WORLD TRADE  
ORGANIZATION  G/SG/N/6/ZAF/1 
G/SG/N/7/ZAF/1 
G/SG/N/8/ZAF/1 G/SG/N/11/ZAF/1 
22 May 2007 
 
(07-2089) 
Committee on Safeguards  Original:   English 
 
 
NOTIFICATION UNDER ARTICLE 12.1(A) OF THE 
AGREEMENT ON SAFEGUARDS ON INITIATION OF  
AN INVESTIGATION AND THE REASONS FOR IT 
 
NOTIFICATION UNDER ARTICLE 12.4 OF THE AGREEMENT 
ON SAFEGUARDS  
 
NOTIFICATION PURSUANT TO ARTICLE 9, FOOTNOTE 2, OF  
THE AGREEMENT ON SAFEGUARDS 
 
SOUTH AFRICA 
 
(Lysine
) 
  
 
 The following communication, dated 14 May 2007, is being circulated at the request of the delegation of South Africa.   
 
_______________ 
 
 
L-Lysine HCI (scientific name) or commonly known as lysine powder and feed supplements 
containing by mass 40 per cent or more lysine, whet her or not containing added antibiotics or added 
melengestrol acetate (scientific name) or commonly known as L-Lysine sulphate and its by-products 
from fermentation or also known as Biolys or Protein Lysine).   
We enclose a notification pursuant to Article 12.1(a) of the Agreement on Safeguards, on 
initiation of a safeguard investigation on the imports of lysine and biolys or protein lysine;  a notification pursuant to Article 12.4 of the Ag reement on Safeguards, after taking provisional 
safeguard measures for imports of lysine and biolys or protein lysine;  and a notification pursuant to 
Article 9, footnote 2 of the Agreement on Safeguards,  on taking a decision not to apply the measure to 
products originating in developing countries.
1   
                                                      
1 A copy of the Government Gazette has also been submitted to the Committee.  This document is also 
available in the WTO Secretariat for inspection by government representatives.   G/SG/N/6/ZAF/1, G/SG/N/7/ZAF/1,  
G/SG/N/8/ZAF/1, G/SG/N/11/ZAF/1 Page 2 
 
 
  A. N
OTIFICATION UNDER ARTICLE 12.1( A) OF THE AGREEMENT ON SAFEGUARDS ON INITIATION 
OF AN INVESTIGATION AND THE REASONS FOR IT  
1. The date when the investigation was initiated 
The investigation was initiated on 11 May 2007.  The notice of initiation by the investigating 
authority was published in the Gove rnment Gazette on 11 May 2007.   
2. The product subject to the investigation 
The subject products are described as L-Lysine  HCI (scientific name) or commonly known as 
lysine powder, classifiable under tariff subheading 29 22.41, and feed supplements containing by mass 
40 per cent or more lysine, whether or not containing added antibiotics or added melengestrol acetate 
(scientific name) or commonly known as L-Lysine sulphate and its byproducts  from fermentation or 
Biolys or Protein Lysine, classifiable under tariff subheading 2309.90.65.   
3. The reasons for the initiation of investigation 
(i) The investigation was initiated at the request of  SA Bioproducts (Pty) Ltd (the Applicant), the 
sole producer of L-Lysine HCI (Feed Grade) min 98.5 per cent (subject product) in the 
SACU, which filed a safeguard application on 5 April 2007.   
The claim is that the subject products are be ing imported into the SACU market in such 
increasing quantities in absolute terms and relative to SACU production and under such conditions, to 
be causing serious injury to the SACU industry.  The Applicant further alleged that a further threat of 
serious injury exists owing to the overcapacity that manufacturers around the world have created.  
(ii) Evidence on the basis of which the investigation was initiated: 
 Analysis of imports 
 
