G/SG/N/7/MDG/1  
G/SG/N/11/MDG/1  
 
9 January 2019  
(19-0115) Page: 1/6 
Committee on Safeguards  Original: French  
 
  
NOTIFICATION UNDER ARTICLE 12.4 OF THE AGREEMENT  ON SAFEGUARDS  
BEFORE TAKING A PROVISIONAL  SAFEGUARD MEASURE  
REFERRED TO  IN ARTICLE 6  
NOTIFICATION UNDER ARTICLE 9, FOOTNOTE 2,  
OF THE AGREEMENT ON SAFEGUARD S 
MADAGASCAR  
(Pasta ) 
The following communication, dated 7  January 2019 , is being circulated at the request of the 
delegation of Madagascar . 
 
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Madagascar is making this notification to the Committee on Safeguards under  Article 12.4  of the 
Agreement on Safeguards , before taking a provisional safeguard measure , as referred to in Article  6 
of the Agreement , in respect of  imports of pasta . Madagascar also wishes to notify  the Committee, 
under Article  9, footnote  2, of the Agreement on Safeguards, of its decision not to apply the proposed  
safeguard measure to imports from developing countries . 
A. NOTIFICATION UNDER ARTICLE 12.4 OF THE AGREEMENT ON SAFEGUARDS 
BEFORE TAKING A PROVISIONAL SAFEGUARD  MEASURE REFERRED TO  IN 
ARTICLE  6 
1. BACKGROUND  
On 20 September  2018, the National Trade Remedies Authority (ANMCC)  published 
Notice  No. 005-ANMCC/Av.18 on the initiation of a safeguard investigation  concerning pasta 
imported in to Madagascar.  
2. PRODUCT CONCERNED  
The imported product at issue  is pasta made from durum wheat flour or wheatmeal  or a mixture 
thereof, other than hand made pasta  or couscous , which is classified under HS codes 19021190, 
19022090, 19021990 and  19023090.  
3. PROPOSED PROVISIONAL SAFEGUARD MEASURE  
The proposed  provisional safeguard measure consists  of an additional ad valorem  duty of 30%  
(thirty  per cent) of the c.i .f. value.  
 
4. PROPOSED DATE OF INTRODUCTION OF THE SAFEGUARD MEASURE  
The provisional safeguard measure will enter into force 15 days a fter the date of publication of the 
notice concerning the application of the measure in two national  newspapers authorized to receive 
legal notices . 
 G/SG/N/7/MDG/1 • G/SG/N/11/MDG/1  
 
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  5. EXPECTED DURATION OF THE PROVISIONAL SAFEGUARD MEASURE  
The provisional safeguard measure will be applie d for 200 days from t he date of its entry into force . 
6. BASIS FOR APPLICATION OF THE PROVISIONAL SAFEGUARD MEASURE  
A preliminary determination, as provided for in Article 6 of the Agreement on Safeguards,  has been 
made that : 
- increased imports have caused serious injury; and  
- there are c ritical circumstances where delay would cause damage which it would be 
difficult to repair . 
I. INCREASE IN IMPORTS  
In 2016, t he volume of pasta imports increased by 3% in relation to 2015. A substantial and 
significant  increase occurred  between 2016 and 2017. In one year, the import volume increased by 
50%. This upward trend was once again recorded for the first seven months of 2018 when compared 
to the same period in 2017, i.e. an increase of a round 13%.  
 
For the first two years , the increase in imports was verified  both in absolute term s and in relation  to 
domestic production.  Between 2015 and 2016 , the share of imports in relation to domestic 
product ion rose from 1,235% to 1,331%, an increase of eight points. The increase in the volume of 
domestic production  from 2017 onwards cannot be construed  as an improvement in the situation  of 
the domestic industry . It reflects  the launch  of production operations at the applicant company, 
HABIBO MILLS , in 2017, which resulted in a production volume of  [  ] tonnes  that amounted  to 
double the volume of production of two other domestic producers in 2016. Despite  this, the share 
of imports in relation to domesti c production remains very high an d was still well above 500% in 
July 2018 . 
II. UNFORESEEN DEVELOPMENTS  
The trade facilitation measures resulting from the application of regional trade agreements, including 
COMESA and the SADC , which allow for duty -free importation of the product under investigation, 
constitute unforeseen developments as they have caused a significant increase in the volume of 
imports. Around 90% of the total volume of Madagascar's imports come from the COMESA region . 
III. SERIOUS INJURY OR THREAT THEREOF  
The information in  the petition , the replies to questionnaires, and data concerning imports have 
enabled the ANMCC to analyse the serious injury and threat thereof to the domestic industry on the 
basis of the following indicators.  
1. SERIOUS INJURY  
i. Rate of the increase in imports  
As explained  above , pasta imports increased suddenly, recently and in increased quantities, most 
notably between 2016 and 2017. The rate of the increase amounted to  50%, despite having only 
been 3%  between 2015 and 2016 . 
 
