WORLD TRADE  
ORGANIZATION  G/SG/N/8/CHL/4 
G/SG/N/10/CHL/7 22 December 2006 
 
 
(06-6136) 
Committee on Safeguards Original:   Spanish 
  
 
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 
 
CHILE 
 
(Powdered Milk, Liquid Milk and Gouda Cheese
) 
 
  The following communication, dated 19 December 2006, is being circulated at the request of 
the delegation of Chile.  
_______________ 
 
  According to instructions by the Government of Chile, the notification under Article 12.1(b) 
of the Agreement on Safeguards on finding a serious injury or threat thereof caused by 
increased imports and the notification pursuan t to Article 12.1(c) of the Agreement on 
Safeguards  are attached.  The definitive measure consists  in a 23 per cent tariff surcharge on imports 
of the product under investigation, i.e. powdered milk, liquid milk and Gouda cheese, classified under 
the subheadings listed in the corresponding notification.   The notification of initiation of the investig ation in question was circulated as document 
G/SG/N/6/CHL/11 of 25 September 2006 and the notification of the provisional measure was 
circulated as document G/SG/N/7/CHL/8 of 23 October 2006.  G/SG/N/8/CHL/4 
G/SG/N/10/CHL/7 Page 2 
 
 
  1. Evidence of serious injury or threat thereof caused by increased imports 
 Farm-gate milk 
 
• Domestic farm-gate milk prices measured in UF (unidades de fomento – Chilean 
inflation-indexed monetary units) fell by 2.9 per cent in the period January-
September 2006 compared to the same period the previous year. 
 • Depending on the size of the producer a nd the enterprise to which its production was 
sold, in the period September 2005/2006 producer profit margins recorded declines 
ranging from 40 to 200 per cent approximately. 
 • Prices paid to producers were expected to fall by some six to eight pesos per litre in 
the spring-summer 2006 season.  As a resu lt of increased imports from Argentina, 
however, the forecast is 16 to 18 pesos less per litre. 
• Apparent consumption showed an increase of  16.2 per cent in the first eight months of 
2006 compared to the same period in 2005, with higher production and imports.  In 
2005, this variable rose by 3.7 per cent compared to 2004. 
 • The ratio of imports of the products from Argentina subject to the safeguard measure 
to domestic farm-gate milk production reached 8.1 per cent in the period January-
August 2006, i.e. double the figure recorded in the same period the previous year. 
 • Variables such as productivity, utilization of installed capacity and employment are 
not measured on a regular basis, so consequently there are no up-to-date figures of statistical significance available. 
 
 Powdered milk 
 
• The share of powdered milk imports from Ar gentina in apparent consumption reached 
4.7 per cent in the first eight months of 2006, representing an increase in relation to the same period in 2005, when it accounted for 2.3 per cent. 
 
• Domestic prices of powdered milk in UF declined by 2.2 per cent between 2004 and 
2005, in contrast with the 5.1 per cent in crease in the preceding year.  Prices rose by 
1.6 per cent in the period January-July 2006 in relation to the same period the previous year. 
 
• The import price of powdered milk from Argentina declined by 7.4 per cent in UF in 
the period January-October 2005/2006.  Th e linear correlation between the import 
price of powdered milk from Argentina and the domestic price of farm-gate milk was 
0.7 in the period 2002 to September 2006. 
 
• Chilean exports of powdered milk (mai nly whole powdered milk) decreased by 
36.9 per cent in the period January-June 2006 compared with the same period in 
2005. 
  G/SG/N/8/CHL/4 
 G/SG/N/10/CHL/7 
 Page 3 
 
 
   Liquid milk 
 
• The share of liquid milk imports from Argentina in apparent consumption in the 
period January-August 2006 reach ed 0.62 per cent, which represents an increase in 
relation to the same period in 2005 (0.17 per cent). 
 
• The import price of liquid milk from Argentin a declined by 6.7 per cent in UF in the 
period January-October 2006 compared to the same period the previous year.  The linear correlation between the import price of liquid milk from Argentina and the 
domestic price of farm-gate milk was 0.66 in the period 2004 to September 2006. 
 
