WORLD TRADE
ORGANIZATIONG/SG/N/8/EGY/1
G/SG/N/10/EGY/1
10 February 1999
(99-0488)
Committee on Safeguards Original:  English
NOTIFICATION UNDER ARTICLE 12.1(B) OF THE
AGREEMENT ON SAFEGUARDS ON FINDING A SERIOUS INJURY
OR THREAT THEREOF CAUSED BY INCREASED IMPORTS
NOTIFICATION PURSUANT TO ARTICLE 12.1(C)
OF THE AGREEMENT ON SAFEGUARDS
EGYPT
The following communication, dated 1 February 1999, has been received from the Permanent
Mission of Egypt.
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With regard to Egyptian document circulated as WTO No. G/SG/N/6/EGY/1 dated
11 August 1998, regarding notice of initiation of a safeguard investigation and the document
circulated as WTO No. G/SG/N /7/EGY/1 dated 11 August 1998 regarding notice of provisional
safeguard measures concerning imports of "Safety Ma tches in Boxes" into Egypt, and pursuant to the
above-referenced provisions of Agreement on Safeguards, and in the light of the agreed format for
notifications (G/SG/1, July 1996), Egypt provides  the following notification to the Committee on
Safeguards.
TABLE OF CONTENTS
Page
I. PROCE DURES................................................................................................................... ..... 2
II. FINDINGS ON SERI OUS INJURY ....................................................................................... 3
 1.  Evidence of serious injury or thre at thereof caused by increased im ports......................... 3
 2.  Product under consideration .............................................................................................. 3
 3.  Domestic  industry ......................................................................................................... ..... 3
 4.  Period of investigation ................................................................................................... .... 4
 5.  Increas ed im ports......................................................................................................... ...... 4
 6.  The situation of th e domestic i ndustry............................................................................... 4
 7.  Customs duties applied .................................................................................................... .. 5
 8.  Causal link ............................................................................................................... .......... 5
 9.  Public  interest ........................................................................................................... ......... 6
10. Serious injury  conclusions .................................................................................................  7
11. Adjustment plan for industry ............................................................................................. 7
12. Conclusions and recommendations of International Trade Policies Department .............. 8
NOTIFICATION PURSUANT TO ARTIC LE 12.1(C).......................................................................10G/SG/N/8/EGY/1
G/SG/N/10/EGY/1
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I. PROCEDURES
(i) The Notice of initiation of safeguard investigation concerning imports of Safety Matches in
Boxes into Egypt was issued on 6 August 1998 and was published in the Official Gazette on
6 August 1998.  A copy of the Notice was also sent to all known interested parties, namely:
Domestic Producers
1. Nile Company for Matches and Wooden Houses
2. Hiekal Company (Al-Ahtam)
3. The Egyptian Company for Matches
Importers
1. Lord Company
2. Noaman Company
3. El Bonian Company4. El-Gawhara Company
5. Wasat El-Delta Company
6. M N Company
Foreign Producers and Exporters
1. Swedish Match
2. Indo-Med
3. Pioneer Overseas Private Ltd
4. Mohsen Match Factory5. Khyber Match Factory
6. Noor Match Factory
7. Asim Match Factory
8. Bilour Match Factory
9. Federation of Pakistan Chambers of Commerce and Industry
10. Asoka Exporters Ltd.
11. Ankur Agro Traders
Foreign Governments
1. Sweden
2. India3. Pakistan
4. Turkey
5. China
(ii) Verification of the information considered necessary for the investigation was done and a
team of investigators visited the domestic industry.
(iii) A public hearing was held of all interested parties on 1 October 1998.  All parties were given
the opportunity to submit written submissions during and after the hearing, but some parties
didn't submit any written comment during or after the hearing.G/SG/N/8/EGY/1
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(iv) Essential Facts and Conclusions Report was circulated to all parties and Governments of
Exporting Countries, and all parties were asked to submit their comments by
21 January 1999.  The Department received comments from the parties listed below:
1. Government of India
2. Nile Company for Matches and Wooden Houses
3. The Pakistani Match Manufacturing Association
II. FINDINGS ON SERIOUS INJURY
The Department has gone through the record, hearing, written submissions and comments on
both of the hearing and the essential facts report that were presented to the department by thedomestic producers, exporters, importers, foreign producers, foreign governments and the associations
etc, and different issues arising therefrom are discussed in these findings at appropriate places.
