WORLD TRADE
ORGANIZATIONG/SG/N/7/CHL/6
G/SG/N/9/CHL/6
25 July 2002
(02-4120)
Committee on Safeguards Original:  Spanish
NOTIFICATION UNDER ARTICLE 12.4 OF THE AGREEMENT
ON SAFEGUARDS BEFORE TAKING A PROVISIONAL
SAFEGUARD MEASURE REFERRED TO IN ARTICLE 6
INFORMATION TO BE NOTIFIED TO THE COMMITTEE WHERE A
SAFEGUARD INVESTIGATION IS TERMINATED WITH
NO SAFEGUARD MEASURE IMPOSED
CHILE
The following communication, dated 22 July 2002, has been received from the Permanent
Mission of Chile.
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Further to the notification in document G/SG/N/6/CHL/9 concerning the initiation of a
safeguard investigation into imports of glucose and glucose syrup, classified under tariff headings1702.3000, 1702.4000 and 1702.6090 of the Chilean Harmonized Tariff System, the Chilean
investigating authority, at its meeting No. 260 of 5 July 2002, decided:
(i) To terminate the investigation into imports of glucose and glucose syrup containing
less than 20 per cent by weight of fructose, classified under tariff heading 1702.3000;
(ii) not to recommend the application of provisional measures on imports of glucose and
glucose syrup classified under tariff heading 1702.4000, although this product will
remain under investigation;  and
(iii) to recommend the application of a provisional tariff surcharge of 14 per cent on
imports of fructose and fructose syrup, classified under tariff heading 1702.6090.
The recommended provisional safeguard measure, if adopted, shall have effect from the date
of publication in the Official Journal and shall not remain in force for more than two hundred days.G/SG/N/7/CHL/6
G/SG/N/9/CHL/6
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NOTIFICATION BY CHILE OF THE TERMINATION OF THE INVESTIGATION
AND THE RECOMMENDATION THAT PROVISIONAL
SAFEGUARD MEASURES BE APPLIED TO
GLUCOSE AND GLUCOSE SYRUP
As notified in document G/SG/N/6/CHL/9 circulated on 17 June 2002, the Chilean
investigating authority initiated a safeguard investigation into imports of glucose and glucose syrup,
classified under tariff headings 1702.3000, 1702.4000 and 1702.6090 of the Chilean Harmonized
Tariff System. This investigation was initiated on 8 June 2002, the date of publication of the related
notice in the Chilean Official Journal.
At its meeting No. 260 of 5 July 2002, the Chilean investigating authority:
(i) Acting with the unanimity of members present, decided not to recommend the
application of such measures and to terminate the investigation into imports of
glucose and glucose syrup containing less than 20 per cent by weight of fructose,
classified under tariff heading 1702.3000, since it does not consider them to be direct
competitors of sugar, given that, owing to their low sweetening power and other
chemical conditions, they do not constitute a substitute for liquid sugar in the food
industry, rather a supplement thereof, and also since no increase in imports was
established;
(ii) acting with the unanimity of members present, decided not to recommend the
application of provisional measures on imports of glucose and glucose syrup,
classified under tariff heading 1702.4000, given that the trend of the recent imports of
this possible sugar substitute is unclear and its share of the total sweeteners used inthe food industry is small. The members of the Commission therefore decided that
this product should remain under investigation;  and,
(iii) by a majority of members present, decided to recommend the application of a
provisional tariff surcharge of 14 per cent on imports of fructose and fructose syrup,
classified under tariff heading 1702.6090, given that the information available reveals
an increase in imports which threatens to cause imminent serious injury to the sugar
industry in critical circumstances which justify the recommendation of such a
measure.
1. Product subject to the proposed provisional safeguard measure
Other fructose and fructose syrup, containing more than 50 per cent by weight of fructose,
classified under tariff heading 1702.6090.
2. Proposed provisional safeguard measure
The Investigating authority recommended the application of a provisional ad valorem  tariff
surcharge of 14 per cent.
3. Proposed date of introduction of the provisional safeguard measure
The provisional measure, if adopted, is expected to come into force in the second half of
July 2002.G/SG/N/7/CHL/6
G/SG/N/9/CHL/6
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4. Duration of the provisional safeguard measure
If the provisional measure is adopted, it shall remain in force until a decision is taken on
whether or not to apply a definitive measure. In accordance with Chilean law, namely Article 11 ofLaw 18,525 (notified to the WTO in document G/SG/N /1/CHL/2), the investigating authority has
90 days from the initiation of the investigation to make a recommendation as to whether or not
definitive measures should be applied.
