RESTRICTEDWORLD TRADE
ORGANIZATIONG/SG/Q2/EGY/11
19 June 2000
(00-2452)
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
Replies to Follow-Up Questions Posed by HUNGARY1
Regarding the Notification of EGYPT2
The following communication, dated 15 June 2000, has been received from the Permanent
Mission of Egypt.
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Please refer to G/SG/N/8/EGY/2-G/SG/N10/EGY/2 for further information.
Ad R1. Could you be more specific on these unforeseen developments?
Reply
The referred to unforeseen developments and the effect of the obligations incurred by Egypt
as a contracting party, are the conditions, which gave rise to the enquiry as regards those goods.  The
ownership of the Egyptian industry changed with a major overseas partner withdrawing from Egypt.
The company, consequently, had to adjust to this change and to the loss of a partner, which in the past
was able to give technical support during any period when the market was changing.  The ex-partner,had good knowledge of the local market, and changed to importing.  This led others to import the
goods.  The consequence of these changes led to the industry facing increased international
competition at a time when it had certain problems in adjusting to changes in its structure as well.
This was not foreseeable at the time that Egypt en tered into the WTO commitments.  (Section 1(a) of
Article XIX refers).
Ad R2. The reply more or less reproduces section 1 of Part II of the notification which contains
the summary of the conclusions reached during the investigation of serious injury but does not
seem to answer our question that is how the causal link between increased imports and serious
injury was established and particularly how the authorities did ascertain that the parallelmovement of imports and the decline in the re levant injury factors are not coincidental?
                                                     
1 G/SG/Q2/EGY/9
2 G/SG/N/8/EGY/2-G/SG/N/10/EGY/2 & Suppl.1G/SG/Q2/EGY/11
Page 2
Reply
The question is unclear to Egypt.  The movement of the relevant injury factors and the
increase in imports did coincide, hence the finding that imports caused the serious injury.  If the
question concerns other causes of injury, these were addressed in the enquiry with the results detailedunder the heading "Other causes of injury" in the Final Report.  This states:  The Department
considered all the other causes of serious injury put fo rward to it during the hearing.  It noted that the
management of the industry has been addressing the problems of the company including the problems
of costs, investment and marketing (including packaging).  These were existing problems, which were
within the control of the industr y to solve.  These factors are not new and indicate longstanding
problems, which the industry has not addressed in a timely manner.  The Department concluded that
the problems for the industry existed prior to the increase in imports of the goods.  The imports havebeen the cause of the serious injury, by exacerbating pre-existing factors and causing them to become
serious.  The final report also states, in the "Conclusions about Serious Injury".  Other causes of injury
have been examined.  There were aspects of injury which management has not been addressing
including costs, investment in plant, equipment, and technology and marketing.  It has been found that
injury factors existed before the large increase in  imports.
The sudden surge in imports has made the injury factors serious.  In addition the Final Report
stated:  In the light of the above findings, it was concluded that the domestic industry had not
addressed the problems of cost, investment and marketing, including packaging, adequately over the
period prior to the surge of imports.  It was concluded that the imports of fluorescent lamps hadchanged the injury already being experienced, to serious injury and this caused a significant overall
impairment of its position.
In other words, the problems that pre-existed the surge in imports caused injury to the
industry.  But the import surge increased the degree of injury to a serious level.  Also, there were noother new or post-surge problems that might have exacerbated the pre-existent injury to a serious
level;  of necessity;  then, the only explanation for the exacerbation of the pre-existing injury to a
degree of injury is the sole new element in the equation, which was the unforeseen surge of imports.
Thus the causal linkage between the increased imports and the serious injury was clear.  As all
relevant causes of injury have been examined before a determination was made, the question is not
clear.  Is the suggestion that causes which are not relevant, should have been examined?
Ad R3. Could Egypt explain what the periods mean for which import data were given and
provide the import figures for the same period on a calendar year basis as well?
Reply
As a general rule applied in the safeguards investigations conducted by Egypt, the Egyptian
Investigating Authority relies on the import data provided by the Egyptian Customs Authority, which
is the only reliable source for import statistics.  Because the data on imports was available in fiscal
years (July) 1996/7, 1997/8 and 1998/9 and covered the period of the investigation, as the case was
initiated in September 1999, the Egyptian Investigating Authority used the data published by theEgyptian Customs Authority.  The calendar year information is not available.
Ad R5. Could Egypt explain what the periods mean for which relative figures were given and
provide indexes on the relative increase of imports for the same period on a calendar year basis
as well?G/SG/Q2/EGY/11
Page 3
Reply
The Egyptian authorities used the fiscal year (most recent) data available for the calculation
on the relative increase in imports.  This was the basis for the determination of the relative increase
and it is not prepared to recalculate this on an incorrect basis.  Also, please refer to the above reply.
Ad R6. We would like to clarify our original question.  In essence what we did request were
statistics (absolute or at least relative figures) on a calendar year basis to get a better picture of
the situation of the domestic industry.
Reply
The Egyptian authorities, as explained above, used the most recent data available to calculate
the statistics on imports.  Also, please refer to the above replies.
New Question 1
Could Egypt provide us with data and information on the development of productivity
and employment which notwithstanding the relevant provision of the Agreement seems to be
missing from the notification.
Reply
Article 2(a) requires the Authority when examining serious injury to "evaluate all relevant
factors of an objective and quantifiable nature having a bearing on the situation of that industry".  This
Article lists particular factors for examination, including productivity and employment.  Because of
the special features of employment law in Egypt, changes in employment are not a factor, which isrelevant.  Whether the industry is doing well or poorly, the effects on employment would not be
manifest.  It therefore is not a relevant factor for evaluation because it does not inform.  As
employment is not a relevant factor, calculations of productivity would also be uninformative.  It is
agreed that a calculation based on objective data could have been included which would have shown a
decline in productivity, but given the circumstances any conclusion would have been irrelevant to the
evaluation of serious injury.
New Question 2
In light of the second criterion set out in Articles 2.1 and 4.2(a) of the Agreement on
Safeguards, could you please indicate those conditions which together with the increased
imports caused serious injury?
Reply
The increase in the volume of imports was established from the import data as required under
Article 2.1.  The relevant factors in Article 4.2(a) were all examined.
Other causes were examined as required in Article 4.2(b).  The results were published in a
notification and the WTO Secretariat was notified.
Further issues raised
A. The information in the notification is not sufficiently detailed to come to any well-
founded conclusion regarding the consistency of the safeguard measures with the relevant
provisions of the Agreement on Safeguards.G/SG/Q2/EGY/11
Page 4
Reply
The notification was made in accordance with the format agreed by the Committee on
Safeguards.  This follows the format of notifications of other Members and is not remarkable.  Thefull details of the case are set out in the published Final Report (non-confidential version), which was
available to anybody during the consultation that was planned scheduled for 13 January 2000.  No
request was received from Hungary in this regard.
B. On product coverage, there are doubts that Egypt has fully abided by the relevant rules
of the Agreement.  Egypt does not produce fluorescent lamps of 38 mm diameter, and under the
relevant provisions of the Agreement, there is no justification to retain this product categorywithin the scope of the safeguard measures.
Reply
Hungary claims that the Egyptian industry does not produce fluorescent lamps of 38 mm
diameter.  Could Hungary please identify the source of this information?  According to the
information that has been collected and examined by the Egyptian Investigating Authority from the
petitioner's records during the investigation process, it was clear to the Egyptian Investigating
Authority that the Egyptian industry produces fluorescent lamps of 38 mm.
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