WORLD TRADE  
ORGANIZATION  G/SG/N/8/EEC/3 
G/SG/N/10/EEC/3 
G/SG/N/11/EEC/3/Suppl.1 
10 January 2005 
 (05-0105) 
Committee on Safeguards Original:   English 
  
 
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 
 
NOTIFICATION UNDER ARTICLE 9, FOOTNOTE 2 
OF THE AGREEMENT ON SAFEGUARDS 
 
EUROPEAN COMMUNITIES 
 
(Farmed (other than wild) Salmon, whether
 
or not fresh, chilled or frozen ) 
 
 
 The following communication, dated 6 January 2005,  is being circulated at the request of the 
European Commission.  
_______________ 
 
  In light of the agreed format for notificati ons (G/SG/W/1, 23 February 1995), the European 
Communities provides notification to the Committee on Safeguards of findings of serious injury or 
threat thereof caused by increased imports and no tification of proposed safeguard measures, 
concerning farmed (other than wild) sal mon (whether fresh, chilled or frozen). 
  On 6 March 2004, the Commission initiated an i nvestigation relating to serious injury or 
threat thereof to the Community producers of the product like or directly competitive with the 
imported product.  Following a preliminary inv estigation, the European Communities imposed 
provisional safeguard measures against imports of  the product concerned under Regulation (EC) 
No 1447/2004   of 13 August 2004, which subsequently lapsed on 6 December 2004. 
  The initiation of the investigation, the imposition of provisional measures as well as the 
decision not to apply those provisional measures to certain products orig inating in developing 
countries have been notified to the Committee on Safeguards (see WTO documents G/SG/N/6/EEC/3, 
G/SG/N/7/EEC/3 and G/SG/N/11/EEC/3) 
  Consistent with Article 12.3 of the Agreement on Safeguards , the European Communities is 
prepared to consult with those Members having a substantial interest as exporters of the product 
concerned, with a view to, inter alia , reviewing the information provided in this notification, 
exchanging views on the measure proposed, and reach ing an understanding on ways to achieve the 
objective set out in Article 8.1 of the Agreement .    G/SG/N/8/EEC/3 
G/SG/N/10/EEC/3 G/SG/N/11/EEC/3/Suppl.1 
Page 2 
  
  
 The European Communities invites those Members to provide a direct contact point so that 
the European Communities may inform them with out delay of any develo pments regarding the 
subject of any consultations. 
 
1. Provide evidence of serious injury or  threat thereof caused by increased imports 
Evidence of serious injury 
In order to make a determination of serious injury to the Community producers of the like 
product, an evaluation of all relevant factors of an  objective and quantifiable nature having a bearing 
on their situation has been undertaken.  In partic ular, for the product concerned, an evaluation has 
been carried out of the development of global Co mmunity data for consumption, production capacity, 
production, capacity utilisation, employment, produc tivity, overall sales and market share.  These 
global data are based on statistical information ga thered by the United King dom and Ireland through 
comprehensive industry surveys.  As concerns company specific data, these are based upon data 
provided by the co-operating Community producers on cash flow, return on capital employed, stocks, 
price, undercutting and profitabilit y for the years 2000 to 2003.  
It should be noted at the outset that in the Community salmon farming industry, as elsewhere, 
there is a long and relatively inflexible produc tion cycle leading to harvesting and that, once 
harvested, the farmed salmon must be sold immediat ely since they can only be stored for a few days 
unless frozen.  Freezing is expensive, and in any ev ent, there is limited freezing capacity in the 
Community.  In consequence, the level of production must be planned at least two years in advance 
and, once planned, cannot be altered except at th e margins.  Therefore, oversupply has a delayed 
effect on production, but an immediate and severe effect on prices  
- Analysis of the Community Producers 
(1) Consumption 
 2000 2001 2002 2003
Consumption (t) 507,705 527,970 550,943 618,038
% year on year 
increase   4.0% 4.4% 12.2% 
 
Consumption of the product concerned in the Community was established on the basis of the 
total production by all producers in the Community  and total imports of the product concerned into 
the Community as reported by Eurostat , less European Community exports.  
 Between 2000 and 2003,  consumption in the Community increased by 21.7% from 507,705 
tonnes to 618,038 tonnes. 
 
 It should be noted that salmon has a relatively high level of price elasticity and the markedly 
higher increase in consumption in 2003 can therefore be at least partially explained by the fall in 
prices at wholesale level.   G/SG/N/8/EEC/3 
 G/SG/N/10/EEC/3 
 G/SG/N/11/EEC/3/Suppl.1 
 Page 3 
  
 (2) Production Capacity and Capacity utilisation 
 
 2000 2001 2002 2003
Capacity (t)  340,029 340,294 339,359 347,671
Capacity Utilisation 
(%) 43% 48% 50% 55%
 
Farmed salmon production in the European Community is effectively limited by government 
licences specifying the maximum amount of live fish which may be held in the water at any place at 
any point in time.  Capacity figures given are b ased on the total quantity licensed rather than the 
physical fish-holding capacity of the cages opera ted by the Community producers.  The cost of 
applying for and maintaining licences is relatively low and therefore the cost of maintaining excess 
capacity is also low.  
Having remained stable between 2000 and 2002, th e investigation showed that theoretical 
production capacity increased by 2.2% between 2002 and 2003. 
 
Capacity utilisation (i.e. the quantity of fish in the water compared to the quantity licensed) 
increased from 43% in 2000 to 48% in 2001 and then in creased further in 2003 when it reached 55%.  
This reflects the fact that production increased  more quickly between 2000 and 2003 than licensed 
capacity which increased by only 2.2%. 
 