The information available indicates that the volu me of L-Lysine HCI and L-Lysine Sulphate 
imports increased sharply both in absolute terms an d relative to domestic production, as the unit price 
of the imported product declined.   
 2002 2003 2004 2005 2006 
Total imports under tariff 
subheadings 2922.41 and 
2309.90.65 (tons) 576 1 408 2 106 2 815 4 787 
Average price of imported 
product (R/kg) 13.55 14.25 12.62 6.43 7.00 
 
 Serious injury, threat of serious injury and causal link 
 
The Applicant was suffering serious injury in that its profit declined to a loss situation, its 
sales volumes declined, its output declined, its ma rket share declined, its utilisation of production 
capacity declined, its productivity declined a nd it retrenched some of its employees.   
There is a threat of serious in jury in that the imports are increasing at prices, which will create 
a further demand for the imported product and there is globally an over capacity at exporters.    G/SG/N/6/ZAF/1, G/SG/N/7/ZAF/1,  
 G/SG/N/8/ZAF/1, G/SG/N/11/ZAF/1  Page 3 
 
 
  It was also evident that the decrease in market share of the Applicant coincided with a 
significant increase in the market share of the imported products.   
On this basis it was found that the SACU industr y was suffering serious injury and that there 
is a further threat of serious injury, which coul d be causally linked to the rapid increase in the 
imported subject products.   
4. Further information 
Interested parties must make themselves known within a period of 20 days after the initiation 
of the investigation.   
Any information which the interested parties may wish to submit in writing and any request 
for a hearing before the Commission that they may wish to put forward should be submitted within 
20 days following the initiation of this investiga tion to the Directorate:  Trade Remedies at the 
following address:  dti Campus, 77 Meintjies Street , Sunnyside Pretoria, Block Uuzaji, Ground Floor, 
Tel:  0027 12 394 3600, Fax:  0027 12 394 0518. 
If part of the information provided is of a conf idential nature, the party concerned should give 
the grounds justifying confidentiality and furnish pu blic summaries of such information, which should 
be as detailed as possible. In inst ances that a public summary cannot be provided a sworn statement 
must be provided stating the reasons why the inform ation cannot be summarized.  This requirement is 
designed to secure transparency and due access by a ll the parties to the information relating to this 
investigation. If the summaries are not duly provid ed and in the absence of just cause, ITAC may 
disregard the information deemed to be confidential. 
B. N
OTIFICATION UNDER ARTICLE 12.4  ON TAKING A PROVISIONAL SAFEGUARD MEASURE  
1. The product subject to the provisional safeguard measure 
The products subject to the provisional safeguard measures are L-Lysine HCI (scientific 
name) or commonly known as lysine powder, class ifiable under tariff subheading 2922.41, and feed 
supplements containing by mass 40 per cent or mo re lysine, whether or not containing added 
antibiotics or added melengestrol acetate (scientific  name) or commonly known as L-Lysine sulphate 
and its byproducts from fermentation or Biolys or  Protein Lysine, classifiable under tariff subheading 
2309.90.65.   
2. The provisional safeguard measure 
The provisional safeguard measure is in the fo rm of an ad valorem duty of 160 per cent on 
tariff subheadings 2922.41 and 2309.90.65.   
3. Date of introduction of the safeguard measure 
The provisional safeguard measure was imposed on 11 May 2007.   
4. Expected duration of the provisional measure 
The provisional safeguard measure will be in fo rce for two hundred days from the date of its 
introduction. G/SG/N/6/ZAF/1, G/SG/N/7/ZAF/1,  
G/SG/N/8/ZAF/1, G/SG/N/11/ZAF/1 Page 4 
 
 
  5. The basis for:   
5.1 Making a preliminary determination, as provided for in Article 6 of the Agreement on 
Safeguards, that increased imports are causing a nd are threatening to cause serious injury:   
 UNFORESEEN DEVELOPMENTS 
 
The expansion of capacity and the oversupply in the world, due to the expansion of capacity 
mainly in the People’s Republic of China, which oc curred after the negotiation of the relevant tariff 
concessions, could not have been foreseen at the ti me the concessions were negotiated and therefore 
represents the unforeseen developments, in acco rdance with Article XIX of the GATT. 
INCREASE IN IMPORTS 
 
