WORLD TRADE  
ORGANIZATION  G/SG/N/8/MAR/2/Suppl.2 
G/SG/N/10/MAR/2/Suppl.2 
G/SG/N/11/MAR/1/Suppl.2 
3 July 2009 
 (09-3237) 
Committee on Safeguards Original:   French 
  
NOTIFICATION UNDER ARTICLE 12.1 (B) OF THE AGREEMENT ON 
SAFEGUARDS OF A FINDING OF SERIOUS INJURY OR THREAT OF 
SERIOUS INJURY CAUSED BY INCREASED IMPORTS 
 
NOTIFICATIONS PURSUANT TO ARTICLE 12.1(C) AND ARTICLE 9, 
FOOTNOTE 2, OF THE AGREEMENT ON SAFEGUARDS 
 
NOTIFICATION PURSUANT TO ARTICLE 9, FOOTNOTE 2, 
OF THE AGREEMENT ON SAFEGUARDS 
 
MOROCCO 
 
(Ceramic tiles
) 
   The following communication, dated 17 June 2009,  is being circulated at the request of the 
delegation of Morocco. 
 
_______________ 
 
  On the basis of the agreed formats for notifications set out in documents G/SG/W/1 and 
G/SG/1 of 23 February 1995 and 1 July 1996, respectively, Morocco hereby notifies to the 
Committee on Safeguards the results of the investig ation for extension of the safeguard measure on 
ceramic tiles.   On 3 November 2008, Morocco initiated an investigation concerning extension of the 
safeguard measure imposed on imports of ceramic  tiles under tariff heading 69.08 of the Harmonized 
System.  The initiation of the investigation was notified to the Committee on Safeguards (document 
G/SG/N/6/MAR/4 of 10 December 2008).  
1. Provide evidence that the industry concerned is adjusting and that the safeguard 
measure continues to be necessary to  prevent or remedy serious injury. 
 1.1 Provide evidence that the safeguard measure continues to be necessary to 
prevent or remedy serious injury to  the domestic ceramic tile industry . 
  In order to determine whether the safeguard m easure continues to be necessary, Morocco first 
investigated whether the safeguard measure is still needed to remedy serious injury and, in this 
connection, Morocco considered whether, in the co urse of the period of application of the safeguard 
measure, imports of ceramic tiles had taken pl ace in such increased quantities and under such 
conditions as to cause or threaten serious injury to the domestic industry producing ceramic tiles. 
 G/SG/N/8/MAR/2/Suppl.2 
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   Secondly, Morocco examined whether the safe guard measure continues to be necessary to 
prevent serious injury, and focused for that purpos e on the foreseen and imminent behaviour of the 
imports and their effects on the domestic industr y after the lifting of the safeguard measure. 
 
 (a) Determination as to whether the safe guard measure continues to be necessary to 
prevent or remedy serious injury to the industry 
 
 In accordance with the provisions of Article 7.2 of the Agreement on Safeguards, Morocco 
examined the factors serving to determine, in conform ity with the procedures set out in Articles 2, 3, 4 
and 5 of the Agreement, whether the safeguard meas ure continues to be necessary to remedy serious 
injury.  In this connection, in the context of the i nvestigation covering the period of application of the 
safeguard measure, Morocco anal ysed the following factors: 
 
 - The growth rate of the imports in absolute and relative terms; 
  - the share of the domestic market taken by imports;  and   - the variations in the level of producti on, sales, productivity, capacity utilization, 
profits and losses, inventories and employment. 
 
Trends in imports
 
 
 Imports of ceramic tiles grew at a relativ ely unexceptional rate during the period of 
application of the safeguard measure.  Their av erage annual growth rate was 20 per cent over the 
period 2005-2008. 
  Relative to domestic production, imports of ceramic tiles increased from 15.93 per cent in 
2005 to 19 per cent in 2008, and the market share of imported tiles rose from 14.5 per cent to 16 per 
cent during the same period.  Imports of ceramic tiles
 
 
 2005 2006 2007 2008 
Imports (m²) 5 573 286 6 545 256 7 394 924 8 992 799 
Imports/Production (%) 15.93 17.27 16.20 19 
Average import price (DH/m²) 46.48 40.30 37.51 47.24 
Market share of imports (%) 14.49 14.48 14.67 16 
 
