G/SG/N/8/MDG/2  
G/SG/N/10/MDG/2  
G/SG/N/11/MDG/2/Suppl.2  
 
1 July  2019 
(19-4379) Page: 1/8 
Committee on Safeguards  Original:  French  
 
  
NOTIFICATION UNDER ARTICLE  12.1(B)  OF THE AGREEMENT ON  
SAFEGUARDS ON FINDING A SERIOUS INJURY OR THREAT  
THEREOF CAUSED BY INCREASED IMPORTS  
NOTIFICATION UNDER A RTICLE  12.1(C)  
OF THE AGREEMENT ON SAFEGUA RDS 
(NOTIFICATION OF A P ROPOSAL TO IMPOSE A MEASURE ) 
NOTIFICATION UNDER ARTICLE 9, FOOTNOTE  2, 
OF THE AGREEMENT ON SAFEGUARDS  
MADAGASCAR  
(Blankets and Travelling Rugs)  
The following communication, dated 25 June 2019, is being circulated  at the request of the 
delegation of Madagascar.  
 
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On 20 September 2018, the National Trade Remedies Authority (ANMCC) initiated a safeguard 
investigation on blankets and travelling rugs imported into Madagascar. The initiation of the 
investigation and the imposition of the provisional measure were notified to the WTO Committee on 
Safeguards in documents G/SG/N/6/MDG/2 and G/SG/N/7/MDG/2.  
Consistent with Article 12.3 of the Agreement on Safeguards, Madagascar is prepared to consult 
with tho se Members having a substantial interest as exporters of the product concerned.  
The evidence gathered by the competent authority during the investigation is set out below.  
1  NOTIFICATION UNDER A RTICLE 12.1(B) AND 1 2.1(C) OF THE AGREEM ENT ON 
SAFEGUARDS UPON M AKING A FINDING OF S ERIOUS INJURY  
SERIOUS INJURY  
The determination of serious injury to the domestic blanket and travelling rug industry was based 
on all relevant factors of an objective and quantifiable nature having a bearing on the situation of  
that industry . On the basis of t he data collected during the injury investigation , the following was 
determined : 
i. Rate of increase in imports  
During the investigation period, blankets and travelling rugs were imported in greatly increased 
quantities, both  in absolute terms and relative to domestic production. The increase in imports was 
sudden, recent, sharp and significant. According to data provided by the company  SOMACOU, the 
increase had a negative effect on domestic industry performance indicators suc h as market share, 
the production capacity utilization rate, productivity, profitability, production volume and sales.  G/SG/N/8/MDG/2 • G/SG/N/10/MDG/2 • G/SG/N/11/MDG/2/Suppl.2  
 
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  ii. Market share taken by imports  
 2013  2014  2015  2016  2017  2018  
Market share of the industry (index base 100 
in 2013)  100 55 47 19 12 20 
Market share taken by imports  
(index base 100 in 2013)  100 236 260 344 344 340 
The domestic industry's market share fell sharply from 2013, declining 80 points between 2013 and 
2018. In contrast, the market share taken by  import s of blankets and travellin g rugs increased.  
iii. Production of the  industry  
 2013  2014  2015  2016  2017  2018  
Volume of production (index base 100 in 2013)  100 75 91 126 70 45 
The domestic industry's volume of production fell 25 points from 201 3 to 201 4. The slight 
improvement in 2015 and 2016 did not last; from 2017, the volume of production dropped  
significantly below its 2013 level. The d omestic industry ’s production decline d continuously over the 
last three years , reach ing its lowest level of the inv estigation period in 2018.  
iv. Change in level of sales and turnover  
 2013  2014  2015  2016  2017  2018  
Turnover (index base 100 in 2013)  100 98 122 129 109 118 
Sales volume (index base 100 in 
2013)  100 91 108 107 85 70 
The applicant company  recorded a 2-point decline in its turnover from 2013 to 2014 and a 20-point 
one from 2016 to 2017 . The other years, t urnover appears to improve because the company 
attempted  to refocus on high -end products. This accounts for  the difference in the trends in turnover 
and sales volume. SOMACOU ’s sales volume declined continuous ly during  the last three years of the 
investigation period.  
v. Production capacity utilization rate  
 2013  2014  2015  2016  2017  2018  
Capacity utilization (index base 100 in 
2013)  100 72 88 118 75 54 
The production capacity utilization rate of the blanket and travelling rug industry declined  during the 
investigation period. Over the course of the  investigation period, the applicant company’s production 
capacity utilization rate fell 46 index points. Despite a slight improvement in 2016, the production 
capacity utilization rate s unk steadi ly over the last three years and reached its lowest level, 15%, 
in 2018.  
vi. Employment  
 2013  2014  2015  2016  2017  2018  
Number of employees (index base 100 
in 2013)  100 116 86 96 89 74 
Despite efforts made by SOMACOU  since 2013 to maintain the size of its workforce  and to recover  
the skill sets lost in 2015 and 2016, the new conditions of competition on the domestic market, 
which is largely  flooded with imported blankets and travelling rugs , have led to the loss of a large 
percentage  of jobs . From 2017 to 2018, the level of employment declined  15 points. There was a 
26-point drop in employm ent over the course of the investigation period . G/SG/N/8/MDG/2 • G/SG/N/10/MDG/2 • G/SG/N/11/MDG/2/Suppl.2  
 
