WORLD TRADE
ORGANIZATIONG/TMB/22
2 February 2000
(00-0403)
Textiles Monitoring Body
SIXTY-SECOND MEETING OF THE TMB
Note by the Chairman
1. The Textiles Monitoring Body met on 17, 18, 19 and 26 January 2000.
2. The TMB authorized its Chairman to provide WTO Members with the following information.
Notification under Article 6.11 of the Agre ement on Textiles and Clothing (ATC)
Argentina/Pakistan: imports of products of categories 218, 219/220, 224, 313/317 and 613/617/627
3. On 4 August 1999, Argentina requested consultations with Pakistan pursuant to Article 6.11
of the ATC, and provided it with factual information, as referred to in Article 6.7.  Such information
was, at the same time, communicated to the Chairman of the TMB.  Argentina had decided to
introduce provisionally, with effect from 31 July 1999, a transitional safeguard measure of a durationof three years on imports of woven fabrics of cotton and cotton mixtures, consisting of five quotas on
imports from Pakistan of products of categories 218 (woven cotton and cotton mixtures fabrics of
yarns of different colours), 219/220 (duck/special-weave cotton and cotton mixtures fabrics), 224
(pile tufted cotton and cotton mixtures fabrics), 313/317 (sheeting/twill cotton and cotton mixtures
fabrics) and 613/617/627 (sheeting fabrics/twill and satin/staple-filament fibre combinations of cottonand cotton mixtures).  Consultations were held be tween the two Members, which did not result in a
mutual understanding as to whether the situation called for restraint on the imports of the above-
mentioned products.
4. On 15 November 1999, Pakistan notified to the TMB, pursuant to Article 6.11, that the
consultations concerning the transitional safeguards applied by Argentina to imports from Pakistan of
products of categories 218, 219/220, 224, 313/317 a nd 613/617/627 had not resulted in agreement.
Pakistan requested the TMB to examine the matter and make appropriate recommendations, inaccordance with Article 6.11 of the ATC.  While stating that, under normal circumstances, the review
of the measures should take place at the TMB’s December 1999 meeting, Pakistan, due to certain
difficulties concerning its delegation’s availability at that meeting, requested that this item be placed
on the agenda of the TMB’s meeting scheduled to start on 17 January 2000.
5. Taking note of Pakistan’s request regarding the timing of the examination, the TMB decided
to conduct this examination at its meeting scheduled to start on 17 January 2000, and invited the
participation of representatives of both Argentina and Pakistan.
6. Article 6.11 requires the TMB to "promptly conduct an examination of the matter, and make
appropriate recommendations to the Members concerned within 30 days".  Article 6.10, which is
relevant to the examination of safeguard measures applied under Article 6 without the agreement ofthe Members concerned, states that "[i]n order to conduct such examination, the TMB shall have
available to it the factual data provided to the Chai rman of the TMB, referred to in paragraph 7 [of
Article 6], as well as any other relevant information provided by the Members concerned".G/TMB/22
Page 2
7. In reply to the TMB’s invitation, Argentina and Pakistan sent representatives to present their
respective cases.  The two Members made presentations and provided replies to questions posed by
the TMB.
8. The factual information and data submitted by Argentina, referred to above, and the statement
made by the representative of Argentina set out, inter alia , the following:
- The safeguard measure imposed was contained in a single administrative act but
referred to five product categories and resulted in the introduction of five different
annual quotas.
- For the purpose of determining serious damage under Article 6.11 of the ATC, the
National Commission for Foreign Trade (CNCE) of Argentina had carried out an
investigation to record and verify the tr ends in the main internal and external
variables of all the enterprises which make up the industry producing woven fabricsof cotton and cotton mixtures, with the exception, for methodological reasons, of the
denim manufacturing sector which, in view of its size and special nature, was
considered to deserve separate analysis.  Although the investigation related to the
production of woven fabrics and all the technical reports and calculations had been
confined specifically to the investigation of this stage of production, the industry inquestion included enterprises which manufactured fabrics starting from the fibre
processing stage and were equipped with spinning machines, alongside other
enterprises whose manufacturing process begins with the yarn.  With a view to not
receiving comments on the structure and common characteristics of the enterprises
which make up the industry investigated, the tariff headings for woven fabrics of puresynthetic fibres, pure artificial fibres, or  their mixtures (excluding mixtures with
cotton) and knitted fabrics had been excluded from the investigation and hence from
the restraints applied. For the purpose of supplementing the official statistics
available at sector level, the state of the industry had been investigated using a
sampling procedure which involved  the main producers of products of this type forthe domestic market whose output, in 1998, accounted for 42 per cent of the total
volume.  It was pointed out that the geographical distribution of the enterprises
forming the sample ensured that it did not relate to a particular region or special
economic situation.  In fact, according to Argentina, the sample was sufficiently
representative of the sector as a whole and of each of its constituent categories, on the
basis of which it was decided to apply a transitional safeguard.  With a view to
dissipating any possible misunderstanding, Argentina confirmed that the factual dataprovided by it encompassed 100 per cent of the domestic industry and that the
sampling procedure had solely been used to verify, rectify or complement the data
available.
