WORLD TRADE  
ORGANIZATION  G/SG/N/7/PAN/1 
G/SG/N/11/PAN/1 20 February 2007 
 
(07-0703) 
Committee on Safeguards Original:   Spanish 
  
 
NOTIFICATION UNDER ARTICLE 12.4 OF THE AGREEMENT ON 
SAFEGUARDS RELATING TO A PROVISIONAL SAFEGUARD 
MEASURE PROVIDED FOR IN ARTICLE 6 
 
NOTIFICATION UNDER ARTICLE 9, FOOTNOTE 2, 
OF THE AGREEMENT ON SAFEGUARDS 
 
Printed Polypropylene Film in Rolls and Printed PVC Film in Rolls
 
  
 The following communication, dated 13 February 2007, is being circulated at the request of 
the delegation of Panama.  
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 Pursuant to Article 12.4 and Ar ticle 9, footnote 2, of the Agre ement on Safeguards, we hereby 
submit a notification relating to the adoption of provi sional safeguard measures in respect of imports 
of certain types of plastic film.   A. 
NOTIFICATION UNDER ARTICLE 12.4  OF THE AGREEMENT ON SAFEGUARDS BEFORE TAKING A 
PROVISIONAL SAFEGUARD MEASURE REFERRED TO IN ARTICLE 6 
1. Specify the product subject to the proposed provisional safeguard measure 
Product 1 (BOPP film):   Printed film in rolls for the manufacture of flexible packaging of 
"monolayer" polypropylene for packaging machines, classified under tariff heading 39.20.20.90 of 
Panama's Import Tariff. 
 
Product 2 (PVC film):   Printed film in rolls for the manufact ure of flexible packaging of polyvinyl 
chloride (PVC) for packaging machines, classified  under tariff heading 39.20.49.00 of Panama's 
Import Tariff.  
2. Specify the proposed provisional safeguard measure 
Product 1 (BOPP film):  Printed film in rolls for the manufacture of flexible packaging of 
"monolayer" polypropylene for packaging machines.  A 59.9 per cent  surcharge on the c.i.f. value of 
the imported product, in addition to the MFN tariff applicable to the product.  Product 2 (PVC film):   Printed film in rolls for the manufact ure of flexible packaging of polyvinyl 
chloride (PVC) for packaging machines.  A 79.0 per cent  surcharge on the c.i.f. value of the imported 
product, in addition to the MFN tariff applicable to the product.  G/SG/N/7/PAN/1 
G/SG/N/11/PAN/1 Page 2 
 
 
  3. Specify the proposed date of introduction of the proposed provisional safeguard 
measure 
 Pursuant to domestic legislation, provisional measures come into effect as soon as the Cabinet 
Council decides to adopt and/or apply them. 
 
4. Specify the expected duration of the provisional safeguard measure 
 Provisional measures remain in effect from the time the Cabinet Council decides to apply 
them, until a decision is made as to whether defin itive measures should be applied, provided that this 
period does not exceed 200 days. 
 
5. Provide the basis for making a preliminary de termination, as provided for in Article 6, 
that increased imports have caused or are threatening to cause serious injury 
Increased imports
 
 
Product 1:  BOPP film 
 
 In 2003, 57.0 metric tonnes (MT) of BOPP film  were imported.  These imports originated 
primarily from two markets: China (93 per cent) and Nicaragua (7 per cent).  The following year 
(2004), imports increased by an additional 20.3 MT, bringing the yearly total to 77.3 MT.  These 
additional imports also came from China (78 per cent) and Nicaragua (22 per cent).  In 2005, an 
enormous increase was recorded, raising the level of imports to 322.6 MT, with changes in the 
distribution by country of export (82 per cent from Peru and 14 per cent from China).   From the point of view of the import/productio n ratio, the increase was also considerable.  
Thus, it is noted that the share of the imported product rocketed from 9.5 per cent of total domestic 
output of the investigated product in 2003 to 55.5 per cent in 2005.  This figure stood at around 89.7 
per cent for the first half of 2006, with imports  of 285.4 MT and domestic output of 318.2 MT. 
 
Product 2:  PVC film 
 
 No imports of PVC film were recorded before  2004.  In 2005, imports amounted to 45.8 MT 
and in the first half of 2006 imports already exceeded  the level of the previous year.  Imports in 2005 
were equivalent to double the dom estic output (196.2 per cent).  In the most recent period (the first 
half of 2006), imports were the only source of s upply (67.8 MT), since domestic output had been 
reduced to zero.  
Serious injury
 
