WORLD TRADE  
ORGANIZATION  G/SG/N/6/ARG/6 
7 July 2006 
 
 (06-3271) 
Committee on Safeguards Original:   Spanish 
 
 
 
NOTIFICATION UNDER ARTICLE 12. 1(a) OF THE AGREEMENT ON 
SAFEGUARDS ON INITIATION OF AN INVESTIGATION 
AND THE REASONS FOR IT 
 
ARGENTINA 
 
 
 The following communication, dated 19 June 2006, is being distributed at the request of the delegation of Argentina.  
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1. Date of initiation of the investigation 
 The opening of the investigation announced in Resolution SICyPyME No. 158/2006 of 
6 June 2006, published in the Official Journal of 8 June 2006. 
 
2. Product subject to investigation 
 The investigation involves "compact discs-recordable (CD-R)", under MERCOSUR tariff 
heading 8523.90.10.  3. Reasons for initiating the investigation 
 The investigation was initiated pursuant to  a request by the Argentine Chamber of 
Manufacturers of Magnetic and Optical Media (CAFMO).   The National Foreign Trade Commission (CNCE) carried out a study in response to the application submitted by CAFMO to determine the exis tence or threat of serious injury, within the 
meaning of the Agreement on Safeguards, in conne ction with compact discs -recordable (CD-R), the 
results of which are recorded in CNCE Directive No. 1147 of 14 March 2006.   The study shows that the application contains  sufficient evidence of the threat of serious 
injury to the domestic industry caused by imports. 
 
 The above-mentioned conclusion is based on the following circumstances: 
 
IMPORT TRENDS 
  Recent trends in imports for the period from January 2000 to October 2005 meet the 
conditions required by the Agreement on Safeguards fo r initiating an investigation with a view to the 
imposition of a safeguard measure.  In the course of  the investigation the following factors were 
examined:  G/SG/N/6/ARG/6 
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   (a) Imported product
 
  The imported product for which CAFMO is reques ting the application of a safeguard measure 
is "compact discs-recordable (CD-Rs) " under MERCOSUR tariff heading 8523.90.10.000 L. 
 
 (b) Absolute quantities imported
 
  For the purposes of evaluation, the CNCE c onsidered imports of CD-Rs originating from 
MERCOSUR non-member countries, the principal countries of origin being Chinese Taipei, 
India, Malaysia, Singapore, the United States,  Mexico, China and Japan.  There were no 
imports from MERCOSUR countries. 
  The volume of imports of CD-Rs from outside the MERCOSUR area increased each year, 
except for 2002, when it fell by 61 per cent.  Upward variations for the rest of the period considered 
were 61 per cent in 2001, 119 per cent in 2003, 104 per cent in 2004 and 36 per cent in 2005.  Imports 
rose from approximately 26.3 million units in  2000 to a little over 79 million in 2005. 
  Imports measured in f.o.b. dollars dropped by 3 per cent in 2001 and 79 per cent in 2002.  
They subsequently rose by 79 per cent in 2003, 59 per cent in 2004 and 31 per cent in 2005.  There was a fall of almost 58 per cent between 2000 and 2004.  
 (c) Imports in relati on to domestic production
 
  The ratio of total imports to domestic pr oduction increased from 64 per cent in 2002 to 
111 per cent in 2003, 157 per cent in 2004 and 221 per cent in the first ten months of 2005.  
 As for the different elements of apparent consumption, there has been a decline in the 
domestic industry's share since 2002, which fell fro m 58 per cent in 2002 to 49 per cent in 2003, 
38 per cent in 2004 and 30 per cent in the first ten m onths of 2005.  On the other hand, imports have 
increased their share of the market since 2002, accounti ng for 51 per cent in 2003, 62 per cent in 2004 
and 70 per cent in 2005.  
 (d) Conditions affecting imports
 