 The average import price of ceramic tiles trended downwards, by 19.3 per cent, over the 
period 2005-2007.  In 2008, the average import pric e of these products rose by 26 per cent compared 
with the previous year.  
 Although the import data show a steady upward trend in both absolute and relative terms, 
Morocco cannot conclude that the imports took pl ace in such increased quantities and under such 
conditions as to cause or threaten to cause serious  injury to the domestic tile industry, within the 
meaning of Article 2 of the Agreement on Safeguards.   G/SG/N/8/MAR/2/Suppl.2 
 G/SG/N/10/MAR/2/Suppl.2  G/SG/N/11/MAR/1/Suppl.2 
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  Industry output
 
 
 Morocco noted that the production of ceramic tiles picked up during the period following the 
introduction of the safeguard measure.  The grow th rate of 13 per cent for 2006 over 2005 increased 
to 20 per cent for 2007 over 2006.  For the firs t nine months alone of 2008, production reached 
36 million m2.  Before that period, production had declined on account of massive imports. 
 
Capacity and rate of utilization of production capacity  
 
 Morocco noted that, during the period of app lication of the safeguard measure, the capacity 
utilization rate recorded an upward trend of between 8 and 20 per cent according to the year 
concerned, despite an increase in production capacity during that period.  Sales and turnover
 
 
 The volume of sales by producers of ceramic til es improved from one year to the next during 
the period of application of the safeguard measu re, increasing by 44 per cent between 2005 and 2007. 
  Application of the safeguard led to a substan tial increase in local sales of tiles, in terms of 
both volume and unit price, enabling earlier losses to be retrieved. 
 
Production costs
 
 
 Morocco found that the adjustments implemente d by the domestic industry (cf. section 1.2 
below) during the period of application of the safeguard  measure led to a gain in terms of cost price, 
despite the increase in the price of raw materials,  spare parts and energy.  As a result, following a 
9.5 per cent increase between 2005 and 2006, production costs declined by 7.25 per cent in 2007.  
Industry profitability
 
  The year 2006 saw a significant decline in th e results achieved by domestic producers, based 
on gross operating profit, but from 2007, given the upwa rd trend in sales prices and production costs, 
the domestic industry recorded overall gains which tran sformed a negative rate of return of -7 per cent 
into a positive result of 8 per cent between 2006 and 2007.  Inventories
 
 
 As in the case of other performance indicators, the domestic tile industry recorded no increase 
in inventories during 2007, given the significant improvement in sales.  
Productivity and employment
 
 
 During the period of application of the safe guard measure, Morocco noted a net gain in 
productivity, which was accompanied by an increase in staffing levels and in the number of employee 
hours worked.  These results were ac hieved through an increase in pr oduction to meet the surge in 
demand on the domestic market, which was sparke d by the launch of numerous housing programmes 
between 2005 and 2008. 
  A study of import trends and economic indicat ors for the domestic industry reveals that the 
safeguard measure had a positive impact on the domes tic industry, particularly as from the financial G/SG/N/8/MAR/2/Suppl.2 
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  year 2007, and in this context 20 06 may be considered a transitional year during which firms in the 
tile sector began implementing the adjustment programme.  
 In view of the foregoing, Morocco has determin ed that maintenance of the safeguard measure 
is no longer necessary to remedy serious injury, given that through application of the measure: 
  - Imports have shown normal gr owth in light of trends in demand and there can be no 
question of the existence of a massive increase in imports;  and 
 
 - the factors taken into account to determin e the persistence or otherwise of injury 
developed positively, showing a significan t improvement in the situation of the 
ceramic tile industry, despite the sharp ri se in energy costs between 2005 and 2008. 
  (b) Determination as to whether the safe guard measure continues to be necessary to 
prevent serious injury 
 
Foreseeable trends in imports
 
 
 In accordance with Article 7.2 of the WTO Ag reement on Safeguards, Morocco examined the 
pertinent factors in order to determine whether ther e was a real threat of injury attributable to a 
massive and imminent increase in imports following the planned lifting of the safeguard measure at 
the end of November 2008 and, on that basis, to determine whether the safeguard measure continues 
to be necessary to prevent the potential threat of ser ious injury to the domestic ceramic industry in the 
event of non-renewal of the measure. 
 