A preliminary analysis of the increase in impor ts into the Southern African Customs Union 
(SACU) market of the subject products indicated a sharp increase in imports from 2005 to 2006 and 
generally over the period 2002 to 2006, both in abso lute terms and relative to the SACU industry 
production. 
 2002 2003 2004 2005 2006 
Total imports under tariff 
subheadings 2922.41 and 2309.90.65 (tons)  576 1 408 2 106 2 815 4 787 
Imports as a % of the 
Applicant’s output (Index %) 100 229 320 555 1 637 
 
The information indicates that the import volumes increased significantly from 2005 to 2006 
by 70 per cent. 
The information further indicates that the imports as a percentage of the SACU industry’s 
output increased significantly from 100 basis points in 2002 to 1 637 basis point in 2006. 
Based on the import statistics for the period 20 02 to 2006, a preliminary determination was 
made that there was a rapid and sharp increase in imports, both in absolute terms and relative to 
domestic production. 
SERIOUS INJURY AND THREAT OF SERIOUS INJURY 
 
In order to make a preliminary determination of serious injury and threat thereof to the 
domestic producer of the like products, an evaluation of all relevant factors on an objective and quantifiable basis having a bearing on its situation has been undertaken.  G/SG/N/6/ZAF/1, G/SG/N/7/ZAF/1,  
 G/SG/N/8/ZAF/1, G/SG/N/11/ZAF/1  Page 5 
 
 
  (i) Domestic sales volume 
Metric tons 2002 2003 2004 2005 2006 
Applicant’s sales volume  100 100 78 85 69 
 
This table was indexed due to confidentia lity using 2002 as the base year of 100.   
The information in the table indicates that  the Applicant’s sales volumes decreased by 
31 basis points from 2002 to 2006.   
(ii) Profit and Loss 
Percentage 2002 2003 2004 2005 2006 
Net profit margin 100 136 133 (158) (301) 
 
This table was indexed due to confidentia lity using 2002 as the base year of 100.   
The information in the table indicates that th e profit situation of the Applicant decreased 
significantly to a loss situation over the period 2002 to 2006.  From 2005 the Applicant recorded a 
loss in comparison to the increase in profits from 2002 to 2004.   
(iii) Output 
Metric tons 2002 2003 2004 2005 2006 
Applicant’s output 100 107 114 88 51 
 
This table was indexed due to confidentia lity using 2002 as the base year of 100.   
The information in the table indicates that th e Applicant’s output almost halved from 2002 to 
2006.   
(iv) Market share  
Percentage market share held by 2002 2003 2004 2005 2006 
Applicant 100 90 77 72 53 
Imports 100 219 361 418 639 
SACU market 100 111 101 117 130 
 
This table was indexed due to confidenti ality using 2002 as the base year of 100. 
The information in the table indicates that th e Applicant was losing market share in an 
expanding market.  The total SACU market incr eased from 2002 to 2006 by 30 basis points, while the 
market share of the Applicant decreased by 47 basis points.  The market share of the imports 
increased dramatically by 539 basis points.   G/SG/N/6/ZAF/1, G/SG/N/7/ZAF/1,  
G/SG/N/8/ZAF/1, G/SG/N/11/ZAF/1 Page 6 
 
 
  (v) Productivity 
Units (tons) per employee 2002 2003 2004 2005 2006 
Employee productivity 100 107 114 88 68 
 
This table was indexed due to confidenti ality using 2002 as the base year of 100. 
The information in the table indicates that th e employee productivity, calculated based on the 
tons per employee in production, decreased from 2002 to 2006. 
It was noted that if the Applicant had not retr ench any workers, the units per employee would 
have been 50 basis points for 2006 and not 68. 
(vi) Utilisation of production capacity 
Metric tons 2002 2003 2004 2005 2006 
Capacity 100 116 122 122 122 
Applicant’s output 100 107 114 88 51 
Utilisation of capacity 100 93 94 72 41 
 
