CHILE – PROVISIONAL SAFEGUARD MEASURE ON CERTAIN MILK PRODUCTS
Document: Request for Consultations by Argentina
Date: 30 October 2006
Document codes: WT/DS351/1; G/L/789; G/SG/D34/1
Complainant: Argentina
Respondent: Chile
Third parties: U.S.
Dispute stage: Panel
Agreements cited: Art. I:1, XIX:1, XIX:2  GATT 1994Art. 2, 3, 4, 5, 6, 7, 12  Safeguards

CHILE – PROVISIONAL SAFEGUARD MEASURE
ON CERTAIN MILK PRODUCTS

Request for Consultations by Argentina

 The following communication, dated 25 Oct ober 2006, from the delegation of Argentina to
the delegation of Chile and to the Chairman of the Dispute Settlement Body, is circulated in
accordance with Article 4.4 of the DSU.

 I have been instructed by my Government to contact you in order to request consultations
with Chile pursuant to Article 4 of the Unde rstanding on Rules and Procedures Governing the
Settlement of Disputes (DSU), Article XXIII:1 of the 1994 General Agreemen t on Tariffs and Trade
(GATT 1994) and Article 14 of the Agreement on Sa feguards, in connection with the imposition by
the Government of Chile of a provisional safeguard measure on imports of certain milk products.
1

 The measure in question includes Exempt Decree No. 278, published in the Official Journal
of Friday 13 October 2006, the amendments and ex tensions thereto and any related amendments, and
Record No. 282 of the National Commission responsible for investigating distortions (hereinafter the
Record of the Commission).

 The above-mentioned Decree provides for the application of a provisional safeguard 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; liquid milk, classified under tariff subheadings 0401.1000, 0401.2000, 0401.3010,
0401.3020, 0401.303 0, 0401.3040, 0401.3090 and 0402.9110; and Gouda cheese, classified under
tariff subheading 0406.9010.

 The Argentine Government considers this measure to be inconsistent with Chile's obligations
under the relevant provisions of the GATT 1994 and the Agreement on Safeguards.

1 The initiation of the investigation process was notified to the Committee on Safeguards by document
G/SG/N/6/CHL/11, and the provisional measure by document G/SG/N/7/CHL/8.

 Accordingly, the Argentine Government is of the view that Chile has departed from the
provisions of the GATT 1994 and the Agreement on Sa feguards in its determination, particularly as
regards the following:

 - Non-discriminatory application : insofar as the measures are imposed solely on
imports from Argentina, which constitutes a fl agrant violation of the basic principles
of the multilateral trading system. Moreover, the failure to conduct an investigation
of the relationship between imports from other sources and the impact of those
imports on the situation of the domestic industry also serves to demonstrate the
discriminatory nature of the measure.

 - Investigation procedure: taking into account the fact that the Commission Record
in which application of the provisional measure is recommended does not properly
develop the fundamental points relating to all pertinent issues of fact and law.

 - Unforeseen developments: considering that there were no unforeseen developments
warranting exceptional action such as the application of a safeguard measure.

 - Definition of the like or directly competitive product and the domestic industry :
insofar as neither the application nor the Record of the Commission or the decree
contain arguments from which it may be c oncluded that the products are alike or
directly competitive between themselves a nd in relation to the imported products.
Moreover, the Argentine Government c onsiders that FEDELECHE does not at all
account for a "major proportion" of the total domestic production of the like products
or those directly competitive with the imported products under investigation.

 - Increased imports: considering that there was no finding of an increase in imports
in absolute terms and relative to domes tic production or of an increase under such
conditions as to cause or threaten to cau se serious injury to the domestic industry
producing like or directly competitive products.

 - Increase in imports under conditions such as to cause or threaten to cause
serious injury : analysis of the factors and clear imminence of serious injury:
because the existence of injury or threat of serious injury cannot be concluded from
the factors analysed. In addition, factor s such as productivity, capacity utilization,
employment and profits were not evaluated. Similarly, data relating to prices and
milk deliveries to plants show positive signs. Moreover, in determining the threat of
injury, the authority fails to demonstrate that the threat is clearly imminent.

 - Determination of causal link : insofar as it has not been demonstrated, on the basis
of objective evidence, that there exists a causal link between increased imports of the
product concerned and injury or threat of ser ious and imminent injury to the domestic
industry.

 - Notification of the measure : insofar as there was observed to be no obligation to
notify the measure prior to its adoption.

 In the light of the foregoing, Argentina considers that the above-mentioned provisional
safeguard measure is inconsistent, inter alia, but not exclusively, with Chile's obligations under the
following provisions:

 - GATT 1994:

(1) Article XIX;

(2) Article I.

 - Agreement on Safeguards:

(3) Article 2;

(4) Article 3.1;

(5) Article 4;

(6) Article 5.1;

(7) Article 6;

(8) Article 12.4.

 In these circumstances, Argentina request s consultations with Chile, pursuant to
Article XXIII:1 of the GATT 1994, Article 4 of the DSU and the respective rules of the Agreement on
Safeguards, and proposes that they be held as early as possible at a mutually agreed date and place. In
addition, I have been instructed to indicate that my Government r eserves the right to raise further
factual or legal claims during those consultations.