WORLD TRADE  
ORGANIZATION  G/SG/N/8/CHL/3 
G/SG/N/10/CHL/6 
G/SG/N/11/CHL/5 28 February 2005 
 
(05-0739) 
Committee on Safeguards Original:   Spanish 
   
NOTIFICATION UNDER ARTICLE 12.1(B) OF THE AGREEMENT ON 
SAFEGUARDS ON FINDING A SERIOUS INJURY OR THREAT 
THEREOF CAUSED BY INCREASED IMPORTS 
 
NOTIFICATION UNDER ARTICLE 12.1(C) 
OF THE AGREEMENT ON SAFEGUARDS 
 
NOTIFICATION UNDER ARTICLE 9, FOOTNOTE 2, 
OF THE AGREEMENT ON SAFEGUARDS 
 
CHILE
 
 
(Wheat Flour) 
 
  The following communication, dated 21 February 2005, is being circulated at the request of 
the delegation of Chile.  
_______________ 
 
 
 Pursuant to Article 12.1(c) of the WTO Agreement on Safeguards and further to the 
notification in document G/SG/N/6/CHL/10 - G/SG/N /7/CHL/7 of the initiation of an investigation 
concerning imports of wheat flour, I have the pleasure  to submit herewith a notification stating that 
the Chilean investigating authority has decided to recommend the application of a definitive safeguard 
measure to wheat flour classified under tariff h eading 1101.0000 of the Chilean Harmonized Tariff, 
except
 wheat flour the c.i.f. price of which is equal to or higher than US$0.3/net kg. and which 
complies with the following combination of physic ochemical characteristics: strength of between 310 
and 370, tenacity of between 80 a nd 100, extensibility of between 80 and 110, equilibrium of between 
0.8 and 1.1, wet gluten content 30 per cent minimum, dry gluten content 10.5 per cent minimum and falling number 320 minimum.   Please also find attached, pursuant to Article 9.1, footnote 2, of the WTO Agreement on 
Safeguards, the list of developing country WTO Memb ers to which the exclusion provided for in the 
said Article applies.   Pursuant to Article 12.1(b) and (c) of the Agreement on Safeguards, Chile hereby informs the 
Committee on Safeguards that at its 272nd meeting, he ld on 10 February 2005, the investigating 
authority decided to recommend the adoption of a safeguard measure for imports of wheat flour 
classified under tariff heading 1101.00 00 of the Chilean Harmonized Tariff. 
 G/SG/N/8/CHL/3 
G/SG/N/10/CHL/6 G/SG/N/11/CHL/5 
Page 2 
  
1. Provide evidence of threat of seriou s injury caused by increased imports 
Determination of threat of serious injury
 
 
 To ascertain whether there may be injury attri butable to the imports under investigation, all 
the information compiled and furnished by the Tec hnical Secretariat relating primarily to domestic 
prices, production costs, productio n, domestic sales, exports, inve ntories, financial background, 
installed capacity and use thereof, produc tivity and employment, has been analysed. 
 
 Domestic prices  of wheat flour in UF ( unidades de fomento  – Chilean inflation-indexed 
monetary units) showed a negative annual variation of 4 per cent in 2004, while the annual variation 
recorded in 2003 was positive (9 per cent).   According to information in the complaint, production costs
 rose between the years 2003 and 
2004, mainly as a result of the increased price of wheat , a raw material that accounts for a substantial 
share of total costs.   In 2004, domestic production grew by 2 per cent in relation to the previous year.  The 
2002/2003 annual variation was 4 per cent.  
 In the first half of 2004, the total sales
 of the complainant mills rose by 20 per cent, a growth 
rate similar to that observed in the 2002/2003 variation.   In the first half of 2004, inventories
 fell in relation to the same period the year before, as did 
their share of total production. 
 
 Apparent consumption  increased by 2 per cent in the first half of 2004 in relation to the same 
period in 2003, thus continuing the 4 per cent gr owth trend seen in the previous two years. 
  The contribution margin began to improve in  2003.  That same year, the profits of the 
complainant mills were positive in aggregate term s, which meant that the losses made in 2002 were 
recovered.  
  Installed capacity
 and employment  rose in 2003 and continued to  display the positive annual 
variation that had been observed in 2002.  In 2003, labour productivity  also increased in relation to the 
previous year. 
 
 As far as threat of injury is concerned, the Commission is aware that, in recent years, the rate 
and amount of increased imports of wheat flour cl assified under tariff heading 1101.0000 have been 
such as to create the real possibilit y that these imports – which have an artificial advantage in that 
production costs are 15 per cent lower – could have  a negative impact on the level of sales, 
production, utilization of installe d capacity and profitability of the domestic milling industry. 
 
 Moreover, if other relevant countries of destin ation applied measures to exports of Argentine 
wheat flour classified under tariff heading 1101.0000, a threat of trade diversion would arise, whereby 
surplus wheat flour would be sent to Chile.  Now, as has already been pointed out, Chile is still of 
little relevance to exporters of Argentine wheat flour, accounting for no more than around 5 per cent 
of their total shipments. 
  As regards causality
, the share of wheat flour imports in apparent consumption reached 
0.32 per cent in the period from January to June 2004, i.e. an increase of 0.04 per cent in relation to 
the same period in 2003. G/SG/N/8/CHL/3 
G/SG/N/10/CHL/6 G/SG/N/11/CHL/5 
 Page 3 
   In the 2003/2004 period, the average price of wheat flour imports increased by 28 per cent in dollars c.i.f. and 13 per cent in UF.  Price trends in 2004 were relatively similar to those recorded in 
1999 and 2000. 
 