(3) Total Community Production  
  2000 2001 2002 2003
Production (t) 146,664 161,854 168,374 190,903  
 
Production (taken as fish harvested) grew by 30% from 146,664 tonnes in 2000 to 190,903 
tonnes in 2003, following a single year increase of 13.7%.   
It should be noted that due to the long produc tion cycle, production is planned at least two 
years in advance and that, once the production cy cle is commenced, production levels cannot be 
adjusted except at the margins. 
(4) Employment 
 2000 2001 2002 2003
Employment 
(end of period) 1,269 1,162 1,195 1,193
 
Employment in relation to the product concerned fell by 6% from 1,269 in 2000 to 1,193 in 
2003, although it followed an uneven tre nd with a partial recovery in 2002. 
 
(5) Productivity 
 
 2000 2001 2002 2003
Productivity 
(tonnes/employee) 115 139 141 160
 G/SG/N/8/EEC/3 
G/SG/N/10/EEC/3 G/SG/N/11/EEC/3/Suppl.1 
Page 4 
  
  Productivity has consistently increased throug hout the period under consideration from 115 
tonnes in 2000 to 160 tonnes in 2003.  This reflect s the increasing use of automated feed systems and 
other labour saving devices, and the strong pressure to  reduce costs in the face of mounting financial 
losses. 
 
(6) Sales volume 
2000 2001 2002 2003
Sales in the Community (t) 134,916 148,206 154,171 162,090 
 
Between 2000 and 2002, the Co mmunity producers’ sales of the like product increased by 
14.3% from 134,916 to 154,171 tonnes.  This incre ase occurred against a background of an increase 
in consumption over the same period of 8.5%.  Between 2002 and 2003, the Community producers’ 
sales increased by 5.1% from 154,171 to 162,090 tonn es, notwithstanding an increase in consumption 
between 2002 and 2003 of 10.3%. 
(7) Market share 
 
 2000 2001 2002 2003
Market share  26.5% 28.1% 28.0% 26.1% 
 
The Community producers’ market share incr eased from 26.5% in 2000 to 28.1% in 2001 and 
remained at about this level in 2002, but then fe ll by 1.9 percentage points (or 6.7%) to 26.1% in 
2003, its lowest level in the period considered.  This reflects the fact that imports increased not only in 
absolute terms, but also relative to consumption, in 2003. 
 
(8) Cash Flow  and Return on Capital Employed (ROCE) 
 
Financial year 2000 2001 2002 2003
Cash Flow (index) 100 -221 -384 -221
 
Cash flow could only be examined at the level of the co-operating companies which produced 
the product concerned rather than in relation to onl y the product concerned itself.  This indicator was 
therefore seen as less meaningful than the other indi cators shown.  Nevertheless, it can be seen that 
there was strongly negative cash flow in 2001, 2002 and 2003. 
 
Financial year 2000 2001 2002 2003
ROCE 34 -1 2 -20
 
ROCE could also only be examined on the level of the co-operating companies which 
produced the product concerned rather than in rela tion to only the product concerned itself.  This 
indicator was therefore also seen as less meaningful th an the other indicators.  Nevertheless, it can be 
seen that ROCE fell from 34% in 20 00 to close to zero in 2001 and 2002 before falli ng to -20% in 
2003. 
  G/SG/N/8/EEC/3 
 G/SG/N/10/EEC/3 
 G/SG/N/11/EEC/3/Suppl.1 
 Page 5 
  
 (9) Price of the like product and costs 
 
2000 2001 2002 2003
Unit prices of Community sales 
(€1000/tonne)* 3.50 3.23 3.02 2.79 
 *Prices adjusted to ex Glasgow 
 
The average price of the like product fell by 20.3% between 2000 and 2003, with a steady 
decline in prices over that period. Prices reached their lowest point (€2.79/kg) in 2003.  
 In first semester 2004, the information availabl e indicates that the average unit price of the 
Community producers’ sales increased slightly, in line with the slight increase in average import 
prices but then followed a downward trend.  The la test information indicates that prices are again 
following a downward trend and are very low.  
 In addition to price development, the developm ent of costs has also been considered. Costs 
have fluctuated between €3.0 and €3.2/kg over the period 2000 to 2003 
 
(10) Profitability 
 
2000 2001 2002 2003
Net profit/loss on 
Community sales (%) 7.3% -3.3% -2.5% -17.1%
 
The profitability of the Community producers’ sales in the Community fell from 7.3% in 
2000 to -3.3% in 2001.  Losses became  less pronounced in 2002 (-2.5%) but then increased to -17.1% 
in 2003.  In 2003, as imports increased to their highest  level and the average price of imports fell to its 
lowest level (€2.54/kg), the average price of the Community product also fell to its lowest level (€2.79/kg).  The Community producers’ fall in pr ofitability between 2000 and 2003 occurred at the 
same time as the price per kilo of the Commun ity producers’ product fell from €3.50 to €2.79. 
 
(11) Stocks  
 2000 2001 2002 2003
Closing stock (t) 36,332 39,048 53,178 43,024
 
Stocks in this context refer to live fish in th e water.  The Community producers, as all others, 
have negligible stocks of harvested fish as they ha ve to be sold immediately.  Therefore, a fall in 
closing stock levels indicates a decrease in the quan tity of live fish being on-grown for harvesting in 
the future.  Therefore, in this case, falling stoc k levels are an indicator of growing injury. 
 