ii. Share of the domestic mar ket taken by increased imports  
The market share taken by imports has remained very high since  2015. It amounted to 92.66% 
in 2015 and 93.15% in  2017. Despite  the entry into the domestic market  of the HABIBO MILLS 
company  in 2017, the market share of imports for that year was 87. 93%.  
 
  2015  2016  2017  January - 
July 2017  January - 
July 2018  
Imports  (tonne s) 25,967, 061 26,808, 124 40,300, 093 22,933, 501 25,985,917 
Market share of 
imports  (%) 92.66 93.15 87.93 87.26 85.32 
Market share of 
domestic industry  (%) 7.34 6.85 12.07 12.74 14.68 
 G/SG/N/7/MDG/1 • G/SG/N/11/MDG/1  
 
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  The slight reduction in the share of imports from 2017 onwards cannot therefore be construed  as an 
improvement in the situation  of the domestic industry ; it is simply  a reflection of the applicant 
company 's launching of pasta production and marketing operations and its attempts to increase its 
level of sales .  
 
iii. Sales and turnover of the domestic industry  
Between 2015 and  2016, the domestic industry's sales volume fell by 4%. The same produ cers' 
sales dropped by 15% in 2017, and this decline continued more recently over the same period in 
2018. When taking into account  the performance  of the applicant  company that launched operations  
in 2017, the sales volume of the domestic industry appears  to increase by 169%, and yet this does 
not reflect the overall situation of the  industry, as it is entirely logical that the applicant company , 
having  just started its pasta production operations,  is still trying to increase its volume of production 
and s ales from one year to the next until reaching a level that enables it to secure a return on its 
investments . 
 
iv. Production  
In parallel with the trend in sales, the domestic industry's output  also declined, falling  by 4%  in 2016 
and 15% in 2017 in relation t o its 2015 level. The output  of the HABIBO MILLS  company led to  a 
165% increase in the volume of production being  recorded in 2017, and in July 2018, a 33% increase 
was recorded  in the domestic industry's total production volume. It should be noted that th is 
seemingly positive trend in the domestic production volume is misleading , as while the additional 
amounts resulting from the launch  of pasta productio n operations by the HABIBO MILLS  company 
have broken the trend , the production volume of the two other domestic producers has continued 
to fall  since 2015 . 
 
v. Productivity  
All the companies forming  the domestic industry have tried to maintain  the size of their workforce s. 
This has an impact on how productivity  evolves, as it follows the same trend as production  volume . 
Given that  the workforce of the HABIBO company has remained almost unchanged , while, as 
mentioned above, production has experienced an upward trend , there has been an increase in 
productivity. For the other producers, productivity has fallen steadily since 2015 from [  ] kg per 
employee in 2015  to [  ] kg per employee in  2017.  
 
vi. Production capacity utilization  
The production capacity utilization rate of the domestic industry fell by fo ur points between 2015 
and 2016, dropping  from 49% to 47% in one year. The launch of pasta production operations by 
the HABIBO MILLS  company  contributed to domestic production capacity , but reduced  it 
considerably . In 2017, the production capacity utilization rate was 15%. The efforts made by the 
HABIBO MILLS  company in terms of production  increased it by 33% to a level of 20% of total 
capacity . 
 
vii. Performance  
In 2016 alone , domestic pasta producers recorded a loss of re venue of 97% in relation to the profits 
they made in 2015. In 2017, they experienced a very considerable financial loss , as shown in the 
table below : 
 
  2015  2016  2017  
Performance  of domestic 
producers (ariary)  100 3 -946 
 
In addition to the revenue shortfalls and losses  accumulated by domestic producers since 2015, the 
situation  of the domestic pasta industry on the whole was aggravated by the start -up difficulties 
experienced by the HABIBO MILLS company , which continues to operate below the  break -even 
threshold. While it may seem normal for  a company starting up new operations to initially sell  at a G/SG/N/7/MDG/1 • G/SG/N/11/MDG/1  
 
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  loss, HABIBO MILLS'  performance in terms of production volume a nd turnover during the 
first 19 months of activity was much lower than the  initial forecas ts set out in its business plan . 
 
