  
  
G/SG/N/8/MDG/1  
G/SG/N/10/MDG/1  
G/SG/N/11/MDG/1/Suppl.2  
1 July 2019 
(19-4380) Page: 1/14 
Committee on Safeguards  Original:  French  
 
  
NOTIFICATION UNDER ARTICLE 12.1(B) OF THE AGREEMENT ON  
SAFEGUARDS ON FINDING A SERIOUS INJURY OR THREAT  
THEREOF CAUSED BY INCREASED IMPORTS  
 
NOTIFICATION UNDER ARTICLE 12.1(C)  
OF THE AGREEMENT ON SAFEGUARDS  
(NOTIFICATION OF A PROPOSAL TO IMPOSE A MEASURE)  
 
NOTIFICATION UNDER ARTICLE 9, FOOTNOTE 2,  
OF THE AGREEMENT ON SAFEGUARDS  
MADAGASCAR  
(Pasta)  
The following communication, dated 2 5 June 2 019, is being circulated at the request of the 
delegation of Madagascar.  
 
_______________  
 
 
On 2 0 Sep tember 2 018, the National Trade Remedies Authority (ANMCC) published Notice  
No. 007-ANMCC/Av.18 on the initiation of a safeguard investigation on pasta imported into 
Madagascar.  
 
The initiation of the investigation and the imposition of a provisional measure were notified 
to the WTO Committee on Safeguards and circulated in G/SG/N/6/MDG/1  and 
G/SG/N/7/MDG/1 -G/SG/N/11/MDG/1 . 
 
On 20 February 2 019, the Committee on Safeguards was noti fied (in G/SG/N/6/MDG/1/Suppl.1 -
G/SG/N/7/MDG/1/Suppl.1 -G/SG/N/11/MDG/1/Suppl.1) that the date of entry into force of the 
provisional measure had changed and would be the date of publication of the Interministerial Order 
on the procedures for collecting add itional duties in the context of  trade remedies.  
 
Consistent with Article 12.3 of the Agreement on Safeguards, Madagascar is prepared to consult 
with those Members having a substantial interest as exporters of the product concerned.  
 
1  NOTIFICATIONS UNDER ARTICLE 12.1(B) AND 12.1(C) OF THE AGREEMENT ON 
SAFEGUARDS UPON MAKING A FINDING OF SERIOUS INJURY  
1.1  Provide evidence of serious injury or threat thereof caused by increased imports  
SERIOUS INJURY  
 
The determination of serious injury to the domestic pasta industry was based on  all relevant factors  
of an objective and quantifiable nature  having a bearing on the situation of that industry . On the 
basis of t he data collected during the injury investigat ion, the following  was established . 
Data on injury indicators are current for the period January 2 015 to December 2 018. G/SG/N/8/MDG/1 • G/SG/N/10/MDG/1 • G/SG/N/11/MDG/1/Suppl.2  
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  i. Rate of increase in imports  
There was a sudden, recent and significant increase in pasta imports , particularly in 2017 . That year  
imports increased 50 % from 2016, after having risen  only 3 % from 2015 to 2016.  
ii. Downward trend in import prices  
Change in cost -insurance -freight (c.i.f.) price of imports (all origins)  
 2015  2016  2017  2018  
C.i.f. price per kg ( MGA) 2,386  2,300  2,008  2,067  
The table above shows a downward trend in import prices from 2015. The trend appears not to be 
present between  2017 and 2018 because it was masked by the effects of the depreciation of the 
domestic currency . Between 3 1 December 2 017 and 3 1 December 2 018, the ariary (MGA) 
depreciated 7.76 % against the United States  dollar (USD), which is considerably higher than the 3 % 
average rate of increase in the prices of imports from the three countries over the same period . The 
exchange rate went from MGA 3,220.45 to MGA 3,470.24 per USD 1.  
iii. Effect on prices of domestic products  
Change in average prices of domestic products  
 2015  2016  2017  2018  
HM - - 1,132  1,125  
Index    - -0.62 
SALONE  2,016  2,221  2,218  2,322  
Index  - 10.17  -0.14 4.65 
SOCOBIS  1,194  1,292  1,277  1,198  
Index  - 8.22 -1.17 -6.22 
One part of the domestic industry sells its products at a loss . Another saw its profits deteriorate 
during the period analysed . There is a high degree of temporal  coincidence between the substantial 
decrease in import prices and the decrease in prices of domestic products from 2016 to 2017 . This 
situation is not viable in the long term and threatens to bring the operations of all  the companies in 
the industry  to a halt. 
iv. Change in world market exports of the principal  Member exporting to Madagascar  
 
