G/SG/N/8/MDG/9  
G/SG/N/10/MDG/9  
G/SG/N/11/MDG/9/Suppl.1  
 
19 September  2023 
(23-6234) Page: 1/6 
Committee on Safeguards  Original: French  
 
  
NOTIFICATION , UNDER ARTICLE  12.1(B) OF THE AGREEMENT ON SAFEGUARDS , 
OF A FINDING OF SERIOUS INJURY OR THREAT THEREOF  
CAUSED BY INCREASED IMPORTS  
 
NOTIFICATION UNDER  ARTICLE  12.1(C) OF  
THE AGREEMENT ON SAFEGUARDS  
 
NOTIFICATION UNDER ARTICLE  9, FOOTNOTE  2, OF 
THE AGREEMENT ON SAFEGUARDS  
MADAGASCAR  
Concentrated milk  
The following communication, dated and received on 18  September  2023, is being circulated at the 
request of the delegation of Madagascar.  
 
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In accordance wi th Articles 12.1(b) and 12.1(c) of the Agreement on Safeguards, Madagascar hereby 
notifies the Committee on Safeguards of a finding of serious injury or threat thereof caused by 
increased imports, and of the decision to apply a safeguard measure on imports  of concentrated 
milk. Madagascar also wishes to notify the Committee, under Article  9, footnote  2, of the Agreement, 
of its decision not to apply the proposed safeguard measure to imports from developing countries.  
Pursuant to Article  12.3 of the Agreement on Safeguards, Madagascar stands ready  to consult with 
those Members having a substantial interest as exporters of the product concerned.  
 
NOTIFICATION , UNDER ARTICLES 12.1(B) AND 12.1(C) OF THE AGREEMENT ON 
SAFEGUARDS, OF A FINDING OF SERIOUS INJURY OR THREAT THEREOF CAUSED BY 
INCREASED IMPORTS, AND OF THE DECISION TO APPLY A SAFEGUARD MEASURE  
1.1  Evidence of serious injury or threat thereof caused by increa sed imports  
A. INCREASE IN IMPORTS  
 
i. Unforeseen developments  
 
Madagascar's accession to the WTO in 1995 did not take into account the risk associated with the 
expansion of the trade in "fat -filled milk powder", particularly in recent years. This is a mil k substitute 
produced from drying skimmed milk powder with vegetable fat, mainly palm oil. Classified as a 
low-cost product, it is often exported to countries such as Madagascar where the majority of 
consumers have weak purchasing power. It is also used as  a raw material for producing concentrated 
milk, which is sold 30% cheaper than concentrated milk made from cow's milk. Since consumers 
are not able to distinguish between these two types of concentrated milk, they logically tend to 
choose low -priced conce ntrated milk produced using fat -filled milk powders. This is arguably the 
cause of the increase in imports of concentrated milk to Madagascar, the main exporting country of 
which is Malaysia, where the multinational company, Olam, a producer of dairy produ cts and fat -filled 
blends, is located. Thus, the development of trade in "fat -filled milk powder" at the global level is an 
unforeseen circumstance that explains the increase in imports.  G/SG/N/8/MDG/9 • G/SG/N/10/MDG/9 • G/SG/N/11/MDG/9/Suppl.1  
 
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  ii. Increase in imports in absolute terms  
 
In absolute terms, imports  of concentrated milk have risen steadily and significantly. Between 2020 
and 2021, they increased by 33  index points, and by 40  index points between 2021 and 2022. In 
short, imports increased by 73  index points over the period  considered .  
 
iii. Increase in imports relative to domestic production  
 
Relative to domestic production, imports of concentrated milk continued to increase during the 
period  of investigation , with an increase of 110  index points . In the last two years, the share of 
imports in relation to domestic production increased by 67  index points and 43  index points, 
respectively.  
 