  Considering the conditions in which imports take  place and in view of the characteristics of 
the product, the average f.o.b. import prices reveal the following:  
 The average f.o.b. prices for total imports fell consistently over the years of the period under 
analysis (39 per cent, 47 per cent, 18 per cent, 22 per cent and 3 per cent, respectively).   With regard to the prices of domestically manufactured goods, two sets of figures are available:  the average sales revenue and the list pri ces net of trade discounts.  Trends in the former 
show that such prices fell 27 per cent in 2001,  rose 45 per cent in 2002, fell 17 per cent in 2003, 
stayed much the same in 2004 and decreased 13 per cent in 2005.  As regards the latter, the variations 
followed the same pattern for the same years, althou gh the percentages were different:  they decreased 
37 per cent in 2001, grew 29 per cent in 2002, fell 13 per cent in 2003, showed hardly any variation 
(1 per cent) in 2004 and decreased 13 per cent in 2005.  
 Furthermore, the prices of all imports of CD-Rs on the domestic market, calculated by adding 
to the average f.o.b. prices the import costs that is  to say, without including the profit margins, fell by 
39 per cent in 2001, rose by 46 pe r cent in 2002, decreased by 8 pe r cent in 2003 and 27 per cent in 
2004 and recorded a rise of 1 per cent in 2005.  The extent of the decline in prices of imports in the 
domestic market between 2000 and 200 5 varied depending on the country.  Thus, the fall in prices in  G/SG/N/6/ARG/6 
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  the domestic market for imports from Chinese Taipei was 25 per cent, from India 44 per cent, from 
the United States 19 per cent, from Mexico 46 per cent, from China 35 per cent and from Japan 29 per cent.   The comparison between the prices of imported CD-Rs in the domestic market and the prices 
of domestically produced CD-Rs took into account th e two sets of figures mentioned above.  In the 
first case, regarding the average sales revenue, it sh ould be noted that Chinese Taipei's prices were 
always lower, varying between 22 per cent and 43 pe r cent.  The other countries of origin had higher 
prices for one or more years and the variations be low the price of the domestically produced product 
were between 2 per cent (Mexico, 2005) and 39 per cent (Singapore, 2002 and 2003). 
 
 In the second comparison, regarding the list prices net of trade discounts and the prices of 
imports in the domestic market, Chinese Taipei was also the country of origin that consistently 
applied lower prices than the domestic producers, varying between 6 per cent and 32 per cent, while 
for the other countries the undercutting varied betw een 1 per cent (Malaysia, 2001) and 39 per cent 
(Singapore, 2002 and 2003) alt hough there were some years when there was no undercutting. 
 
SERIOUS INJURY OR THREAT OF SERIOUS INJURY TO THE DOMESTIC INDUSTRY 
 1. Like or directly competitive products 
 At this stage and on the basis of existing info rmation, it has been concluded that domestically 
produced "compact discs-recordable (CD-Rs)" are like products with respect to the imported products 
that are the subject of the application.  
A like or directly competitive product fulfils the following conditions:  
(a) Physical and chemical characteristics 
 A CD-R is an optical medium for the digital storage of audio and video recordings, images, 
text or data.  A compact disc-recordable (CD-R) is  an optically readable disc that can be written to 
only once.  It consists of a polycarbonate disc contai ning a continuous groove (the track) which starts 
from the centre and spirals towards the outer edge of the disc, with a heat-sensitive dye between the 
polycarbonate and the reflective silver coating.  When recording onto a CD-R the laser burns this 
heat-sensitive coating, altering its reflective capacities  and storing the information recorded in binary 
form.   The technical characteristics of a CD-R are:  
(a) Diameter:  120mm; 
(b) thickness:  1.2mm;  and 
(c) central hole:  15mm. 
2. Domestic industry 
 The Commission analysed the information submitted by CAFMO, which represents the 
following enterprises:  Industrias Plásticas Catamar ca, Teltron y Videolar Río Grande, which account 
for the whole of the domestic supply of CD-Rs. 
 G/SG/N/6/ARG/6 
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  3. Situation of the domestic industry 
 In order to analyse the situation of the domestic industry, the following aspects were 
considered.   At its highest point domestic production reached about 47.2 million CD-R units, whereas at 
the end of October 2005 production amounted to almost 35.8 million units. 
  It emerges from an examination of the perform ance of each of the enterprises of the sector 
that the variations in production were in line with  those in total domestic output, showing a rise in all 
the years except for the period considered in 2005 when the three enterprises making up the domestic 
industry recorded a decline, IPC falling by 21 per cent, Teltron by 3 per cent and Videolar by 2 per 
cent.  Production at the end of October 2005 was al most 11.4 million units in the case of IPC, about 
17.5 million in the case of Teltron and a little more than 6.8 million in the case of Videolar.   Total domestic production in 2000 was shared between IPC with 76 per cent, and Teltron, 
with 24 per cent.  From 2001 onwards Videolar  began to produce CD-Rs and the share of each 
enterprise showed the following trends:  IPC's shar e decreased each year to reach 32 per cent at the 
end of October 2005, while Teltron's share fluctuat ed from 39 per cent in 2001 to 30 per cent in 2002, 
36 per cent in 2003, 46 per cent in 2004 and 49 per cent  in 2005, and Videolar went from 12 per cent 
in 2001 to 24 per cent in 2002, 21 per cent in 2003, 18 per cent in 2004 and 19 per cent in 2005.  
 Domestic sales in units for the whole of the industry showed an increase of 414 per cent in 
2001, 81 per cent in 2002, 50 per cent in 2003, 30 per cent in 2004 – the year in which they peaked at about 45.6 million units – and a fall of 15 per cen t in 2005, reaching in October about 33.8 million 
CD-Rs.  
 The industry's inventories rose by 59 per cent in 2002 and dropped by 5 per cent in 2003 and 
27 per cent in 2004.  They increased by 101 per cent in 2005.  The ratio of inventories to sales for the 
industry was on average more than three months of sales in 2001 and 2002, diminishing to an average of two months in 2003 and little mo re than one month in 2004.  It rose in 2005 to an average of 
2.4 months of sales.  
 Production capacity  varied over the period 2000-2005, rising almost every year for the three 
enterprises, except in the final period when it re mained unchanged.  Pro duction capacity, which in 
2000 stood at 10.7 million units, increased by 90 per cent in 2001, 64 per cent in 2002, 44  per cent in 2003 and 38 per cent in 2004, equivalent to 66.2 million units in that last full year. 
 