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  vii. Productivity  
 2013  2014  2015  2016  2017  2018  
Coverage  (index base 100 in 
2013)  100 65 106 131 79 61 
Source:  Questionnaire  responses  
The domestic industry’s productivity, significantly affected by the weak production capacity 
utilization rate, fell 35 points from 2013 to 2014. The slight improvement from 2015 to 2016 was 
only fleeting. It was immediately followed by a stunning 52-point drop from 2016 to  2017. 
Productivity was at its lowest level of the investigation period in 2018.  
viii. Inventory  
 2013  2014  2015  2016  2017  2018  
Final inventory (index base 100 
in 2013)  100 97 99 177 176 146 
The preceding  analyses show that the domestic industry's annual production volume was in decline  
during the investigation period. Despite this low annual production volume, the domestic industry 
had difficult y selling its products on the market. As a result, the annual inventory volume w as very 
high during the period analysed, with more than 50% of the blankets and travelling rugs 
manufactured  remaining in inventory. Inventory levels were at their highest in  2016 and 2017. 
Inventory amounts even exceeded sales volumes  in 2017 . They decreased slightly in 2018.  
ix. Profitability  
 2013  2014  2015  2016  2017  2018 
Losses (index base 100 in 
2013)  -100 -19 -139 -126 -66 -20 
From 2013, the company consistently incurred huge financial losses , which varied according to the 
volume of sales. The highest losses occurred  in 2015, the year when sales volume was also at its 
highest . This means that  the company t ook a financial loss on every unit sold . The losses cont inued 
through 2018.  
x. Selling price  
 2013  2014  2015  2016  2017  2018  
Selling price (index base 100 in 2013)  100 108 112 120 129 164 
The table of the annual changes in selling prices reveals that the domestic industry  has been 
attempting  to adjust its selling prices since 2013. However, because of competition from imports , it 
has had to  align its prices with the market. Its selling price s have been stuc k below its cost price s 
despite the constant rise in production costs.  
xi. Change in production cost s 
 2013  2014  2015  2016  2017  2018  
Production cost (index base 100 in  2013)  100 112 126 134 139 152 
There was an upward trend in production cost s owing to the decrease in production  volume  during 
the investigation period. Production cost s rose 52 points  between 2013 and 2018 . G/SG/N/8/MDG/2 • G/SG/N/10/MDG/2 • G/SG/N/11/MDG/2/Suppl.2  
 
