WORLD TRADE
ORGANIZATIONG/SG/N/8/CHN/1
G/SG/N/10/CHN/1
5 November 2002
(02-6100)
Committee on Safeguards Original:  English
NOTIFICATION UNDER ARTICLE 12.1(B) OF THE AGREEMENT ON
SAFEGUARDS ON FINDING A SERIOUS INJURY OR THREAT
THEREOF CAUSED BY INCREASED IMPORTS
NOTIFICATION PURSUANT TO ARTICLE 12.1(C)
OF THE AGREEMENT ON SAFEGUARDS
PEOPLE'S REPUBLIC OF CHINA
The following notification, dated 1 November 2002, has been received from the Permanent
Mission of the People's Republic of China.
_______________
Upon instructions from my capital, I am pleas ed to forward you the notification from the
People's Republic of China pursuant to Articles 12.1(b) and 12.1(c) of the Agreement on Safeguards,
in finding of serious injury or threat thereof, to the domestic industries producing certain steel
products and a notification on proposed safeguard measures.  The notification contains all pertinent
information relating to the proposed safeguard measures in accordance with Article 12.2 of the
Agreement on Safeguards.
The Ministry of Foreign Trade and Economic Cooperation of the People's Republic of China
(MOFTEC) offers consultations on the proposed safeguard measures at any time after
1 November 2002.
A copy of this letter has also been sent to the Permanent Missions of Japan, Republic of
Korea, Germany, the European Communities and Malaysia to the WTO.G/SG/N/8/CHN/1
G/SG/N/10/CHN/1
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NOTIFICATION UNDER ARTICLE 12.1(B) AND (C) AND ARTICLE 12.2 OF THE
AGREEMENT ON SAFEGUARDS
In light of the agreed format for notifi cations (G/SG/W/1, 23 February 1995), the PRC
provides notification to the Committee on Safeguards of findings of serious injury or threat thereof
caused by increased imports and notification of proposed definitive safeguard measures.
On 20 May 2002, MOFTEC initiated a safeguard  investigation on certain imported steel
products.  The 11 categories of steel products covered by the investigation are non-alloy plates, nonalloy sheets and coils, electrical sheets, stainless steel plates and sheets, other non alloy strips, non
alloy wires, non alloy bars and rebars, non alloy sections, seamless pipes, welded pipes and slabs.
On 21 May 2002, MOFTEC announced provisional safeguard measures on 9 categories and
17 sub-categories steel products amongst those covere d by the investigation.  These products are non
alloy plates, non alloy sheets and coils (non alloy hot rolled sheets and coils, non alloy cold rolled
sheets and coils, tin mill products, galvanized sheets, organic coated sheets), electrical sheets (oriented
electrical sheets and non grain-oriented electrical sheets), stainless steel plates and sheets (stainless
non alloy plates, stainless non alloy hot rolled sheets and coils, stainless non alloy cold rolled sheets
and coils), non alloy wires, non alloy bars and rebars (non alloy hot rolled bars and rebars and nonalloy cold rolled bars and rebars), non alloy sections (non alloy hot rolled sections, moulded sections),
seamless pipes, slabs.
The initiation of the investigation, the imposition of provisional measures as well as the
decision not to apply those provisional measures to certain products originating in developingcountries have been notified to the Committee on Safeguards in G/SG/N/6/CHN/1, G/SG/N/7/CHN/1,
G/SG/N/11/CHN/1 (20 May 2002).
Consistent with Article 12.2 of the Agreement on Safeguards , this notification contains all
pertinent information relating to the five sub-category products on which definitive safeguard
measures are proposed.  Annexes I and II to this notification include all the elements of information
specified in Article 12.2 of the Agreement on Safeguards .
Consistent with Article 12.3 of the Agreement on Safeguards , the PRC is prepared to consult
with those countries/regions having a substantial interest as exporters of one or more of the products
concerned, with a view to, inter alia , reviewing the information provided in this notification,
exchanging views on the measure proposed, and reaching an understanding on ways to achieve theobjective set out in Article 8.1 of the Agreement on Safeguards .
1. Provide evidence of serious injury or th reat thereof caused by increased imports
Non alloy hot rolled sheets and coils:
See Annex I Product 1, p. 5
Non alloy cold rolled sheets and coils:
See Annex I Product 2, p. 8
Organic coated sheets:
See Annex I Product 3, p. 11G/SG/N/8/CHN/1
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Non grain-oriented electrical sheets:
See Annex I Product 4, p. 13
Stainless non alloy cold rolled sheets and coils:
See Annex I Product 5, p. 16
2. Provide information on whether there is an absolute increase or an relative increase inimports compared with domestic production
Non alloy hot rolled sheets and coils:
See Annex I Product 1, p. 5
Non alloy cold rolled sheets and coils:
See Annex I Product 2, p. 8
Organic coated sheets:
See Annex I Product 3, p. 10
Non grain-oriented electrical sheets:
See Annex I Product 4, p. 13
Stainless non alloy cold rolled sheets and coils:
See Annex I Product 5, p. 15
3. Provide precise description of the product involved
Non alloy hot rolled sheets and coils:
See Annex I Product 1, p. 5
Non alloy cold rolled sheets and coils:
See Annex I Product 2, p. 7
Organic coated sheets:
See Annex I Product 3, p. 10
Non grain-oriented electrical sheets:
See Annex I Product 4, p. 12
Stainless non alloy cold rolled sheets and coils:
See Annex I Product 5, p. 15
4. Provide precise description of the proposed measures
Non alloy hot rolled sheets and coils:
See Annex I Product 1, p. 6
Non alloy cold rolled sheets and coils:
See Annex I Product 2, p. 9G/SG/N/8/CHN/1
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Organic coated sheets:
See Annex I Product 3, p. 12
Non grain-oriented electrical sheets:
See Annex I Product 4, p. 14
Stainless non alloy cold rolled sheets and coils:
See Annex I Product 5, p. 17
Annex II contains a list of products originating in developing countries/regions to which it is
proposed not to apply safeguard measures, except in the cases of those products originating in those
countries against which an ‘x’ appears in that annex.
