WORLD TRADE  
ORGANIZATION  G/SG/N/7/CHL/8 
23 October 2006 
 
 (06-5112) 
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 
 
CHILE 
 
Powdered Milk, Liquid Milk and Gouda Cheese
 
   The following communication, dated 18 October 2006, is being circulated at the request of 
the delegation of Chile. 
 
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   Pursuant to Article 12.4 of the Agreem ent on Safeguards, Chile hereby informs the 
Committee on Safeguards that at its 282nd meeting, held on 6 October, the investigating authority 
decided to recommend the application of a provisio nal 23 per cent tariff surcharge on imports of 
powdered milk, liquid milk and Gouda cheese, originating in Argentina. 
 
1. Provide evidence of serious injury or  threat thereof caused by increased imports 
 
 The serious injury stems from a sustained and very significant increase in imports of 
powdered milk, liquid milk and Gouda cheese from Ar gentina, which is the main source of the 
imports and is causing serious injury to the domestic  industry, under critical circumstances.  Imports 
from other sources are not included in the measure, since they are not regarded as being the cause of 
the injury. 
 
 In the period January-June 2005/2006, dome stic farm-gate milk prices measured in UF 
(unidades de fomento  – Chilean inflation-indexed monetary units) fell by 0.7 per cent.  An increase of 
11.4 per cent was recorded in the period 2003/2004, bu t prices dropped by 0.1 per cent in 2005 cent in 
relation to the previous year. 
 
 As regards causality, the share of powdered m ilk imports from Argentina in apparent total 
consumption of milk in the first half of 2006 reach ed 4.9 per cent, representing an increase in relation 
to the same period in 2005, when it accounted for 1. 4 per cent.  Viewed over a wider timescale, the 
coefficient in 2005 was 2.3 per cent – higher than th at recorded in 2004 (2.0 per cent) and lower than 
that noted in 2003 (4.7 per cent). 
  The import price of powdered milk from Argen tina declined by 8.4 per cent in UF in the 
period January-August 2005/2006.  The decline occurred after two years of relative stability. 
  The linear correlation between the import pri ce of powdered milk from Argentina and the 
domestic price of farm-gate milk, both measured in  UF, was 0.72 in the period 2002 to June 2006. 
 G/SG/N/7/CHL/8 
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   The import price of liquid milk from Argentina decreased by 9.3 per cent in UF terms in the 
period January-August 2005/2006.  A downwar d price trend was also noted in 2005. 
  The linear correlation between the import price of liquid milk from Argentina and the domestic price of farm-gate milk, both measured in  UF, was 0.66 in the period 2004 to June 2006. 
 
 The linear correlation between the import pr ice of Gouda cheese from Argentina and the 
domestic price of farm-gate milk, both measured in  UF, was 0.54 in the period 2002 to June 2006. 
 
2. Provide information on whether there is an  absolute increase in imports or an increase 
in imports relative to domestic production  (please see also Article 12.1 for the context) 
 
 Powdered milk
 
  In the period January-August 2006, Argentina was the main source of imports of powdered 
milk with a 74 per cent share.  The volume of impor ts increased by 122 per cent compared to the same 
period the previous year.  Likewise, in 2005 a 15 per cent increase was record ed in relation to 2004, 
preceded by a 58 per cent decrease.   The ratio of total powdered milk imports fro m Argentina, measured in litres, to domestic 
farm-gate milk production in the period January-J une 2006 reached 5.1 per cent – a coefficient higher 
than the 1.3 per cent recorded for the same period the previous year. 
  Liquid milk
 
  In the period January-August 2006, Argentina w as the main source of imports of liquid milk 
with a 92 per cent share.  The volume of imports in creased by 301.2 per cent in relation to the same 
period the previous year.  Viewed over a wider timescale, import volumes have risen significantly 
since 2004.   The ratio of liquid milk imports from Argentina to domestic farm-gate milk production in the 
period January-June 2006 reached 0.54 per cent – a coe fficient higher than the 0.15 per cent recorded 
for the same period the previous year. 
  Gouda cheese
 
  In the period January-August 2006, Argentin a was the main source of imports of Gouda 
cheese with a 95 per cent share.  The volume of imports rose by 108.1 per cent in relation to the same 
period the previous year.  An increase in import volum es has been noted over the past four years, with 
a particularly marked upward trend since 2005,  when the annual variation was 100 per cent. 
 
3. Provide a precise description of the product involved 
  Powdered milk, classified under tariff s ubheadings 0402.1000, 0402.2111, 0402.2112, 
0402.2113, 0402.2114, 0402.21 15, 0402.2116, 0402.2117, 0402 .2118, 0402.2911, 0402.2912, 
0402.2913, 0402.2914, 0402.2915, 0402.2916, 0402. 2917 and 0402.2918 in Chile's harmonized tariff, 
with the exception of powdered cream under those s ubheadings;  liquid milk, classified under tariff 
subheadings 0401.1000, 0401.2000, 0401.3010, 0401.3020, 0401.3030, 0401.3040, 0401.3090 and 
0402.9110 in Chile's harmonized tariff, with the ex ception of liquid cream and evaporated milk under 
those subheadings;  and Gouda cheese, classifi ed under tariff subheading 0406.9010 in Chile's 
harmonized tariff.   G/SG/N/7/CHL/8 
 Page 3 
 
 
  4. Provide a precise description of the proposed measure 
 
 It is a provisional safeguard measure, consis ting of a provisional tariff surcharge of 23 per 
cent ad valorem , applicable to imports of powdered milk , liquid milk and Gouda cheese, classified 
under the tariff subheadings listed above and originat ing in Argentina.  The other sources of imports 
are not included in the measure, si nce they are not regarded as being the cause of the injury to the 
domestic industry concerned.  
5. Provide the proposed date of introduction of the measure 
  The provisional measure came into effect on 13 October 2006. 
 
6. Provide the expected duration of the measure 
 
 The measure will remain in effect until it h as been decided whether or not to apply a 
definitive measure, for a maximum period of 200 days as of the date of intr oduction of the provisional 
measure.  
7. For a measure with a duration of more than three years, provide the proposed date for 
the review (under Article 7.4) to be held not later than the mid-term of the measure, if 
such a date for the review has already been scheduled 
 
 Not applicable, since this is a provisional measure.  
8. If the expected duration is over one year, provide the expected timetable for progressive 
liberalization of the measure 
 
 Not applicable, since this is a provisional measure.  
9. If the measure is being extended, also provide: 
 
 (a) Evidence that the industry concerned is  adjusting and that the safeguard measure 
continues to be necessary to prev ent or remedy serious injury; 
  (b) reference to the WTO document that notif ied the initial application of the measure; 
  (c) duration of the measure from initial a pplication till the date at which it will be 
extended;  and, 
  (d) precise description of the measure in pl ace prior to the date of extension (in this 
context, please note that the last sentence of Article 7.4 states that:  "A measure extended under paragraph 2 sha ll not be more restrictive than it was at the end of the 
initial period, and should continue to be liberalized."). 
 
 Not applicable, since this is a provisional measure.  
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