 A comparison of domestic and import prices for the 2001-2004 period did not reveal any relevant variations in domestic flour prices, which remained stable over the entire period.  The price 
of imported flour, on the other hand, showed great er variations and was generally lower than the 
domestic price. 
 
 If the domestic price is compared to an estimate of the entry cost, i.e. the cost including the 
ad valorem  tariff, specific duties and tariff reductions resulting from the price band on imports of 
wheat flour, two different sets of prices can be obser ved.  One set is lower than that of the domestic 
product and ranges from 0.2 to 0.3 US$/net kg.  The other, however, reflec ts higher price levels, 
which in the last two years exceeded 0.4 US$/net kg. 
 
2. Provide information on imports 
Imports
 
  The imports under investigation are classifi ed under tariff heading 1101.0000 of the national 
customs tariff.  Argentina is the main source of im ports of wheat flour, with a relative share of over 
60 per cent.   The volume imported in 2004 rose to 7,854 tonnes, representing an increase of 771 per cent in relation to 2003.  Viewed over a wider timescale, th e volume imported in 2004 was higher than that 
recorded for the 1999-2003 period.  During that period, the greatest volume was recorded in 2000, 
with imports amounting to around 3,700 tonnes.   Most notably, the volume of imports accelerated  over the last three months of 2004.  In 
December it reached 2,734 tonnes, the highest m onthly value recorded in the period analysed. 
 
 The import/domestic production ratio for wheat  flour over the 2000-2004 period remained 
below 1 per cent in all the years considered.  In 2004 it reached its highest level, at 0.61 per cent. 
 Unforeseen developments
 
 
 As noted above,  Argentina is the main source of imports of wheat flour classified under tariff 
heading 1101.0000, which includes mixed flour from Ar gentina, since, in Chile, wheat flour that is 
mixed or combined with other materials is classifi ed according to the product that gives it its essential 
character.  In this regard, the discriminatory a nd selective imposition of export duties in Argentina 
constitutes an unforeseen development that would explain the increasing flow of wheat flour imports into the country. 
 
 Argentina, by means of Resolutions No. 11 and No. 35 of the Ministry of the Economy and Infrastructure, of March and April 2002 respectively, established a 20 per cent export duty on wheat and wheat flour as of April 2002.  Exports of mixed flour, however, are not, in practice, subject to taxes, as an export duty of 5 per cent is fully refunded. 
 
 The foregoing means that some of the wheat flour exported from Argentina to Chile as mixed 
flour and classified in Chile as wheat flour, as explained above, is subject to an export tax of only 5 per cent, which is cancelled out by the 5 per cent export refund that Argentin e exporters receive for 
this product, instead of being subject to the 20 per cent tax levied on exports of wheat flour. G/SG/N/8/CHL/3 
G/SG/N/10/CHL/6 G/SG/N/11/CHL/5 
Page 4 
    Consequently, the imposition of a 20 per cent e xport tax on wheat, and not on mixed flour, 
has created an artificial competitive advantage for the Argentine milling industry, which allows the 
industry to apply a price for wheat in Argentina th at is 20 per cent below its international value, a 
situation that would not occur under normal market conditions.  
3. Specify the product concerned 
 Wheat flour , classified under tariff heading 1101.0000 of the Chilean Harmonized Tariff, 
except
 wheat flour the c.i.f. price of which is equal to or higher than US$0.3/net kg. and which 
complies with the following combination of physicochemical characteristics:  strength of between 310 and 370, tenacity of between 80 a nd 100, extensibility of between 80 and 110, equilibrium of between 
0.8 and 1.1, wet gluten content 30 per cent minimum, dry gluten content 10.5 per cent minimum and falling number 320 minimum. 
 
4. Provide a precise description of the proposed measure 
 The investigating authority recommended the application
 of a 17 per cent ad valorem  tariff 
surcharge.  
5. Specify the proposed date of introduction of the measure 
 The recommended measure, if finally adopted, is expected to come into effect at the end of 
February or the beginning of Marc h 2005, upon publication of the implementing decree in the Official 
Journal.  
6. Specify the expected duration of the measure 
 If applied, the measure will remain in effect  for one year as from 10 December 2004, i.e. the 
date of publication of the decree establishi ng the provisional measure on the said goods. 
 
Annexes attached. G/SG/N/8/CHL/3 
G/SG/N/10/CHL/6 G/SG/N/11/CHL/5 
 Page 5 
  
MINUTES OF THE 272
ND MEETING OF THE NATIONAL COMMISSION RESPONSIBLE 
FOR INVESTIGATING THE EXISTENCE OF DISTORTIONS IN THE PRICE OF IMPORTED GOODS, HELD ON 10 FEBRUARY 2005 
 
The meeting opened at 9:30 hours and was attende d by the following members of the Commission: 
 Chairman, Inspector-General of the Economy   Mr. Enrique Vergara Vial 
 
Representative of the Central Bank of Chile   Ms. Gloria Peña Tapia 
 Deputy Representative of the Ministry of Finance  Mr. Juan Araya Allende  Deputy Representative of the Ministry of the Economy,  Ms. Lucía Cangas León 
Development and Reconstruction 
 Representative of the Ministry of Agriculture   Mr. Igor Garafulic Olivares  National Director of Customs     Mr. Raúl Allard Neumann  
Deputy Representative of the Ministry of   Mr. Jorge Culagovski Drobny 
Foreign Affairs  Also in attendance were:  
Deputy Representative of the Director of    Mr. Juan Eduardo Chackiel Torres 
International Exchange and Trade Policy  Lawyer, Ministry of Foreign Affairs    Mr. Alvaro Espinoza Soto  Adviser to the National Director of Customs   Mr. Juan Pérez-Cotapos Contreras 
 
