WORLD TRADE  
ORGANIZATION  G/SG/N/6/CHL/10 
G/SG/N/7/CHL/7 10 December 2004 
 
(04-5449) 
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 
 
NOTIFICATION UNDER ARTICLE 12.4 OF THE AGREEMENT ON 
SAFEGUARDS BEFORE TAKING A PROVISIONAL SAFEGUARD 
MEASURE REFERRED TO IN ARTICLE 6 
 
CHILE 
 
Wheat Flour
 
   The following communication, dated 8 December 2004, is being circulated at the request of 
the delegation of Chile.  
_______________ 
 
  Please find attached a notification by Chile, pursu ant to Article 12.1(a) and Article 12.4 of the 
Agreement on Safeguards, to the effect th at the investigating authority, at its 268
th meeting on 
3 December 2004, decided to initiate a safeguards investigation concerning imports of wheat flour 
classified in tariff heading 1101.0000 of the Chilean Harmonized Tariff, and to recommend applying a provisional safeguard measure to imports of this product.  The investigati on will be initiated on 
10 December 2004, the date of publication of the notice of initiation in the Diario Official (Official 
Journal) of Chile. G/SG/N/6/CHL/10 
G/SG/N/7/CHL/7 Page 2 
 
 
  Pursuant to Article 12.1(a) and Article 12.4 of the Agreement on Safeguards, Chile hereby 
informs the Committee on Safeguards that at its 268
th meeting, held on 3 December 2004, the 
investigating authority decided to initiate a safe guards investigation for imports of wheat flour 
classified under tariff heading 1101.0000 of the Chilean Harmonized Tariff and to recommend 
applying a provisional safeguard measure to imports  of this product.  The investigation will be 
initiated on 10 December 2004, the date of publication in the Diario Oficial (Official Journal) of 
Chile.  
1. Specify the date when the investigation was initiated  
 On 10 December 2004, the date on which the notice of initiation was published in the Diario 
Oficial . 
 
2. Specify the product subject to investigation 
Wheat flour  classified in tariff heading 1101.0000 of the Chilean Harmonized Tariff. 
3. Provide the reasons for initiating the investigation  
(i) The investigation was initiated at the request of the Asociación de Molineros del Sur A.G.  and 
the Asociación de Molineros del Centro A.G.   These associations submitted a safeguard 
request on 30 December 2004 which was enla rged on in a written communication of 
5 October 2004.  The request is backed by th ese associations and contains information from a 
representative group of mills which are members of the the associations and accounted for 
more than 65 per cent of total production in th e last two years, according to figures available 
in the first half of 2004. 
(ii) Evidence  on the basis of which the investigation was initiated 
Analysis of imports
 
 
Imports of wheat flour from January to Novemb er 2004 amounted to 5,791 tons, more than 
four times the volume recorded for the same period in  the previous year.  October and November in 
particular, saw an increase in th e rate of imports of wheat flour and accounted for 37 per cent of total 
imports in the above-mentioned period.   As a result of this trend, the growth rate of imports was 
double that of 2003, which was already more than 100 per cent. 
 
Furthermore, from January to November 2004 impor t prices in CIF dollars declined by 14 per 
cent as compared to the same period in 2003, whic h had already seen a drop of 4.5 per cent.  A 
comparison of the trend in the domestic price with the price of imported wheat flour shows that the latter was higher until the first half of 2003, and since then has been lower. 
 
Threat of injury and causal link
 
 
The investigating authority took into cons ideration the unforeseen, recent and significant 
increase in imports of wheat flour posing a threat of serious injury to the domestic industry. 
 It was also noted that Argentina, the main supp lier of wheat flour imports to Chile, established 
export duties for wheat and wheat flour in March a nd April 2002, and set them at 20 per cent from the 
latter date.  Exports of mixed flour , on the other hand, are subject to an export duty of 5 per cent and a 
refund of the same amount.  This situation, which Chile did not anticipate, makes it advantageous to 
ship wheat flour as exports of mixed flour and thus pay lower export duties.  G/SG/N/6/CHL/10 
 G/SG/N/7/CHL/7 
 Page 3 
 
 
  
The foregoing indicates - given that wheat is not a commodity whose price is liable to 
influence by Argentina - a drop in the domestic pr ice of wheat in Argentina amounting to about 20 per 
cent of the FOB export price, a percentage  similar to that of the export duty. 
 
The resulting competitive advantage, taking into  account the participation of wheat in the 
production of wheat flour, amounts to 17 per cent.  In  addition, Argentine mills are able to increase 
significantly their exports to Chile at a lower pri ce, owing to the above-mentioned difference in export 
duties. 
 
Since wheat flour imports from Argentina accounted for 60 per cent of total imports of this 
product to Chile in the period from January to N ovember 2004, and in view of the circumstances 
described in the foregoing paragraphs, there is a clear case of threat of serious injury to the domestic 
industry. 
 
The foregoing paragraphs show that the threat of  serious injury to the domestic injury is 
caused entirely by the artificial lowering of the price of the main input of wheat flour imports to Chile, 
which enables this product to be imported at prices 17 per cent lower. 
 
