G/SG/N/8/MDG/4  
G/SG/N/10/MDG/4  
G/SG/N/11/MDG/4/Suppl.1  
21 February  2020 
(20-1374) Page: 1/7 
Committee on Safeguards  Original:  French  
 
  
NOTIFICATION, UNDER ARTICLE 12.1(B) OF T HE AGREEMENT ON  
SAFEGUARDS, OF A FIN DING OF SERIOUS INJU RY 
OR THREAT THEREOF CA USED BY INCREASED IM PORTS  
 
NOTIFICATION UNDER A RTICLE 12.1(C)  
OF THE AGREEMENT ON SAFEGUARDS  
 
NOTIFICATION UNDER ARTICLE 9, FOOTNOTE 2, 
OF THE AGREEMENT ON SAFEGUARDS  
MADAGASCAR  
Pasta  
 
The following communication , dated 20 February 2 020, is being circulated at the request of the 
delegation of  Madagascar . 
 
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In accordance with A rticles 12.1(b) and 12.1(c) of the  Agreement  on Safeguards , Madagascar hereby 
notifies the Committee on Safeguards of a finding of serious injury or threat thereof caused by 
increased imports , and of  the decision to apply a safeguard measure on imports of pasta in the  form 
of spaghetti, macaroni,  noodles or in any other form . Madagascar also wishes to notify the 
Committee, under Article  9, footnote  2, of the Agreement on Safeguards, of the decision not to apply 
the proposed safeguard measure to imports originating in  developing countries.  
Pursuant to  Article 12.3 of the Agreement on Safeguards, Madagascar is prepared to consult with 
those Members having a substantial interest as exporters of the product concerned . 
1  NOTIFICATION, UNDER ARTICLES 12.1(B) AND 12.1(C) OF THE AGREEMENT ON 
SAFEGUARDS, OF A FINDING OF SERIOUS INJURY OR THREAT THEREOF CAUSED BY 
INCREASED IMPORTS, AND OF THE DECISION TO APPLY A SAFEGUARD MEASURE  
1.1  Evidence of serious injury or threat thereof caused by increased imports  
The determination of serious in jury to the domestic pasta industry was based on all relevant factors 
of an objective and quantifiable nature having a bearing on the situation of that industry . Data 
available to the  Authority  was used to analyse  the serious injury suffered by  the domestic industry . 
i. Rate of increase in imports  
i.1 Rate of increase in imports in absolute and relative terms  
There was a sudden, recent and significant increase in pasta imports, particularly in 2017 . That year , 
imports were up  50% from 2016, after having risen by only 3 % between 2015 and 2016. Over 
four years , from 2015 to 2018, imports rose by 73%. G/SG/N/8/MDG/4 • G/SG/N/10/MDG/4 • G/SG/N/11/MDG/4/Suppl.1  
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  i.2 Downward trend in import prices  
The analysis  of imports  showed that the average  cost, insurance  and freight (c.i.f.) price of imports 
decreased considerably , falling from MGA 2 ,386 to MGA 2 ,067 per kilogram from 2015 to 2018.  
ii. Effect on prices of domestic products  
One part of the domestic industry has been selling its products at a loss , while a nother saw  its profits 
fall during the period analysed . A high degree of temporal coincidence between the substantial 
decrease in import prices and the decrease in prices of domestic products from 2016 to 2017  has 
been observed . This situation is not viable in the long term and threatens to bring the operations of 
all the companies in the industry to a halt.  
iii. Share of the domestic market taken by increased imports  
Imports took a significant share of the market during the investigation period , even though 
HABIBO  MILLS launched its operations in 2017. The market share of imports remained at 87 % in 
2018.  
iv. Analysis of domestic industry indicators  
A – SECTORAL ANALYSIS OF THE S ITUATION  OF THE DOMESTIC INDUSTRY  
Given the differing  situations of the companies in the domestic industry, a sectoral analysis of 
indicators of injury to the domestic industry was undertaken . This examined  the injury indicators of 
HABIBO MILLS, the company that began operating in 2017, and those of two othe r domestic 
producers , SALONE SA and SOCOBIS, whose operations considerably predated the investigation 
period . 
In addition to HABIBO MILLS' output indicators for the first two years , the Authority  used the 
company's business plan , prepared  in 2014, to carry  out the injury analysis and draw relevant  
conclusions.  
The analysis of the data from HABIBO MILLS' business plan and the verification of the sources of 
information used therein  led the National Trade Remedies Authority ( ANMCC ) to conclude that the 
projections it presented were pertinent and achievable for the following reasons:  
‐ The average c.i.f. price per kilogram in 2014 was MGA 2 ,543, significantly higher than the 
company's estimated 2017 price of MGA (confidential ) per kilogram . The com pany 
undoubtedly expected the price to increase over the coming years, but the opposite 
occurred . 
‐ Imports amounted to only 25,172 tonnes in 2014 and their rate of increase was more or less 
slow and normal until 2016 . There was a sudden and abnormal increas e in imports in 2017 , 
coinciding with the period when the investment was being made ( i.e. when the plant was 
being installed) . Prior to 2017, the normal average annual rate at which imports increased 
was 3.2 %. At that average annual rate of increase, the e stimated volume of imports would 
have been expected to reach 27,000 tonnes in 2017 . However, that year, the volume of 
pasta imports suddenly rose to 40,300 tonnes, exceeding the estimate by more than 
