. /.   WORLD TRADE  
ORGANIZATION  G/SG/N/6/BRA/3 
19 September 2008 
 (08-4393) 
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 
 
(CD-R and DVD-R)
 
   The following communication, dated 17 September 2008, is being circulated at the request of the Delegation of Brazil.   
 
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  This notification is submitted in compliance with the "Regulation on the Application of 
Safeguard Measures to Imports from Non-Me mber Countries of MERCOSUR" and with 
Article 12.1(a) of the WTO Agreement on Safeguards,  following the agreed format for notifications 
(G/SG/W/1, 23 February 1995).    G/SG/N/6/BRA/3 
Page 2  
 
  1. Specify the date when the investigation was initiated  
 
 5 September 2008, by Circular (Resolution) SECEX Nº 63.    
2. Specify the product subject to the investigation  
 
Recordable optical medias:  CD-R (Compact Disc Recordable) and DVD-R (Digital Versatile 
Disc Recordable), which are generally classifi ed under item 8523.40.11 of Mercosur Common 
Classification (NCM).    3. Provide the reasons for the initiation of the investigation  
 
 On 21 December 2007, the company Videolar S.A.  (thereafter the "applicant"), whose output 
constituted 75.3 per cent of the total domestic production in the period between June 2006 and 
July 2007, applied for the initiation of an investiga tion to verify the need for a safeguard measure to 
the product "recordable optical medias (CD-R and DVD-R)".   
  It has been noticed that the imports of the product concerned continually increased during the period under consideration.  From P1 to P4, there was an increase of 637.5 per cent, with total imports 
going from 315.806.000 units to 2.329.061.000 units, which represented and absolute increase both to 
the apparent consumption a nd the domestic production.   
 
The analysis of the economic factors and indices having a bearing on the state of the industry 
showed, on one hand, an increase of the utilization of capacity, output and sales.  The inventories increased from P1 to P4, but when taken relativ ely to the output, there was a decrease.   
 
On the other hand, from P1 to P4, there was loss of market share, price depression by 37.9 per 
cent (from R$ 0,95/unit in P1 to R$ 0,59/unit in P4), decline in profits and in return on investments.  
Along the period concerned, the time for investment recovery became progressively longer.    
The price/cost relation deteriorated during the period concerned with some improvement in P3 
and P4, although insufficient to recover the P1 relation.   
 
 It has been noticed significant price undercutting during the whole period, reaching 108 per cent in P4.     Furthermore, the adjustement plan presented by  the applicant was considered feasible on a 
preliminary basis.  It shall be detailed during the investigation.   
  In the light of the above information, and pur suant to Decree nº 1.488/95 (Brazilian regulation 
on safeguards), the investigation was initiated based upon  evidence of threat of serious injury to the 
domestic industry.  There was no evidence of others factors which could provide an explanation to the 
deterioration of some economic factors of the domes tic industry, like the decline in profits and in 
return on investments.   
   
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