viii. Employment  
The level of employment in the domestic industry increased by eight points between 2015 and 2016. 
This increase was boosted by the launch  of the HABIBO MILLS company in 2017. In July 2018, the 
level of employment once again fell in relation to 2017 . 
2. THREAT OF SERIOUS INJURY  
The analysis of the threat of serious injury was based on facts drawn from information provided by 
the applicant and data gathered in t he context of the investigation. The details are provided below : 
 
i. Downward trend in import prices  
The domestic pasta industry is also seriously threatened by the downward trend in import prices, 
which forces  the industry to sell below  its production costs  and leads to the accumulation of financial 
losses. This situation is not viable in the long term and threatens to bring an end to  the activities of 
all the companies in the industry. The following table summarize s this downward trend in import 
prices : 
 
EGYPT  2015  2016  2017  July 2018  
Quantity imported   15,599 16,930 28,037 20,170 
Share  / total volume imported   60 63 70 78 
Average import price (a riary/kg)  1,940 1,766 1,477 1,460 
 
TURKEY  2015  2016  2017  July 2018  
Quantity imported  1,975 1,798 1,585 910 
Share  / total volume imported  8 7 4 4 
Average import price (ariary/kg)  1,866 1,525 1,445 1,512 
 
INDONESIA  2015  2016  2017  July 2018  
Quantity imported  1,325 1,510 1,823 1,240 
Share  / total volume imported  5 6 5 5 
Average import price (ariary/kg)  2,405 2,326 2,108 2,159 
 
ii. Trend in exports on the world market  
Given that Egypt  accounts for the largest share of the total amount of pasta imported into 
Madagascar, the analysis of the trend followed by its pasta exports on the world market has been 
of particular interest to  the ANMCC. The threat of injury to the domestic industry has therefore been 
established on the basis of  the fact that Egypt's exports to the world market have increased year on 
year and that Madagascar  is the main destination for these exports . Furthermore, there is a risk that 
the rate of the increase in pasta imports will continue . 
 
iii. Capacity of exporters  
According to the annual IPO pasta  industry status report  for 20131, Egypt's pasta production capac ity 
is 400,000 tonnes , while average pasta consumption per person is 1.2  kg each year. This means 
that Egypt has an available additional exportable capacity  of more than 200,000 tonnes , which poses 
a threat to the domestic industry . 
 
                                                
1 http://www.internationalpasta.org/index.aspx?id=7  G/SG/N/7/MDG/1 • G/SG/N/11/MDG/1  
 
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  IV. CAUSAL LINK  
The ANMCC has examined the correlation between the increase in imports and the serious injury or 
threat thereof to the domestic industry. The impact of factors other than the increase in imports that 
are likely to cause injury to the domestic industry  has also  been examined . 
 
i. Increased imports  
Imports of pasta have risen significantly and substantially since 2015. The increase mainly took 
place in 2017, when imports  rose by 50% in relation to 2016. The causal link was established on  the 
basis of  the impact of these  increase d imports on the situation  of the domestic industry. The domestic 
industry  has experienced a loss of market share, a fall in turnover, a decrease in the volume of 
production, a low production capacity utilization rate  and an accumulation of financial losses due to 
the significant increase in imports of pasta . 
 
ii. Contraction in demand or change s in the pattern of consumption  
Domestic consumption of pasta has followed an upward trend since 2015. An increase of 64% was 
recorded in 2017 in relation to 2015. Between 2017 and 2018, there was an increase of 16%  in 
domestic consumption for the same period from January to July. The ANMCC therefore believes that 
the injury suffered by the domestic industry cannot be attrib uted to a  contraction in demand . 
The increase in domestic production has always been accompanied by a significant  and stronger rise 
in the volume of imports. However , the domestic industry's s ales fell between 2015 and 2016, and  
despite the increase in its sales following the launch of production operations  at the HABIBO MILLS 
company in 2017, they remain at a very low level in relation to the total volume of imports . 
iii. Trend in domestic prices  
According to import statistics for the last three years corresponding to the investigation period , the 
average prices of imported products have continue d to fall. This downward trend in import prices 
has had a depressive effect on the prices paid by  consumers  on the domestic market and has forced 
domestic producers to align the mselves with the  prices of imported products in order to retain their 
market share, even if sell ing at a loss. Despite this , the market share and sales volume of domestic 
producers have continued to decline due to the severe pressure that imported products  put on prices, 
which has led to an accumulation of financial losses . 
iv. Competition between domestic producers  
The companies SOCOBIS and  SALONE saw their performance indicators deteriorate even before the 
HABIBO MILLS company began its operations  in 2017. Th e total sales volume of these three domestic 
producers that make up  the domestic pasta industry in Madagascar amounted to only [10-15]% of 
the domestic demand in 2017. That year, the HABIBO MILLS company suffered a substantial loss 
despite the  other produc ers not experiencing any growth, their profits having continued to fall since 
2015. The ANMCC therefore concluded, on a preliminary basis, that competition between domestic 
producers could not be considered a cause of the injury suffered by the domestic industry . 
v. Technological development s 
In respect of reference made to the manufacturing process for imported products, the ANMCC has 
verified the domestic production process  and is able to confirm that the domestic industry has 
production technology that is  in line with international standards for pasta  production . Furthermore, 
two of the domestic producers have new production lines that wer e put into operation barely 
two years ago. Technological developments cannot therefore be considered  a cause of the inj ury 
suffered by the domestic industry . 
vi. Export performance  
Since  domestic pasta producers have , at least until now, focused  only on the domestic market, they 
have not engage d in any export operations. U nder no circumstances can export performance be 
considered a  cause of the injury suffered by the domestic industry . G/SG/N/7/MDG/1 • G/SG/N/11/MDG/1  
 