5. Provide proposed date of introduction of the measures
The five products for which safeguard measures are proposed are currently subject to
provisional measures, which are set to expire on 19 November 2002.  The proposed date of
introduction of the proposed measures is 20 November 2002.
6. Provide expected duration of the measures
The expected duration of the proposed measures is three years.
7. For a measure with the duration of more than three years, provide the proposed date
for the review (under Article 7.4 of Agreement on Safeguards ) to be held not later than the
mid-term of the measure, if such a date for the review has already been scheduled
Not applicable.
8. If the expected duration is over one year, provide expected timetable for progressive
liberalization of the measures
As noted in Item 4 of this notification, each of the proposed measures provides for
progressive liberalization.
9. Provide information relating to the extension of a safeguard measures
Not applicable.G/SG/N/8/CHN/1
G/SG/N/10/CHN/1
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ANNEX I:  PRODUCT INFORMATION
PRODUCT 1: NON ALLOY HOT ROLLED SHEETS AND COILS
1. Product Concerned
The product concerned is certain flat rolled products of iron or non-alloy steel, of a thickness
under 4.75 mm, of a width of 600 mm or more, hot rolled, not clad, not plated or coated, mainly
including hot rolled coils and sheets of different kinds.  The product concerned is classified under the
2002 Customs Import Tariff of the People’s’ Republic of China with the HTS numbers 72081000,
72082600, 72082700, 72083800, 72083900, 72084000, 72085300, 72085400, 72089000.
2. Increased Imports
Consumption
1997 1998 1999 2000 2001
Consumption
(in tonnes)10,025,670 10,387,851 12,013, 173 10,734,108 12,117,274
Import data
1997 1998 1999 2000 2001
Total imports
(in tonnes)2,173,757 1,922,186 2,802,302 2,716,024 2,630,803
Rate of increase(in %) -11.57 45.79 -3.08 -3.14
Market share (in %) 21.68 18.50 23.33 25.30 21.71
Volume as moving average (in tonnes)
1998/1997 1999/1998 2000/1999 2001/2000
Volume as moving average(in tonnes)2,047,971 2,362,244 2,759,163 2,673,413
The investigation reveals that the import quantities of the product concerned increased
suddenly, sharply and significantly in the most recent past.  The import quantity of the product
concerned for 1997 was 2,173,800 tons.  However, the import of the product concerned in 1999
greatly increased to 2,802,300 tons, representing 28.91% increase over the import quantity of 1997
and 45.79% increase over 1998.  Afterwards, the annual import remained at a relatively high level.
The import for 2000 was 2,716,000 tons and the import for 2001 was 2,630,800 tons, among which2000 gained 24.9% increase over 1997 and 41.30% increase over 1998 and 2001 gained 21.02%
increase over 1997 and 36.86% increase over 1998.
3. Serious Injury
Consistent with the Regulations of the People’s Republic of China on Safeguard Measures
(the “PRC Measures”) and the relevant WTO regulations, the criteria for determining the injury to the
domestic industry include market share, production, capacity, utilisation rate of capacity, sales
volume, sales revenue, price, pre-tax profits, employment, per capita salary, productivity, etc.G/SG/N/8/CHN/1
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No. Injury Index Unit 97 98 99 2000 2001
1Market share37.95% 77.14% 46.63% 54.00% 58.86%
2ProductionTonnes 6111199.7 7142147.7 8418469.2 8041439.2 8519556.9
3CapacityTonnes 8145531 8932076 10816312 14106158 12891511
4Utilisation rate
of capacity75.03% 79.96% 77.83% 57.01% 66.09%
5Total salesTonnes 3841174 8180775 6492946 7615642 8036182
6Total sales
incomeRMB
Yuan10204320790 19512551232 15181226932 19927523079 19819491229
7Weighted
average selling
priceRMB
Yuan
 per tonne2266 2092 2009 2313 2102
8Total pre-tax
profitsRMB
Yuan204694099 -753752565 -290491232 1557936611 835424615
9Pre-tax profit for
unit productRMB
Yuan45.45 -80.82 -38.45 180.82 88.59
10Employment6604 8051 11630 10646 10048
11Per capita salaryRMB
Yuan16403 16236 14912 15770 18276
12ProductivityTonne
per employee
per annum1179.61 1169.85 1102.38 1093.21 1528.53
The domestic capacity, sales revenue, pre-tax profits, employment of the product concern
demonstrated an apparent decline between 1997 and 2001.  The increase in the total domestic sales
volume showed a tendency of slowdown.  The domes tic market share dropped sharply in 1999 with a
decrease of 30.5% in comparison with 1998.  There was a general downward tendency in the
domestic utilisation rate of capacity and average selling price.