1. Evidence of Serious Injury or Threat thereof caused by Increased Imports
It has been concluded that the Egyptian Match Industry has been seriously injured.  In
reaching this conclusion, a full range of factors relating to the industry were examined.  The evidence
of serious injury should show a significant overall impairment in the position of the domestic
industry.  The industry prices were depressed a nd undercut by the imports, production, market share,
sales, utilization of production capacity in the industry had declined seriously and there was asubstantial decline in profits.
2. Product under consideration
(i) The product under consideration for the purpose of the present investigation is
"Safety Matches in Boxes".  It does not include "Comb" matches which are matches
made of paper instead of wooden sticks.
(ii) The product enters Egypt under tariff classification H.S. Tariff Heading No. 36 05 00.(iii) The product under investigation is subject to the regular customs duty of 30 per cent.
3. Domestic Industry
(i) The application was submitted by the Nile Company and supported by Egyptian
Company for Matches which also provided detailed information to the Department.
(ii) Both companies are privately owned, the Nile Company was privatized during 1997.(iii) These two companies produce more than 96 per cent of all domestic production.
(iv) A third domestic producer, Hiekal Comp any "Al-Ahtam", is privately owned and
supported the industry application but did not provide any industry information.G/SG/N/8/EGY/1
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4. Period of Investigation
With respect to the period of investigation to assess the impact of increased imports, generally
it is necessary to analyze the relevant data comparatively for over a longer period, usually data for aperiod of the most recent three years.
The investigation was initiated on 5 August 1998, and all domestic producers had submitted
data covering the period from the year 1995 to April 1998, and the decision to initiate the
investigation was taken on the basis of this data.
5. Increased Imports
(i) The data provided showed that the imports increased by 165 per cent in 1997 compared to
1995 and increased by 411 per cent in the first four months of 1998 compared to the first four
months of 1995.
(ii) The following Table shows the absolute increase in quantities of imports of the goods under
investigation to Egypt:
Table:  Absolute Volume of Imports
(000 Cartons)
Year 1995 1996 1997 1998
(4 months)
Imports 70,749 85,178 187,712 120,568
% Increase from
1995- 20.4 165 411*
* Compared to the same period of 1995.
The data in the above table shows that in absolute terms the imports have increased each year
since 1995.  The level of imports in the first four months of 1998 indicates that the imports for all of
1998 will be approximately double those of 1997.
6. The Situation of the Domestic Industry
The Department analyzed all data submitted by the domestic industry and the industry figures
showed a sudden and sharp decrease in production, market share, profitability, and capacity of
utilization and selling prices.
A careful examination has been carried out on the above-mentioned factors, and leads to the
facts set below:
(i) Sales declined significantly in 1997 by 18.4 per cent compared to the year 1996, and
in the first four months of 1998 sales declined by 8.8 per cent compared to the first
four months of 1997.  On the basis of sales for the first four months of 1998, the
annual sales in 1998 will show a further decline against sales in 1997.G/SG/N/8/EGY/1
G/SG/N/10/EGY/1
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(ii) Production declined in 1997 by 13.7 per cent compared to the year 1996, and it
declined by 4 per cent in the first four months of 1998 compared to the first four
months of 1997.  On the basis of the produc tion for the first four months of 1998, the
annual production for that year will be below that in 1997.  The evidence shows thatthere has been significant decline in production over the period that is associated with
the rising level of imports.
(iii) Capacity utilization declined in 1997 significantly to 51 per cent which corresponds
to a decline in production in that year.  In the first four months of 1998 there was a
further decline in capacity utilization from that achieved in 1997 to reach 47 per cent.
(iv) In 1997 average selling prices declined by 1.6 per cent compared to the year 1996 and
in the first four months of 1998 declined significantly by 7.2 per cent compared to the
first four months of 1997.  Depression of prices in the first four months of 1998 may
have caused partly the reduction in the rate of decline in sales, production and
capacity utilization in the same period.
(v) Profits per carton declined by 30.2 per cent in 1997 compared to the year 1996, and
this decline accelerated significantly in the first four months of 1998 to reach 61 per
cent compared to the first four months of 1997, due to the large increase in import
volumes in that period.
(vi) Employment has declined significantly in 1997 and in 1998, however some of the
reduction in employment have occurred as a result of the privatization of the Nile
Company in 1997.
(vii) The following Table shows a significant decline in the market share of the industry.
Year 1995 1996 19971998
(4 months)
Market share 94% 94% 85% 74%
7. Customs Duties applied
The actual duty rate was only 35 per cent and reduced to 30 per cent by virtue of presidential
Decree No. 243/1998 issued on 29 September 1998.
8. Causal Link
It is concluded on the basis of the following findings that the domestic industry has suffered
from serious injury which can be attributed to a significant increase in the volume of imports, in
absolute terms.