5. Explain the basis for:
(i) Formulating a preliminary determination,  pursuant to Article 6, of an increase in
imports that has caused or threatens to cause serious injury
(i.1) Imports
The Commission noted that imports under the tariff heading 1702.3000 declined by 28 per
cent in the first five months of 2002 in relation to the same period in the previous year, whilst those
classified under tariff headings 1702.4000 and 1702.6090 increased by 24 per cent and 30 per cent
respectively. Similarly, the changes recorded in 2000/2001 were 5 per cent for tariff heading
1702.3000, -27 per cent for tariff heading 1702.4000 and 65 per cent for tariff heading 1702.6090
(Annex 1).
Imports are mostly concentrated under the tariff heading corresponding to fructose
(1702.6090), which in 2001 accounted for 79 per cent of total imports, followed by tariff heading
1702.3000, with 12 per cent, and 1702.4000, with 9 per cent. In the first five months of 2002, 86 per
cent of imports came under the main tariff heading.
The imports/domestic production ratio for the product classified under tariff heading
1702.3000, calculated in accordance with the conversion coefficients provided by Iansa and Inducorn
1
respectively, was 0.6 per cent, and 0.3 per cent for 2001, values similar to those recorded in 2000.The product classified under tariff heading 1702.4000 had a ratio of 0.5 per cent and 0.3 per cent for
2001, lower than those of 2000.  Finally, the ratio for the product classified under tariff heading
1702.6090 was 5.6 per cent and 5.4 per cent for 2001, higher than those recorded in 2000 (Annex 2).
With regard to unforeseen developments, the relevant elements taken into consideration were
the current state of the Argentine economy and its adverse effect on the sugar and corn syrup market,
coupled with the depreciation of its currency.
(i.2) Injury and causal link
To ascertain whether there may be injury attributable to the imports at issue in this
application, the Commission is analysing all of the information furnished by the applicant company,
such as domestic prices, production costs, production, domestic sales, inventories, financialbackground, installed capacity and use thereof, and employment.
Domestic sales prices of sugar to the industrial sector in UF ( unidades de fomento  - Chilean
inflation-indexed monetary units) showed 3.3 per cent growth in the period January to
May 2001/2002 and 8.6 per cent in 2000/2001. US dollar prices declined in the period 1999-2001,maintaining the trend of the first five months of 2002. This is reflected by the percentage changes of
-5.8 per cent in the period January to May 2001/2002 and of -5.2 per cent in 2000/2001.
                                                     
1 Only glucose producer and main importer of the goods under investigation.G/SG/N/7/CHL/6
G/SG/N/9/CHL/6
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The unit cost of production in UF rose 3.7 per cent in the period 2000/2001;  expressed in
US dollars, it fell 8.6 per cent in this period.
The Commission took account of the fact that sugar production rose 7.1 per cent in
2000/2001, prolonging the recovery which followed the 1999 downturn. It should be noted that
production is seasonal and concentrated in the period April to September. Moreover, given the
homogeneity of the product, separating production according to destination sector
(industrial/household) is not feasible.
The Commission also took into consideration the facts that Iansa is both a sugar producer and
importer and that sales of the imported product fell as a percentage of total sales from 1999 to 2002(to May).
Likewise, it took into account the fact that sales to the industrial sector represent around 53
per cent of the company's total sugar sales (average for 1999-2002) and that these suffered a decline in
both 2000 (-14 per cent) and 2001 (-2 per cent). The period January to May 2001/2002 also sawa 2 per cent fall.
The Commission noted that inventories increased between May 2001 and May 2002, partly as
a result of Iansa's increased production, imports by the company itself and the decline in its sales,
inter alia . Again, given the homogeneity of the product, separating inventories according to
destination sector (industrial/household) is not feasible.
The Commission also took account of the contribution margin for sugar and the operating
results of the sugar industry, which encompasses sugar and its by-products. Expressed in Chilean
pesos, the contribution margin for sugar rose in 2000/2001. The variation also increased in January toMarch 2002 in relation to the same period the previous year.
