing duty on the same product had been annulled.  The EuropeanCommunities asserted that safeguard measures should not be used as a convenient instrument to
replace other types of trade defence measures that cannot be maintained.  On substance, the European
Communities stated that Chile has failed to provid e sufficient evidence justifying the need for
emergency action.  On the contrary, Chile's findings in the countervailing duty investigationG/SG/M/16
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completed just before initiation of the safeguard investigation would seem to indicate that the
conditions for applying safeguard measures are not fulfilled.  In particular, imports declined in 1999,
both in absolute terms and relative to domestic production.  Furthermore, the market share held by
imports has always been moderate, even decreasing from 10 per cent in 1996 to 6 per cent in 1999.  In
addition, there were no critical circumstances justifying the imposition of a provisional safeguardmeasure, contrary to Article 6 of the Safeguards Agreement.  For these reasons, the European
Communities has requested Article 12.4 consultations with Chile.   The European Communities asked
Chile to disclose all the information regarding this investigation as soon as possible, and in any event
before imposing any definitive safeguard measure.  The European Communities urged Chile to
promptly remove the provisional measure.
22. The United States asked Chile to update the Committee on the current status of its safeguard
investigation.  The United States also raised a number of questions regarding Chile's notifications.
These questions can be found in document G/SG/Q2/CHL/7.
23. New Zealand shared the concerns expressed by other delegations.
24. Australia shared the concerns expressed by other delegations, adding that there were both
legal and economic questions concerning Chile's action.  In particular, Australia referred to Chile's
definition of the relevant domestic industry, to its preliminary determination of serious injury, and toits preliminary determination of increased imports.  In this regard, Australia noted that 1999 imports
were less than 1998 imports, and that domestic milk powder producers have been recording strong
economic performance.  Australia also asserted that there were no unforeseen developments justifying
Chile's safeguard action.  Chile's concern in applying a provisional safeguard measure seems
primarily to be lower international prices.  Australia questioned the use of safeguard measures as aresponse to downward movement in world prices.  In any event, Australia noted that international
prices of milk powder have increased substantially since the middle of 1999, and are currently well
above levels in 1998, when Chilean production of milk powder was at a record level.  Given increased
international prices and continued high levels of domestic production, Australia questions the
justification provided by Chile for imposing a provisional safeguard measure.  In Australia's view,there is similarly no justification for imposing a definitive safeguard measure.  Australia urged the
Chilean Government not to impose a definitive safeguard measure, and to revoke the provisional
measure without delay.
25. Canada shared the concerns expressed by other delegations, and noted that it has requested
Article 12.4 consultations with Chile on this matter.
26. Chile informed Members that Article 12.4 consultations will take place on 21 and
22 November 2000.  The results of these consultations will be communicated to all Members, in
accordance with Article 12.5.
(iii) Egypt - powdered milk
27. The Chairman noted that Egypt's  notification concerning the initiation of an investigation on
powdered milk (G/SG/N/6/EGY/3) wa s followed by notifications regarding a provisional safeguard
measure (G/SG/N/7/EGY/2 and Corr.1).
28. The European Communities expressed its concern regarding the safeguard action taken by
Egypt.  According to the European Communities, th ere is no evidence that increased imports cause, or
threaten to cause, serious injury to the domestic industry.  First, it is questionable whether imported
milk powder competes directly w ith domestic fresh / liquid milk.  Second, imports of powdered milk
have decreased substantially.  Third, international milk powder prices have increased sharply in 2000,thereby eliminating the alleged import pressure on domestic prices.  As a result, there was no basis forG/SG/M/16
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the imposition of provisional measures, since there were no "critical circumstances" as required by
Article 6. The European Communities therefore asked Egypt to remove promptly its provisional
safeguard measure on powdered milk.  More generally, the European Communities also expressed
concern regarding the proliferation of provisional safeguard measures imposed without proper
justification but solely in response to movements in international prices.
29. The United States registered its interest in this case as a principal supplier of powdered milk,
and noted that it had concerns regarding the conduct of Egypt's investigation.  The United States noted
that Article 6 permits the imposition of a provisional safeguard measure "pursuant to a preliminary
determination".  The Egyptian investigation was initiated on 25 September 2000, and the provisional
measure was imposed the next day.  According to the United States, this implies at best that only
some nominal form of investigation was carried out before the provisional measure was imposed.
