RESTRICTEDWORLD TRADE
ORGANIZATIONG/SG/Q2/KOR/1
13 November 2000
(00-4805)
Committee on Safeguards Original:  English
NOTIFICATIONS PURSUANT TO ARTICLE 12.1(C) AND
ARTICLE 9, FOOTNOTE 2, OF THE AGREEMENT ON SAFEGUARDS
ON TAKING A DECISION TO APPLY A SAFEGUARD MEASURE
Questions posed by the UNITED STATES regarding the
Notifications of the Republic of KOREA1
The following communication, dated 9 November 2000, has been received from the
Permanent Mission of the United States.
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According to the notification made pursuant to Article 12.1(a) of the WTO Safeguards
Agreement (G/SG/N/6/KOR/4, 20 October 1999), the imports of garlic amounted to 9,467 metric tons
in 1996; 18,389 metric tons in 1997; 35,996 metric tons in 1998; and, 22,899 metric tons for the first
six months of 1999.  However, the import figures provided in the notification of the application of a
provisional (G/SG/N/7/KOR/4, 11 November 1999), wh ich applies only to frozen garlic, and prepared
or preserved garlic, by Vinegar or Acetic Acid, only accounts for imports of 2,944 metric tons in
1996, 5,401 metric tons in 1997, 9,943 metric tons in 1998, and 9,490 metric tons in the first half of
1999.
- Please explain the discrepancy in these import figures.  Are the remaining imports of
6,523 metric tons in 1996, 12,988 metric tons in 1997, 26,053 metric tons in 1998, and
13,409 metric tons in the first half 1999 attributed to fresh garlic?  Given that these amounts
exceed the amount of imports for chilled and prepared/preserved garlic during the
investigatory period, on what basis was the decision made to apply the provisional safeguardmeasure only to frozen and prepared/preserved garlic?
According to para 5.2 of G/ SG/N/7/KOR/4, the domestic market share of imported garlic
increased from 3.3 per cent in 1996 to 6.2 per cent in 1997, and 11 per cent in 1998.
- Do these import market shares include imports of fresh garlic?  If yes, what percentages of
market share were taken by the products subject to provisional safeguard measure, frozen
garlic and prepared/preserved garlic?
We note that the data provided in paragraph 5.2 of G/SG/N/7/KOR/4 provides information
concerning the share of the domestic market taken by imports of garlic.  However, we are concerned
that Korea may be imposing a provisional safeguard measure to protect its domestic market from
imports, at the same time as domestic production is increasing and export sales are increasing.
                                                     
1 G/SG/N/6/KOR/4, G/SG/N/7/KOR/4, G/SG/N/8/KOR/3, G/SG/N/10/KOR/2-G/SG/N/11/KOR/2 &
Suppl.1.G/SG/Q2/KOR/1
Page 2
- What were the volumes and values of domestic production of garlic, including fresh, chilled
and prepared/preserved for the years 1996, 1997, 1998 and first half 1999?
- What were the volumes and values of exports of garlic, in all forms, during those same
periods?
We note, in paragraph 5.3 of G/SG/N/7/KOR/4, that profits of the domestic garlic industry in
terms of Won per hectare in the first half of 1999 decreased 43 per cent of the profits of the same
period in the previous year.
- Was the Korean domestic garlic industry profitable in the first half of 1999?  If the industry
was operating profitably, even if at reduced levels of profitability, on what basis do criticalcircumstances exist that damage would be caused that would be difficult to repair?
- Was the Korean domestic garlic industry profitable in the years 1996-1998?- Does the Government of Korea provide domestic supports to its garlic producers?  If so, in
what amounts for the years 1996, 1997, 1998 and first half 1999?  How was the availability of
domestic supports taken into account when the determination was made that domestic
producers were faced critical circumstances from increased imports?
We note in paragraph 5.6 of G/SG/N/7/KOR/4 that there is a discussion about the causal link
between the increase in imports and the decrease in domestic prices.  However, it is stated that the
price of garlic is influenced by the production of the year, quality and consumption level.
- Given the factors identified by Korea as affecting price, why were production, quality and
consumption levels not included in the information provided in G/SG/N/7/KOR/4?
- There does not appear to have been a preliminary determination that increased imports have
caused or are threatening to cause serious injury.  If such a preliminary determination was
made, was it based upon serious injury or threat of serious injury?
- The information provided in paragraph 5.6 only concerns changes in price levels, it does not
address the issue of “significant overall impairment of the domestic industry.”  Did thecompetent authority consider the factors such as  changes in the level of sales, productivity,
production, capacity utilization, and profits and losses when it made its preliminary
determination?  What “clear evidence” was considered in evaluating these factors?
- Did the competent authority look at sales, productivity, production, capacity utilization and
profits and losses over a five-year period, or only for the first half of 1999?
Paragraph 5.6 of G/SG/N/7/KOR/4 seems to make much of the substitution of frozen and
prepared/preserved garlic for domestic fresh garlic.
- Did the competent authority find that there was a similar displacement of imported fresh
garlic by frozen and prepared/preserved garlic?  What were the quantities and values of
imported fresh garlic during the years 1996, 1997, 1998 and first half 1999?