Given that Egypt accounts for the largest share of Madagascar's total pasta import s, the ANMCC paid 
particular attention to the analysis of changes  in Egypt's  pasta exports to the world market . Those 
exports  have increased , with Madagascar being  the main destination . The risk that  pasta imports 
will continue to  increase  at this rate  is very high, given the export price, the trend  and Egypt's  
production capacity . 
Madagascar's share of Egypt's exports to the  world market  
 2015  2016  2017  2018  
Exports to the world  54,008,000  41,048,000  64,447,000  60,909,000  
Exports to Madagascar  15,599,241  16,930,251  28,037,054  33,625,301  
Madagascar's share of Egypt's exports 
(%) 29 41 44 55 
v. Capacity of exporters  
According to the annual report of the International Pasta Organisation (IPO)1 on pasta statistics for 
2013, Egypt's pasta production capacity was 400,000 tonnes, while average pasta consumption per 
person was 1.2 kg per year. As this was the information that was available to the Authority, it was 
presumed that Egypt's production capacity and average consumption per person ha d remained 
                                                
1 http://www.internationalpasta.org/index.aspx?id=7  G/SG/N/8/MDG/1 • G/SG/N/10/MDG/1 • G/SG/N/11/MDG/1/Suppl.2  
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  unchanged . Under this assumption, Egypt has potential additional export capacity of more 
than 200,000 tonnes.  
Egypt's export capacity  
Production capacity (kg)  400,000,000  
Consumption per person (kg)  1.2 
Population²  97,833,5212 
Domestic consumption (kg)  
(Population x Consumption per person)  117,400,225  
Export capacity (kg)  
(Production capacity - Domestic consumption)  282,599,775  
Total exports in 2017 (kg)  64,447,000  
Additional available export capacity  
(Export capacity - Total exports in 2017)  218,152,775  
The domestic industry suffers from  the effects of Egypt's significant  export capacity and faces a very 
vibrant rate of increase . Its surv ival is consequently under threat . 
vi. Share of the domestic market taken by increased imports  
The d ata for examining  market share are presented in the table below.  
Share of the domestic market taken by increased imports  
  2015  2016  2017  2018  
Imports (tonnes)  25,967,061  26,808,124  40,300,093  44,909,601  
Market share of imports  (%) 100 101 95 93 
Market share of the domestic  
industry  (%) 100 93 164 183 
Market share of pre -existing 
companies  (%) 100 93 52 44 
Since 2015, t he market share taken by imports has consistently been  very high . It was [ ] % in 
2015 and [ ] % in 2016 . Despite the fact that the company HABIBO MILLS entered the domestic 
pasta market in 2017, the market share of imports, at over 85 %, remains  very high.  
The slight reduction in the share of imports from 2017 onwards cannot therefo re be construed as an 
improvement in the situation of the domestic industry ; it simply reflect s the launch of production by 
the applicant company with a marketing strategy that still seeks to increase the level of  its pasta 
sales.  
The table shows a downwar d trend in the market share of the domestic industry until Habibo Mills 
began operations . If the analysis is done on the data for the other two producers, their share 
continued to decline through the end of the investigation  period . 
Consequently, despite a  decrease being observed in the market share of imports over the last two 
years, the ANMCC has maintain ed that that cannot be constru ed as an absence of  injury to the 
domestic industry.  
vii. Analysis of domestic industry indicators  
A - SECTORAL ANALYSIS OF THE STATE OF THE DOMESTIC INDUSTRY  
 
Given the difference in the situation s of the companies in the domestic industry and in order to, inter 
alia, have greater certainty regarding the results of the preliminary determination  as to serious 
injury , the ANMCC undertook a sectoral analysis of indicators of injury to the domestic industry , 
considering separately the injury indicators of HABIBO MILLS , the company that began operating in 
                                                
2 https://www.populationdata.net/pays/egypte  G/SG/N/8/MDG/1 • G/SG/N/10/MDG/1 • G/SG/N/11/MDG/1/Suppl.2  
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  2017, and the injury indicators of the other two domestic producer s, SALONE SA and SOCOBIS, 
whose operations considerably predated the investigation  period . 
In addition to  HABIBO MILLS ' output  indicators for the first two years analysed in the preliminary 
determination, the Authority used the company's business plan, prepared in 2014, to carry out its 
injury analysis and draw  relevant conclusions.  
The analysis of the data from HABIBO MILLS' bus iness plan and the verification of the sources of 
information it used led to the conclusion by the ANMCC that the projections it presented were 
relevant and achievable for the following reasons:  
- The average c.i.f. price per k ilogram  in 2014 was MGA 2,543, significantly higher than the 
company's estimated  2017 price of MGA [ ]. T he company certainly expected the price to 
increase over the coming years, but the opposite occurred.  
 
- Imports amounted to only 25,172 tonnes in 2014 and their rate of increase was more or less 
slow and normal until 2016 . Coinciding with the period when the investment was being made 
(that is, wh en the plant was being installed ), there was a sudden and abnormal  increase in 
imports  in 2017 . Before 2017, the n ormal average annual rate at which  imports  increased  was 
3.2%. A t that average annual rate of increase, the volume of imports would have been 
expected to reach  27,000  tonnes  in 2017 . However, that year, the volume of pasta imports 
suddenly rose to  40,300 t onnes, exceeding the estimate by more than 13,000 tonnes . This 
difference represent s an expansion of the market that would have benefited HABIBO MILLS, 
which had set its projection for 2017 at [ ] tonnes, which is still lower than 16,784 tonnes, the 
sum of  the [ ] tonnes  it produced  and the 13,000 tonnes in excess imports.  
 
