WORLD TRADE
ORGANIZATIONG/SG/N/10/CHL/4
G/SG/N/11/CHL/4
19 July 2002
(02-3998)
Committee on Safeguards Original:  Spanish
NOTIFICATION PURSUANT TO ARTICLE 12.1(C)
OF THE AGREEMENT ON SAFEGUARDS
NOTIFICATION PURSUANT TO ARTICLE 9, FOOTNOTE 2,
OF THE AGREEMENT ON SAFEGUARDS
CHILE
The following communication, dated 16 July 2002, has been received from the Permanent
Mission of Chile.
_______________
Pursuant to Article 12.1(c) of the WTO Agreement on Safeguards and further to the
notification  in document  G/SG/N/6/CHL/8 - G/SG/N/9/CHL/5 of the initiation ex officio of an
investigation into certain steel products, I have the pleasure to submit herewith a notification by Chile
stating that the Chilean investigating authority has decided to recommend the application of a
definitive safeguard measure to imports of two steel products.
Please also find attached, pursuant to Article 9.1, footnote 2, of the WTO Agreement on
Safeguards, the list of developing country Members of the WTO to which the exclusion provided for
in the said Article applies.G/SG/N/10/CHL/4
G/SG/N/11/CHL/4
Page 2
NOTIFICATION BY CHILE OF THE TERMINATION OF THE
SAFEGAURD INVESTIGATION INTO CERTAIN STEEL PRODUCTS
As notified in document G/SG/N/6/CHL/8 - G/SG/N/9/CHL/5, circulated on 12 April 2002,
the Chilean investigating authority initiated a new safeguard investigation into certain steel products.
At its meeting No. 259 on 28 June 2002, the Chilean investigating authority decided to
terminate the safeguard investigation into the eighteen products involved, recommending the
application of safeguard measures for only some of the products under investigation, as detailed
hereunder.
The investigating authority, acting with the unanimity of its members, decided not to
recommend the application of safeguard measures to the following products:
1. Coils, hot-rolled, pickled , classified under tariff heading 7208.2600;
2. Coils, hot-rolled, pickled , classified under tariff heading 7208.2700, of a thickness of
1.8 mm or more and a width of 1070 mm or less;
3. Coils, hot-rolled , classified under tariff heading 7208.3600, of a thickness of up to 12 mm;
4. Coils, hot-rolled , classified under tariff heading 7208.3700, of a width of 1070 mm or less;
5. Coils and sheets, hot-rolled , classified under tariff headings 7208.3900 and 7208.5400,
respectively, of a thickness of 1.8 mm or more;
6. Coils and sheets, cold-rolled (cold-reduced) , classified under tariff headings 7209.1600 and
7209.2600, respectively, of a thickness of up to 1.9 mm;
7. Coils and sheets, cold-rolled (cold-reduced) , classified under tariff headings 7209.1700 and
7209.2700, respectively;
8. Coils and sheets, cold-rolled (cold-reduced) , classified under tariff headings 7209.1800 and
7209.2800 respectively, of a thickness of 0.35 mm or more;
9. Flat-rolled products,  plated or coated with ti n, in coils or sheets,  classified under tariff
heading 7210.1200, of a thickness of between 0.18 mm and 0.35 mm;
10. Flat-rolled products,  plated or coated with aluminium- zinc alloys, in coils or sheets ,
classified under tariff heading 7210.6100, of a thickness of between 0.35 mm and 0.80 mmand a width of 1000 mm or less;
11. Milling bars and rods , classified under tariff heading 7228.3000, measuring between
25.4 mm and 101.6 mm in diameter;
12. Concrete-reinforcing bars and rods , classified under tariff headings 7213.1000 and
7214.2000 respectively, measuring between 8 mm and 36 mm in diameter;
13. Bars and rods of rectangular (other than square) cross-section , classified under tariff
heading 7214.9100, of a thickness of between 3 mm and 12 mm;G/SG/N/10/CHL/4
G/SG/N/11/CHL/4
Page 3
14. Other bars and rods other than of rectangular cross-section , classified under tariff
heading 7214.9900: of circular cross-section, measuring between 6 mm and 38 mm in
diameter; of square cross-section, with sides measuring between 10 mm and 25 mm; ofhexagonal cross-section, the distance between the faces measuring from 19 mm to 31.8 mm;
bars and rods with concave grooves in the faces and rounded edges ("star-shaped" cross-
section) and sides measuring between 10.5 mm and 12.5 mm;