 Stock levels increased from 36,332 tonnes in 2000 up to 53,178 tonn es in 2002 and then 
declined to 43,024 tonnes in 2003.   This represents a fall in stocks between 2002 and 2003 of 19.1%. 
 
(12) Conclusion 
Between 2000 and 2002, theoretical production capac ity remained more or less stable, whilst 
production increased by 14.8%.  In consequence,  capacity utilisation increased from 43% to 50% in 
this period.  Stocks of live fish in the water al so increased.  There was some loss of employment, 
whereas productivity increased mostly due to greater use of automation. G/SG/N/8/EEC/3 
G/SG/N/10/EEC/3 G/SG/N/11/EEC/3/Suppl.1 
Page 6 
  
 Sales volumes increased by 14.3% between 2000 and 2002 (compared to 8.5% growth in 
consumption), and the Community  producers’ market share increased from 26.5% to 28.0%.  
However, even in this period prices fell by  13.7% between 2000 and 2002, and despite a 
small decrease in costs in 2002 (partly due to hi gher capacity utilisation and better productivity), this 
appears to have led to a fall in profitability fro m 7.3% in 2000 to losses of -3.3% and -2.5% in 2001 
and 2002. ROCE and cash flow also developed negatively in this period.  
Between 2002 and 2003, the position of the Comm unity producers worsened considerably.  
Although production capacity and production increase d, the increase in production capacity was small 
(2.2%) compared to the increase in consumption in that year.  Taking account of the long production 
cycle, production levels are set at least two years in advance and the increase in production was in line with previously developed production plans.  In creased production of itself should not therefore be 
seen as indicating that the Community producers were  in a healthy situation in 2003.  Increased 
production led to higher capacity utili sation and improved productivity. 
All other indicators developed negatively. Stocks of fish in the water fell by 19.1%.  Despite 
10.3% growth in consumption, the Community produ cers’ sales increased by only 5.1% and they lost 
market share which fell by 6.7%.  Moreover, this lo ss of market share occurred against a background 
of falling prices, in which the Community producers we re forced to cut prices in order to sell their 
produce.  Prices fell by a further 7.6% compared to  2002 (and were 20.3% lower than in 2000), whilst 
costs increased to their average leve l for the four year period.  This led to a sharp drop in profitability 
and the Community producers incurred losses of 17. 1%.  These losses were reflected in an overall 
ROCE of -20%.  Whilst cash flow appeared to impr ove, this actually reflected reduction in stocks of 
fish in the water and an inability to re-invest.  
 Taking account of all of these factors the conclusion reached is that the Community producers 
have suffered serious injury in terms of a signifi cant overall impairment of the situation in their 
position. 
 
Causation analysis  
 
In order to examine the existence of a cau sal link between the increased imports and the 
serious injury, and ensure that inju ry caused by other factors is not attributed to increased imports, the 
injurious effects of factors considered to be causi ng injury have been distinguished from each other, 
the injurious effects have been attributed to th e factors which are causing them, and, after having 
attributed injury to all causal factors present, it h as been determined whether increased imports are a 
“genuine and substantial” cause of serious injury. 
 
(1) Analysis of Causation Factors 
 - Effect of increased imports  
As explained below, between 2000 and 2003, an d in particular as between 2002 and 2003, 
imports of the product concerned have taken place in increased quantities and high volumes onto the 
Community market.  
 Farmed salmon is essentially a commodity produc t, and the product concerned and the like 
product compete mainly on price.  Whilst one party argued that imports from Chile are the price-setter, it is generally accepted that imports, particul arly from Norway, are the market leader and price- G/SG/N/8/EEC/3 
 G/SG/N/10/EEC/3 
 G/SG/N/11/EEC/3/Suppl.1 
 Page 7 
  
 setter.  In consequence, even low levels of underc utting result in price depression for the Community 
producers. 
 
In the current case, the most important injuriou s effect of increased imports was the large 
financial losses to the Community producers. Due to the market and price leadership of imports, 
increased imports drove down prices throughout the Community.  Had imports increased to a lesser 
degree, this price pressure would also have been lower.  Had demand in the Community market been 
such as to sustain such an increas e in imports at substantially higher prices, albeit such an increase 
would have resulted in lower sales and market share for the Community producers, it is possible that 
the Community producers would not have suffered serious injury.  
 Between 2000 and 2002, the price of imports fell by 19% and was closely followed by the 
Community producers’ prices.  Whilst the market share of the Community producers’ sales in the 
Community increased in this period, this reflected production decisions taken in earlier years and in 
both 2001 and 2002 the Community producers’ sales were made at a loss.  
 Between 2002 and 2003, imports grew by 15%.  Th e market share of imports grew from 72% 
to 73.9%, whilst the market share of the Community producers fell from 28% to 26.1%.  Over the same period imports grew from 236% to 239% of Community production.  Thus, imports appear to 
have increased relative to both Community produ ction and consumption at the expense of the 
Community producers.  
 However, the most important aspect of the increase in imports was its effect on the prices and 
profitability of the Community producers.  As no ted above, it is generally accepted that imports 
(particularly from Norway) are the price leader in  the Community market for farmed salmon.  The 
existence of undercutting has therefore been examin ed to establish whether indeed the low priced 
imports have tended to depress the prices  practised by the Community producers. 
 In order to reach a determination as to the level of undercutting, price information was 
examined for comparable time periods, at the same le vel of trade and for sales to similar customers.  
Based on a comparison of average ex-Glasgow prices charged by the Community producers and by 
exporting producers to the Community importers  (CIF European Community border including 
customs duty), domestic prices were undercut in th e three most recent years by between 3.1% and 
7.1%.  This appears to have resulted in price de pression for the Community producers because, due to 
their large market share, prices are set by imports.  In particular, it can be seen that the increase in 
imports at ever lower prices until Q3 2003 forced  the Community producers to continually reduce 
their prices until Q3 2003 leading to the lo sses sustained by them in that year.  
 A direct comparison of import prices and the Community producers’ prices confirms this 
analysis. Import prices fell by 28.5% between 2000 and 2003, from €3.62 to €2.59/kg including duty.  
Over the same period, the average price of the lik e product fell by 20% from €3.50 to €2.79/kg, with a 
steady decline in prices over that period.  
 Between 2002 and 2003, the average unit pri ce of imports fell from €2.93 to €2.59/kg 
including duty.  As imports increased to their highest  level and the average price of imports fell to its 
lowest level (€2.59/kg including duty), import pri ces led Community producers’ prices in a downward 
trend and the average price of the Community product fell to its lowest level (€2.79/kg).  The average 
unit price of the Community product (adjusted ex -Glasgow) fell from €3.02 to  €2.79/kg, representing 
a fall of 8%.  
 G/SG/N/8/EEC/3 
G/SG/N/10/EEC/3 G/SG/N/11/EEC/3/Suppl.1 
Page 8 
  