It was noted that the installed capacity of Iansa S.A. remained stable between 1999 and 2002.
Conversely, its use has been increasing in recent years, with a rise from 74 per cent in 1999 to 83 per
cent in 2001.
Total employment (permanent and temporary staff) grew by 1.3 per cent in 2001 and
stabilized in the wake of the 14 per cent fall in 1999/2000.
Apparent consumption of natural sweeteners was calculated on a global - industrial and
household use - basis (since, owing to its homogeneity, sugar cannot be separated according to
destination sector with regard to production, inventories and imports) and expressed in terms of sugarequivalent on the basis of the average conversion factors furnished by Iansa and Inducorn. This
variable declined 0.6 per cent from 2000 to 2001, unlike the 1999/2000 annual variation which
showed a 4 per cent increase.
Production and employment figures show that average productivity increased from 1999 to
2001.
The share in apparent consumption of natural sweeteners of imports under tariff headings
1702.4000 and 1702.6090, calculated using figures in sugar equivalent based on average conversion
factors, increased from approximately 1.5 per cent in 1999 to 6.3 per cent in 2001.
The average import prices in US dollars c.i.f. for the products under investigation fell 1.8 per
cent for tariff heading 1702.4000 and 1.3 per cent for tariff heading 1702.6090 in the first five months
of 2002 in relation to the previous year. In 2000/2001, the price trend was not homogeneous, givenG/SG/N/7/CHL/6
G/SG/N/9/CHL/6
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that tariff heading 1702.4000 saw a 3.5 per cent increase, whereas tariff heading 1702.6090 fell by
0.7 per cent.
Furthermore, the price series of the products imported under tariff headings 1702.4000 and
1702.6090 and the domestic price of sugar, expressed as a ratio, can be seen to follow similar courses
of development, that is to say, in general terms, relative stability from 1999 to 2000, followed by
growth in 2001 up until the first months of 2002, when they regained stability.
The relationship between the domestic prices of industrial sugar and the import prices of the
products in contention (c.i.f. plus tariffs and estimated import costs) was also taken into consideration
for the period 1999 to May 2002 in US dollars/tonne of sugar equivalent, based on an average of theconversion factors provided by Iansa and Inducorn. The results show the price of the imported
product to be 5 per cent higher for tariff heading 1702.4000 and 20 per cent lower for tariff heading
1702.6090.
Finally, the Commission considered an analysis of factors other than the increase in the
imports under investigation and which could also have affected the domestic industry to be
appropriate.
In this framework, the pattern of imports of refined sugar was assessed. In the first five
months of 2002, they rose by 98 per cent in relation to the same period the previous year to total justover 111,000 tonnes. The level of activity of some sweetener user industries was also studied, in
particular the physical production indices of the “food” and “beverages, wines and spirits” sectors and
which reflect an upward trend in the period 1997 to March 2002.
With regard to threat of injury, the informa tion furnished by the complainant shows that the
growth in imports of fructose present a threat of injury since it would result in one of the following
two situations:  either it would push down the domestic price of sugar below the level consistent with
the cost of production, or else the domestic price would be maintained, but at the cost of a significant
accumulation of inventories.
(ii) Determining the existence of critical circumstances where delay would cause damage
which would be difficult to repair
These circumstances are based on the fact that domestic sugar is an industrial by-product of
sugar beet, which is an agricultural product and, as such, subject to an unavoidable climatic cycle:
soil preparation from May to July, sowing at the beginning of August and harvesting as from the
following March. As a result, at the end of May, the beginning of each production season, the sugarindustry ensures the supply of its main input by way of contracts with producers, which are subject to
negotiation and determination of the price payable at the time of harvesting.
It ensues that the loss from any fall in the pr ice of sugar on the market at the time of the beet
harvest in relation to the values of the industrial product agreed upon when the contracts were signed,has to be absorbed by the industry.
