G/SG/N/8/UKR/4  
G/SG/N/10/UKR/4  
 
26 March 2014  
(14-1876)  Page: 1/7  
 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 OF A PROPOSAL TO IMPOSE A MEASURE 
UKRAINE  
(Tableware and kitchenware of porcelain) 
The following communication, dated 24 March 2014, is being circulated at the request of the 
Delegation of Ukraine. 
 
_______________ 
 
 
On 28 May 2013 the initiation of investigation on import in Ukraine of the tableware and 
kitchenware of porcelain regardless of country of origin and export has been notified to the 
Committee on Safeguards (G/SG/N/6/UKR/10). 
 The investigation has been initiated pursuant to the application of "Drughkivskyy porcelain factory" 
Ltd, SC "Sumskyy porcelain factory" and "Coral" Lt d "Dovbyskyy porcelain factory" (hereafter - the 
Applicant). 
 Taking into consideration that collective output of these entities in production of the like products 
constitutes a major proportion of the total domestic production of those products (more 
than 90%), these entities represent the domestic in dustry in the meaning of Article 4.1.(c) of the 
Agreement on Safeguards. 
 
1  EVIDENCE OF SERIOUS INJURY OR THREAT THEREOF CAUSED BY INCREASED IMPORTS 
1.A. Evidence of serious injury 
 
In order to make a determination of serious injury to domestic production of the like product in Ukraine as a result of growing imports into Ukraine, an evaluation of all relevant factors of an 
objective and quantifiable nature affecting the si tuation in this industry has been undertaken. 
 The period of investigation was from 1 April 2010 – till 31 March 2013. 
 
During this period an evaluation of growth of im ports into Ukraine has been carried out, as well as 
the state of industrial, commercial and financial situation of the domestic industry. This period of investigation consists of three comparable parts: II quarter 2010 - I quarter 2011 (first period), 
II quarter 2011 - I quarter 2012 (second period), II quarter 2012 - I quarter 2013 (third period). 
 G/SG/N/8/UKR/4 • G/SG/N/10/UKR/4 
 
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  Analysis has shown, that during the period of investigation: 
 -  production of goods and the percentage of capaci ty utilization of the Applicant in the third period 
compared with the second period fell by 4%; in the third period compared to the first – period 
by 10%; 
-  applicant's sales of goods on the domestic market in the third period compared with the second period fell by 6%; in the third period compared to the first period – by 22% ; 
-  total balance of goods in the third period compared with the second period increased by 102%, 
in the third period compared to the first period by 78%; -  employment rate on the Applicant's enterprises in the third period compared with the second period fell by 9%; in the third period compared to the first period – by 14% ; 
-  liquidity index in the third period compared with the second period decreased by 42%, in the 
third period compared with the first period - by 31%; -  Applicant's activity on selling goods on the domestic market in the third period was unprofitable 
in contrast to the first and second periods. 
Enterprises of the Applicant haven't had capital investment profit.  
Table. 1. А.1 
Indicator І period ІІ period ІІІ period 
Profit / loss of the Applicant on the domestic market, US dollar 
Ratios, % 100 344.65 [loss] 
The rate of growth /decline, % - 244.65 [loss] 
Quantity of production of go ods by the Applicant, tons 
Ratios, % 100 93.54 89.54 
The rate of growth /decline, % - -6.46 -10.46 
Quantity of sell of goods by the Ap plicant on the domestic market, tons  
Ratios, % 100 82.92 77.74 
The rate of growth /decline, % - -17.08 -22.26 
Share of goods in consumption, %  
Ratios, % 100 78.58 31.05 
The rate of growth /decline, % - -21.42 -68.95 
Total amount of stock of goods at the end of period, tons 
Ratios, % 100 88.04 177.78 
The rate of growth /decline, % - -11.96 77.78 
Production capacity, tons 
Ratios, % 100 100 100 
Utilization of production capacity, %  
Ratios, % 100 93.54 89.54 
The rate of growth /decline, % - -6.46 -10.46 
Liquidity conditions, % 
Ratios, % 100 118.88 69.36 
The rate of growth /decline, % - 18.88 -30.64 
Labour productivity, tons per capita 
Ratios, % 100 98.95 100.21 
The rate of growth /decline, % - -1.05 0.21 
Utilization of capital assets, % 
Ratios, % 100 121.55 109.28 
The rate of growth /decline, % - 21.55 9.28 
Employment at the enterprises of Applicant, people 
Ratios, % 100 93.83 85.55 
The rate of growth /decline, % - -6.17 -14.45 
 
Together, all these factors give grounds to the investigation authority to conclude about the fact of significant injury to the domestic industry during the period of investigation. 
 