Adviser to the National Director of Cu stoms   Mr. Guillermo Jorquera Figueroa 
 Technical Secretary of the Commission    Mr. Gonzalo Becerra Martínez  272-01-0205
 Final Resolution in the Safeguards In vestigation Concerning Imports of Wheat 
Flour  
 
 The Chairman of the Commission called the meeting to order and reminded the members 
present that the purpose of the meeting was to  decide upon the final recommendation in the 
safeguards investigation concerning imports of wh eat flour classified under tariff heading 1101.0000.  
He invited the Technical Secretary to take the floor and present the background to the case, after 
which there would be a period for discussion among the members.   Following the presentation and the debate, the decision on whether to recommend definitive 
measures was put to a vote.  It was thereby agreed by the majority of the members present, with one 
vote against by the representative of the Central Bank , to recommend a definitive safeguard measure, 
consisting in an ad valorem  tariff surcharge of 17 per cent on imports of wheat flour classified under 
tariff heading 1101.0000 of the national customs tariff,  except wheat flour the c.i.f. price of which 
is equal to or higher than US$0.3/net kg. and which complies with the following combination of 
physicochemical characteristics:  strength of betw een 310 and 370, tenacity of between 80 and 100, 
extensibility of between 80 and 110, equilibrium of between 0.8 and 1.1, wet gluten content G/SG/N/8/CHL/3 
G/SG/N/10/CHL/6 G/SG/N/11/CHL/5 
Page 6 
  30 per cent minimum, dry gluten content 10.5 per cent minimum and falling number 320 minimum.  The measure is to remain in force for one year as from 10 December 2004, i.e. date of the publication 
of the decree establishing a provisional tariff surcha rge on the said goods, given that the information 
available makes it possible to determine an increase  in imports which threatens to cause imminent 
serious injury to the milling industry .  The fact is that in 2004, imports of wheat flour classified under 
tariff heading 1101.0000 increased by 771 per cent in relation to 2003, with an imported volume which rose to 7,854 tonnes.  Consequently, if the definitive safeguard measure were not adopted, this 
figure would in all certainty rise, since the greatest share of imports comes from Argentina, where 
Chile accounts for no more than around 5 per cent of total exports.  Also to be taken into 
consideration are the installed capacity of the Argentine industry, the continuation of the current export tax policy and the measures that may be adopted  in other markets.  Proof of the above is the 
sharp increase in imports over the last quarter of  2004, reaching 35 per cent of the annual total in 
December.  All of these factors threaten to cause serious injury to domestic production. 
 
 The reasons for the exception stem from the fact that the physical characteristics and prices of 
the type of wheat flour concerned are totally differ ent to those of wheat flour produced in Chile.  
Hence, the wheat flour in question cannot be consid ered a like or directly competitive product for the 
purposes of the application of the definitive safeguard measure approved at this meeting.  
 The vote against by the representative of the Ce ntral Bank was based on the view that imports 
of the product in question do not cause or threaten to cause serious injury to the domestic industry producing like or directly competitive products, and so  do not fulfil the requirements laid down in the 
WTO Agreement on Safeguards.  According to th e representative, imports of the product under 
investigation, observed in recent years, are not rele vant, given that, measured in relation to domestic 
production and apparent cons umption, they have a very low weighting, which makes it difficult and 
unlikely for them to cause  injury to domestic production.  Moreover, in recent years, the domestic 
industry has shown growing leve ls of production and sales, as well as positive financial results. 
  The resolution is given in full hereunder:  RESOLUTION ON DEFINITIVE MEASURES IN THE SAFEGUARDS INVESTIGATION CONCERNING IMPORTS OF WHEAT FLOUR CLASSIFIED UNDER TARIFF HEADING 1101.0000. 
 
I. General background
 
 On the basis of the applications submitted by the Asociación de Molineros del Sur and the  
Asociación de Molineros del Centro , dated 30 September 2004 and 5 October 2004 respectively, the 
Commission, at its 268th meeting on 3 December 2004, unanimous ly decided to initiate a safeguards 
investigation concerning imports of wheat flour classified by the National Customs Service under tariff heading 1101.0000, which is the like or dir ectly competitive product produced by the domestic 
industry.  The notice of initiation of the investig ation was published in the Official Journal on 
10 December 2004.  Moreover, it was decided to recommend the application of a 17 per cent 
provisional tariff surcharge to the aforementioned wheat flour imports, notice of which was also 
published in the Official Journal on 10 December 2004.  At the meeting, the Commission decided not to initiate an investigation concerning goods  exported to Chile under subheading 190120 and 
requested that the National Customs Service give special attention, in accordance with the powers 
conferred upon it by law, to the classification of wheat flour when it is mixed or combined with other 
materials, so as to ensure it is classifi ed under the appropriate tariff heading. 
 G/SG/N/8/CHL/3 
G/SG/N/10/CHL/6 G/SG/N/11/CHL/5 
 Page 7 
   At its 270
th meeting held on 17 January 2005, the Commission approved the disclosure to all 
interested parties of the essential facts relating to  the safeguards investigation into wheat flour 
imports. 
 
 The 271st meeting, held on 27 January 2005, was a pu blic hearing attended by 10 participants, 
including representatives of domestic flour producers,  Argentine producers and foreign governments. 
  Domestic industry and representativeness
 
 
 The applicant institutions are the Asociación de Molineros del Sur A.G. and the Asociación de 
Molineros del Centro , which accounted for around 70 per cent of  domestic production in the first half 
of 2004.  
 The following information relates to the product under investigation: 
  Like or directly competitive product
 
  The applicants have indicated that wheat flour imports compete directly with domestic production of the same product.  For the purposes of anal ysing this matter, the elements referred to in 
WTO case law have been considered in order to verify whether or not two products are directly 
competitive, namely physical characteristics, the product's end use, prices and distribution channels. 
  After examining the information compiled duri ng the course of the investigation, indicating 
that the price levels and physicoc hemical properties of certain imported flours are similar to those of 
the domestic product, it can be concluded that dom estic wheat flour and certain imported flours, 
classified under tariff heading 1101.0000, are like or  directly competitive products.  However, another 
group of flours, imported and classified under the same tariff heading, also exists, with price levels 
and physicochemical properties that are different fro m those of the domestic product.  Flours in this 
group are therefore neither like nor directly co mpetitive with the domestic product, and have 
accordingly been excluded from the investigation. 
 