This table was indexed due to confidenti ality using 2002 as the base year of 100. 
The information in the table indicates that th e Applicant’s utilisation of capacity decreased 
significantly from 2002 to 2006.  It further indicates that the Applicant’s utilisation decreased by 31 basis points from 2005 to 2006 and by 59 basis points from 2002 to 2006.  
(vii) Employment  
 2002 2003 2004 2005 2006 
Number of production employees 100 100 100 100 75 
 
This table was indexed due to confidenti ality using 2002 as the base year of 100. 
The information in the table indicates that the Applicant substantially reduced its workforce 
by 25 per cent in 2006.  The information in th e table indicates the minimum number of production 
employees necessary to run the production plant.  
(viii) Other relevant factors  
The Applicant indicated that owing to the loss of local market share to very low priced 
imports, the company’s borrowings rose to a level in  2006 that resulted in its bankers threatening to 
put the company into liquidation.  The Applicant indi cated that securing a new equity investor averted 
the threat.  However, it indicated that the loss of  local market share to unreasonably low priced 
imports continues and indeed is more severe than in 2006.  It stated that consequently, the threat that 
the company may be closed remains very real. 
(ix) Freely disposable capacity of the exporters 
It was noted that there was significant freely disposable capacity globally. Exporters are 
disposing of their surplus capacity in the world,  impacting on the world prices and forcing other 
exporters to export at very low prices.   G/SG/N/6/ZAF/1, G/SG/N/7/ZAF/1,  
 G/SG/N/8/ZAF/1, G/SG/N/11/ZAF/1  Page 7 
 
 
  (x) Price of the imported products 
 2002 2003 2004 2005 2006 
Average price of imported 
product (R/kg) 13.55 14.25 12.62 6.43 7.00 
 
The price of the imported product decreased signi ficantly from 2004 to 2006.  From 2003 to 
2006 the price of the imported product more th an halved.  These very low prices, increases the 
demand for the imported product.   
(xi) Preliminary determination 
After considering all relevant factors, a prel iminary determination was made that the SACU 
domestic industry was suffering serious injury and a threat of serious injury.   
CAUSATION 
 
In order to examine the existence of a cau sal link between the increased imports and the 
serious injury, and in order to ensure that the serious  injury caused by other factors is not attributed to 
the increased imports, the effects of th e following factors were analysed:   
(i) Volume of imports and market share 
The market share of the Applicant decr eased significantly from 2002 to 2006, with a 
corresponding increase in imports.  The volume of imports increased by 70 per cent from 2005 to 2006.  From 2002 to 2006, the volume of imports increased by 727 per cent.   
(ii) Consequent impact of the increased imports 
There was a negative impact on all the serious in jury factors.  The profit situation of the 
company changed to a loss situation from 2005, while the imports more than double from 2004 to 2006.  The significant increase in imports fro m 2005 to 2006 caused the losses suffered by the 
Applicant to increase significantly.  With the sudden increase in imports from 2005 to 2006, the 
Applicant retrenched some of its employees, whic h can be seen in the decrease in employment 
figures.   
Although the productivity showed a decrease from 2002 to 2006, the decrease would have 
been even more severe if the retrenchment of employees is not taken into consideration.   
(iii) Factors other than the increase in imports , which could cause the serious injury 
- Contraction in demand for the product 
 
The demand for the product grew from 2002 to 2006.  However, the Applicant’s market share and 
sales volumes decreased over the same period.   
- Developments in technology 
 
The Applicant stated that it introduced a new b acterial strain in 2004 th at was benchmarked in 
2006 to be world competitive and better than most.  The Applicant has also licensed its technology 
abroad. Developments in technology have not created an injurious effect. G/SG/N/6/ZAF/1, G/SG/N/7/ZAF/1,  
G/SG/N/8/ZAF/1, G/SG/N/11/ZAF/1 Page 8 
 