B. SERIOUS INJURY  
 
The determination of serious injury to the domestic concentrated milk industry was based on all 
relevant factors of an objective and quantif iable nature having a bearing on the situation of that 
industry. On the basis of the data available to the Authority, it was determin ed that the domestic 
industry had suffered serious injury.  
 
i. Rate of increase in imports  
 
Data from the investigation sho wed that there was a sharp and significant increase of 40 index points 
in the volume of imports of concentrated milk in 2022 compared to 2021. Relative to domestic 
production, the share of imports increased significantly during the period  considered . This situation 
has had a very negative impact on the performance indicators of the domestic industry.  
 
ii. Share of the domestic market taken by imports  
 
The market share taken by imports increased by 17  index points between 2020 and 2022. On 
average, importers hold 82% of the local market. At the same time, over the three years, the 
domestic industry lost half of its market share.  
 
iii. Domestic production  
 
Domestic production of concentrated milk saw a significant decline of 21  index points between 2020 
and 2021. In contrast, between 2021 and 2022, the volume of domestic production recorded a slight 
increase of 3  index points. Despite this increase, the petitioner is still unable to achieve the same 
production volume of concentrated milk as in 2020, as between 2020 and 2022, production 
decreased by 18  index points.  
 
iv. Changes in the level of sales  
 
The sales volume dropped by 29  index points in 2021. De spite a negligible increase of 3  index points 
between 2021 and 2022, the domestic industry's sales volume in the last year of the investigation 
showed a considerable gap compared to the base year.  
 
v. Production capacity utilization rate  
 
Given the low level of production, the domestic production capacity utilization rate is very low. During 
the period  considered , it remained below half. The highest level was in 2020, as it showed a 
downward trend. Compared with the base year, this utilization rate fell by 18  index points. A 
significant proportion of this capacity has therefore remained unused for some years. This situation 
means the company cannot generate returns on its business and make new investments.  
 
vi. Employment  
 
Despite its difficulties in the face of rising imports, the domestic industry has made efforts to retain 
its workforce, with staff numbers remaining stable throughout the period  considered . 
 G/SG/N/8/MDG/9 • G/SG/N/10/MDG/9 • G/SG/N/11/MDG/9/Suppl.1  
 
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  vii. Productivity  
 
Productivity of the domestic industry declined between 2020 and 2022 in line with production, with 
a drop of 18  index points. The lowest level was in 2021, when production was at its lowest.  
 
viii. Inventor ies 
 
The inventory volume of concentrated milk at the end of each year of the investigation period grew 
by 321  index points in 2022. In 2021, the volume was already far more than double its level in 2020, 
and it had quadrupled in 2022 when compared to the inventory volume of concentrated milk in the 
base year.  
 
ix. Profitability  
 
The decline in sales volume has affected the company's profitability. During the period  of 
investigation from 2020 to 2022 , the company lost 53  index points from its profit. The petitioner's 
profit fell by 23  index points in 2021 compared with the base year. In 2022, its profi t continued to 
fall, as it dropped sharply by 30  index points, while its sales volume increased by 3  index points.  
 
C. CAUSAL LINK  
 
i. Effect of increase d imports  
 
YEAR  2020  2021  2022  
Imports  100 133 173 
Domestic consumption  100 117 148 
Production  100 79 82 
Sales  100 71 74 
Production capacity utilization rate  100 79 82 
Market share  of imports  100 114 117 
Market share  of the domestic industry  100 61 50 
Performance  100 77 47 
 
Imports of concentrated milk into Madagascar increased during the period 2020 -2022. This increase 
has caused serious injury to the domestic industry, particularly in terms of profitability, production, 
sales, production capacity utilization and market share.  
 
The significant increase in domestic demand between 2020 and 2022 was largely absorbed by a 
substantial rise in imports. Despite the negligible increase in sales volume in 2022, it did not reach 
the same level as in 2020. Moreover, the company's profits ha ve fallen significantly.  
 