 The degree of utilization of production capacity  of the industry increased between 2000 
and 2002, rising from 41 per cent in 2000 to 68 per cen t in 2001 and to 78 per cent in 2002, whereas it 
declined to 68 per cent in 2003.  In 2004 it increased again, rising to 71 per cent, but fell to 65 per 
cent in 2005 owing to a drop in the level of production.   The total number of employees  in the production sector of the industry showed a rising 
trend, going from 70 employees in 2000 to 80 in 2 001, 83 in 2002, 97 in 2003, 114 in 2004, and 
remaining unchanged in 2005.   The total wage bill  paid out and the average monthly wage  also rose. 
 
 The average physical output per employee measured in units per employee and regarded as 
an indicator of productivity rose 173 per cent in 2001, 81 per cent in 2002, 7 per cent in 2003, 23 per cent in 2004, but fell by 9 per cent in 2005.   G/SG/N/6/ARG/6 
 Page 5 
 
 
   The cost structures  for the domestic industry have shown a decreasing price-cost ratio, 
which has stood at less than one since 2002, a parame ter that applies to each of the three enterprises 
making up the domestic industry.   An analysis of the sale prices of CD-Rs, calculated on the basis of the list prices net of trade 
discounts provided by CAFMO, shows that current  prices fell by 37 per cent in 2001, rose by 29 per 
cent in 2002, decreased by 13 per cent in 2003, ro se by hardly 1 per cent in 2004 and dropped by 
11 per cent in 2005.  An examination of the prices as compared with the Index of Wholesale Industrial 
Prices (IPIM) – General Level and with the IPIM fo r Manufactured Products and the IPIM for Plastic 
Products (base January 2000 = 100) highlights ne gative variations almost every year in all 
three indices, fluctuating between 6 per cent and 36 per cent. 
  The firms' economic performance data show that two of them have posted operating losses, 
while for the third the operating profit has been minima l.  It should be noted that sales of the product 
under analysis represented at the end of the period co nsidered a high percentage of the share of CD-Rs 
in the billing of the three enterprises. 
 
4. Conclusions regarding serious injury or threat of serious injury to the domestic industry 
 With regard to serious injury or threat of serious injury to the domestic industry, CNCE 
concluded that on the basis of the conclusions  and underlying reasons for such conclusions 
concerning imports and the conditions under which th ey enter the domestic market, the imports in 
question have led to a deterioration in the state of the domestic industry which justifies the initiation 
of an investigation regarding threat of seri ous injury under the Agreement on Safeguards. 
  The indicators for the domestic industry show  a slow-down trend against a background of 
rising imports.  The following factors should be noted: 
 
• The decrease in the level of the industry's production capacity, which despite a 
recovery in 2004 fell again in 2005. 
 
• As already mentioned, the fall in averag e sales revenue, which amounted to 22 per 
cent during the period under investigation. 
 
• Finally, the price-cost ratio, which show s a downward trend below one for the whole 
of the industry, a parameter that applies to each of the three enterprises making up 
domestic industry. 
 
• The increase in the absolute level of invent ories in the domestic industry in the last 
period. 
 