 
  - Productivity of the domestic industry 
 
The Applicant stated that as i ndicated, it is on a level playing field with the exporters.  It 
stated that its technology and productivity in gene ral is comparable with the best.  The Applicant 
stated that this was confirmed in 2006 when pros pective purchasers of th e business from within the 
industry assessed the company.  The Applicant stat ed that this benchmarking confirmed that the 
company’s technology was world class. 
- View of the Applicant’s clients regarding qua lity, delivery times, service and after sales 
service 
 
The Applicant stated that it is certified in term s of ISO 9001/2000.  It stated that in addition, 
the company has recently obtained the FAMI-QS certif ication form the Danish Standards certification 
authority.  The Applicant stated that this latter certification is a feed additives quality certification, 
recently introduced by the European Union Authorit ies, and is required of all manufacturers within 
and exporters of feed additives to the European Union.  The Applicant stated that the company 
complies with the highest and most modern quality st andards applicable to feed additives.  It stated 
that the companies’ customers, who have approve d the company as a supplier of feed amino acids, 
acknowledge this. 
The Applicant stated that as a local supplier, w ho carries stock, the company is able to deliver 
product to any local customer within 24 hours of orde r.  The Applicant stated that the company runs 
24 hours a day, 7 days a week, and therefore always has staff available to deal with any customer 
requirement. 
The Applicant stated that it deals with an y customer queries in terms of its quality 
management system.  It stated that analytical certificates of compliance accompany all deliveries of 
the company’s products.  It stated that in addition, f eed trials are carried out from time to time with a 
number of the leading universities in the country.  The Applicant stated that the majority of its 
customers have been buying from the company since its start up 12 years ago. 
- Attitude of the workforce towards the company 
 
The Applicant stated that although it was obliged  to reduce the workforce substantially in 
2006, the employees were fully informed about the reasons for the retrenchments and a constructive 
attitude remains among all the staff.  
The Applicant stated that notwithstanding the constructive attitude, the company continues to 
lose skilled staff owing to the ever-present threat of closure.   
(iv) Preliminary determination 
After considering all relevant factors and info rmation, a preliminary determination was made 
that there was a causal link between  the increase in imports of the subject product and the serious 
injury suffered by the Applicant and the further thre at of serious injury to the SACU industry.  In 
coming to this conclusion, relevant factors other than the increase in imports, such as the productivity 
of the Applicant, developments in technology, view  of the Applicant’s clients and the attitude of the 
Applicant’s workforce, that could be causing serious  injury were examined and it was found that these 
did not detract from the causal link. 
5.2 Determining the existence of critical ci rcumstances where delay would cause damage, 
which will be difficult to repair  G/SG/N/6/ZAF/1, G/SG/N/7/ZAF/1,  
 G/SG/N/8/ZAF/1, G/SG/N/11/ZAF/1  Page 9 
 
 
   
The investigating authority has made a prelimin ary determination that critical circumstances 
exist where delay would cause damage, wh ich would be difficult to repair.   
The Applicant’s actual serious injury is borne ou t by the information, the most important of 
which is the volume of imports, which increased with 127 per cent from 2004 to 2006 and the price of 
imports, which decreased from R12.62 per kg in 2004 to R7.00 per kg in 2006, a decrease of 45 per cent. 
This had a serious impact on the Applicant in  that production decreased substantially between 
2004 and 2006, its market share declined substantia lly from 2004 to unsustainable levels in 2006, its 
net profit in 2004 turned into a threatening loss in 2006 and the staff complement had to be reduced 
aggressively in 2006 in order to survive. 
It can be anticipated that without the appli cation of a provisional safeguard measure, imports 
of the subject products into the SACU industry will increase further and particularly as a result of the 
low import prices, the SACU industry will continue to lose its share in the domestic market.   
Based on this, there exists critical circumst ances in which delay in the adoption of a 
provisional safeguard measure would cause dama ge which would be difficult to repair. 
6. Offer of consultations under Article 12.4 
Consistent with Article 12.4 of the Agreemen t on Safeguards, South Africa is prepared to 
consult on the provisional safeguard measure with those Members having a substantial interest as 
exporters of the subject product at any time after 11 May 2007. 
C. N
OTIFICATION UNDER ARTICLE 9, FOOTNOTE 2 UPON TAKING A DECISION NOT TO APPLY THE 
PROVISIONAL SAFEGUARD MEASURE TO SUBJECT PRODUCTS ORIGINATING IN DEVELOPING 
COUNTRIES  
1. The measure 
The provisional safeguard measure was imposed in the form of an ad valorem duty as 
described in the notificatio n under Article 12.4 above. 
2. The products subject to the measure 
The measure applies to the products described  in paragraph 1 of the notification under 
Article 12.4 above. G/SG/N/6/ZAF/1, G/SG/N/7/ZAF/1,  
G/SG/N/8/ZAF/1, G/SG/N/11/ZAF/1 Page 10 
 