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  CONCLUSION CONCERNING THE CAUSAL LINK  
Having completed the  above -mentioned analysis , the ANMCC is satisfied  that none of these other 
factors fundamentally  contribute to the injury or threa t thereof. There is indeed a  correlation 
between the substantial and significant increase in imports and the serious injury or threat thereof 
suffered by the domestic industry . 
7. 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 exporters of the produ cts concerned . 
8. FURTHER PROCEDURES  
The ANMCC will co nduct a public hearing with interested parties on 5 February  2019. Interested 
parties must express their interest in part icipating in the public hearing . In addition, they must 
present written submissions setting out their views no later than ten  days befo re the public hearing . 
9. FURTHER INFORMATION  
Information on the decision to apply the provisional safeguard measure to the products concerned 
and the broadening of the scope of the investigation may be obtained from the websites of the 
ANMCC  (www.anmcc.mg ) and the Ministry of Trade and Consumption  (www.mcc.gov.mg ) or may 
be requested from : 
 
Monsieur Le Directeur Général de l 'ANMCC  
Enceinte Ex conquête Antanimena BP: 7653  
Tel.: +261 34 05  441 41 - Email: dg.anmcc@gmail.com  
101-ANTANANARIVO – MADAGASCAR  
 
Any correspondence concerning this investigation must be sent to the above address . 
B. NOTIFICATION PURSUANT TO ARTICLE 9, FOOTNOTE 2 , OF THE AGREEMENT ON 
SAFEGUARDS OF THE DECISION NOT TO APPLY THE SAFEGUARD  
Below is the list of developing countries excluded from the provisional safeguard measure because 
their exports repr esent less than 3% of Madagascar's total imports of pasta  and collective ly account 
for not more than 9% (Article 9. 1 of the Agreement on Safeguards ). 
 
Afghanistan;  Albania; Angola; Antigua and Barbuda;  Argentina; Armenia; Bahrain; Bangladesh; 
Barbados; Bel ize; Benin; Bolivia,  Plurinational State of ; Botswana; Brazil; 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 Con go; Djibouti; 
Dominica; Dominican Republic; Ecuador;  El Salvador;  Eswatini;  Fiji; Gabon; Gambia; Georgia; 
Ghana; Grenada; Guatemala; Guinea; Guinea -Bissau; Guyana; Haiti; Honduras; India; Israel; 
Jamaica; Jordan; Kazakhstan; Kenya; Kuwait;  Kyrgyz Republic;  Lao People's Democratic Republic;  
Lesotho; Liberia; Malawi; Malaysia;  Maldives; Mali; Marshall Islands;  Mauritania; Mexico; Moldova; 
Mongolia; Montenegro; Morocco;  Mozambique; Myanmar; Namibia; Nepal; Nicaragua; Niger; Oman;  
Pakistan; Panama;  Papua New Gu inea; 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;  South Africa; Sri Lanka; Suriname; Tajikistan; 
Tanzania; Thaila nd; The former Yugoslav Republic of Macedonia;  Togo; Tonga; Trinidad and Tobago; 
Tunisia; Uganda; Ukraine; United Arab Emirates; Uruguay; Vanuatu; Venezuela,  Bolivarian Republic of ; 
Viet Nam; Yemen; Zambia;  Zimbabwe.  
 
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