- HABIBO MILLS ' projected volume of production for its first year of operation is relatively low  
and equals  50% of its production capacity.  
A.1 - INJURY INDICATORS FOR HABIBO MILLS  
 
HABIBO MILLS performance indicators are presented in the tables below ( Sources : Actual data and 
data from Habibo Mills' business plan ): 
 
- Sales and turnover  
Change in sales and turnover  
 2015  2016  2017  2018  
Sales (kg) - - 100 140 
Projected sales  - - [ ] [ ] 
Achievement rate  - - 25%  30%  
Turnover  (MGA  thousand ) - - 100 140 
Projected turnover  (MGA  thousand ) - - [ ] [ ] 
Achievement rate  - - 19%  22%  
As the table above shows, HABIBO  MILLS was able to increase its sales and turnover in the domestic 
market during the period 2017 -18, but it still incurred losses . This performance is extremely poor if 
it is compared with the sales and turnover projections for the last two years . The achievement rate 
with respect to  the 2018 projections was 30% for sales and 22 % for turnover.  
 
- Production  
Change in production  
 2015  2016  2017  2018  
Production  (kg) - - 100 140 
Projected production  (kg) - - [ ] [ ] 
Achievement rate  - - 25%  30%  
As with sales, the company's actual production in 2017 and 2018 was significantly lower than its 
projections . It was unable to go beyond 30 % of the projected volume in two years of operation.  G/SG/N/8/MDG/1 • G/SG/N/10/MDG/1 • G/SG/N/11/MDG/1/Suppl.2  
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  - Productivity  
Change in productivity  
 2015  2016  2017  2018  
Production  (Index)  - - 100 140 
Employment  (Index)  - - 100 101 
Productivity  (kg per employee)  - - 100 139 
The company's productivity  improved 39 % from 2017 to 2018 . Since the number of employees  
remained almost unchanged, the improvement in productivity quite simply reflects the increase in 
production during  the same period.  
 
- Production capacity utilization  
Production capacity utilization  
 2015  2016  2017  2018  
Production capacity utilization  - - 100 140 
Projected production capacity 
utilization  - - [ ] [ ] 
Achievement rate  (%) - - 25 30 
The increases in the production capacity utilization rate are correlated with  the increase d production 
volume during the period , which  result ed from the company's efforts to achieve a return on its 
investment  and retain  jobs. The ANMCC emphasize s, however, that the levels achieved during the 
two years of operation are significantly lower than the initial projections.  
 
- Selling price and production cost  
Average unit selling price and production cost  
 2015  2016  2017  2018  
Selling price  - - 1,132  1,125  
Index  - - 100 99 
Projected selling price  - - [ ] [ ] 
Index  - - 100 100 
Production cost  - - [ ] [ ] 
Index  - - 100 106 
Projected production cost  - - 100 100 
Unlike the unit production cost, the average unit selling price declined during the period of 
investigation . This was the result of the vigorous competition from imports and led to the company's 
inability to sell at a decent price allow ing it to cover its costs and generate a profit.  
 
- Performance  
 
 2015  2016  2017  2018  
Performance  (MGA  thousand ) - - 100 126 
Projected performance  (MGA  
thousand ) - - [ ] [ ] 
Achievement rate  - - -42%  -44%  
Since it began operations, the company has suffered losses that would be  normal for the first year . 
However, the second year, HABIBO  was unable to improve its performance and continued to take 
on financial losses, despite its production and sales efforts . This was due to  the company's inability 
to increase its selling prices given the relatively low import prices, which were lower than  its 
production costs.  
Furthermore, based on the temporal coincidence between the sharp  50% increase in imports 
from 2017 to 2016 and the size of the financial losses incurred by HABIBO MILLS , it can be concluded  
that the company's poor performance was not  the result of  start-up losses, but rather the direct 
effect of the increase in imports.  G/SG/N/8/MDG/1 • G/SG/N/10/MDG/1 • G/SG/N/11/MDG/1/Suppl.2  
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  - Employment  
 
 2015  2016  2017  2018  
Employment  - - 100 101 
The size of the company's workforce  has remained almost unchanged over the last two years . 
The 1% increase from 2017 to 2018 represents one additional employee in 2018.  
- Break -even point  
 
HABIBO MILLS' business plan indicates that , with an average unit selling price of MGA [ ]/500g,  the 
volume of production at the break -even point  is [ ] kg. W hen the calculation is done using the 
projected selling price and the actual cost in 2018, the volume at the break -even point  is [ ] kg. 
Using  actual 2018 conditions, with an average unit selling price of MGA 1,125/500g  and an average 
unit production cost of MGA [ ]/500g , the production volume at the break -even point would be 
[ ] kg. T his volume  exceeds the company's production capacity and would therefore never be 
achieved  under  the current domestic market conditions.  
This situation is primarily due to the fact that the company  is unable to raise its selling price given 
the competition from imports , while production costs, on the other hand, rise every year.  
Since the compa ny can never produce in excess of  its production capacity, it can be assumed that , 
if the situation continues without a safeguard measure being taken, Habibo Mills ' business  will never 
be profitable.  
- Return on investment  
Projected return on investment  
The company's business plan projected that a return on investment would be achieved after the fifth 
year of operations (that is, in 2021) . This break -even point is considered normal, given that the 
period of amortization of fixed assets used is 10 years . Unfortunately, given the current situation, 
this return on investment will not materialize before the end of the entire amortization period unless 
the company is able to revise its prices.  
 
