WORLD TRADE  
ORGANIZATION  G/SG/N/13/EEC/1 
22 December 2005 
 (05-6228) 
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 
 
EUROPEAN COMMUNITIES 
 
(Mandarins
) 
  
 The following communication, dated 19 December 2005, is being circulated at the request of 
the Delegation of the European Communities.  
_______________ 
 
 
1. Specify the measure and the product subj ect to the measure for which the mid-term 
review was conducted, and provide referen ce to the WTO document that notified the 
safeguard measure subject to the review 
 
 The measure is a tariff quota on imports of ce rtain prepared or preserved mandarins, in excess 
of which an additional duty will be payable.  The ad ditional duty was set at a level consistent with the 
aim of preventing serious injury to the Community producers.  In terms of a fixed duty, the duty 
payable is €301 per tonne.  Further details regarding the measure are set out in the notification on 
definitive measures: G/SG/N/8/EEC/2/Suppl.1, G/SG/N/10/EEC/2/Suppl.1, 
G/SG/N/11/EEC/2/Suppl.2 dated 15 April 2004  
 The product concerned is certain prepared or preserved mandarins (including tangerines and satsumas), clementines, wilkings and other similar citrus hybrids, not containing added spirit, containing added sugar and is currently classi fied within the European Community Combined 
Nomenclature (CN) codes 2008 30 55 and 2008 30 75.  2. Provide the dates of initiation and conclusion of the review 
 
 On 4 June 2005, the European Commission initia ted an investigatory process relating to the 
definitive safeguard measure on imports of prepared  or preserved mandarins which had been imposed 
on 7 April 2004.  The review was concluded on 4 November 2005.   
 
3. Describe the results of the review, providing  some detail on the basis for reaching those 
results 
 
 The review conducted by the European Commission concluded that the application of the 
safeguard measures in force is effe ctive, still necessary and that the current pace of liberalisation is 
appropriate.  Full information regarding the conclusions  of the review is set out  in the Notice in the 
Official Journal of the European Co mmunities attached in Annex I.   
 G/SG/N/13/EEC/1 
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4. Indicate whether: 
 
 (i) the measure has been, or will be, withdrawn as a result of the review.  If 
yes, then indicate the date of withdrawal;  and, 
 
  The measure will not be withdrawn as a result of the review.  
   
 (ii) the pace of liberalization has been, or will be, increased as a result of the 
review.  If yes, then indicate the revised time-table for progressive 
liberalization. 
 
  The pace of liberalization remains unchanged.  
 
  G/SG/N/13/EEC/1 
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ANNEX I 
 
17.12.2005    Official Journal of the European Union           C 322/7 
 
Notice regarding consultations on the applic ation of the safeguard measures imposed  
on imports concerning certain prepared or preserved citrus fruits by Commission Regulation (EC) 
No. 658/2004 
 
(2005/C 322/06) 
 
Definitive safeguard measures were imposed on the imports of certain prepared or preserved citrus 
fruits (such as mandarins) on 7 April 2004 pursuant to Commission Regulation (EC) No. 658/2004.1  By 
virtue of Council Regulation (EC) No. 3285/942 and Council Regulation (EC) No. 519/943, and in 
particular Article 21 and Article 18 thereof, the Commission has consulted the Member States on the 
application of the safeguard measures. 
 
The Commission officially advised the Community producers and their association, the importers 
and traders and their associations, the suppliers, the exporting producers in China and their associations, of 
the initiation of a mid-term review, by a Notice of 4 June 2005.4 
 Following an examination of the effects, the appropriateness of continuing the measures, and the 
pace of liberalization, the Commission informed the Memb er States of the findings of the investigation.  
Consultations were held within the Advisory Comm ittee established under Article 4 of Regulation (EC) 
No. 3285/94 and Article 4 of Regulation (EC) No. 519/94. 
 
1.  Product concerned  
The product in question is prepared  or preserved mandarins (including tangerines and satsumas), 
clementines, wilkings and other similar citrus hybrid s, not containing added spirit, but containing added 
sugar ('the product concerned'). 
 
The product concerned is currently classified within CN codes 2008 30 55 and 2008 30 75. These 
CN codes are given for information only. 
 
2.  Procedure 
 2.1.  Scope of consultations 
 
Article 21(1) of Regulation (EC) No. 3285/94 and Article 18(1) of Council Regulation (EC) No. 
519/94 obliges the Commission to consult on the application of the measures with Member States no later than at the mid-point of the period of application of the measures.   
 
