WORLD TRADE G/SG/7
12December 1996
ORGANIZATION(96-5318)
Original: English Committee onSafeguards
SAFEGUARD PROCEEDINGS INITIATED BYKOREA
INRESPECT OFCERTAIN DAIRY PRODUCTS
Request forConsultations from theEuropean Community
under Article 12.3oftheAgreement onSafeguards
Thefollowing communication, dated 11December 1996, hasbeenreceived fromthePermanent
Delegation oftheEuropean Commission.
_______________
Background
On28May1996 theKorean Trade Commission ("KTC") initiated safeguard proceedings in
respect ofcertain dairy products based onmilk powder (Korean CNcodes 0404.90.0000 and
1901.90.0000) andnotified suchinitiation totheCommittee onSafeguards ("the Committee") on
11June1996 (document G/SG/N/6/KOR/2 of1July1996).
TheEuropean Community raised thismatter attheCommittee 'sregular meeting on
25October 1996, aswellasinbilateral contacts withtheKorean Government, inorder toexpress
itsserious concern astothese proceedings.
TheEuropean Community nowunderstands thatadetermination ofinjury hasbeenmade by
theKTCon23October 1996, andthattheKTCmaypropose tothecompetent authorities intheKorean
Government toadopt safeguard measures inrespect oftheabove-mentioned products intheverynear
future.
TheKTC'sinjury determination
TheEuropean Community hadalready expressed toKorea itsmisgivings astothelackofdata
onwhich tobaseanassessment ofthese proceedings. Thenotification oftheinitiation contained only
dataonanalleged absolute increase inimports, andthere weresome doubts astowhether suchdata
effectively referred totheproducts subject tothecomplaint ortoawider range ofdairy products.
Noinformation wassupplied, atthatstage, inrespect ofanyother factors relevant toaserious injury
determination, oronthecausal linkbetween imports andanyalleged injury.
TheEuropean Community hassince received some more information inaletter fromtheKTC
totheEuropean Commission, aswellasinwhat appears tobeasummary oftheKTC'sinjury
determination. Nevertheless, evenifthisinformation weretobetaken atitsfacevalue, there appear
tobeserious doubts astowhether theconditions forafinding ofserious injury (andsubsequent adoption
ofsafeguard measures based upon suchafinding) arepresent inthiscase. Inparticular:
./.G/SG/7
Page2
(a) TheKTCmentionsa"substitutiverelationship"betweentheimportedmilkpowder-based
products andthedomestic product, butnoanalysis hasbeensupplied astohowand
whytheimported products directly compete withdomestic onesasrequired byArticle 2
oftheAgreement.
(b) Apartfromtheveryconcisenatureoftheinformationsupplied,whichcastssomedoubts
onwhether thestateofthedomestic industry hasbeenanalysed withthedegree of
precision required bytheAgreement, noanalysis atallappears tohavebeenmade
ofwhether there isinfactacausal linkbetween imports andthealleged injury. The
European Community understands thatfearsastothesafety ofdomestically produced
milkpowder seems tobeattherootofincreased unsold stocks andproducers 'losses
inKorea.
Inaddition,itmustbenotedthatiftheKTCmadeadeterminationofinjury,suchadetermination
should havebeennotified totheCommittee onSafeguards inaccordance withArticle 12.1(b) ofthe
Agreement onSafeguards. Todatenonotification hasbeencirculated toWTO Members.
Request forconsultations
Inthesecircumstances, theEuropean Community isoftheopinion thatKorea should notadopt
safeguard measures onthebasis oftheKTC'sfinding of23October, oratleastnotwithout having
supplied additional information totheCommittee asprovided forinArticle 12.2oftheAgreement.
Moreover, should theKorean Government propose toadopt safeguard measures, theEuropean
Community, having asubstantial interest asexporter oftheproducts concerned, requests theopportunity
toholdconsultations priortotheadoption ofsuchmeasures, withaviewtoreviewing theinformation
sofarprovided bytheKorean Government (aswellasanyfurther information theKorean Government
mayprovide under Article 12.2oftheAgreement), andtodiscussing theapplication ofArticle 8.1
oftheAgreement tothepresent case.
Finally, theEuropean Community would welcome theopportunity toholdsuchconsultations
attheearliest opportunity. Acopyofthisrequest isbeing transmitted totheChairman oftheCommittee
inorder tobecirculated toMembers oftheCommittee.