 An examination of the data supplied by th e Spanish Association of Tile Manufacturers 
(ASCER) showed that, between 2005 and 2007, the unit price of exports to Morocco recorded a slight 
upward trend followed by a substantial decline in 2008.   This decline in the unit price confirms the 
allegations that were made by the Moroccan tile  producers and corroborated by the study submitted 
by the Professional Association of Ceramic Industri es (APIC), to the effect that Spanish tiles are 
undoubtedly a quality product but compete directly and closely with the Moroccan product because of 
a highly attractive unit price.   At the same time, statistical data on Span ish exports by geographical area for the first 
nine months of 2008 confirmed the upward tre nd in exports of ceramic tiles from Spain to 
Eastern Europe (22.3 per cent) and to Africa (15.6 per cent).  These facts were confirmed by ASCER, 
which indicated that Spanish producer/exporters had redirected their exports to destinations less 
adversely affected by the difficult and comple x economic circumstances besetting the Spanish 
domestic market, and the markets of Europe and the Unite d States, due mainly to the real estate crisis.  
Similarly, ASCER stated that Africa and Eastern Europe continued to be key outlets for Spanish ceramic tile production. 
 
 Moreover, according to the study carried out  by a well-known international ceramic industry 
expert on the situation of the ceramic tile industry at the global level, and in Spain in particular, 
following the international real estate crisis, the real  estate sector in the United States and Europe has 
faced a difficult situation which in 2007 was reflect ed in a decrease in ceramic tile consumption of 
20 per cent in the United States and 3.2 per cent in Germany, and stagnating consumption in France 
and the United Kingdom.  These four countries alon e account for 32 per cent of Spanish exports of 
ceramic tiles.  At the same time, domestic consum ption in Spain fell by 1.4 per cent in 2007. 
  G/SG/N/8/MAR/2/Suppl.2 
 G/SG/N/10/MAR/2/Suppl.2  G/SG/N/11/MAR/1/Suppl.2 
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   The fall in Spanish exports to these major expor t customers was also a direct consequence of 
the real estate crisis.  Indeed, in 2007 exports of cer amic tiles from Spain declined by 4.7 per cent to 
the United Kingdom, by 37.5 per cent to the United States, 10.5 per cent to Germany and 22.6 per 
cent to Saudi Arabia.  The decline in Spanish ex ports, coinciding with lower levels of domestic 
consumption, led to a significant build-up of  inventories estimated at some 300 million m
2 ready for 
shipment to export markets at highly competitive prices.   According to Eurostat data, the per unit value of Spanish exports fell sharply, by 44 per cent, 
during the first 11 months of 2008.  This reflects a substantial reduction in Spanish unit export prices 
of ceramic tiles in 2008, as well as a desire to dispose of accumulated stocks.   On the other hand, with reference to the argument put forward by the European Commission and ASCER to the effect that there is no strong pressure on imports because the quotas granted by 
Morocco under the initial safeguard measure have not  been fully taken up, Morocco analysed the use 
of quotas for the years 2007 and 2008, and found that, overall, quota fill rates were 94 per cent in 2007 and 96.5 per cent in 2008.  In the case of the Eu ropean Union, the rates were 84 per cent in 2007 
and 94 per cent in 2008.  In the light of these resu lts, Morocco considers that the quotas were filled 
overall, including the quota granted to the European  Union, which would reflect an interest by 
Moroccan importers and European exporters in placing tiles of Spanish origin on the Moroccan 
market. 
  In view of the foregoing, Morocco concludes that  it is reasonable to consider that the effects 
of the international real estate crisis, including the changes that have affected the ceramic tile sector in 
the main producer countries worldwide, in terms of the fall in unit sales prices, the build-up of 
significant inventories and the modification of export destinations, confirm the real and imminent 
possibility of a massive increase in imports of cer amic tiles to Morocco at very competitive prices 
once the safeguard measure is lifted, thus posing a risk  of serious injury to the domestic tile industry. 
 
