WORLD TRADE G/SG/N/8/KOR/2
20March 1997
ORGANIZATION(97-1156)
Original: English Committee onSafeguards
NOTIFICATION UNDER ARTICLE 12.1(b) OFTHE
AGREEMENT ONSAFEGUARDS ONFINDING ASERIOUS INJURY
ORTHREAT THEREOF CAUSED BYINCREASED IMPORTS
KOREA
Thefollowing communication, dated 11March 1997, hasbeenreceived fromthePermanent
Mission ofKorea.
_______________
Pursuant toArticle 12.1(b) oftheWTO Agreement onSafeguards, andinlightoftheformat
fornotifications adopted bytheCommittee onSafeguards (G/SG/W/1, 23February 1995), the
RepublicofKoreanotifiestheCommitteeonSafeguardsuponthefactthattheKoreanTradeCommission
(KTC) hasmade afinding on21January 1997 ofaserious injury tothedomestic industries caused
byincreased imports offinished bicycles andbicycle frames andforks.
1. Evidence ofserious injury caused byincreased imports
Based onthestatistical evidence presented asfollows, theKTC hasdecided thatbicycles and
bicycle frames andforks imported intotheRepublic ofKorea hadbeencausing serious injury tothe
domestic industries concerned. However, theKTC hasdecided thatthere isnosufficient evidence
tosupport afinding ofaserious injury orthreat thereof tothedomestic industry caused byincreased
imports ofother parts andaccessories concerned.
(a) Share ofdomestic market
Imports offinished bicycles andbicycle frames andforks haveregistered amore rapid
increase thanapparent consumption anddomestic goods consumption intheRepublic ofKorea.
Asimports offinished bicycles increased inquantity substantially during theperiod subject
toinvestigation, theshare ofdomestic finished bicycles inapparent consumption decreased
from 97.6% in1993 to77.2% forthefirstseven months of1996.
With regard toimports ofbicycle frames andforks, astheyincreased substantially
inmonetaryvalueduringtheperiodsubjecttoinvestigation,theshareofdomesticbicycleframes
andforks inapparent consumption decreased from76.3% in1993to43.6% forthefirstseven
months of1996.G/SG/N/8/KOR/2
Page2
TABLE 1A-1
INCREASES INIMPORTS, APPARENT CONSUMPTION,
DOMESTIC GOODS CONSUMPTION
(percentchanges)
Year 1994 1995 1996: 1-7
Finished bicycles
(inunits)Imports 302.0 109.9 44.5
Apparent consumption 19.7 12.4 -4.5
Domestic goods consumption 12.8 3.9 -13.2
Bicycle frames
andforks
(inmonetary
value)Imports 15.3 88.1 68.7
Apparent consumption 4.6 33.7 7.6
Domestic goods consumption 1.2 17.1 -27.6
TABLE 1A-2
SHARE OFDOMESTIC BICYCLES AND BICYCLE FRAMES AND FORKS
INTHE DOMESTIC MARKET
(inpercent)
Year 1993 1994 1995 1996: 1-7
Finished bicycles
(inunits)97.6 92.0 85.1 77.2
Bicycle frames andforks
(inmonetary value)76.3 73.9 64.7 43.6
(b) Sales
Sales ofdomestic finished bicycles inthedomestic market decreased from 601,658
units orWon 50,100 million inthefirstseven months of1995 to522,089 units or
Won44,141 million inthesame period of1996. Forthefirstseven months of1996, sales
ofdomestic finished bicycles inthedomestic market decreased 13.2% inquantity or11.9%
inmonetary value, compared withthesame period in1995.