- Argentina had first examined, in its general considerations, the evolution of certain
economic variables, as mentioned below, for the whole industry producing wovenfabrics of cotton and cotton mixtures, except denim, on a calendar-year basis for the
period 1995–1998.  Output had risen from 1995 to 1997, that trend being interrupted
in 1998, which marked the beginning of a decline that was continuing.  The share of
output in apparent domestic consumption had fallen from 91 per cent in 1995 to
69 per cent in 1998.  Counting only the personnel employed in the weaving stage ofthe production process, employment had increased by 2 per cent between 1995 and
1997; productivity had risen by 10.5 per cent. Employment had fallen by 11 per cent
in 1998, reflecting the declining trend in output, which, according to Argentina,
determined a slight downturn in productivity.  During the period investigated, the
enterprises which made up the industry had pursued investment policies that tendedG/TMB/22
Page 3
to increase productivity rather than to expand capacity, which had remained more or
less steady throughout the period.  These enterprises had followed a highly restrictive
wage policy, the average wage remaining more or less static while the consumer price
indices tended to stabilise. This wage policy had been based on a sharp fall in the
average prices of the products manufactured by the industry.  In 1998, in parallel withcutbacks in employment, average industrial wages had begun to decline and were still
declining.  Since 1995, imports of the fabrics produced by the industry had steadily
risen, taking up an increasing percentage of the apparent demand.  Although up to
1997 the volume of production had not been affected, since 1998 the increase in
imports had run parallel with a fall in the absolute value of the domestic output.
During the same period, exports had been declining significantly, which reflected the
industry’s difficulties in competing, given the generalized process of sectoral pricedeflation following the series of devaluations which began in mid-1997 in South-East
Asia.  In the face of this price deflation and the growing pressure from imports, the
industry’s average domestic prices had been falling steadily, in line with the world
cycle, especially since 1997, having contracted by more than 15 per cent in the last
two years.  This trend was continuing.  In volume terms, domestic sales had expandedbetween 1995 and 1997, after which a sharp deterioration had set in.  This situation,
together with the above-mentioned fall in prices, had resulted in  the value of
domestic sales, which had remained steady or even increased slightly during the three
preceding years, recording a fall of 22 per cent in 1998, an effect which was still
intensifying.  This declining trend in the level of domestic sales and exports had ledto a sustained increase in end-product inventory levels which, in 1998, had reached
high absolute values equivalent to almost three months’ output.  Since indicators for
profitability, return on investment and indebtedness were enterprise-specific and
difficult to assign to an industrial sector in particular, the average economic
performance of the enterprises surveyed had been taken as being representative of thesectoral situation.  Enterprises had maintained very low or negative operating margins
on sales during the period investigated; special concern being aroused by the
indicator for 1998 which showed enterprises becoming unprofitable, a trend that was
continuing or intensifying.  This situation was also reflected in the rate of return on
net assets which had been falling to levels incompatible with continued business
activity, including negative values indicative  of disinvestment.  The implications of
these indicators had been confirmed by the industry’s level of indebtedness whichhad risen steadily throughout the period in question due not only to investment but
also to very low or negative profitability.  Argentina’s analysis of the variables, both
collectively and individually, showed clearly that the industry in question had
suffered damage during the period under investigation.  It also showed that the
damage was continuing and, given the time that had elapsed, had to be regarded notas a cyclic phenomenon but rather as a continuous and sustained trend.  If remedial
action was not taken, this would cause serious damage to the domestic industry.  The
trend in imports, their increasing share of apparent consumption and their falling
price level, were the key to the difficulties confronting the industry.  Argentina’s
analysis showed that "82 per cent of sectoral imports [came] from three countries,Pakistan, China and Pakistan, in respect of which […] measures under Article 6.11 of
the ATC [were] being adopted".
- In addition to this overall examination of certain economic variables for the whole
industry producing woven fabrics of cotton and cotton mixtures, Argentina had
analysed in detail, with respect to each of the individual product categories subject toa provisional safeguard measure, the trend of imports and their impact on the state of
the domestic industry producing like and/or directly competitive products.G/TMB/22
Page 4
With respect to products of  category 218  (woven cotton and cotton mixtures fabrics
of yarns of different colours), the trend in imports showed that in 1998 imports were
71 per cent higher than in 1995.  During the intervening periods there had been a
significant and continuously rising annual trend.  As a result of the level achieved by
imports, there had been declines in output, domestic sales, domestic prices, capacityutilization, employment and wages, while inventories and productivity were rising.
The excessive increase in imports during the period under investigation had caused
serious damage to the domestic industry manufacturing category 218 goods, none of
which could be attributed to technological innovations or changes in consumer
preference, since there had been no significant changes in market trends.
With respect to products of category 219/220  (duck/special-weave cotton and cotton
mixtures fabrics) imports accounted for a significant proportion of apparentconsumption, which in the last 12 months to April 1999 amounted to 32 per cent.
During the same period imports had risen by 3.3 per cent as compared with 1998.  As
a result of the level achieved by imports, there had been declines in output, domestic
sales, domestic prices, capacity utilization, the number of employees and wages,
whereas inventories and productivity had been rising.  The excessive volume ofimports during the period under review had caused serious damage to the domestic
industry manufacturing category 219-220 produ cts, none of which could be attributed
to technological innovations or changes in consumer preference, since there had been
no significant changes in market trends.  The sector had continued to make
substantial investments in order to maintain its competitiveness  (see the generalconsiderations above regarding the industry producing woven fabrics of cotton and
cotton mixtures except denim) and, at the same time, because of the nature of the
products in this category, there had been no changes in consumer preference.