Unforeseen change in circumstances
 
  The massive and imminent increase in imports of ceramic tiles to Morocco once the safeguard 
measure is lifted and the risk of serious injury to  the domestic tile industry posed by such an increase 
is a direct consequence of the financial and r eal estate crisis which has mainly affected the 
United States and Europe, including Spain.  
 Morocco considers that the onset of the inte rnational real estate crisis constitutes an 
unforeseen change in circumstances which obliged the Moroccan producers of ceramic tiles to request 
an extension of the safeguard measure, whereas up to  the end of the first half of 2008 the idea of 
renewing the initial safeguard measure had never been raised.   In conclusion, and having regard to the international economic climate marked by the 
existence of significant inventories and unused prod uction capacity, as well as the high quota fill rate, 
Morocco has determined that a re newed massive increase in imports would be made imminent by the 
lifting of the safeguard measure.  Such a resumption of massive imports is a key factor for the existence of a threat of serious injury.   1.2 Determination as to whether the domestic industry has made adjustments 
 
 An adjustment programme was undertaken by  the domestic ceramic tile industry when the 
safeguard measure was introduced.  Most of the i nvestments made since 2005 ha ve been directed to 
the maintenance and survival of the industry whic h was undergoing financial and social restructuring. G/SG/N/8/MAR/2/Suppl.2 
G/SG/N/10/MAR/2/Suppl.2 G/SG/N/11/MAR/1/Suppl.2 
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 In 2005, prior to the application of the safegua rd measure and given the lack of foreseeability 
caused by the massive increase in imports and their steadily growing share of the market, investments 
in expanded capacity were very limited.  Following the introduction of the safeguard measure in 2006, 
which made it possible to stabilize the market sh are of domestic producers, the industry invested 
heavily in the modernization and rationalization of the manufacturing process as well as in enhancing 
production capacity.  
 The structural adjustment programme undertaken by the domestic industry focused on the 
following three main lines of action:  
• Lowering production costs by reducing energy-related charges and fixed costs; 
 
• improving the quality of tiles by modern izing production facilities and ensuring 
conformity with standards NM 13006 and ISO 9001:  2000;  and 
 
• staff training with a view to making optimum use of the new production facilities and 
implementing and monitoring certification projects. 
  In the light of the actions taken by most domestic ceramic tile producers under the adjustment 
programme, Morocco considers that, in overall term s, the domestic industry has made adjustments 
which have had a tangible impact with regard to both reducing production costs and improving the 
quality of tiles produced.   However, apart from the adjustment progra mme introduced and implemented to varying 
degrees by domestic tile producers, other projects have  not yet been completed and their results are 
only partial. 
 
 Thus, maintenance of the safeguard measure w ill enable the sector to  complete the actions 
under way so as to achieve an adequate degree of co mpetitiveness and serve to give it immunity to 
imports.  
 At the conclusion of the investigation and on the basis of the best information available, 
Morocco arrived at the following determinations:   (i) Maintenance of the safeguard measur e is not necessary to remedy an injury. 
  (ii) The safeguard measure continues to  be necessary to prevent serious injury. 
 
 (iii) The domestic tile industry is undertaking structural adjustments.   In the light of these determinations, Morocco considers that the conditions for extending the 
safeguard measure provided for in Article 7.2 of  the Agreement on Safeguards have been met. 
 
2. Specify the product subject to the measure 
 The measure concerns glazed ceramic tiles under tariff heading 6908 of the Harmonized 
System, used for floor or wall coverings, of vari able shape and size (square, rectangular, hexagonal, 
truncated tiles, etc.).  These tiles may be manufactured by extrusion of (extruded tiles) or dry pressing (pressed tiles) or by other processes.  G/SG/N/8/MAR/2/Suppl.2 
 G/SG/N/10/MAR/2/Suppl.2  G/SG/N/11/MAR/1/Suppl.2 
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3. Specify the reference to the WTO documents notifying the initial application of the 
measure 
 The WTO document notifying the initial a pplication of the measure is document 
G/SG/N/8/MAR/2 - G/SG/N/10/MAR/2 - G/SG/N/11/MAR/1 of 2 September 2005. 
  The other documents concerning this measure are the following notifications:  G/SG/N/6/MAR/3 of 22 February 2005 and G/SG /N/8/MAR/2/Suppl.1 - G/SG/N/10/MAR/2/Suppl.1 
- G/SG/N/11/MAR/1/Suppl.1 of 6 March 2005. 
 