Sales ofdomestic bicycle frames andforks inthedomestic market decreased from
Won3,119 million inthefirstseven months of1995toWon2,257 million inthesame period
of1996. Forthefirstseven months of1996, salesofdomestic bicycle frames andforks in
thedomestic market decreased 27.6%, compared withthesame period of1995.G/SG/N/8/KOR/2
Page3
TABLE 1B
SALES OFDOMESTIC FINISHED BICYCLES AND BICYCLE FRAMES AND FORKS
INTHE DOMESTIC MARKET
Year 1993 1994 %
change
(94/93)1995 %
change
(95/94)1995
1-71996
1-7%
change
(96/95)
Finished
bicyclesQuantity
(units)687,227 775,182 12.8 805,464 3.9 601,658 522,089 -13.2
Value
(million
Won)44,391 57,136 28.7 61,898 8.3 50,100 44,141 -11.9
Bicycle
frames
andforksValue
(million
Won)4,168 4,218 1.2 4,940 17.1 3,119 2,257 -27.6
(c) Production
Production ofdomestic finished bicycles decreased 8.6% inquantity and13.5% in
monetary value from1994 to1995, and22.4% inquantity and16.8% inmonetary value for
thefirstseven months of1996, compared withthesame period of1995.
Production ofdomestic bicycle frames andforks decreased 28.3% inmonetary value
forthefirstseven months of1996, compared withthecorresponding period of1995.
TABLE 1C
PRODUCTION OFDOMESTIC BICYCLES AND BICYCLE FRAMES AND FORKS
Year 1993 1994 %
change
(94/93)1995 %
change
(95/94)1995
1-71996
1-7%
change
(96/95)
Finished
bicyclesQuantity
(units)1,147,870 1,188,610 3.5 1,086,690 -8.6 807,010 626,218 -22.4
Value
(million
Won)81,070 90,979 12.2 78,705 -13.5 61,727 51,363 -16.8
Bicycle
frames
andforksValue
(million
Won)4,577 4,390 -4.1 5,010 14.1 3,149 2,258 -28.3
(d) Utilization ofproduction capacity
Theutilization ofproduction capacity ofdomestic finished bicycles deteriorated from
78.1% in1993 to70.4% forthefirstseven months of1996.
Theutilization ofproduction capacity ofdomestic bicycle frames andforks fellfrom
52.7% in1993 to39.9% forthefirstseven months of1996.G/SG/N/8/KOR/2
Page4
TABLE 1D
UTILIZATION OFPRODUCTION CAPACITY OFDOMESTIC FINISHED BICYCLES
AND BICYCLE FRAMES AND FORKS
(inpercent)
Year 1993 1994 1995 1996: 1-7
Finished
bicycles78.1 82.1 72.1 70.4
Bicycle frames
andforks52.7 56.6 51.7 39.9
(e) Inventories
Inventories ofdomestic finished bicycles increased 11.3% inmonetary value from
Won3,469 million attheendof1993 toWon3,860 million attheendof1995.
Inventories ofdomestic bicycle frames andforks increased 129.5% inmonetary value
from Won105million attheendof1993 toWon241million attheendof1995.
TABLE 1E
INVENTORIES OFDOMESTIC FINISHED BICYCLES
AND BICYCLE FRAMES AND FORKS
Year 1993 1994 %
change
(94/93)1995 %
change
(95/94)1996
1-7%
change
(96/95)
Finished
bicyclesQuantity
(1,000
units)50 46 -8.3 51 9.5 38 -25.5
Value
(million
Won)3,469 3,414 -1.6 3,860 13.1 3,312 -14.2
Bicycle
frames
andforksValue
(million
Won)105 193 83.8 241 31.7 230 -4.6
(f) Profits andlosses
Operating income ofthedomestic finished bicycle industry asawhole dropped 12%
fromWon2,803 million in1994toWon2,466 million in1995, and84.7% forthefirstseven
months of1996, compared withthesame period of1995. Ordinary income (earnings before
extra items andincome taxes) ofthedomestic finished bicycle industry felldrastically from
Won593million in1994 toalossofWon53million in1995. Furthermore, ordinary loss
deteriorated seriously toWon1,710 forthefirstseven months of1996.