The domestic industry's market share is moving in the opposite direction to that of imports. Unlike 
imports, which increased by 33 and 40 index points  successively  over the last two years, the 
domestic industry's market share has lost 39 and 11 index points successively over the same period.  
 
ii. Other causal factors  
 
- Contraction in demand or changes in consumption patterns  
 
There was no change in the way concentrated milk was consumed or used during the period  
concerned . Concentrated milk, whether local or imported, is generally used for consumption in 
households and public catering. It is also used in dessert mixes. The hypothesis of a change in 
consumption patterns cannot therefore be considered a cause of th e injury.  
 
With regard to contraction in demand , this  cannot be considered a cause of the injury either . 
Domestic consumption has increased every year. It increased by 17  index points in 2021 and 
31 index points in 2022. Overall, between 2020 and 2022, it increased 48  index points. It is therefore 
held that the injury to the domestic industry cannot be attributed to a contraction in domestic market 
demand.  
 G/SG/N/8/MDG/9 • G/SG/N/10/MDG/9 • G/SG/N/11/MDG/9/Suppl.1  
 
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  - Competition between domestic producers  
 
As Socolait is the only producer of concentrated milk in M adagascar, competition with other domestic 
producers does not exist and cannot be considered as a n injury factor.  
 
- Technological developments  
 
Although the production units have been in operation since 1972, the company has undertaken 
regular upgrades to keep pace with changing technology and to acquire new, state -of-the-art 
machinery for improved performance. As a result, the company is able to produce high -quality 
concentrated  milk and obtain higher yields by means of the  new machines. Consequently, lagging 
behind in terms of technology cannot be considered a source of the injury suffered by S ocolait . 
 
- Export performance  
 
As all the concentrated milk produced by the petitioner is sold on the local market, the cause of the 
injury suffered by the domestic industry cannot be attributed to poor export performance.  
 
- Product quality  
 
Milk production and collection comply with strict hygie ne rules, under the constant supervision of 
the company's technicians. Milk undergoes various compliance tests throughout the collection 
network. In addition, the company has its own laboratory that is responsible for checking the quality 
of the fresh milk  as soon as it arrives at the plant and throughout the manufacturing process. 
Furthermore , a monitoring mechanism has been set up to ensure that product quality is maintained 
until final consumption. Thus, the quality of locally produced milk cannot be con sidered a factor 
causing injury to the domestic industry.  
 
1.2  Precise  description of the product involved  
Concentrated milk packaged in different types of packaging and imported under HS codes 04029100 
and 04029900 in accordance with the Malagasy customs tari ff. Concentrated milk may contain added 
sugar or not, and may be skimmed or semi -skimmed.  
 
1.3  Precise  description of the proposed measure  
The definitive safeguard measure will take the form of a tariff rate quota, including a fixed annual 
quota of 3,000 tonnes, in excess of which an additional duty of 32% must be paid.  
 
1.4  Proposed  date of introduction of the measure  
The definitive safeguard measure will enter into force on 16 September  2023, the date of publication 
of the public notice in two newspapers aut horized to receive legal notices: L'Express de Madagascar  
and La Vérité . 
 
1.5  Expected  duration of the measure  
The duration of the definitive safeguard measure is four years, including the period of application of 
the provisional measure since 6  June 2023 
 
1.6  Proposed date for the review (under Article  7.4) 
The review, under Article 7.4 of the Agreement on Safeguards, will be held not later than the 
mid-term of the definitive measure.  
 G/SG/N/8/MDG/9 • G/SG/N/10/MDG/9 • G/SG/N/11/MDG/9/Suppl.1  
 
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  1.7  Expected  timetable for progressive liberalization of the measure  
Period of application of the 
safeguard measure  Quota (additional duty at a 
rate of 0%) Rate of additional duty applied to 
out-of-quota imports  
6 June 2023 - 31 December  2023 
3,000  tonnes/year  32% 
2024 31% 
2025 30% 
2026 29% 
1 January  2027 - 5 June 2027 28% 
 
1.8  Adjustment  plan  
The domestic industry has submitted an adjustment plan, outlining the actions it intends to take to 
improve its competitiveness in the face of competition from imports. Its adjustment programme is 
based on the following areas: production volume, cost control, quality, marketing strategy, 
investment and staff ing levels . 
 
