WORLD TRADE
ORGANIZATIONG/SG/N/6/HUN/1
G/SG/N/7/HUN/1G/SG/N/11/HUN/1
23 May 2002
(02-2860)
Committee on Safeguards Original:  English
NOTIFICATION UNDER ARTICLE 12.1(A) OF THE AGREEMENT ON
SAFEGUARDS ON INITIATION OF AN INVESTIGATION AND
THE REASONS FOR IT
NOTIFICATION UNDER ARTICLE 12.4 OF THE AGREEMENT ON
SAFEGUARDS BEFORE TAKING A PROVISIONAL SAFEGUARD
MEASURE REFERRED TO IN ARTICLE 6
NOTIFICATION PURSUANT TO ARTICLE 9,
FOOTNOTE 2, OF THE AGREEMENT ON SAFEGUARDS
HUNGARY
The following communication, dated 22 May 2002, has been received from the Permanent
Mission of Hungary.
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I. ARTICLE 12.1(A) NOTIFICATION
Pursuant to Article 12.1(a) of the Agreement on Safeguards and to the format of notifications
under the Agreement as adopted by the Committee on Safeguards (G/SG/N/6), Hungary herebynotifies that its competent authorities have initiated a safeguard investigation, as follows:
1. Date investigation was initiated
On 22 May 2002, the Ministry of Economic Affairs is initiating an investigatory process
relating to serious injury or threat of serious injury to the domestic producers of products like or
directly competing with certain imported steel products. The public notice on the initiation of
investigation was  published in the Economic and Employment Journal (Gazdasági és Foglalkoztatási
Közlöny) No. 9. of the Ministry of Economic Affairs on 16 May 2002.
2. Product subject to the investigation
Certain steel products as specified in Annex 1.
3. Reasons for the initiation of investigation
(i) Was the investigation initiated pursuant to a petition from the domestic industry?
No, the investigation was initiated by the Ministry of Economic Affairs.G/SG/N/6/HUN/1
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(ii) Evidence on the basis of which the investigation was initiated.
In recent years and especially in 2001 there has been a significant increase in imports of the
products concerned both in absolute terms, and relative to consumption of the Hungarian
market and production as compared to previous years.  Annex 2 contains detailed information
as to the increases in imports, which form th e basis for the initiation of the investigation.
Statistical data suggest that the significant increase in imports has been accompanied by a
sharp decrease of import prices of 22.8 per cent in 2001 as compared to the period 1996-2000.
The investigating authorities found evidence of a reduction of employment and market share,
low level of capacity utilization as well as losses suffered by the industry during the same
period which appeared to be a direct consequence of the significant increase in imports.
(iii) Evidence, if any, on critical circumstances where delay would cause damage which it would
be difficult to repair
The recent restriction of access to the two major steel markets in the world by virtue of the
introduction of safeguard measures made the diversion of steel exports excluded from these
markets a real and imminent threat to third countries, including Hungary.  The Hungarian
authorities considered that delay in taking a safeguard measure countering this threat wouldcause damage which would be difficult to repair to the domestic industry already suffering
from serious injury due to the significant increas e in imports at low prices that occurred in
2001.G/SG/N/6/HUN/1
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ANNEX 1
Product coverage
No. Product description Tariff Number
1 Non-alloy hot rolled sheets and plates 7208.40 - 90
2 Non-alloy cold rolled sheets and plates 7209.25 - 90
3 Non-alloy hot rolled narrow strip 7211.13 – 19
4 Hot rolled bars and rods of iron or non-alloy steel7213.10, 7213.20, 7213.91.10,
7214.20,  7214.99.10
5Non-alloy hot rolled bars and rods, excluding
concrete steel7214.10, 7214.30, 7214.91,
7214.99.31 - 90,  7215.90
6Not further worked non-alloy hot and cold rolled
bars and rods7215.10,  7215.50
7 Non alloyed angles, shapes and sections7216.10, 7216.21, 7216.22,
7216.31.99,  7216.32.99
8Cold-formed or cold-finished angles, shapes and
sections7216.61 – 99
9 Non-alloyed wire 7217.10 – 90
10Other bars and rods of other alloy steel; angles,
shapes and sections7228
11Other tubes and pipes, hollow profiles of iron
welded of circular cross-section7306.30
12Other tubes and pipes, hollow profiles of iron
welded of non-circular cross-section7306.60 – 90
13Stranded wire, ropes, cables, plaited bands, slings
and the like7312.10 – 90
14 Cloth, grill, netting and fencing 7314
15 Sheets otherwise plated or coated with zinc 7210.41, 7210.49, 7212.30G/SG/N/6/HUN/1
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ANNEX 2
Statistical data on imports of certain steel products subject to
safeguard investigation
No. ProductPeriod of
1996-2000Year
2001Increase in %
1. 7208.40 - 90