1.B. Causation analysis  
The impact of rising imports of goods and cond itions of import to financial and economic 
conditions of the domestic producers.  G/SG/N/8/UKR/4 • G/SG/N/10/UKR/4 
 
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  Conditions for import of goods are presented in the Table. 1.B.1. 
Table 1. В.1 
Indicator І period ІІ period ІІІ period 
Import price, US dollars/ton 2 148.33 1 985.07 1 727.80 
Ratios, % 100 92.4 80.43 
The rate of growth /decline, % - -7.6 -19.57 
Applicant's price of goods, % 100 112.64 119.29 
The rate of growth /decline,% - 12.64 19.29 
 
According to the Table 1. В.1 price of imports into Ukraine of goods, which is the object of 
investigation, in the third period compared with the second period fell by 13%; in the third period compared with the first period by 19.6%. 
 
The price of domestically produced goods, on the contrary, in the third period compared with the 
second period increased by 5.9%; in the third peri od compared with the first period – by 19.3%. 
 
In the third period import prices of goods, object of the investigation, declined to a level lower than the Applicant's prices on the domestic market, and also lower than its cost of production. 
 
These terms of imports of goods to Ukraine negatively influenced the pricing of domestic products on the domestic market and prevented selling of po rcelain products by the prices proportional to 
the increase of production cost. 
 
As the results of the investigation, the investigation authority has found that during the investigation period there has been the growth of imports of goods both in absolute and relative 
terms to production of domestic industry. 
 At the same time, the downward trend for import price for goods, what is the object of 
investigation, led to disproportionate changes in selling prices of domestic industry on the 
domestic market of Ukraine with regard to increasing of its production cost.  The trend of growth of import to Ukraine of good s, what are the object of investigation, and the 
terms of import has led to losses in activity of enterprises of domestic porcelain industry. 
 These terms of imports to Ukraine of goods, what is object of investigation, led to the 
displacement from the internal market and reducing of the share of Applicant in consumption on 
the domestic market of Ukraine by 69% in the thir d period compared with the first period and as a 
result: reduction of production volumes, reduction of capacity utilization; increase of total amount 
of stock of goods; reduction of sales of goods on  the domestic market, reduction of the number of 
employees in enterprises of Applicant, reduction of the liquidity index etc.   It should be noted that the share of imports of goods, what is object of investigation, in 
consumption on the domestic market of Ukraine on  the contrary increased by 23% in the period. 
 Other Factors 
 
As the share of the Applicant in the domestic pr oduction of goods is above 90%, the competitive 
effect of other Ukrainian producers can be neglected. 
 
During investigation some interested parties indicated to the investigation authority that there are other factors what effected domestic industry and resulted injury cannot be considered as caused by increase of import. Inter alia such factors were: export-oriented policy of the Applicant and 
conditions of exports, significant amounts of smuggl ed goods, an increase of the production cost of 
porcelain products.  
However the investigation authority bases its findings exclusively on official statistics. Ukrainian 
legislation provides for accurate customs valuation and measures counteracting to smuggling including criminal and administrative liability. Thus to consider mentioned other factors as such G/SG/N/8/UKR/4 • G/SG/N/10/UKR/4 
 
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  that injures domestic industry besides the growth of import would be incorrectly for the 
investigation objectives.  Production cost growth by 29% in the third peri od compared to the first period was caused by 
rising of prices for natural gas, electric power, rise of legally established minimum salary in 
Ukraine, increased cost of raw materials and basic in puts. In this case due to the growth of import 
to Ukraine of good, which is object of investigation, and the conditions of import, in particular 
decrease of import price by 20%, the domestic industry was denied the opportunity to increase the 
selling price of product in proportion to the increase of production cost.  Also in some comments of interested parties it was noted that the Applicant exported goods what 
are the object of investigation by the prices that  are lower than the prices of imports of certain 
interested parties. Thus by their opinion the injury caused to the Applicant may be result of the Applicant's activity on external markets. 
 