The United States presented a number of questions to Egypt (see document G/SG/Q2/EGY/12).
30. Australia associated itself with the comments made by the European Communities and the
United States, and regretted the tendency for certain Members to consider the imposition of a
provisional measure as part and parcel of the initiation of an investigation.  Given the significant trade
impact resulting from the imposition of a provisional measure, such provisional measure may only be
imposed following a clear determination of Article 6 "critical circumstances".  Australia asked Egyptto explain what "critical circumstances" justified the imposition of a provisional measure in the
present case.  Furthermore, Australia queried why Egypt included liquid milk producers (including
buffalo milk producers) in its definition of the relevant domestic industry.  Even if liquid milk
producers are included, there is scant evidence to suggest that they have suffered serious injury as a
result of imports of powdered milk, since world prices have been increasing for some time.  Australiaexpressed its understanding that Egyptian farmers' problems are due largely to internal factors, such as
increased competition, increased production, and the role of the major processors purchasing liquid
milk.
31. New Zealand shared the concerns expressed by other delegations.
(iv) India - gamma ferric oxide / magnetic iron oxide
32. There were no comments on this notification.
(v) India - methylene chloride
33. The European Communities expressed concern regarding India's investigation, noting that it
is based solely on threat of serious injury.  The European Communities asserted that, on the basis of
the scant information in India's notification, no investig ation should have been initiated.  In particular,
there has been no recent or sharp increase in imports, and there are no clear indications that the
domestic industry is threatened with serious injury.  On the contrary, domestic producers areoperating at full capacity.  In addition, other factors such as an increase in the world price for raw
materials, and the overall evolution of the world ma rket for this product, seem to be responsible for
any adverse effects on the performance of domestic producers.  The European Communities recalled
that, according to Article 4.1(b), determinations of threat of serious injury "shall be based on facts and
not merely on allegation, conjecture or remote po ssibility".  The European Communities invited India
to exercise all the appropriate caution called for in a threat of injury case, and noted the absence of
any "critical circumstances" that might justify the imposition of provisional measures requested by the
applicants.
34. The United States noted that domestic producers have requested the immediate application of
provisional safeguard measures in both cases notified by India.  The United States asked India to
confirm whether it has implemented a provisional safeguard in these cases.G/SG/M/16
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35. India confirmed that no provisional safeguard measures have been imposed in either case.  In
respect of comments by the European Communities, India denied that its notifications contain only
"scant" information.  India noted that the amount of information it generally includes in its
notifications far exceeds that contained in other Members' notifications.  On substance, India asserted
that imports increased by approximately 40 per cent during the period 1998-2000.  During the sameperiod, world prices have fallen by approximately 40-46 per cent.  While domestic producers are
running at full capacity, that is only to keep up with the substantial fall in world prices.  With regard
to Article 4.1(b), India noted that it has only just initiated the investigation.  While Article 4.1(b) will
apply during the course of the investigation, it does not necessarily apply at the initiation stage.
(vi) Morocco - bananas
36. Morocco informed the Committee that its investigation was initiated on 26 June 2000,
following an examination by the Consultative Co mmittee on Imports of an application submitted by
the domestic producer.  According to Morocco, preliminary results indicate that banana imports
increased by 169 per cent during 1999.  The market share of imported bananas has grown from
5.2 per cent in 1997 and 4.3 per cent in 1998, to 11 per cent in 1999.  According to unverified data
from domestic producers, their profits fell from 180 million dirhams in 1997 to 61.3 million dirhams
in 1998, with a loss of 89 million dirhams in 1999.  Furthermore, domestic prices dropped from6.5 dirhams per kilo in 1997 to 5.5 dirhams per kilo in 1998, and to 4 dirhams per kilo in 1999.
37. Ecuador expressed concern regarding the investigation initiated by Morocco.  Ecuador asked
Morocco to make available to the Committee all information available to it.
(vii) El Salvador - rice
38. The United States noted that it is a principal supplier of the product under investigation, and
asked El Salvador to update the Committee on the status of the investigation.
(viii) United States - extruded rubber thread
39. The United States informed the Committee that on 3 October 2000 the USITC determined
that increased imports of extruded rubber thread are not a substantial cause or threat of serious injury
to domestic producers.  Accordingly, the investigation was terminated.   A public report concerningthe investigation will be available after the USITC submits its findings to the President of the
United States, which will occur by 4 December 2000.