Quantity of import in tons 66,269 113,870 +71.8
Import/consumption in % 22.8 33.7 +47.8
2. 7209.25 - 90
Quantity of import in tons 18,155 22,926 +26.4
Import/consumption in % 18.6 24.8 +33.3
3. 7211.13 - 19
Quantity of import in tons 17,019 26,790 +57.4
Import/consumption in % 30.2 40.6 +34.4
4.7213.10 - 20
7213.91.107214.20
7214.99.10
Quantity of import in tons 47,028 109,076 +131.9
Import/consumption in % 33.5 43.1 +28.6
5. 7214
Quantity of import in tons 28,133 45,765 +62.6
Import/consumption in % 26.3 47.8 +81.7
6. 7215
Quantity of import in tons 14,409 18,454 +28
Import/consumption in % 66.7 68.4 +2.5G/SG/N/6/HUN/1
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7.7216.10
7216.21
7216.22
7216.31.99
7216.32.99
Quantity of import in tons 12,595 16,170 +28.4
Import/consumption in % 26.7 31.3 +17.2
8. 7216.61 - 99
Quantity of import in tons 16,583 27,072 +63.3
Import/consumption in % 51.5 66 +28.2
9. 7217.10 - 90
Quantity of import in tons 28,405 36,694 +29.2
Import/consumption in % 47.1 51.3 +8.9
10. 7228.10 - 80
Quantity of import in tons 30,953 34,450 +11.3
Import/consumption in % 59.4 65.8 +10.8
11. 7306.30
Quantity of import in tons 17,962 39,232 +118.4
Import/consumption in % 28.7 52.8 +84
12. 7306.60 - 90
Quantity of import in tons 24,796 40,052 +61.5
Import/consumption in % 26.2 37 +41.2
13. 7312.10 - 90
Quantity of import in tons 4,711 7,259 +54
Import/consumption in % 56 56.1 +0.2G/SG/N/6/HUN/1
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14. 7314.
Quantity of import in tons 6,731 14,809 +120
Import/consumption in % 27 33.6 +24.4
15.7210.41
7210.497212.30
Quantity of import in tons 31,825 59,592 +87.2
Import/consumption in % 86.5 93.3 +7.9G/SG/N/6/HUN/1
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II. ARTICLE 12.4 NOTIFICATION
Pursuant to Article 12.4 of the Agreement on Safeguards and to the format of notifications
under the Agreement as adopted by the Committee (G/SG/N/6), Hungary hereby submits a
notification before taking a provisional measure regarding imports of certain steel products, under
Article 6 of the Agreement.
1. The product subject to the proposed provisional safeguard measure
Certain steel products as specified in Annex 3.
2. The proposed provisional safeguard measure
The proposed provisional safeguard measure consists of additional duties to be paid on
imports exceeding certain quantities.  These quantities represent average import volumes during therepresentative period 1998-2000 increased by 10 per cent.  Specific quantities are allocated to
substantial suppliers (EU, CEFTA) on the basis of past performance.  The additional duty is 20 per
cent or 25 per cent depending on the product category.  The quantities referred to and the additional
duties, which will be applied to the various product categories, are set out in Annex 4.
3. The proposed introduction of  the provisional safeguard measure
3 June 2002.
4. The expected duration of the provisional safeguard measure
The provisional safeguard measure will apply for six months from the date of its introduction.
5. Preliminary determination that increased imports have caused or are threatening to
cause serious injury
(i) Unforeseen developments
Since 1996 imports of various steel products have been continuously on the rise.  The
significant increase of imports in 2001 has led to the dramatic deterioration of the situation of the
domestic producers of like products.  This situation is aggravated by the expected repercussions of the
safeguard measure introduced by a major importer at the beginning of 2002.  The resulting severerestriction of access to one of the main steel markets in the world created a significant threat of
diverting major quantities of steel products towards other markets.  The other major international
outlet for steel products reacted to this threat by introducing a provisional safeguard measure in order
to prevent such trade diversion from happening to its market.  This has increased the exposure of the
Hungarian producers to a major influx of steel products, which have lost their traditional markets.
(ii) Increase in imports
From the average quantity of 365,574 tons during the period 1996-2000 total imports of the
product categories concerned grew to 612,241 tons in 2001.  In other words imports taken as a whole,increased by 67,4 per cent. Total imports relative to consumption and production increased from 34
and 31 per cent during the same period to 43 and 44 per cent respectively in 2001.  Import prices
declined by 22.8 per cent in 2001 compared to the period of 1996-2000.  Since there were significantG/SG/N/6/HUN/1
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variations in import prices depending on the country of origin, these figures do underestimate the real
impact of price undercutting that occurred on the Hungarian market.