Imports of products of category 224  (pile tufted cotton and cotton mixtures fabrics)
were 107 per cent higher in 1998 than in 1995.  During the intervening periods therehad been a significant and continuously risi ng annual trend in imports, with a small
downturn starting in 1998.  For the 12 months ending in April 1999 there had been a
sharp fall of 10.3 per cent  in apparent domestic consumption, which had led to a
decline in imports and a fall in domestic output.  Nevertheless, imports had largely
held their share of apparent consumption at a level of around 56 per cent.  As a result
of imports, between 1995 and the year ending April 1999, the domestic producers had
lost 28 per cent of their share of apparent consumption, while during the same periodthe ratio of imports to domestic production had increased by 102 per cent.  During all
the intervening periods this trend had been steady and increasing, with a slight
downturn during the last 12 months ending April 1999 as a result of a decline in
domestic demand.   As a result of the level achieved by imports, there had been
declines in output, domestic sales, domestic prices, capacity utilization, employmentand wages while, at the same time, inventories and productivity had been rising. The
sector had continued to make substantial investments in order to maintain its
competitiveness  (see the general considerations above regarding the industry
producing woven fabrics of cotton and cott on mixtures except denim) and, at the
same time, because of the nature of the products in this category, there had been nochanges in consumer preference.  The excessive increase in imports during the period
under investigation has caused serious damage to the domestic industry
manufacturing category 224 goods, none of which could be attributed to
technological innovations or changes in consumer preference, since there had been no
significant changes in market trends.G/TMB/22
Page 5
As regards products of category 313/317  (sheeting/twill cotton and cotton mixtures
fabric), the trend showed that imports were 144 per cent higher in 1998 than in 1995.
During the intervening periods there had been a significant and continuously rising
annual trend, with a slight downturn, starting in 1998.  For the 12 months ending in
April 1999, there had been a sharp fall of 5.8 per cent in apparent domesticconsumption which, given the 1.4 per cent increase in imports as compared to the
calendar year 1998, had led to a significant decline of 9.3 per cent in domestic output.
Throughout the period up to 1998, imports had maintained their share of apparent
consumption at a level of around 27 per cent, a figure which had risen to 29 per cent
in the 12 months to April 1999.  As result of the level achieved by imports, there had
been declines in output, domestic sales, domestic prices, capacity utilization,
employment and wages, while inventories and productivity were increasing. Thesector had continued to make substantial investments in order to maintain its
competitiveness  (see the general considerations above regarding the industry
producing woven fabrics of cotton and cott on mixtures except denim) and, at the
same time, because of the nature of the products in this category, there had been no
changes in consumer preference.  However, as a result of imports, between 1995 andthe year ending April 1999, domestic producers had lost 22 per cent of their share of
apparent consumption, while during the same period the ratio of imports to domestic
production had increased by 133 per cent.  In every period this trend had been steady
and increasing, which had intensified the effect on domestic output of the above-
mentioned fall in domestic demand.  The excessive increase in imports during theperiod under investigation has caused serious damage to the domestic industry
manufacturing category 313-317 goods, none of which could be attributed to
technological innovations or changes in consumer preference, since there have been
no significant changes in market trends.
With respect to imports of products of category 613/617/627  (sheeting fabrics/twill
and satin/staple-filament fibre combinations of cotton and cotton mixtures), the trend
showed that imports had been 203 per cent higher in 1998 than in 1995.  During the
intervening periods there had been a significant and continuously rising annual trend
which intensified in the 12 months ending April 1999.  In the 12 months ending
April 1999, a fall of 5.2 per cent in appare nt consumption had occurred as compared
to calendar year 1998.  This had led to a reduction in domestic output, although it had
had no effect on imports, which had significantly increased their share of apparentconsumption to the 50 per cent level.  As result of the level achieved by imports,
there had been a decline in output, domestic sales and domestic prices, capacity
utilization, employment and wages, while inventories as well as productivity had
increased. The sector had continued to make substantial investments in order to
maintain its competitiveness (see the general considerations above regarding theindustry producing woven fabrics of cotton and cotton mixtures except denim) and, at
the same time, because of the nature of the products in this category, there had been
no changes in consumer preference.  As a result of imports, between 1995 and the
year ending April 1999 domestic producers had lost 38 per cent of their share of
apparent consumption, while during the same period the ratio of imports to domesticproduction had increased by 300 per cent, so that imports and domestic output
became almost equal in volume terms (domestic output 9,646 tons, imports
9,673 tons).  During all the intervening periods this trend had been steady and
increasing.  The excessive increase in imports during the period under investigation
had caused serious damage to the domestic industry manufacturing category 613-617-627 goods, none of which could be attributed to technological innovations or changes
in consumer preference, since there had been no significant changes in market trends.G/TMB/22
Page 6
- For all these reasons Argentina had concluded that there was serious damage as a
result of the increase in imports of the products belonging to the five categories
mentioned above, and had decided to impose the safeguard measures subject to the
present examination by the TMB.
9. The representative of Pakistan stated, inter alia , that the restrictions imposed by Argentina on
imports from Pakistan were not justified under the provisions of Article 6, much less in the particular
context of the unusual and critical circumstances referred to Article 6.11, for the following main
reasons:
  - The restrictions applied by Argentina lacked any justification under Article 6.  The
TMB had already considered in detail the information provided by Argentina to
Pakistan in accordance with the provisions of Article 6.7 (the "market statement"),
since this was the same as had been provided by Argentina with respect to theintroduction of provisional safeguard  measures on imports of the same products from
Brazil.  The TMB had, on that occasion, come to the conclusion that the restrictions
imposed by Argentina on imports of these products from Brazil were not justified,
and had confirmed this conclusion when Argentina had requested, pursuant to
Article 8.10, that the TMB review its own conclusions.  The TMB had, therefore,recommended that Argentina rescind these measures forthwith.  Since the measures
with respect to Pakistan had been adopted on the basis of the same market statement,
Pakistan submitted that the TMB should reconfirm its conclusions and recommend
that Argentina rescind the measures introduced on imports from Pakistan.
