RESTRICTEDWORLD TRADE
ORGANIZATIONG/SG/Q2/CHL/8
2 May 2001
(01-2228)
Committee on Safeguards Original:  Spanish
NOTIFICATION UNDER ARTICLE 12.1(A) OF THE AGREEMENT ON
SAFEGUARDS ON INITIATION OF AN INVESTIGATION
AND THE REASONS FOR IT
AND
NOTIFICATION UNDER ARTICLE 12.4 OF THE AGREEMENT ON
SAFEGUARDS BEFORE TAKING A PROVISIONAL
SAFEGUARD MEASURE REFERRED
TO IN ARTICLE 6
Replies by Chile to the Questions Posed by the UNITED STATES1
Regarding the Notifications Made by CHILE2
The following communication, dated 30 April 2001, has been received from the Permanent
Mission of Chile.
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Question 1
What is the current status of the safeguar d investigation on liquid and powdered milk,
notified in G/SG/N/6/CHL/4?
Reply
By document G/SG/N/8/CHL/2 – G/SG/N/10/CHL/3, Chile notified the Committee on
Safeguards of the decision by the Chilean investigating authority to recommend the application of a
definitive safeguard measure on powdered milk and UHT milk.  On 10 January 2001, the decree
establishing a 12 per cent ad valorem  tariff surcharge as a definitive safeguard measure on the said
products was published in the Official Journal of Chile.  It is important to bear in mind that the
provisional measure was 16 per cent ad valorem .
Question 2
Has a public hearing been held on the investigation?
                                                     
1 G/SG/Q2/CHL/7.
2 G/SG/N/8/CHL/1-G/SG/N/10/CHL/1 and Suppl.1.G/SG/Q2/CHL/8
Page 2
Reply
On Friday 18 August 2000, in the framework of the safeguards investigation on milk, a public
hearing was held before the investigating authority in conformity with the procedure laid down in
Law No. 18.525.
The following entities provided the investig ating authority with written submissions and
participated in the hearing:  Acoleche A.G.;  Asociación de Productores de Leche de Ñuble A.G.;
Asociación de Productores de Leche de Valdivia A.G.;  Asociación de Productores de Leche Zona
Central;  Centro de Industria Lechera de la Repúb lica de Argentina;  Colun;  Conaprole and CILU;
Embassy of Argentina; Embassy of Australia;   Embassy of Canada;  Embassy of Uruguay;
Fedeleche;  New Zealand Dairy Board;  Sociedad Nacional de Agricultura;  and the Delegation of theEuropean Commission.
Question 3
When does the Government of Chile expect to announce the results of its determination
on the investigation?  We note in G/SG/N/6/CHL/3Suppl.1 that a provisional safeguard measure
was announced on 13 July 2000.
Reply
The notification contained in document G/SG/N/7/CHL/3Suppl.1 concerns Decree No. 211 of
the Ministry of Finance dated 12 July 2000, establishing as a provisional safeguard measure an ad
valorem  tariff surcharge of 16 per cent on the import of various milk products.
In document G/SG/N/8/CHL/2 – G/SG/N/10/CHL/3 of 12 January 2001, Chile notified the
establishment of a definitive safeguard measure of 12 per cent ad valorem  on imports of milk
products.
Question 4
What was the effective date of the application of the provisional safeguard measure?
Reply
The effective date of the application of the provisional safeguard measure was 13 July 2000
(date of publication of Decree 211), and of the definitive measure, 10 January 2001.
Question 5
Article 12.6 of the WTO Safeguards Agreement provides that a provisional safeguard
measure may be applied "in critical circumstances where delay would cause damage which it
would be difficult to repair."
Did the competent authority consider what damage was likely to occur in the 200-day
period, beginning in July 2000, had a decision b een made to not impose a provisional safeguard
measure?  If so, what immediate consequences did the authority preliminarily determine were
likely to occur?G/SG/Q2/CHL/8
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Question 6
Did the competent authority publish a repor t on the provisional safeguard measure,
including its preliminary findings on the existence of critical circumstances?  If so, what is the
legal citation to that report?
Reply
The notifications contained in document G/SG/N/6/CHL/4 (initiation of the investigation) and
G/SG/N/6/CHL/3 (recommendation of the provisional measure) reveal the following:
"In the case of powdered milk, between the period January-April 1997 and
January-April 2000, imports increased from 1,791 to 5,297 tonnes, corresponding to an increase of
over 190 per cent;  in January-April 2000, there was an increase of 38 per cent in comparison with the
same period the previous year.
In the case of liquid UHT milk, during the period January-April 2000, 177,000 litres were
imported, which is more than five times the volume imported in 1999.
This increase has caused injury to domestic milk production, as can be seen from the decrease
in production, in domestic prices, in investment and in jobs, as well as a threat of injury to domestic
production of liquid UHT milk.
The information available shows a close link between domestic and external prices of
powdered milk.  Consequently, the downward trend in international prices of this product in recent
years has been reflected in a reduction by the same amount in domestic prices.  In the case of liquid
UHT milk, there has been an increase in imports at prices which oblige the domestic industry toreduce its earnings in order to be competitive.
The situation in the dairy sector has deteriorated to such an extent that it has led to a decrease
in investment and production, the closure of dairies,  a fall in the number of jobs, and has also had
other effects.  In addition, recent increases in imports of liquid milk at low prices have constituted a
threat and an indication which makes it even more necessary to apply urgent measures."
The Report is contained in the record of session 213 of the Commission (investigating
authority), held on 9 June 2000.
Question 7
Did the Government of Chile initiate Article 12.4 consultations immediately after the
measure was taken?  With which countries did Chile consult?  Which countries have substantial
export interests in these products?
Reply
Chile would like to begin by pointing out that Article 12.4 of the Agreement on Safeguards
states that "consultations shall be initiated immediately after the measure is taken".
The question by the United States seems to suggest that the initiative for holding
consultations lies solely with the Member that adopts the provisional measure.G/SG/Q2/CHL/8
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Chile considers that the mere notification of th e measure is sufficient to indicate that the
notifying Member is prepared to hold consultations requested by any other interested Member, since
Article 12.4 is imperative in that respect.
In any case, Article 12.4 does not stipulate that the Member imposing the measure must offer
to hold consultations, since this is implicit in the notification itself.
Article 12.4 consultations were held on 21 November 2000, with the participation of
Argentina, Canada, Australia, New Zealand, Uruguay, United States, the European Communities and
Poland.  Chile's notification concerning the results of these consultations can be found in document
G/SG/24/Suppl.8 of 11 December 2000.
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