1.9  Date of prior consultation with th ose Members having a substantial interest  as 
exporters of the goods  
In accordance with Article 12.3 of the WTO  Agreement on Safeguards, Madagascar is prepared to 
hold consultations with those Members having a substantial interest as exporters of the product 
concerned.  
 
Requests for consultations should be sent to the Director -General of the ANMCC at the following 
email address: dg.anmcc@gmail.com ; dg@anmcc.mg . 
 
NOTIFICATION , UNDER ARTICLE  9, FOOTNOTE  2, OF THE AGREEMENT ON  SAFEGUARDS , 
OF NON -APPLICATION OF A SAFEGUARD MEASURE TO DEVELOPING COUNTRIES  
2.1  Description of the measure  
The definitive safeguard measure will take the form of a tariff rate quota, including a fixed annual 
quota of 3,000 tonnes, in excess of which an additional duty of 32% must be paid.  
 
2.2  Products subject to the measure  
Concentrated milk packaged in different types of packaging and imported under HS codes 04029100 
and 04029900 in accordance with the Malagasy customs tariff. Concentrated milk may contain added 
sugar or not, and may be skimmed or semi -skimmed.  
 
2.3  Developing countries to which the measure is not applied under Article 9.1 of the 
Agreement on Safeguards  
Afghanistan; Albania; Angola; Antigua and Barbuda; Argentina; Armenia; Bahrain; Bangladesh; 
Barbados; Belize; Benin; Bolivia, Plurinational State of; Botswana; B razil; Brunei Darussalam; 
Burkina Faso; Burundi; Cabo Verde; Cambodia; Cameroon; Central African Republic; Chad; Chile; 
Colombia; Congo; Costa Rica; Côte d'Ivoire; Cuba; Democratic Republic of the Congo; Djibouti; 
Dominica; Dominican Republic; Ecuador; Egy pt; El Salvador; Eswatini; Fiji; Gabon; Gambia; 
Georgia; Ghana; Grenada; Guatemala; Guinea; Guinea -Bissau; Guyana; Haiti; Honduras; India; 
Indonesia; Israel; Jamaica; Jordan; Kazakhstan; Kenya; Kuwait; Kyrgyz Republic; Lao People's 
Democratic Republic; Les otho; Liberia; Malawi; Maldives; Mali; Mauritania; Mauritius; Mexico; 
Moldova; Mongolia; Montenegro; Morocco; Mozambique; Myanmar; Namibia; Nepal; Nicaragua; 
Niger; North Macedonia; Oman; Pakistan; Panama; Papua  New Guinea; Paraguay; Peru; 
Philippines; Qat ar; Rwanda; Saint Kitts and Nevis; Saint Lucia; Saint Vincent and the Grenadines; 
Samoa; Saudi Arabia; Senegal; Seychelles; Sierra Leone; Solomon Islands; South Africa; Sri Lanka; 
Suriname; Tajikistan; Tanzania; Thailand; Togo; Tonga; Trinidad and Tobago; Tunisia; T ürkiye; 
Uganda; Ukraine; United Arab Emirates; Uruguay; Vanuatu; Venezuela, Bolivarian Republic of; 
Viet Nam; Yemen; Zambia; Zimbabwe.  
 G/SG/N/8/MDG/9 • G/SG/N/10/MDG/9 • G/SG/N/11/MDG/9/Suppl.1  
 
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  2.4  Further information  
Information on the decision to apply the definitive safeguard measure to the products con cerned 
may be obtained from:  
 
Monsieur Le Directeur Général de l'ANMCC  
Enceinte Ex -Conquête Antanimena, Antananarivo 101, Madagascar  
Tel.: +261 34 05  441 41  
Email:  dg.anmcc@gmail.com /dg@anmcc.mg  
Website:  www.anmcc.mg  
 
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