- Notwithstanding that position, Pakistan submitted that Argentina had adopted the
restrictions on imports from Pakistan pursuant to Article 6.11, which provided that in
"highly unusual and critical circumstances, where delay would cause damage which
would be difficult to repair, action under paragraph 10 [of Article 6] may be taken
provisionally on the condition that the request for consultations and notification to the
TMB shall be effected within no more than five working days after taking the action".Argentina had not met the procedural requirements of Article 6.11 since consultations
had been requested by Argentina through a letter to Pakistan dated 4 August 1999,
while the decisions to "take action" had been adopted by Argentina on 13 July 1999,
long before the five days stipulated in Article 6.11.
- Argentina had not provided any analysis to justify the recourse to Article 6.11 on the
basis of "highly unusual and critical circumstances".  Throughout its market
statement, Argentina seemed to argue that the alleged damage to its industry had beendue to factors that had continued to effect the industry over a number of years.  The
very basis of Argentina’s recourse to Article 6.11 being invalid, the action itself was
also unjustified.
- Argentina had not provided a specific answer to the question raised in the
consultations by Pakistan as to whether, in the context of Article 6.7, the matter mightbe considered to be a single case or five different cases.
- Since Article 6.1 provides that "[t]he transitional safeguard should be applied as
sparingly as possible, consistently with the provisions of this Article", any recourse to
Article 6 must be examined strictly, and consequently, the examination of the
demonstration that a particular product is being imported into Argentina’s territory insuch increased quantities as to cause serious damage or actual threat thereof to the
domestic industry producing like and/or directly competitive products should be
carried out strictly on the basis of the data provided by Argentina in the market
statement.  In this regard, the data presented referred to domestic producersG/TMB/22
Page 7
responsible for 42 per cent of the output of the products in question, and at no point in
the market statement did Argentina provide any indication as to which portion of
information referred to this group of comp anies or to the entire universe of the
producers of the products in question, or to the textile sector as a whole.  This raised
serious doubts about the reliability or representativity of the information on the basisof which the restrictions had been imposed.  In examining a safeguard measure
introduced by Colombia, the TMB had concluded that a measure adopted on the basis
of partial information could not be justified.  Also, information had been provided
with respect to investment and profits only in the general part of the market
statement, and not according to each of the product categories on which a provisional
safeguard measure had been introduced.  In the case of the restrictions introduced by
the United States on imports of woven wool sh irts and blouses from India, the dispute
settlement panel had ruled that "[a]t a minimum, the importing Member must be able
to demonstrate that it has considered the relevance or otherwise of each of the factors
listed in Article 6.3".  According to Pakistan, the lack of specific information with
respect to two essential variables mentioned in Article 6.3 represented a significant
drawback in the market statement.  Furthermore, the data submitted by Argentinapresented some additional difficulties due to their lack of comparability, as data for
the level of imports during the period referred to in Article 6.8 had been provided (for
the category-specific information only), but not for the previous corresponding
period.
- With respect to imports of products of the five categories taken together, the
conclusion that could be drawn was that the volume of imports from all sources had
grown between 1997 and 1998 and decreased by 0.4 per cent between 1998 and the
period May 1998 to April 1999 (the representative period).  Also, Argentina had
stated that the enterprises concerned were vertically integrated.  Since the products in
question represented only part of the production of these units, it was not clear, forexample, whether the alleged decline in employment had resulted from shifts between
various segments of production within these units or from some other causes.  It was
well known that the Argentinian economy had been passing through a period of
structural adjustment, and other data seemed to indicate that the momentary drop in
production that had taken place in the Argentinian textile industry was essentially
related to the general picture of recession that had characterized Argentina since late
1997.  In this respect the 10.4 per cent drop in employment in the textiles industryalmost matched the 9.8 per cent increase in unemployment in the Argentinian
economy as a whole between May 1998 and May 1999.  The drop in output in the
textiles industry compared favourably to the 13.7 per cent drop in industrial output
registered in the period May1998 to April 1999.
In terms of conclusion, for all the reasons mentioned above, the data provided failed to substantiate
Argentina’s claim.  Since under Article 6, as expr essed by the TMB on a number of occasions, it was
for the Member introducing the safeguard measure to demonstrate that the requirements of Article 6
had been fully met, the TMB should conclude, as it had done in its consideration of the safeguard
measures introduced by Colombia, that because Argentina had not demonstrated that its domestic
industry was being damaged on account of imports, it should rescind the measures imposed.  Also,Argentina had not provided a specific answer to the que stion raised by Pakistan as to whether, in the
context of Article 6.7, the matter may be considered to be a single case or five different cases.
Without prejudice to this important consideration Pakistan was of the view that even in the context of
the information provided by Argentina with respect to the separate categories, Argentina’s measures
were not justified under Article 6 of the ATC.  Pakistan did not wish to repeat the points which hadalready been examined by the TMB in its detailed, category-by-category consideration of theG/TMB/22
Page 8
measures applied by Argentina on imports of similar products from Brazil.  However, should the
TMB deem it necessary, Pakistan was prepared to do so.
Preliminary comments
10. In starting its examination of the transitional safeguard measure introduced provisionally by
Argentina pursuant to Article 6.11 on imports from Pakistan of woven fabrics of cotton and cotton
mixtures, consisting of five quotas, the TMB recalled that similar measures affecting products of the
same product categories had been taken provisionally by Argentina, for the same period and pursuant
to the same provisions of the ATC, against imports  of these products originating in Brazil.  The TMB
noted that the factual information provided by Argentina pursuant to Article 6.7, when it had invoked
the provisions of Article 6.11 vis-à-vis Pakistan, was the same as had been provided when it had
invoked the provisions of Article 6.11 vis-à-vis Brazil.  The TMB also recalled that the measures
introduced provisionally on imports from Brazil had already been examined by the Body in detail,first pursuant to Article 6.11
1 and, subsequently, pursuant to Article 8.102.