4. Causation
The import of the product concerned is generally on the rise and, on the other hand, all the
economic indicators reflecting serious overall impairment of the domestic industry began to show a
tendency of deterioration.
It has been concluded after the analysis of the other elements which might potentially lead to
the injury to the domestic industry that the sharp increase in the import quantities of the product
concerned has caused serious injury to the domestic industry that produces the like or directlycompetitive products and there is a substantive causal link between the sharp increased imports and
the serious injury to the domestic industry.
5. Proposed Measure
It is proposed that definitive safeguard measures be taken to prevent or remedy the serious
injury to the domestic producers caused by the increase in imports.  The definitive safeguard measures
are proposed to take the form of tariff quota in excess of which an additional duty requires to be paid.
In order to maintain the normal import level of the product, the total tariff quota for the first
half year of the implementation of the definitive safeguard measures (based on 185 days) will be theG/SG/N/8/CHN/1
G/SG/N/10/CHN/1
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average import of the prior three years plus 3%.  Co nsistent with the provisions of the PRC Measures
and the obligations of the PRC under Article 19 of the GATT and the WTO  Agreement on
Safeguards , safeguard measures should be liberalised progressively during their effective term.
Accordingly, the tariff quota for year 2 and year 3 during the term of the definitive safeguardmeasures will increase 3% each year over that of the prior year.
The imported products above the tariff quota will be imposed with additional duties.  During
the term of the definitive safeguard measures, the rate of the additional duty will decrease, from the
second year, at the rate of 8% per year and the specific annual rate for the special duty will be: 10.3%
between 20 November 2002 and 23 May 2003; 9.5% between 24 May 2003 and 23 May 2004; 8.7%
between 24 May 2004 and 23 May 2005.
The implementation term of the definitive safeguard measures will last 3 years (including the
implementation term of the provisional safeguard measures) and end on 23 May 2005, unless the
situation has changed to render the definitive safeguard measures unnecessary.
Consistent with Article 5 Para 2 of the WTO  Agreement on Safeguards  and Article 19 of the
1994 GATT, members with substantial interests in supplying the relevant product should have the
opportunity to obtain a certain percentage of the tariff quota for the product.
The following table lists the allocation of the tariff quota among the countries/regions with
substantial interests in providing the product:
Product
concernedCountry/
Region2002.11.20 －2003.5.23
Quota (kg)2003.5.24 －2004.5.23
Quota (kg)2004.5.24 －2005.5.23
Quota (kg)
Total 1,418,097,127 2,881,803,325 2,968,257,424
Japan 333,984,103 678,709,858 699,071,153
Ukraine 259,387,473 527,117,408 542,930,930
Republic of
Korea206,325,718 419,287,317 431,865,937
Russia 186,296,298 378,584,288 389,941,816
Chinese Taipei 176,955,333 359,601,933 370,389,991
Kazakstan 164,973,601 335,253,110 345,310,703Hot Rolled
Sheets and
Coils
Others 90,174,600 183,249,411 188,746,893
PRODUCT 2: NON ALLOY COLD ROLLED SHEETS (STRIPS)
1. Product Concerned
The product concerned is certain flat rolled products of iron or non-alloy steel, of a thickness
under 4.75 mm, of a width of 600 mm or more, cold rolled, not clad, not plated or coated, mainly
including cold rolled coils and sheets of different kinds.  The product concerned is classified with the
HTS numbers 72091500, 72091600, 72091700, 72091800, 72092500, 72092600, 72092700,
72092800, 72099000.G/SG/N/8/CHN/1
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2. Increased Imports
Consumption
1997 1998 1999 2000 2001
Consumption
(in tonnes)6,480,040 7,090,198 9,784,142 10,700,483 10,708,443
Import data
1997 1998 1999 2000 2001
Total imports
(in tonnes)3,172,235 2,863,950 4,606,308 5,528,977 5,486,336
Rate of increase(in %) -9.72 60.84 20.03 -0.77
Market share(in %) 48.95 40.39 47.08 51.67 51.23
Volume as moving average (in tonnes)
1998/1997 1999/1998 2000/1999 2001/2000
Volume as moving average(in tonnes)3,018,093 3,735,130 5,067,643 5,507,657
The investigation reveals that the import quantities of the product concerned increased
suddenly, sharply and significantly in the most recent past.  The import quantity of the product
concerned for 1997 was 3,172,200 tons.  However, the import of the product concerned in 1999greatly increased to 4,606,300 tons, representing 45.20% increase over the import quantity of 1997
and 60.84% increase over 1998.  Afterwards, the annual import continued to increase.  The import for
2000 was 5,529,000 tons and the import for 2001 was 5,486,300 tons, among which 2000 gained
74.28% increase over 1997, 93.05% increase over 1998 and 20.03% increase over 1999 and 2001
gained 72.95% increase over 1997, 91.56% increase over 1998 and 19.10% increase over 1999.
3. Serious Injury
Consistent with the Regulations of the People’s Republic of China on Safeguard Measures
(the “PRC Measures”) and the relevant WTO regulations, the criteria for determining the injury to thedomestic industry include market share, production, capacity, utilisation of capacity, sales volume,
sales revenue, price, pre-tax profits, employment, per capita salary, productivity, etc.