A.2 - INJURY  INDICATORS  FOR SALONE SA AND SOCOBIS  
(Sources : Actual data from the companies SALONE SA and SOCOBIS)  
 
- Sales and turnover  
 
The table below shows the changes in the sales volumes  of the companies SALONE and SOCOBIS:  
 
Sales volume (kg)  2015  2016  2017  2018  
Sales, SALONE and SOCOBIS  100 96 85 81 
Change in turnover (MGA)  
Turnover  2015  2016  2017  2018  
Turnover, SALONE and SOCOBIS (index)  100 106 96 97 
The two producers recorded dec reases in sales volumes throughout the investigation period . There 
was a 19 -point decline in sales volume from 2015 to 2018, which was accompanied by a 3 -point 
decrease in  turnover . 
- Production  
 
Just like with sales  volumes , the two producers' production  volumes  fell continuously from 2015. 
This decrease  amounted to 20 points from 2015 to 2018.  G/SG/N/8/MDG/1 • G/SG/N/10/MDG/1 • G/SG/N/11/MDG/1/Suppl.2  
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  Change in production  
Change in production  2015  2016  2017  2018  
Production, SALONE and SOCOBIS 
(index)  100 96 85 80 
 
- Productivity  
As indicated above, all the domestic producers tried to maintain the size of their workforces , and 
there was no significant change in those workforces . As a result, t he change s in productivity followed 
the same trend as the change s in production volume . That trend was a consistent downward one 
from 2015, with productivity decreasing from 22,856 kg per employee in 2015 to 18,228 kg per 
employee in 2018.  
Change in productivity  
Productivity  2015  2016  2017  2018  
Production, SALONE and SOCOBIS (Index)  100 96 85 80 
Workforce , SALONE and SOCOBIS (Index)  100 108 104 100 
Productivity, SALONE and SOCOBIS 
(kg/employee)  22,856  20,344  18,671  18,228  
 
- Production capacity utilization  
Change in production capacity utilization rate  
Production capacity utilization  2015  2016  2017  2018  
Production capacity, SALONE and SOCOBIS 
(kg) [ ] [ ] [ ] [ ] 
Production, SALONE and SOCOBIS (Index)  100 96 85 80 
Production capacity utilization rate (%)  49 47 22 18 
It can be seen from t he table above that the production capacity utilization rate of the two domestic 
producers declined 31 points from 2015 to 2018.  
- Performance  
Change in performance  
Performance  (MGA  thousand ) 2015  2016  2017  2018  
Performance, SALONE and 
SOCOBIS  [ ] [ ] [ ] [ ] 
Index  100 3 43 28 
The table above shows that the profits of the two domestic producers dropped considerably, by 72 
points , from 2015 to 2018.  
- Employment  
 
As indicated above, the domestic industry attempted to retain jobs during the period between  2015 
and 2018. Consequently, there was no great fluctuation in the level of employment during that 
period . Nevertheless, employment increased eight points from 2015 to 2016 and then declined three 
points from 2016 to 2017 before returning to its 2015 level. 
Change in employment  
Employment  2015  2016  2017  2018  
Workforce,  SALONE et SOCOBIS  [ ] [ ] [ ] [ ] 
Index  100 108 104 100 
B - OVERALL ANALYSIS OF THE SITUATION OF THE DOMESTIC INDUSTRY  
The preceding sectoral analysis highlighted the significant overall impairment of all the companies 
in the domestic industry . This impairment  can be seen  in almost all the economic indicators analysed, 
with the exception,  over the last two years, of the increases in production and sales volumes 
occasioned  by HABIBO MILLS ' launch  of its operations . The additional volume s of production and G/SG/N/8/MDG/1 • G/SG/N/10/MDG/1 • G/SG/N/11/MDG/1/Suppl.2  
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  sales contributed by HABIBO MILLS have not kept the domestic industry from incurring financial 
losses , nor have they led to an improvement in its performance . As shown in the table below, the 
domestic industry's performance has deteriorated each year from the beginning of the investigation 
period.  
Domestic industry performance indicators  
 2015  2016  2017  2018  
Imports  (kg) 25,967,061  26,808,124  40,300,093  44,909,601  
Market share of imports  (index)  100 101 95 93 
Sales  (index)  100 86 264 340 
Turnover  (Index)  100 106 186 223 
Production  (index)  100 96 265 333 
Productivity  (kg per employee)  22,856  20,344  32,996  42,382  
Production capacity utilization  (%) 100 96 30 36 
Performance  (MGA  thousand ) 100 3 -698 -909 
Employment  (number)  100 108 184 179 
 