15. L sections , classified under tariff heading 7216.2100, of a height of between 20 mm and
65 mm; and,
16. L sections, classified under tariff heading 7216.4000, of a height of 80 mm.
By a majority of its members, the investigating authority, decided to recommend the
application of definitive safeguard measures on:
• Coils and sheets, hot-rolled , classified under tariff headings 7208.3800 and
7208.5300, respectively; and,
• Bars and rods , classified under tariff headings 7213.9110, 7213.9120 and
7213.9190, measuring 5.5 mm or more in diameter.
1. Information on evolution of imports, injury factors and causal link:
(a) Coils and sheets, hot-rolled, classified under tariff headings 7208.3800 and 7208.5300,
respectively.
In accordance with the information compiled during the investigation initiated on
28 December 2001 on the same subject, an analysis was conducted to assess whether any domestic
production was competing with the imported product, particular attention being paid to the technical
characteristics of both types of product in relation to thickness and width, once it had been established
that there were no significant differences as regards price and distribution channels.
In this case, the imports which would be competing with the domestic product are coils and
sheets, hot-rolled, classified under tariff headings 7208.3800 and 7208.5300, respectively, since their
ranges of thickness (of 3 mm. or more but less than 4.75 mm.) are covered by the domestic industry.
The width variable would not be a key factor in a definition of the competitive product in spite of the
fact that some of the imported products are larger than those supplied by the domestic industry, giventhat the greater width required by major users is for reasons of material yield and not a technological
imperative which would prevent them from being substituted by domestic supply.
With regard to the methodological approach adopted to study the import trends of this
product, a decision was made to record import figures restricted to the above-mentioned thickness
range by way of a selection of the pertinent tariff headings used in import declarations.  This process
also excluded operations conducted by domestic producers and those which were wrongly classified.
This analysis corresponded to the period January 1999 to May 2002 since the information in
import declarations prior to this period proved insufficient to conduct a representative screening.  In
any case, the Commission also monitored the evolution of imports on the basis of entire tariff
headings (without a selective review) from 1997 until May 2002 in order to have an additional trend
analysis at its disposal.
On the basis of the above, the Commission, by a majority of its members, considered that:G/SG/N/10/CHL/4
G/SG/N/11/CHL/4
Page 4
- In this case, the information available has established that imports of the products in
question have increased and that serious injury to the domestic industry producinglike or directly competitive products is imminent, for which reason the application of
a definitive safeguard measure is being recommended.
- This recommendation is based on the confirmation of a recent surge in imports, both
in absolute terms and terms relative to domestic production, coupled with the fall in
price of the imported product, expressed in both US dollars and UF (Chilean
government inflation index-linked monetary units).
- Moreover, amongst the factors which were taken into consideration, and which are
described in an annex hereto, are the decline in both 2002 production and domestic
sales, the reversal of the inventory trend and the concurrent increase in imports and
decline in apparent consumption.  Sales margins, for their part, are negative this year.
- As regards causality, the increase in the imports of the product under investigation in
relation to apparent consumption was confirmed.  Furthermore, the hot-rolled product
family showed a positive correlation between the average domestic prices of these
products and international prices selected in accordance with the main regions oforigin of the product imported into Chile, the figures of which are annexed hereto.
- With regard to "unforeseen developments", the recent trend in international prices for
the most representative steel products were taken into account, as well as the
protective measures adopted by a group of producer countries as of March this year.
