G/SG/N/6/MDG/6  
G/SG/N/7/MDG/6  
G/SG/N/11/MDG/6  
 
28 August  2019 
(19-5559) Page: 1/6 
Committee on Safeguards  Original:  French  
 
  
NOTIFICATION UNDER A RTICLE 12.1(A) OF TH E AGREEMENT ON  
SAFEGUARDS ON INITIA TION OF AN INVESTIGA TION  
AND THE REASONS FOR IT 
NOTIFICATION UNDER A RTICLE 12.4 OF THE A GREEMENT ON SAFEGUAR DS 
BEFORE TAKING A PROV ISIONAL SAFEGUARD ME ASURE  
REFERRED TO IN ARTIC LE 6 
NOTIFICATION UNDER A RTICLE 9, FOOTNOTE 2 , 
OF THE AGREEMENT ON SAFEGUARDS  
MADAGASCAR  
(Lubricating oils ) 
The following communication, dated 2 7 August 2 019, is being circulated at the request of the 
delegation of Madagascar . 
 
________ _______  
 
  
In accordance with Articles 12.1 (a) and 12.4 of the Agreement on Safeguards, Madagascar is 
notifying the Committee on Safeguards of the initiation of an investigation and before taking a 
provisional safeguard measure referred to in Article 6 of the Agreement, in respect of imports of 
lubricating oils . 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 country Members of the WTO . 
 
A. NOTIFICATION UNDER A RTICLE 12.1(A) OF TH E AGREEMENT ON SAFEG UARDS ON 
INITIATION OF AN INV ESTIGATION AND THE R EASONS FOR IT  
1. Date of initiation  
 
The investigation was initiated on 1 4 August 2 019, the date on which the notice of initiation was 
published in two national newspapers authorized to receive legal notices . 
 
2. Product under consideration  
 
Lubricating oils  classified under Madagascar customs tariff code 27101933.  
 
3. Exporting countries  
 
The main countries exporting lubri cating oils to Madagascar are  Egypt, South Africa and the  
United  Arab Emirates . 
 
4. Reasons justifying the initiation of the investigation  
 
As a result of unforeseen developments, lubricating oils have been imported in such increased 
quantities that the in crease has caused or threatens to cause serious injury to the domestic industry 
producing the product that is like or directly competitive with the product under investigation . G/SG/N/6/MDG/6 • G/SG/N/7/MDG/6 • G/SG/N/11/MDG/6  
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5. Duration of the investigation  
 
The investigation will be conducted over a period of 9 months and will last no longer than 12 months . 
 
6. Further information  
 
Interested parties must make themselves known to the ANMCC, the investigating authority, within 
a period of 30 days following  the initiation of the investigation . 
 
Replies to questionnaires, comments and any relevant information to be relayed to the ANMCC must 
be sent by 3 0 September 2 019 at the latest . 
 
If information requested from interested parties in connection with the investi gation is not provided 
within the specified time -frame, decisions will be based on the best information available . This will 
also be the case if information is erroneous or incomplete . 
 
7. Public hearings  
 
The ANMCC  may organize public hearings, either at the request of interested parties or ex officio , 
so as to enable interested parties to defend their interests . 
 
B. NOTIFICATION UNDER ARTICLE 12.4 OF THE AGREEMENT ON SAFEGUARDS BEFORE 
TAKING A PROVISIONAL SAFEGUARD ME ASURE REFERRED TO IN ARTICLE 6  
1. Specify the product subject to the proposed provisional safeguard measure  
 
Lubricating oils  classified under Madagascar customs tariff code 27101933.  
 
2. Specify the proposed provisional safeguard measure  
 
The provisional safeguard measure will take the form of an additional duty to the ad valorem  customs 
duty, charged at a rate of 19 % (nineteen per cent ) of the c.i.f. value . 
 
3. Specify the proposed date of introduction of the proposed provisional safeguard  
measure  
 
The provisional safeguard measure will enter into force on 1 September 2 019. 
 
4. Specify the expected duration of the provisional safeguard measure  
 
The provisional safeguard measure will be applied for 200 days from the date of its entry into fo rce. 
 
5. Provide the basis for : 
 
 5.1 Making a preliminary determination, as provided for in Article 6 of 
the Agreement on Safeguards, that increased imports have caused or are 
threatening to cause serious injury . 
 
I. INCREASE IN IMPORTS  
 
I.1- Evolution of imports in absolute terms  
 
Year 2014  2015  2016  2017  2018  
Total imports  (tonne s) 5,178 6,310 6,650 7,453 9,998 
Evolution (%)  - 22% 5% 12% 34% 
Total imports  (Index) 100 122 129 144 193 
 G/SG/N/6/MDG/6 • G/SG/N/7/MDG/6 • G/SG/N/11/MDG/6  
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  Imports of lubricating oils increased steadily throughout the review period . The most notable 
increase occurred in 2018, when imports rose by more than 34 % in relation to the volume imported 
in 2017 . In 5 years , the import volume doubled, rising from 5,178 tonnes in 2014 to  9,998 tonnes 
in 2018.  
 