Operating income ofthedomestic bicycle frame andforkindustry dropped 80.8% from
Won281million in1994toWon54million in1995. Furthermore, operating income reversed
toadrastic lossofWon123million forthefirstseven months of1996. Ordinary income of
thedomestic bicycle frame andforkindustry alsoworsened toalossofWon187million in
1994 andeventoalossofWon288million forthefirstseven months of1996.G/SG/N/8/KOR/2
Page5
TABLE 1F
PROFITS AND LOSSES OFTHE DOMESTIC FINISHED BICYCLE INDUSTRY
AND BICYCLE FRAME AND FORK INDUSTRY
(Values inWonmillion)
Year 1993 1994 %
change
(94/93)1995 %
change
(95/94)1996
1-7%
change
(96/95)
Finished
bicyclesOperating
income1,349 2,803 107.7 2,466 -12.0 220 -84.7
Ordinary
income-669 593 reversed to
black-53 reversed to
red-1,710 red
continued
Bicycle
frames
andforksOperating
income117 281 140.2 54 -80.8 -123 reversed
tored
Ordinary
income-96 19 reversed to
black-187 reversed to
red-288 red
continued
(g) Employment
Thetotalnumber ofemployees inthedomestic finished bicycle industry declined 24.7%
onaverage from 728persons in1993 to548persons forthefirstseven months of1996.
Thenumber ofemployees inthedomestic bicycle frame andforkindustry declined
16.5% onaverage from145persons in1993to112persons forthefirstseven months of1996.
TABLE 1G
EMPLOYMENT INTHE DOMESTIC FINISHED BICYCLE INDUSTRY
AND BICYCLE FRAME AND FORK INDUSTRY
(number ofpersons)
Year 1993 1994 1995 1996: 1-7
Finished bicycles 728 664 621 548
Bicycle frames andforks 145 141 130 112
(h) Causal relationship
Theunitary prices ofimported bicycles andthose ofimported bicycle frames andforks
were21-27% lower thanthose which weredomestically produced. Duetotheincreased share
ofimported products inthedomestic market, aswellasthelower price competitiveness of
domestic products, theindustries ofdomestic finished bicycles andbicycle frames andforks
hadbeenseriously depressed during theperiod under investigation. TheKTCexamined other
factors, besides theincreased imports, suchasexport decrease, over-investment, change of
foreign exchange rate,etc.However, onfinding thattheother factors werenotasubstantial
cause ofserious injury tothedomestic industries, theKTCconcluded thattheincreased imports
were theprincipal cause ofthesignificant overall impairment tothedomestic industries
concerned.G/SG/N/8/KOR/2
Page6
2. Informationregardinganyabsoluteincreaseinimportsorincreaseinimportsrelativetodomestic
producers
(a) Finished bicycles
Imports offinished bicycles increased 302.0% inquantity and274.6% invalue from
1994to1995. Forthefirstseven months of1996, imports offinished bicycles increased 44.5%
inquantity and77.4% invalue, compared withthesame period of1995.
Interms ofquantity, production ofdomestic bicycles increased only3.5% in1994,
decreased 8.6% in1995, anddecreased 22.4% forthefirstseven months of1996, while imports
offinished bicycles increased 302.0% in1994, 109.9% in1995, and44.5% forthefirstseven
months of1996. Thus, itisapparent thatimports offinished bicycles haveincreased relative
todomestic production during theperiod under investigation.
(b) Bicycle frames andforks
Imports ofbicycle frames andforks increased 15.3% invalue from1993to1994, and
88.1% from1994to1995. They further increased 68.7% forthefirstseven months of1996,
compared withthesame period of1995.
While domestic production ofbicycle frames andforks increased 14.1% invalue in
1995fromadecrease of4.1% in1994, thistrend reversed toadecrease of28.3% forthefirst
seven months of1996. Moreover, imports ofbicycle frames andforks increased 15.3% in
1994, 88.1% in1995and68.7% forthefirstseven months of1996. Thus, itisapparent that
imports ofbicycle frames andforks increased relative todomestic production during theperiod
under investigation.