(b) Bars and rods, classified under tariff headings 7213.9110, 7213.9120 and 7213.9190,
measuring 5.5 mm or more in diameter.
In accordance with the information compiled during the investigation initiated on
28 December 2001 on the same subject, an analysis was conducted to assess whether any domestic
production was competing with the imported product, particular attention being paid to the technical
characteristics of both types of product in relation to diameter, once it had been established that therewere no significant differences as regards price and distribution channels.
In this case, the imports which would be competing with the domestic product are bars and
rods, classified under tariff headings 7213.9110, 7213.9120 and 7213.9190, measuring 5.5 mm or
more in diameter.
With regard to the methodological approach adopted to study the import trends of this
product, a decision was made to record import figures restricted to the above-mentioned diameter
range by way of a selection of the pertinent tariff headings used in import declarations.  This process
also excluded operations conducted by domestic producers and those which were wrongly classified.
This analysis corresponded to the period January 1999 to May 2002.  The Commission also
monitored the evolution of imports on the basis of entire tariff headings (without a selective review)
from 1997 until May 2002 in order to have an additional trend analysis at its disposal.
On the basis of the above, the Commission, by a majority of its members, considered that:
- In this case, the information available has established that imports of the products in
question have increased and that serious injury to the domestic industry producingG/SG/N/10/CHL/4
G/SG/N/11/CHL/4
Page 5
like or directly competitive products is imminent, for which reason the application of
a definitive safeguard measure is being recommended.
- This recommendation is based on the confirmation of a recent surge in imports, both
in absolute terms and terms relative to domestic production, coupled with the fall in
price of the imported product, expressed in both US dollars and UF (Chilean
government inflation index-linked monetary units).
- Moreover, amongst the factors which were taken into consideration, and which are
described in an annex hereto, are the decline in both 2002 production and domestic
sales and the concurrent increase in imports and decline in apparent consumption.Sales margins, for their part, are negative this year.
- As regards causality, the increase in the imports of the product under investigation in
relation to apparent consumption was confir med.  Furthermore, bars and rods showed
a positive correlation between the average domestic prices and international pricesselected in accordance with the main regions of origin of the product imported into
Chile, the figures of which are annexed hereto.
- With regard to "unforeseen developments", the recent trend in international prices for
the most representative steel products were taken into account, as well as theprotective measures adopted by a group of producer countries as of March this year.
It should also be noted that this product, although it was not covered by the safeguard
investigation into steel products initiated by the United States in June 2001, nor that
conducted by other countries in 2002, was subject to a previous safeguard measure
which ceases to be effective in March 2003.
1.1 Injury factors at company and industry level
In its analysis of the periods January-March 2001/2002, the Commission took into account
the fact that the operating profits (in nominal Chilean pesos) of Compañía Siderúrgica Huachipato
S.A., although they remained positive, fell 47 per cent, a situation explained by an increase in
operating costs exceeding that in operating income.  A decline of 17 per cent was recorded in 2001 inrelation to 2000, mainly attributable to an increase in operating and administrative costs over and
above that in operating income.
A comparison of the periods January-March 2001/2002 for Gerdau Aza S.A. revealed that
operating profits (in nominal Chilean pesos) rose by eight per cent, mainly owing to an increase in
operating income.  This maintained the earlier trend, since operating profits were up 51 per cent in
2001 in relation to 2000.
Employment in the industry has declined successively since 1998, falling to 3,067 persons in
2001.  A two per cent decrease was recorded in 2000/2001.
The information used with regard to production and sales was updated to April 2002.  The
production of Compañía Siderúrgica Huachipato S.A. saw a decline (-5 per cent) in January-April
2001/2002, as did domestic sales (-12 per cent).  Conversely, exports recovered 29 per cent.  By way
of comparison, in the 2000/2001 period the company saw a three per cent decline in production, an11 per cent increase in domestic sales and a 74 per cent contraction in exports.
