WORLD TRADE  
ORGANIZATION  G/SG/N/8/ZAF/1/Suppl.1 
G/SG/N/10/ZAF/1 
G/SG/N/11/ZAF/1/Suppl.1 
1 October 2007 
 (07-4136) 
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 PURSUANT TO ARTICLE 9, FOOTNOTE 2, OF  
THE AGREEMENT ON SAFEGUARDS 
 
SOUTH AFRICA 
 
(Lysine
) 
  The following communication, dated 25 September 2007, is being circulated at the request of the delegation of South Africa.    
_______________ 
 
  The South African Government has the honour to notify the Committee on Safeguards of a 
Notification under Article 12.1(b) of the Agreement on Safeguards on finding serious injury or threat 
thereof caused by increased imports of L-Lysine HCI (scientific name) or commonly known as lysine powder and feed supplements containing by mass  40 per cent or more lysine, whether or not 
containing added antibiotics or added melengestrol acetate (scientific name) or commonly known as 
L-Lysine sulphate and its byproduc ts from fermentation or also known as Biolys or Protein Lysine.   
 
Furthermore we also include a Notification pursuant to Article 12.1(c) and Article 9, 
footnote 2, of the Agreement on Safeguards on taki ng a decision to apply a safeguard measure.   
 
Representatives of the South African International Trade Administration Commission will 
be in Geneva for consultations with members with  a substantial interest during the latter part of 
October.   
 
The South African Government would appreciate it if these notifications under 
Articles 12.1 (b) and 12.1(c) and Article 9, foot note 2 of the Agreement on Safeguards could be 
circulated to the WTO Membership on 1 October 2007.   
 
 (L-Lysine HCI (scientific name) or commonly known as lysine powder and feed supplements 
containing by mass 40 per cent or more lysine, whet her or not containing added antibiotics or added 
melengestrol acetate (scientific name) or commonl y known as L-Lysine sulpha te and its byproducts 
from fermentation or also known as Biolys or Protein Lysine.)    G/SG/N/8/ZAF/1/Suppl.1 
G/SG/N/10/ZAF/1 G/SG/N/11/ZAF/1/Suppl.1 
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   In light of the agreed format for notifications (G/SG/W/1, 23 February 1995), South Africa 
provides notifications to the Committee on Safeguards of findings of serious injury or threat thereof caused by increased imports and  proposed safeguard measures. 
 
 On 11 May 2007, the International Trade Administration Commission of South Africa (the Commission) initiated an investigation relating to seri ous injury or threat thereof to the South African 
producer of the like or directly competitive with  the imported product.  Following a preliminary 
determination, South Africa imposed provisional safeguard measures against the imports of the 
product concerned in Notice No. R445 of Government Gazette No. 29889 dated 11 May 2007. 
  The initiation of the investigation and the imposition of provisional measures have been 
notified to the Committee on Safeguards (see WTO document G/SG/N/6/ZAF/1-G/SG/N/7/ZAF/1-G/SG/N/8/ZAF/1-G/SG/N/11/ZAF/1). 
 
 Consistent with Article 12.3 of the Agreem ent on Safeguards, South Africa is prepared to 
consult with those Members having a substantial inter est as exporters of the pr oduct concerned, with a 
view to, inter alia , reviewing the information provided in th is notification, exchanging views on the 
measure proposed, and reaching an understanding on ways to achieve the objective set out in 
Article 8.1 of the Agreement on Safeguards.  In accordance with the Commission's Safeguard 
Regulations, a period of 30 days from the date of this  notification is provided fo r these consultations.    
 A.  NOTIFICATION UNDER ARTICLE 12.1(B) AND (C)   
1.  Provide evidence of serious injury or  threat thereof caused by increased imports 
 