I.2- Evolution of imports in relative terms  
 
Year 2014  2015  2016  2017  2018  
Total imports  (tonne s) 5,178 6,310 6,650 7,453 9,998 
Imports/ Domestic production  (Index) 100 131 171 240 277 
 
Since 2014, i mports have increased every year in relative terms vis-à-vis domestic production . They 
increased by 177 % between 2014 and 2018, rising steadily and without interruption . 
 
II. SERIOUS INJURY  
 
The ANMCC  made a preliminary determination of serious injury to the domestic industry producing 
like or directly competitive product s after evaluating, on an objective and quantifiable basis, relevant 
factors having a bearing on the situation of th is domestic indus try. 
 
i. Rate of the increase in imports  
 
As shown above, imports of lubricating oils increased suddenly, recently, notably and steadily 
between 2014 and 2018.  
 
ii. Production volume  
 
Year 2014  2015  2016  2017  2018  
Production (Ind ex) 100 93 75 60 70 
 
The volume of domestic production decreased considerably between 2014 and 2018 . The MOCO 
company saw its production volume fall by more than 30 index points during the period under review . 
Production increased in 2018 in relation to 2017, but remained below the levels reached in the years 
prior to 2017 . 
 
iii. Domestic market sales  
 
Year 2014  2015  2016  2017  2018  
Sales volume  
(Index) 100 86 73 63 61 
 
MOCO saw its sales decline each year on an almost regular basis . Throughout the entire review 
period, the volume of sales decreased by a total of 39%. 
 
iv. Turnover  
 
Year 2014  2015  2016  2017  2018  
Turnover of  MOCO  
(Index) 100 87 74 61 64 
 
By 2018, MOCO's t urnover had fallen  by 36 % in relation to 2014 . A slight increase was recorded in 
2018 in relation to 2017, but the level rem ained below that of the years prior to 2017 . 
 
  G/SG/N/6/MDG/6 • G/SG/N/7/MDG/6 • G/SG/N/11/MDG/6  
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  v. Market  share  
Year 2014  2015  2016  2017  2018  
Market share  (Index) 100 76 63 50 37 
 
In terms of market share, MOCO lost  63 index points  between  2014 and 2018 on account of pressure 
from imports . 
 
vi. Inventory  
 
Year 2014  2015  2016  2017  2018  
Final inventory  (Index) 100 181 189 117 259 
 
The company's annual inventory volume rose on a yearly basis . The highest level was reached in 
2018, whe n efforts were made in respect of production, but sales did not follow suit . 
 
vii. Emplo yment  
 
Year 2014  2015  2016  2017  2018  
Emplo yment  (Index) 100 90 73 78 80 
 
The level of employment in the domestic industry fell  by 20% during the period under review . It 
increased slightly in 2017 and 2018, but never exceeded the level recorded in 2014 . 
 
viii. Productivit y 
 
Year 2014  2015  2016  2017  2018  
Productivit y 
(Index) 100 103 102 77 88 
 
A drop in productivity was recorded during the period under review.  Workforce productivit y fell by 
12 points during this period . In 2015, however, this indicator rose by three points in relation to 
2014, only to decrease in 2016 and 2017 . From 2017 onwards , the prod uctivity level was lower than 
that recorded in 2014 . 
 
ix. Production  capacity utilization  
 
Year 2014  2015  2016  2017  2018  
Production capacity utilization rate  18% 17% 13% 11% 13% 
Production capacity utilization (Index) 100 93 75 60 70 
 
MOCO's  production capacity utilization rate has been strongly influenced by the decline in the number 
of orders received . Production capacity utilization decreased at the same rate as the company 's 
production . This indicator deteriorated during the review period , falling by 30 points between 2014 
and 2018 . The domestic industry is not managing to utilize even a quarter of its capacity . 
 
x. Results  
 
Year 2014  2015  2016  2017  2018  
Net results  
(Index) 100 56 42 14 21 
 
The drop in sales volume during the period under review explains the decline in the company's 
results since 2014 . The poorest result was obtained in 2017 . The petitioning company 's results 
currently amount to less than a quarter of its 2014 result . 
 G/SG/N/6/MDG/6 • G/SG/N/7/MDG/6 • G/SG/N/11/MDG/6  
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  III. CAUSAL LINK  
 
i. Effects of increased imports  
 
The steady and significant  absolute and relative increase in imports  in relation to domestic production 
since the start of the review  period has had a damaging effect on MOCO's sales and profits . 
Consumers' choices have been oriented towards impor ted products offered to them at extremely 
low prices – prices that the domestic industry cannot  compete with . As a result, MOCO's orders have 
decreased since 2014, despite efforts to maintain customer loyalty by lowering sales prices . 
 