In the periods January-April 2001/2002, Gerdau Aza S.A. recorded an increase in both
production (11 per cent) and domestic sales (nine per cent), but a fall in exports (-29 per cent).G/SG/N/10/CHL/4
G/SG/N/11/CHL/4
Page 6
Previously, in 2000/2001, the company's production grew by 13 per cent, domestic sales by 19 per
cent and exports by 42 per cent.
Domestic industry productivity, measured in tonnes per employee, increased between 1998
and 2001 at an average annual rate of eight per cent.  A review by company reveals that Compañía
Siderúrgica Huachipato S.A. records average annual growth of three per cent and Gerdau Aza S.A. of
approximately 50 per cent.
2. Precise description of the products involved:
• Coils and sheets, hot-rolled , classified under tariff headings 7208.3800 and
7208.5300, respectively; and,
• Bars and rods , classified under tariff headings 7213.9110, 7213.9120 and
7213.9190, measuring 5.5 mm or more in diameter.
3. Precise description of the recommended measure:
A definitive ad valorem  tariff surcharge of 10 per cent on imports of Coils and sheets, hot-
rolled , classified under tariff headings 7208.3800 and 7208.5300, respectively; and,
A definitive ad valorem  tariff surcharge of 10 per cent on imports of Bars and rods ,
classified under tariff headings 7213.9110, 7213.9120 and 7213.9190, measuring 5.5 mm or more in
diameter.
4. Proposed date of introduction of the recommended measure:
The definitive measure, if adopted, is expected to come into effect in the second half of July
2002.
5. Expected duration of the recommended measure:
The definitive safeguard measure, if adopted, will remain in force for one year at the most.
This definitive measure may be extended for a further period not exceeding one year.
6. Exemption from application of the measure pursuant to Article 9.1 of the Agreement on
Safeguards
It was recommended that the proposed measure, if imposed, should not be applied against
developing country Members of the World Trade Orga nization with average individual shares of total
imports of less than three per cent over the 24 months from June 2000 to May 2002 and which
collectively account for not more than nine per cent of total imports, as established in Article 9.1 of
the Agreement on Safeguards and a list of which is annexed hereto.G/SG/N/10/CHL/4
G/SG/N/11/CHL/4
Page 7
Annex 5.1
(A) Developing Country Members of the World Trade Organization
Countries Imports over the last 24 months (June 2000 to May 2002)
 Tonnes Percentage Share of Total
Angola* - 0.00
Antigua and Barbuda* - 0.00
Argentina*                               614 2.97
Bahrain*                                  - 0.00
Bangladesh*                                  - 0.00
Barbados*                                  - 0.00
Belize*                                  - 0.00
Benin*                                  - 0.00
Bolivia*                                  - 0.00
Botswana*                                  - 0.00
Brunei Darussalam*                                  - 0.00
Burkina Faso*                                  - 0.00
Burundi*                                  - 0.00
Cameroon*                                  - 0.00
Chad*                                  - 0.00
Colombia*                                  - 0.00
Congo*                                  - 0.00
Korea, Republic of*                                  - 0.00
Costa Rica*                                  - 0.00
Côte d'Ivoire*                                  - 0.00
Cuba*                                  - 0.00
Djibouti*                                  - 0.00
Dominica*                                  - 0.00
Ecuador*                                  - 0.00
Egypt*                                  - 0.00
El Salvador*                                  - 0.00
United Arab Emirates*                                  - 0.00
Fiji*                                  - 0.00
Philippines*                                  - 0.00
Gabon*                                  - 0.00
Gambia*                                  - 0.00
Ghana*                                  - 0.00
Grenada*                                  - 0.00
Guatemala*                                  - 0.00
Guinea*                                  - 0.00
Guinea-Bissau*                                  - 0.00
Guyana*                                  - 0.00
Hong Kong, People's
Republic of China*                                 - 0.00
Haiti*                                  - 0.00
Honduras*                                  - 0.00
India*                                  - 0.00
Indonesia*                                  - 0.00
Solomon Islands*                                  - 0.00G/SG/N/10/CHL/4
G/SG/N/11/CHL/4
Page 8