 The following aspects form the basi s of the above-mentioned conclusion: 
 (i) Physical characteristics 
 The information compiled during the investiga tion clearly highlights the existence of two 
groups.  In the first, there is an imported pr oduct sharing the same physical and technical 
characteristics as the domestic product, while in the second, the imported product and the domestic 
product are clearly differentiated by their physical and technical characteristics.  Wheat flour which complies with the following combination of physic ochemical characteristics is neither a like nor 
directly competitive product:  strength of between  310 and 370, tenacity of between 80 and 100, 
extensibility of between 80 and 110, equilibrium of  between 0.8 and 1.1, we t gluten content 30 per 
cent minimum, dry gluten content 10.5 per cen t minimum and falling number 320 minimum. 
 (ii) End use of the product 
 It is agreed that both the domestic and the imported wheat flour have similar uses and 
functions.  They are most commonly used in the preparation of bread and pastry products. 
 G/SG/N/8/CHL/3 
G/SG/N/10/CHL/6 G/SG/N/11/CHL/5 
Page 8 
  (iii) Prices 
 When the prices of the domestic product are compared to estimated cost of importing the 
product under investigation, two sets of prices can be id entified.  The first of th ese is situated between 
0.2 and 0.3 US$/net kg. and applies to imports of  the product similar to the domestic product. The 
other set reflects higher price levels, which in the last two years exceeded 0.4 US$/net kg. and apply 
to products which are not like or dir ectly competitive with the domestic product. 
 (iv) Distribution channels 
 The information gathered during the investiga tion shows that some imported flour is sold 
through the same distribution channel as the dom estic product, while another channel earmarks the 
imported product for private consumption.  II. Imports
 
 The imports under investigation are classifi ed under tariff heading 1101.0000 of the national 
customs tariff.  Argentina is the main source of im ports of wheat flour, with a relative share of over 
60 per cent.   The volume imported in 2004 rose to 7,854 tonnes, representing an increase of 771 per cent in relation to 2003.  Viewed over a wider timescale, th e volume imported in 2004 was higher than that 
recorded for the 1999-2003 period.  During that period, the greatest volume was recorded in 2000, 
with imports amounting to around 3,700 tonnes.   Most notably, the volume of imports accelerated  over the last three months of 2004.  In 
December it reached 2,734 tonnes, the highest m onthly value recorded in the period analysed. 
 
 The import/domestic production ratio for wheat  flour over the 2000-2004 period remained 
below 1 per cent in all the years considered.  In 2004 it reached its highest level, at 0.61 per cent. 
 Unforeseen developments
 
 
 As noted above,  Argentina is the main source of imports of wheat flour classified under tariff 
heading 1101.0000, which includes mixed flour from Ar gentina, since, in Chile, wheat flour that is 
mixed or combined with other materials is classifi ed according to the product that gives it its essential 
character.  In this regard, the discriminatory a nd selective imposition of export duties in Argentina 
constitutes an unforeseen development that would explain the increasing flow of wheat flour imports 
into the country. 
  Argentina, by means of Resolutions No. 11 and No. 35 of the Ministry of the Economy and Infrastructure, of March and April 2002 respectively, established a 20 per cent export duty on wheat and wheat flour as of April 2002.  Exports of mixed flour, however, are not, in practice, subject to taxes, as an export duty of 5 per cent is fully refunded. 
  
 The foregoing means that some of the wheat flour exported from Argentina to Chile as mixed 
flour and classified in Chile as wheat flour, as explained above, is subject to an export tax of only 5 per cent, which is cancelled out by the 5 per cent export refund that Argentin e exporters receive for 
this product, instead of being subject to the 20 per cent tax levied on exports of wheat flour. 
 
 Consequently, the imposition of a 20 per cent e xport tax on wheat, and not on mixed flour, 
has created an artificial competitive advantage for the Argentine milling industry, which allows the G/SG/N/8/CHL/3 
G/SG/N/10/CHL/6 G/SG/N/11/CHL/5 
 Page 9 
  industry to apply a price for wheat in Argentina th at is 20 per cent below its international value, a 
situation that would not occur under normal market conditions.  
III. Determination of serious injury or threat thereof
 
  To ascertain whether there may be injury attr ibutable to the imports under investigation, all 
the information compiled and furnished by the Techni cal Secretariat relating particularly to domestic 
prices, production costs, productio n, domestic sales, exports, inve ntories, financial background, 
installed capacity and use thereof, produc tivity and employment, has been analysed. 
 
 Domestic prices  of wheat flour in UF ( unidades de fomento  – Chilean inflation-indexed 
monetary units) show a negative a nnual variation of 4 per cent in 2004, while the annual variation 
recorded in 2003 was positive (9 per cent).  
 According to information in the complaint, production costs
 rose between the years 2003 and 
2004, mainly as a result of the increased price of wh eat, a raw material that accounts for a substantive 
share of total costs.   In 2004, domestic production grew by 2 per cent in relation to the previous year.  The 
2002/2003 annual variation was 4 per cent. 
 