(iii) Threat of serious injury
The investigating authority has evaluated relevant information on available factors of an
objective and quantifiable nature to determine what effect increased imports at low prices are having
on domestic producers of the corresponding like products in order to be able to make a preliminary
determination as to whether there is clear evidence of serious injury or threat of serious injury to
domestic producers of each of the like products.  These factors include the development of imports,production, consumption, domestic sales, market share, prices, profitability and employment for the
years 1996 to 2001.
Import  volumes in absolute terms of each of the product categories concerned increased, in
some cases even at a rate of 118, 120 or 132 per cent in 2001 as compared to the period 1996-2000.Imports relative to consumption of all of the product categories increased as well in certain cases by
more than 80 per cent.  With regard to imports relative to production with the exception of a few
categories the situation was similar with increases reaching 70 per cent.  Capacity utilization  was
generally low, less than half of the product categories registered a rate exceeding 60 per cent.  With
regard to the products concerned market share  of domestic producers has decreased from 63 per cent
during the period 1996-2000 to 57 per cent in 2001.  After a profit of Ft. 2,312 billion in 1996
domestic producers of the like products suffered a historic level of material loss reaching
Ft. 8.8 billion last year.  Employment  in the Hungarian steel industry declined from an average 12,765
during the period 1996-2000 to 10,009 in 2001, that is by 22.5 per cent.  This evolution seems to be
broadly corresponding to the estimated changes in em ployment relating to each of the like products.
Based on its preliminary analysis, the investigating authority has made a preliminary
determination that in relation to each of the 15 product categories concerned, domestic producers have
suffered serious injury and are threatened by  the significant increase of this injury.
(iv) Causation
On the basis of available information the investigating authority has made a preliminary
determination that there is clear evidence of a causal link between the recent growth of import
volumes and the injury caused to domestic producers as well as the import restrictions introduced by
two major importers and the expected further increase  of Hungarian imports and the threat of injury.
The investigating authority has established that the reduction of employment and market share, thelow level of capacity utilization as well as the losses suffered by the domestic industry of the like
products are directly attributable to the increase of imports at low prices.
(v) Other factors
To ensure that the threat of serious injury is not attributable to other factors than the increase
in imports, the investigating authority has carried out a preliminary analysis of other factors (e.g.
international economic situation, ownership changes in the domestic industry) that may have
contributed to the serious injury suffered by the domestic producers.  In the course of further
investigation a detailed examination of all factors, which have, or may have contributed to the injurywill be conducted by the investigating authority.G/SG/N/6/HUN/1
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(vi) Critical situation
The recent restriction of access to two major steel markets in the world by virtue of the
introduction of safeguard measures made the diversion of steel exports excluded from these markets a
real and imminent threat to third countries, incl uding Hungary.  The Hungarian authorities considered
that delay in taking a safeguard measure countering this threat would cause damage which would be
difficult to repair to the domestic industry which is already suffering from serious injury due to the
significant increase in imports at low prices that occurred in 2001.
6. Offer of consultations under Article 12.4
Hungary is ready to hold consultations on the provisional safeguard measure.
7. Other informationG/SG/N/6/HUN/1
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ANNEX 3
Product coverage
No. Product decsription Tariff Number
1 Non-alloy hot rolled sheets and plates 7208.40 - 90
2 Non-alloy cold rolled sheets and plates 7209.25 - 90
3 Non-alloy hot rolled narrow strip 7211.13 – 19
4 Hot rolled bars and rods of iron or non-alloy steel7213.10, 7213.20, 7213.91.10,
7214.20,  7214.99.10
5Non-alloy hot rolled bars and rods, excluding
concrete steel7214.10, 7214.30, 7214.91,
7214.99.31 - 90,  7215.90
6Not further worked non-alloy hot and cold rolled
bars and rods7215.10,  7215.50
