WORLD TRADE G/SG/N/6/ARG/1
G/SG/N/7/ARG/1
ORGANIZATION 25February 1997
(97-0787)
Original: Spanish Committee onSafeguards
NOTIFICATION UNDER ARTICLE 12.1(A) OFTHE AGREEMENT
ONSAFEGUARDS ONINITIATION OFANINVESTIGATION AND
THE REASONS FOR IT
AND
NOTIFICATION UNDER ARTICLE 12.4OFTHE AGREEMENT ON
SAFEGUARDS BEFORE TAKING APROVISIONAL SAFEGUARD
MEASURE REFERRED TOINARTICLE 6
ARGENTINA
Thefollowing communication, dated 21February 1997, hasbeenreceived fromthePermanent
Mission ofArgentina.
________________
Iampleased toinform you,forthepurposes ofnotifying theWorld Trade Organization 's
Committee onSafeguards that,under Article 12oftheAgreement onSafeguards, myGovernment
hasdecided toinitiate aninvestigation inconnection withfootwear products andthat,pursuant to
Article 6oftheAgreement, willapply aprovisional safeguard measure.
Thetextofthenotification isattached andfollows theformat adopted bytheCommittee on
Safeguards. TheMinisterial Resolution ordering therelevant administrative actwillbeforwarded to
youafterpublication intheOfficial Gazette oftheArgentine Republic.
Ialsowishtoinform youthattheArgentine authorities areready toholdconsultations under
Article 12oftheAgreement onSafeguards withinterested parties whosoindicate.
I. Notification under Article 12.1(a)
Pursuant toArticle 12.1(a) oftheWTO Agreement onSafeguards andusing theformat adopted
bytheCommitteeonSafeguards(documentG/SG/N/6),theArgentineRepublicherebygivesnotification
oftheinitiation ofasafeguards investigatory process.
1. Dateofinitiation oftheinvestigation
On25October 1996, theChamber oftheFootwear Industry submitted totheSecretariat for
Industry, Trade andMining, oftheMinistry oftheEconomy andPublic Works andServices, arequest
fortheapplication ofasafeguard measure under theAgreement onSafeguards oftheGATT 1994,
adopted byLawNo.24,425/95 andregulated byDecree No.1059/96. Onthebasis oftherequest,
theimplementing authority decided toproceed toinitiate aninvestigation which willstart on
25February 1997.G/SG/N/6/ARG/1
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2. Products subject toinvestigation
Theinvestigation involves footwear ofallkinds (except ski-boots andsnowboards), from
handicraft work tothemost sophisticated designer types, using allkinds ofmaterials anddifferent
manufacturing technologies, depending ontheparticular product.
These products come under thefollowing tariff headings:
6401 WATERPROOF FOOTWEAR OFRUBBER ORPLASTICS
6401.10.00 Footwear incorporating aprotective metal toe-cap
6401.91.00 Other footwear, covering theknee
6401.92.00 Other footwear, covering theankle, butnotcovering theknee
6401.99.00 Other
6402 FOOTWEAR OFRUBBER ORPLASTICS
6402.12.00 Ski-boots andsnowboards
6402.19.00 Other (sports)
6402.20.00 Footwear withuppers ofstraps (thongs)
6402.30.00 Other footwear, incorporating aprotective metal toe-cap
6402.91.00 Other, covering theankle
6402.99.00 Other
6403 FOOTWEAR WITH LEATHER UPPERS
6403.12.00 Ski-boots andsnowboards
6403.19.00 Other (sports)
6403.20.00 Footwear withouter soles ofleather anduppers ofstraps
6403.30.00 Footwear made onaplatform ofwood
6403.40.00 Other footwear, incorporating aprotective metal toe-cap
6403.51.00 Other footwear covering theankle, withsoles ofleather
6403.59.00 Other, withsoles ofleather
6403.91.00 Other, covering theankle, withouter soles ofrubber orplastics
6403.99.00 Other, withouter soles ofrubber orplastics
6404 FOOTWEAR WITH TEXTILE UPPERS
6404.11.00 Sports footwear withouter soles ofrubber orplastics
6404.19.00 Other, withouter soles ofrubber orplastics
6404.20.00 Footwear withouter soles ofleather
6405 OTHER FOOTWEAR
6405.10 With uppers ofleather
6405.10.10 With soles ofrubber orplastics anduppers ofcomposition leather
6405.10.20 With soles anduppers ofcomposition leather
6405.10.90 Other
6405.20.00 With uppers oftextile material
6405.90.00 Other
3. Reasons forinitiating theinvestigation
Asstated initem1,theChamber oftheFootwear Industry submitted arequest fortheapplication
ofsafeguard measures. From theevidence gathered sofar,theimplementing authority considers that
theapplicant represents approximately 70percentofthedomestic industry inthissector.G/SG/N/6/ARG/1
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TheChamberattachedinformationondevelopmentsinfootwearimports,whichmadeitpossible
notonlytomeasure theimpact onapparent consumption butalsotoanalyse theimpact ofsuchimports
ondomestic production.