No. Injury Index Unit 97 98 99 2000 2001
1Market share36.39% 53.49% 44.86% 42.77% 45.12%
2Production Tonnes3595035.7 3950314.6 4791717.2 5184953.2 5481771.9
3Capacity Tonnes5012154 5498777 5570213 6527232 6791684
4Utilisation rate
of capacity71.73% 71.84% 86.02% 79.44% 80.71%
5Total sales Tonnes2376882 3803026 4415690 4779384 5054286
6Total sales
incomeRMB
Yuan8382728385 10749535404 13073474165 16077037070 14591758376
7Weighted
average selling
priceRMB
Yuan
per tonne3527 2827 2961 3364 2887G/SG/N/8/CHN/1
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No. Injury Index Unit 97 98 99 2000 2001
8Total pre-tax
profitsRMB
Yuan630382396 160679653 1146083326 1717042060 842816813
9Pre-tax profit for
unit productRMB
Yuan265.21 42.25 259.55 359.26 166.75
10Employment8878 9020 9305 9077 8344
11Per capita salaryRMB
Yuan16490 18247 22085 26560 31472
12ProductivityTonne
per
employee
per annum513.15 528.74 647.35 676.25 792.43
Between 1997 and 2001, the domestic production capacity and volume experienced
inadequate growth, sales volume experienced slow growth, utilisation of capacity was inadequate and
market share remained stagnant.  During the investigation period in particular, the investigated
producers experienced obvious decline in price and sales revenue.  The pre-tax profits andemployment also manifested apparent downward te ndency while the average salary and productivity
were increasing.
4. Causation
The import of the product concerned is generally on the rise and, on the other hand, all the
economic indicators reflecting serious overall impairment of the domestic industry began to show a
tendency of deterioration.
It has been concluded after the analysis of the other elements which might potentially lead to
the injury to the domestic industry that the sharp increase in the import quantities of the product
concerned has caused serious injury to the domestic industry that produces the like or directly
competitive products and there is a substantive causal link between the sharp increased imports and
the serious injury to the domestic industry.
5. Proposed Measure
It is proposed that definitive safeguard measures be taken to prevent or remedy the serious
injury to the domestic producers caused by the increase in imports.  The definitive safeguard measures
are proposed to take the form of tariff quota in excess of which an additional duty requires to be paid.
In order to maintain the normal import level of the pr oduct, the total tariff quota for the first half year
of the implementation of the definitive safeguard measures (based on 185 days) will be the averageimport of the prior three years plus 5%.  Consistent with the provisions of the PRC Measures and the
obligations of the PRC under Article 19 of the GATT and the WTO  Agreement on Safeguards ,
safeguard measures should be liberalised progressively during their effective term.  Accordingly, the
tariff quota for year 2 and year 3 during the term of the definitive safeguard measures will increase
5% each year over that of the prior year.
The imported products above tariff quota will be imposed with additional duties.  During the
term of the definitive safeguard measures, the rate of the additional duty will decrease, from the
second year, at the rate of 8% per year and the specific annual rate for the special duty will be: 22.4%
between 20 November 2002 and 23 May 2003; 20.6% between 24 May 2003 and 23 May 2004;19.0% between 24 May 2004 and 23 May 2005.G/SG/N/8/CHN/1
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The implementation term of the definitive safeguard measures will last 3 years (including the
implementation term of the provisional safeguard measures) and end on 23 May 2005, unless the
situation has changed to render the definitive safeguard measures unnecessary.
Consistent with Article 5 Para 2 of the WTO  Agreement on Safeguards  and Article 19 of the
1994 GATT, members with substantial interests in supplying the relevant product should have the
opportunity to obtain a certain percentage of the tariff quota for the product.
The following table lists the allocation of the tariff quota among the countries/regions with
substantial interests in providing the product:
Product
ConcernedCountry/
Region2002.11.20 －2003.5.23
Quota (kg)2003.5.24 －2004.5.23
Quota (kg)2004.5.24 －2005.5.23
Quota (kg)
Total 2,771,232,856 5,740,945,903 6,027,993,198
Japan 533,174,368 1,104,535,549 1,159,762,326
Republic of
Korea528,579,770 1,095,017,280 1,149,768,144
Chinese
Taipei518,586,281 1,074,314,553 1,128,030,281
Russia 388,227,861 804,261,230 844,474,292
Kazakstan 387,796,050 803,366,682 843,535,017
Ukraine 228,586,528 473,544,794 497,222,034Cold
Rolled
Sheets
(Strips)
Other 186,281,998 385,905,814 405,201,104
PRODUCT 3: ORGANIC COATED SHEETS
1. Product Concerned
The product concerned is certain flat rolled products of iron or non-alloy steel, of a width of
600mm or more, clad or coated, and flat rolled products of iron or non-alloy steel, of a width of less
than 600mm,clad or coated, mainly painted, varnished or coated with plastics.  The product concerned
is classified with the HTS numbers 72107000 and 72124000.
2. Increased Imports
Consumption
1997 1998 1999 2000 2001
Consumption
(in tonnes)226,479 361,279 616,527 884,922 1,540,463
Import data
1997 1998 1999 2000 2001
Total imports
(in tonnes)51,506 113,126 297,376 492,352 716,699
Rate of increase
(in %)119.64 162.87 65.57 45.57
Market share(in %) 22.74 31.31 48.23 55.64 46.52G/SG/N/8/CHN/1
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Volume as moving average (in tonnes)
1998/1997 1999/1998 2000/1999 2001/2000
Volume as moving average (in
tonnes)82,316 205,251 394,864 604,526
The investigation reveals that the import quantities of the product concerned increased
suddenly, sharply and significantly in the most recent past.  The annual import quantity of the product
concerned between 1997 and 2001 increased continuously.  The import of the product concerned in1997 was 51,500 tons.  The import of the product concerned for 1998 was 61,600 tons more than
1997, representing 119.64% increase over the import quantity of 1997.  The import of the product
concerned for 1999 was 184,200 tons more than 1998, representing 162.87% increase over the import
quantity of 1998.  The import of the product concerned for 2000 was 195,000 tons more than 1999,
representing 65.57% increase over the import quantity of 1999.  The import for 2001 was 224,300tons more than 2000, representing 45.57% increase over the import quantity of 2000.