We note in the notification, pursuant to Article 12.1(b) of the WTO Safeguards Agreement
(G/SG/N/8/KOR/3, 21 February 2000), that garlic im ports increased 93.6 per cent in 1997, 95.7 per
cent in 1998, and 28.2 per cent during the period January to September 1999, compared to the
previous years.G/SG/Q2/KOR/1
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- Did these import quantities include fresh, as well as chilled and prepared/preserved garlic?
- What were the import quantities and import values of garlic during the periods 1996, 1997,
1998 and January-September 1999?  What were the quantities and values of domestic
consumption of garlic during those same periods?
- On what basis did the competent authority determine that production, productivity and
capacity utilization were not appropriate factors to evaluate injury due to the characteristics of
the garlic industry?  Did the competent authority gather information on productivity and
capacity utilization for the periods 1996, 1997, 1998 and January-September 1999?  If so,
please describe.
We note, from the footnote 1 information prov ided in G/SG/N/8/KOR/3, that the Korean
competent authority considers “farmgate price” to be the most appropriate indicator of the degree of
injury to the domestic industry which is “just a group of garlic producers.”  Using the farmgate prices
of garlic times (at 1 ton=907.2 kilograms) the domestic production of garlic in tons, the value of
domestic production of garlic appears to have been approximately W 677,616 million in 1996,W 715,110 million in 1997, W 971,604 million in 1998 and W 684,860 million in 1999.  (Note: these
values appear to be consistent with the sales values, based upon marketing year, provided in para (e)
of G/SG/N/8/KOR/3.)
- Given that the value of domestic production actually increased steadily throughout the period,
with only a small fall-off, yet still above 1996 levels, in 1999, please explain how imports
have seriously injured domestic producers?  It appears that almost all of these production
increases went to sales, both domestic and overseas, because inventories actually declined in
quantities in 1996-1998.  (Note:  The inventory level on September 1999 is not relevant for
this analysis, because it includes the domestic harvest, but most sales do not occur until wintermonths.)
We note that profits per hectare actually increased from W 7490 thousand per hectare in 1996
to W 14,790 per hectare in 1998.
- Do these profits per hectare include government support payments received by domestic
garlic producers?
- What were the amounts of government support payments received by Korean producers
during the years 1996, 1997, 1998 and January-September 1999?  What was the per hectare
value of those support payments for each of those periods?
It was noted in the productivity section that it was not appropriate to evaluate the injury to the
domestic industry on the ground of year-to-year changes of garlic yields, because they are heavily
influenced by weather conditions.
- Did the competent authority consider the weather conditions for each of years of the
investigation in order to determine whether weather in fact affected productivity?  Was there
an unusual weather year during the investigatory period?  (Note:  It appears that the domestic
production increased on a regular basis throughout, which would indicate that weather was
not much of a factor).  Were there any reasons other than weather that the Korean authorities
identified in determining that they did not attach much importance to productivity?
We note in G/SG/N/8/KOR/3 para 2 that there had been almost no international trade in
frozen garlic and prepared/preserved garlic.  It was noted that imports of these products increasedG/SG/Q2/KOR/1
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dramatically as exporters sought to escape the high level of tariffs on fresh and chilled garlic.  This
change in trade patterns was impossible to for ecast at the time of the Uruguay Round negotiations.
- Was the increase in import values for fresh garlic foreseen?  We note in
G/SG/N/10/KOR/2/Suppl.1 that tariff rates on fr esh and chilled garlic have been increased
60 per cent or 300 Won, whichever is greater, by the application of a safeguard measure.
Won’t this create an even greater incentive for exporters to seek to export frozen and
prepared/preserved garlic?
- What is meant by “MMA” in paragraph 4 of G/SG/N/10/KOR/2/Suppl.1?  What is the current
value of MMA?
We note that Korea has imposed a tariff rate quota on frozen garlic and prepared/preserved
garlic.  It is noted that the allocation of the quota is based on the proportions of supply during the last
three years in accordance with Article 5.2(a) of the Safeguards Agreement.
Please provide the tariff rate quota allocations by country for the period 1 June-
31 December 2000; 1 January 2001-31 December 2001; and 1 January 2001-
31 December 2002.
The in-quota tariff amount is 20,105 MT for the 8-month period 1 June-31 December 2000,
but is only 22,267 MT for the 12-month period 1 January-31 December 2002.
- Please explain how a smaller in-quota tariff share in the year 2000 than in the year 2002
satisfies the progressive liberalization requirement of Article 7.4 of the Safeguards
Agreement, particularly given the prohibitive out of quota tariff rates that are being applied.
We note that the provisional safeguard measure was applied on 13 November 1999 and the
final safeguard is not scheduled to end until 31 December 2002.
- Since this total period exceeds 3 years, does the Korea Government intend to review the
measure at the mid-term of the measure, pursuant to Article 7 paragraph 4?
We note that G/SG/N/11/KOR/2/Suppl.1, the notification on Article 9, footnote 2 of the
Agreement on Safeguards, failed to address the Article 9, footnote 2 exclusion of developing country
Members.
- Please identify all developing country Members excluded from this safeguard measure.
- Please identify the developing countries that are subject to this safeguard measure.
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