Unforeseen Developments
 
  The expansion of capacity and the oversupply in the world, due to the expansion of capacity 
mainly in the People's Republic of China, which oc curred after the negotiation of the relevant tariff 
concessions, could not have been foreseen at the ti me the concessions were negotiated and therefore 
represents the unforeseen developments, in acco rdance with Article XIX of the GATT. 
 Serious Injury and Threat of Serious Injury
 
  In order to make a final determination of ser ious injury and threat thereof to the domestic 
producer of the like products, an evaluation of a ll relevant factors on an objective and quantifiable 
basis having a bearing on its situation has been undertaken.  (i)  Domestic sales volume  
 
Metric tons 2002 2003 2004 2005 2006 
Applicant's sales volume  100 100 78 85 69 
 
 This table was indexed due to confiden tiality using 2002 as the base year of 100. 
  The information in the table indicates that the sales volumes decreased by 31 basis points 
from 2002 to 2006.  G/SG/N/8/ZAF/1/Suppl.1 
 G/SG/N/10/ZAF/1 
 G/SG/N/11/ZAF/1/Suppl.1 
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  (ii)  Profit and Loss  
 
 2002 2003 2004 2005 2006 
Net profit margin 100 136 133 (158) (311) 
Gross profit on SACU consumption 100 120 126 47 22 
 
 This table was indexed due to confiden tiality using 2002 as the base year of 100. 
  The information in the table indicates that the profit situation decreased significantly to a loss 
situation over the period 2002 to 2006.  From 2005 the Applicant recorded a loss  in comparison to the 
increase in profits from 2002 to 2004.   
(iii)  Output 
 
Metric tons 2002 2003 2004 2005 2006 
Applicant's output 100 107 114 88 51 
Output for SACU consumption 100 100 78 85 69 
 
 This table was indexed due to confiden tiality using 2002 as the base year of 100. 
  The information in the table indicates that th e Applicant's output almost halved from 2002 to 
2006.   
(iv)  Market share  
 
Percentage market share 2002 2003 2004 2005 2006 
Applicant 100 91 81 78 56 
Imports 100 224 364 410 718 
SACU market 100 109 96 109 124 
 
 This table was indexed due to confiden tiality using 2002 as the base year of 100.  
 
 The information in the table indicates that the Applicant was losing market share in an 
expanding market.  The total SACU market incr eased from 2002 to 2006 by 24 basis points, while the 
market share of the Applicant decreased by 44 basis points.  The market share of the imports 
increased dramatically by 618 basis points. 
 
(v)  Productivity 
 
Units (tons) per employee 2002 2003 2004 2005 2006 
Employee productivity 100 107 114 88 68 
 
 This table was indexed due to confiden tiality using 2002 as the base year of 100. 
 
 The information in the table indicates that the employee productivity, calculated based on the 
tons per employee in production, decreased from 2002 to 2006.   It was noted that if the Applicant had not re trench any workers, the units per employee would 
have been 50 basis points for 2006 and not 68. G/SG/N/8/ZAF/1/Suppl.1 
G/SG/N/10/ZAF/1 G/SG/N/11/ZAF/1/Suppl.1 
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  (vi)  Utilisation of production capacity 
  
Metric tons 2002 2003 2004 2005 2006 
Capacity 100 116 122 122 122 
Applicant's output 100 107 114 88 51 
Utilisation of capacity 100 93 94 72 41 
 
 This table was indexed due to confiden tiality using 2002 as the base year of 100.  
  The information in the table indicates that the Applicant's utilisation of capacity decreased 
significantly from 2002 to 2006.  It further indicates that the Applicant's utilisation decreased by 
31 basis points from 2005 to 2006 and by 59 basis points from 2002 to 2006.  
 
(vii)  Employment  
 
 2002 2003 2004 2005 2006 
Number of production employees 100 100 100 100 75 
 
 This table was indexed due to confiden tiality using 2002 as the base year of 100. 
  The information in the table indicates that th e Applicant substantially reduced its workforce 
by 25 per cent in 2006.  The information in th e table indicates the minimum number of production 
employees necessary to run the production plant.  
 