The share of export sales in the total sales of goods by the Applicant during the investigation period was about 60%. In the third period compar ed with the first period Applicant's exports of 
goods decreased by 4.8%, output – by 10.5%, sales of porcelain products on the domestic 
market– by 22.3%. Thus the decline in sales of ta bleware and kitchenware of porcelain for export 
was significantly lower than the decline in production and sales.  
Table 1. В.2 
Indicator І period ІІ period ІІІ period 
The volume of Applicant's export 
Ratios, % 100 107.16 95.19 
The rate of growth /decline, % - 7.16 -4.81 
 
Thus, the abovementioned factors haven't had a de termining influence on the nature of the socio-
economic indicators of domestic industry and causing it serious injury. 
 1.C. Conclusion on causation 
 
After examining the possible effects of other known factors, the investigation authority came to the conclusion about existence of a causal link between the increased imports and serious injury 
caused to the domestic industry. 
 2  NFORMATION ON WHETHER THERE IS AN ABSOLUTE INCREASE IN IMPORTS OR AN INCREASE IN IMPORTS RELATIVE TO DOMESTIC PRODUCTION 
The investigation authority conducted study of impo rts of the goods in absolute terms and relative 
to consumption or production of goods in Ukraine. 
Table 2.1 
Indicator І period ІІ period ІІІ period 
Total import of goods, what are ob ject to investigation, to Ukraine 
Volume of the import, tons 5 740.93 6 491.78 17 685.80 
Ratios, % 100 113.08 308.06 
The rate of growth /decline, % - 13.08 208.06 
The ratio of imports to production  of goods by the Applicant, % 
Ratios, % 100 120.89 344.07 
The rate of growth /decline, % - 20.89 244.07 
The ratio of imports to consumption of  goods on the market of Ukraine, % 
Ratios, % 100 107.15 123.04 
The rate of growth /decline, % - 7.15 23.04 
 
The results of the study showed that during the investigation period there has been a growth of 
import to Ukraine of goods, what are object of investigation: 
 
-  in absolute terms in the third period compared with second period - increased by 172%, and 208% in third period compared with first period; G/SG/N/8/UKR/4 • G/SG/N/10/UKR/4 
 
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  -  with regard to production of goods by the A pplicant in the third period compared with second 
period - increased by 185%; and by 244% in the third period compared with the first period; -  relative to consumption of goods in the third period compared with the second period - increased by 15%; and by 23% in the third period compared with the first period. 
 
Thus, the growth of import to Ukraine of goods, what are object of investigation, both in absolute terms and relative to production of a product by the Applicant and consumption in Ukraine is quite 
significant, sudden and recent to assert the existing "unforeseen circumstances". 
 At the same time, during the last year of investigation period and by the decision of the European Commission of 14.11.2012 # 1072/2012 the provisional anti-dumping measures were applied 
from 16.11.2012 on import to the European Union, including crockery and cutlery kitchenware of 
porcelain, on the level of 17.6% - 58.8%. The use of provisional anti-dumping measures is 
unforeseen circumstance that could have lead to a reorientation of foreign producers to new export 
markets, including Ukraine. 
 Beside this, from 03.09.2012 the Customs Union (Order of the Department of protection of the 
domestic market of the Eurasian Economic Commission of 30.08.2012 №7) initiated the special 
safeguard investigation on import of porcelain tableware to the common customs territory of the Customs Union. The fact of initiation of special investigation and, consequently, the likely use of special safeguard measures, is unforeseen circumstances and could encourage foreign producers 
to seek other export markets in case of the introduction of safeguard measures to protect the 
domestic market of the Customs Union.  
In addition, by information on the results of the hearings, other contingency, effected increase of 
imports to Ukraine of porcelain products is the expansion of distribution networks with foreign 
investment during the investigation period. These networks provide centralized control and trade 
cycle, beginning from the order, giving preferences to foreign producer, and finalizing with sells to 
final consumer.  Full and MFN rate of import duty on goods, what is object to investigation, during the investigation 
period was constant and amounted to 10% (from 01.01.2013 import duty rate for import to 
Ukraine of porcelain crockery originating from the countries - members of EFTA was 6.7%; for CIS countries - zero rate of import duty). Despite th e constant import duty, there was quite significant 
increase of import to Ukraine of goods, what is object of investigation, the redistribution of 
consumption patterns of porcelain products on the do mestic market of Ukraine by displacing of the 
domestic producers in favour of imported products. 
 
3  PRECISE DESCRIPTION OF THE PRODUCT INVOLVED 
Tableware and kitchenware of porcelain cl assified under UKTZED codes 6911 10 00 00.
* 
 
4  DESCRIPTION OF IMPORTED GOODS THAT IS NO LONGER UNDER INVESTIGATION IN 
CONNECTION WITH THE EXTENS ION OF SAFEGUARD MEASURES OR REPLACEMENT OF 
TEMPORARY MEASURES 
Not applicable. 
 5  PRECISE DESCRIPTION OF THE PROPOSED MEASURE 
The investigation authority will recommend application of safeguard measure in form of special 
duties on import to Ukraine of goods,  what is object to investigation. 
 The rate of special duty was calculated by comp aring of customs value of the goods, what are 
object of investigation, and calculated minimum price of goods under which will be no injury to 
domestic industry.   
Thus the proposed rate of safeguard duty is 35.6%. 
 