7 Non alloyed angles, shapes and sections7216.10, 7216.21, 7216.22,
7216.31.99,  7216.32.99
8Cold-formed or cold-finished angles, shapes and
sections7216.61 – 99
9 Non-alloyed wire 7217.10 – 90
10Other bars and rods of other alloy steel; angles,
shapes and sections7228
11Other tubes and pipes, hollow profiles of iron
welded of circular cross-section7306.30
12Other tubes and pipes, hollow profiles of iron
welded of non-circular cross-section7306.60 – 90
13Stranded wire, ropes, cables, plaited bands, slings
and the like7312.10 – 90
14 Cloth, grill, netting and fencing 7314
15 Sheets otherwise plated or coated with zinc 7210.41, 7210.49, 7212.30G/SG/N/6/HUN/1
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ANNEX 4
Import quantities and additional duties as provided for by the provisional measure
No. DescriptionQuantities
(in tons)Additional
duty %
25
EU 13,696
CEFTA 30,2141.Non-alloy hot rolled sheets and
plates
Others 2,251
25
EU 7,176
CEFTA 4,8442.Non-alloy cold rolled sheets and
plates
Others 255
20
EU 6,881
CEFTA 6,2913. Non-alloy hot rolled narrow strip
Others 110
25
EU 6,417
CEFTA 20,7194.Hot rolled bars and rods of iron or
non-alloy steel
Others 2,558
25
EU 10,990
CEFTA 9,4205.Non-alloy hot rolled bars and rods,
excluding concrete steel
Others 1,090
20
EU 5,250
CEFTA 2,4806.Not further worked non-alloy hot
and cold rolled bars and rods
Others 180
25
EU 2,483
CEFTA 4,3357.Non alloyed angles, shapes and
sections
Others 827
20
EU 9,242
CEFTA 2,4558.Cold-formed or cold-finished
angles, shapes and sections
Others 76
20
EU 8,455
CEFTA 8,0179. Non-alloyed wire
Others 1,272
20
EU 11,468
CEFTA 5,45110.Other bars and rods of other alloy
steel; angles, shapes and sections
Others 1,045G/SG/N/6/HUN/1
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No. DescriptionQuantities
(in tons)Additional
duties %
20
EU 7,976
CEFTA 2,39211.Other tubes and pipes, hollow
profiles of iron welded of circularcross-sectionOthers 2,533
20
EU 12,607
CEFTA 4,19512.Other tubes and pipes, hollow
profiles of iron welded of non-
circular cross-sectionOthers 1,153
20
EU 2,202
CEFTA 30413.Stranded wire, ropes, cables, plaited
bands, slings and the like
Others 440
20
EU 1,526
CEFTA 2,28314. Cloth, grill, netting and fencing
Others 1,270
20
EU 16,972
CEFTA 5,03515.Sheets otherwise plated or coated
with zinc
Others 201G/SG/N/6/HUN/1
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III. ARTICLE 9, FOOTNOTE 2, NOTIFICATION
Notification to the Committee on Safeguards of non-application of safeguard measure to
developing countries under Article 9.1 of the Agreement on Safeguards
1. Specify the measure
The provisional measure consists of additional duties to be paid on imports exceeding the
relevant import ceilings as described in the notification by Hungary under Article 12.4.
2. Specify the product subject to the measure
The measure applies to certain steel products described in the notification by Hungary under
Article 12.4.
3. Specify the developing countries to which the measure is not applied under Article 9.1 of
the Agreement on Safeguards, and the import shares of these countries individually and
collectively
Imports of the products concerned subject to a provisional safeguard measure originating in
any of the developing or least developed countries shall not be subject to the provisional measures.
These countries are the following:
Afghanistan, Albania, Algeria, Angola, Argentina,  Bahamas, Bangladesh, Barbados, Belize, Benin,
Bhutan, Bolivia, Bosnia and Herzegovina, Botswana, Brazil, Burkina Faso, Burundi, Cambodia,Cameroon, Cape Verde, Central African Republic, Chad, Chile, China, Colombia, Comoros, Congo,
Costa Rica, Cuba, Democratic People's Republic of  Korea, Democratic Republic of Congo, Djibouti,
Dominican Republic,  Ecuador, Equatorial Guinea, Eritrea, Ethiopia, Fiji, Gabon, Gambia, Ghana,
Grenada, Guatemala, Guinea,  Guinea-Bissau, Guyana, Haiti, Honduras, India, Indonesia, Iran
(Islamic Republic of), Iraq, Jamaica, Jordan, Ke nya, Kiribati, Lao People's Democratic Republic,
Lebanon, Lesotho, Liberia, Libyan Arab Jamahiriya , Madagascar, Malawi, Malaysia, Maldives, Mali,
Mauritania, Mauritius, Mexico, Mongolia, Morocco, Mozambique, Myanmar, Nepal, Nicaragua,Niger, Nigeria, Oman, Pakistan, Papua New Guinea , Peru, Philippines, Rwanda, Saint Lucia, Saint
Vincent and the Grenadines, Samoa, Sao Tome and Principe, Senegal, Seychelles, Sierra Leone,
Singapore, Solomon Islands, Somalia, South Africa, Sri Lanka, Sudan, Suriname, Swaziland, Syrian
Arab Republic, Thailand, Togo, Tonga, Trinidad and Tobago, Tunisia, Tuvalu, Uganda, United
Republic of Tanzania, Uruguay, Vanuatu, Vene zuela, Viet Nam, Yemen, Zambia, Zimbabwe.
4. Not applicable
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