The market share held by imports remains very high despite HABIBO MILLS'  arrival i n 2017 and its 
efforts.  
Conclusion on injury  
The review of all the relevant factors above reveal ed a significant  overall impairment in the domestic 
industry's  economic indicators, including production volume, sales volume, market share, 
performance and production capacity utilization, and also show ed that imports weigh heavily and 
threaten the survival of domestic producers . It is therefore concluded that there  is injury to the 
domestic industry producing a product like or directly competitive with the investigated product . 
CAUSAL LINK  
 
The causal link between the increase in pasta imports and the serious injury to the domestic industry 
has been demonstrated thr ough the following points : 
A. EFFECTS OF THE INCREASE IN IMPORTS  
Imports of pasta rose substantially and without interruption from 2015. Since the market share of 
imports was between [80 and 95] % during the investigation  period , market conditions were 
consistently  controlled by the imports . The sharp rise in import volumes coincided with a downward 
trend in the average c.i.f. price of imports throughout the investigation period , which led to a 
decrease in the prices of domestic like or directly competitive products . At the same time that 
imports were continuously increasing, there was an annual decline in the price of pasta imports , as 
shown in the table below : 
Change in c.i.f. price of imports (all origins ) 
 2015  2016  2017  2018  
C.i.f. price per kg ( MGA) 2,386  2,300  2,008  2,067  
If domestic pasta had been sold at prices equal to those of the imports, the domestic industry would 
still have incurred losses . 
Unlike the upswing in  imports , domestic industry indicators experienced significant  overall 
impairment , thus constituting  serious injury, particularly with respect to profitability . 
B. TEMPORAL IMPACT  
The causal link was established on the basis of the impact of the increased imports on  the situation 
of the domestic industry  during the investigation period . The domestic industry experienced a loss 
of market share, a fall in turnover, a decrease in production  volume , a low production capacity 
utilization rate and a  series of financial losses during the period when imports increased . One can 
cite 2017 in particular ; in that year, imports recorded a disproportionate rise compared to the  
previous  trend, increasing 50% from 2016, and the domestic industry was unable to sell its products G/SG/N/8/MDG/1 • G/SG/N/10/MDG/1 • G/SG/N/11/MDG/1/Suppl.2  
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  at the decent price projected in its business plan . The domestic industry was forced  to align itself 
with the price imposed by the world market and, as a result, took on losses . The pressure from 
imports, in terms of  both price and quantity, cont inued in 2018 and is leading to an ever -worsening 
situation for the domestic industry . 
C. EFFECTS OF OTHER FACTORS  
i. Contraction in demand or changes in the pattern of consumption  
(a) Trend in domestic consumption  
Domestic pasta consumption has been rising since 2015 , increasing 85% from 2015 to 2018. It is 
therefore held that the injury to the domestic industry cannot be attributed to a contraction in 
domestic demand.  
Pasta consumption  
 2015  2016  2017  2018  
Consumption  100 103 164 185 
The increase in domestic consumption  has always been accompanied by a significant and stronger 
rise in the volume of imports . Domestic industry sales, on the other hand, declined from 2015 
to 2016. 
(b) Comments regarding  the substitution of rice  for pasta  
The rate of increase in domestic demand during the investigation  period  indicates that the rate of 
substitution of pasta for the staple rice has also accelerated . This situation will certainly be of benefit 
both to producers and importers of pas ta. Since the producers of  products like or directly competitive 
with the investigated products  are producers of pasta and not of rice, the claim that the substitution 
of rice for pasta i s the cause of the serious injury is unfounded and cannot therefore be accepted . 
ii. Competition among  domestic producers  
The performance indicators of the companies SOCOBIS and SALONE were deteriorating even before 
HABIBO MILLS began operating  in 2017 . The total sales volume of the three domestic pasta 
producers accounted for  [less than  15] % of domestic demand in 2017. That indicates that the 
domestic market is far from being covered by domestically produced pasta and the level of 
competition among domestic pasta producers is far from being a cause of the injury . 
In 2017, HABIBO MILLS incurred a substantial loss without the other producers experiencing an 
upswing . Their performance has deteriorated since 2015. In addition, the Authority emphasizes  the 
significant market share taken by imports during this period, as compared with the min imal share 
of the domestic industry . Also, the additional volume of sales contributed by  Habibo Mills is 
considerably lower than the additional volume  imported . As a re sult, prices have essentially been 
determined by the arrival of cheaper and cheaper imports . The ANMCC therefore conclude s that 
competition among  domestic producers cannot be considered a cause of the injury to the domestic 
industry.  
iii. Technological developments  
Through its verification visit relating to  the production process,  the ANMCC was able to verify that 
the domestic industry has production technology that is in line with  international standards for pasta 
production, if reference is made to the manufacturing processes  that are known  for the imported 
products . Furthermore, two of the domestic pasta producers have new production lines that were 
put into operation barely two  years ago . Technological developments cannot therefore be considered 
a cause of the injury to the domestic industry.  
iv. Export performance  
Since domestic pasta producers have, at least until now, focused only on the domestic market, they 
do not export their products . This leads the ANMCC to affirm  that export performance can in no way  
be considered a cause of the injury to the domestic industry.  G/SG/N/8/MDG/1 • G/SG/N/10/MDG/1 • G/SG/N/11/MDG/1/Suppl.2  
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  v. Electricity costs and power failures  
The effects of power  outages and the costs that the importers claim have been generated by those 
outages ha ve been evaluated in terms of the freq uency of the outages and the additional costs and 
material damage resulting from them . Given that power  outages are not a recent development  in 
Madagascar and did not begin just two or thre e years ago, most domestic producers have back -up 
generat ors as a short - or long -term solution . This is true for the pasta industry . It should also be 
noted  that the outages are less frequent and rare in industrial areas . The additional  costs from self -