In compliance with the relevant provisions, th e purpose of the inves tigation has been to: 
 
(a)  examine the effects of the safeguard measures;  (b)  determine whether and in what manner, it wo uld be appropriate to accelerate the pace of 
liberalization; and 
 
                                                     
 
1 OJ L 104, 8.4.2004, p. 67. 
2 OJ L 349, 31.12.1994, p. 53. 
3 OJ L 67, 10.3.1994, p. 89. 
4 OJ C 137, 4.6.2005, p. 11. G/SG/N/13/EEC/1 
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(c)  ascertain whether its application is still necessary. 
 
2.2  Period of investigation 
 
In this sector of activity, the canning season star ts in October each year.  Data are analysed on for 
each canning season, that is to say, according to periods running from October to September of the 
following year.  The original investigation analysed the data relevant for the period 1998/1999 up to 
2002/03.  The current investigation covers the periods 2003/04 and 2004/05. 
 
It is recalled that production of canned  mandarins is concentrated in Spain. 
 
2.3.  Parties concerned by the proceeding 
 
Questionnaires were sent to all parties known to be concerned by the proceedings and to all other 
companies that made themselves known with in the deadlines set out in the Notice. 
 Replies were received from five Community producers, five suppliers, eleven importers, seven 
exporters/traders and two associations. 
 
The Commission's services sought and verified all the information deemed necessary for the 
purpose of the investigation and verification inspections were carried out at the premises of the following companies: 
 
Community producers 
 
- Halcon Foods, S.A., Murcia, Spain 
- Alcurnia Alimentacion, s.l., Murcia, Spain 
- Conservas y Fruta S.A., Murcia, Spain 
- Industrias Videca S.A., Valencia, Spain 
- Agricultura y Conservas, S.A., Valencia 
 
Suppliers 
 
- Cooperativa Agricola Ntra Sr a del Oreto Coop. V, Valencia 
 
Unrelated importers  
- Wünsche Handelsgesellschaft Internatio nal mbH & Co., KG, Hamburg, Germany 
- I. Schröder KG (GmbH & Co), Hamburg, Germany 
- Edeka Zentrale AG & Co. KG, Hamburg, Germany 
- Hüpeden & Co. (GmbH & Co.) KG, Hamburg, Germany 
 
3.  Restructuring 
 
As is envisaged in recital 120 of Regulation (EC)  No. 658/2004, the restructuring efforts made by 
the Community's canned mandarin producers were examined in the re view.  The main result of the 
restructuring process thus far has been to cut last season's capacity of 33,000 tonnes.  This cut corresponds 
to 25 per cent of the original total capacity.  Efforts have also been undertaken to rationalise the supply of 
raw material and to establish more cost effective sale s and distribution channels, with the aim of achieving 
a more efficient production chain whilst allowing greater economies of scale.  Main features of the 
activities carried out to date include the cessation of  mandarin-canning activities by certain producers, 
take-overs of companies, the establishment of a cooperative company for the purpose of joint purchasing, 
and the introduction of a new production line system. 
  G/SG/N/13/EEC/1 
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The results of the restructuring are now becoming visible, and should over time encourage the 
initiation of even further restructuring activities.  Expe cted activities include the finalisation of processes 
leading to technical improvement of the production.  Further effects and economies of scale resulting from 
the consolidation of such activities as the reduction of production and establishment of cooperative 
companies are also envisaged. 
 
4.  Results of the investigation 
 
Analysis of the measures in place is based on da ta gathered for the thre e last canning seasons. 
Figures supplied for the year 2002/03 are those reported in the Regulation (EC) No. 658/2004 setting the definitive safeguard measures on imports of canned mandarins.  These figures are reported here as a 
reflection of the situation in the industry at the time of initiation of the proceeding, before the original 
investigation took place.  The data reported for the year 2003/04, which were checked during the current 
mid-term review, relate to a period when investigation leading to the imposition of the measures was 
underway.  The data relating to the year 2004/05 correspond to a period falling after the measures were 
imposed.  
4.1  Imports 
 
4.1.1.  Volume of imports
 
 
The following tables present imports from China to  the EU-25.  Imports fr om all other countries 
are negligible as they represent less than 2 per cent of  the total imports, or 1,000 tons per year.  (Volume in 
Tonnes, seasonal data from October to September): 
 
 2002/03 2003/04 2004/05 (*) 
 50,500 63,900 46,600 (*) 
Index 100 127 92 
 
(*) Extrapolated on the basis of 10 months sales. 
(Source: Eurostat) 
 
During the season of 2004/05, import volumes stabilised at around 47,000 tonnes. Approximately 
60 per cent of the 2004/05 imports took place in March and April 2005, just before the expiry of the 
licence period.  This stabilisation in the imports followed  a period of rise in imports, reaching a level of 
63,900 tonnes in 2003/04.  The import peak in 2003/04 was probably due to the anticipation of the 
imposition of definitive measures. 
 