(i) There has been a significant reduction in production and sales since 1996.(ii) The market share of  the industry has declined significantly since 1996.(iii) There has been a significant decline in capacity utilization since 1996.G/SG/N/8/EGY/1
G/SG/N/10/EGY/1
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(iv) There was a significant depression of average selling prices in the first four months of
1998 compared with average selling prices achieved in 1997.
(v) The industry has suffered a serious and substantial decline in profits over the period
under review, particularly since 1996, and the rate of decline is accelerating.
(vi) All above facts clearly showed that the domestic industry is facing critical
circumstances, and the further importation would cause damage that would be
difficult to repair, thus justifying immediate action under the Agreement on
Safeguards.  The serious injury is directly related to the increase of imports.
9. Public interest
(i) The WTO Agreement on Safeguards is designed to clarify and reinforce the disciplines of
GATT 1994, specifically those of Article XIX Emergency Action on Imports of Particular
Products.  Article XIX of GATT provides for the suspension of the obligations of acontracting party in whole or in part, or in the modification or withdrawal of concessions in
limited circumstances.  If as a result of unforeseen developments and of the effect of
obligations incurred, any product is being im ported into the territory in such increased
quantities and under such conditions as to cause or threaten serious injury to domestic
industry, then safeguard action may be considered to prevent or remedy such injury.
In the preamble to the WTO Agreement, it states;"Recognizing  the importance of structural adjustment and the need to enhance rather than
limit competition in the international markets;…"
(ii) The Egyptian Government has signed the WTO Agreement in order to benefit from the trade
and other economic effects of trade.  Included among these benefits is competition for local
industry, which helps to ensure that the Egyptian economy in general attracts resources to
efficient industries and consumers pay no more than is necessary for the goods being
purchased.
(iii) The Department takes the view that Safeguard measures are an exception to free trade, and
can only be applied as a temporary exception where the volume of imports has increased
sharply and rapidly so that it causes serious injury to a local industry.  The measures are only
available to act as a temporary buffer against unforeseen shocks from open borders.  This
temporary period gives an industry time to make adjustments to meet competition from othersources.  The public interest is therefore only served where an industry can demonstrate that
adjustment will be made which will result, in a fixed time-frame, in an industry in Egypt that
is competitive.
(iv) The Department agrees with the domestic industry view that the continuation of the domestic
industry will realize social benefits for employment and wages, and availability of matches at
steady prices in the domestic market.  If th e industry closes down, the consumer will pay a
high price in the absence of the real competition.
(v) The domestic producers provide employment to a large number of people and make a
valuable contribution to the Egyptian economy.  Safeguard duty would thus enable them to
survive in face of competition offered by imports which should also be in the long-term
interest of the society.G/SG/N/8/EGY/1
G/SG/N/10/EGY/1
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10. Serious Injury Conclusions
The following is a summary of the conclusions reached during the investigation of serious
injury:
- Imports have increased significantly since 1996, both in absolute terms and in relation
to production, and the rate of increase is accelerating.
- There has been a significant reduction in production and sales since 1996.- The market share of the industry has declined significantly since 1996.
- There has been a significant decline in capacity utilization since 1996.
- There was a significant depression of average selling prices in the first four months of
1998 compared with average selling prices achieved in 1997.
- The industry has suffered a serious and substantial decline in profits over the period
under review, particularly since 1996, and the rate of decline is accelerating.  Other
factors have also affected profitability.
- Employment in the industry has declined significantly since 1996, but this cannot be
attributed entirely to increased imports.
- The injury effects noted above have occurred in association with a significant
increase in imports.
11. Adjustment Plan for Industry
(i) Industry plans
(a) The Nile Company1. Restructure its factories at present in Cairo and Alexandria, and invest about
twenty million pounds to develop such factories.
2. Restructure its labour force and decrease the number of workers in the company.3. Develop sales and marketing systems to enable the distribution of matches in the
whole country.
4. Increase exports to Arab and African countries which would enable the company to
make use of its full production capacity and that would lead to a decrease in its cost
of production.
5. The company was privatized in 1997 and the contract to privatize the industry
imposed substantial legal requirements for the new owners to increase the efficiency
and cost effectiveness of the company.
(b) The Egyptian Company:
1. Replace and renew its machines to increase its production capacity.G/SG/N/8/EGY/1
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2. Take more care of packing and packaging and buy new machines for that purpose.
3. Full automation of the whole production process to increase efficiency and increase
production which will decrease production costs.