13,000  tonnes . This difference represents an expansion o f the market that would have 
benefited HABIBO MILLS, which had set its projection for 2017 at (confidential ) tonnes . This 
figure  is still lower than 16,784 tonnes, the sum of the (confidenti al) tonnes it produced and 
the 13,000 tonnes in excess imports . 
‐ HABIBO MILLS' projected volume of production for its first year of operation was relatively 
low and equal led 50% of its production capacity . G/SG/N/8/MDG/4 • G/SG/N/10/MDG/4 • G/SG/N/11/MDG/4/Suppl.1  
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  A.1 – INJURY INDICATORS FOR HABIBO MILLS : 
HABIBO MILLS ' performance indicators  are based on actual data and data from the company's 
business plan . 
- Sales and turnover  
HABIBO MILLS was able to increase its sales and turnover in the domestic market during the period 
2017-18, but it still incurred losses . This performance was extremely poor when  compared wi th the 
sales and turnover projections for the previous two years . The rate of achievement of  the 
2018 projections was 30 % for sales and 22 % for turnover . 
- Production  
As with sales, the company's actual  levels of  production in 2017 and 2018 w ere significantl y lower 
than its projections . It was unable to exceed  30% of the projected volume during two years of 
operation . 
- Productivit y 
The company's productivity improved by 39% from 2017 to 2018 . Since the number of employees 
remained almost unchanged, the improvement in productivity is reflected in  the increase in 
production during the same period . 
- Production capacity utilization  
The levels achieved during the two years of operation were significan tly lower than the initial 
projections  of 25% and 30% for 2017 and 2018, respectively . This was despite  production capacity 
utilization increas ing by 40% and efforts being undertaken by the company to achieve a return on 
its investment and retain jobs . 
- Selling price and production cost  
Unlike the unit production cost, the average unit selling price fell during the investigation period . 
This was the result of vigorous competition from imports , mean ing that the company  was unable  to 
sell at a decent price that would allow it to cover its costs and generate profit s. 
- Performance  
From the  beginning of its  operations, the company suffered losses that were seemingly  normal for 
its first yea r. However, HABIBO MILLS was unable to improve its performance  during its second year 
and continued to incur financial losses, despite its production and sales efforts . This was due to the 
company's inability to increase or maintain its selling prices given the relatively low import prices, 
which were lower than its p roduction costs . 
Furthermore, based on the temporal coincidence between the sharp 50 % increase in imports from 
2016 to 2017 and the  significant  financial losses incurred by HABIBO MILLS,  it can be concluded 
that the company's poor performance cannot be att ributed to  start-up losses, but instead is the 
direct result  of the increase in imports . 
- Emplo yment  
The size of the company's workforce has remained almost unchanged over the last two years . 
- Break -even threshold  
As things stand,  it has been established that the company will never break even  unless it is able to 
raise its selling price . G/SG/N/8/MDG/4 • G/SG/N/10/MDG/4 • G/SG/N/11/MDG/4/Suppl.1  
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  - Return on investment  
The company's business plan project s that a return on investment would be achieved after the 
fifth year of operations ( i.e. in 2021) . This break -even point is considered normal, given that the 
amortization  period  of fixed assets used is 10 years . Unfortunately, due to  the current situation, this 
return on investment will not materialize before the end of the  amortization period unless the 
company is able to adjust its prices . 
A.2 – INJURY INDICATORS FOR SALONE SA AND SOCOBIS : 
(Sources : Actual data from SALONE SA and SOCOBIS .) 
- Sales and turnover  
The two producers saw their sales volumes decrease throughout the investigation period . There was 
a 19% decline in sales volume between 2015 and 2018, which was accompanied by a 3 % decrease 
in turnover . 
- Production  
Just like  the trend in sales , the two domestic producers' production volumes fell continuously as 
from 2015 . This decrease amounted to 20 % from 2015 to 2018 . 
- Productivit y 
As indicated ab ove, all the domestic producers tried to maintain the size of their workforces, which 
did not undergo  any significant change s. As a result, the changes in productivity followed the same 
trend as the changes in production volume : i.e. a steady downward s trend as from 2015, with 
productivity decreasing from 22,856 kg per employee in 2015 to 18,228 kg per employee in 2018 . 
- Production capacity utilization  
The production capacity utilization rate of the two domestic producers declined by 63% between  
2015 and 2018. 
- Performance  
The profits of the two domestic producers dropped considerably, by 72 %, from 2015 to 2018 . 
- Emplo yment  
As mentioned  above, the domestic industry tried to retain jobs during the period 2015 -18, so the 
level of employment did not f luctuate considerably . Nevertheless, employment increased by 8 % 
between 2015 and 2016 and then declined by 3 % between 2016 and 2017, before returning to its 
2015 level . 
 