 In the first half of 2004, the total sales
 of the complainant mills rose by 20 per cent, a growth 
rate similar to that observed in the 2002/2003 variation.   In the first half of 2004, inventories
 fell in relation to the same period the year before, as did 
their share of total production. 
  Apparent consumption
 increased by 2 per cent in the first half of 2004 in relation to the same 
period in 2003, thus continuing the 4 per cent gr owth trend seen in the previous two years. 
  The contribution margin began to improve in  2003.  That same year, the profits of the 
complainant mills were positive in aggregate term s, which meant that the losses made in 2002 were 
recovered.   Installed capacity
 and employment  rose in 2003 and continued to  display the positive annual 
variation that had been observed in 2002.  In 2003, labour productivity  also increased in relation to the 
previous year. 
  As far as threat of injury is concerned, the Commission is aware that, in recent years, the rate 
and amount of increased imports of wheat flour cl assified under tariff heading 1101.0000 have been 
such as to create the real possibilit y that these imports – which have an artificial advantage in that 
production costs are 15 per cent lower – could have  a negative impact on the level of sales, 
production, utilization of installe d capacity and profitability of the domestic milling industry. 
  Moreover, if other relevant countries of destin ation applied measures to exports of Argentine 
wheat flour classified under tariff heading 1101.0000, a threat of trade diversion would arise, whereby 
surplus wheat flour would be sent to Chile.  Now, as has already been pointed out, Chile is still of 
little relevance to exporters of Argentine wheat flour, accounting for no more than around 5 per cent 
of their total shipments.  G/SG/N/8/CHL/3 
G/SG/N/10/CHL/6 G/SG/N/11/CHL/5 
Page 10 
   As regards causality
, the share of wheat flour imports in apparent consumption reached 
0.32 per cent in the period from January to June 2004, i.e. an increase of 0.04 per cent in relation to 
the same period in 2003. 
 
 In the 2003/2004 period, the average price of wheat flour imports increased by 28 per cent in dollars c.i.f. and 13 per cent in UF.  Price trends in 2004 were relatively similar to those recorded in 
1999 and 2000.  
 A comparison of domestic and import prices for the 2001-2004 period did not reveal any 
relevant variations in domestic flour prices, which remained stable over the entire period.  The price 
of imported flour, on the other hand, showed great er variations and was generally lower than the 
domestic price.  
 If the domestic price is compared to an estimate of the entry cost, i.e. the cost including the 
ad valorem  tariff, specific duties and tariff reductions resulting from the price band on imports of 
wheat flour, two different sets of prices can be obser ved.  One set is lower than that of the domestic 
product and ranges from 0.2 to 0.3 US$/net kg.  The other, reflects higher price levels, which in the 
last two years exceeded 0.4 US$/net kg.  
IV. Decision
 
 Having examined the evidence and informati on available and in accordance with current 
laws, the National Commission responsible for investiga ting the existence of distortions in the price of 
imported goods, at its 272nd meeting on 10 February 2005,  
 
RESOLVES: 
 (i) By the majority of the members present, to  recommend the adoption of a definitive safeguard 
measure, consisting in an ad valorem  tariff surcharge of 17 per cent on imports of wheat flour 
classified under tariff heading 1101. 0000 of the national customs tariff, except wheat flour the c.i.f. 
price of which is equal to or higher than US$0.3/net kg. and which complies with the following 
combination of physicochemical characteristics:  strength of between 310 and 370, tenacity of 
between 80 and 100, extensibility of  between 80 and 110, equilibriu m of between 0.8 and 1.1, wet 
gluten content 30 per cent minimum, dry gluten  content 10.5 per cent minimum and falling number 
320 minimum.  The measure is to remain in forc e for one year as from 10 December 2004, i.e. the 
date of publication of the decree establishing a pr ovisional tariff surcharge on the said goods, given 
that the information available makes it possible to de termine an increase in imports which threatens to 
cause imminent serious injury to the milling industry.  The measure will not apply to Mexico, Canada 
or Peru, pursuant to the trade agreements signed with those countries, nor to developing country 
Members of the World Trade Organization (WTO), the average individual share of which, during the 24 months from January 2003 to  December 2004, was less than 3 per cent of total imports and 
collectively accounted for not more than 9 per cen t, in accordance with Article 9.1 of the WTO 
Agreement on Safeguards, and wh ich are listed in the Annex. 
 (ii) To inform the Minister for Finance so that he can communicate the present recommendation 
to the President of the Republic.  G/SG/N/8/CHL/3 
G/SG/N/10/CHL/6 G/SG/N/11/CHL/5 
 Page 11 
  
272-02-0205
 Approval of the minutes  
 
 The Chairman submitted the minutes to the members present for their approval.  Following a 
brief exchange of views, the members present unani mously decided to approve them as submitted. 
  The meeting was adjourned at 11:30 hours.   
 
   GONZALO BECERRA MARTINEZ ENRIQUE VERGARA VIAL 
Technical Secretary Inspector-General of the Economy 
 Chairman of the Commission  Santiago, 10 February 2005  G/SG/N/8/CHL/3 
G/SG/N/10/CHL/6 G/SG/N/11/CHL/5 
Page 12 
  