2. Notifications of application of provisional safeguard measures
40. The Chairman noted that, since the last meeting of the Committee, Chile has notified
provisional safeguard measures on liquid / pow dered milk (G/SG/N/7/CHL/3 and Suppl.1) and
synthetic socks (G/SG/N/7/CHL/4), and Egypt has notified a provisional measure on powdered milk
(G/SG/N/7/EGY/2).  Since Chile's notification on liquid / powdered milk and Egypt's notification on
powdered milk have already been considered, the Committee addressed Chile's notification on
synthetic socks.
41. Chile  explained that although it had opened an investigation on both cotton and synthetic
socks, the provisional measure only covers synthetic socks.  The investigation on cotton socks has
been terminated.
42. Colombia asserted that Chile's provisional measure is not consistent with Article 6 of the
Safeguards Agreement or Article XIX of the GATT 1994.  Colombia noted that Chile's current
applied rate is 9 per cent, and that the provisional measure takes the form of a 13 per cent surcharge.G/SG/M/16
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This amounts to a total duty of 22 per cent, which is less than Chile's bound rate of 25 per cent.  Given
that the provisional measure will be less than Chile's bound rate, Colombia asserted that Chile is not
really applying a genuine safeguard measure within the meaning of Article XIX of the GATT 1994.
Instead, it is applying a tariff surcharge.  While this may not be inconsistent with Chile's WTO
commitments, it is contrary to Chile's regional co mmitments.  Accordingly, Chile should raise this
matter in the appropriate regional forum, and not in the WTO Safeguards Committee.
43. Ecuador noted that its exports account for approximately 10 per cent of Chile's domestic
synthetic sock market, and that bilateral consultations have taken place.  Ecuador requested further
information regarding the preliminary analysis undertaken by the Chilean authorities.
44. The United States put a number of questions  to Chile (see document G/SG/Q2/CHL/6).
45. Chile stated that the issue raised by Colombia was addressed by Chile in document
G/SG/N/10/CHL/2.  Chile stated that the provisional measure was notified as a WTO safeguard
measure, despite it being less than Chile's bound rate, since it is possible that any definitive measure
will exceed Chile's bound rate.
3. Notifications of findings of serious injury or threat thereof caused by increased
imports
46. The Chairman noted that, since the last meeting of the Committee, notifications of findings of
serious injury or threat thereof have b een received from Argentina on footwear
(G/SG/N/8/ARG/1/Suppl.1 and Suppl.2) and from Latvia on swine meat (G/SG/N/8/LVA/1/Corr.1).
(i) Argentina - footwear
47. There were no comments regarding Argentina's notifications.
(ii) Latvia - swine meat
48. Latvia informed the Committee that this notification refers only to a minor technical
amendment to an earlier notification.  Latvia recalled that its definitive safeguard measure on swine
has in any event been terminated (see document G/SG/N/10/LVA/2).
49. The United States recalled that a provisional safeguard measure had been applied on swine
meat.  The United States asked whether termination of the definitive safeguard included liquidation of
duties collected while the provisional safeguard measure was in place.
50. Latvia asked the United States to put this question in writing.
4. Notifications of termination of an investigation with no safeguard measure imposed
51. The Chairman recalled that the Committee has received notifications of termination from
Chile on cotton socks (G/SG/N/9/CHL/2), from the United States on crabmeat (G/SG/N/9/USA/2),
and from Venezuela on cold-rolled and hot-rolled steel (G/SG/N/9/VEN/1 and 2).
(i) Chile - cotton socks
52. There were no comments regarding this notification.G/SG/M/16
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(ii) United States - crabmeat
53. There were no comments regarding this notification.
(iii) Venezuela - hot-rolled and cold-rolled steel
54. There were no comments regarding these notifications.
5. Notifications of a decision to apply a safeguard measure
55. The Chairman recalled that, since the last meeting, notifications concerning a decision to
apply a safeguard measure have been received from Argentina on footwear
(G/SG/N/10/ARG/1/S uppl.4 and Suppl.5), from India on ph enol (G/SG/N/10/IND/5), from Korea on
garlic (G/SG/N/10/KOR/2 and Suppl.1), from La tvia on swine meat (G/S G/N/10/LVA/1/ Corr.1 and
G/SG/N/10/LVA/2), and from the United States  on wheat gluten (G/S G/N/10/USA/2/Suppl.2).
