CHILE – DEFINITIVE SAFEGUARD MEASURES ON CERTAIN MILK PRODUCTS
Document: Request for Consultations by Argentina
Date: 9 January 2007
Document codes: WT/DS356/1; G/L/811; G/SG/D35/1
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 – DEFINITIVE SAFEGUARD MEASURES
ON CERTAIN MILK PRODUCTS

Request for Consultations by Argentina

 The following communication, dated 28 Decemb er 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 definitive safeguard measure on imports of certain milk products.
1

 In September 2006 the Government of Chile decided, by Record No. 279 of the National
Commission Responsible for Investigating Distortions (hereinafter Record of the Commission), to
initiate a safeguards investigation into imports of powdered milk classified under tariff headings:
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, 0401.3030, 04 01.3040, 0401.3090 and 0402.9110; and Gouda cheese classified under
subheading 0406.9010 of the Chilean Harmonized Ta riff, as requested by the National Federation of
Milk Producers, FEDELECHE. The investiga tion began on 11 September 2006, the date of
publication in the Diario Oficial de Chile (Official Journal).

 Thereafter, on 6 October at its meeting No. 282, the Commission decided to recommend
applying a provisional tariff surcharge of 23 per cen t to imports of powdere d milk, liquid milk and
gouda cheese from Argentina. The recommendation was set forth in Exempt Decree No. 728,
published in the Diario Oficial of Friday 13 October 2006.
2

 The safeguards investigation led the comp etent authorities – acting pursuant to the
Commission's recommendation in Record No. 285 of 5 December 2006 – to issue Exempt Decree
No. 987, published in the Diario Oficial of Thursday 14 December, establishing the application of a

1 The initiation of the investigation process was notified to the Committee on Safeguards by document
G/SG/N/6/CHL/11, the provisional measure by document G/SG/N/7/CHL/8, and the definitive measure by
documents G/SG/N/8/CHL/4 and G/SG/N/10/CHL/ 7, circulated to Members of the WTO on
22 December 2006.
2 Exempt Decree No. 278, published in the Diaro Oficial of 13 October 2006 and covered by the
consultation requested in document WT/DS351/1.

definitive safeguard of 23 per cent to imports from Ar gentina of powdered milk classified under tariff
subheadings: 0402.1000, 0402.2111, 0402.2112, 0402.2113, 0402.2114, 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, with the exception of powd ered cream under those subheadings; liquid
milk classified under the 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 tariff subheading 0406.9010.

 The Argentine Government considers the defi nitive safeguard measure imposed on the above-
mentioned milk products from Argentina to be inconsistent with Chile's obligations under the relevant
provisions of the GATT 1994 and the Agreement on Safeguards.

 The Argentine Government is thus of the view that in its determination, Chile has departed
from the provisions of the GATT 1994 and the Agreem ent on Safeguards, particularly in respect of
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 that neither the Commission Record
recommending application of a definitive measure nor any other text that the
Commission has provided to date properly develops the fundamental points relating
to all pertinent issues of fact and of law.

 - Unforeseen developments : since the elements of the Argentine Government's
economic policy relied on in Commission Record 285 are no more than a bald
reference and cannot, as Chile make outs, be regarded as an unforeseen circumstance.

 - Definition of the like or directly competitive product and the domestic industry :
insofar as neither the application nor th e 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.

 - Evaluation of all relevant factors to de termine whether the increase in imports
has caused or threatens to cause serious injury : analysis of the factors and clear
imminence of serious injury: because the ex istence of injury or threat of serious
injury cannot be concluded from the factors analysed. In addition, factors such as
productivity, capacity utilization, employment and profits have not been properly

evaluated and only a few brief re ferences have been made. Similarly, data relating to
prices and milk deliveries to plants show positive signs.

 - Determination of serious injury or threat of serious injury : insofar as Chile has
not demonstrated a significant overall impa irment in the position of the domestic
industry or any clearly imminent serious injury.

 - Determination of causal link : insofar as it has not been demonstrated, on the basis
of objective evidence, that there exists a causal link between the increased imports of
the products concerned and the serious injury to the domestic industry that the
competent authority believes has been shown, as there are several important factors
unrelated to the imports from Argentina – su ch as the exchange rate – which have not
been properly analysed.

 - Need for the measure in order to prev ent or remedy serious injury and to
facilitate adjustment : insofar as serious injury or threat thereof to the domestic
industry in question has not been demonstr ated, and the measure is not needed to
remedy some assumed injury or threat. The remedy afforded by the measure thus
exceeds the period needed to prevent or re medy the alleged serious injury and to
facilitate adjustment.

 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

 (3) Article XVI:4 of the Agreement Esta blishing the World Trade Organization (WTO
Agreement)

 – Agreement on Safeguards:

 (4) Article 2

 (5) Article 3.1

 (6) Article 4

 (7) Article 5.1

 (8) Article 7.1

 (9) Article 12.2

 Furthermore, the measures adopted by Chile also appear to nullify or impair the benefits
accruing to Argentina directly or indirectly under the cited Agreements.

 Argentina reserves its rights regarding pursuit of the remedies provided for in the Agreement
on Safeguards and the DSU and also reserves its right s to raise additional factual matters and legal
claims during the course of the consultations.

 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 relevant rules of the Agreement on
Safeguards, and proposes that they be held as early as possible at a mutually agreed date and place.