WORLD TRADE  
ORGANIZATION  G/SG/N/6/BRA/4 
11 August 2009 
 (09-3855) 
Committee on Safeguards Original:   English 
  
 
NOTIFICATION UNDER ARTICLE 12.1(A) OF THE 
AGREEMENT ON SAFEGUARDS ON INITIATION OF 
AN INVESTIGATION AND THE REASONS FOR IT 
BRAZIL 
 
(Desiccated coconut
) 
   The following communication, dated 7 August 2009, is being circulated at the request of the Delegation of Brazil.   
 
_______________ 
 
  Notification to the Committee on Safeguards upon initiation of an investigation process 
relating to serious injury or threat thereof and the reasons for it.   
 
1. Specify the date when the investigation was initiated 
 
 31 July 2009.    2. Specify the product subject to the investigation 
 
 Desiccated coconut , classified under the tariff line 0801.11.10 of the Mercosur Common 
Nomenclature (NCM).    
3. Provide the reasons for the initia tion of investigation, for example 
 
 (i) Was the investigation initiated pursuant to a petition from the domestic industry?   
  Yes, the revision was initiated pursuant to a petition from the domestic industry.    
 (ii) Evidence on the basis of which the investigation was initiated.   
  1. Imports   When analyzing imports by volume, Indonesia was the main foreign supplier of desiccated 
coconut between 2006 and 2008.  Vietnam was th e second main supplier in 2006, and the third 
in 2008.  The Phillipines were the second main supp lier in 2007 and 2008.  Sri Lanka was the third 
main supplier in 2006 and 2007.   G/SG/N/6/BRA/4 
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  The three main foreign suppliers of desiccated  coconut accounted for 94 per cent of the total 
imports in 2006, 92,8 per cent in 2007 and 87,3 per cent in 2008.  Noted that, in 2006, Brazil registered imports from five different countries, in 2007 from eight countries and in 2008 from seven 
countries.  Only Indonesia, Sri Lanka and Vietnam exported the product to Brazil in all three years.    
 With regard to the value of imports, the thr ee main suppliers accounted for 91,1 per cent of 
the total values of imports in 2006, 93,2 per cent in 2007 and 90,3 per cent in 2008.     The total value of Brazilian imports of d esiccated coconut and its respective quantity 
presented different patterns.  In value, the total imported varied positively, and presented a growth of 
26 per cent from 2006 to 2007.  In quantity, the total fell by 9 per cent during the same period.  
From 2007 to 2008, the total imported increased by  95 per cent in value and by 35 per cent in 
quantity.  From 2006 to 2008, the change in the total import value increased by 147 per cent in value 
and by 46 per cent in quantity.    
 2. The performance indicators of the domestic industry 
   2.1 Planted area and production   In relation to the total planted area, a reduction of 5,991 hectares was observed from 2006 to 2007, equivalent to 2.1 per cent.  From 2007 to  2008, the reduction was of 6,632 hectares (-2,4 per 
cent).  Comparing 2006 to 2008, the total area decr eased by 12,623 hectares (-4.5 per cent).   
  The total production of coconut varied negatively, with a decrease of 28,727 fruits (-1.5 per cent) in the production over years under analysis.    
  2.2 Areas with new plantations 
  From 2006 to 2007, there was an increase of 154. 8 per cent in areas with new plantations and 
in the production of seedlings.  Fr om 2007 to 2008, there was no new fa rming or seedling production.   
   2.3 Planted area and dried coconut production 
 
 From 2006 to 2007, there was an increase of 8.4 per cent in the planted area, and the total production of dry coconut varied positively (2 per ce nt).  From 2007 to 2008, the planted area fell by 
1.4 per cent, but the production increased by 1 per cent.  From 2006 to 2008, the planted area of dry 
coconut increased by 7 per cent and the domestic production rose by 3 per cent.   
 
  2.4 Development of labour   There was an increase of 3,466 job positions from 2006 to 2007.  In percentage, this variation 
was of 8.4 per cent.  From 2007 to 2008, there was a decrease of 2,242 jobs, equivalent to a decrease of 5 per cent.  Comparing 2006 to 2008, the labour force increased by 3 per cent.   
 
