G/SG/N/8/KGZ/2  
G/SG/N/10/KGZ/2/Suppl.1  
 
13 October 2014  
(14-5789)  Page: 1/3  
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 UNDER ARTICL E 12.1(C) OF THE AGREEMENT 
ON SAFEGUARDS ON TAKING A DECISION 
TO APPLY A SAFEGUARD MEASURE 
KYRGYZ REPUBLIC  
(Wheat flour) 
The following communication, dated 10 October 2014, is being circulated at the request of the 
Delegation of the Kyrgyz Republic. 
 
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 Pursuant to Article 12.1 (b) and (c) of the Agreem ent on Safeguards, the Kyrgyz Republic hereby 
notifies the  Committee on Safeguards  of the following: 
 On 4 March 2014 in accordance with the Law of the Kyrgyz Republic on Safeguards, and for the purpose of protecting the rights of domestic flour industries, the Government of the 
Kyrgyz Republic adopted Decree No.119 "On the introduction of safeguard measures with regard 
to the importation of wheat flour into the Kyrgyz Republic". This Decree shall enter into force from the date of its official publication. 
 
1. Presence of serious injury or threat caused by increased imports 
 
According to information of the National Statistical Committee of the Kyrgyz Republic, the import 
of wheat flour has increased by 5.3 times in 2011 as compared to 2010. While in 2012 importation of this product decreased by 17.98% in compar ison with 2011 and made up 111.6 thousand tons 
against 136.1 thousand tons in 2011. Seasonal duties that were implemented in the first half of 
the year during two months caused a decline in the volume of the importation of wheat flour into 
the Kyrgyz Republic in 2012.  
Before these duties were introduced, 12,176 tons of flour per month were imported on average, 
and since duties were introduced the average volu me of imported flour was reduced to 2,199 tons. 
 
It may be noted that the largest specific weight for more than 99% in total import was from 
member-states of the Eurasian Economic Community.  According to information of the National Statistical Committee, the main importers of wheat flour 
into the Kyrgyz Republic in 2012 were from non-WTO members Kazakhstan (97%) and Uzbekistan 
(1%), and a WTO member – Russia (2%).  
Based on the above, it is thus concluded that there was serious injury to domestic industry as a 
result of increased imports of wheat flour.  G/SG/N/8/KGZ/2 • G/SG/N/10/KGZ/2/Suppl.1 
 
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  2. Evidence of  serious injury or threat caused by increased imports 
 Increased importation of wheat flour to the Kyrgyz Republic has caused serious injury to domestic producers of wheat flour as refl ected by the following facts: 
 
Real consumption did not change significantly in 2010-2012, and comprised 504.34 thousand tons 
in 2010, 575.58 thousand tons in 2011 and 554.39 thousand tons in 2012. 
 
According to national statistical data for the period of 2010-2012, the output of domestic industries had a downward trend. In 2012 the production wa s 8% less than in 2010, and in 2011 production 
was 8.2% less than in 2010. 
 
Moreover, based on information of the Committee for the Mill Industry of the Kyrgyz Republic, due to the oversupply of stocks of domestic flour pr oducers in 2012, the majority of large producers 
had to suspend their production and put thei r employees on unpaid leave. As a result, 
well-qualified employees began to leave the country in order to look for jobs.  
As of the end of 2012, the surplus of non-dist ributed flour amongst flour producers comprised 
35.437 thousand tons. Stocks of unprocessed wheat grain comprised 100 thousand tons.   
Balance of Flour Market 
 
Indicator 2010 2011 2012  
Total production in thousand tons 478.8 440.2 442.8 
Growth rate, % 93.32% 91.94% 101.0% 
Total export in thousand tons 0.068 0.662 0 
Total import in thousand tons 25,604 136,045 111,585 
Imports from Kazakhstan 20,833 108,115 107,822 
Growth rate, % 36.99% 531.34% 82.02% 
Total consumption 504,336 575,583 554,385 
Share of import in domestic consumption 5.08% 32.54% 20.13% 
 
The share of domestically produced flour in th e domestic market from 2010 to 2012 decreased 
from 94.92 % in 2010 to 79.87% in 2012. At the same time the share of imports in the domestic 
market increased by 20.13 % in 2012 compared to 5.08% in 2010.  
 
Indicator 2010 2011 2012  
% of specific weight of domestic production in the domestic 
market 94.92 67.46 79.87 
% of specific weight of imports in the domestic market 5.08 32.54 20.13 
 
According to the Ministry of Agriculture and Melioration of the Kyrgyz Republic, domestic flour industries are represented by 21 large milling ente rprises, 9 medium-sized enterprises and around 
3,000 small enterprises. More than 12.0 thousand people are employed in the sector.  
 
Production capacities of domestic producers coul d comprise more than 600 thousand tons per year 
and in fact the production capacities of flour industries can provide for full consumption of flour 
inside the country. 
 However production capacity of domestic enterp rises was, on average, not more than 40%. The 
average number of people employed in th e milling industry decreased from 3,898 to 
3,627 persons or remained at 7%.  G/SG/N/8/KGZ/2 • G/SG/N/10/KGZ/2/Suppl.1 
 
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  Indicators of the flour industry within the country 2010 2011 2012  
Average annual number of employees 3,898 3,659 3,627 
% of utilization of average annual capacity 38.2 29.1 39.3 
 
Analysis of price information on import and domestic products for 2010-2012 showed that domestic producers were unable to compete with import prices for flour. The difference between 
prices for imported and domestically produced similar products is increasing. The price for the 
domestic product was higher than the import price by 33.9% in 2011 and by 25.6% in 2012.  
Indicator 2010 2011 2012  
Percentage of domestic and import prices 5.4% 33.9% 25.6% 
 
At the same time, the rate of importation of wheat flour into the Kyrgyz Republic indicates the 
possibility of continuing significant growth at leve ls that would have the effect of suppressing the 
prices of domestic producers.   
3. Conclusion 
 For the period of 2010-2012, the main financial an d economic indicators in the domestic flour 
industries have shown a negative trend. There was a decline in production, declining share of 
domestic product in the internal market and a reduction of production capacity caused by the 
increased imports of wheat flour.   
Thus the above factors demonstrate clear evidence that the domestic industry suffered from 
serious injury caused by the increased imports of wheat flour.  
 
4. Precise description of the product involved 
 The product involved is wheat flour classified under  HS of the Kyrgyz Republic and of the Eurasian 
Economic Community - 1101 00 110 0 and 1101 00 150 0. 
 
5. Precise description and duration of the proposed measure  
Safeguard measures shall be applied in the form of special customs duties with respect to the 
import of wheat flour into the Kyrgyz Republic and shall remain in force until 22 July 2017.  
 
6. Proposed date of introduction of the measure 
 Safeguard measures shall be introduced from the date when the Decree of the Government of the 
Kyrgyz Republic enters into force. 
 
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