ANNEXES 
 
Imports of Wheat Flour 
MONTH US$ c.i.f. Tonnes US$/tonnes UF/tonnes 
Jan-99 84,263 366 230 7.45 
Feb-99 115,334 527 219 7.32 
Mar-99 17,742 68 261 8.72 
Apr-99 28,347 125 227 7.42 
May-99 74,379 323 231 7.54 
June-99 141,753 607 233 7.88 
JuIy-99 11,546 45 259 8.99 
Aug-99 5,711 20 283 9.73 
Sep-99 9,106 32 282 9.90 
Oct-99 14,635 59 249 8.94 
Nov-99 22,772 165 138 5.01 
Dec-99 8,772 59 150 5.36 
Jan-00 75,930 421 180 6.22 
Feb-00 21,908 112 195 6.62 
Mar-00 103,707 583 178 5.92 
Apr-00 66,421 352 189 6.28 
May-00 7,404 56 133 4.53 
June-00 21,628 156 139 4.77 
July-00 31,914 178 179 6.29 
Aug-00 9,274 36 257 9.14 
Sep-00 6,384 32 197 7.17 
Oct-00 28,145 138 205 7.46 
Nov-00 32,738 165 198 7.28 
Dec-00 274,518 1,441 191 6.96 
Jan-01     
Feb-01     
Mar-01     
Apr-01 257,605 1,347 191 7.24 
May-01     
June-01     
July-01 197,713 1,015 195 7.98 G/SG/N/8/CHL/3 
G/SG/N/10/CHL/6 G/SG/N/11/CHL/5 
 Page 13 
  
Imports of Wheat Flour 
MONTH US$ c.i.f. Tonnes US$/tonnes UF/tonnes 
Aug-01     
Sep-01 40,097 197 203 8.64 
Oct-01 99,967 504 198 8.69 
Nov-01 22 0.1 219 9.28 
Dec-01     
Jan-02     
Feb-02     
Mar-02     
Apr-02 13,674 77 179 7.17 
May-02     
June-02 22,555 176 128 5.29 
July-02     
Aug-02     
Sep-02     
Oct-02     
Nov-02 275 1 220 9.39 
Dec-02 57 0.2 283 11.85 
Jan-03     
Feb-03     
Mar-03 66 0.3 265 11.77 
Apr-03     
May-03 16,852 100 169 6.97 
June-03 20,622 125 165 6.89 
July-03 15,606 101 155 6.43 
Aug-03 19,296 125 154 6.42 
Sep-03 19,296 125 154 6.16 
Oct-03 19,297 125 154 5.88 
Nov-03 11,631 75 155 5.71 
Dec-03 17,835 125 143 5.08 
Jan-04 20,603 125 165 5.60 
Feb-04 17,396 100 173 6.02 
Mar-04 122,268 539 227 8.14 G/SG/N/8/CHL/3 
G/SG/N/10/CHL/6 G/SG/N/11/CHL/5 
Page 14 
  
Imports of Wheat Flour 
MONTH US$ c.i.f. Tonnes US$/tonnes UF/tonnes 
Apr-04 50,178 241 208 7.53 
May-04 66,768 349 192 7.20 
June-04 140,431 635 221 8.38 
July-04 69,311 331 209 7.76 
Aug-04 71,652 317 226 8.39 
Sep-04 106,405 515 207 7.42 
Oct-04 204,859 1,011 203 7.15 
Nov-04 165,255 956 173 5.98 
Dec-04 530,424 2,734 194 6.46 
1999 534,360 2,395 223 7.48 
2000 679,971 3,669 185 6.53 
2001 595,405 3,063 194 7.81 
2002 36,561 254 144 5.89 
2003 140,501 901 156 6.19 
2004 1,565,551 7,854 199 7.00 
 
Source:  Prepared by the Technical Secretariat on the basis of customs import declarations.  G/SG/N/8/CHL/3
G/SG/N/10/CHL/6
G/SG/N/11/CHL/5
 Page 15Wheat Flour – Wholesale Prices Chilean Market 
(Unit of value/tonne) 
2001 2002 2003 2004 
Year 
In pesos In UF In dollars In pesos In UF In dollars In pesos In UF In dollars In pesos In UF In dollars 
January 161,980 10.26 284 159,883 9.84 240 180,883 10.82 250 186,347 11.03 325 
February 161,077 10.19 286 159,883 9.86 236 182,883 10.96 245 185,367 11.00 317 
March 160,410 10.13 273 159,050 9.82 240 190,797 11.41 257 182,700 10.86 303 
April 159,076 10.05 266 158,717 9.79 243 190,797 11.31 266 182,033 10.81 299 
May 158,743 9.99 263 161,417 9.91 247 189,297 11.13 269 181,700 10.75 286 
June 158,743 9.94 258 161,250 9.87 239 188,297 11.08 266 181,700 10.70 282 
July 156,410 9.76 238 164,583 10.06 236 186,797 11.03 266 181,367 10.63 287 
August 158,743 9.9 235 170,037 10.39 242 189,130 11.17 269 181,700 10.62 286 
September 162,973 10.16 239 177,217 10.79 244 189,130 11.17 280 180,997 10.55 294 
October 162,973 10.09 230 173,217 10.49 233 188,797 11.13 292 180,997 10.51 298 
November 161,306 9.93 234 181,217 10.89 255 187,573 11.05 300 178,683 10.36 299 
December 160,217 9.85 239 178,883 10.68 255 187,013 11.04 310 174,370 10.08 303 
Average 160,221 10.02 254 167,113 10.20 243 187,616 11.11 273 181,497 10.66 298 
Var./previous year    4% 2% -4% 12% 9% 12% -3% -4% 9% 
 
Source:  Prepared by the Secretariat on the basis of information from Odepa and the complaint.   
  G/SG/N/8/CHL/3 
G/SG/N/10/CHL/6 
G/SG/N/11/CHL/5 
Page 16  
Cost Structure of Domestic Wheat Flour 
(Sales Price = 100) 
2001 2002 2003 As at July 2004 Items 
Unit 
Price Quantity Total Cost 
per 
Tonnes of 
Flour Unit 
Price Quantity Total Cost 
per 
Tonnes of 
Flour Unit 
Price Quantity Total Cost 
per 
Tonnes of 
Flour Unit 
Price Quantity Total Cost 
per 
Tonnes of 
Flour  
Direct Costs             
  Raw Material             
      Wheat   74.16   78.20   77.40   72.99 
  Labour   1.83   1.79   1.06   1.13 
  Energy   0.76   0.86   0.92   0.97 
  Other 
Components   2.73   2.15   1.97   2.64 
A. Total 
Direct Costs   79.49   83.00   81.35   77.73 
Indirect Costs             
  General 
Costs   14.03   14.10   12.45   14.72 
  Other Costs   4.76   5.41   5.67   5.89 
B. Total 
Indirect 
Costs   18.79   19.51   18.12   20.61 
 
C. Profit   1.73   -2.51   0.53   1.66 
 
D. Sales Price 100.00 100.00 100.00 100.00 
 
Source:  Asociación de Industriale s Molineros del Sur A.G . and Asociación Gremial de Molineros del Centro A.G.  
 