B – OVERALL ANALYSIS OF THE SITUATION OF THE DOMESTIC INDUSTRY  
The preceding sectoral analysis highlighted the significant overall impairment of all the companies 
in the domestic industry . This impairment can be seen in almost all the economic indicators analysed , 
with the exception, over the last two years, of the increases in pro duction and sales volumes caused 
by the launch of HABIBO MILLS' operations . The additional production and sales volumes produced 
by HABIBO MILLS have not prevented  the domestic industry from incurring financial losses, nor have 
they led to an improvement in its performance, which has deteriorated year-on-year since the 
beginning of the investigation period . 
Thus, the review of all the relevant factors above has revealed a significant overall impairment of 
the domestic industry's economic indicators , including production volume, sales volume, market 
share, performance and production capacity utilization . It has also showed that imports are taking 
a toll on, and threat en the survival of , domestic producers . It is therefore concluded that there is G/SG/N/8/MDG/4 • G/SG/N/10/MDG/4 • G/SG/N/11/MDG/4/Suppl.1  
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  serious injury to the domestic industry producing like product s or products directly competitive with 
the product  under investigation . 
UNFORESEEN DEVELOPMENTS  
There was a  sudden, recent, significant and sharp increase in imports of the investigated product . 
This increase was due to unforeseen developments, including the 2016 monetary crisis in Egypt, 
which led Egypt's central bank to devalue the Egyptian pound by 48 % after the collapse of its dollar 
reserves and to move to a floating exchange rate regime . This change in Egypt's monetary policy 
boosted its exports, including pasta exports, of which 55 % were exported to Madagascar in 2018, 
compared with 29 % in 2015 . More than  70% of the volume of pasta imported by Madagascar comes 
from Egypt . 
INCREASE IN IMPORTS  
i. Change in imports  in absolute terms  
According to statistics  provided by the Madagascar Customs Service, the volume of pasta imports in 
2016 were up  3% from 2015. A substantial and significant increase occurred between 2016 and 
2017, with a 50% increase over one year . This upward trend was seen again in 2018 . Imports 
increased by 73 % during the investigation period.  
Change in  imports  in absolute terms  
 
