WORLD TRADE  
ORGANIZATION  G/SG/N/10/BRA/3/Suppl.4 
G/SG/N/14/BRA/2 27 July 2006 
 
 
(06-3624) 
Committee on Safeguards Original:   English 
  
 
NOTIFICATION PURSUANT TO ARTICLE 12.1(C) OF THE 
AGREEMENT ON SAFEGUARDS 
 
NOTIFICATION UNDER ARTICLE 12.1(B) OF THE  
AGREEMENT ON SAFEGUARDS ON FINDING A SERIOUS INJURY 
OR THREAT THEREOF CAUSED BY INCREASED IMPORTS 
 
BRAZIL 
 
(Coconuts
) 
 
 
I have the honour to write in my capacity as representative of the MERCOSUR Pro Tempore  
Presidency to notify the Committee on Safeguards of th e intention to extend the safeguard measure in 
effect in the customs territory of Brazil, concerni ng desiccated peeled coconut, whether or not grated, 
classified under the tariff line 0801.11.10, of the Mercosur Common Nomenclature (NCM) applied by 
Brazil, under Articles 12.1(b) and 12.1(c) of the Agreement on Safeguards, following the agreed 
format for notifications contained in docum ent G/SG/W/1, 1 July,1996.  The appropriate 
documentation is attached.  
Pursuant to Article 12 of the WTO Agreemen t on Safeguards, the Federative Republic of 
Brazil also states that is ready to hold prior cons ultations with Members havi ng a substantial interest 
as exporters of the product concerned, and to that end offers the dates of 7-11 August 2006. 
 
This notification is made in accordance with the terms of the WTO Agreement on Safeguards 
and the “Regulations on the Application of Sa feguard Measures to Supports from Non-Member 
Countries of MERCOSUR”, adopted under Common Market Council Decision No. 17/96, which was 
notified to the WTO in 21 February 1997. G/SG/N/10/BRA/3/Suppl.4 
G/SG/N/14/BRA/2 Page 2 
 
 
  1. Evidence that the safeguard measure conti nues to be necessary to prevent or remedy 
serious injury or threat thereof caused by increa sed imports and that the industry concerned is 
adjusting 
 
Pursuant to Article 7, paragraphs 2 and 3 of the Agreement on Safeguards, a safeguard 
measure should not be applied for a period exceeding four years, unless it is extended.  The period 
may be extended provided that th e competent authorities of the importing Member have determined 
that the safeguard measure continu es to be necessary to prevent or remedy serious injury and that 
there is evidence that the industry is adjusting.  
 The analysis conducted by Brazilian authorities considered 3 periods of 12 months:  P1 
(September 2002 to August 2003); P2 (September 2003 to August 2004) and P3 (September 2004 to August 2005).   Domestic sales and the Brazilian consumption ha ve increased from P1 to P2.  Although 
consumption continued growing from P2 to P3, domestic sales fell to a level below P1. 
Despite of the increasing volume of  sales made by the domestic indus try from P1 to P2, its share in 
Brazilian consumption was maintained at the same leve l.  Comparing P2 to P3, it was noted that such 
share dropped 4 percentile points.   The share of the domestic industry in the industrial demand has continuously decreased.  
From P1 to P2, it decreased 1,3 percentile point. In P3, comparatively to P2, more 16,7 percentile 
points, totalizing a decline of, approximately, 18 percentile points, from P1 to P3.   The domestic production increased from P1 to P2 and decreased in the subsequent period, 
compared to P2 or P1.  When analyzing the cu ltivated area and the production per hectare, the 
conclusions were the same.  The re duction of employment from P1 to P3 was superior to the decrease 
of the cultivated area in the same period.   There was also a continued decline in th e internal prices of the domestic industry. 
  The net income has declined continuously during the analyzed period by reason of the 
continued decrease in price, considering that, from P1 to P2, the quantity sold had increased. 
  An undercutting margin was observed in all of the periods analyzed.  
The review has determined that from P1 to P2, the domestic industry implemented the 
structural adjustment which resulted in its par tial recovery.  The production per hectare and the 
plantation area increased in that period.  
However, subsequently, a substantial increase of imports resulted in a decrease of the share of 
domestic industry in apparent consumption.  As a consequence, the main economic indicators of the 
domestic industry were affected: decrease in the figu res of production, prices, sales, cultivated area 
and employment.  
The evaluation of the adjustment made by the sector indicated that the domestic industry is 
implementing the adjustment plan. But, in P3, when the imports grew substantially, they caused 
serious prejudice, reflected in the results expect ed from the implementation of the adjustment. 
 
As a result, it was concluded that the requirements for the extension  of the safeguard measure 
were met.  G/SG/N/10/BRA/3/Suppl.4 
 G/SG/N/14/BRA/2 
 Page 3 
 
 
  2. Information on an abso lute increase in imports. 
 
Brazilian Imports of Desiccated Coconut  
 
Period In ton. Index In US$ FOB Index 
P1 4.367,23 100.0 3.230.946 100.0 
P2 4.749,94 108,8 3.041.554 94,1 
P3 8.665,65 198,4 7.090.300 219,4 
 
 The imports of desiccated coconut increased c ontinuously: from P1 to P2, 8,8%; and from P2 
to P3, 82,4%, resulting in a total increase of 98,4%, from P1 to P3.  At the same period, the quota 
increased 10%.  The fact that the safeguard meas ure was applied to certain developing countries 
cannot explain the substantial increasing in imports. 
 