Imports into some Member States more than tripled between the 2002/03 season and the 2004/05 
season.  Other Member States, traditionally not importe rs, started to import canned mandarins from China.  
On the other hand, some of the accession countries imported big quantities during the two months leading 
up to the accession and then, in some cases, imports  completely stopped afte r the enlargement of the 
European Union in May 2004. 
 It will be recalled that imports were subjected to a system of tariff quotas of around 32,000 tonnes 
for imports from China and of around 2 000 tonnes for imports originating in other countries. When the 
quota is exhausted a duty of EUR 301 per tonne ('EUR/T') is payable.  On these grounds, it is clear that 
imports were made both within the quota and outside it, then the latter being subject to the payment of the 
duty.  This demonstrates that EU demand is satisfied. 
   
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4.1.2.  Import prices
 
 
 2002/03 2003/04 2004/05 
(10 months) 
 595 524 520 
Index 100 88 87 
 
  (Source: Eurostat) 
 
Import prices at c.i.f. EU border  level were found to be decreasing and fell from 595 EUR/T in 
2002/03, down to 524 EUR/T in 2003/04 and further down to 520 EUR/T during the season 2004/05. 
Prices dropped by a total of 13 per cent between the season 2002/03 and the season 2004/05.  This drop was mainly the result of the depreciation of the US do llar against the euro.  It is recalled that imported 
canned mandarins are invoiced in US  dollars, which depreciated by 18 per cent over the period.  The 
increase of the invoiced price in US dollars of 5 per cent was therefore counterbalanced by the 
depreciation, resulting in an effective price drop of 13 per cent (18 %-5 %).  A slight increase in the import 
price was, however, observed as from January 2005. 
 4.2  Situation of the Community producers 
 
In order to assess the effect of the measures, an examination of the relevant economic factors has 
been conducted by the Commission.  The fact that the production volume is decided once a year at the start 
of the canning season in November must be taken into account when analysing the findings of the investigation. 
 
4.2.1.  Production capacity and capacity utilisation
 
 
 2002/03 2003/04 2004/05 
(10 months) 
Capacity 129,000 129,000 96,000 
Capacity utilisation 31% 22% 40% 
 
Production capacity remained stab le between the seasons 2002/03 and 2003/04 and decreased by 
around 25 per cent in the season 2004/05 (see point 3 above - restructuring).  This led to a slight improvement of capacity utilisation from 20 per cent in 2003/04 to 40 per cent in 2004/05. 
 
4.2.2.  Production
 
 
 2002/03 2003/04 2004/05 
Tonnes 39,600 28,200 38,000 
Index 100 71 96 
 
Production recovered during 2004/05 - the season that followed the imposition of the definitive 
measures.  EU production had, prior to this time, been in sharp and constant decline due to massive 
imports from China.  The lowest point of production was reached in the season 2003/04 when the output 
was down to 28,200 tonnes.  This downturn in production coincided with the period where definitive 
safeguard measures were not yet in place. 
 At the time, many of the Community producers were considering stopping the production of 
canned mandarins altogether, as they were close to bankruptcy.   
 Production volume is still mainly determined by the relationship between the cost of production 
and the expected sale price.  The expected sale price is in turn mainly determined by the price level of  G/SG/N/13/EEC/1 
 Page 7 
 
 
imports from China.  Imports from the quota allocated to countries other than China are minimal, and are 
therefore not having a material impact on Community producers' sale prices. 
 
4.2.3.  EU sales  
 
 2002/03 2003/04 2004/05 (e) 
Tonnes 28,000 23,000 28,000 
Index 100 82 100 
 
  (e) Extrapolated on the basis of 9 months sales. 
 
Owing to increased compe titiveness and a moderate raise of the import prices during the last 
months, sales recovered during the 20 04/05 season.  This recent positiv e development follows a negative 
trend that had persisted until the 2003/04 season. 
 
4.2.4.  Consumption  
 
 2002/03 2003/04 2004/05 (e) 
Tonnes 79,000 82,000 84,000 (e) 
Index 100 104 106 
 
(Source: Eurostat data and companies estimate) 
 
EU-25 consumption has increased moderately in the last two seasons, mainly owing to a growing 
consumption as a consequence of the enlargement of the European Union in 2004. 
 