Theimplementing authority alsohasevidence toindicate thattheforegoing produced acomplex
economic andfinancial situation forthesector, adecline indomestic production, theclosure ofthe
majority ofplants, anincrease inidlecapacity, lossofjobs, temporary lay-offs, increased stocks and
difficulties inrecovering investment costs.
Inview oftheevidence submitted bythesector involved, theimplementing authority finds
thatthisconstitutes critical circumstances asprovided forinArticle 6oftheAgreement onSafeguards
oftheGATT 1994, adopted byLawNo.24,425.
Accordingly, theimplementing authority decided toinitiate theinvestigation.
II. Notification under Article 12.4
Pursuant toArticle 12.4oftheAgreement onSafeguards andinkeeping withtheformat adopted
bytheCommittee onSafeguards (G/SG/1), Iattach anotification before taking aprovisional safeguard
measure, under Article 6oftheAgreement onSafeguards.
1. Product subject totheproposed provisional safeguard measure
Themeasure involves products under thefollowing tariff headings:
6401 WATERPROOF FOOTWEAR OFRUBBER ORPLASTICS
6401.10.00 Footwear incorporating aprotective metal toe-cap
6401.91.00 Other footwear, covering theknee
6401.92.00 Other footwear, covering theankle, butnotcovering theknee
6401.99.00 Other
6402 FOOTWEAR OFRUBBER ORPLASTICS
6402.12.00 Ski-boots andsnowboards
6402.19.00 Other (sports)
6402.20.00 Footwear withuppers ofstraps (thongs)
6402.30.00 Other footwear, incorporating aprotective metal toe-cap
6402.91.00 Other, covering theankle
6402.99.00 Other
6403 FOOTWEAR WITH LEATHER UPPERS
6403.12.00 Ski-boots andsnowboards
6403.19.00 Other (sports)
6403.20.00 Footwear withouter soles ofleather anduppers ofstraps
6403.30.00 Footwear made onaplatform ofwood
6403.40.00 Other footwear, incorporating aprotective metal toe-cap
6403.51.00 Other footwear covering theankle withsoles ofleather
6403.59.00 Other, withsoles ofleather
6403.91.00 Other, covering theankle, withouter soles ofrubber orplastics
6403.99.00 Other, withouter soles ofrubber orplasticsG/SG/N/6/ARG/1
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6404 FOOTWEAR WITH TEXTILE UPPERS
6404.11.00 Sports footwear withouter soles ofrubber orplastics
6404.19.00 Other, withouter soles ofrubber orplastics
6404.20.00 Footwear withouter soles ofleather
6405 OTHER FOOTWEAR
6405.10 With uppers ofleather
6405.10.10 With soles ofrubber orplastics anduppers ofcomposition leather
6405.10.20 With soles anduppers ofcomposition leather
6405.10.90 Other
6405.20.00 With uppers oftextile material
6405.90.00 Other
2. Type ofproposed provisional safeguard measure
Toprevent serious injury todomestic industry, theproposal wastoadopt aprovisional safeguard
measure consisting oftheapplication ofspecific duties tofootwear imports, intheformoffixedamounts
perpair. Theprovisional amounts proposed arethefollowing:
Provisional Minimum Specific Duties onFootwear Imports
Tariff heading US$perpair
6401.10.00 7.80
6401.91.00 5.40
6401.92.00 2.20
6401.99.00 1.40
6402.12.00 0.00
6402.19.00 7.40
6402.20.00 0.90
6402.30.00 11.50
6402.91.00 7.00
6402.99.00 6.30
6403.12.00 0.00
6403.19.00 12.10
6403.20.00 5.00
6403.30.00 3.50
6403.40.00 6.90
6403.51.00 7.60
6403.59.00 7.17
6403.91.00 10.40
6403.99.00 7.30
6404.11.00 7.00
6404.19.00 2.50
6404.20.00 2.90
6405.10.10 6.00
6405.10.20 6.50
6405.10.90 6.50
6405.20.00* 0.84
6405.90.00 6.00
*Except footwear withsoles anduppers ofwool felt.G/SG/N/6/ARG/1
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3. Proposed dateofintroduction oftheprovisional measure
Theprovisional measure isscheduled tostarton25February 1997.