(i) Argentina - footwear
56. The Chairman noted that Argentina's notifications concerning the application of a measure on
footwear were followed by notifications regard ing the non-application of a measure to developing
countries (G/SG/N/11/ARG/ 1/Suppl.4 and Suppl.5).
57. Indonesia fully recognized the legitimacy of safeguard action taken to prevent or remedy
injury and facilitate domestic industry adjustment.  However, to ensure that the balance of rights and
obligations in the Safeguards Agreement was not being impaired, Indonesia was of the position thatthe safeguard measure should not be applied so as to constitute abuse of the measure.
58. In this regard, Indonesia noted that Argentina's measure was an extension of an earlier
measure, which was found to be inconsistent with the Safeguards Agreement in the context of WTO
dispute settlement proceedings (see Argentina - Safeguard Measures on Imports of Footwear
(WT/DS121/AB/R)).  According to Indonesia, ther e should be no extension of safeguard measures
which have been condemned in this way.  Therefore, Indonesia requested Argentina to remove its
measure in order to facilitate the flow of trade of this product.
59. Thailand associated itself with Indonesia's comments.
60. The United States noted that, in accordance with Article 19.1 of the Dispute Settlement
Understanding ("DSU"), the Dispute Settlement B ody ("DSB") recommended that Argentina bring its
measure into conformity with the Safeguards Agreement.  The United States does not consider that
this recommendation necessarily requires revocation of the condemned measure, or precludes
modification of that measure.  The United States asked Argentina to confirm whether the measure at
issue is actually a modification of the condemned measure.  In this regard, the United States also
asked Argentina to demonstrate how it had complied with the requirements of Article 7.2 of the
Safeguards Agreement (governing the extension of safeguard measures) when it extended its
safeguard measure by 150 days pursuant to Resolution No. 122/2000.  Can Argentina point to anyfinding by the panel or Appellate Body that the product coverage of its safeguard measure was
inappropriate?  Is there anything to suggest that the elimination of some, but not all, products from the
coverage of the measure would be an appropriate means to bring the measure into conformity
pursuant to Article 19.1 of the DSU?  What is the basis for defining performance sports footwear
based on brand name?  Does the record contain any evidence to indicate that all the models sold underthe covered brands are in fact performance sports footwear?G/SG/M/16
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61. Argentina stated that it modified its safeguard measure in order to bring it into conformity
with the Safeguards Agreement, consistent with Article 19.1 of the DSU.  With respect to the US
questions, Argentina asserted that the Safeguards Committee is not the appropriate forum for
discussing Argentina's implementation of DSB recommendations.
62. Australia noted that a condemned measure may be able to be brought into conformity through
modification, rather than elimination, but only in certain circumstances.  However, Article 7 of the
Safeguards Agreement is quite specific about the further application of new measures.  In the present
case, therefore, the only way for Argentina to bring the condemned measure into conformity is for
Argentina to revoke that measure.
63. The United States asked Argentina to explain why, if this is not an appropriate forum to
discuss this matter, Argentina made a notification in document G/SG/N/8/ARG/1/Suppl.1 raising
these very issues.  Since Argentina has brought such issues to the floor, it should respond to specificquestions regarding these issues.
64. Argentina explained that its notifications refer to the extension of a safeguard measure, to
findings of serious injury, and to the application of the measure in respect of developing country
Members.  They do not refer to the implementation of DSB recommendations.
(ii) India - phenol
65. India clarified that the final and detailed findings of the Director-General of Safeguards have
already been circulated under Article 12.1(b) (see document G/SG/N/8/IND/6), and that the present
notification is merely a governmental communi cation confirming the recommendations of the
Director-General of Safeguards.
(iii) Korea - garlic
66. The Chairman noted that Korea's notifications were followed by notifications regarding the
non-application of a measure to developing countries (G/SG/N/11/KOR/2 and Suppl.1).
67. The United States expressed concern regarding the magnitude of Korea's safeguard measure,
which takes the form of a duty of up to 456 per cent.  The United States considers that such a high
duty could be prohibitive of imports, and therefore fail to assist the domestic industry in adjusting tocompetition from imports.  The United States put a series of technical questions to Korea (see
document G/SG/Q2/KOR/1).
