CHILE – PROVISIONAL SAFEGUARD MEASURE ON CERTAIN MILK PRODUCTS/ CHILE – DEFINITIVE SAFEGUARD MEASURE ON CERTAIN MILK PRODUCTS
Document: Request for the Establishment of a Panel by Argentina
Date: 9 March 2007
Document codes: WT/DS351/2; WT/DS356/2
Complainant: Argentina
Respondent: Chile
Third parties: U.S.
Dispute stage: Panel
Agreements cited: Art. I, XIX  GATT 1994Art. 2, 3.1, 4, 5.1, 7.1, 12.2  SafeguardsArt. XVI:4  Agreement Establishing the World Trade Organization

CHILE – PROVISIONAL SAFEGUARD MEASURE
ON CERTAIN MILK PRODUCTS/
CHILE – DEFINITIVE SAFEGUARD MEASURE
ON CERTAIN MILK PRODUCTS

Request for the Establishment of a Panel by Argentina

 The following communication, dated 8 March 2007, from the delegation of Argentina to the
Chairman of the Dispute Settlement Body, is circulated pursuant to Article 6.2 of the DSU.

 I have been instructed by the Government of the Argentine Republic to contact you in order
to request the establishment of a panel pursuant to Article XXIII of the General Agreement on Tariffs
and Trade 1994 (GATT 1994) , Articles 4 and 6 of the Understanding on Rules and Procedures
Governing the Settlement of Disputes (DSU ), and Article 14 of the Agreement on Safeguards (AS), in
connection with the imposition by the Government of Chile of provisional and definitive safeguard
measures on certain milk products from Argentina.

 In this connection, Exempt Decree No. 728, pub lished in the Official Journal of the Republic
of Chile on 13 October 2006, provides for the impos ition of a provisional safeguard on certain milk
products from Argentina in accordance with the recommendation contained in the Minutes of Meeting
No. 282 of the "National Commission responsible for investigating distortions in the price of imported
goods" (hereinafter the Commission on Distortions). Subsequently, likewise pursuant to the
recommendation of the Commission, as contained in the Minutes of Meeting No. 285, Exempt Decree
No. 987, published in the Official Journal of the Republic of Chile of 14 December 2006, ordered the
imposition of a definitive safeguard on the same produc ts. It should be noted that these measures
were adopted in the course of an investigation pr ocedure initiated by resolution of the Commission on
Distortions, as is clear from the Minutes of Meeting No. 279 published on 11 September 2006.

 On 25 October 2006, Argentina requested cons ultations with Chile concerning the initiation
of the safeguard investigation and the subseque nt imposition of a provisional safeguard. The
consultation meeting was held on 23 November 2006 in Santiago, Chile.
1 Subsequently, in the light
of the imposition of a definitive safeguard, Argentin a requested further consultations with Chile on
28 December 2006, and these were held on 2 February 2007. 2 Thus, in both cases, an attempt was
made to reach a mutually satisfactory settlement, but this attempt unfortunate ly failed to produce any
results.

1 The above-mentioned request was circulated on 30 October 2006 to the rest of the WTO Members in
document WT/DS351/1.
2 The above-mentioned request was circulated on 9 January 2007 to the rest of the WTO Members in
document WT/DS356/1.

 As the measures concerned were adopted at different times, they were the subject of
successive individual consultations. Nevertheless Argentina considers that, as these measures were
ordered in the course of the same investigation procedure, their integrated and combined treatment by
the same Panel under a unified procedure for th e settlement of both disputes would be more
conducive to a comprehensive settlement of the claims put forward by Argentina.

Background and identification of the measures at issue

 On 1 September 2006, according to the Minutes of Meeting No. 279 of the Commission on
Distortions, it was decided to initiate a safegua rd investigation on imports of powdered milk,
classified under tariff subhead ings 0402.1000, 0402. 2111, 0402.2112, 0 402.2113, 0 402.2114,
0402.2115, 0402.2116, 0402.2117, 0402.2118, 0402.29 11, 0402.2912, 0402 .2913, 0402.2914,
0402.2915, 0402.2916, 0402.2917 and 0402.2918; liquid milk, classified under tariff subheadings
0401.1000, 0401.2000, 0401.3010, 0401.3020, 0401.3030, 0401.3040, 0401.3090 and 0402.9110;
and Gouda cheese, classified under tariff subheading 0406.9010 of the Chilean Harmonized Tariff, as
requested by the National Federation of Milk Pr oducers, FEDELECHE. The investigation began on
11 September 2006, the date of publication in the Official Journal of Chile.

 Subsequently, at the meeting of 6 October 2006 of the Commission on Distortions (Minutes
of Meeting No. 282), it was decided to recommend the imposition of a provisional tariff surcharge of
23 per cent on imports from Argentina of powde red milk, classified under tariff subheadings
0402.1000, 0402.2111, 0402.21 12, 0402.2113, 0402.2114, 0402 .2115, 0402.2116, 0402.2117,
0402.2118, 0402.2911, 0402.2912, 0402.2913, 0402.2914, 0402.2915, 0402.2916, 0402.2917 and
0402.2918, with the exception of powdered cream u nder those subheadings; liquid milk, classified
under tariff subheadings 0401.1000, 0401.2000, 0401.3010, 0401.3020, 0401.3030, 0401.3040,
0401.3090 and 0402.9110, with the exception of liquid cream and evaporated milk under those
subheadings; and Gouda cheese, classified under ta riff subheading 0406.9010. In accordance with
the terms of the recommendations by the Commission on Distortions, the Ministry of Finance, by
order of the President of the Republic, issued Ex empt Decree No. 728 of 12 October 2006 ordering
the establishment of a provisional safeguard measur e with a maximum period of application of 200
days. This measure was published in the Official Journal of Friday, 13 October 2006.