3. Serious Injury
Consistent with the PRC Measures and the relevant WTO regulations, the criteria for
determining the injury to the domestic industry incl ude market share, production, capacity, utilisation
rate of capacity, sales volume, sales revenue, price, pre-tax profits, employment, average salary,
productivity, etc.
No. Injury Index Unit 97 98 99 2000 2001
1Market share68.67% 54.34% 44.28% 39.85% 27.70%
2Production Tonnes176264.0 201013.0 272412.4 379527.0 422153.1
3Capacity Tonnes353688 463688 463688 483688 482896
4Utilisation rate
of capacity49.84% 43.35% 58.75% 78.47% 87.42%
5Total sales Tonnes155523 363966 273023 360627 426938
6Total sales
incomeRMB
Yuan982941226 2122174232 1520148880 1943574078 2030342910
7Weighted
average sellingpriceRMB
Yuan
 per  tonne6320 5831 5568 5389 4756
8Total pre-tax
profitsRMB
Yuan-21851981 49621608 152792229 332788795 158671582
9Pre-tax profit for
unit productRMB
Yuan-140.51 136.34 559.63 922.81 371.65
10Employment411 591 636 598 674
11Per capita salaryRMB
Yuan24186 27426 30721 33042 41785
12ProductivityTonne
per  employee
per  annum437.53 484.53 481.32 661.72 680.40
The domestic production capacity, production and sales volume of the product concerned
were on an insufficient increase between 1997 and 2001.  In particular, during the investigation
period, there was an apparent drop in the domestic market share of the product concerned and theG/SG/N/8/CHN/1
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price of the investigated enterprises.  There was an apparent downward tendency in their pre-tax
profits in the later period of the investigation, while the average salary and productivity rose relatively
recently.
4. Causation
The import of the product concerned is generally on the rise and, on the other hand, all the
economic indicators point to a tendency of serious overall impairment of the domestic industry.
It has been concluded after the analysis of the other elements which might potentially lead to
the injury to the domestic industry that the sharp increase in the import quantities of the productconcerned has caused serious injury to the domestic industry that produces the like or directly
competitive products and there is a substantive causal link between the sharp increased imports and
the serious injury to the domestic industry.
5. Proposed Measure
It is proposed that definitive safeguard measures be taken to prevent or remedy the serious
injury to the domestic producers caused by the increase in imports.  The definitive safeguard measures
are proposed to take the form of tariff quota in excess of which an additional duty requires to be paid.
In order to maintain the normal import level of the product, the total tariff quota for the first
half year of the implementation of the definitive safeguard measures (based on 185 days) will be the
average import of the prior three years plus 15%.  Consistent with the provisions of the PRC
Measures and the obligations of the PRC under Article 19 of the GATT and the WTO  Agreement on
Safeguards , safeguard measures should be liberalised progressively during their effective term.
Accordingly, the tariff quota for year 2 and year 3 during the term of the definitive safeguard
measures will increase 15% each year over that of the prior year.
The imported products above the tariff quota will be imposed with additional duties.  During
the term of the definitive safeguard measures, the rate of the additional duty will decrease, from the
second year, at the rate of 8% per year and the specific annual rate for the special duty will be: 23.2%
between 20 November 2002 and 23 May 2003; 21.3% between 24 May 2003 and 23 May 2004;19.6% between 24 May 2004 and 23 May 2005.
The implementation term of the definitive safeguard measures will last 3 years (including the
implementation term of the provisional safeguard measures) and end on 23 May 2005, unless the
situation has changed to render the definitive safeguard measures unnecessary.
The proposed tariff quota is 292,687,016kg between 20 November 2002 and 23 May 2003;
664,083,108kg between 24 May 2003 and 23 May 2004; and 763,695,575kg between 24 May 2004
and 23 May 2005.