68. Korea asserted that its safeguard measure is consistent with the Safeguards Agreement.
(iv) Latvia - swine meat
69. Latvia recalled that it has now terminated its measure on swine meat.
(v) United States - wheat gluten
70. The Chairman noted that the US notification regarding the application of a measure on wheat
gluten was followed by a notification regarding the non-application of a measure to developing
countries (G/SG/N/11/USA/2/Suppl.2).
71. The European Communities made a number of preliminary comments on the US answers (see
document G/SG/Q2/USA/10) to previous EC que stions (see document G/SG/Q2/USA/8).  With
regard to Question 1, the European Communities was pleased to note that the US measure had notG/SG/M/16
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been extended to cover pet-food mix.  With regard to Question 2(a) and (b), the
European Communities remains concerned that the imposition of the new US quarterly quota was not
in accordance with WTO disciplines, especially Article XIII.3(b) of the GATT 1994 concerning
shipments en route.  The European Communities di sputed the US assertion that the new quarterly
quota remedies the trade distortion resulting from the former annual quota.  TheEuropean Communities referred to a statement of US policy regarding first-come-first-served quota in
circumstances of high demand contained in a paper submitted by the United States in 1997 in the
context of the Agriculture Committee's Analysis and Information Exchange Process.  In that paper,
the United States asserted that if first-come-first-served is used when the "quota is small and demand
is high", there is likely to be a "chaotic rush to import on the day the tariff rate quota is opened", and
that this can give rise to uncertainty for traders which "could diminish the value of the concession".
According to the European Communities, therefore,  the United States was clearly aware of the
negative effect on trade that first-come-first-served quota would have.  The European Communities
explained that, for this reason, it had proposed the constructive solution of limiting release from
warehouse on a quarterly basis, while allowing traders to know for the whole year how much wheat
gluten would be admitted.  The United States rejected this solution, despite it knowing that the wheat
gluten business relies on forward contracting.  Acco rding to the European Communities, it is difficult
not to conclude that the creation of maximum uncertainty through the use of four quarterly first-come-
first-served quota was not deliberate.
72. The United States explained that in the second year of the three-year measure, imports filled
the entirety of the annual quota in the first two weeks after it opened.  This sudden entry of imports
disrupted the US wheat gluten market, and prevented the achievement of the goals of the measure:the remedy of serious injury and the facilitation of domestic industry adjustment.  Information
available to the United States suggested that imports accounting for the entirety of the even larger
third-year annual quota would enter on the day the quota opened.  To prevent the disruption that
would accompany a one-day massive influx of imports , the United States divided the third-year quota
on a quarterly basis.  Furthermore, Article XIII.3(b) of the GATT 1994 requires the entry ofmerchandise in transit at the time a quota is imposed, only to the extent that it is practicable to count
that amount against the quota for the period, and as necessary the quota for subsequent periods.  If the
United States had allowed entry of all products in transit, and counted any excess against quota for
subsequent periods, it would have filled all four quarters of the third-year quota on the first day of that
quota, thereby rendering the quota ineffective.  Thus, it was not practicable to allow entry of all
products in transit.  Instead, importers had the option of warehousing any imports that did not enter
into the first quarter quota.  Those imports would then be eligible for entry under subsequent quota asthey opened, and for unrestricted entry upon termination of the measure.
6. Notifications regarding the non-application of a safeguard measure to developing
countries
73. The Chairman noted that since the last meeting, notifications on the non-application of a
safeguard measure to developing countries were received from Argentina on footwear
(G/SG/N/11/ARG/1/Suppl. 4 and 5), from Korea on garlic (G/SG/N/11/KOR/2 and Suppl.1), and
from the United States on wheat gluten (G/SG/N/11 /USA/2/Suppl.2).  Since these notifications were
all addressed in the context of the preceding agenda item, the Committee moved on to the next agenda
item.
7. Notifications regarding proposed suspensions of concessions and other obligations
74. The Chairman noted that the Committee received six joint notifications concerning the
proposed suspension of concessions since the last meeting:  from Argentina and Indonesia in respect
of Argentina's measure on footw ear (G/SG/N/12/ARG/2 & G/SG/N/12/IDN/1), from Brazil and the
European Communities in respect of Brazil's measure on toys (G/SG/N/12/BRA/1/Add.1 and Corr.1G/SG/M/16
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& G/SG/N/12/EEC/2/Add.1 and Corr.1), from the Un ited States and the European Communities in
respect of the US measure on steel wire rod (G/SG/N/12/USA/2 & G/SG/N/12/EEC/4), from the
United States and the European Communities in respect of the US measure on line pipe
(G/SG/N/12/USA/3 & G/SG/N/12/EEC/5), from the Un ited States and Japan in respect of the US
measure on steel wire rod (G/SG/N/12/USA/4 & G/SG /N/12/JPN/1), and from the United States and
Japan in respect of the US measure on line pipe (G/SG/N/12/USA/5 & G/SG/N/12/JPN/2).