 At its meeting on 5 December 2006 (Minutes of Meeting No. 285), the Commission on
Distortions terminated the investigation and reco mmended the imposition of a definitive safeguard in
the form of a tariff surcharge of 23 per cent on impor ts from Argentina of powdered milk, liquid milk
and Gouda cheese, which at the time were subject to the provisional safeguard. Pursuant to that
recommendation, on 12 December 2006 the Ministry of Finance, by order of the President of the
Republic, issued Exempt Decree No. 987 imposing a safeguard for a period of one year from
13 October 2006. The Decree was published in the Official Journal of Thursday, 14 December 2006.

 Consequently, the measures at issue include the Minutes of Meeting No. 279 of the
Commission on Distortions, at which initiation of th e investigation was ordered; Exempt Decree
No. 728, which provides for the imposition of the provisional safeguard; Exempt Decree No. 987,
ordering the imposition of the definitive safeguard, and the extensions and any related amendments
thereto; and the proceedings which resulted in the imposition of these measures.

Legal basis of the claim

 The Government of the Argentine Republic c onsiders that these measures violate Chile's
obligations under the relevant provisions of the GATT 1994 and the Agreement on Safeguards,
particularly, but not exclusively with regard to:

1. Articles I:1 and XIX:1 of the GATT 1994 and Ar ticle 2.2 of the Agreement on Safeguards,
inasmuch as both the provisional safeguard m easure and the definitive safeguard measure
discriminate between products from Argentina and products from other WTO country Members, by
virtue of being imposed solely on imports from Argen tina. In addition, the investigation procedure of
the Chilean implementing authority was also conduc ted in a discriminatory manner, inasmuch as
imports from other sources were not taken into account.
2. Articles 2.1 and 4.2(a) and (b) of the Ag reement on Safeguards, in conjunction with
Article 4.1(c) of the Agreement on Safeguards a nd Article XIX:1 of the GATT 1994, inasmuch as the
initiation of the investigation, the determinations and the resulting measures were not based on an
adequate definition of like or directly competitiv e products or of the domestic industry for like
products or products directly competing with allegedly increased imports.
3. Articles 3.1 and 4.2(c) of the Agreement on Safeguards and Article XIX of the GATT 1994,
inasmuch as the competent authorities have not set fo rth or included in their reports (Minutes of the
Commission) or in any part of the record of investigation proceedings the findings and reasoned
conclusions on all pertinent issues of fact and law, as required by the Ag reement on Safeguards and
Article XIX of the GATT 1994, including justification of the measures imposed in relation to both the
provisional safeguard and the definitive safeguard. No r have they included a detailed analysis of the
case under investigation, or demonstrated the relevance of the factors examined.
4. Article XIX:1 of the GATT 1994, since the competent authorities of Chile have not
demonstrated the occurrence of unforeseen devel opments warranting exceptional action such as the
imposition of a safeguard. Nor have they establishe d that the alleged increase in imports and the
conditions of their importation were the result of unforeseen developments and the effect of
obligations assumed under the GATT 1994.
5. Article XIX:1 of the GATT 1994 and Articles 2. 1 and 4.2(a) and (b) of the Agreement on
Safeguards, inasmuch as it was not properly establis hed that imports were entering "in such increased
quantities, absolute or relative to domestic produc tion, and under such conditions as to cause or
threaten to cause serious injury to the domestic industry that produces like or directly competitive
products".
6. Articles 2.1, 4.1(a) and (b) and 4.2(a) and (b) of the Agreement on Safeguards and
Article XIX of the GATT 1994, inasmuch as there was not shown to be a significant overall
impairment in the position of the domestic industry or any clearly imminent serious injury. Moreover,
the implementing Chilean authority failed to carry out an evaluation of all relevant factors to
determine serious injury or the threat thereof.
7. Articles 2.1 and 4.2(b) of the Agreement on Safeguards, inasmuch as it has not been
demonstrated, on the basis of objective evidence, th at there exists a causal link between the alleged
increase in imports of the products concerned and the alleged serious injury or threat of serious and
imminent injury to the domestic industry which the competent authority believes to have been
established, nor was an analysis made to ensure th at the injury caused by ot her factors was not being
attributed to Argentine imports.

8. Articles 5.1 and 7.1 of the Agreement on Safegua rds, inasmuch as there is no record in the
investigation of an analysis of whether the meas ures imposed were necessary to prevent or remedy
serious injury and to facilitate adjustment. Nor is there any record that an adjustment plan was
proposed.
9. Article 6 of the Agreement on Safeguards and Article XIX:2 of the GATT 1994, inasmuch as
the Chilean authorities imposed a provisional safegua rd without having demonstrated the existence of
"critical circumstances, where delay would cause dama ge which it would be difficult to repair". Nor
did they make a "preliminary determination that th ere is clear evidence that increased imports have
caused or are threatening to cause serious injury" to the domestic industry producing like or directly
competitive products.
10. Articles 12.4 and 12.2 of the Agreement on Safe guards, since Chile failed to provide prior
notification to the Committee on Safeguards when it ordered the imposition of the provisional
safeguard and failed to provide all relevant info rmation in notifying both safeguard measures, and
moreover included erroneous data concerning their duration.
 For the above reasons, the Argentine Republic requests the establishment of a panel with
standard terms of reference under Ar ticle 7.1 of the DSU in order to examine the claims made and to
find that the measures imposed by the Republic of Chile, together with the amendments and
extensions thereto and any related amendments, are inconsistent with its obligations under the above-
mentioned agreements, and nullify or impair benefits accruing directly to Argentina under the
Agreements of the World Trade Organization.