PRODUCT 4: NON GRAIN-ORIENTED ELECTRICAL SHEETS
1. Product Concerned
The product concerned is certain flat rolled products of alloy steel, made of other electrical
sheets than oriented electrical sheets.  The product concerned is classified with the HTS numbers
72251900 and 72261900.G/SG/N/8/CHN/1
G/SG/N/10/CHN/1
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2. Increased Imports
Consumption
1997 1998 1999 2000 2001
Consumption
(in tonnes)422,477 516,230 788,822 1,349,219 1,364,468
Import data
1997 1998 1999 2000 2001
Total imports
(in tonnes)242,815 326,551 472,763 714,518 646,004
Rate of increase
(in %)34.49 44.77 51.14 -9.59
Market share
(in %)57.47 63.26 59.93 52.96 47.34
Volume as moving average (in tonnes)
1998/1997 1999/1998 2000/1999 2001/2000
Volume as moving average
(in tonnes)284,683 399,657 593,640 680,261
The investigation reveals that the import quantities of the product concerned increased
suddenly, sharply and significantly in the most recent past.  The annual import quantity of the product
concerned between 1997 and 2000 increased continuously.  After 2000, the annual import remained ata relatively high level.  The import of the product concerned in 1997 was 242,800 tons.  The import of
the product concerned for 1998 was 83,700 tons more than 1997, representing 34.49% increase over
the import quantity of 1997.  The import of the product concerned for 1999 was 146,200 tons more
than 1998, representing 44.77% increase over the import quantity of 1998.  The import of the product
concerned for 2000 was 241,800 tons more than 1999, representing 51.14% increase over the importquantity of 1999.  Although the import for 2001 was little less than 2000, representing 9.59% decrease
as compared with the import quantity of 2000, the import for 2001 was 403,200 tons more than 1997
and 319,500 tons more than 1998, representing respectively 166.05% and 97.82% increase over the
import quantity of 1997 and 1998.  2001 also gained 36.64% increase over 1999.
3. Serious Injury
According to the PRC Measures and the relevant WTO regulations, the criteria for
determining the injury to the domestic industry incl ude market share, production, capacity, utilisation
rate of capacity, sales volume, sales revenue, price, pre-tax profits, employment, average salary,
productivity, etc.
No. Injury Index Unit 97 98 99 2000 2001
1 Market share 31.07% 35.81% 34.99% 50.30%
2 Production Tonnes 180733 198500 249224 483705 752830
3 Capacity Tonnes 199318 319318 319318 887992 887992
4Utilisation rate of
capacity 90.68% 62.16% 78.05% 54.47% 84.78%
5 Total sales Tonnes 160397 282551 472093 721264
6 Total sales incomeRMB
Yuan 713680347 1113614113 2094773670 2620176329G/SG/N/8/CHN/1
G/SG/N/10/CHN/1
Page 14
No. Injury Index Unit 97 98 99 2000 2001
7Weighted average
selling priceRMB
Yuan
 per tonne 4449 3941 4437 3633
8 Total pre-tax profitsRMB
Yuan 152531466 -42259722 113139060 49147205
9Pre-tax profit for unit
productRMB
Yuan 950.96 -149.56 239.65 68.14
10 Employment 1147 1824 1807 2268 2536
11 Per capita salaryRMB
Yuan 15002 12776 14276 19873 26439
12 ProductivityTonne
per employee
per annum 157.60 138.98 144.88 290.69 574.13
According to the data collected during the investigation, the increase in the domestic
production capacity, production and sales volume of the product concerned showed a tendency of
slowdown.  The domestic operating ratio decreased while there was an increasing tendency in thedomestic market share.  There was an apparent drop in the price and total pre-tax profit of the
manufacturers.  The increase in their sales income and number of employees showed a tendency of
slowdown.  There was even a downw ard tendency in the number of their employees recently, while
the average salary and productivity rose relatively.
4. Causation
The import of the product concerned is generally on the rise and, on the other hand, all the
economic indicators point to a tendency of serious overall impairment of the domestic industry.
It has been concluded after the analysis of the other elements which might potentially lead to
the injury to the domestic industry that the sharp increase in the import quantities of the product
concerned has caused serious injury to the domestic industry that produces the like or directly
competitive products and there is a substantive causal link between the sharp increased imports and
the serious injury to the domestic industry.
5. Proposed Measure
It is proposed that definitive safeguard measures be taken to prevent or remedy the serious
injury to the domestic producers caused by the increase in imports.  The definitive safeguard measuresare proposed to take the form of tariff quota in excess of which an additional duty requires to be paid.
In order to maintain the normal import level of the product, the total tariff quota for the first
half year of the implementation of the definitive safeguard measures (based on 185 days) will be the
average import of the prior three years plus 10%.  Consistent with the provisions of the PRC
Measures and the obligations of the PRC under Article 19 of the GATT and the WTO  Agreement on
Safeguards , safeguard measures should be liberalised progressively during their effective term.
Accordingly, the tariff quota for year 2 and year 3 during the term of the definitive safeguard
measures will increase 10% each year over that of the prior year.
The imported products above the tariff quota will be imposed with additional duties.  During
the term of the definitive safeguard measures, the rate of the additional duty will decrease, from thesecond year, at the rate of 8% per year and the specific annual rate for the special duty will be: 20.2%G/SG/N/8/CHN/1
G/SG/N/10/CHN/1
Page 15
between 20 November 2002 and 23 May 2003; 18.6% between 24 May 2003 and 23 May 2004;
17.1% between 24 May 2004 and 23 May 2005.
The implementation term of the definitive safeguard measures will last 3 years (including the
implementation term of the provisional safeguard measures) and end on 23 May 2005, unless the
situation has changed to render the definitive safeguard measures unnecessary.
The proposed tariff quota is 340,760,324kg between 20 November 2002 and 23 May 2003;
739,424,806 kg between 24 May 2003 and 23 May 2004; and 813,367,287kg between 24 May 2004
and 23 May 2005.
PRODUCT 5: COLD ROLLED STAINLESS STEEL SHEETS (STRIPS)
1. Product Concerned
The product concerned is certain flat rolled products of stainless steel, of a thickness under 4.75 mm,
cold rolled but not further processed.  The product concerned is classified with the HTS numbers
72193200, 79193300, 72193400, 72193500 and 72202000.