11. The TMB observed that the statement made by the representative of Argentina during the
present meeting provided an overview of the developments experienced by the whole industry
producing woven fabrics of cotton and cotton mixtures (except denim) and also a detailed analysis of
the state of the domestic industry with respect to each of the individual product categories subject tothe provisional safeguards.  The statement by the representative of Pakistan, without addressing in
detail the analysis made by Argentina regarding the five product categories taken individually,
focused on those arguments which, in the view of Pa kistan, proved that the restraints provisionally
applied by Argentina lacked any justification under the provisions of Article 6.  The representative of
Pakistan stated also that, should the TMB deem it necessary, he would be prepared to provide moredetailed arguments with respect to the product categories concerned.  In taking note of this statement,
the TMB decided to consider first the general arguments raised by the representative of Pakistan,
without prejudice as to whether, at a subsequent stage of the examination, the TMB might decide to
seek any further elaboration from Pakistan on particular aspects of the matter.
Consideration of the arguments made by Pakistan
12. The TMB noted that, in the view of Pakistan, since the safeguard measures with respect to
Pakistan had been adopted on the basis of the same factual information as the one presented in support
of the measures taken against imports from Brazil, which had already been considered by the Body in
detail and had led to the conclusion that  the measures adopted by Argentina had not been justified
and should be rescinded, the TMB should reconfirm these conclusions and recommend that Argentina
also rescind the measures introduced on imports from Pakistan.  The TMB recalled that, in examining
the measures applied on imports from Brazil of products of categories 218, 219/220, 224 and 313/317,
the Body had concluded that it had not been demonstrated that the products of these categories were
being imported into Argentina, at the time Argentina had decided to introduce a safeguard measure
pursuant to Article 6.11, in such increased quantities as to cause serious damage to the domestic
industry producing like and/or directly competitive products.  The TMB had recommended, therefore,
that Argentina rescind the safeguard measures introduced on imports of these products originating inBrazil
3.  Subsequently, having given thorough consideration, pursuant to Article 8.10, to the reasons
presented by Argentina for its inability to conform to these recommendations, the TMB had
recommended that Argentina reconsider its position and that the measures introduced provisionally by
Argentina on the imports from Brazil of products of these categories be rescinded forthwith4.
                                                     
1 See G/TMB/R/58, paragraphs 4 to 45.
2 See G/TMB/R/60, paragraphs 4 to 25.
3 See G/TMB/R/58, paragraphs 16, 18, 21 and 26.
4 See G/TMB/R/60, paragraph 25.G/TMB/22
Page 9
13. Therefore, the TMB agreed with Pakistan that, as far as categories 218, 219/220, 224 and
313/317 were concerned, in re-examining the determination of serious damage caused by total
imports to the Argentinian domestic industry producing like and/or directly competitive products on
the basis of the same factual information, the Body would reach the same conclusions.  Consequently,
it was not necessary for the TMB to proceed to a more detailed examination regarding thesecategories.  The TMB was of the view, however, that the same did not apply to the measure affecting
imports of the products of category 613/617/627.  It was recalled in this regard that in examining the
determination made by Argentina of the serious damage caused to the domestic industry by increased
quantities of imports, the TMB had reached preliminary conclusions but, as reflected in the report
adopted by the Body, "[t]he TMB did not make a final determination as to whether increased imports
of products of category 613/617/627 had caused se rious damage to the domestic industry producing
like and/or directly competitive products" 
5.  In this particular case the TMB could reach conclusions
and adopt a recommendation on the basis of additional considerations6 which, at least at first sight,
would not necessarily be applicable to the measure affecting imports from Pakistan.  Therefore, with
respect to the measure affecting imports of products of category 613/617/627 from Pakistan the TMB
concluded that it could not simply reconfirm outright the conclusions and recommendation already
made when it had examined the measure taken on imports from Brazil.
14. The TMB noted that, according to Pakistan, during the bilateral consultations held between
the two parties, Pakistan had requested Argentina to indicate whether, in the context of Article 6, the
matter might be considered to be a single measure or five different ones, but Argentina had not
provided a specific answer.  The TMB observed in this regard that the relevant resolution adopted by
the Argentine authorities and notified to the TMB defined the measure as "a safeguard measure …consisting in the fixing of annual quotas … grouped in accordance with the categorization set out in
Annex I, … up to the amount set out in Annex II."  Annex I defined in detail the five product
categories concerned and Annex II established five annual quotas (expressed in kilograms) applicable
to the five respective categories.  It could be noted, therefore, that five different individual restraints
had been introduced.  In line with this, the factual information provided by Argentina, apart fromsome general considerations and from data pertaining to the five product categories taken together,
contained detailed and category-specific analysis, one-by-one, regarding the five categories.  The
TMB also took note of the statement of the representative of Argentina according to which the
measure took the form of one administrative act consisting of five specific restraints.  In the light of
this reconfirmation and also consistent with the approach the Body had already adopted during the
examination of the safeguard measures applied provisionally on imports of the same products from
Brazil, the TMB was of the view that the five measures should be considered separately.