(viii)  Other relevant factors  
 
 The Applicant's loss of local market share to ve ry low priced imports, lead to a rose in the 
company's borrowings to a level in 2006 that resulte d in its bankers threatening to put the company 
into liquidation.  The securing of a new equity investor  averted the threat.  However, the loss of local 
market share to unreasonably low priced imports con tinued and indeed is more severe than in 2006.  
The threat that the company may be closed remains very real.  
(ix)  Freely disposable capacity of the exporters 
 
 It was noted that there was significant freely disposable capacity globally.  Exporters are 
disposing of their surplus capacity in the world,  impacting on the world prices and forcing other 
exporters to export at very low prices.   
(x)   Price of the imported products 
 
 
 2002 2003 2004 2005 2006 
Average FOB price of imported 
product (R/kg) 16.17 17.18 15.92 8.50 7.86 
 
 The price of the imported product decreased si gnificantly from 2004 to 2006.  From 2003 to 
2006 the price of the imported product more th an halved.  These very low prices, increases the 
demand for the imported product.  G/SG/N/8/ZAF/1/Suppl.1 
 G/SG/N/10/ZAF/1 
 G/SG/N/11/ZAF/1/Suppl.1 
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  Causation
 
  In order to examine the existence of a cau sal link between the increased imports and the 
serious injury, and in order to ensure that the serious  injury caused by other factors is not attributed to 
the increased imports, the effects of the following factors were analysed: 
 (i)  Volume of imports and market share  
 The market share of the Applicant decr eased significantly from 2002 to 2006, with a 
corresponding increase in imports.  The volume of imports increased by 100 per cent from 2005 to 2006.  From 2002 to 2006, the volume of  imports increased by 783 per cent. 
 (ii)  Consequent impact of the increased imports   
 There was a negative impact on all the serious injury factors.  The profit situation of the 
company changed to a loss situation from 2005, while the imports more than double from 2004 to 2006.  The significant increase in imports fro m 2005 to 2006 caused the losses suffered by the 
Applicant to increase significantly.  With the sudden increase in imports from 2005 to 2006, the 
Applicant retrenched some of its employees, whic h can be seen in the decrease in employment 
figures. 
  Although the productivity showed a decrease from 2002 to 2006, the decrease would have been even more severe if the retrenchment of  employees is not taken into consideration. 
 
(iii)  Factors other than the increase in im ports, which could cause the serious injury 
 
 -  Contraction in demand for the product 
  The demand for the product grew from 2002 to 2 006.  However, the Applicant's market share 
and sales volumes decreased over the same period. 
 
 -  Developments in technology   The Applicant introduced a new bacterial strain  in 2004 that was benchmarked in 2006 to be 
world competitive and better than most.  The App licant has also licensed its technology abroad. 
Developments in technology have not created an injurious effect. 
  -  Productivity of the domestic industry   The Applicant's technology and productivity in ge neral is comparable with the best.  This was 
confirmed in 2006 when prospective purchasers of  the business from within the industry assessed the 
company.  This benchmarking confirmed that  the company's technology was world class. 
  -  View of the Applicant's clients regard ing quality, delivery times, service and after 
sales service 
 
 The Applicant is certified in terms of ISO 9001/ 2000.  In addition, the company has recently 
obtained the FAMI-QS certification form the Danish  Standards certification authority.  This latter 
certification is a feed additives quality certificati on, recently introduced by the European Union 
Authorities, and is required of all manufacturers within and exporters of feed additives to the G/SG/N/8/ZAF/1/Suppl.1 
G/SG/N/10/ZAF/1 G/SG/N/11/ZAF/1/Suppl.1 
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  European Union.  The company complies with the highest and most modern quality standards 
applicable to feed additives.    
 The Applicant as a local supplier, who carries stock, is able to deliv er product to any local 
customer within 24 hours of order.     The Applicant deals with any customer queries in terms of its quality management system.  
Analytical certificates of compliance accompany all de liveries of the company's products.  In addition, 
feed trials are carried out from time to time with a number of the leading universities in the country.   
  -  Attitude of the workforce towards the company   Although the Applicant was obliged to redu ce the workforce substantially in 2006, the 
employees were fully informed about the reasons for the retrenchments and a constructive attitude 
remains among all the staff.    Notwithstanding the constructive attitude, the company continues to lose skilled staff owing 
to the ever-present threat of closure.   
 