 The CNCE concluded that the above indices ar e indicators of a probable threat of serious 
injury which – although it cannot be determined at this stage whether there is general and significant 
impairment of the domestic industry – does in fact  provide an overall picture which justifies the 
initiation of an investigation to determine the threat of serious injury.   In view of the aforementioned factors, the CNCE believed that the balance sheets of the 
enterprises and the current impossibility for the domes tic industry to supply the domestic market as it 
continues to develop formed the basis for a decisi on in support of the conclusion that there were no 
critical circumstances which would warrant the adoption of a provisional measure.  G/SG/N/6/ARG/6 
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   This conclusion is all the more pertinent when it is noted that among the factors in favour of 
initiating a possible investigation, the above-mentioned pr ice-cost ratio is in fact a variable with which 
the domestic industry has had to contend prac tically since the beginning of the period under 
investigation.  
 The CNCE therefore considered that the critical  circumstances did not exist that would allow 
the application of provisional measures, in the event that it were decided to initiate an investigation. 
  Having considered the evidence submitted by the sector involved, the implementing authority 
finds that this evidence constitutes the circumstanc es necessary for the initiation of an investigation. 
 
 Accordingly, the implementing authority has deci ded that an investigation should be initiated 
and has issued Resolution SICyPyME No. 158/2006 of 6 June 2006 to that effect, as published in the 
Official Journal of 8 June 2006, a copy of which is attached.  G/SG/N/6/ARG/6 
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  Secretariat of Industry, Trade and Small and Medium-Sized Enterprises 
 FOREIGN TRADE  Resolution No. 158/2006 
 
Announcing the decision to initiate a safeguard investigation concerning the production of compact discs-recordable  
Buenos Aires, 6 June 2006  
Having regard
 to file No. S01:0446557/2005 of the Registry of the Ministry of the Economy and 
Production, and   Whereas
: 
 
 In the above-mentioned file the Argentin e Chamber of Manufacturers of Magnetic and 
Optical Media (CAFMO) requested the initiation of an investigation with a view to the application of 
a safeguard measure concerning the export to the Argentine Republic of compact discs-recordable 
(CD-R), under MERCOSUR tariff heading 8523.90.10;  
 The National Foreign Trade Commission, a decentralized body under the Secretariat of 
Industry, Trade and Small and Medium-Sized Enterprises of the Ministry of the Economy and Production concluded by a majority in Directive No. 1147 of 14 March 2006 that " ... on account of 
the conclusions and underlying reasons for such c onclusions concerning imports and the conditions 
under which they enter the domestic market, they conc lude that the imports in question are considered 
to have led to a deterioration in the state of the domestic industry which justifies the initiation of an 
investigation regarding threat of serious  injury under the Agreement on Safeguards"; 
  Bearing in mind that at the very beginning of the investigation the applicant requested the imposition of provisional safeguard measures, the National Foreign Trade Commission delivered its 
opinion on the existence of the critical circumstan ces referred to in Article 35 of Decree No. 1059 
dated 19 September 1996;   
  In this connection, in Directive No. 1147 of 14 March 2006, the National Foreign Trade 
Commission as a whole took the view that " ... the critical circumstances do not exist that would allow the application of provisional measures, in the event that it were decided to initiate an investigation"; 
 
 For its part, the Directorate for Unfair Comp etition attached to the National Directorate for 
the Management of Foreign Trade of the Under-Sec retariat for Trade Policy and Management of the 
Secretariat of Industry, Trade and Small and Medium-Sized Enterprises of the Ministry of the Economy and Production submitted a report on the feasib ility of the initiation of an investigation with 
a view to applying a safeguard measure on the impo rtation of the product which is the subject of 
investigation; 
  The report mentioned in the preceding prea mbular paragraph was drawn up by the Under-
Secretariat for Trade Policy and Management attached  to the Secretariat of Industry, Trade and Small 
and Medium-Sized Enterprises; 
 