Note:  The above corresponds to the cost structure of a typical mill within the industry. 
  G/SG/N/8/CHL/3
G/SG/N/10/CHL/6
G/SG/N/11/CHL/5
 Page 17Trends in the Volume of Production, Domest ic Market Sales and Exports of Wheat Flour 
(Production January 2001 = 100) 
 
Year: (2001) 
Variables Jan Feb Mar Apr May June  July Aug Sep Oct Nov Dec TOTAL 
Production (kg.) 100.00 102.39 118.38 113.81 120.42 115.70 119.94 127.73 117.56 119.86 121.76 122.87 1,400 
Total Sales 102.03 96.97 111. 93 108.18 114.00 114.48 117.20 120. 51 112.33 118.30 120.41 118.70  
Domestic Market Sales 102. 03 96.97 111.93 108.18 114.00 114.48 117. 20 120.51 112.33 118.30 120.64 118.70  
Export Market Sales - - - - - - - - - - - -  
Self-Consumption 3.07 3.11 4.81 4.76 6. 13 7.20 6.46 5.95 5.58 4.38 4.41 4.15  
Inventories 18.19 20.74 22. 60 23.58 23.89 26.02 22.74 24. 34 25.07 22.92 19.64 22.61  
Year: (2002) 
Variables Jan Feb Mar Apr May June  July Aug Sep Oct Nov Dec TOTAL 
Production (kg.) 112.58 100.56 107.66 118.90 125.37 120.82 125.95 119.74 105.93 124.64 126.37 152.96 1,441 
Total Sales 103.81 97.41 103. 73 117.25 120.50 109.15 119.50 114. 37 110.76 121.26 106.99 155.48  
Domestic Market Sales 103. 81 97.41 103.73 117.25 120.50 109.15 119. 50 114.37 110.76 121.26 118.36 155.48  
Export Market Sales - - - - - - - - - - - - - 
Self-Consumption 2.73 3.85 4.45 5.36 6. 04 6.04 6.09 5.75 6.18 4.60 4.10 4.47  
Inventories 25.29 25.41 25. 24 20.10 18.98 24.61 24.96 25. 80 14.82 25.90 29.43 20.99  
Year:  (2003) 
Variables Jan Feb Mar Apr May June  July Aug Sep Oct Nov Dec TOTAL 
Production (kg.) 133.29 124.78 137.26 139.57 153.72 154.75 165.87 160.87 150.19 180.86 150.98 157.32 1,809 
Total Sales 131.03 120.46 129. 23 136.93 141.78 148.09 158.82 154. 20 155.37 163.01 144.55 165.40  
Domestic Market Sales 131. 03 120.46 129.23 136.93 141.78 148.09 158. 82 154.20 155.37 163.01 144.55 165.40  
Export Market Sales - - - - - - - - - - - - - 
Self-Consumption 3.29 3.45 4.21 4.66 5. 52 5.70 6.18 5.42 5.86 4.51 4.76 5.47  
Inventories 21.43 22.31 25. 23 23.22 29.37 30.34 31.21 32. 66 23.90 37.22 38.90 28.26  
Year:  (2004) 
Variables Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec June-04 
Production (kg.) 168.48 145.35 173.73 166. 65 175.3 170.26 - - - - - - 1,000 
Total Sales 154.12 145.21 163.39 164 175.34 165.15 - - - - - -  
Domestic Market Sale s 154.12 145.32 163.3 163.97 175.33 165.31 - - - - - -  
Export Market Sales - - - - - - - - - - - - - 
Self-Consumption 4.15 5.01 5.6 6.68 5.67 5.67 - - - - - -  
Inventories 37.45 32.49 37.26 33. 02 27.71 25.89 - - - - - -  
 
Source:  Asociación de Industriales Molineros del Sur A.G. and Asociación Gremial de Molineros Del Centro A.G.  
  G/SG/N/8/CHL/3 
G/SG/N/10/CHL/6 
G/SG/N/11/CHL/5 
Page 18  
Installed Capacity for Manufacturing the Domestic Product and Employment 
Year Installed Capacity 
Complainant Companies Utilization of Installed Capacity 
Complainant Companies Employment 
Complainant Companies (2001 = 100) 
2001 100.00 75% 100.00 
2002 119.58 84% 112.72 
2003 120.71 83% 115.82 
 
Source:  Asociación de Industriale s Molineros del Sur A.G.  and Asociatión Gremial de Molineros del Centro A.G.  
 
Labour Productivity Index 
Year Index (2001 = 100) 
2001 100 
2002 91 
2003 116 
 
Source:  Prepared by the Technical Secretariat on the basis of information in the complaint. 
 