 Sales
 
  In particular, it is noted that the volume of  BOPP film sales, which stood at 262.0 MT in 
2004, fell to 178.3 MT in 2005.  For the first half of 2006, the sales volume amounted to 41.9 MT.  
Thus, based on trends for the first half of the y ear, the annual value of sales for 2006 could be even 
less than half the level reco rded for the previous year. 
  In 2005, the value of sales of PVC film fell by almost 50 per cent to a level corresponding to 26.6 MT. It should be noted that the volume recorded for 2004 was 49.6 MT.  The sales situation also 
coincides with the increase in imports of the produc t under investigation.  For the first half of 2006, 
domestic sales of PVC f ilm were non-existent.  G/SG/N/7/PAN/1 
 G/SG/N/11/PAN/1 
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Domestic market share taken by imports  
  The market share taken by imports increased from 9 per cent in 2003 to 46 per cent (in the 
first half of 2006).  This represents an abso rption level of 37 percen tage points during the 
investigation period, to the detriment of the domestic  output of BOPP film.  Moreover, it is noted that 
this situation continues to intensif y even in the most recent period. 
  In the case of PVC film, imports recorded since 2005 have displaced domestic production by 
66 per cent.  According to the information provided by the applicant, there are no records relating to 
the production of this product for the first half of 2006, which means that domestic consumption is 
supplied entirely by the imported product.  Production
 
 
 In 2004, 256.2 MT of BOPP film was produced, but  this figure fell drastically to 175.5 MT in 
2005.  The applicant also reported that for the firs t half of 2006, production of this product did not 
exceed 41.8 MT, which indicates a dramatic decline in activity.   In the case of the domestic production of PVC film, a significant reduction is also noted, 
given that the volume of 50.5 MT observed for 2004 fell to 23.4 MT. 
 Productivity
 
  Productivity levels for BOPP film increased slightly in 2005, mainly as a result of the more 
than proportional reductions in the employment va riable in relation to re ductions in production. 
  With regard to PVC film, productivity has increa sed significantly due to drastic job cuts.  It 
should be noted that in the most recent period (t he first half of 2006), overall production decreased 
and it is therefore irrelevant to calculate this indicator for that period.  
Utilization of installed capacity
 
  The applicant's installed cap acity for the production of product 1, BOPP film, has been 
estimated at 329 MT per year.  We note that the pr oduction capacity utilization level for 2004, which 
was 78 per cent, fell to 53 per cent for the last full year, a decrease of 32 per cent.  This situation can 
be explained by the declines in production mentione d above.  No figures have been reported for the 
first half of 2006, but the reductions observed in the production of BOPP film for this period show 
that the use of installed capacity  has also continued to decrease. 
  In the case of PVC film, it is noted that the installed capacity utiliza tion level fell by 54 per 
cent, from 50 per cent in 2004 to 23 per cent in 2005.  It should however be reiterated that, for the first 
half of 2006, the use of installed capacity to produce this product was reduced to zero through the 
elimination of PVC film production.  Import prices
 
 
 For the first half of 2006, an average price of  3.78 balboas per kilogram was recorded, which 
is slightly lower than the average price noted for 2004 (3.83).  A study of quarterly price behaviour for the most recent period shows a stable pattern of approximately 4.00 balboas per kilogram for 
BOPP film.  G/SG/N/7/PAN/1 
G/SG/N/11/PAN/1 Page 4 
 
 
   Quarterly behaviour for the most recent period shows a downward trend with a value close to 
4.00 balboas per kilogram for PVC film.   These price levels for imported products are si gnificantly lower than those recorded for the 
domestic like product during the investigation period. 
 Profits and losses
 
  The fall in sales of these products (BOPP film and PVC film) is the main reason for the 
substantial reduction in the applican t's total revenue, leading to significant losses for the applicant in 
its most recent fiscal year, from July 2005 to June 2006.   Revenue from sales of BOPP and PVC products  accounts for most of the substantial 
reduction in the applicant's total revenue and in turn largely explains the losses reflected in the 
applicant's financial results. 
 Employment
 
  The figures provided by the applicant show a significant fall in this variable for BOPP film.  In 2005, there was a 32.6 per cent reduction compar ed to the previous year.  According to recent 
information for the first half of 2006, the employme nt level in respect of BOPP film has fallen to 
20 employees, which means an additional reduction of 31 per cent.   A severe decline is noted in the case of PV C film, where employment was reduced to a 
minimum.  According to data provided by the applican t for the first half of the year, the elimination of 
PVC film production also meant the elimination of employment.  
 Stocks
 
  The accumulation of stocks for both like produc ts is not significant in relation to production 
volumes and is not therefore a variable whose behavi our reveals much about the situation faced by the 
domestic industry.  It may therefore be regarded as of little relevance for the purpose of the injury 
analysis.  Causal link 
 
 
 It was determined that the mechanism wher eby the increased imports and their price level 
affect the general situation of each of the domestic  industries is shaped by  the decline in sales 
resulting from changes in production and the reduction in  the use of installed capacity.  This is the 
reason for the falls in market share and employment, and the difficulty in adjusting prices on account of production costs, which have caused a sharp deteri oration in the applicant's financial situation and 
losses in the most recent statement of financial results.   This situation was also reflected in the decline 
in financial ratios such as liquidity, cash flow and investment returns. 
 Other factors
 