4. Specify the duration of the measure from initial application until the date at which it 
will be extended 
 The initial safeguard measure entered into  force as from 26 January 2006 following the 
publication in Official Bulletin No. 5390 of 26 Ja nuary 2006 of Order No. 72-06 of 13 January 2006 
by the Minister of Finance and Privatization.  Mo rocco plans to renew the safeguard measure for an 
additional duration of three years from 1 December 2008, i.e. until 31 December 2011.  
5. Provide a precise description of the measure in place prior to the date of extension 
 The safeguard measure consisted of the impos ition, over and above the customs duty already 
in force, of a specific additional import duty of 1. 5 dirhams per net kilogram, applicable to imports 
exceeding an annual quota of 7.07 million m
2.  The quota not subject to this additional duty was 
increased by 10 per cent per year dur ing the period of application. 
 
Period Quota  
26.01.06 to 30.11.06 7.07 million m2 
01.12.06 to 30.11.07 7.796 million m2 
01.12.07 to 30.11.08 8.532 million m2 
 
6. Description of the extended measure 
 Morocco plans to renew the safeguard measur e for a further three years, that is, until 
31 December 2011.  
 The measure will take the form of an additiona l import duty of 1.5 di rhams per net kilogram 
applicable to imports of cer amic tiles under heading 6908. 
  The measure will be coupled with an annual quota of 13.1 million m
2 not subject to the 
additional duty, i.e. an increase of 58.23 per cent co mpared with the quota granted during the last year 
of the initial measure. 
 
7. If the duration of the measure exceeds three years, indicate the proposed date of the 
review (under Article 7.4) to be carried out not later than the mid-term of the measure, 
if the date of such review has already been set 
 Not applicable. 
 G/SG/N/8/MAR/2/Suppl.2 
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  8. Indicate the expected timetable for pr ogressive liberalization of the measure 
 Pursuant to Article 7.4 of the Agreement on Safeguards and in order to meet the progressive 
liberalization requirement, Morocco plans to raise th e level of the quota not subject to the additional 
duty by 10 per cent per year. 
 
9. Developing countries to which the measure is not applied under Article 9.1 of the 
Agreement on Safeguards 
 Under Article 9.1, footnote 2, Morocco excludes the following developing country Members 
from the proposed measure because imports from each of these countries account for less than 3 per 
cent of total Moroccan imports:   Albania;  Angola;  Antigua and Barbuda;  Ar gentina;  Armenia;  Bahrain, Kingdom of;  
Bangladesh;  Barbados;  Belize;  Benin;  Boli via;  Botswana;  Brazil;  Brunei Darussalam;  
Bulgaria;  Burkina Faso;  Burundi;  Ca mbodia;  Cameroon;  Cape Verde;  
Central African Republic;  Chad;  Chile;  Colomb ia;  Congo;  Costa Rica;  Côte d'Ivoire;  
Croatia;  Cuba;  Democratic Republic of  the Congo;  Djibouti;  Dominica;  
Dominican Republic;  Ecuador;  Egypt;  El Salvador;  Former Yugoslav Republic of 
Macedonia;  Fiji;  Gabon;  The Gambia;  Georgia;  Ghana;  Grenada;  Guatemala;  Guinea;  
Guinea-Bissau;  Guyana;  Haiti;  Honduras;  Hong K ong, China;  India;  Indonesia;  Jamaica;  
Jordan;  Kenya;  Korea, Republic of;  Kuwait;  Kyrgyz Republic;  Latvia;  Lesotho;  Macao, 
China;  Madagascar;  Malawi;  Maldives;  Mala ysia;  Mali;  Malta;  Mauritania;  Mauritius;  
Mexico;  Moldova;  Mongolia;  Mozambique;  Myanmar;  Namibia;  Nepal;  Nicaragua;  Niger;  Nigeria;  Oman;  Pakistan;  Pana ma;  Papua New Guinea;  Paraguay;  Peru;  
Philippines;  Qatar;  Romania;  Rwanda;  Saint Kitts and Nevis;  Saint Lucia;  Saint Vincent 
and the Grenadines;  Saudi Arabia;  Senegal;  Sierra Leone;  Singapore;  Solomon Islands;  
South Africa;  Sri Lanka;  Suriname;  Swazila nd;  Chinese Taipei;  Tanzania;  Thailand;  
Togo;  Tonga;  Trinidad and Tobago;  Turkey;  Uganda;  Ukraine;  Uruguay;  Venezuela (Bolivarian Republic of);  Viet Nam;  Zambia;  and Zimbabwe. 
 
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