 In the light of the conclusions of the Nati onal Foreign Trade Commission and the technical 
analysis carried out by the Under-Secretariat for Trade Policy and Management , it is concluded that, 
in view of the factors in the present case, circum stances exist that would justify the initiation of an 
investigation with a view to the application of a safeguard measure concerning the export to the G/SG/N/6/ARG/6 
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  Argentine Republic of compact discs-recordab le (CD-R), which come under MERCOSUR tariff 
heading 8523.90.10;   Resolution No. 763 of 7 June 1996 and Reso lution No. 381 of 1 November 1996 of the 
former Ministry of the Economy and Public Works and Services have established the contents and 
procedures for the presentation of a certificate in the context of the monitoring of non-preferential 
origin for import transactions subject to such a requ irement, in accordance with the provisions of the 
Agreement on Rules of Origin, which forms part of the General Agreement on Tariffs and Trade 
1994, approved by Law No. 24.425;  
 In accordance with the provisions of the resolutions cited in the preceding preambular 
paragraph, the Secretariat of Industry, Trade and Small and Medium-Sized Enterprises is the 
implementing authority of the regime in ques tion and as such stipulates the circumstances and 
methods that are to apply in carrying out such monitoring;  
 Accordingly, it may decide to require certificat es of origin when the goods are subject to the 
application of anti-dumping, countervailing or specific duties or safeguard measures in accordance with the provisions of Article 2(c) of Resolution No. 763 of the former Ministry of the Economy and 
Public Works and Services;   In view of what has been stated in the pr eceding preambular paragraphs, it is necessary to 
notify the General Directorate of Customs, attached to the Federal Public Revenue Administration, an 
autonomous body within the Ministry of the Ec onomy and Production, that it should proceed to 
require the production of the certificates of origin si xty (60) days after the entry into force of the 
resolution stipulating that an investigation should be initiated;  
 On the basis of what is stated in the pr eceding preambular paragraphs there exist the 
requirements laid down by the Agreement on Safegua rds incorporated into our legislation by Law 
No. 24.425, that would justify the initiation of an investigation with a view to the application of a 
safeguard measure concerning the importation of compact discs-recordable (CD-R);   The Argentine Republic, by Law No. 23.981 of 15 August 1991, ratified the Treaty of 
Asunción making it a State party to the Southern  Common Market (MERCOSUR), and also, by Law 
No. 24.560 of 20 September 1995, ratified the Protocol of Ouro Preto;   MERCOSUR Council Decision No. 17 of 17 December 1996 approve d the Regulation 
concerning the application of safeguard measure s to imports from non-member countries of the 
Southern Common Market (MERCOSUR); 
  Under the regulation referred to in the precedi ng preambular paragraph, the application of 
safeguard measures to imports originati ng from the States parties is excluded; 
  The Secretariat of Economic Policy of the Ministry of the Economy and Production has taken 
the proper action within its sphere of competence; 
  The Legal Service for Industry, Trade and Sma ll and Medium-Sized Ente rprises attached to 
the General Directorate of Legal Affairs of the Ministry of the Economy and Production has taken the 
appropriate action within its sphere of competence; 
 
 This measure is issued under the powers c onferred by the Agreement on Safeguards, 
incorporated into our legislation by Law No. 24.425;    G/SG/N/6/ARG/6 
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  Therefore, 
 The Secretariat of Industry, Trade and Small and Medium-Sized Enterprises  Decides: 
 
 Article 1 - To announce the initiation of a safeguard investigation concerning the export to 
the Argentine Republic of compact discs-record able (CD-R), under MERCOSUR tariff heading 
8523.90.10;  
 Article 2 - To notify the General Directorate of Cust oms, attached to the Federal Public 
Revenue Administration, an autonomous body with in the Ministry of the Economy and Production, 
that all imports of the product described in Article 1 of this resolution are subject to the regime for the 
monitoring of non-preferential origin under the te rms of Article 2(c) of Resolution No. 763 of 
7 June 1996 of the former Ministry of th e Economy and Public Works and Services.   
 
 Article 3 -  To instruct the General Directorate of Customs, attached to the Federal Public 
Revenue Administration, an autonomous body within  the Ministry of the Economy and Production, to 
proceed to require the production of certificates of origin for all imports of the product described in 
Article 1 of this resolution, whatever their origin, si xty (60) days after the date of entry into force of 
this resolution.  Furthermore, the import destina tions for consumption of the goods covered by this 
resolution shall be monitored, whatever the origin  declared, in accordance with the procedure laid 
down for cases which are processed through the red channel (goods to declare);   Article 4 - The requirement mentioned in the preceding article shall be consistent with the 
conditions and procedures established by Resolutio n No. 763 of 7 June 1996 and Resolution No. 381 
of 1 November 1996 of the former Ministry of  the Economy and Public Works and Services. 
  Article 5  - The hearing provided for in Article 13(e) of Decree No. 1059 of 
19 September 1996 shall be held sixty (60) calenda r days from the day following the publication of 
this resolution in the Official Journal.  
 Article 6 - This resolution shall take effect from the day following its publication in the 
Official Journal.   Article 7 - The publication of this resolution in the Official Journal shall be deemed sufficient 
notification for all purposes. 
 
 Article 8 - For communication, publication, transmittal to the National Directorate of Official 
Records and archiving – Miguel G. Peirano.  
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