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  UNFORESEEN DEVELOPMENTS  
The ANMCC 's consideration of unforeseen circumstances under Article XIX(1)(a) of the GATT was 
based on the following elements:  
• China's rise in international trade rests on its comparative advantage in labour -intensive 
industries , which is due to its almost limitless workforce.  
• China is the world's largest exporter of blankets and travelling rugs, and it is  almost 
impossible for the world’s manufacturers to withstand  that domination.  
• Egypt was Africa's top importer of blankets and travelling rugs before 2015. Its safeguard 
measure on imports of blankets and travelling rugs resulted in a significant decrease in 
Chinese exports of those products to Africa. That situation prompted China to modify its 
export pattern and channel exports to other markets, including, it would seem, the 
Madagascar market.  
• China used th at opportunity to redirect its exports to Madagas car in an attempt to regain 
the market share lost in Egypt. In 2016, Egypt’s imports  of blankets and travelling rugs 
decreased by 3,838 tonnes while Madagascar ’s imports of those products increased by 
1,334 tonnes, or 35% of the market lost.  
These developm ents could not be foreseen when tariff concessions were being negotiated in the 
WTO framework and occurred after Madagascar's accession to the WTO. They are undoubtedly 
responsible for the increase in imports of blankets and travelling rugs to Madagascar.  
CAUSAL LINK  
The causal link between the increase  in imports of blankets and travelling rugs and the serious injury 
to the domestic industry was demonstrated through the following elemen ts: 
i. Increase in imports  
According to the data collect ed during the investigation, the volume of imports of blankets and 
travelling rugs increased steadily and significantly, both in absolute terms and relative to domestic 
production , from 2013. Madagascar’s i mports of blankets and travelling rugs increased 7 92% from 
2013 to 2018. Th e rise continued through  April 2019. The applicant  demonstrated that there had 
been a continuous and very sharp increase  in the share of import ed blankets and travelling rugs 
relative to  domestic production from 2013 and that the rate of increase had been quite remarkable . 
Moreover, the market share held by imports increased 160 points between 2013 and 2015. It rose 
continuously throughout  the period examined  and amounted to [ ]% of the market  in 2017 . 
Conversely , the domestic industry's market share declined  considerably from year to year over the 
period analysed. In 2017, the domestic industry 's share was miniscule  and represent ed only 12 index 
points . It is therefore  concluded that the increased imports cannot be seen as a response to changes 
in domestic consumption, but rather occurred  at the expense  of domestic production.  
Furthermore, a comparison of the selling pri ces offered to end consumers revealed a big difference 
in domestic markets. Imported blankets a nd travelling rugs are around 40 to 50% cheaper  than 
blankets and travelling rugs manufactured domestical ly. 
For the reasons laid out above , there is a clear  correlation between the increase in imports and the 
serious injury to the domestic industry.  
ii. Coincid ing trends  
The volume of imports  was at its highest  in 2017 ; that was also the year when  the domestic 
industry's market share  was at its lowest , there was the biggest year-on-year drop in production, of 
56 points, and an enormous financial loss  was incurred . G/SG/N/8/MDG/2 • G/SG/N/10/MDG/2 • G/SG/N/11/MDG/2/Suppl.2  
 
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  The drop in sales volume , which was accompanied by a big increase in production costs , resulted in 
huge financial losses. It is key that they occurred at the same time , as it attests to the existence of 
a causal link between the increase in impor ts and the serious injury.  
iii. Export sales of the domestic industry  
Since SOMACOU has never exported its products, the injury it suffered cannot be attributed to poor 
export performance.  
iv. Contraction in demand or change in the pattern of consumption  
As shown in the table below, the analysis of the investigation data has revealed  that the injury to 
the domestic industry is not caused by a reduction in domestic demand or consumption. It is instead 
caused by the choices of its  customers being redirected to imported products sold at low prices. 
During the investigation period, consumption of blankets and travelling rugs increased steadily, but 
the industry was unable to take advantage of this favourable situation.  
Table 9: Consumption of blankets and trave lling rugs  
 2013  2014  2015  2016  2017  2018  
Consumption  (index base 100 in 2013)  100 169 231 584 694 365 
Indeed, its sales and production decreased substantially in 2014, 2017 and 2018. The slight 
improvement in sales recorded for 2015 is not significant in the face of the changes in domestic 
demand and the increase in imports. This is why SOMACOU ’s market sh are declined by 80 index 
points  from 2013 while import s aggressively gained ground. This shows that the decline in sales and 
production was certainly caused by the increase in imports of blankets and travelling rugs.  
v. Change in domestic prices and costs  
As explained above, the industry's production costs rose year after year  from 2013. Given  the 
increase in imports, SOMACOU stress ed that , in order to respond to its customers ' choices being 
redirected to  imported products and to remain on the market, its s elling prices had to  be aligned 
with those of imported products, even if they were below its cost price. Despite this effort, however, 
the company's market share has continued to fall over several years. Furthermore, the import and 
selling price s of import ed blankets and travelling rugs consistently declined . The import price in 2018 
was around half of what it had been  in 2015. The following table shows this decline : 
Table 10: Unit import price  
 2013  2014  2015  2016  2017  2018  
Unit import price ( dollars /piece)  5.05 5.81 6.05 5.77 3.48 3.25 
Change (%)  - 15% 4% -4% -40% -7% 
vi. Competition between domestic producers  
Given that SOMACOU is Madagascar's sole producer of blankets and travelling rugs, competition 
between domestic producers does not exist and could never be a factor in the injury to the domestic 
industry.  
Absolute increase in imports or increase in imports relative to domestic production  
The absolute increase in imports is presented in the table below:  
  2013  2014  2015  2016  2017  2018  April 
2018  April 
2019  
Imports (in tonnes)  133 379 566 1,900  2,404  1,186  86 156 
Annual change  - 185 49 236 27 -50 - 81 
Increase (index base 100 in 
2013 and April 2018 ) 100 285 426 1,429  1,808  892 100 181 G/SG/N/8/MDG/2 • G/SG/N/10/MDG/2 • G/SG/N/11/MDG/2/Suppl.2  
 