This is the situation currently facing the ap pellant company owing to the significant and
growing increase in imports of fructose at a price lower than that of sugar, and there is an imminent
risk of the sugar industry not being able to sell the sugar at the prices needed to cover its costs. The
industry would thus be faced with making an economic  loss by selling below cost or postponing the
sale of the product for a considerable length of time and bearing the burden of the storage costs, with
much the same result.G/SG/N/7/CHL/6
G/SG/N/9/CHL/6
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Furthermore, available information reveals that the alternative of stockpiling to prevent prices
falling below cost level would force the company to have a greater amount of sugar than normal in
storage at the beginning of the next harvest, thereby incurring high costs.  Likewise, the sale of
surplus sugar then - at a lower price - would en tail substantial losses for the sugar company.G/SG/N/7/CHL/6
G/SG/N/9/CHL/6
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Annex 1
Monthly Imports of the Products Under Investigation
Quantity in Metric Tonnes
1. Glucose and glucose syrup
containing less than 20 per cent by
weight of fructose  (1702.3000)2. Glucose and glucose syrup
containing at least 20 per cent but
less than 50 per cent by weight of
fructose (1702.4000)3. Other fructose and fructose syrup
containing more than 50 per cent by
weight of fructose  (1702.6090)1
Period Quantity Cumulative
quantity Cumulative
change (%)Quantity Cumulative
quantityCumulative
change (%)Quantity Cumulative
quantity Cumulative
change (%)
Jan-99 479 479 323 323 -    -
Feb-99 142 621 168 491 -   -
Mar-99 842 1,463 325 816 -  -
Apr-99 485 1,948 282 1,098 7 7
May-99 505 2,454 367 1,464 64 71
Jun-99 886 3,340 339 1,803 331  402
Jul-99 299 3,638 495 2,298 0 402
Aug-99 449 4,087 408 2,706 663 1,065
Sep-99 741 4,829 306 3,013 587 1,652
Oct-99 550 5,379 734 3,747 990  2,642
Nov-99 312 5,690 561 4,308 1,109  3,751
Dec-99 333 6,023 531 4,838 1,004 4,755
Total 1999    6,023    4,838      4,755
Jan-00 366 366 (24) 1,027  1,027  218 2,236  2,236 (+)
Feb-00 394 759  22 1,104  2,132 334 1,228  3,464 (+)
Mar-00 522 1,281 (12) 916 3,048  274 803  4,267 (+)
Apr-00 400 1,681  (14) 599 3,648  232 2,100  6,367 90,854
May-00 421 2,102 (14) 531 4,179  185 3,302 9,668 13,533
Jun-00 141 2,243  (33) 357 4,535  152 600 10,268 2,455
Jul-00 549 2,792  (23) 380  4,915   114 1,355 11,623  2,791
Aug-00 711 3,503  (14) 390  5,305   96 1,867 13,490 1,167
Sep-00 220 3,723   (23) 158  5,463  81 2,373 15,863  860
Oct-00 1,561 5,284   (2) 770  6,233  66 3,135 18,998  619
Nov-00 943 6,227   9 399 6,632  54 3,714 22,712 505
Dec-00 885 7,112 18 390 7,022  45 5,685 28,396 497
Total 2000     7,112    7,022    28,396G/SG/N/7/CHL/6
G/SG/N/9/CHL/6
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1. Glucose and glucose syrup
containing less than 20 per cent by
weight of fructose  (1702.3000)2. Glucose and glucose syrup
containing at least 20 per cent but
less than 50 per cent by weight of
fructose (1702.4000)3. Other fructose and fructose syrup
containing more than 50 per cent by
weight of fructose  (1702.6090)1
Period Quantity Cumulative
quantity Cumulative
change (%)Quantity Cumulative
quantityCumulative
change (%)Quantity Cumulative
quantity Cumulative
change (%)
Jan-01 496 496  36 452 452 (56) 5,332 5,332 138
Feb-01 570 1,066  40 325 776  (64) 3,063  8,395  142
Mar-01 965 2,031 59 399 1,176  (61) 3,586 11,982 181
Apr-01 495  2,526  50 213 1,389  (62) 3,880 15,861 149
May-01 886   3,413 62 240 1,629 (61) 4,990  20,852 116
Jun-01 407  3,820 70 341 1,970  (57) 2,805 23,657  130
Jul-01 310  4,130 48 301 2,271  (54) 2,599 26,256 126
Aug-01 594 4,725 35 673 2,944   (45) 4,376 30,632 127
Sep-01 787 5,512 48 755 3,700  (32) 4,609 35,241  122
Oct-01 833 6,345 20 665 4,364  (30) 3,857 39,098  106
Nov-01 410 6,755 8 369 4,733 (29) 4,094 43,192 90
Dec-01 712 7,468 5 384 5,117  (27) 3,768  46,960  65
Total 2001    7,468      5,117    46,960
Jan-02 693  693  40 559 559 24 6,509 6,509  22
Feb-02 276  970  (9) 494 1,052 36 3,671 10,180 21
Mar-02 306 1,276  (37) 361  1,414 20 4,812 14,991  25
Apr-02 645 1,921  (24) 433   1,847 33 6,487  21,479  35
May-02 522 2,443  (28) 176 2,022 24 5,561 27,039  30
Total 2002    2,443    2,022    27,039
Change
2001/20005.0% -27.1% 65.4%
Change
Jan-May 02/01-28.4% 24.1% 29.7%
1 Tariff heading 1702.6090 corresponds to a new opening in the 2002 Tariff System. The previous years are based
on tariff heading 1702.6000.