4. Expected duration oftheprovisional safeguard measure
Ithasbeen decided thattheprovisional safeguard measure willapply foraperiod of
200(twohundred) days, during which theinvestigation willproceed further andadecision willbe
taken onwhether ornottoadopt afinalmeasure.
5. Preliminary determination thatincreased imports havecaused orarethreatening tocause serious
injury
Theassessment wasmade bothinunits andinamounts. Itwasfound thatifacomparison
ismade interms ofimported units(pairs), between 1991 and1995 there wasanabsolute increase of
70.54 percent, while interms ofUS$c.i.f. theincrease was157.2 percent. Thedataprovided by
theNational Statistics andCensus Institute produced thefollowing figures:
Total Footwear Imports
Unitmeasure/year 1991 1992 1993 1994 1995
Millions ofpairs 8.86 16.63 27.78 19.84 15.11
Millions ofUS$c.i.f. 44.4 110.9 128.8 141.5 114.2
Variation inTotal Footwear Imports
Base1991=100
Unitmeasure/year 1991 1992 1993 1994 1995
Pairs 100 187.7 245.82 223.93 170.54
US$ 100 249.77 290.1 318.7 257.2
Furthermore, theincrease wasweighted inrelative terms, inthattworatios wereused, namely
imports/production andimports/apparent consumption. Thetwounits ofmeasure mentioned above
(pairs andUS$) were usedforbothindicators, withthefollowing results:
Ratios
Ratio 1991 1995 %
increase1995/91 increase in
percentage points
Imports/production (pairs) 9.69 23.45 13.76 142
Imports/production (US$) 5.59 14.58 8.99 161
Imports/apparent consumption (pairs) 9.19 20.14 10.95 119.15
Imports/apparent consumption (US$) 5.43 13.80 8.37 154
Therelative increase istherefore clear, bothinimports toproduction andinimports to
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Theincrease inimports onthedomestic market between 1991 and1993 andtheconsequent
decline indomestic production hadanadverse effect ontheindustry, particularly inregard to
employment,closureofestablishments,installedcapacityandcapacityutilizationrates,levelofcompany
indebtedness andincreased stocks.
Inviewoftheseeffects,causedbytheincreaseinimports,theimplementingauthoritydetermined
theexistence ofathreat ofserious injury tothedomestic industry.
6. Determination ofcritical circumstances where delay would cause damage which itwould be
difficult torepair
Pursuant totheinformation supplied bytheapplicant, theimplementing authority considered
thefollowing variables:
Production: Intheinvestigation period there wasa29.52 percentdrop(measured inpairs)
and15percentdrop(measured inconstant pesos) between 1991 and1995.
Installed capacity: Between 1991and1995, installed capacity (measured inpairs) fellby14per
cent. Asignificant indicator istheclosure of331establishments in1993, withtheclosure
of997establishments between 1991 and1995.
Idlecapacity: Anincrease hasbeenfound inunderutilized production capacity; while plant
capacity utilization in1991 stood at65percent, in1995 itwas53percent.
Jobs: Between 1991and1995therewasa34percentdropinthenumber ofpeople employed
(14,000 jobs).
Stocks: Imports caused asignificant decline insales ofdomestic products. Despite the
reductions inproduction levels, thelocal industry wasforced toaccumulate stocks, which
involved considerable financial costforenterprises. Between 1991and1995, stocks offootwear
intheleading enterprises roseby282percent, witha312percentpeak(1994-1991).
Investment costs: Theabove circumstances made itimpossible torecover suchcosts.
Indebtedness: Theabove circumstances have ledtoincreased levels ofindebtedness for
enterprises inthesector andjeopardized theirfinancial situation.
From thisexamination, theimplementing authority deemed itnecessary toadopt aprovisional
safeguard measure, inviewoftheexistence ofcritical circumstances asreferred toinArticle 6ofthe
Agreement onSafeguards oftheGATT 1994. Inthisway,anattempt isbeing made toprevent injury
thatwould bedifficult toremedy, toenable thesector toovercome anextreme situation andmake it
possible toinstitute areadjustment plantorestructure theindustry.