generation of electricity are not significant because it is not used continuously and the difference 
between electricity bills and  the invoices  for the fuel used do not significantly affect the cost of 
production . 
With respect to the material damage that the power  outages can cause , the recourse to generat ors, 
the swiftness of the outages and the fact that outages are less frequent in industrial areas are key 
reason s for asserting that the power  outages either are not a cause of injury or contribute only 
minimally to injury to the domestic industry . The ANMCC has nonetheless gathered information on 
the capacity of the generat or of one of the producers to compensate for a power outage . According 
to this information , the plant has a contracted load of 370 kW with JIRAMA, Madagascar's water and 
electricity provider . This means that consumption cannot exceed th at limit, while  the installed 
generator has a capacity of 600 kW, provid ing a large  available margin . 
Consequently, it is concluded that neither electricity costs nor power failures  are fact ors in the serious 
injury to the domestic industry . 
vi. Depreciation of the domestic currency , the ariary  
The information provided by the domestic industry indicate s that a large part of the raw materials 
that it uses are imported . Consequently, the value of the domestic currency plays an important r ole 
in its supply cost . The depreciation of the ariary contributes to  the increase  in the  cost of raw 
materials and, as a result, the cost of production . 
However, import s also use  the domestic  currency and are as much subject to the effects of its 
depreciation as domestic producers . Almost all import costs are affected by the depreciation of the 
domestic currency and its effects on imports should be more considerable than on domestic 
production . 
It is therefore concluded that the depreciation of the domestic currency is not a factor contributing 
to the serious injury to the domestic industry . 
vii.  Claim of overcapacity of  investments  
The data gathered revealed that the production capacity of the domestic industry is still below 
domestic consumption . It was 38,064 tonnes in 2017 and 39,304 tonnes in 2018 , while domestic 
consumption was [ ] tonnes in 2017 and [ ] tonnes in 2018 . Consequently , the claim regarding the 
overcapacity of investment is unfounded and therefore rejected . 
viii. Claim of poor cost management  
Choosing the origin and suppliers of raw materials is a strategic policy matter for  the company for 
various reasons . The choice  may be motivated by quality, the time frame for payment, price, 
availability and so on . The fact that domestic producers of products  like or directly compet itive with 
imported pasta do not buy or use cheap flour s can be interpreted as poor cost management.  
Here, an analysis of the production cost structure of the domestic industry led to a finding by the 
ANMCC that the purchase prices of the flours used as raw materials followed the international prices 
for the product and were sometimes even below  the international prices for  large-scale supply . 
Poor cost management  cannot therefore be considered a cause of the serious injury to the domestic 
industry.  G/SG/N/8/MDG/1 • G/SG/N/10/MDG/1 • G/SG/N/11/MDG/1/Suppl.2  
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  Conclusion on causation  
Having analysed  the various factors discuss ed above , it is concluded that none of these other factors  
fundamentally contribute s to the alleged serious injury or threat thereof . There is a correlation  
between the significant  increase in imports and the serious injury or threat thereof to the domestic 
industry producing products like or directly competitive with the investigated product.  
1.2  Provide information on whether there is an absolute increase in imports or an 
increase in imports relative to domestic production  
UNFORESEEN DEVELOPMENTS  
Egypt's 2016 currency crisis led the country  to undertake structural reforms supported by the IMF 
through  its Extended Fund Facility . The reforms, which include d devalu ing the Egyptian pound, 
moving to a floating exchange rate and improving the performance of its exports to the world and 
its pasta exports to Madagascar, constitute an unforeseen development leading to an increase in 
pasta imports to Madagascar, under Article  XIX of the General Agreement on Tariffs and 
Trade  (GATT).  
INCREASE IN IMPORTS  
i. Absolute c hange in imports  
According to statistic al data  provided by the Madagascar Customs Service, the volume of pasta 
imports increased 3% from 2015 to 2016. A substantial and significant increase occurred between 
2016 and 2017 . In one year, the import volume increased by 50 %. This upward trend was seen 
again between  2017 and 2018. It reached 11%, higher than for the first year of the investigation 
period . 
Absolute c hange in imports  
Year 2015  2016  2017  2018  
Imports  25,967,061  26,808,124  40,300,093  44,909,601  
Change  100 103 155 173 
ii. Change in imports relative to domestic production  
Change in imports relative to domestic production  
Year 2015  2016  2017  2018  
Import s 25,967,061  26,808,124  40,300,093  44,909,601  
Domestic p roduction  [ ] [ ] [ ] [ ] 
Import s / Domestic p roduction  (%) ( three 
producers ) 100 108 59 52 
Import s / Domestic p roduction (%) ( two pre -
existing producers ) 100 108 182 217 
Import s / Domestic p roduction (%) (HABIBO 
MILLS)  - - 100 79 
For the first two years  of the investigation period , the increase in imports was verified both in 
absolute terms and relative  to domestic production . From 2015 to 2016, the share  of imports relative 
to domestic production rose from [ ] % to [ ] %, an eight-point increase.  
The rate of increase in imports relative to domestic production appears not to continue through  the 
last two years . This decrease is deceptive because the increase in the volume of domestic production 
cannot be constru ed as an improvement in the situation of the domestic industry ; rather, it reflects 
Habibo Mills ' entry into the pasta production business  in 2017 . 
However, the proportion of imports relative to domestic production remains very high . In 2018,  
imports again exceeded  600% of domestic production . This rate is higher than what was found in G/SG/N/8/MDG/1 • G/SG/N/10/MDG/1 • G/SG/N/11/MDG/1/Suppl.2  
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  the preliminary determination for the period from January to July 2 018. It can be concluded that 
imported products still largely dominated the domestic market . 
In undertaking  the separate analysis of the trend in t he increase of imports relative to domestic 
production, the relative rate of  the increase in imports is clear if we stay with the trend in the 
production of the two pre-existing  domestic producers . The volume of the ir production declined 
continuously  throughout the  investigation period . 
Conclusion on increase in imports  
 