15. The TMB next turned to the argument of Pakistan according to which, since Argentina had
not provided any analysis to justify its recourse to the provisions of Article 6.11 on the basis of
"highly unusual and critical circumstances" as referred to in that article, the very basis of Argentina’s
recourse to Article 6.11 was invalid, and, therefore, the action itself was unjustified.  The TMB
observed that the recourse by Argentina to Article 6.11 was an important aspect of the matter referredto it and, therefore, required careful consideration.  It was recalled that during its consideration of the
safeguard measures applied on imports of the same products from Brazil, the TMB had already made
a number of observations in this regard
7 and had found that the recourse by Argentina to this
particular provision of Article 6 had not been appropriate.  The TMB was of the view that this issue
would have to be addressed further during the detailed examination of the measure introduced byArgentina on imports from Pakistan but, at this stage of the TMB’s consideration of the matter, such
non-compliance with certain requirements of Article 6.11 did not provide, in itself, sufficient ground
to conclude that it would not be necessary to pr oceed to the detailed examination of the measure
affecting imports of category 613/617/627 products.
                                                     
5 See G/TMB/R/58, paragraph 40.
6 See G/TMB/R/58, paragraph 40 and G/TMB/R/60, paragraph 16.
7 See G/TMB/R/58, paragraphs 41 to 45, and G/TMB/R/60, paragraph 22.G/TMB/22
Page 10
16. As regards the view of Pakistan that the request for consultations and the notification to the
TMB had been made more that five working days after the action had been taken, contrary to what is
stipulated in Article 6.11, the TMB made the following observations:
- The measures had been introduced as from 31 July 1999 and the respective
notification and request for consultation had been made on 4 August 1999, "within nomore than five working days" as stipulated in Article 6.11, from the implementation
of the provisional safeguard measure.
- The notion of "taking" a safeguard action is not defined clearly by Articles 6.10 and
6.11, at least as far as a possible distinction between "taking" and "applying" a
measure is concerned.
- There can be a reading that an action is being taken in the sense of the above
provisions when the restraint is effectively implemented, while another readingaccording to which "taking" and "applying" the measure are distinct actions, cannot
be excluded either.
- In any case, while it could be argued that the effect of a restraint begins immediately
once it is announced, the decision in the present case was taken on 13 July 1999, but
was published (and, therefore, became known to the foreign and domestic economicoperators) only later and the difference of slightly more than two weeks in
administrative terms, including the prep aration of the implementation through
appropriate procedures, did not seem to be excessive.
17. The TMB noted the statement of Pakistan according to which the factual information
presented by Argentina referred to 42 per cent of the output of the products subject to the safeguardmeasure, and that this raised serious doubts about the reliability or the representativity of the
information provided. The TMB observed that this issue had already come up in the context of the
Body’s examination of the measures affecting imports from Brazil and, on that occasion, the TMB
had been satisfied by the additional clarification prov ided by Argentina.  The TMB also recalled that,
in its statement to the present meeting, the representative of Argentina had emphasized that the factualinformation provided had been drawn up on the basis of official data obtained from the different
Argentinian institutions in charge and encompassed 100 per cent of the domestic industry in question.
The sampling procedure had been used in addition to the data thus provided with the sole purpose of
verifying, rectifying or complementing the data men tioned above.  On the basis of this reaffirmation
the TMB assumed that the data presented covered 100 per cent of the total domestic industry
producing the products concerned.
18. As to the point made by Pakistan regarding the lack of comparability of some of the data
provided by Argentina, the TMB recalled that it had already addressed this aspect during its
examination of the measures affecting imports from Brazil and had made some observations in this
regard
8.  The TMB considered it important to reiterate these observations in the context of the present
review, in particular that reliable indications can only be obtained by comparing data for
corresponding time periods.
19. The TMB considered that the remaining arguments made by Pakistan (the reference to the
operations of vertically integrated enterprises, to structural adjustment and recession, and to the lack
of category-specific information with respect to investments and profits) could best be addressed in
the context of a detailed and systematic examination of the determination of serious damage made by
Argentina with respect to category 613/617/627.
                                                     
8 See G/TMB/R/58, paragraph 13 and G/TMB/R/60, paragraph 17.G/TMB/22
Page 11
20. Recalling its conclusions as reflected in paragraph 13 above the TMB decided (a) not to
undertake any further examination of the measures affecting imports of the products of categories
218,219/220, 224 and 313/317 and (b) to proceed to the examination of the measure on imports of
products of category 613/617/627.
Examination of the safeguard measure introduced on imports of category 613/617/627 products
21. The TMB recalled that the factual inform ation provided by Argentina contained inter alia ,
detailed category-specific information and data regarding this product category as well as an analysis
of the state of the domestic industry producing these products.
22. In line with paragraph 11 above, the TMB requested the representative of Pakistan to provide
its view regarding the measure affecting imports of products of category 613/617/627.
23. The representative of Pakistan stated, inter alia , the following:
Argentina had also, with respect to category 613/617/627, failed to demonstrate that its
domestic industry suffered serious damage due to increased quantities of imports.  In this
regard, Pakistan submitted that Argentina had not provided information referred to in
Article 6.7 that could be deemed to be complete or reliable.  The data were not comparable
between various time periods and no category-specific information had been submitted on
investments and profits.  One could see, however, that the marginal increase in total importsof the products of category 613/617/627 could not be such as to cause damage to the
Argentine industry producing these products.  According to the established practice of the
TMB, confirmed by rulings of dispute settlement panels, if one of the conditions specified in
Article 6.2 had not been met the safeguard measure had to be found not to be justified.  It was
clear, therefore, that since there had been no increase in total imports of the productconcerned the first essential condition for taking safeguard action, as provided for in
Article 6.2, had not been fulfilled, much less the conditions of highly unusual and critical
circumstances of Article 6.11.  In the view of  Pakistan, the Argentinian industry’s problems,
if any, were of a structural character and the result of factors other than imports.  It was also
the TMB’s practice to rule that a measure was not justified if it had not been successfullydemonstrated that the industry in question was being damaged due to increased quantities in
total imports of the products.  It was for the country taking the measure to make this
demonstration and, in this particular case Argentina had not successfully demonstrated that
(a) there had been an increase in imports and (b) that there had been any causal relationship
between such imports and the alleged damage to its industry.  Indeed it was clear that the
problems faced by the Argentinian industry were due to factors other than imports.  For these
reasons Argentina’s restriction on this product category lacked justification under the ATCand, therefore, Pakistan requested that the TMB recommend that Argentina rescind it.