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  From 2013 to 2017, there was a significant and unprecedented increase, of 1,708%, in imports of 
blankets and travelling rugs. The most notable increases occurred from 2013 to 2014 and from 2015 
to 2016. During th ose two periods, imports jumped  185% and 236% , respectively. This means that 
the volume of imports rose from 133 tonnes to 379 tonnes between 2013 and 2014, and from 
566 tonnes to 1,900 tonnes between 2015 and 2016. Import volumes were at their highest in 2017, 
when they amount ed to 2,404 tonnes.  
The decrease in import volumes in 2018 seems questionable , given the flooding of the local market 
by imported blankets and travelling rugs. The significant difference b etween the quantity of blankets 
and travelling rugs imported, amounting to 551 tonnes according to the Madagascar customs  
service , and the quantity exported by China, amounting to 1,186 tonnes according to T rade Map 
data, for a single year confirms the sus picion . 
In any case, the rate of increase in imports of blankets and travelling rugs over the entire 
investigation period comes to a considerable 792%.  
Furthermore, the increase in imports of blankets and travelling rugs regained momentum in the 
most recen t period analysed. There was an 81% increase in imports of blankets and travelling rugs 
in the first four months of 2019 compared to  the same period the preceding year.  
It is therefore concluded tha t, in absolute terms, there was a significant, sharp and continuous 
increase in imports of blankets and travelling rugs, both over the entire investigation period and  in 
a very recent period.  
Increase in imports relative to domestic production  
Imports of blankets and travelling  rugs consistently increased relative to domestic production  at a 
significant  annual rate , going from 100 index points in 2013 to 1,962 in 2018  and peaking at  2,559 
in 2017. This increase continued through  April 2019, as shown in the table below.  
Table 12:  Increase in imports relative to domestic production  
 2013  2014  2015  2016  2017  2018  April 
2019  April 
2019  
Domestic production (index base 
100 in 2013 and April 2018)  100 75 91 126 70 45 100 94 
Imports (in tonnes)  133 379 566 1,900  2,404  1,186  86 156 
Imports/Production (%)  39 147 181 441 998 765 128 66 
Imports/Production (index base 
100 in 2013 and April 2018)  100 377 464 1,131  2,559  1,962  100 52 
i. Adjustment plan  
The domestic industry has prepared an adjustment plan that is based on enhancing  its producti on 
utilization  and its marketing strategy.  
ii. Public interest  
Given the latent producti on capacity of the domestic industry, the risk of the market being 
insufficient ly suppl ied is very slim. The increase in the domestic industry’s market share after 
implementation of the safeguard measure will allow  it to increase its production volume and  thereby  
reduce i ts unit production costs. Consequently , the concern over a significant rise  in consumer prices 
will only be relevant for  imported blankets and travelling rugs.  G/SG/N/8/MDG/2 • G/SG/N/10/MDG/2 • G/SG/N/11/MDG/2/Suppl.2  
 