2015  2016  2017  2018  Jan. to Sept. 
2019  
Import s 25,967,061 26,808,124 40,300,093 44,909,601 25,120,526 
Change  100 103 155 173 - 
Source:  Data compiled from Madagascar  Customs Service  statistics . 
More recent ly, from 1 January  to 30 September 2 019, the volume of imports  almost equalled  the 
annual volume recorded  for the  first two years of the investigation period . 
Analysing  monthly averages could be misleading due to the fluctuation  of monthly imports each 
year. Trends can therefore only be analysed  based on a com parison of annual data . 
ii. Change in imports relative to domestic production  
Change in imports relative to domestic production (Index) 
Imports/Domestic production  
(three producers ) 2015  2016  2017  2018  
Import s/Domestic p roduction  100 108 59 52 
(two pre -existing producers ) 100 108 182 217 
Import s/Domestic p roduction  - - 100 79 
Source:  Data compiled from Madagascar Customs Service  statistics  and data from domestic producers . 
For the first two years of the investigation period, the increase in imports was verified both in 
absolute terms and relative to domestic productio n. The proportion of imports relative to domestic 
production rose eight  points between 2015 and 2016.  
The rate of increase in imports relative to domestic production appears not to have continue d for 
the last two years . This decrease is misleading , as the increase in the volume of domestic production 
cannot be construed as an improvement in the situation of the domestic industry ; rather, it reflects 
HABIBO MILLS' entry into the pa sta production business in 2017. 
However, the proportion of imports relative to domestic production remain ed very high . In 2018, 
this proportion e xceeded  600%. It can be concluded that imported products still largely dominated 
the domestic market . G/SG/N/8/MDG/4 • G/SG/N/10/MDG/4 • G/SG/N/11/MDG/4/Suppl.1  
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  Upon undertaking a separate analysis of the evolution of  the increase in imports relative to domestic 
production, the relative rate of the increase in imports is clear from the production trends of  SALONE 
and SOCOBIS . The volume of their production declined co ntinuously throughout the investigation 
period . 
1.2  Precise description of the product involved  
Pasta in the form of  spaghetti, macaroni,  noodles or in any other form, classified under  Madagascar 
customs tariff codes  19021190, 19021990, 19022090 and 19023090.  
1.3  Precise description of the proposed measure  
In order to prevent or remedy the serious injury to domestic producers caused by the import of 
pasta in greatly increased quantities, the proposed definitive safeguard measure consists of an 
additional duty of 30 % of the product's c.i.f. value.  
1.4  Proposed date of introduction of the measure  
The definitive safeguard measure will enter into force on the date that the relevant decision is made.  
1.5  Expected duration of the measure  
The duration of the definitive safeguard m easure  is four years, including the period of application of 
the provisional measure . 
1.6  Proposed date for the review (under Article 7.4)  
The review , under A rticle 7 .4 of the Agreement on Safeguards , will be held not later than the 
mid-term of the definitive measure.  
1.7  Expected timetable for progressive liberalization of the measure  
The timetable for liberalization is as follows : 
Period Rate of additional duty  
1 August 2 019-31 July 2 020 30% 
1 August 2 020-31 July 2 021 29% 
1 August 2 021-31 July 2 022 28% 
1 August 2 022-31 July 2 023 27% 
1.8  Date for prior consultation with Members having a substantial interest as exporters 
of goods  
Pursuant to A rticle 12 .3 of the WTO Agreement on Safeguards, Madagascar is prepared to hold 
consult ations  with Memb ers having a substantial interest as export ers of the product concerned  no 
later than  16 March 2 020. 
Requests for consultations  should be sent to the Director -General of the ANMCC at the following 
email address : dg.anmcc@gmail.com . 
2  NOTIFICATION UNDER ARTICLE 9, FOOTNOTE 2, OF THE AGREEMENT ON SAFEGUARDS 
OF NON -APPLICATION OF A SAFEGUARD MEASURE TO DEVELOPING COUNTRIES  
2.1  Description  of the  measure 
In order to prevent or remedy the serious injury to domestic producers caused by the import of 
pasta in greatly increased quantities, the proposed definitive safeguard measure consists of an 
additional duty of 30 % of the product's c.i.f. value . G/SG/N/8/MDG/4 • G/SG/N/10/MDG/4 • G/SG/N/11/MDG/4/Suppl.1  
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  2.2  Produ cts subject to the  measure 
Pasta in the form of spaghetti, macaroni, noodles or in any other form, classified under Madagascar 
customs tariff codes 19021190, 19021990, 19022090 and 19023090 . 
2.3  Developing countries to which the measure is not applied under Article 9.1 of the 
Agreement on Safeguards  
Imports from the following countries will not be subject to the definitive safeguard measure as long 
as the imports from each of these countries do not exceed 3 % of Madagascar's total imports and 
they do not collectively account for more than 9 %: 
 
Afghanistan ; Albania ; Angola ; Antigua and Barbuda ; Argentina ; Armenia ; Bahrain ; Bangladesh ; 
Barbados ; Belize; 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 Congo ; 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; 
Nigeria ; 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 ; South Africa ; Sri Lanka ; Suriname ; Swaziland ; 
Tajikistan ; Tanzania ; Thailand ; 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.  
2.4  Further information  
Information on the decision to apply the definitive safeguard measure to the products concerned 
may be obtained from:  
Monsieur Le Directeur Général de l 'ANMCC  
Enceinte Ex -Conquête Antanimena, Antananarivo 101 – Madagascar  
Email:  dg.anmcc@gmail.com  
 
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