G/SG/N/6/MDG/8  
3 June 2022 
(22-4251) Page: 1/4 
Committee on Safeguards  Original:  French  
 
  
NOTIFICATION UNDER ARTICLE 12.1(A) OF THE AGREEMENT  
ON SAFEGUARDS ON INITIATION OF AN INVESTIGATION  
AND THE REASONS FOR IT  
MADAGASCAR  
(Paints)  
The following communication, dated and received on 3 June 2022, is being circulated at the request 
of the delegation of Madagascar.  
 
_______________  
 
 
In accordance with Article  12.1(a) of the Agreement on Safeguards, Madagascar hereby notifies the 
Committ ee on Safeguards of the initiation of an investigation in respect of imports of paints . 
 
1. Date of initiation  
The investigation was initiated on 1 June 2 022, the date on which the notice of initiation was 
published in two national newspapers that publish legal notices ( La Vérité  and L'Express de 
Madagascar ). 
 
2. Product under consideration  
 
Water paints and oil paints under Madagascar customs tariff codes 320611, 320619, 320620, 
320641, 320642, 320649, 320650, 320710, 320720, 320730, 320740, 320810, 320820, 320890, 
320910, 320990, 321000, 381400, 390512, 390690, 390730, 390750 and 390950.  
 
3. Exporting countries  
 
The main exporters are Egypt and South Africa.  
 
4. Reasons justifying the initiation of the investigation  
 
As a result of unforeseen developments, paints have been imported in such increased quantities that 
the increase has caused or threatens to cause serious injury to the domestic industry producing the 
product that is like or directly competitive with the product under inv estigation.  
 
4.1. INCREASE IN IMPORTS  
 
i. Evolution of imports in absolute terms  
Imports of paints grew by 10 % in 2019, but fell by 13 % in 2020 as a result of the crisis caused by 
the COVID -19 pandemic . In 2021, they recovered by 15 % relative to 2020 . 
 G/SG/N/6/MDG/8  
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  ii. Evolut ion of imports in relative terms  
Year 2018 2019 2020 2021 
Imports/Production  
(index base 100)  100 187 89 115 
Source : Data from the petition  
Relative to domestic production, imports grew in 2021 and were 15 index points higher than in the 
base year and 26 index points higher than in 2020.  
 
4.2. SERIOUS INJURY  
i. Production  
Year 2018  2019  2020  2021  
Production (index base 100)  100 110 108 96 
Source : Data from the petition  
On average, water paints accounted for around 60 % of total production and oil paints around 40 %. 
Domestic production followed a downward trend during the period under consideration, 2018-2021, 
with a significant drop of 14 index points between 2019 and 2021.  
 
ii. Sales and market share  
a. Sales volume  
Year  2018  2019  2020  2021  
Sales (index base 100)  100 111 105 75 
Source : Data from the petition  
Sales increased by 11 index points between 2018 and 2019 before declining in 2020 and 2021 . In 
2020, sales were 6 index points lower than in 2019 . In 2021, sales of local paints decreased 
significantly to 25 index points below their 2018 level.  
 
b. Market share taken by imports  
 
Year 2018  2019  2020  2021  
Market share of imports  69% 68% 67% 76% 
Market share of imports  
(index base 100)  100 100 97 111 
Market share of the domestic industry 
(index base 100)  100 101 107 75 
Source : Data from the petition  
The market share of imported paints decreased by 3 index points in 2020 compared with the base 
year. In 2021, the share grew by 14 index points to 11 index points above the base -year level . The 
opposite occurred with the market share of the domestic industry . This situation shows the negative 
effects that increased imports have on competition at the local market level.  
 
iii. Inventory  
Year  2018  2019  2020  2021 
Inventory (index base 100)  100 178 142 315 
Source : Data from the petition  G/SG/N/6/MDG/8  
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  The inventory volume increased throughout the period under consideration . The significant increase 
of 78 index points in 2019 and the excessive increase of 215 index points in 2021 show that domestic 
industries are still struggl ing to sell their products , despite having reduced how much paint they 
produce.  
 
iv. Profits and losses  
Year  2018  2019  2020  2021  
Profits (index base 100)  100 92 68 66 
Source : Data from the petition  
The domestic industry's l ower sales and profit margins caused a sharp decline in its results . 
Compared with the base year, profits were down 8 index points on the base year in 2019 and 
32 points in 2020 . This situation has caused concern among local paint producers  and may lead to 
the closure of  their businesses as a result, since their profits dropped by 34 index points between 
2018 and 2021, despite a 25 index -point reduction in their sales volume.  
 
v. Employment and productivity  
Year  2018  2019  2020  2021  
Employees (index base 100)  100 108 112 117 
Productivity (index base 100)  100 101 96 82 
Source : Data from the petition  
During the period under consideration , most producers recruited staff in an effort to boost  
production, but production levels fell due to a continuous decline in sales . Despite this downturn in 
production, the domestic industry tried to maintain staff numbers in the hope that the situation 
would improve . Staff productivity was therefore 4 index points below the baseline level in 2020 and 
18 points below in 2021.  
 
vi. Production capacity utilization  
Year  2018  2019  2020  2021  
Production capacity  
(index base 100)  100 100 100 100 
Production capacity utilization rate  27% 30% 29% 26% 
Utilization rate (index base 100)  100 110 108 96 
Source : Data from the petition  
Local producers have not invested in equipment to increase their production capacity since they are 
still unable to fully exploit their existing capacity . The average utilization rate did not exceed 30 % 
during the period under consideration . In the final year under review, the rate fell to 4 index points 
below the 2018 level.  
4.3. CAUSAL LINK  
i. Effects of increased imports  
While imports increased between 2018 and 2021, most domestic industry indicators deteriorated . 
For example, production volumes shrank, inventory levels increased due to the drop in sales, and 
profits fell.  
 
The respective market shares of imports and the domestic industry moved in opposite directions, 
with the share of impor ts increasing and the share of the domestic industry declining.  
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  ii. Other serious injury factors  
Analysis of the petition has shown that the injury to the domestic industry was not due to other 
factors such as product quality, shrinking demand, technology use d, competition among local 
producers or export performance, but due to increased imports.  
 
5. Duration of the investigation  
 
The investigation will last at least nine months and no longer than 12  months.  
 
6. Further information  
 
All persons having a substantial interest and wishing to be considered interested parties in this 
investigation should make themselves known to the National Trade Remedies Authority (ANMCC), 
the investigating authority, and may request a questionnaire from  the ANMCC, within 30  days of the 
initiation of the investigation.  
 
Completed  questionnaire s, comments and any relevant information must reach the ANMCC by 
12 July 2 022 at the latest.  
 
If information requested from interested parties in connection with the  investigation is not provided 
within the specified time frame, decisions will be based on the best information available . This will 
also be the case if information is erroneous or incomplete.  
 
7. Public hearings  
 
The ANMCC may hold public hearings, either  at the request of the interested parties or ex officio , to 
give interested parties the opportunity to submit evidence and their viewpoints and, in particular, 
the opportunity to respond to other parties ' submissions and to make their views known.  
 
8. Further information  
 
Requests for further information and correspondence regarding the investigation should be sent to:  
 
Monsieur Le Directeur Général de l 'ANMCC  (Director -General of the AMMCC ) 
Enceinte Ex -Conquête Antanimena, Antananarivo 101 - Madagascar  
Email : dg@anmcc.mg  / dg.anmcc@gmail.com  
Website: www.anmcc.mg  
 
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