In light of the analysis  of the elements above , the ANMCC concluded that it could be that there is no 
increase in imports relative to domestic production , but the continuous, significant, sharp, sudden 
and recent increase in pasta imports in absolute terms is clear and unquestionable . 
1.3  Adjustment p lan 
The domestic industry prepared an adjustment plan focused on increased supply, improvements to 
quality and/or the introduction of new product lines, the marketing strategy and staff training and 
recruitment . 
1.4  Provide the precise description of the product involved  
The product subject to the definitive measure is pasta made from wheat flour or wheatmeal or a 
mixture the reof, other than handmade pasta or couscous, which is classified under codes 19021190, 
19021990, 19022090 and 19023090  of Madagascar's tariff nomenclature.  
 
1.5  Provide precise description of the proposed measure  
The proposed definitive safeguard measure consists of  an annual fixed tariff quota to prevent or 
remedy serious injury to the domestic industry , while at the same time  preserving traditional trade 
flows as much as possible . 
The level of the tariff quota is set at 31,000,000 kg per year, which is equal to the average volume 
of imports for the last three representative years preceding the initiation of the investigation . It will 
be distributed as follows : 
 Egypt Mauritius  Indonesia  Turkey  Other  Total  
Volume of import quota to 
which the additional duty 
does not apply  
(kg) 20,190,000  6,770,000  1,560,000  1,790,000  690,000  31,000,000  
 
Of the quota, 90% will be allocated to traditional importers over the last three years . The remaining 
10% will be reserved for new importers . 
Out-of-quota imports will be subject to an additional ad valorem duty on top of the customs duty 
of 44% of the c.i.f. value.  
Minimum f.o.b.  prices of USD  1,200/metric t onne for imports of noodles and of USD  450/metric 
tonne for imports of spaghetti and macaroni are also p roposed. 
 