(i) Argentina / Indonesia - footwear
75. Indonesia informed the Committee that it was in consultation with Argentina under
Article 8.1 with a view to maintaining a substantially equivalent level of concessions and other
obligations through compensation.  Indonesia had proposed the level of compensation in terms of
quantity of pairs to be given by Argentina and look ed forward to receiving a positive response to its
proposal in the next bilateral consultation.
76. Argentina confirmed that it is holding Article 8.1 consultations with Indonesia.  Argentina
recalled that it is still waiting for certain information it had requested from Indonesia.
(ii) Brazil / European Communities - toys
77. The United States noted that Brazil has still not responded formally to the US request to
extend the 90-day period provided for in Article 8.2, even though it has again agreed to extend the
Article 8.2 period for the European Communities.  The United States also asserted that it is
unconvinced that the Brazilian toy industry continues to require safeguard protection, given the fact
that it has benefited from four years of protection, and that imports have declined.
78. Brazil stated that it had replied to all questions from the United States on this matter at the last
regular meeting of the Committee.  Brazil asked the United States to put any additional questions it
may have in writing.
(iii) United States / European Communities - steel wire rod
79. There were no comments regarding this joint notification.
(iv) United States / European Communities - line pipe
80. There were no comments regarding this joint notification.
(v) United States / Japan - steel wire rod
81. There were no comments regarding this joint notification.
(vi) United States / Japan - line pipe
82. There were no comments regarding this joint notification.
83. The Committee took note of all statements made under agenda item C.G/SG/M/16
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D. OTHER BUSINESS
(i) Issues concerning the application of the Safeguards Agreement
84. Egypt proposed that the Committee consider establishing a working party, or group, to
address issues concerning the application of the Safeguards Agreement.  Egypt asserted that the
Safeguards Agreement contains a number of grey areas that could be subject to contradictory
interpretations.  In order to reduce the risk of contradictory interpretations, Egypt suggested that a
forum could be established within which Members could discuss their practices, and possibly reach
understandings on the application of various provisions of the Safeguards Agreement.
85. The European Communities supported Egypt's proposal, noting the positive experience of
Members in the Ad Hoc Group on Implementation of the Committee on Anti-Dumping Practices
("Anti-Dumping Ad Hoc Group").  Although from th e outside progress in the Anti-Dumping Ad Hoc
Group may appear slow, discussions within the Anti-Dumping Ad Hoc Group have been extremely
useful and educational.  A forum in which to exchange views on various issues relating to safeguard
investigations would be equally useful, especially as the Safeguards Agreement provides less detailed
procedural guidance than the Anti-Dumping Agreement and the Agreement on Subsidies andCountervailing Measures.  The European Communities suggested that the Chairman consult
informally with Members on this matter.
86. Mexico asked whether it is necessary to establish a separate forum for discussing matters
concerning the application of safeguard measures, given that the Committee could simply discuss
such matters in informal mode.
87. Australia joined the European Communities in supporting Egypt's proposal, noting the
potential benefits of Members exchanging views on safeguard matters.  Australia asked the Chairman
to hold consultations on this matter.  With regard to the issue raised by Mexico, Australia suggested
that the establishment of a separate forum, with separate working papers etc., may result in more
streamlined discussions than if discussions were held within the Committee  per se .  Australia
asserted that consideration would have to be give n to the terms of reference of any separate forum,
and to the possibility of recommendations being made within that forum.
88. Nigeria supported Egypt's proposal.
89. Chile expressed preliminary support for Egypt's proposal, and asked Egypt to explain what it
considered would be the product of the proposed working party / group.
90. India expressed a systemic concern regarding the establishment of a separate subsidiary body,
given the difficulty of small delegations to service additional bodies and meetings.  India also noted
that there may be difficulties in determining how  to deal with any recommendations resulting from
any subsidiary body established by the Committee.  India asked the Chairman to consult informally
on the matter raised by Egypt.  India suggested that the Secretariat prepare a note regarding the legal
authority of the Committee to establish subsidiary bodies.