Israel*                                  - 0.00
Jamaica*                                  - 0.00
Jordan*                                  - 0.00
Kenya*                                  - 0.00
Kuwait*                                  - 0.00
Lesotho*                                  - 0.00
Macau, China*                                  - 0.00
Madagascar*                                  - 0.00
Malaysia*                                  - 0.00
Malawi*                                  - 0.00
Maldives*                                  - 0.00
Mali*                                  - 0.00
Morocco*                                  - 0.00
Mauritius*                                  - 0.00
Mauritania*                                  - 0.00
Mongolia*                                  - 0.00
Mozambique*                                  - 0.00
Myanmar*                                  - 0.00
Namibia*                                  - 0.00
Nicaragua*                                  - 0.00
Niger*                                  - 0.00
Nigeria*                                  - 0.00
Pakistan*                                  - 0.00
Panama*                                  - 0.00
Papua New Guinea*                                  - 0.00
Paraguay*                                  - 0.00
Peru*                                  - 0.00
Qatar*                                  - 0.00
Congo, Democratic
Republic of the*                                 - 0.00
Central African
Republic*                                 - 0.00
Dominican Republic*                                  - 0.00
Kyrgyz Republic*                                  - 0.00
Romania*                               311 1.50
Rwanda*                                  - 0.00
Saint Kitts and Nevis*                                  - 0.00
Saint Vincent and the
Grenadines*                                 - 0.00
Saint Lucia*                                  - 0.00
Senegal*                                  - 0.00
Sierra Leone*                                  - 0.00
Singapore*                                  - 0.00
Sri Lanka*                                  - 0.00
Suriname*                                  - 0.00
Swaziland*                                  - 0.00
Thailand*                                  - 0.00
Tanzania, United
Republic of*                                 - 0.00
Togo*                                  - 0.00
Trinidad and Tobago*                                  - 0.00G/SG/N/10/CHL/4
G/SG/N/11/CHL/4
Page 9
Tunisia*                                  - 0.00
Uganda*                                  - 0.00
Uruguay*                                  - 0.00
Zambia*                                  - 0.00
Zimbabwe*                                  - 0.00
Subtotal                               925 4.48
(B) Developing countries that are not Me mbers of the World Trade Organization with
agreements that include a Most -Favoured-Nation (MFN) clause
Lebanon                                  - 0.00
Total Imports                          20,653 100.00
(C) Countries with trade agreements th at include global safeguard clauses
Countries  Imports over the last 36 months (June 1999 to May 2002)
 Tonnes Percentage Share of Total
Canada                                  - 0.00
Mexico (*)                            4,831 13.90
Peru                                  - 0.00
Total Imports                          34,749 100.00
(*): Mexico is in third place in the country ranking table, with an import growth rate of -100 per cent in
comparison with a rate of -19 per cent of total imports.  The growth rate of total imports in the period January-May 2002/2001 is 125 per cent, while no imports from Mexico have been recorded as of 2001.G/SG/N/10/CHL/4
G/SG/N/11/CHL/4
Page 10
Annex 5.2
Countries excluded from the application of safeguards to imports of Bars and rods, classified
under tariff headings 7213.9110, 7213.9120 and 7213.9190
(A) Developing Country Members of the World Trade Organization
Countries Imports over the last 24 months (June 2000 to May 2002)
 Tonnes Percentage Share of Total
Angola*                             - 0.00
Antigua and Barbuda*                              - 0.00
Bahrain*                              - 0.00
Bangladesh*                              - 0.00
Barbados*                              - 0.00
Belize*                              - 0.00
Benin*                              - 0.00
Bolivia*                              - 0.00
Botswana*                              - 0.00
Brazil*                        1,415 2.43
Brunei Darussalam*                              - 0.00
Burkina Faso*                              - 0.00
Burundi*                              - 0.00
Cameroon*                              - 0.00