1.6  Provide proposed date of introduction of the measure  
The definitive safeguard measure will enter into force on the date of publication of the related notice.  
1.7  Provide expected duration o f the measure.  
The definitive safeguard measure will remain in force for four years, including the period of 
application of the provisional measure.  G/SG/N/8/MDG/1 • G/SG/N/10/MDG/1 • G/SG/N/11/MDG/1/Suppl.2  
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  1.8  For a measure with a duration of more than three years, provide the proposed date 
for the review (under Article 7.4) 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 . 
1.9  If the expected duration is over one year, provide expected timetable for progressive 
liberalization of the measure.  
The timetable for liberalization is as follows:  
Period  Quota  
(kg) Rate of a dditional duty outside 
quota  
3 June  to 31 December 2 019 31,000,000  44% 
2020  31,000,000  40% 
2021  31,000,000  36% 
2022  31,000,000  32% 
1 January  to 2 June 2 023 31,000,000  28% 
1.10  Public interest  
The definitive safeguard measure will have minimal impact on prices to consumers because of the 
preservation of traditional trade flows with our trading partners the efforts to be undertaken  by the 
domestic industry . 
1.11  Date for prior consultation with those Members having a substantial interest as 
exporters of goods  
Members having a substantial interest as exporters o f the investigated product and wishing to 
consult with Madagascar under  Article 12.3 of the Agreement on Safeguards may send a request to 
the Director General of the ANMCC at the following email address : dg.anmcc@g mail.com  / 
dg@anmcc.gov.mg . 
The consultations will take place no later than 5 July 2 019. 
2  NOTIFICATION UNDER ARTICLE 9, FOOTNOTE 2  
2.1  Specify the measure  
The definitive safeguard measure consists of an annual fixed tariff quota to prevent or remedy 
serious injury to the domestic industry, while at the same time preserving traditional trade flows as 
much as possible . 
The level of the tariff quota is set at  31,000,000 kg per year, which is equal to the average volume 
of imports for the last three representative years preceding the initiation of the investigation . It will 
be distributed as follows : 
 Egypt Mauritius  Indonesia  Turkey  Other  Total  
Volume of import quota to 
which the additional duty 
does not apply  
(kg) 20,190,000  6,770,000  1,560,000  1,790,000  690,000  31,000,000  
Of the quota, 90 % will be allocated to traditional importers over the last three years . The remaining 
10% will be reserved for new importers.  
Out-of-quota imports will be subject to an additional ad valorem duty on top of the customs duty 
of 44% of the c.i.f. value.  
Minimum f.o.b. prices of USD 1,200/metric tonne for imports of noodles and of USD 450/metric 
tonne for imports of spaghetti and macaroni are also proposed.  
 G/SG/N/8/MDG/1 • G/SG/N/10/MDG/1 • G/SG/N/11/MDG/1/Suppl.2  
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  2.2  Specify the products subject to the measure  
The product subject to the defini tive measure is pasta made from wheat flour or wheatmeal or a 
mixture thereof, other than handmade pasta or couscous, which is classified under codes 19021190, 
19021990, 19022090 and 19023090  of Madagascar's tariff nomenclature.  
2.3  Specify the developing coun tries to which the measure is not applied under Article  9.1 
of the Agreement on Safeguards, and the import shares of these countries individually 
and collectively  
Imports from the following countries will not be subject to the definitive safeguard measure as long 
as the imports from each of th ese countries do not exceed 3 % of Madagascar's total imports and 
they do not collectively account for  more than 9 %: 
Afghanistan ; Albania ; Angola ; Antigua and Barbuda ; Argentina ; Armenia ; Bahrain ; Bangladesh ; 
Barbados ; Belize; Benin; Bolivia, Plurinational State of ; Botswana ; Brazil; Brunei Darussalam ; 
Burkina Faso ; Burundi ; Cabo Verde ; Cambodia ; Cameroon ; Central African Republic ; Chad; Chile; 
Colombia ; Congo; Costa Rica ; Côte d'Ivoire ; Cuba; Democr atic Republic of the Congo ; Djibouti ; 
Dominica ; Dominican Republic ; Ecuador ; El Salvador ; Eswatini ; Fiji; Gabon; Gambia ; Georgia ; 
Ghana; Grenada ; Guatemala ; Guinea ; Guinea -Bissau ; Guyana ; Haiti; Honduras ; India; Israel; 
Jamaica ; Jordan ; Kazakhstan ; Kenya; Kuwait ; Kyrgyz Republic ; Lao People's Democratic Republic ; 
Lesotho ; Liberia ; Malawi; Malaysia ; Maldives ; Mali; Marshall Islands ; Mauritania ; Mexico; Moldova ; 
Mongolia ; Montenegro ; Morocco ; Mozambique ; Myanmar ; Namibia ; Nepal; Nicaragua ; Niger; Oman; 
Pakistan ; Panama ; Papua New Guinea ; Paraguay ; Peru; Philippines ; Qatar; Rwanda ; Saint Kitts and 
Nevis ; Saint Lucia ; Saint Vincent and the Grenadines ; Samoa ; Saudi Arabia ; Senegal ; Seychelles ; 
Sierra Leone ; Solomon Islands ; South Africa ; Sri Lanka ; Suriname ; Tajikistan ; Tanzania ; Thailand ; 
The former Yugoslav Republic of Macedonia ; Togo; Tonga; Trinidad and Tobago ; Tunisia ; Uganda ; 
Ukraine ; United Arab Emirates ; Uruguay ; Vanuatu ; Venezuela, Bolivarian Republic of ; Viet Nam ; 
Yemen ; Zambia ; Zimbabwe.  
2.4  Further information  
Information on the decision to apply the definitive safeguard measure to the products concerned 
may be obtained from:  
 
Monsieur Le Directeur Général de l'ANMCC  
Enceinte Ex conquête Antanimena - BP: 7653 
Email:  dg.anmcc@gmail.com  et dg@anmcc.gov.mg  
101- ANTANANARIVO - MADAGASCAR  
 
__________  