91. Uruguay associated itself with the concerns raised by India, and suggested that the Chairman
consult informally on this matter.
92. Hungary expressed preliminary support for Egypt's proposal.
93. Venezuela expressed preliminary support for Egypt's proposal, and requested further
clarification from Egypt regarding the objectives of its proposal.G/SG/M/16
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94. Brazil expressed support for Egypt's proposal.
95. Argentina expressed support for Egypt's proposal, but shared other Members' concern
regarding the proliferation of subsidiary bodies within the WTO.
96. Japan expressed its interest in Egypt's proposal.
97. Canada asked the Chairman to consult informally on this matter.
98. Egypt recalled the scope for varying interpretations of certain provisions of the Agreement,
noting that varying interpretations had even been expressed during the course of this meeting.  Egypt
is not necessarily proposing the establishment of a subsidiary body akin to the Anti-Dumping Ad Hoc
Group, nor the drafting of recommendations to be adopted by the Committee.  Egypt is simply
seeking to promote a discussion of certain grey areas of the Agreement.  Egypt acknowledged the
concern of certain delegations regarding the large number of meetings to be covered by smaller
delegations, but noted that Egypt itself only has a small delegation with limited resources.  Egyptasserted that it did not intend to circulate any writ ten proposal for the time being, but simply wanted
to place the issue on the table.  Egypt encouraged the Chairman to hold informal consultations on this
matter, with a view to reporting to th e Committee at its next regular meeting.
99. In light of Members' reaction to Egypt's proposal, the Chairman indicated that he would hold
informal consultations with Members on this matter.  Furthermore, the Secretariat would prepare a
note on the legal authority of the Committee to establish subsidiary bodies.
(ii) Colombia - taxis
100. Colombia informed the Committee that it recently submitted a notification to the Committee
to the effect that it has terminated its investig ation on taxis without imposing any safeguard measure.
The investigation was terminated without imposition of any measure as a result of an absence of anycausal link between increased imports and serious injury to the domestic industry.
101. The Committee took note of the statements made under this agenda item.
E. PROGRESS IN PHASING OUT MEASURES COVERED BY ARTICLES 10 AND 11 OF
THE AGREEMENT
102. The Chairman noted that, by virtue of Article 13.1(d) of the Safeguards Agreement, the
Committee is required to monitor the phase-out of measures covered by Articles 10 and 11.1 of the
Agreement.  Two Members - the European Communities and Korea - had notified pre-existing
Article XIX measures covered by Article 10 by the deadline set forth in the Agreement.  In addition,
five Members  - Cyprus, the European Communities, Korea, Slovenia and South Africa - had notified
pre-existing grey-area measures covered by Article 11, along with the timetable for the phase-out of
such measures, by the deadline set forth in the Agreement.    The Annex to the Safeguards Agreement
identified one additional such measure maintained  by the European Communities with a termination
date of 31 December 1999.
103. The Chairman recalled that the Committee decided at its special meeting of 24 February 1995
that Article 13.1(d) monitoring should be conducted on an annual basis, with the relevant Members
submitting a report regarding their progress in phasing out the measures.  The Chairman informed the
Committee that all the abovementioned Members have confirmed (either at previous Committeemeetings or in the build-up to this meeting) that their pre-existing measures have expired, consistent
with Articles 10 and 11.2 of the Safeguards Agreement.  The Chairman suggested, therefore, that
there is no longer any need for the relevant Members to report further on this matter.G/SG/M/16
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104. The Chairman further recalled that in 1998 Nigeria notified certain Article XIX measures
which it claimed were covered by Article 10 (G/SG/N/2/NGA).  The Chairman invited the
representative of Nigeria to update the Committee on the status of these measures.
105. Nigeria stated that it will inform the Committee as soon as possible on the status of its
notified measures.
106. The Committee decided that Nigeria should provide Members with a brief written report on
the status of these measures as soon as possible, in order that the Committee could review this report
at its next regular meeting.
F. ANNUAL REPORT TO THE COUNCIL FOR TRADE IN GOODS
107. The Committee adopted its annual report to the Council for Trade in Goods (see document
G/L/409).
G. DATE OF NEXT REGULAR MEETING108. The Committee decided to hold its next regular meeting on Monday, 30 April 2001.
109. The meeting was adjourned.
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