                                               
* UKTZED is the Ukrainian Foreign Economic Activity Commodity Classification, based till 2013 on 
Harmonized System 2007 and since 2014 – on HS2012. G/SG/N/8/UKR/4 • G/SG/N/10/UKR/4 
 
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  6  PROVIDE PROPOSED DATE OF INTRODUCTION OF THE MEASURE 
Not available. 
 7  PROVIDE EXPECTED DURATION OF THE MEASURE 
Period of 3 years. 
 8  FOR A MEASURE WITH A DURATION OF MORE THAN THREE YEARS, PROVIDE THE 
PROPOSED DATE FOR THE REVIEW (UNDER AR TICLE 7.4) TO BE HELD NOT LATER THAN 
THE MID-TERM OF THE MEASUR E, IF SUCH A DATE FOR THE REVIEW HAS ALREADY BEEN 
SCHEDULED 
Not applicable. 
 
9  IF THE EXPECTED DURATION IS OVER ONE YEAR, PROVIDE EXPECTED TIMETABLE FOR PROGRESSIVE LIBERALISATION OF THE MEASURE 
The investigation authority proposes the following schedule of liberalization by reduction of the 
duty rates:  
12 months from the date of application - to 32%; 
24 months from the date of application - to 28.8%. 
 10  FINAL DATE FOR SUBMISSION OF COMMENTS BY STAKEHOLDERS AND DATE OF 
PRIOR CONSULTATION WITH THE MEMBERS HAVING A SUBSTANT IAL INTEREST AS 
EXPORTERS OF GOODS 
i. Interested parties are invited to submit comments on this issue and on participation 
in consultations - till 28 March 2014. 
ii. According to the article 12.3 of the Agr eement on Safeguards, the date of prior 
consultations with interested parties having a substantial interest as exporters of 
goods offered - till 3 April 2014 in Kyiv (Ukraine). 
11  INFORMATION RELATING TO THE EXTENSION OF A SAFEGUARD MEASURE 
Not applicable. 
 
12  THE MAIN COUNTRIES OF ORIGIN OF IM PORTED GOODS TO UKRAINE. IF THERE ARE 
ANY EXPORTING MEMBERS TO WHICH THE MEASURE DOES NOT APPLY FOR ANY REASON OTHER THAN THE APPLICATION OF ARTICLE 9.1, THE NAMES OF SUCH 
EXPORTING MEMBERS AND REASONS FOR NON-APPLICATION OF THE MEASURE 
i. The share of countries in total imports into Ukraine of goods, what is the object of 
the investigation, described in the table 12.1 
Table 12.1 
Country of origin II І period 
Net import, % 100.00 
People's Republic of China, % 94.19 
Poland, % 2.30 
Belarus, %  0.50 
Czech Republic, %  0.62 
Republic of Turkey, % 0.52 
 G/SG/N/8/UKR/4 • G/SG/N/10/UKR/4 
 
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  ii. Pursuant to the Agreement on Free Trade of Commonwealth of Independent States 
of 18.10.2011 and taking into consideration provisions of paragraph 8 of Article XXIV of the GATT 1994, import of goods, what are subject to investigation, originating from Armenia, Kazakhstan, Moldova, Kyrgyz Republic and Russian Federation shall 
be deemed as not prejudicial and/or threatening to cause injury to domestic 
industry, and shall be excluded from the application of safeguard measures. 
Under the Free Trade Agreement between the EFTA States and Ukraine of 24.06.2010 and taking 
into consideration the provisions of paragraph 8 of Article XXIV of the GATT 1994 import of goods, 
what are object of investigation, originating from Iceland, Liechtenstein, Norway and Switzerland is 
considered as the one that does not cause damage  and/or threaten to cause injury to domestic 
industry, and shall be excluded from the application of safeguard measures. 
 
The volume of import to Ukraine of goods, what is object of investigation, excluded from the application of safeguard measures, in the third period amounted to 0.1% of total imports, and 
therefore it could not affect the main conclusions of the investigation authority regarding the fact 
of the growth in imports causing serious injury to domestic industry.  
__________