Year 2014  2015  2016  2017  2018  
Total imports  (tonne s) 5,178 6,310 6,650 7,453 9,998 
Domestic p roduction (tonne s) 100 93 75 60 70 
Sales volume  (tonne s) 100 86 73 63 61 
 
It is clear that while imports increase, MOCO's sales are on the decline . Imported  products are 
therefore substituting domestically manufactured products, of which there are less and less . The 
market share captured by imports has increased significantly year -on-year, while that of the 
domestic industry has fallen steadily . 
 
This decline  has impacted  other economic indicators such as profitability, the production capacity 
utilization rate  and employment, all of which have deteriorated considerably from one year to the 
next. 
 
ii. Other causal factors  
 
- Contraction in demand  
 
The rise in domestic consumption – 64% in five years – indicates that there has never been a 
contraction in domestic demand (see table below) :  
Year 2014  2015  2016  2017  2018  
Domestic consumption  (Index) 100 114 116 126 164 
 
It is therefore held that the injury to the domestic industry cannot be attributed to a contraction in 
domestic market demand . 
 
- Export performance  
 
At present, MOCO only produces for the domestic market . The injury suffered by the company is not 
a result of export performance . 
 
- Technology used  
 
The factory has existed since the 1970s and produce s various types of lubricating oils . These oils 
have been ISO 9001 -certified since 2009 and meet the specifications o f the leading international oil 
brands . It should be noted that lubricating oils must be manufactured using the same process as 
that applied by MOCO, whether they are imported or domestically manufactured . This confirms that 
the technology used cannot be considered a cause of the injury suffered . 
 
- Competition between domestic producers  
 
The petitioner is the sole producer of lubricating oils in Madagascar . Competition between domestic 
producers is therefore non -existent and is not a factor causing serious injury to the domestic 
industry . 
 
 G/SG/N/6/MDG/6 • G/SG/N/7/MDG/6 • G/SG/N/11/MDG/6  
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  5.2 Determining that there are critical circumstances where delay would cause 
damage which it would be difficult to repair  
 
A preliminary determination has been made that critical circumstances exist in which delay would 
cause damage that would be difficult to  repair . According to the analysis of the domestic industry's 
indicators, the survival of this Madagascan producer of lubricating oils would be threatened if the 
conditions of competition in respect of imports continued without any emergency action being t aken. 
 
6. Offer of consultations under Article 12.4  
 
In accordance with Article 12.4 of the Agreement on Safeguards, Madagascar is prepared to hold 
consultations on the provisional safeguard measure with those Members having a substantial interest 
as expor ters of the products concerned . 
 
7. Further information  
 
Requests for further information and correspondence regarding the investigation must be sent to : 
 
Monsieur Le Directeur Général de l'ANMCC  
Enceinte Ex -Conquête Antanimena, Antananarivo 101 – Madagascar  
Email: dg.anmcc@gmail.com  
 
C. NOTIFICATION UNDER ARTICLE 9, FOOTNOTE 2, OF THE AGREEMENT ON 
SAFEGUARDS OF THE DECISION NOT TO APPLY THE SAFEGUARD  
Below is the list of  developing countries to which the provisional measure will not apply, as their 
exports represent less than 3 % of Madagascar's total imports of lubricating oils and collectively 
account for not more than 9 %: 
 
Afghanistan ; Albania; Angola ; Antigua and Barbuda ; Argentin a; Armenia; Bahrein; Bangladesh ; 
Barbad os; Belize; Benin; Bolivia,  Plurinational State of ; Botswana ; Brazil; Brunei Darussalam ; 
Burkina Faso ; Burundi ; Cabo Verde ; Cambod ia; Camero on; Central African Republic ; Chad; Chile; 
Colombi a; Congo ; Costa Rica ; Côte d'Ivoire ; Cuba; Democratic Republic of the Congo ; Djibouti ; 
Domini ca; Dominican Republic ; Ecuador ; El Salvador ; Eswatini ; Fiji; Gabon; Gambia; Georgia ; 
Ghana; Grenad a; Guatemala ; Guinea; Guinea-Bissau ; Guyana ; Haiti; Honduras ; India; Indonesia; 
Israel; Jamaica; Jordan ; Kazakhstan ; Kenya; Kuwait ; Kyrgyz Republic ; Lao People's Democratic 
Republic ; Lesotho ; Liberia; Malawi; Malaysia ; Maldives ; Mali; Mauritania ; Mauritius ; Mexico; 
Moldova ; Mongoli a; Montenegro; Morocco ; Mozambique ; Myanmar ; Namibi a; 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 Islands ; Sri Lanka ; Suriname ; Tajikistan ; Tanzani a; Thailand; 
The former Yugoslav Republic of Macedonia ; Togo; Tonga; Trinidad and Tobago ; Tunisia; Turkey; 
Uganda ; Ukraine ; Uruguay ; Vanuatu ; Venezuela,  Bolivarian Republic o f; Viet Nam; Yemen; Zambia; 
Zimbabwe.  
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