 -  Export performance of the domestic industry 
 
 The information in this table was indexed due  to confidentiality using 2002 as the base year. 
  The information in the table indicates that  the Applicant's export volumes decreased from 
2002 to 2006 and significantly decreased from 2005 to 2006. 
 
Conclusion on causation 
  After considering all factors, it is conclude d that there is a substantial link between the 
increased imports and serious injury experienced by the SACU industry. 
 
2.  Provide information on whether there is an  absolute increase in imports or an increase 
in imports relative to domestic production 
 
 2002 2003 2004 2005 2006 
Total imports in tons 483 1 167 1 669 2 127 4 261 
 
 The imports increased with 100 per cent from 2005 to 2006 in absolute terms and with more 
than 240 per cent relative to domestic production from 2005 to 2006. 
 
3.  Provide a precise description of the product involved 
 
 The subject products are described as L-Lysine  HCI (scientific name) or commonly known as 
lysine powder, classifiable under tariff subheading 29 22.41, and feed supplements containing by mass 
40 per cent or more lysine, whether or not containing added antibiotics or added melengestrol acetate  2002 2003 2004 2005 2006 
Export volumes 100 100 102 111 41 
Export values 100 111 105 61 27 
Price per kilogram 100 112 104 55 64  G/SG/N/8/ZAF/1/Suppl.1 
 G/SG/N/10/ZAF/1 
 G/SG/N/11/ZAF/1/Suppl.1 
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  (scientific name) or commonly known as L-Lysine su lphate and its by-produc ts from fermentation or 
Biolys or Protein Lysine, classifiable under tariff subheading 2309.90.65.  4.  Provide a precise description of the proposed measure 
 
 An ad valorem  tariff of 27 per cent on L-Lysine HCI classifiable under tariff subheading 
2922.41 and feed supplements containing by mass  40 per cent or more lysine, whether or not 
containing added antibiotics or added melengestrol acetate (scientific name) or commonly known as 
L-Lysine sulphate and its by-products from fermen tation or Biolys or Protein Lysine classifiable 
under tariff subheading 2309.90.65.  
5.  Provide the proposed date of introduction of the measure 
  It is expected that the definitive measure , if adopted, will come into effect in mid-
November 2007.  
6.  Provide the expected duration of the measure 
 
 The safeguard measure, if adopted, will remain  in force for 2 years and 11 months, including 
the period of application of the provisional measure. 
 
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 date for the review has already been scheduled 
 
 Not applicable. 
 
8.  If the expected duration is over one year , provide the expected timetable for progressive 
liberalization of the measure 
 
Period Rate of safeguard measure 
11 May 2007 – 10 May 2008 27% 
11 May 2008 – 10 May 2009 18% 
11 May 2009 – 11 April 2010 9% 
 
9.  If the measure is being extended, also pr ovide: (i) evidence that the industry concerned 
is adjusting and that the safeguard measure continues to be necessary to prevent or 
remedy serious injury 
  Not applicable. 
 B.  NOTIFICATION UNDER ARTICLE 9, FOOTNOTE 2   
1.  Specify the measure 
 
 The measure consists of the ad valorem  tariff of 27 per cent described in the notification 
under Article 12.1(c), above. G/SG/N/8/ZAF/1/Suppl.1 
G/SG/N/10/ZAF/1 G/SG/N/11/ZAF/1/Suppl.1 
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  2.  Specify the products subject to the measure 
 
 The measure shall be applied to the products described in paragraph 4 of the notification 
under Article 12.1(c), above. 
 