• Chilean exports of liquid milk decreased by 16.8 per cent in the period January-June 
2006 compared with the same period in 2005, in contrast with the 192.3 per cent recorded in 2005. 
 
 Gouda cheese 
 
• The share of Gouda cheese imports from Ar gentina in apparent consumption in the 
first eight months of 2006 reached 2.33 pe r cent, representing an increase in relation 
to the same period in 2005, when it accounted for 1.22 per cent. 
 
• The import price of Gouda cheese from Argen tina declined by 3.1 per cent in UF in 
the period January-October 2005/2006.  Th e linear correlation between the import 
price of Gouda cheese from Argentina and the domestic price of farm-gate milk was 
0.54 in the period 2002 to September 2006. 
 
• Apparent consumption of liquid milk, po wdered milk and Gouda cheese showed an 
increase of 16.2 per cent in the first eight  months of 2006 compared to the same 
period in 2005, with higher production and im ports.  In 2005, this variable rose by 
3.7 per cent compared to 2004. 
 
• An analysis of other factors shows that imports originating from countries other than 
Argentina declined by 45 per cent in the period January-October 2006 in relation to the same period the previous year. 
 
2. Information on whether there is an absolu te increase in imports or an increase in 
imports relative to domestic production  (see also Article 12.1 for the context) 
• Imports from Argentina of the products at issue expressed in litre-of-milk equivalents 
showed a 71 per cent increase in the peri od January-October 2006 in relation to the 
same period the previous year. 
 
 Powdered milk 
 
• The volume of powdered milk imports from Argentina grew by 90 per cent in the 
period January-October 2006 compared to the same period the previous year.  In 2005, the volume increased by 15 per cent in relation to 2004. 
 
• The ratio of total imports of powdered m ilk from Argentina, expressed in farm gate 
milk equivalents, to domestic farm-gate milk production reached 6.6 per cent in the 
period January-August 2006, a coefficient high er than the 3.3 per cent recorded in the 
same period the previous year. G/SG/N/8/CHL/4 
G/SG/N/10/CHL/7 Page 4 
 
 
   Liquid milk 
 
• The volume of liquid milk imports from Argentina increased by 92 per cent in the 
period January-October 2006 compared to the same period the previous year. 
 
• The ratio of imports of liquid milk from Argentina to domestic farm-gate milk 
production reached 0.81 per cent in the period January-August 2006, a coefficient higher than the 0.23 per cent recorded in  the same period the previous year. 
  Gouda cheese 
 
• In the period January-October 2006, imports from Argentina showed a 52 per cent 
rise in volume over the same period the previous year.  Import volumes have undergone a sustained increase over the past four years. 
 
• The ratio of Gouda cheese imports from Argentina, expressed in farm gate milk 
equivalents, to domestic farm-gate milk  production reached 3.09 per cent in the 
period January-August 2006, a figure higher than the 1.62 per cent recorded in the same period the previous year. 
 3. 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, with the exception of powdered cream under those subheadi ngs;  liquid milk, classified unde r tariff subheadings 0401.1000, 
0401.2000, 0401.3010, 0401.3020, 0401.3030, 0401.3040, 0401.3090 and 0402.9110, with the 
exception of liquid cream and evaporated milk  under those subheadings;  and Gouda cheese, 
classified under tariff subheading 0406.9010.  
4. Description of the proposed measure 
 The definitive safeguard measure consists in a 23 per cent tariff surcharge on imports from 
Argentina. 
 5. Proposed date of introduction of the measure 
 14 December 2006. 
 6. Expected duration of the measure 
 From 14 December 2006 to 14 December 2007. 
 
7. Proposed date for the review to be held no t later than the mid-term of the measure (for 
a measure with a duration of more than three years) 
 Not applicable. 
  G/SG/N/8/CHL/4 
 G/SG/N/10/CHL/7 
 Page 5 
 
 
  8. Expected timetable for the progressive libera lization of the measure (if the expected 
duration is over one year) 
 Not applicable. 
 9. Information to be provided in the event of the duration of the measure having to be 
extended . 
 Not applicable. 
 
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