4.2.5.  Market share  
 
 2002/03 2003/04 2004/05 
Community producers 35% 28% 33% 
 
The Community producer market share partially re covered to 33 per cent after the imposition of 
definitive safeguard measures in 2004/05.  The recove ry followed a decrease from 35 per cent in 2002/03 
down to 28 per cent in 2003/04. 
 
4.2.6.  Employment, hours worked and productivity  
 
 2002/03 2003/04 2004/05 
Employment 2,343 2,224 1,970 
Hours worked 675,000 475,000 580,000 
Hours worked/tonne 17.0 16.8 15.3 
 
The production of canned mandarins is seasonal and a majority of the workforce is accordingly 
made up of temporary employ ees.  Productivity for this mature produc t is fairly stable and variances are 
mainly linked to yield and the characteristics of the fresh product.  The restructuring process during the investigated season of 2004/05 has, however, added technical improvements as a factor enhancing 
productivity and has resulted in a decrease in hours worked per tonne produced. 
 
 
  
 
 G/SG/N/13/EEC/1 
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4.2.7  Undercutting
 
 
The investigation revealed that the price undercutting increased after the imposition of definitive 
safeguard measures.  The main factor  contributing to this development wo uld be the depreciation of the US 
dollar ( refer to part 4.1.2 above). 
 
(Source: Eurostat and companies' data) 
 
4.2.8  Profitability  
 
 2002/03 2003/04 2004/05 
Net profit/loss EU sale s -4.3% -6.5% -5.5% 
 
(Source: Companies' results) 
 During the 2004/05 season, results of the Community Producers started to recover slowly as 
production increased and import prices first stabilised.  As from January 2005, the prices started to 
increase.  This positive development followed a period of poor results in 2003/04.  Weak sales volumes, 
increasing import volumes at an extremely low price, and the fact that the provisional safeguard measures 
were yet not effective, were all factors that contributed to these weak results in 2003/04. 
 
4.3.  Situation of other interested parties 
 
4.3.1.  Exporters
 
 
More than 98 per cent of the total exports or iginate in the People's Republic of China. 
Questionnaires were sent to the expo rters, and the information gathered represented around 20 per cent of 
the total volume exported to the EU and therefore had to be complemented by data from Eurostat.  The 
information obtained in the questionnaires roughly  confirmed the data obtained through Eurostat. 
 
4.3.2.  Importers/retail chains  
 
On average, 75 per cent of the imports of canned satsumas to the EU are made by German 
importers and retail chains while the remaining 25 pe r cent is split mainly between the Czech Republic, the 
Netherlands, United Kingdom and Belgium.  The current investigation confirmed that the licence system 
in place is functioning properly and that licenses are fully used by the traditional importers. The financial 
situation for the importers has continued to be secure with inter alia an average profitability of 
approximately 15 per cent for the canned mandarins sector.  
5.  Analysis of the findings 
 5.1  Assessment of the effect of the measures 
 
Positive effects have been observed as  a result of the measures imposed. 
 
The imposition of the measures allowed the Co mmunity producers to embark on a restructuring 
process.  The substantial cut in capa city achieved as a result thereof, in combination with measures still to 
be enacted, should allow the sector to become incr easingly competitive, to maximise productivity and to 
take advantage of economies of scale. 
 
Imports have stabilised after the peak in 2003/04 and in the 2004/05 season, the measures resulting 
in a decrease in the volume of imports.  Import pri ces that previously had been decreasing began to 
increase in 2005.  G/SG/N/13/EEC/1 
 Page 9 
 
 
The overall results of the Community producers fo r the investigated period are still negative, but 
are improving when compared to the previous season.  The combinatio n of increased competitiveness of 
the Community industry and the increase in import pri ces have resulted in a recovery of the EU producer's 
sales and production.  Profitability, which in the season 2003/04, was dow n to -6.5 per cent has recovered 
to -5.5 per cent in the season 2004/05. 
 
Considering the ongoing restructuring process, the im port trends and the improving situation of the 
Community producers, the conclusion to be drawn is that the measures enacted under Commission 
Regulation (EC) No. 658/2004 are effective. 
 5.2  Assessment of the necessity to continue the application of the measures 
 
It is only the most recent trends that have show n that the positive results of the safeguard measures 
have begun to materialise.  This is, however, to be  expected, since definitive measures have only been 
effective for one canning season. 
 
The restructuring process has begun and has so far resulted in a cut of capacity of 25 per cent. 
Further activities are to be expect ed in the coming years and the finalisation of  this process will 
consequently require more time. 
 