Source: Prepared by the Technical Secretariat on the basis of Customs declarations.G/SG/N/7/CHL/6
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Annex 2
Ratio of Imports under Tariff Heading 1702.3000 to Domestic Sugar Production
Year Imports of sugar equivalents (*) Domestic production (C) Imports/Production  ratio (%)
Coefficient  -
IANSA (A)Coefficient  - other
parties (B)(A) /(C) (B) /(C)
1999 2,417 1,031 415,000 0.6% 0.2%
2000 2,854 1,218 437,700 0.7% 0.3%
2001 2,996 1,278 468,900 0.6% 0.3%
Notes:
(*) Column A is based on the equivalence coefficient reported by IANSA:  0.75. Column B is based on the equivalence
coefficient reported by Inducorn:  0.32.
Source: Prepared by the Technical Secretariat on the basis of Customs import declarations and information furnished by the appli cant
and other interested parties.
Ratio of Imports under Tariff Heading 1702.4000 to Domestic Sugar Production
Year Imports of sugar equivalents (*) Domestic production
(C)Imports/Production ratio (%)
Coefficient  -
IANSA (A)Coefficient  - other parties
(B)(A) /(C) (B) /(C)
1999 2,078 1,464 415,000 0.5% 0.4%
2000 3,016 2,124 437,700 0.7% 0.5%
2001 2,198 1,548 468,900 0.5% 0.3%
Notes:
(*) Column A is based on the equivalence coefficient reported by IANSA:  0.71. Column B is based on the equivalence
coefficient reported by Inducorn:  0.50.
Source: Prepared by the Technical Secretariat on the basis of Customs import declarations and information furnished by the appl icant
and other interested parties.
Ratio of Imports under Tariff Heading 1702.6090 to Domestic Sugar Production
Year Imports of sugar equivalents (*) Domestic production (C) Imports/Production ratio (%)
Coefficient  -
IANSA (A)Coefficient  - other
parties (B)(A) /(C) (B) /(C)
1999                  2,639                     2,569           415,000 0.6% 0.6%
2000                15,760                    15,339           437,700 3.6% 3.5%
2001                26,063                    25,368           468,900 5.6% 5.4%
Notes:
(*) Column A is based on the equivalence coefficient reported by IANSA:  0.75.  Column B is based on the equivalence
coefficient reported by Inducorn:  0.73.
Source: Prepared by the Technical Secretariat on the basis of Customs import declarations and information furnished by the appli cant and
other interested parties.G/SG/N/7/CHL/6
G/SG/N/9/CHL/6
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Annex 3
Summary of Information on Injury Factors
Area Annual variation
Domestic production
2000 5.5%
2001 7.1%
January-May 2002 15.3%
Domestic sales – Industrial sector
2000 -13.7%
2001 -1.9%
January-May 2002 -2.1%
Domestic sales – Household sector
2000 -9.6%
2001 8.3%
January-May 2002 -10.3%
Installed capacity
2000 0.0%
2001 0.0%
January-May 2002 0.0%
Use of installed capacity
2000 (+)
2001 (+)
Change in inventories (tonnes)
2000 (+)
2001 (+)
January-May 2002 (+)
Apparent consumption
2000 4.0
2001 -0.6
Share of imports / Apparent Consumption
2000 (+)
2001 (+)
Contribution margin for sugar (in Chilean pesos)
2000 -2.6%
2001 36.4%
January-March 2002 65.7%
Source: Technical Secretariat, on the basis of information furnished by the interested parties and Customs
import declarations .
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