WORLD TRADE  
ORGANIZATION  G/SG/N/7/HRV/1/Suppl.2 
G/SG/N/8/HRV/1 
G/SG/N/10/HRV/1 G/SG/N/11/HRV/1/Suppl.1 
17 December 2009 
 
(09-6585) 
Committee on Safeguards Original:   English 
 
 
 
NOTIFICATION UNDER ARTICLE 12.4 OF THE AGREEMENT 
ON SAFEGUARDS BEFORE TAKING A PROVISIONAL 
SAFEGUARD MEASURE REFERRED TO IN ARTICLE 6 
 
NOTIFICATION UNDER ARTICLE 12.1(B) OF THE AGREEMENT ON  
SAFEGUARDS ON FINDING A SERIOUS INJURY OR THREAT  
THEREOF CAUSED BY INCREASED IMPORTS  
 
NOTIFICATION PURSUANT TO ARTICLE 12.1(C) 
OF THE AGREEMENT ON SAFEGUARDS 
 
NOTIFICATION PURSUANT TO ARTICLE 9, FOOTNOTE 2 
OF THE AGREEMENT ON SAFEGUARDS 
 
CROATIA 
 
(Semi-hard cheese and cheese substitutes ) 
   The following communication, dated 9 December 2009, is being circulated at the request of 
the Delegation of Croatia.   
 
_______________  
 
 
 Within the scope of the safeguard investiga tion on imports on semi hard cheese and cheese 
substitutes and in light of the agreed format for notifications (G/SG/W/1, 23 February 1995), Croatia 
provides to the Committee on Safeguards notification of  findings of serious injury or threat thereof 
caused by increased imports, notification concerning  the termination of an investigation with no 
safeguard measure imposed on cheese substitutes a nd notification of proposed introduction of 
safeguard measures concerning semi hard cheese (Gouda and Edam).   
 
 Following the preliminary data, Croatia impo sed provisional safeguard measures on imports 
of the product concerned under Government's Decision published in the Official Gazette ( Narodne 
novine ) 72/09, for the duration of two hundred days (200).   
 
 On 28 August 2009, Croatia initiated an investig ation related to serious injury or threat 
thereof to the Croatian producers of products like or directly competing with certain imported semi 
hard cheese and cheese substitutes.  The public notice on the initiation of investigation was published 
in the Official Gazette ( Narodne novine ) 103/09.   
 G/SG/N/7/HRV/1/Suppl.2, G/SG/N/8/HRV/1,  
G/SG/N/10/HRV/1, G/SG/N/11/HRV/1/Suppl.1 Page 2 
 
 
   The imposition of provisional measure and its s upplement, the initiation of the investigation 
as well as the decision not to apply the provisio nal measures to certain products originating in 
developing countries were notified to the Committee on Safeguards:    
• Notification under Article 12.4 of the Agreemen t on Safeguards before taking a provisional 
safeguard measure referred to in Article 6, Notif ication pursuant to Article 9, Footnote 2 of 
the Agreement of Safeguard (G/SG/N/7/HRV/1-G/SG/N/11/HRV/1).   
• Notification under Article 12.4 of the Agreem ent on Safeguard measure referred to in 
Article 6 (G/SG/N/7/HRV/1/Suppl.1).   
• Notification under Article 12.1(A) of the Ag reement on Safeguards on initiation of an 
Investigation procedure and the reasons for it (G/SG/N/6/HRV/1).   
 
 Croatia hereby informs that the related safegua rd investigation has been terminated without 
applying any definitive safeguard measure agains t imports of two products due the fact that no 
evidence has been found of serious  injury or threat thereof cau sed by increase in imports.  The 
announcement of termination was made through the Decision published in the Official Gazette (Narodne novine ) 140/09.   
 
 These products are cheese substitutes clas sified under 210690 9250 and 2106909850 CN 
Codes of the Croatia's Customs Tariff Regulation for 2009.    All duties collected pursuant to the Decisi on on implementing the provisional safeguard 
measure on import of Ementaler and cheese subs titutes shall be refunded to importers.   
  Regarding the two remaining products within th e scope of the above mentioned investigation, 
Croatia provides notification to the Committee on Safe guards of findings of serious injury or threat 
thereof caused by increased imports and notification of proposed safeguard measures.    
 In accordance with Article 12.3 of the Agreement on Safeguards , Croatia is prepared to enter 
into consultation with the Members having a subs tantial interest as exporters of the products 
concerned.    
1. Provide evidence of serious injury or  threat thereof caused by increased imports 
 
Evidence of serious injury 
 
 In order to make a determination of serious in jury or threat thereof to the domestic producer 
of the like product, an assessment of all relevant fact ors has been made.  In this investigation, data 
submitted by the applicant association, which cons titutes major proportion of domestic production, as 
well as other relevant Croatian institutions, were used.   
  The information below covers the 3-years period from 2006 to 2008 and also the first 6-month period of the year 2009.    
Indicators 
of Injury Unit 2006 2007 2008 1-6/2008 1-6/2009 
Total 
consumption tons 10956 10713 9623 4484 4198 
Domestic 
sales tons 5896 6060 5574 2197 1602  G/SG/N/7/HRV/1/Suppl.2, G/SG/N/8/HRV/1,  
 G/SG/N/10/HRV/1, G/SG/N/11/HRV/1/Suppl.1  Page 3 
 