Imports/Apparent Consumption Ratio 
Year Ratio 
2001 0.26% 
2002 0.02% 
2003 0.07% 
Jan-June 03 0.04% 
Jan-June 04 0.32% 
 
Source:  Prepared by the Technical Secretariat on the basis of information in the complaint . 
 G/SG/N/8/CHL/3 
G/SG/N/10/CHL/6 G/SG/N/11/CHL/5 
 Page 19 
   
PARTICIPANTS IN PUBLIC HE ARING HELD ON 27 JANUARY 2005 
  
1. Asociación de Molineros del Centro A.G.  and Asociación de Industriales Molineros del Sur 
A.G. 
 
2. Molinos Fuentes S.A. 
 
3. Compañía Molinera Schott 
 
4. Compañía Molinera San Cristóbal 
 
5. Compañía Molinera del Pacífico 
 6. Federación Argentina de la Industria Molinera 
 7. Molino Cañuelas 
 
8. Embassy of Argentina 
 9. Delegation of the European Commission in Chile 
 10. Mexican Ministry of the Economy 
 G/SG/N/8/CHL/3 
G/SG/N/10/CHL/6 G/SG/N/11/CHL/5 
Page 20 
   
Countries excluded from the application of safeguards to imports of wheat flour 
classified under tariff heading 1101.0000 
(A) Developing country Members of the World Trade Organization 
Imports over the last 24 mont hs (January 2003 to December 2004) Countries 
Tonnes Percentage share of total 
Angola - 0.00 
Antigua and Barbuda - 0.00 
Armenia - 0.00 
Bahrain - 0.00 
Bangladesh - 0.00 
Barbados - 0.00 
Belize - 0.00 
Benin - 0.00 
Bolivia - 0.00 
Botswana - 0.00 
Brazil 3 0.03 
Brunei Darussalam - 0.00 
Burkina Faso - 0.00 
Burundi - 0.00 
Cameroon - 0.00 
Central African Republic - 0.00 
Chad - 0.00 
China 25 0.29 
Colombia - 0.00 
Congo - 0.00 
Congo, Democratic Republic of the - 0.00 
Costa Rica - 0.00 
Côte d'Ivoire - 0.00 
Cuba - 0.00 
Djibouti - 0.00 
Dominica - 0.00 
Dominican Republic - 0.00 
Ecuador - 0.00 
Egypt - 0.00  
El Salvador 0.01 0.00 
 Fiji - 0.00 
Former Yugoslav Republic of 
Macedonia - 0.00 
Gabon - 0.00 
Gambia - 0.00 
Georgia - 0.00 
Ghana - 0.00 
Grenada - 0.00 
Guatemala - 0.00 
Guinea - 0.00 
Guinea-Bissau - 0.00 
Guyana - 0.00 
Haiti - 0.00 
Honduras - 0.00 
Hong Kong, China - 0.00 
India - 0.00 
Indonesia - 0.00 
Israel - 0.00 G/SG/N/8/CHL/3 
G/SG/N/10/CHL/6 G/SG/N/11/CHL/5 
 Page 21 
  
Countries excluded from the application of safeguards to imports of wheat flour 
classified under tariff heading 1101.0000 
(A) Developing country Members of the World Trade Organization 
Imports over the last 24 mont hs (January 2003 to December 2004) Countries 
Tonnes Percentage share of total 
Jamaica - 0.00 
Jordan - 0.00 
Kenya - 0.00 
Korea, Republic of - 0.00 
Kyrgyz Republic - 0.00 
Kuwait - 0.00 
Lesotho - 0.00 
Macau, China - 0.00 
Madagascar - 0.00 
Malawi - 0.00 
Malaysia - 0.00 
Maldives - 0.00 
Mali - 0.00 
Mauritania - 0.00 
Mauritius - 0.00 
Mexico - 0.00 
Moldova - 0.00 
Mongolia - 0.00 
Morocco - 0.00 
Mozambique - 0.00 
Myanmar - 0.00 
Namibia - 0.00 
Nicaragua - 0.00 
Niger - 0.00 
Nigeria - 0.00 
Oman - 0.00 
Pakistan - 0.00 
Panama - 0.00 
Papua New Guinea - 0.00 
Paraguay - 0.00 
Peru - 0.00 
Philippines - 0.00 
Qatar - 0.00 
Romania - 0.00 
Rwanda - 0.00 
Saint Kitts and Nevis - 0.00 
Saint Lucia - 0.00 
Saint Vincent and the Grenadines - 0.00 
Senegal - 0.00 
Sierra Leone - 0.00 
Singapore - 0.00 
Solomon Islands - 0.00 
South Africa - 0.00 
Sri Lanka - 0.00 
Suriname - 0.00 
Swaziland - 0.00 
Tanzania, United Republic of - 0.00 
Thailand 0.01 0.00 
Togo - 0.00 G/SG/N/8/CHL/3 
G/SG/N/10/CHL/6 G/SG/N/11/CHL/5 
Page 22 
  
Countries excluded from the application of safeguards to imports of wheat flour 
classified under tariff heading 1101.0000 
(A) Developing country Members of the World Trade Organization 
Imports over the last 24 mont hs (January 2003 to December 2004) Countries 
Tonnes Percentage share of total 
Trinidad and Tobago - 0.00 
Tunisia - 0.00 
Uganda - 0.00 
United Arab Emirates - 0.00 
Uruguay - 0.00 
Venezuela - 0.00 
Zambia - 0.00 
Zimbabwe - 0.00 
Subtotal 28 0.32 
 
(B) Developing countries that are not Members of the World Trade Organization with agreements that 
include a most-favoured-nation (MFN) clause  
Lebanon - 0.00 
Total Imports 8,755 100.00 
 
(C)  Countries with trade agreements that include a global safeguard clause  
 
Imports over the last 36 mont hs (January 2002 to December 2004) Countries 
Tonnes Percentage share of total 
Canada - 0.00 
Mexico 0.01 0.00 
Peru - 0.00 
Total Imports 9,008 100.00 
 
__________