 2000 2001 2002 2003
Unit prices of Community sales 
(€1000/tonne)* 3.50 3.23 3.02 2.79 
Unit prices of imports incl. 
customs duty (€1000/tonne)^ 3.62 3.05 2.93 2.59 
 *Prices adjusted to ex Glasgow. ^Import prices are CIF including import duty of 2% 
 
The fall in the Community producers’ prices appears to have been the main cause of a 
significant fall in their profitability.  In 2000, when  their costs per kilo were €3.1 and their sales price 
(adjusted ex Glasgow) was €3.50, the Community producers made a profit of 7.3%.  In 2001 and 
2002, although their capacity utilisation, production, productivity, stocks of live fish, sales and market 
share all increased, they incurred financial losses,  reduced overall ROCE and negative overall cash 
flow as their sales prices (adjusted ex Glasgow) fell  to €3.23 and €3.02 respectively and costs first 
slightly increased and then fell to €3.2 in 2001 and €3 .0 in 2002, respectively. Employment also fell. 
 
In 2003, as prices (adjusted ex Glasgow) fe ll to €2.79 under pressure from low priced 
imports, and with costs at their 2000 level of €3.1, the Community producers incurred a loss of 17.1%.  This was reflected in the negative overall ROCE  and cash flow.  At the same time their sales 
volume increased by only 5.1% compared to an in crease in consumption of 10.3% and their market 
share fell by 1.9 percentage points, as the volume and market share of imports increased.  Albeit capacity, capacity utilisation and production, produc tivity increased and employment remained stable, 
the effect of the increase in low priced imports on capacity utilisation and production and employment 
is delayed.  That production can be expected to decr ease as a result of the increase in imports is shown 
by the decrease in stocks of live fish in 2003. 
 
 For the foregoing reasons, it is concluded that  there is a correlation between the increase in 
imports and the serious injury suffered by the Co mmunity producers, and that the increase in low 
priced imports has had injurious effects on the Community producers, particularly in terms of 
downward pressure on prices on the Community mark et resulting in large financial losses to the 
Community producers.  - Other Factors 
 
(a)  Effect of changes in consumption in the United Kingdom  
One party argued that there had been an alle ged fall in consumption in the United Kingdom in 
2003 and that this had caused injury to the Co mmunity producers.  However, the United Kingdom 
market cannot be isolated from the overall Community market and European Community 
consumption increased by 21.7% between 2000 an d 2003, and by 12.2% be tween 2002 and 2003.  
Therefore, the primary reason for the Community  producers’ substantial losses in 2003 is the low 
prices rather than an alleged fall in consumption.  
 
(b) Effect of changes in export performance 
 
 2000 2001 2002 2003
Exports (in tonnes) 11748 13648 14203 28813
 
The effect of variations in the level of expor ts has also been examined.  Exports increased 
throughout the period considered, and indeed doubled between 2002 and 2003 as, in light of the 
disastrous situation on the Community market, the Community producers sought to increase their  G/SG/N/8/EEC/3 
 G/SG/N/10/EEC/3 
 G/SG/N/11/EEC/3/Suppl.1 
 Page 9 
  
 exports.  It is therefore concluded, despite a claim by  one party to the contrary, that the changes in the 
level of exports were not a cause of the serious inju ry suffered by the Community producers.  In any 
event, data relating to profitability is based  on data relating to Community sales only.  
 
(c) Effect of any excess capacity  
Whether injurious effects may have resu lted from excess capacity amongst the Community 
producers has also been examined .  Theoretical capacity increased during the period of the 
investigation by 2.2% betw een 2000 and 2003 – by considerably less than production and 
consumption.  In addition, as previously noted, the th eoretical capacity is the total quantity of live fish 
for which government licences are held.  The cost of  applying for and maintaining licences is low. 
Indeed, the main cost driv ers are the cost of smolts (baby fish ), feed and labour.  Therefore, it is 
concluded that the increase in theoretical capacity  did not cause injurious effects to the Community 
producers. 
 