24. With respect to the issue of comparability of  data, the TMB reiterated the observations made
in paragraph 18 above, and decided to consider the other points raised by Pakistan in the context of
the detailed examination of the serious damage claimed by Argentina.
25. The TMB noted that, in the view of Pakistan, there had been virtually no increase in total
imports into Argentina and that a marginal increase of 0.1 per cent could hardly be such as to cause
serious damage to the domestic industry.  The TMB observed that total imports of Argentina had
increased by more than 1,400 tonnes in 1998, compared to 1997 (+17 per cent), and amounted to
9,658.5 tonnes.  According to the information provided pursuant to Article 6.7, in the period
May 1998 to April 1999 imports had increased by slightly more than 14 tonnes (0.15 per cent) ifcompared to data related to the calendar year 1998.  While Pakistan, on the one hand, questioned the
comparability of the two data series, and the TMB agreed with Pakistan in this respect, on the other
hand Pakistan also seemed to draw conclusion s by comparing data between May 1998 to April 1999G/TMB/22
Page 12
and January to December 1998.  The TMB reiterated its view that the two data cannot be compared
because of the overlap of eight months.  The TMB noted also that in reply to its questions Argentina
had submitted additional data comparing developments on a rolling-year basis, i.e. between the period
May 1998 to April 1999 and the corresponding previous period.  Though the TMB was of the view
that its examination of the matter had to be based essentially on the information and data submitted byArgentina when it had requested consultations with Pakistan, it could be noted that the additional
information confirmed that imports by Argentina during the most recent period, i.e. during the period
May 1998 to April 1999, had further increased by 10 per cent, compared to the period May 1997 to
April 1998.  Regarding developments since 1995, it could be observed 
9 that imports had increased by
more than 3,191 tonnes from 1996 to 1997 (+63.4 per cent), while the corresponding figure for
1996/1995 was about 1,850 tonnes (+58.0 per cent).  The TMB noted that since 1998 the rate of
increase in imports had started to decelerate, however, there had been an increase in the quantity oftotal imports during the periods for which comparable data had been made available, and this trend
had been continuous since 1995.  Therefore, the TMB had to proceed to examine whether it had been
successfully demonstrated by Argentina that the increased imports of category 613/617/627 products
had caused serious damage to the domestic industry producing like and/or directly competitive
products.
26. In beginning its examination of the possible effects of the increased imports on the state of the
domestic industry, as reflected in changes in the economic variables listed in Article 6.3 and in the
other indicators reported by Argentina, the TMB recalled that it had already conducted such a detailed
examination when it had examined, on the basis of the same factual information, the safeguard
measure introduced by Argentina on the imports of category 613/617/627 products originating inBrazil.  The TMB's analysis was described in paragraphs 30 to 34 of G/TMB/R/58.  In its analysis of
the variables contained in Article 6.3, as reflected in paragraphs 27 to 34 below, the TMB bore in
mind the observations and analysis referred to above.
27. Compared to 1997, domestic output had fallen by 1,325 tonnes (-10 per cent) in 1998, while
imports had increased by more than 1,400 tonnes (+17 per cent).  Looking at developments inprevious periods, in 1997 output had increased by 290 tonnes (+2.5 per cent), while imports had
increased by 3,191 tonnes (+63.4 per cent) and apparent consumption had also increased by
3,453 tonnes (+21 per cent).  In 1996 output fell by 875 tonnes (-7 per cent), while imports increased
by approximately 1,850 tonnes (+58 per cent) and the apparent consumption increased by
1,026 tonnes (+7 per cent).  This could also be an indication that the difficulties experienced by the
domestic industry had started earlier than during the most recent period.  Productivity (calculated as
the domestic output per person employed) remained essentially stable in 1998 compared to theprevious year.  It had increased by more than 6 per cent in 1996, followed by a further increase of
4 per cent in 1997.  The TMB noted that, according to Argentina, as explained in the factual
information provided, "the steady increase in productivity … was achieved by investment".
Compared to the previous periods, production capacity had been reduced by 1,530 tonnes in 1996, by
470 tonnes in 1997 and by 300 tonnes in 1998.  Also as a result, capacity utilization had remainedstable though relatively low during the period 1995 to 1996 (71 and 72 per cent respectively),
followed by an increase to 76 per cent in 1997.  Howe ver, the rate of utilization fell to 69 per cent in
1998 and to 62 per cent in the period May 1998 to April 1999, which could be an indication of serious
difficulties.