Chad*                              - 0.00
Colombia*                              - 0.00
Congo*                              - 0.00
Korea, Republic of*                              - 0.00
Costa Rica*                              - 0.00
Côte d'Ivoire*                              - 0.00
Cuba*                              - 0.00
Djibouti*                              - 0.00
Dominica*                              - 0.00
Ecuador*                              - 0.00
Egypt*                              - 0.00
El Salvador*                              - 0.00
United Arab Emirates*                              - 0.00
Fiji*                              - 0.00
Philippines*                              - 0.00
Gabon*                              - 0.00
Gambia*                              - 0.00
Ghana*                              - 0.00
Grenada*                              - 0.00
Guatemala*                              - 0.00
Guinea*                              - 0.00
Guinea-Bissau*                              - 0.00
Guyana*                              - 0.00
Hong Kong, People's Republic of
China*                             - 0.00
Haiti*                              - 0.00G/SG/N/10/CHL/4
G/SG/N/11/CHL/4
Page 11
Honduras*                              - 0.00
India*                              - 0.00
Indonesia*                              - 0.00
Solomon Islands*                              - 0.00
Israel*                              - 0.00
Jamaica*                              - 0.00
Jordan*                              - 0.00
Kenya*                              - 0.00
Kuwait*                              - 0.00
Lesotho*                              - 0.00
Macau, China*                              - 0.00
Madagascar*                              - 0.00
Malaysia*                              - 0.00
Malawi*                              - 0.00
Maldives*                              - 0.00
Mali*                              - 0.00
Morocco*                              - 0.00
Mauritius*                              - 0.00
Mauritania*                              - 0.00
Mexico*                               8 0.01
Mongolia*                              - 0.00
Mozambique*                              - 0.00
Myanmar*                              - 0.00
Namibia*                              - 0.00
Nicaragua*                              - 0.00
Niger*                              - 0.00
Nigeria*                              - 0.00
Pakistan*                              - 0.00
Panama*                              - 0.00
Papua New Guinea*                              - 0.00
Paraguay*                              - 0.00
Peru*                              - 0.00
Qatar*                              - 0.00
Congo, Democratic Republic of
the*                             - 0.00
Central African Republic*                              - 0.00
Dominican Republic*                              - 0.00
Kyrgyz Republic*                              - 0.00
Romania*                              - 0.00
Rwanda*                              - 0.00
Saint Kitts and Nevis*                              - 0.00
Saint Vincent and the
Grenadines*                             - 0.00
Saint Lucia*                              - 0.00
Senegal*                              - 0.00
Sierra Leone*                              - 0.00
Singapore*                              - 0.00
Sri Lanka*                              - 0.00
Suriname*                              - 0.00
Swaziland*                              - 0.00
Thailand*                              - 0.00G/SG/N/10/CHL/4
G/SG/N/11/CHL/4
Page 12
Tanzania, United Republic of*                              - 0.00
Togo*                              - 0.00
Trinidad and Tobago*                              - 0.00
Tunisia*                              - 0.00
Uganda*                              - 0.00
Uruguay*                              - 0.00
Zambia*                              - 0.00
Zimbabwe*                              - 0.00
Subtotal                        1,423 2.44
(B) Developing countries that are not Me mbers of the World Trade Organization with
agreements that include a Most -Favoured-Nation (MFN) clause
Lebanon                              - 0.00
Total Imports                      58,253 100.00
(C) Countries with trade agreements th at include global safeguard clauses
Countries  Imports over the last 36 months (June 1999 to May 2002)
 Tonnes Percentage Share of Total
Canada                              - 0.00
Mexico (*)                               8 0.01
Peru                              - 0.00
Total Imports                      72,920 100.00
(*): Mexico is in eleventh place in the country ranking table.
__________