(d) Effect of competition amongst the Community producers  
Some exporters argued that the reason behind the fall in the price of salmon on the 
Community market was an oversupply by the Comm unity producers.  However, imports increased by 
15% in 2003 whereas the Community producers’ sal es in the Community increased by only 5.1%.  
Further, imports are the price leader in this market, not the Community producers.  Indeed, an 
examination of the pricing behaviour of all parti es in 2002 and 2003 clearly shows that imports were 
consistently sold at lower prices than those of  the Community producers, and that the Community 
producers’ prices followed those of imports in a do wnward trend.  The effect of competition amongst 
the Community producers balances itself amongst them  - losses incurred by one are offset by gains 
made by another ceteris paribus .  Therefore, it is concluded that competition amongst the Community 
producers was not a cause of the serious injury observed.  
 
(e) Effect of increased mortality on production costs  
One party argued that higher than normal fish  mortality rates in Ireland and disease outbreaks 
in the United Kingdom and Ireland in 2002 and 20 03 could have increased production costs and 
interrupted the normal production cycle for some pr oducers.  However, these phenomena were limited 
to a small number of farms.  Further, as the ta ble below shows, the Community producers’ production 
costs fell in 2002 and were close to their four year average in 2003.  Therefore, it is concluded that 
higher than normal fish mortality rates were not the cause of material injurious effects.  
 
 2000 2001 2002 2003
Average cost of production 
(€1000/tonne)  3.1 3.2 3.0 3.1 
 
(f) Effect of higher production costs generally 
 
It was argued that the Norwegian industry h as lower production costs than the Community 
producers and that this, and a failure by the Comm unity producers to reduce production costs, is a 
reason for increased imports and serious injury.  The information available suggests that whilst 
Norway enjoys advantages in relation to certain costs, the Community pro ducers enjoy advantages in 
relation to others.  Overall, it is noted that wh ilst the Community producers are incurring significant 
losses in the current market, so too are Norwegia n producers.  The Community producers made a loss 
of -17.1% in 2003.  Norwegian Gove rnment data indicate that in 2003 for a sample of 148 salmon and G/SG/N/8/EEC/3 
G/SG/N/10/EEC/3 G/SG/N/11/EEC/3/Suppl.1 
Page 10 
  
 rainbow trout farms losses were -12.1%.  In add ition, the Norwegian producers were operating under 
a heavy burden of debt, representing a significant propor tion of their total costs.  Their total debt 
(excluding equity and provisions) was 6.3 billion NOK compared to a total turnover of 5.6 billion 
NOK
1 (equalling around €750 m and €670 m respectively).  Th is situation has in some cases led to the 
Norwegian banks effectively taking ownership of No rwegian producers.  Therefore, the conclusion is 
that, whilst there may be small differences, an y difference between the Community producers’ 
average cost of production and that of exporting producers was not a material cause of the serious 
injury suffered. 
 
(g) Higher transport costs in Scotland   
One party argued that there is a less developed infrastructure in remote areas of Scotland and 
that this increases costs and may cau se injury to Community producers.  In this regard, it is noted that 
fish farming in Norway, which is the Community market leader, is often undertaken in remote 
locations with relatively poor transport infrastructure.  
 Transport costs are not a large part of the overall cost of production of farmed salmon and 
vary according to the origin of goods and the destina tion to which they are to be delivered.  Overall, 
there is not considered to be a si gnificant difference in the costs of transport to the Community market 
as between Norway, the United Kingdom and Ireland.  In addition, exporting producers (which by 
definition are located outside the European Community) are generally likely to have higher transport costs when selling to the Community market.  Theref ore, it is not considered that higher transport 
costs in Scotland have contributed to the injury to the Community producers. 
 
Further and in any event, no evidence was produ ced to the effect that transport costs in 
Scotland have increased in recent years, and theref ore, higher transport costs could not explain the 
recent increase in financial losses su ffered by the Community producers. 
 
(h) Other factors  
 It was argued that stricter environmental a nd sanitary legislation in the Community, import 
restrictions in third countries, scientific reports  on salmon and negative public relations resulting from 
press coverage had contributed to the injury suffe red by the Community producers.  No evidence was 
however produced in support of these arguments, nor were the arguments developed.  In these 
circumstances, these factors cannot be taken as releva nt causation factors for the serious injury to the 
Community producers.  No other causation factors of possible relevance were identified during the 
provisional stage of the investigation.  (2) Attribution of injurious effects   The increase in imports had only a limited ne gative effect on the quantities sold by the 
Community producers, although their sales and mark et share dropped somewhat in 2003.  However, 
most importantly it appears that the considerable increase in imports had a devastating effect on the 
profitability of the Community producers, given the accompanying price drop.  Given that imports 
(with around 70-75% of the market) enjoy the position of price-leader , the downward spiral in import 
prices had a considerable depressing effect on Comm unity producers’ prices.  This resulted in 
considerable losses to the Community producers.  No  other factors which could have contributed to 
the injury apart from the increase in low priced imports were identified. 
 