 
  Indicators 
of Injury Unit 2006 2007 2008 1-6/2008 1-6/2009 
Market 
share % 53,8 56,6 57,9 49,0 38,2 
Production tons 6710 6950 6980 3460 3640 
Import tons 5058 4654 4049 2287 2596 
Capacity tons 7800 7900 8000 4000 4000 
CUR % 86 88 87 87 91 
Employment number of 
workers 390 375 400 400 400 
Productivity tons per 
employee 15.8 18.5 17.5 8.7 9.1 
Stocks tons 630 650 1050 1050 1850 
Profitability profit in 
euro per 
kilogram 0.46 0.26 0.1 0.1 -0.85 
 
 The consumption of products concerned decrea sed throughout the period under investigation.  
In 2007, consumption decreased for 2.2 percentage points, and in 2008 for further 10.2 percentage 
points.  In the first half of 2009, in comparison wi th the same period of previous year, consumption 
decreased for 6.4 percentage points.    
 In the year 2007 domestic sales increased for 2. 8 percentage points, while in 2008 started to 
show negative trend dropping for 8 percentage points.   In the first half of 2009 it entered sharp 
downward trend and dropped for 27 .1 percentage points in comparison with the same period of 
previous year.    
 Similarly, the market share of domestic produc ts recorded stable growth form 2006 until the 
end of 2008, when reached 58 per cent.  However, in the first half of 2009 it markedly declined to the 
level of 38 per cent.     Installed capacity have not shown a substan tial change throughout the entire period and 
remained at the level of average 7900 tons per year.   
 
Regarding the utilisation of capacity, it can be  observed from the table above that CU ratio 
remained relatively stable within the interval  86 – 91 per cent throughout the entire period yet 
including the first half of 2009.    
The growth of production maintained stable throughout the period of investigation.  In 
comparison with 2006, production growth rate amount ed to 3.6 and 4.0 per cent, in 2007 and 2008 
respectively.  In the first half of 2009, compared with the same period of the previous year, production 
growth rate amounted to 6.0 per cent.    
This is explained by the fact that the most of Croatian cheese production is flexible and able 
to react immediately to the disturbances on the mark et.  Consequently and due to the specific nature G/SG/N/7/HRV/1/Suppl.2, G/SG/N/8/HRV/1,  
G/SG/N/10/HRV/1, G/SG/N/11/HRV/1/Suppl.1 Page 4 
 
 
  of the basic raw material, the quantities of milk  collected from farmers were transferred into 
production of cheese which can be preserved for a longe r period of time than other dairy products.   
  The stocks slightly rose in 2007 and at the end of the year reached the optimum level.  
In 2008, stocks amounted to the 1050 tons.  At the end of June 2009, stocks amounted to the 
1850 tons or three times stocks of those in 2006.  The extremely high stocks resulted in financial 
losses.    
Profitability reached the peak level in 2006, and afterwards it has recorded significant decline 
hitting the bottom in late May 2009.  During the first half of 2009 domest ic production generated 
losses.     Total number of workers has remained stable  during the period of investigation.  The 
productivity has remained stable during the entire period, completely due to the unchanged total 
number of workers.   
 
Causation analysis  
 
 Effect of increased imports  
 
Import Unit 2006 2007 2008 I - VI 2008 I – VI 2009 
Absolute tons 5058 4654 4049 2287 2596 
Relative to 
Domestic 
Production % 75.4 66.9 58.0 66.1 71.3 
Share in 
Domestic 
market % 46.2 43.4 42.1 51.0 61.8 
 
 An analysis of the increase in imports to Cr oatia of the products concerned both in absolute 
and relative terms has been carried out over the pe riod from 2006 to first six months of 2009.   
  Import of the products concerned decreased thro ughout three years of investigation so in 
the 2007 the imported quantity was 8 per cent lower th en in 2006.  Furthermore, data for 2008 shows 
that imported quantity was 13 per cent lower in comparison with 2007 and 20 per cent in comparison 
with 2006.  But, during first six months in 2009,  the imported quantity increased for 13 per cent.   
  Similar to the imports in absolute terms, the ratio of imports to  the domestic production 
decreased throughout three years of investigation but in first six months of 2009, the ratio in imports increased.    
 The import of the products concerned decreased s lightly within the three years period, though 
increase was significant in the first six months of 2009.     In addition, the import price of products c oncerned continuously decreased throughout the 
investigation period.  In 2006 import price amounted  to 3 EUR/kg, in 2007 to 3.59 EUR/kg, in 2008 
to 3.73 EUR/kg and in 2009 to 2.21 EUR/kg.   
  G/SG/N/7/HRV/1/Suppl.2, G/SG/N/8/HRV/1,  
 G/SG/N/10/HRV/1, G/SG/N/11/HRV/1/Suppl.1  Page 5 
 
 
   For the foregoing reasons, the investigation au thority concludes that there is a correlation 
between the increased import at low prices and the serious injury suffered by the domestic industry 
and that these import at low prices have had injurious effects on the domestic market.    
Other Factors 
 
The situation at the domestic market of the products concerned was estimated based on 
already presented data, but also through the analysis  of other factors that could have led to the 
problems in the production.   
 