2. Increased Imports
Consumption
1997 1998 1999 2000 2001
Consumption
(in tonnes)204,177 308,686 791,544 813,611 1,064,772
Import data
1997 1998 1999 2000 2001
Total imports
(in tonnes)169,183 270,700 564,316 442,708 612,217
Rate of increase(in %) 60.00 108.47 -21.55 38.29
Market share(in %) 82.86 87.69 71.29 54.41 57.50
Volume as moving average (in tonnes)
1998/1997 1999/1998 2000/1999 2001/2000
Volume as moving average(in tonnes)219,941 417,508 503,512 527,463
The investigation reveals that the import quantities of the product concerned increased
suddenly, sharply and significantly in the most recent past.  The annual import quantity of the product
concerned between 1997 and 2000 increased consecutively.  The import of the product concerned in
1997 was 169,200 tons.  The import of the product concerned for 1998 was 101,500 tons more than
1997, representing 60.00% increase over the import quantity of 1997.  The import of the productconcerned for 1999 was 293,600 tons more than 1998, representing 108.47% increase over the import
quantity of 1998.  Although the import for 2001 was 442,700 tons, little less than 1999, the import for
2001 remained at a relatively high level compared with 1997 and 1998.  The import of the product
concerned for 2001 was 169,500 tons more than 2000, representing 45.57% increase over the import
quantity of 2000.G/SG/N/8/CHN/1
G/SG/N/10/CHN/1
Page 16
3. Serious Injury
Consistent with the PRC Measures and the relevant WTO regulations, the criteria for
determining the injury to the domestic industry incl ude market share, production, capacity, utilisation
of capacity, sales volume, sales revenue, price, pre-tax profits, employment, average salary,
productivity, etc.
No. Injury Index Unit 97 98 99 2000 2001
1 Market share 11.13% 12.98% 26.43% 43.43% 36.43%
2 Production Tonnes 21602.1 39402.3 221424.8 355091.7 391839.8
3 Capacity Tonnes 54774 54774 401974 459974 493632
4Utilisation rate
of capacity 39.44% 71.94% 55.08% 77.20% 79.38%
5 Total sales Tonnes 22716 40080 210259 357486 389901
6Total sales
incomeRMB
Yuan 312746385 476616781 2692271760 5767689441 5193487726
7Weighted
average selling
priceRMB
Yuan
Per  tonne 13767 11891 12805 16134 13320
8Total pre-tax
profitsRMB
Yuan -95692014 -52883860 -107278237 214316680 156300427
9Pre-tax profit
for unitproductRMB
Yuan -4212.48 -1319.44 -510.22 599.51 400.87
10 Employment 1053 1019 1888 1818 1712
11Per capita
salaryRMB
Yuan 10562 9788 16955 27443 32622
12 ProductivityTonne
per
employee
per  annum 23.72 38.02 140.74 221.02 248.23
According to the data collected during the in vestigation period, the increase in the domestic
production capacity and production of the product concerned showed a tendency of slowdown
between 1997 and 2001.  The domestic operating ratio remained substantially unchanged while therewas an apparent drop in the domestic market share of the product concerned in 2001.  There was a
downward tendency in the price of the investigated  enterprises, while the increase in their sales
income showed a tendency of slowdown and started to demonstrate a downward tendency.  Their pre-
tax profit and unit profit have begun to decrease recently.  There was a consecutive decrease in the
number of their employees recently, while the average salary and productivity rose relatively.
4. Causation
The import of the product concerned is generally on the rise and, on the other hand, all the
economic indicators point to a tendency of serious overall impairment of the domestic industry.
It has been concluded after the analysis of the other elements which might potentially lead to
the injury to the domestic industry that the sharp increase in the import quantities of the product
concerned has caused serious injury to the domestic industry that produces the like or directly
competitive products and there is a substantive causal link between the sharp increased imports and
the serious injury to the domestic industry.G/SG/N/8/CHN/1
G/SG/N/10/CHN/1
Page 17
5. Proposed Measure
It is proposed that definitive safeguard measures be taken to prevent or remedy the serious
injury to the domestic producers caused by the increase in imports.  The definitive safeguard measures
are proposed to take the form of tariff quota in excess of which an additional duty requires to be paid.
In order to maintain the normal import level of the product, the total tariff quota for the first
half year of the implementation of the definitive safeguard measures (based on 185 days) will be the
average import of the prior three years plus 10%.  Consistent with the provisions of the PRC
Measures and the obligations of the PRC under Article 19 of the GATT and the WTO  Agreement on
Safeguards , safeguard measures should be liberalised progressively during their effective term.
Accordingly, the tariff quota for year 2 and year 3 during the term of the definitive safeguard
measures will increase 10% each year over that of the prior year.
The imported products above the tariff quota will be imposed with additional duties.  During
the term of the definitive safeguard measures, the rate of the additional duty will decrease, from the
second year, at the rate of 8% per year and the specific annual rate for the special duty will be: 18.1%
between 20 November 2002 and 23 May 2003; 16.7% between 24 May 2003 and 23 May 2004;
15.3% between 24 May 2004 and 23 May 2005.
The implementation term of the definitive safeguard measures will last 3 years (including the
implementation term of the provisional safeguard measures) and end on 23 May 2005, unless the
situation has changed to render the definitive safeguard measures unnecessary.
Consistent with Article 5 Para 2 of the WTO  Agreement on Safeguards  and Article 19 of the
1994 GATT, members with substantial interests in supplying the relevant product should have the
opportunity to obtain a certain percentage of the tariff quota for the product.