                                                     
 
1 Norwegian Directorate of Fish eries Statistical Survey 2003.   G/SG/N/8/EEC/3 
 G/SG/N/10/EEC/3 
 G/SG/N/11/EEC/3/Suppl.1 
 Page 11 
  
 (3) Conclusion on causation 
  Therefore, having determined that no material  injurious effects resulted from the other known 
factors, it is concluded that there is a genuine and substantial link between increased low priced 
imports and serious injury to the Community producers.  
2. Provide information on whether there is an  absolute increase in imports or an increase 
in imports relative to domestic production  
 (1) Introduction 
 
An examination has been undertaken based on data for the period 2000 to 2003, focussing on 
imports in the most recent period for which reliabl e data are available, to establish whether the 
product concerned is imported into the Community in such greatly increased quantities, absolute or 
relative to total Community productio n, and/or on such terms or conditi ons as to cause, or threaten to 
cause, serious injury to the Community producers.  One party claimed that the import increase was 
due to the fact that imports of wild salmon we re included in the import data.  However, the 
investigation showed that although Eurostat data  does not distinguish between wild and farmed 
salmon, the available information (US and Canadian export statistics) indicates that imports of wild 
salmon to the Community have in f act decreased since 2001.  Therefore, the inclusion of imports of 
all salmon in the Eurostat data did not cause the in crease in imports observed in those data.  One party 
also claimed that 2000 was an inappropriate base y ear for the analysis undertaken, claiming that 
salmon prices were unusually high in that year .  However, the analysis focuses on the key 
developments in the most recent period, and ch anging the base year to 1999 or 2001 would not 
change the  outcome of that analysis. 
 The definitive findings set out below are t hus based on the data from 2000 to 2003.  
 
(2) Volume of imports   
 2000  2001  2002  2003  
Imports 372,789 379,764 396,772 455,948 
Year on year 
increase %  2% 4% 15% 
Total Community 
Production 146,664 161,854 168,374 190,903 
Imports/ 
Production 254% 235% 236% 239% 
 Source:  Import figures provided by Eurostat. Community production calculated from 
government data for Ireland and the United Ki ngdom and industry data for France and Latvia. 
 
Imports increased from 372,789 tonnes in 2000 to 455,948 tonnes in 2003, an increase of 
22%.  Between 2002 and 2003, imports increased by 15%.  
 Relative to Community production, imports fell from 254% in 2000 to 235% in 2001, but 
have since increased again to 239% in 2003. Althou gh this represents a reduction compared to 2000, 
it is noted that following a dip in 2001, imports have increased relative to production in each year 
since. In addition, it is recalled that in 2003 ther e was an absolute increase in imports of 15%, a much 
higher rate of increase than in previous years. G/SG/N/8/EEC/3 
G/SG/N/10/EEC/3 G/SG/N/11/EEC/3/Suppl.1 
Page 12 
  
 Quarterly figures for the years 2002 and 2003 show that in 2003 quarterly imports were 
higher than in the same quarter in 2002, and that  the highest increases (up to 20.8%) occurred in the 
second half of 2003. 
 
 Q1 2002 Q2 2002 Q3 2002 Q4 2002 
Volume (t) 86,753 96,988 93,375 119,657 
     
 Q1 2003 Q2 2003 Q3 2003 Q4 2003 
Volume (t)  92,667 108,655 112,862 141,763 
Year on year 
increase % 6.8% 12.0% 20.8% 18.5% 
 Source: Eurostat 
(3) Conclusion 
  Based on the import data for the period from 2000  to 2003, it is concluded that there is a 
recent, sudden, sharp and significant increase in impo rts, both absolute and relative to production. 
 
3. Provide precise description of the product involved 
 
 The product in respect of which the European  Communities is proposing to impose definitive 
safeguard measures is farmed (other than wild) sal mon (whether fresh, chilled or frozen).  It is 
currently classified within CN codes ex 0302 12 00, ex  0303 11 00, ex 0303 19 00, ex 0303 22 00, ex 
0304 10 13 and ex 0304 20 13.  
4. Provide precise description of the proposed measure 
 
Variable duty  
Measures should be taken which will have the ef fect of increasing prices to a level at which 
there is at least full cost recovery by the Commun ity producers.  It is therefore proposed to impose a 
variable duty as follows.  The Community producers’ average cost of production has been found to be 
€3.10 per kilo in 2003.  However, the Commun ity producers’ product normally commands a price 
premium over the imported product of up to around 10% .  It is therefore concluded that the import 
price level should be established at €2850 per tonne on a whole fish equivalent basis (WFE) for fresh 
salmon.  This should permit Community producers, despite the low price element, to sell at around 
break-even.  
 
As there appears to be a price difference of around 4% on the market between fresh and 
frozen salmon, it is considered that a lower impor t price level should be established for frozen salmon 
which reflects that difference.  The import price level for frozen farmed salmon should therefore be 
€2740 per tonne WFE.  On the basis of the conv ersion ratios to non fillets (Group 1) and fillets 
(Group 2) (1:0.9 and 1:0.65 respectively), the im port price level for impor ts in Group 1 should be 
€3170 per tonne fresh and €3040 frozen, and that for imports in Group 2 should be €4380 per tonne 
fresh and €4220 frozen.  G/SG/N/8/EEC/3 
 G/SG/N/10/EEC/3 
 G/SG/N/11/EEC/3/Suppl.1 
 Page 13 
  
  
As market prices are currently lower and in or der to prevent market disturbances, especially 
for the processing industry, the price element should be phased-in over a period of time.  This will 
allow the market to gradually adapt to the import pri ce to be established.  It is considered that the 
phase-in period should be from the date of entry into force of definitive safeguard measures until 
15 April 2005, during which period a fixed duty of 200 €/tonne should apply.  
 If imports are undertaken at a CIF Community bo rder price equal to or above the relevant 
import price established, no duty would be payable.  If imports are undertaken at a lower price, the 
difference between the actual price and the import pr ice established would become payable.  This 
minimum price element should be applicable at all times, both within the tariff quota as set out below, 
and when the threshold of the tariff quota is reached. 
 