Although the volume of imports has decreased, th e quota of 32,000 tonnes is exceeded regularly 
and price undercutting has increased, mainly on account of the depreciation of the US dollar. 
 
As was concluded in Part 5 above, the financia l results of the Community producers for the 
investigated period are improving in comparison to the previous season, but the overall results are still 
negative.  Similarly, the production, market share a nd sales of the Community producers in 2004/05 are 
starting to recover but are s till equal to, or slightly belo w, the figures in 2002/03. 
 
Whilst recognising the increasingly positive effect of the measures, the Community producers 
have asked for an increase of the additional duty to a level which could prevent imports beyond the quota.  
Producers would, moreover, be in favour of the introduction of a minimum price system set at a reasonable 
level in order to prevent erratic import prices. 
 
However, no provision for increasing the level of the protection as a result of the mid-term 
investigation is contained in Article 21 of the basic Regulation (EC) No. 3285/94 on the common rules for 
imports or in the relevant WTO rules.  
 
The cooperating importers have opposed the establishment of a minimum price, arguing that such 
a system would be inappropriate, owing to the risk of cross-subsidisation between mandarins and other 
canned items that are imported.  Furthermore, some of  the traditional importers would prefer that their 
present ratio of 75 per cent allo cated be increased to 95 per cent in order to prevent speculation on 
licences. As to the amount of the tariff quota, some of  the importers ask for a subs tantial increase, alleging 
that the EU producers lack sufficient raw materials (f resh mandarins) to meet the demand of the domestic 
market. 
 
The investigation has conversely revealed that the crop of fresh satsumas, although slightly 
decreasing, is available on the market in sufficient quantities and at reasonable pric es.  As to the arguments 
relating to the calculation and allocati on of the amounts within the tariff quota, established practice in these 
cases requires that sufficient possibilities remain open to other actors on the market in order to ensure that 
competition is maintained.  An amendment to th e allocation and calcula tion of the quota would 
consequently be inappropriate. 
 
Considering the existing Chinese capacities and the f act that the Community producers' situation is 
still fragile, the abolition of the me asures would enda nger the completion of th e ongoing restructuring G/SG/N/13/EEC/1 
Page 10  
 
process.  China has the capability to simultaneously su pply the markets of Japan, US and Europe and can 
easily adapt to world demand. 
 
The additional duty, to be paid once the quota is used up, must similarly still be considered 
appropriate when taking into account the big gap between  the Chinese prices at c. i.f. EU border level and 
European prices and the underselling found to exist. 
 
In view of the above, the Commission therefore concludes that the application of the present 
safeguard measures is still necessary to facilitate th e adjustment of Community producers and to allow the 
continuation of the restructuring process as well as the further recovery from the current negative economic situation.  
5.3  Assessment of the pace of liberalization 
 
As foreseen by the WTO and the Community lega l framework, a gradual liberalization of the 
measures is already in place.  To this end, an annua l 5 per cent increase of the quota is provided through 
Commission Regulation (EC) No. 658/2004.  Despite the additional duty, imports are above the ceiling of 
the 32,000 tonnes a year tariff quota.  The invest igation has demonstrated that improvement of the 
economic indicators of the EU producers and their ongoing restructuring process does not exceed the pace 
foreseen and matches the reasonable expectations of the time when the measures were imposed.  Thus the 
recovery and restructuring process needs more time to  achieve its effects than one single canning season.  
The situation of the importers has not changed and remains positive. 
 
An expansion of the import tariff quota would indeed jeopardise the ongoing restructuring 
processes and would undermine the effect of the measur es.  On this basis, the Commission considers that 
the pace of liberalization of the imports foreseen in Regulation (EC) No. 658/2004 is adequate and that it 
would be inappropriate to accelerate it. 
 
6.  Final considerations 
 
The above findings demonstrate that the situation of the Community producers is gradually 
improving as a result of the measures.  A restructuring process in line with the ex pectations of the current 
proceeding is also ongoing; the full effects are expected to materialise in the next years. 
 
The established tariff quota has been exceeded throughout the period investigated, demonstrating 
that the specific duty is not excessive and allows  ample outsourcing of the Community market.  The 
current pace of liberalization should not be further accelerated if measures are to remain effective so as to 
allow the recovery of Community producers. 
 
7.  Conclusion 
 
The Commission's analysis, supported by the Advisory Committee, therefore concludes that the 
application of the safeguard measures in force is ef fective, still necessary and that the current pace of 
liberalization is appropriate. 
 
The measures in place should therefore continue in  their current form and at their present level, 
without any amendments. 
 
 
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