4. Provisional measure:   the investigating authority recommended a 17 per cent ad valorem  
surcharge. 
5. Proposed date of introduction of the measure:   Upon publication of the Ministry of 
Finance Supreme Decree issuing the proposed measure. 
6. Expected duration of the measure:  Until a decision is taken on whether or not to apply a 
definitive measure. 
7. Provide the basis for:  
 (i) making a preliminary determination, as pr ovided for in Article 6 of the Agreement on 
Safeguards, that increased imports have caused or are threatening to cause serious injury: 
 
See paragraph 3 above. 
 (ii) determining that there are critical circumstances where delay would cause damage 
which would be difficult to repair: 
  Failure to apply a provisional safeguard me asure immediately would mean imminent and 
significant overall impairment for the domestic m illing industry, because the domestic selling price of 
wheat flour in Chile would drop as imports at the lower price increased, the imports replacing both the 
production of the domestic millers and th e production of the main input, wheat. 
 8. Other information  (as contained in the notice of in itiation of the investigation to be 
published in the Diario Oficial ) 
 Period of the investigation
:  the final decision will be adopted within 90 days of the initiation 
of the investigation. 
 G/SG/N/6/CHL/10 
G/SG/N/7/CHL/7 Page 4 
 
 
  Public hearing
:  to be held on 27 January 2005 at 9.30 am, at Agustinas 853, 12th Floor, 
Santiago.  Parties wishing to appear at the heari ng should apply in writing to the Technical Secretariat 
up until the 3rd working day prior to the date set for the hearing.   
 
 Any information which interested parties may wish to submit and any requests for a hearing 
by the Commission should reach the Technical Secret ariat within 30 days of the initiation of the 
investigation at the following address:  Secretar ía Técnica, calle Morandé 115, 3er piso, Banco 
Central de Chile, tel. (56-2) 670  2866, fax (56-2) 6 70 2414.  Queries should be addressed to the 
Technical Secretariat.  G/SG/N/6/CHL/10 
 G/SG/N/7/CHL/7 
 Page 5 
 
 
 ANNEXES 
 
Annex 1 
 
IMPORTS OF WHEAT FLOUR 
Month Tons 
Jan-01 84 
Feb-01 42 
Mar-01 1 
Apr-01 1,431 
May-01 - 
Jun-01 - 
Jul-01 1,057 
Aug-01 84 
Sep-01 239 
Oct-01 588 
Nov-01 0 
Dec-01 84 
Jan-02 - 
Feb-02 - 
Mar-02 1 
Apr-02 161 
May-02 42 
Jun-02 218 
Jul-02 43 
Aug-02 - 
Sep-02 84 
Oct-02 42 
Nov-02 1 
Dec-02 42 
Jan-03 0 
Feb-03 84 
Mar-03 63 
Apr-03 43 
May-03 100 
Jun-03 167 
Jul-03 206 
Aug-03 125 
Sep-03 167 
Oct-03 167 
Nov-03 138 
Dec-03 251 
Jan-04 188 
Feb-04 100 
Mar-04 602 
Apr-04 304 G/SG/N/6/CHL/10 
G/SG/N/7/CHL/7 Page 6 
 
 
 Month Tons 
May-04 349 
Jun-04 698 
Jul-04 415 
Aug-04 401 
Sep-04 599 
Oct-04 1,095 
Nov-04 1,040 
Source : Customs declarations of entry.  G/SG/N/6/CHL/10 
 G/SG/N/7/CHL/7 
 Page 7 
 
 
 ANNEX 2 
 
Flour Import Prices 
(US$ CIF/Ton) 
Wheat flour Month 1101.0000 
Jan-01 393 
Feb-01 391 
Mar-01 260 
Apr-01 203 
May-01  
Jun-01  
Jul-01 202 
Aug-01 363 
Sep-01 234 
Oct-01 224 
Nov-01 219 
Dec-01 364 
Jan-02  
Feb-02  
Mar-02  
Apr-02 278 
May-02 369 
Jun-02 177 
Jul-02 422 
Aug-02  
Sep-02 396 
Oct-02 397 
Nov-02 220 
Dec-02 403 
Jan-03  
Feb-03 439 
Mar-03 429 
Apr-03 567 
May-03 169 
Jun-03 239 
Jul-03 304 
Aug-03 154 
Sep-03 224 
Oct-03 228 
Nov-03 293 
Dec-03 309 
Jan-04 273 
Feb-04 173 
Mar-04 254 
Apr-04 262 G/SG/N/6/CHL/10 
G/SG/N/7/CHL/7 Page 8 
 
 
 Wheat flour 
Month 1101.0000 
May-04 192 
Jun-04 244 
Jul-04 261 
Agug-04 284 
Sep-04 242 
Oct-04 223 
Nov-04 198 
Source :  Customs declarations of entry.  G/SG/N/6/CHL/10 
 G/SG/N/7/CHL/7 
 Page 9 
 
 
 ANNEX 3 
 
Wheat flour – Wholesale Prices Chilean Market 
($/ton) 
Month 2001 2002 2003 2004 
January 161,980 159,883 180,883 186,347 
February 161,077 159,883 182,883 185,367 
March 160,410 159,050 190,797 182,700 
April 159,076 158,717 190,797 182,033 
May 158,743 161,417 189,297 181,700 
June 158,743 161,250 188,297 181,700 
July 156,410 164,583 186,797 181,367 
August 158,743 170,037 189,130  
September 162,973 177,217 189,130  
October 162,973 173,217 188,797  
November 161,306 181,217 187,573  
December 160,217 178,883 187,013  
Source :  Odepa. 
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