Tariff quota  
In order to ensure that, beyond the traditional level of imports, the Community producers can 
operate at a reasonable level of profitability whils t keeping the Community market open and ensuring 
the availability of supply to meet demand, it is in addition considered appropriate to establish tariff 
quotas reflecting traditional levels of imports.  Beyond those quotas, an additional duty should be 
payable on imports.  Traditional levels of imports of farmed salmon which respect the price element 
established can then continue without payment of any additional duty, and unlimited quantities can be 
imported albeit upon payment of the additional duty.  
 It is proposed to calculate the tariff quotas on th e basis of the average volume imported in the 
period 2001 to 2003.  However, it is noted that im ports from Chile fell substa ntially (to below 3% of 
imports to the Community) in the second semester 2003 due to technical reasons concerning border controls, which is approximately half of their nor mal share of imports to the Community.  For this 
reason imports from Chile in 2003 are not represen tative and imports quantities from Chile for the 
calculation of the quota are based on average imports in 2001, 2002 and an adjusted figure for 2003 (based on 2002 plus average import growth rates in 2003 excluding Chile) so as not to distort 
traditional flows of trade. 
 In order to avoid an unnecessary administra tive burden, the tariff quota should operate on a 
first come first served basis. 
 
It appears that in normal circumstances Comm unity consumption of farmed salmon had been 
growing at between around 4% to 5%  annually taking into account growth levels observed in the new 
Member States.  However, data for the first se mester 2004 indicates that market growth in the 
Community salmon market is in fact increasing, and that whilst the size of the market in the new 
Member States is small relative to that in the EU-15,  there is evidence that the annual growth rates in 
the new Member States (which were of the order of 30%) have increased as a result of enlargement 
and are now materially higher (around 50%).  In order to take account of this growth, the tariff quotas 
(based on average imports in 2001 to 2003) should be  increased by 10%.  As the salmon market is 
seasonal, with higher imports and sales in the second  semester than the first, the tariff quotas should 
be seasonally adjusted.  The quotas have been calculated on a whole fi sh equivalent basis (WFE) and 
conversion ratios to fillets and non fillets actuall y imported are 1:0.65 and 1:0.9 respectively.  
Accordingly, the quota for the initial period of a pplication of the measure (6 February 2005 to 
13 August 2005) is 214,005 tonnes WFE. 
 The additional duty should be set at a level such as to provide adequate relief to the 
Community producers but at the same time should not constitute an unnecessarily onerous burden on G/SG/N/8/EEC/3 
G/SG/N/10/EEC/3 G/SG/N/11/EEC/3/Suppl.1 
Page 14 
  
 importers and users.  An ad
 valorem  duty is considered unsuitable as it would act as an incentive to 
lower import prices free of duty, and would increase in real terms if a price increase occurs.  
Therefore a fixed amount of duty should be set. 
 
A minimum price element as outlined above will always be applicable to enable Community 
producers to sell at break-even.  As also menti oned above, the minimum pric e element is set below 
the Community producers’ cost of production, but as they have been able to sell at a premium of 
around 10% in the past, it is expected that they will con tinue to be able to do so and thus recover their 
costs of production.  Should traditional trade levels  be surpassed, and an additional duty thus become 
payable, it is considered appropriate, in app lication of the Community institution’s traditional 
“underselling” approach, to base th is additional duty on the differen ce between the level of the non-
injurious target price of the Community producers a nd the minimum price element.  This difference, 
which reflects the extent to which the price of the imported product is lower than the price which the 
Community producers could be expected to achieve in  a non-injurious situation, after adjustment for 
price differences as between the imported product an d the Community product, is thus considered to 
be a reasonable basis for fixing the level of duty.  This difference was calculated on the basis of the 
weighted average non-injurious price per tonne of  the Community product, based on the cost of 
production of the Community product plus a profit on turnover of 14%.  This non-injurious price was 
compared with the minimum price element.  The difference between these two prices results in a duty 
payable of €330 euro per tonne (WFE), which, based on the conversion ratios shown above, is 
equivalent to €366 per tonne for other th an fillets and €508 per tonne for fillets. 
 In order to induce adjustment, the measures s hould be subject to liberalisation on a regular 
basis following their imposition, thereby ensuring th at there is a strong incentive for the Community 
producers to progressively undertake the n ecessary restructuring and adjustment.   It is considered that 
liberalisation should commence one year after th e imposition of provisional measures, and be 
undertaken annually thereafter.  
 
 Liberalisation should be designed to allow th e importation of increasing quantities of farmed 
salmon which respect the price element without th e payment of additional duty thereby increasing the 
competitive pressure to which the Community pr oducers are subject during the course of the 
measures.  Similarly, in order that imports be yond the level of the tariff quota gradually become 
subject to a lower duty, the rate of the additiona l duty should be gradually reduced.  Liberalisation 
must also take account of the expectation of market  growth.  Liberalisation should therefore take the 
form of an increase in the tariff quota together w ith a decrease in the level of the additional duty 
payable beyond the level of the tariff quota.  On each occasion the tariff quota should be increased by 
10% and the additional duty decreased by 5%.   The level of the quota and of the additional duty over the entire period of application of the measures is provided in table below:  
Period Tariff quota Additional duty 
6/2/05 to 13/8/05 213.000 tonnes WFE 330 €/T WFE 
14/8/05 to 13/8/06 486.000 tonnes WFE 313,5 €/T WFE 
14/8/06 to 13/8/07 535.000 tonnes WFE 297,83 €/T WFE 
14/8/07 to 13/8/08 588.000 tonnes WFE 282,93 €/T WFE 
 