It was thus determined that in the observed pe riod there were no such changes in the demands 
for the products concerned and consumption, no changes in the production technology or consumer 
preferences or even export trends which could have  been linked to the problems that the domestic 
industry recorded in the first half of 2009.   
 
Moreover, significant changes have not been r ecorded in the installed capacities and can be 
excluded as a possible factor.   
With regard to the production costs (having in  mind primarily the price of milk as the basic 
raw material in cheese production), they were even lowered in the period under investigation and have 
not influenced the production loss created in 2009.   
 
Conclusion on causation 
  Having examined the injurious effects of othe r known factors, the investigation authority 
reaches the conclusion that there is a genuine and substantial causal link between increased imports 
and serious injury suffered by the domestic industry.   
 
2. Provide information on whether there is an  absolute increase in imports or an increase 
in imports relative to domestic production  
 
Data presented above show that the increase in  imports in relative and absolute amounts has 
been determined, which resulted in the reduced sh are of the domestic products on the market.   
 
During the period of investigation one can notice a slight growth of price of imported 
products which continued in 2007 and 2008, however a really drastic fall was recorded in the first half 
of 2009 when the imported prices reached the level be low the price level of the basic raw material in 
production.    
3. Provide precise description of the product involved 
 
 The products in respect of which Croatia is imposing definitive safeguard measure are Gouda and 
Edam classified within CN codes 04069023 and 04069078 respectively.   
 
4. Provide precise description of the proposed measure 
 
 The safeguard measure is in the form of increased duties:   
 
CN Code Description Safeguard duty 
04069078 Gouda 1.05 €/kg 
04069023 Edam 0.55 €/kg G/SG/N/7/HRV/1/Suppl.2, G/SG/N/8/HRV/1,  
G/SG/N/10/HRV/1, G/SG/N/11/HRV/1/Suppl.1 Page 6 
 
 
   Below is the list of Developing Countries  excluded from the measures as they export less 
than 3 per cent of imports to Croatia (Article 9.1 of the Agreement on Safeguards ) 
 
Afghanistan, Albania, Algeria, Angola, Argent ina, American Samoa, Armenia, Azerbaijan, 
Bangladesh, Bahamas, Bahrain, Benin, Belarus, Belize, Bermuda, Bolivia, Bosnia and Herzegovina, 
Botswana, Brazil, Burundi, Bhutan, Burkina Faso, M ontenegro, Cote d'Ivoire, Chad, Chile, Dominica, 
Dominican Republic, Democratic Republic of the Congo, Djibouti, Ecuador, Egypt, Eritrea, Ethiopia, 
Fiji, Philippines, Falkland Isles, Gabon, Ghana, Gambia, Grenada, Greenla nd, Guinea, Guatemala, 
Guinea-Bissau, Guyana, Honduras, Haiti, India, I ndonesia, Iraq, Iran, Jamaica, Yemen, Jordan, 
Kazakhstan, Cape Verde, Kenya, Kiribati, Chin a, Columbia, Congo, Costa Rica, Comoros, Cuba, 
Laos, Lebanon, Liberia, Lesotho, Socialist People' s Libyan Arab Jamahiriya, Madagascar, Macedonia, 
Maldives, Malawi, Mali, Malaysia, Macao, Mars hall Islands, Mauritania, Mauritius, Mexico, 
Micronesia, Moldova, Mongolia, Mozambique, Namibia, Niger, Nigeria, Nicaragua, Nepal, Pakistan, 
Palau, Panama, Papua, Paraguay, Peru, Russia, Rwanda, Samoa, Saudi Ar abia, Solomon Islands, 
Salvador, Seychelles, North Timor, Sierra Leone, Somalia, Serbia, Central African Republic, Sudan, 
Surinam, Swaziland, Saint Kitts and Nevis, Saint Lu cia, Saint Vincent and the Grenadines, Sri Lanka, 
Tajikistan, Thailand, Togo, Tunisia, Turkmenist an, Turkey, Tanzania, Ukraine, Uganda, Uruguay, 
Uzbekistan, Vanuatu, Viet Nam, Venezuela, Zambia and Zimbabwe.    
5. Provide proposed date of introduction of the measure 
 
 The date of introduction of the prop osed measure is 9 November 2009.   
 
6. Provide expected duration of the measure 
 
 The measure should remain in force until 8 January 2010.   
 
7. For a measure with a duration of more than three years, provide the proposed date for 
the review  
 
 Not applicable.   
 
8. If the expected duration is over one year , provide expected timetable for progressive 
liberalisation of the measure 
 
 Not applicable.   
 
9. Provide information relating to the extension of a safeguard measure 
 
 Not applicable.     
 
__________