The following table lists the allocation of the tariff quota among the countries/regions with
substantial interests in providing the product:
Product
concernedCountry/
Region2002.11.20 －2003.5.23
Quota (kg)2003.5.24 －2004.5.23
Quota (kg)2004.5.24 －2005.5.23
Quota (kg)
Total 300,927,557 653,094,131 718,403,544
ChineseTaipei102,711,033 222,910,702 245,201,772
Japan 84,972,644 184,413,603 202,854,963
Republic of
Korea59,794,046 129,769,240 142,746,164
Germany 22,168,050 48,110,660 52,921,726Cold
RolledStainlessSteel
Sheets
(Strips)
Other 31,281,784 67,889,926 74,678,919G/SG/N/8/CHN/1
G/SG/N/10/CHN/1
Page 18
ANNEX II
LIST OF PRODUCTS ORIGINATING IN DEVELOPING COUNTRIES
AND REGIONS TO WHICH THE SAFEGUARD MEASURES APPLY
Countries & regionsNon alloy hot
rolled sheets
and coilsNon alloy cold
rolled sheets and
coilsOrganic coated
sheetsNon-grain-
oriented electrical
sheetsCold rolled stainless
sheets and coils
Afghanistan
Bahrain
Bangladesh
Bhutan
Brunei
Myanmar
Cambodia
Cyprus
Korea, DPR
Hong Kong
India
Indonesia
Iran
Iraq
Israel
Jordan
Kuwait
Laos, PDR
Lebanon
Macao
Malaysia*
Maldives
Mongolia
Nepal
Oman
Pakistan
Palestine
Philippines
Qatar
Saudi Arabia
Singapore
Korea Rep.** * * *
Sri Lanka
Syrian
ThailandG/SG/N/8/CHN/1
G/SG/N/10/CHN/1
Page 19
Countries & regionsNon alloy hot
rolled sheets
and coilsNon alloy cold
rolled sheets and
coilsOrganic coated
sheetsNon-grain-
oriented electrical
sheetsCold rolled stainless
sheets and coils
Turkey
United ArabEmirates
Republic of Yemen
Vietnam
Algeria
Angora
Benin
Botswana
Burundi
Cameroon
Cape Verde
Central African Rep.
Comoros
Chad
Congo
Djibouti
Egypt
Eq. Guinea
Ethiopia
Gabon
Gambia
Ghana
Guinea
Guinea Bissau
Côte d'Ivoire
Kenya
Liberia
Libyan Arab Jm
Madagascar
Malawi
Mali
Mauritania
Mauritius
Morocco
Mozambique
Namibia
Niger
Nigeria
Reunion
RwandaG/SG/N/8/CHN/1
G/SG/N/10/CHN/1
Page 20
Countries & regionsNon alloy hot
rolled sheets
and coilsNon alloy cold
rolled sheets and
coilsOrganic coated
sheetsNon-grain-
oriented electrical
sheetsCold rolled stainless
sheets and coils
Sao Tome &Principe
Senegal
Seychelles
Sierra Leone
Somalia
South Africa
Sudan
Tanzania
Togo
Tunisia
Uganda
Burkina Faso
Congo, DR
Zambia
Zimbabwe
Lesotho
Swaziland
Eritrea
Albania
Bulgaria
Malta
Romania
Georgia
Armenia
Azerbaijan
Byelorussia
Kazakhstan **
Kyrgyzstan
Moldova
Tajikistan
Turkmenistan
Ukraine**
Uzbekistan
Yugoslavia FR
Slovak Rep
Macedonia Rep
Bosnia &
Hercegovina
Antigua & Barbuda
Argentina
ArubaG/SG/N/8/CHN/1
G/SG/N/10/CHN/1
Page 21
Countries & regionsNon alloy hot
rolled sheets
and coilsNon alloy cold
rolled sheets and
coilsOrganic coated
sheetsNon-grain-
oriented electrical
sheetsCold rolled stainless
sheets and coils
Bahamas
Barbados
Belize
Bolivia
Bonaire
Brazil
Cayman Is
Chile
Colombia
Dominica
Costa Rica
Cuba
Curacao
Dominican Rep.
Ecuador
French Guyana
Grenada
Guadeloupe
Guatemala
Guyana
Haiti
Honduras
Jamaica
Martinique
Mexico
Montserrat
Nicaragua
Panama
Paraguay
Peru
Puerto Rico
Saba
Saint Lucia
Saint Martin Is
Saint Vincent &Grenadines
El Salvador
Suriname
Trinidad & Tobago
Turks & Caicos Is
UruguayG/SG/N/8/CHN/1
G/SG/N/10/CHN/1
Page 22
Countries & regionsNon alloy hot
rolled sheets
and coilsNon alloy cold
rolled sheets and
coilsOrganic coated
sheetsNon-grain-
oriented electrical
sheetsCold rolled stainless
sheets and coils
Venezuela
Br. Virgin Is
St. Kitts-Nevis
Cook Is
Fiji
Nauru
New Caledonia
Vanuatu
Norfolk Is
Papua New Guinea
Society Is
Solomon Is
Tonga
Tuamotu Is
Tubai Is
Samoa
Kiribati
Tuvalu
Micronesia Fs
Marshall Is Rep
Palau
Note:  The measure is not applied, except in the case of those products originating in those
countries against which an "*"appears in this annex.
__________