3.  Specify the developing countries to which the measure is not applied under Article 9.1 of 
the Agreement on Safeguards, and the import  shares of these countries individually and 
collectively 
 
 (a)  Imports from the following countries are excluded form the application of the 
safeguard measure, as described above: 
  Afghanistan, Algeria, Antigua and Barbuda, A ngola, Argentina, American Samoa, Anguilla, 
Antarctica, Aruba, Azerbaijan, Barbados, Banglad esh, Burkina Faso, Bahrain, Burundi, Benin, 
Belarus, Bolivarian Republic of Venezuela, Brune i Darussalam, Bolivia, Bahamas, Bhutan, Belize, 
Bermuda, Bouvet Island, British Virg in Islands, British Indian Ocean Territory, Democratic Republic 
of Congo, Central African Republic, Congo, Côte d'Ivoire, Cameroon, Chad, Colombia, Costa Rica, 
Cuba, Cape Verde, Cayman Islands, Chile, Christ mas Islands, Cocos Islands , Cook Islands, Djibouti, 
Dominican Republic, Ecuador, Egypt, Eritrea, Ethiopia,  Fiji, Federated States of Micronesia, Falkland 
Islands, French Polynesia, French Southern Terr itories, Gabon, Grenada, Ghana, Gambia, Georgia, 
Greenland, Guinea, Equatorial Guinea, Guatemala,  Guinea-Bissau, Gibraltar, Guam, Honduras, Haiti, 
Heard Island and McDonald  Islands, Indonesia, Iraq, Iran (Islami c Republic of), Jamaica, Jordan, 
Kazakhstan, Kenya, Cambodia, Kiribati, Comoros, St Kitts and Nevis, Kuwait, Kyrgyzstan, Laos, 
Lebanon, St Lucia, Sri Lanka, Liberia, Libyan, Arab Jamahiriya, Morocco, Madagascar, Marshall 
Islands, Mali, Moldova, Mongolia, Mauritania, Mauritius, Malaysia , Maldives, Malawi, Mozambique, 
Macao, Mayotte, Mexico, Montserrat, Niger, Nigeria,  Nicaragua, Nepal, Nauru, Netherlands Antilles, 
New Caledonia, Niue Island, Norfolk Island, Nort hern Mariana Islands, Om an, Panama, Peru, Papua 
New Guinea, Philippines, Pakistan, Palau, Paraguay,  Pitcairn, Qatar, Russian Federation, Rwanda, 
Samoa, Saudi Arabia, Solomon Islands, Seychell es, Sudan, Sierra Leone, Senegal, Somalia, 
Suriname, Sao Tomé and Principe, El Salvador, Syrian Arab Republic, South Georgia and South 
Sandwich Islands, St Helena  and dependencies, St Pierre and Mi quelon, Tajikistan, Togo, Tunisia, 
Tonga, East Timor, Trinidad and Tobago, Turkme nistan, Tuvalu, Tanzania, Tokelau, Turks and 
Caicos Islands, Ukraine, United Arab Emirates,  United States Minor out lying islands, Uganda, 
Uruguay, Uzbekistan, St Vincent, Vietnam, Vanua tu, Virgin Islands of USA, Wallis and Futuna 
Islands, Yemen, Zambia and Zimbabwe. 
 
 (b)  The imports from each of the countries listed in (a) above accounted for less than 
3 per cent of total imports of the subject products for the period 1 January 2006 to 
31 December 2006. 
 
4.  If there is a change in the list of deve loping countries exempted from the safeguard 
measure pursuant to Article 9.1, please notify 
 
 Not applicable.   The International Trade Administration Commis sion of South Africa's (the Commission's) 
Final Report No. 250, containing the recommendation a pproved by the Minister of Trade and Industry 
in South Africa, is available on request   
__________