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  iii. Provide a precise description of the product involved  
The products involved are blankets and travelling rugs of all colours, dimensions and weights, 
generally of wool, animal hair, cotton or man-made  fibres, with a surface that is often brushed, 
classified  under the following Madagascar customs tariff codes:  
- 6301 1000: Electric blankets  
- 6301 2000: Blankets and travelling rugs, of wool  
- 6301 3000: Blankets and travelling rugs, of cotton  
- 6301 4000: Blankets and travelling rugs, of synthetic fibres  
- 6301 9000: Other blankets and travelling rugs  
Blankets and travelling rugs are generally made with fabric thick enough to provide good protection 
from the cold. Travelling rugs often have a fringe made from the weav e of the fabric itself, while 
blankets usually have hemmed, trimmed or otherwise finished edges.  
iv. Provide a precise description of the proposed measure  
The proposed definitive safeguard measure consists of a n additional  duty on top of the ad valorem  
custom s duty of 41% of the c.i.f. value . 
v. Provide proposed date of introduction of the measure  
The definitive safeguard measure will enter into force on the date of publication of the related notice.  
vi. Provide expected duration of the measure  
If adopted, the safe guard measure will remain in force for four years, including the period of 
application of the provisional measure beginning 3 June 2019.  
vii. For a measure with a duration of more than three years, provide the proposed 
date for the review (under Article 7.4) to  be held not later than the mid -term 
of the measure, if such a date for the review has already been scheduled  
Not applicable  
viii. If the expected duration is over one year, provide expected timetable for 
progressive liberalization of the measure.  
The timetabl e for liberalization is as follows:  
• Year 1: 41%  
• Year 2: 38%  
• Year 3: 35%  
• Year 4: 32%  
ix. Date of prior consultation with those Members having a substantial interest as 
exporters of the product concerned  
Members having a substantial interest as exporters of the product concerned and wishing to consult 
with Madagascar under  Article 12.3 of the Agreement on Safeguards may send a request to the 
Director  General of the ANMCC  at the following email address: dg.anmcc@gmail.com  / 
dg@anmcc.gov.mg  
The c onsultations will take place no later than 5 July 2019 . G/SG/N/8/MDG/2 • G/SG/N/10/MDG/2 • G/SG/N/11/MDG/2/Suppl.2  
 
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  2  NOTIFICATION UNDER A RTICLE 9, FOOTNOTE 2  
i. Specify the measure  
The definitive saf eguard measure consists  of an additional  duty on top of the ad valorem  customs 
duty of 41% of the c.i.f. value . 
ii. Specify the products subject to the measure  
The definitive safeguard measure appl ies to blankets and travelling rugs imported under the 
followi ng Madagascar customs tariff codes:  
• 6301 1000: Electric blankets  
• 6301 2000: Blankets and travelling rugs, of wool  
• 6301 3000: Blankets and travelling rugs, of cotton  
• 6301 4000: Blankets and travelling rugs, of synthetic fibres  
• 6301 9000: Other blankets and travelling rugs  
iii. 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  
Afghanistan; Albania; Angola; Antigua and Barbuda;  Argentina, Armenia; Bahrain; Bangladesh; 
Barbados; Belize; Benin; Bolivia, Plurinational State of; Botswana; Brazil; Brunei Darussalam; 
Burkina Faso; Burundi; Cabo Verde; Cambodia; Cameroon; Central African Republic; Chad; Chile; 
Colombia; Congo; Costa Ri ca; Côte d'Ivoire; Cuba; Democratic Republic of the Congo; Djibouti; 
Dominica; Dominican Republic; Ecuador; Egypt; El Salvador; Eswatini; Fiji; Gabon; Gambia; 
Georgia; Ghana; Grenada; Guatemala; Guinea; Guinea -Bissau; Guyana; Haiti; Honduras; India; 
Indone sia; Israel; Jamaica; Jordan; Kazakhstan; Kenya; Kuwait; Kyrgyz Republic; 
Lao People's  Democratic Republic; Lesotho; Liberia; Malawi; Malaysia; Maldives; Mali; Mauritania; 
Mauritius; Mexico; Moldova; Mongolia; Montenegro; Morocco; Mozambique; Myanmar; Nami bia; 
Nepal; Nicaragua; Niger; Oman; Pakistan; Panama; Papua New Guinea; Paraguay; Peru; 
Philippines; Qatar; Rwanda; Saint Kitts and Nevis; Saint Lucia; Saint Vincent and the Grenadines; 
Samoa; Saudi  Arabia; Senegal; Seychelles; Sierra Leone; Solomon Island s; South Africa; Sri Lanka; 
Suriname; Tajikistan; Tanzania; Thailand; The former Yugoslav Republic of Macedonia; Togo; 
Tonga; Trinidad and Tobago; Tunisia; Turkey; Uganda; Ukraine; United Arab Emirates; Uruguay; 
Vanuatu; Venezuela, Bolivarian Republic of; Viet Nam; Yemen; Zambia; Zimbabwe.  
iv. Further information  
Information on the determination may be obtained from:  
Monsieur Le Directeur Général de l'ANMCC  
Enceinte Ex conquête Antanimena - BP: 7653  
Email: dg.anmcc@gmail.com  ; dg@anmcc.gov.mg  
101- ANTANANARIVO – MADAGASCAR  
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