 In accordance with Article 5 (2) (a) of the Agreement on Safeguards , and Article XIII of the 
GATT 1994, all Members having a subs tantial interest in supplying th e product concerned shall have 
the possibility to obtain the allocation of a specific share in this quota.  G/SG/N/8/EEC/3 
 G/SG/N/10/EEC/3 
 G/SG/N/11/EEC/3/Suppl.1 
 Page 15 
  
  
 Below is the list of Developing Countries  excluded from the measures as they export less 
than 3% of imports to the Community (Article 9.1 of the Agreement on Safeguards ) 
 
 United Arab Emirates;  Afghanistan;  Antigua and Barbuda;  Angola;  Argentina;  American 
Samoa;  Anguilla;  Antartica;  Aruba;  Barbados;  Bangladesh;  Burkina Faso;  Bahrain;  Burundi;  
Benin;  Brunei Darussalam;  Bolivia;  Brazil;  Baha mas;  Bhutan;  Botswana;  Belize;  Bermuda;  
Bouvet Island;  British Virgin Isla nds;  British Indian Ocean Territory;  Democratic Republic of 
Congo;  Central African Republic;  C ongo;  Côte d'Ivoire;  Cameroon;  Chad;  Colombia;  Costa Rica;  
Cuba;  Cape Verde;  Cayman Islands;  Christmas Is land;  Cocos Islands (or Keeling Islands);  Cook 
Islands;  Djibouti;  Dominica;  Dominican Republic;  Algeria;  Ecuador;  Egypt;  Eritrea;  Ethiopia;  
Fiji;  Federated States of Micronesia;  Falkland Islands;  French Polynesia;  French Southern Territories;  Gabon;  Grenada;  Ghana;  Gambia;  Guinea;  Equatorial Guinea;  Guatemala;  Guinea-
Bissau;  Guyana;  Gibraltar;  Guam;  Honduras;  Hong Kong, China;  Haiti;  Heard Island and 
McDonald Islands;  Indonesia;  India;  Iraq;  Iran (Islamic Republic of);  Jama ica;  Jordan;  Kenya, 
Cambodia, Kiribati, Comoros, St Kitts and Nevi s, Kuwait, Lao People's Democratic Republic;  
Lebanon;  St Lucia;  Sri Lanka;  Liberia;  Lesotho;   Libyan Arab Jamahiriya;   Morocco;  Madagascar;  
Marshall Islands;  Mali;  Myanmar;  Mongolia;  Mauritania;  Mauritius;  Maldives;  Malawi;  Mexico;  
Malaysia;  Mozambique;  Macao, China;  Mayotte;  Montserrat;  Namibia;  Niger;  Nigeria;  
Nicaragua;  Nepal;  Nauru;  Netherlands Antilles;  New Caledonia and dependencies;  Niue Island;  
Norfolk Island;  Northern Mariana Islands;  Oman ;  Panama;  Peru;  Papua New Guinea;  People’s 
Republic of China;  Philippines;  Pakistan;  Palau;  Paraguay;  Pitcairn;  Qatar;  Rwanda;  Samoa;  
Saudi Arabia;  Solomon Islands;  Seychelles;  Sudan;   Sierra Leone;  Senegal;  Somalia;  Suriname;  
Sao Tomé and Principe;  El Salvador;  Syrian Ar ab Republic;  Swaziland;  South Georgia and South 
Sandwich Islands;  St Helena  and dependencies;  St Pierre and Mi quelon;  Togo;  Tunisia;  Tonga;  
East Timor;  Trinidad and Tobago;  Tuvalu;  Tanzania (United Republic of);  Chinese Taipei;  
Tokelau;  Turks and Caicos Islands;  United Stat es Minor outlying islands;  Uganda;  Uruguay;  
St Vincent and the Northern Grenadines;  Venezuela;  Viet Nam;  Vanuatu;  Virgin Islands of USA;  
Wallis and Futuna Islands;  Yemen;  South Africa;  Zambia and Zimbabwe. 
 5. Provide proposed date of introduction of the measure 
 
 Under Community law, a decision whether to impose safeguard measures shall be taken, in 
principle within 9 months from the date of the initiation of the investigation.  In exceptional 
circumstances, this time limit may be extended by a further maximum period of two months.  The 
proposed date of introduction of the pr oposed measure is 6 February 2005. 
 
6. Provide expected duration of the measure 
 
 It is proposed that the measure shoul d remain in force until 13 August 2008. 
 7. For a measure with a duration of more than three years, provide the proposed date for 
the review (under Article 7.4) to be held not later than the mid-term of the measure, if 
such a date for the review has already been scheduled 
 
 It is proposed to hold the mid-term review  of the proposed measure in August 2006. 
 G/SG/N/8/EEC/3 
G/SG/N/10/EEC/3 G/SG/N/11/EEC/3/Suppl.1 
Page 16 
  
 8. If the expected duration is over one year , provide expected timetable for progressive 
liberalisation of the measure 
 
 As noted above in item 4, the proposed measur e provides for progressive liberalisation.  The 
terms of the liberalisation are indicated in item 4.  
9. Provide information relating to the extension of a safeguard measure 
 
 Not applicable. 
 
__________