4 Get acquainted with new technology in the match industry, transfer and implement it.5. Continue training technicians and hire experts.6. Consider establishing a distribution company in which all domestic producers would
participate, so that it can have the ability to study all markets, open new exportmarkets and enable distribution to the whole domestic market.
7. Get better raw material sources, plant and equipment at reasonable prices and
coordinate the purchasing process collectively so that the industry can benefit from
discounts for large purchases.
(ii) The Department considers that the plans of the local industry to make adjustments to enable it
to meet international competition in the near fu ture as a critical feature of the investigation.
(iii) From the reconstructuring plans of the domestic industry it appears that they need  a period of
about three years to substantially complete their plans and to restructure their units.
12. Conclusions and recommendations of International Trade Policies Department
The following is a summary of the overall conclusions reached by the Department on the
investigation:
(i) Safety matches are being imported into Egypt in such increased quantities in absolute terms,
that serious injury has been, is being and will continue to be caused to the domestic industry
producing like or directly competitive products.
(ii) Safeguard measures are required to allow the industry to adjust to import competition.  Such
measures should be in the form of duties, which would be phased out proportionately over a
period of three years.
(iii) It is in the public interest that imports be allowed to continue.(iv) The domestic industry is in need of adjustment and the industry has plans for such
adjustment, which may meet with differing degr ees of success but which will be monitored by
the Department.
(v) The Department does not consider that safeguard measures are a substitute for a competitive
domestic industry supported only by long-term tariffs, and does not consider that a "tax"
should be imposed upon consumers in any case, without the industry having firm plans for
improvement which will be implemented.  The Department would only contemplate measures
if it can be assured by the industry that the Egyptian consumer is only to be disadvantagedtemporarily.  At the end the local industry must be in a position to meet international
competition and provide the local consumer with value for money.G/SG/N/8/EGY/1
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In view of the findings above, it is concluded that the increased imports of Safety Matches in
Boxes to Egypt has caused serious injury to the domestic producers and the imposition of the
safeguard duty for a period of three years will be in the public interest and the measures should be in
the form of duty because the quota system would not provide price restraint through competition withthe industry.  It is the Department's view that pr ice competition is an essential element in any scheme
of structural adjustment for the industry.
Considering the need to progressively liberalize the safeguard duty in order to facilitate
positive adjustment by the domestic industry, a safeguard duty at the rates mentioned below is
recommended to be imposed on Safety Matches in Boxes imported into Egypt for a period of three
years according to the following table:
Years First year
1Second year Third year2
Duration From 19.02.1999 to
18.02.2000From 19.02.2000 to
18.02.2001From 19.02.2001 to
04.08.2001
Duty rate C.I.F. export
price value34% 22% 11%
                                                     
1 The introduction of the measure starting from 19 February 1999.
2 The measure is expected to last through to 4 August 2001.G/SG/N/8/EGY/1
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NOTIFICATION PURSUANT TO ARTICLE 12.1 (C)
OF THE AGREEMENT ON SAFEGUARDS UPON TAKING
A DECISION TO APPLY OR EXTEND A SAFEGUARDS MEASURE
Pursuant to the above referenced provisions of the Agreement on Safeguards and in the light
of the agreed format for notifications (G/SG/I, 1 July 1996) Egypt provides the following notification
to the Committee on Safeguards.
Notification under Article 12.1 (c) upon taking a decision to apply a safeguard measure
1.-2. This information was provided in previous notifications.  See G/SG/N/6/EGY/1
(11 August 1998) and G/SG/N /7/EGY/1 (11 August 1998).
3. Provide a precise description of the product involved.   Safety Matches in Boxes and do not
include "Comb Matches" which are matches made of paper instead of wooden sticks, which enter
Egypt under tariff classification H.S. Tariff Heading No. 36 05 00 and subject to input duty (30 %).
4. Provide a precise description of the proposed measure.  The measure is a surtax on imports of
Safety Matches in Boxes, for a period of three years.
5. Provide the proposed date of introduction of the measure.  The measure will be introduced on
19 February 1999.
6. Provide expected duration of the measure .  The measure is expected to last through to
4 August 2001.
7. Not applicable.8. If the expected duration is over one year, provide expected timetable for progressive
liberalization of the measure .  The expected measure will be decreased progressively each year to
reach zero per cent after the end of the three years* as indicated in the following table:
Years First year Second year Third year
Duration From 19.02.1999 to
18.02.2000From 19.02.2000 to
18.02.2001From 19.02.2001 to
04.08.2001
Duty rate C.I.F. export
price value34% 22% 11%
* The three years period includes 200 days over which provisional measures are in place ie. from
8 August 1998 to 20 February 1999.
9. Not applicable.
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