  2.5 Apparent consumption   In order to measure the apparent consumpti on, the total imported amount was added to the 
domestic sales of dry coconut, shelled, even grated.   
 
 The participation of imports diminished 0.3 per cent from 2006 to 2007 and increased 1.2 per 
cent from 2007 to 2008.  From 2006 to 2008, the growth in its participation in the national apparent 
consumption was 0.9 per cent.  The participation of the domestic industry in the Brazilian market 
presented a pattern opposed to that of the imports.    G/SG/N/6/BRA/4 
 Page 3 
 
 
    2.6 Stocks 
  As examined in the original investigation and in its revisions and cons idering that dry coconut 
cannot be stocked for more than fifteen days, this  indicator is not relevant for this case.   
 
  2.7 Domestic sales of dry coconut 
  The figures show a growth of 2 per cent in  sales of dried coconut from 2006 to 2007.  
From 2007 to 2008, sales of dried coconut decreased 4.8 per cent.    
  2.8 Revenue 
  From 2006 to 2008, there was a reduction of 29 per cent in the revenue of the domestic 
industry.  This reduction is due both to the decreas e in the sold amount and to the reduction of the 
sales price.   
 
  2.9 Production costs   Production costs increased from 2006 to 2007 and decreased in 2008.  Comparing 2006 to 2008, the production cost decreased 34,9 per cent (R$/fruit) and 33,3 per cent (R$/kg).    
 3. Commitment to adjustment 
  The application of a safeguard measure on th e imports of a certain product is aimed at 
allowing the elevation of the level of protection to a sector that is suffering serious injury or threat of 
serious injury caused by an increase of imports.  Th is increase in protection is intended to allow the 
affected sector to make adjustments so as to be ab le to compete with the imports by the end of a 
specified period.  This is why the increase of prot ection has a temporary char acter and this additional 
protection should be gradually reduced throughout th is period so as to ensure the implementation of 
the necessary adjustment.     The two former commitments to adjustment fo cused on the recovery and renewal of coconut 
plantations and training of technicians and produ cers.  Throughout the period of validity of the 
measure, the domestic industry provided informati on concerning the completion of the commitment.   
  In short, effective efforts were made aiming at  the fulfilment of the agreed commitment.  This 
is an industry with a very peculiar feature, it is  an economic sector whose main actors are family 
farmers which are an important part of the coconut growers workforce.   
  Within the scope of the last half-period revision, under the WTO Agreement on Safeguards, it was concluded that the targets agreed to some item s were topped; in relati on to others, however, the 
domestic industry has not yet fulf illed the commitment.  Anyway, the analysis of performance 
indicators for the domestic industry found that the e fforts made by the industry for its restructuring 
were reflected in these indicators.   
  Together with the petition, the domestic indus try presented a new proposal for a commitment 
to adjustment called "technology transfer network for revitalising coconut planted areas in coastal 
plains and coastal lowlands of the Northeast".  This proposal will have the participation of 
SINDICOCO, producers, technical assistance a nd rural policies entities and non-governmental 
organisations.   G/SG/N/6/BRA/4 
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  4. Conclusion 
  The objective of the revision of the safeguard  measure is to check whether this measure 
remains necessary to prevent or repair serious inju ries caused by imports and whether the industry has 
been making adjustments to become able to compete with imports by the end of application period.  
In this case, the domestic industry is effectively bein g recovered.  This result is particularly evident 
when comparing price and cost from 2007 to 2008.     The opening of the revision for extension of the safeguard measure w ill allow the assessment, 
by the Brazilian Government, of the current needs of the sector so as to complete both its restructuring 
process and the consistency of the adjustment plan.   
  According to the above-mentioned, the opening  of the revision of the safeguard measure 
applied on the import of dried coconut, desiccated , even grated, commonly classified under tariff line 
0801.11.10 of the Mercosur Comm on Nomenclature (NCM), in acco rdance with Decree 1488, 1995 
was recommended.   
  (iii) Evidence, if any, on critical circum stances where delay would cause damage which it 
would be difficult to repair.   
  Not applicable.   
 
  
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