 
  3. The developing countries in the list below are excluded from the measure as they export 
less than 3 per cent of imports to SACU 
Afghanistan, Algeria, Antigua and Barbuda, A ngola, Argentina, American Samoa, Anguilla, 
Antarctica, Aruba, Azerbaijan, Barbados, Banglad esh, Burkina Faso, Bahrain, Burundi, Benin, 
Belarus, Bolivarian Republic of Venezuela, Brune i Darussalam, Bolivia, Bahamas, Bhutan, Belize, 
Bermuda, Bouvet Island, British Virg in Islands, British Indian Ocean Territory, Democratic Republic 
of Congo, Central African Republic, Congo, Côte d’ Ivoire, Cameroon, Chad, Colombia, Costa Rica, 
Cuba, Cape Verde, Cayman Islands, Chile, Christ mas Islands, Cocos Islands , Cook Islands, Djibouti, 
Dominican Republic, Ecuador, Egypt, Eritrea, Ethiopia,  Fiji, Federated States of Micronesia, Falkland 
Islands, French Polynesia, French Southern Terr itories, Gabon, Frenada, Ghana, Gambia, Georgia, 
Greenland, Guinea, Equatorial Guinea, Guatemala,  Guinea-Bissau, Gibraltar, Guam, Honduras, Haiti, 
Heard Island and McDonald  Islands, Indonesia, Iraq, Iran (Islami c Republic of), Jamaica, Jordan, 
Kazakhstan, Kenya, Cambodia, Kiribati, Comoros, St Kitts and Nevis, Kuwait, Kyrgyzstan, Laos, 
Lebanon, St Lucia, Sri Lanka, Liberia, Libyan, Arab Jamahiriya, Morocca, Madagascar, Marshall 
Islands, Mali, Moldova, Mongolia, Mauritania, Mauritius, Malaysia , Maldives, Malawi, Mozambique, 
Macao, Mayotte, Mexico, Montserrat, Niger, Nigeria,  Nicaragua, Nepal, Nauru, Netherlands Antilles, 
New Caledonia, Niue Island, Norfolk Island, Nort hern Mariana Islands, Om an, Panama, Peru, Papua 
New Guinea, Philippines, Pakistan, Palau, Paraguay,  Pitcairn, Qatar, Russian Federation, Rwanda, 
Samoa, Saudi Arabia, Solomon Islands, Seychell es, Sudan, Sierra Leone, Senegal, Somalia, 
Suriname, Sao Tomé and Principe, El Salvador, Syrian Arab Republic, South Georgia and South 
Sandwich Islands, St Helena  and dependencies, St Pierre and Mi quelon, Tajikistan, Togo, Tunisia, 
Tonga, East Timor, Trinidad and Tobago, Turkme nistan, Tuvalu, Tanzania, Tokelau, Turks and 
Caicos Islands, Ukraine, United Arab Emirates,  United States Minor out lying islands, Uganda, 
Uruguay, Uzbekistan, St Vincent, Vietnam, Vanua tu, Virgin Islands of USA, Wallis and Futuna 
Islands, Yemen, Zambia and Zimbabwe. 
 
 
__________