TABLE 2
DOMESTIC PRODUCTION AND IMPORTS OFFINISHED BICYCLES
AND BICYCLE FRAMES AND FORKS
(Values inWonmillion; US$in1,000)
Year 1993 1994 1995 1996: 1-7
%
change
(94/93)%
change
(95/94)%
change
(96/95)
Finished
bicyclesProduction Units 1,147,870 1,188,610 3.5 1,086,690 -8.6 626,218 -22.4
Value
(Won)81,079 90,979 12.2 78,705 -13.5 51,363 -16.8
Imports Units 16,774 67,431 302.0 141,567 109.9 154,117 44.5
Value
(US$)1,065 3,990 274.6 8,210 105.8 10,468 77.4
Bicycle
frames
andforksProduction Value
Won4,577 4,390 -4.1 5,010 14.1 2,258 -28.3
Imports Value
(US$)1,612 1,818 15.3 3,495 88.1 3,699 68.7G/SG/N/8/KOR/2
Page7
3. Precise description oftheproducts involved
Theproducts subject toinjury determination arefinished bicycles andbicycle frames andforks,
i.e.,HSK 8712.00.9090 andHSK 8714.91.0000. Finished bicycles subject toinjury determination
arebicycles forgeneral uses,excluding motorized, tricycles, racing andtransportation. Bicycle frames
andforks subject toinjury determination arebicycle frames andforks, andaccessories thereof, for
bicycles ofgeneral usesexcept forinvalid carriage.
TheKTCexamined whether theimported products subject toinvestigation are"likeordirectly
competitive products" withthedomestic products, toprove whether there hadbeenaserious injury
orthreat thereof tothedomestic industries concerned, caused byincreased imports oftheproducts
inquestion.
TheCommission reviewed whether theimported products subject toinvestigations werelike
domestic products inview ofallsubstantial aspects, including physical characteristics, quality and
consumers 'perception ofthose products. Although there weresome differences interms ofpriceand
quality between theimported andthedomestic products, there weresubstantially fewdifferences in
termsofphysicalcharacteristicsandconsumers'perception.Accordingly,theimportedfinishedbicycles
andbicycle frames andforks wereconsidered likethose produced intheRepublic ofKorea. However,
between bicycles andrespective parts ofbicycles, there wasnotsufficient rationale toconsider these
aslikeproducts, because ofconsiderable differences interms oftheirphysical characteristics and
consumers 'perception. TheTaiwanese Bicycle Exporters 'Association expressed thissame opinion
atthepublic hearing heldattheKTC on2December 1996.
Inaddition, withregard towhether theimported products subject toinvestigation aredirectly
competitive withthose domestically produced, theKTC dulyreviewed thereof bytaking intoaccount
whether theimported products hadthesame functions orcommercial usesasdomestically produced
onesandwhether theyweresubstitutable fordomestically produced ones. However, asfinished bicycles
andrespective partsofbicycles haddifferent functions and,inmostcases, werenotsubstitutable with
eachother, itwasdetermined thattheywere notdirectly competitive.
Toreview theabove points, theKTCclassified theproducts subject toinvestigation intoeight
groups, i.e.,finished bicycles andseven groups ofpartsandaccessories. Among these eight groups
ofindustries which manufacture theproducts subject toinvestigation,two industries which manufacture
finished bicycles andbicycle frames andforks were determined tobeseriously injured byincreased
imports, whereas theinjury orthreat thereof totheindustries oftheother sixgroups ofparts and
accessories wasnotfound duetothefactthatthere waseither nosubstantial increase inimports or
insufficient causal relationship between increased imports andinjury orthreat thereof.
4. Information onsafeguard measures tobetaken
TheKTC hasnotyetmade anyrecommendation forsafeguard measures tothegovernment
authorities concerned. TheKTC willrecommend thegovernment authorities concerned totake
appropriate remedial measures within 45daysaftertheinjury determination made bytheKTC on
21January 1997.