 Certain Brazilian importers used the tariff line 0801.11.90 to classify the product and 
circumvent the quota.    In general, the prices of the desiccated coconut imported decreased from P1 to P2 and 
increased in P3.  Some foreign producers, how ever, decreased these prices from P2 to P3. 
  The imports increased in relation of the production of the domestic industry too.   There were no imports from the State-parties of MERCOSUR. 
 
3. Description of the product subject to the safeguard measure 
 
 The product subject to the safeguard measure is the desiccated peeled coconut, whether or not 
grated, classified in the item 0801.11.10 of the Mercosur Nomenclature based on the Harmonized 
System (NCM/SH). 
 
 Based on the available information about the imported and the domestically produced 
product, and taking into account that both are destined  to the same market and near substitutes, it was 
ratified that the dry coconut produced in Brazil is directly competitive to the imported grated coconut. 
 4. WTO document that notified the initial application of the measure 
 
The WTO document that notified the initial application of the measure was 
G/SG/N/11/BRA/2.  
Other documents related with th is measure are G/SG/N/13/BRA/3, 
G/SG/N/6/BRA/2/Suppl.1, G/SG/N/11/BRA/2/Suppl.3, G/SG/N/11/BRA/2/Suppl.2, and 
G/SG/N/11/BRA/2/Suppl.1. 
 
5. Duration of the measure from initial application of the measure 
 
The initial safeguard measure was applied from 1 September 2002 to 31 August 2006. Brazil 
now has the intention to extend the safeguard measure  for 4 more years.  The measure to be extended 
is expected to be in force from 1 September 2006 to 31 August 2010. 
 
  G/SG/N/10/BRA/3/Suppl.4 
G/SG/N/14/BRA/2 Page 4 
 
 
  6. Precise description of the measure in place prior to the date of extension 
 
Period Quota (in tons) 
01.09.2002 to 31.08.2003 3.957,0 
01.09.2003 to 31.08.2004 4.154,9 
01.09.2004 to 31.08.2005 4.352,7 
01.09.2005 to 31.08.2006 4.550,6 
 
7. Description of the extended measure 
 
 Therefore, the safeguard measure will be extended for more 4 years, under the forms of 
quantitative restrictions, applied to imports of  desiccated coconuts, classified under NCM/SH 
0801.11.10, as follows:  
Period Quota (in tons) 
01.09.2006 to 31.08.2007 4.778 
01.09.2007 to 31.08.2008 5.017 
01.09.2008 to 31.08.2009 5.256 
01.09.2009 to 31.08.2010 5.495 
 
8. Progressive liberalization of the measure 
 
The measure will be progressively liberalized, at regular intervals, at the beginning of each 
period of application (September 2007, September 2008 and September 2009) 
 
The quota will be increased in 5, 10 and 15 pe r cent, in each period, calculated taking in 
account the quota of the first period of the extension of measure. 
 
9. Developing countries to which the measure is not applied under article 9.1 of the 
agreement on Safeguards. 
 Pursuant to Article 9 of the Agreement on Safe guards, the measure will not be applied against 
products originating in a developing country Member , as long as its share of the total imports of the 
product concerned in the importing Member does not exceed 3 per cent and account for not more than 
9 per cent of the total imports of the product concerned. 
  G/SG/N/10/BRA/3/Suppl.4 
 G/SG/N/14/BRA/2 
 Page 5 
 
 
  The extension of the safeguard measure will not a pply to the countries listed below.  It has to 
be noted that since 2005, this list was not modified.   
ANGOLA MALAWI 
ANTIGUA AND BARBUDA MALDIVES 
BAHRAIN MALI 
BANGLADESH MALTA 
BARBADOS MAURITANIA 
BELIZE MAURITIUS 
BENIN MOLDOVA 
BOLIVIA MONGOLIA 
BOTSWANA MOROCCO 
BRUNEI DARUSSALAM MOZAMBIQUE 
BURKINA FASO MYANMAR 
BURUNDI NAMIBIA 
CAMEROON NICARAGUA 
CENTRAL AFRICAN REPUBLIC NÍGER 
CHAD NIGERIA 
CHILE OMAN 
CHINA  
CHINESE TAIPEI PAKISTAN 
COLOMBIA PANAMA 
CONGO PAPUA NEW GUINEA 
COSTA RICA PERU 
CUBA QATAR 
CYPRUS RWANDA 
DEMOCRATIC REPUBLIC OF THE 
CONGO  
DJIBOUTI SAINT KITTS AND NEVIS 
DOMINICA SAINT LUCIA 
ECUADOR SAINT VINCENT & THE 
GRENADINES 
EGYPT SENEGAL 
EL SALVADOR SIERRA LEONE 
FIJI SOLOMON ISLANDS 
GABON SOUTH AFRICA 
THE GAMBIA SURINAME 
GRENADA SWAZILAND 
GUATEMALA TANZANIA 
GUINEA BISSAU THAILAND 
GUINEA TOGO 
GUYANA TRINIDAD AND TOBAGO 
HAITI TUNISIA 
HONDURAS TURKEY 
JAMAICA UGANDA 
JORDAN UNITED ARAB EMIRATES 
KENYA VENEZUELA 
KUWAIT ZAMBIA 
LESOTHO ZIMBABWE 
MADAGASCAR  G/SG/N/10/BRA/3/Suppl.4 
G/SG/N/14/BRA/2 Page 6 
 
 
  10. Proposed date for the mid-term review. 
 
The mid-term review will begin in September 2008. 
 
Brazil is ready to consult with Members with in terest in the products concerned with a view 
to providing additional information.  To this end, and taking into account that a final decision will be 
taken by the competent author ities during the week starting 28
 August 2006, proposes to hold 
consultations in Geneva during the week starting 7 August 2006, if necessary. 
 
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