  In conclusion, it is determined, on a preliminar y basis, that there is a causal link between the 
increased imports and the serious injury observed in domestic industries that produce printed BOPP 
film in rolls and printed PVC film in rolls.  The inju ry cannot therefore be attributed to other factors, 
such as exports, the importers' decision not to draw  supplies from local production, the importance of 
quality and the applicant's quality-related problems, or the applicant domestic producer's lack of 
efficiency.  The injury is attri butable to the increase in imports.  G/SG/N/7/PAN/1 
 G/SG/N/11/PAN/1 
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6. Provide the basis for the determination of  critical circumstances where delay would 
cause damage which it would be difficult to repair 
 The marked deterioration in the applicant's fi nancial situation, notably the losses recorded for 
the last fiscal year ending June 2006, which is re flected in the decline in financial ratios such as 
liquidity, cash flow and investment returns and h as been caused by the severe downturn in sales and 
the increase in imports, combined with the loss of additional customers and the non-perishable nature 
of the product under investigation, will irremedi ably complicate the normal production process and 
will make subsequent repair difficult if provisional measures are not applied. 
 
 It is determined, on a preliminary basis, that  there is clear evidence that increased imports 
have caused or are threatening to cause serious inju ry to the domestic industry and that consequently 
there are critical circumstances where delay would cau se damage or injury which it would be difficult 
for the industry to repair.  Hence, there is a lega l basis for the imposition of provisional measures in 
respect of both products. 
 
7. Offer of consultations under Article 12.4 
 The Republic of Panama offers consultations  on the provisional safeguard measures at any 
time following the adoption of the measure.   8. Other information 
 Government representatives may also consult the text of the Preliminary Resolution on 
Provisional Measures which is available onlin e at http://www.mici.gob.pa/exportaciones/ 
Documentos.pdf  
B. 
NOTIFICATION OF NON -APPLICATION OF SAFEGUARD MEAS URE TO DEVELOPING COUNTRIES 
UNDER ARTICLE 9.1, FOOTNOTE 2, OF THE AGREEMENT ON SAFEGUARDS  
1. Description of the measure 
 See the above notification under Article 12.4.   
 
2. Products subject to the measure 
 See the above notification under Article 12.4. 
  
3. Developing country members to which the me asure is not applied under Article 9.1 of 
the Agreement on Safeguards, and the import  shares of these countries individually and 
collectively 
 Pursuant to Article 9.1, footnote 2, the provisional safeguard measures do not apply to 
developing country Members (except for China, Colo mbia and Peru).  Each developing country has a 
share of less than 3 per cent in imports of BOPP fi lm and PVC film, except for China, Colombia and 
Peru, which exceed this level.  Th e collective share of countries with imports amounting to less than 
3 per cent in relation to total imports of BOPP film and PVC film, is less than 9 per cent.  
 G/SG/N/7/PAN/1 
G/SG/N/11/PAN/1 Page 6 
 
 
  ANNEX 
 
Factors Relating to the Serious Injury 
 
Variable 2003 2004 2005Jan.-Jun. 
2006 
BOPP film 
Imports (MT) 57.0 77.3 322.6 285.4 
Year-on-year increase in imports1 n/a 35.6% 317.3% 485.1% 
Importation/domestic production (%) 9.5% 15.4% 55.5% 89.7% 
Price of imports (balboas/kg.) 2.22 3.83 3.47 3.78 Applicant's sales (MT) 225.6 262.0 178.3 41.9 
Year-on-year increase in appli cant's sales n/a 16.1% -31.9% -64.7% 
Price of domestic product 5.86 Applicant's production (MT) 237.4 256.2 175.5 41.8 
Market share absorbed by imports (%) 9.0% 13.0% 36.0% 46.0% 
Productivity (MT/employee/year) 7.66 5.96 6.05 2.1 Use of installed capacity (%) 72% 78% 53% n/a 
Employment (#) 31 43 29 20 
Average cost (balboas/kg.) Confidential Stocks (MT) 18 12 8 n/a 
Profits/losses* Confidential 
 
1 Imports for the first half of 2005 amount to 48.8 MT 
n/a = not available 
und. = undetermined 
*Corresponds to the applicant's total operations.  Values  are for the period July-June of the following year. 
 
Source :  Technical study. 
 
Variable 2003 2004 2005Jan.-Jun. 
2006 
PVC film 
Imports (MT) 0 0 45.8 67.8 
Year-on-year increase in imports n/a und. und. und. Importation/Domestic production (%) 0 0 196% und. 
Price of imports (balboas/kg.) und. und. 3.90 4.49 Applicant's sales (MT) 60.0 49.6 26.6 0 Year-on-year increase in appli cant's sales n/a -17.3% -46.4% -100.0% 
Price of national product 7.73 und. 
Applicant's production (MT) 63.4 50.5 23.4 0 Market share absorbed by imports (%) n/a n/a 66% 100% 
Productivity (MT/employee/year) 2.64 4.2 11.68 und. 
Use of installed capacity (%) 63% 50% 23% n/a Employment (#) 24 12 2 0 
Profits /losses
* Confidential 
Average cost (balboas/kg.) Confidential Stocks (MT) 3.7 4.1 0.4 n/a 
 n/a = not available  
und. = undetermined 
*Corresponds to the applicant's total operations.  Values  are for the period July-June of the following year.  
 
Source :  Technical study.  
 
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