WORLD TRADE  
ORGANIZATION  G/L/723 
G/SG/N/13/BRA/3 7 December 2004 
 
(04-5216) 
Committee on Safeguards Original:   English 
  
 
NOTIFICATION UNDER ARTICLE 12.5 OF THE 
AGREEMENT ON SAFEGUARDS OF THE RESULTS  
OF A MID-TERM REVIEW REFERRED TO IN ARTICLE 7.4 
 
BRAZIL 
 
(Desiccated Peeled Coconut) 
 
 
 The following communication, dated 26 November  2004, is being circulated at the request of 
the Delegation of Brazil.  
_______________ 
 
  This notification is made pursuant paragraph 5 of Article 12 of the Agreement on Safeguards, 
which sets forth that mid-term reviews, under paragra ph 4 of Article 7, shall be notified to the Council 
for Trade in Goods, in conformity with the format established in document G/SG/W/1, dated 
23 February 1995. 
1. Specify the measure and the product subj ect to the measure for which the mid-term 
review was conducted, and provide reference to the WTO document that notified the 
safeguard measure subject to the review 
 
 Mid-term review of the Safeguard Measure applied on the imports of desiccated peeled 
coconut, whether or not grated, classified under the tariff line 0801.11.10 of the Mercosur Common 
Nomenclature ( Nomenclatura Comum do Mercosul  – NCM).  The application of the Safeguard 
Measure was notified to the WTO, as per document G/SG/N/8/BRA/3.  
2. Provide the dates of initiation and conclusion of the review 
  The review was initiated in July 2004 and was concluded in September of the same year. 
 
3. Describe the results of the review, providing  some detail on the basis for reaching those 
results 
 
(1) Analysis of the evolution of imports and of the state of the domestic industry 
  For the purposes of this mid-term review, years 2002 and 2003 have been analysed, considering that the safeguard measure is in force since 1 September 2002.  
 During the period in which the safeguard is in force, Brazilian imports and the domestic 
industry economic indicators presented the following  results according to the comparison between 
years 2002 and 2003. 
 G/L/723 
G/SG/N/13/BRA/3 Page 2 
 
 
  262,672 kg (5.5 per cent) reduction, in quantity, in desiccated coconut imports; 
  US$37,179 (1.1 per cent) decline, in value, of desiccated coconut imports; 
 
 4.4 per cent rise in the f.o.b. average price of the imported product; 
 
 2.5 per cent increase in the desi ccated coconut cultivated area; 
 
 9.5 per cent growth of the desiccated coconut production; 
 
 9.1 per cent increase in the production per hectare; 
 
 2.5 per cent rise in employment; 
 
 6.8 per cent positive variation of the production per employee; 
 
 27.5 per cent decline of domestic prices in national currency terms; 
 
 9.5 per cent rise in internal sales of desiccated coconut; 
 
 20.3 per cent drop in revenue in national currency terms; 
 
 less than 1 per cent rise in the domestic apparent consumption share; 
 
 7.7 per cent decline of the undercutting margin. 
 
In sum, a fall in volume and a rise in f.o.b. prices of imports were detected.  Nevertheless, the 
volume of imports for the years 2002 and 2003, r espectively 4,782.6 tons and 4,519.9 tons, was 
higher than the quota for the first three years of the measure – respectively, 3, 957 tons, 4,154  tons and 
4,353.7 tons. 
 
Furthermore, desiccated coconut imports volume in 2002 was affected as a result of purchases 
made between January and August of that year, by when imports were still not subjected to 
quantitative controls. 
 
The result of 2003 includes desiccated coconut imports from countries not subjected to the 
measure in place.  This is due to the Agreemen t on Safeguards provision regarding the exclusion of 
developing countries based on their share of the to tal imports of the member applying the measure. 
 
Therefore, despite the positive variation of production (per hectare and per employee), 
internal sales, domestic apparent consumption share and employment, this circumstance had its effect 
on the domestic industry performance since there was a decline in revenue as well as in desiccated 
coconut domestic prices, both in na tional currency and in US dollars. 
 
The evaluation of the adjustment undertaking indi cated that efforts were made to achieve its 
effective fulfilment.  However, this is a sector w ith very distinctive characteristics as it is an economic 
segment whose main actors are family producers that account for a significant share of coconut-
growers. 
 
There were distinct results concerning the agr eed goals for a number of items as some were 
outdone and in others the sector was not able to fu lfil the commitment.  Nonetheless, the analysis of 
domestic industry economic indicators demonstrated th at the efforts made by the sector concerning its  G/L/723 
 G/SG/N/13/BRA/3 
 Page 3 
 
 
 restructuring process already had positive results, sp ecifically as regards the rise in the production per 
hectare and per employee. 
 
(2) Conclusion about the mid-term review 
 
The safeguard measure has been having pos itive effects on the domestic industry.  The 
adjustment undertaking has also been reasonably fulfilled, though not all expected results were 
achieved, particularly regarding prices behaviour.  Thus, the safeguard measure is still necessary to 
ensure the full recovery of the sector.  Therefore, and taking into account the results of the mid-term 
review, the liberalization staging of the safeguard measure will not be changed. 
  
__________