28. End-product inventories increased by about 285 tonnes (+14 per cent) in 1998 and by about
390 tonnes during the period May 1998 to April 1999, representing roughly 22 and 29 per cent,
respectively, of total domestic output of the corresponding periods, during which periods output,
however, decreased significantly.  As already indicated by the TMB, inventories had shown an
increasing trend since 1995, representing 16 per cent of the volume of domestic output in 1995 and
                                                     
9 See also G/TMB/R/58, paragraph 28.G/TMB/22
Page 13
also in 1996, and 17 per cent in 1997.  It appeared that the level of the inventories had already been
relatively high in 1995, indicating that some of the difficulties facing the domestic industry had
already been manifest at the beginning of the peri od subject to the investigation carried out by the
Argentinian authorities.  The seriously deteriorating trend observed in 1998 and in the period May
1998 to April 1999 showed, however, that the situation of the industry had significantly worsenedrecently.
29. Apparent consumption increased by 0.4 per cent in 1998 compared to 1997 (+90.7 tonnes),
while it had shown a substantial increase during the period preceding 1998 (+1,026 tonnes in 1996
and +3,453 tonnes in 1997 over the respective preceding years).  As a result of changes in output,
consumption and imports, the share held by imports in the apparent consumption showed a sharply
increasing trend:  about 20 per cent in 1995, 30 per cent in 1996, 41 per cent in 1997, 48 per cent in
1998 and 50 per cent in the period May 1998 to April 1999.  Since exports represented, throughoutthe period investigated, less than 1 per cent of the output and, therefore, had practically no effect on
the developments characterizing the domestic industry, these figures and trend indicated that imports
had substantially increased to the detriment of the domestic production.
30. Average wages fluctuated between limited margins in the period 1995 to 1997: a  decrease by
3 per cent in 1996 was followed by an increase of 5 per cent in 1997.  In 1998, average wagesdecreased by 2 per cent, and showed an important decrease in the period May 1998 to April 1999.
There was no indication to the effect that the wage bill had influenced job losses or the general
competitiveness of the industry.  Employment decreased by 11 per cent in 1998 and it appeared that
this trend of decline accelerated during the most recent period.  These developments had been
preceded by an annual decrease of 2 per cent in 1997 and 12 per cent in 1996.  While the significantdrop in 1996 could perhaps be explained in part by the impact of investments made, as a result of
which productivity increased by 6 per cent in the same period, this could not apply to the period
starting with 1998, when productivity remained essentially stable.  The TMB noted the argument
made by Pakistan that since part of the Argentinian industry was vertically integrated, the decline in
employment may have been due to shifts within various segments of the production within the sameenterprises.  The Body observed in this regard th at though, in theory, such an assumption could not be
refuted, it was not supported by sufficient evidence.  Though in reply to questions posed by the TMB,
the representative of Argentina indicated that two companies had shifted part of their production from
this category to the production of category 313/317 products, it could be observed that employment in
the latter category had also decreased (by 10.7 per cent) in 1998, and that this trend seemed to
continue in the most recent period.  In additio n, employment in the broader industry producing
products of the five product categories subject to the safeguard measures decreased by slightly morethan 10 per cent in 1998, compared to 1997, indicating that the decrease of employment in one
segment could not result from the deployment of more workforce in the production of other segments.
31. The average domestic prices of category 613/617/627 products showed a continuously
declining trend;  a decrease by 4.4 per cent in 1996 was followed by further decreases in the
subsequent periods (10.1 per cent in 1997 and 12 per cent in 1998).  The TMB noted Argentina'sexplanation according to which "this trend is a result of the domestic producer's need to adapt his
prices to those of the foreign competition to counter the lower prices at which imports are being
entered".  Given that no average import prices had been provided by Argentina, the TMB could not
fully assess the validity of this statement.  However, the increased volume of imports could likely
exercise downward pressure on the price level prevailing in the Argentinian market, in particular inthe most recent period.  Other factors, like increased productivity could perhaps also explain the price
decrease for the years 1996 and 1997, but their impact, if any, seemed to be less evident in 1998.
32. With respect to investments and profits, the TM B referred to its earlier statement according to
which "[t]he information regarding investments (which  could not be attributed to the specific product
categories, but was related to the overall sector) seemed to confirm that the primary objective hadG/TMB/22
Page 14
been to increase productivity rather than to expand production capacity.  As to profits, the indications
given were enterprise-specific and, therefore, could not provide meaningful guidance in the
consideration of the case at hand"10.  The TMB noted the observation of Pakistan that no category-
specific information had been made available by Argentina on these two variables.  In this context
Pakistan recalled the findings of a dispute settlement panel11 according to which, "at a minimum, the
importing Member must be able to demonstrate that it had considered the relevance or otherwise of
each of the factors listed in Article 6.3".  The Body noted that Argentina had provided category-
specific information with respect to nine of the eleven variables listed in Article 6.3 and, in addition,
had submitted specific information regarding two other indicators as well (see paragraphs 33 and 34
below).  Also, it could not be argued that Argentina had not considered investments and profits at all.
Argentina had explained in the factual information that since these indications were enterprise-
specific, and therefore difficult to assign to a specific sector, the information related to investmentsand profits had been provided at a more aggregated level.  The TMB did not find this explanation to
be unreasonable, all the less since the more aggregated data did not seem to be in contradiction with
the category-specific information provided with respect to the other variables.
33. Since part of the domestic industry was vertical ly integrated, Argentina provided information
also regarding the industry's "own consumption" of category 613/617/627 products.  The ratio of own
consumption by the domestic industry to its total output remained relatively stable during the period
1996 to 1998, indicating that slightly less than half of the total output was used by the producers
themselves for further processing.  In 1998, the domestic industry's own consumption dropped by
more than 630 tonnes, which corresponded roughly to half of the decrease in total domestic output.
On the basis of the information available, the TMB could not reach a conclusion regarding the actualcause(s) of the important decline in the above data.  It could perhaps be explained by a possible
reduction in the production of goods for which category 613/617/627 products were downstream
products, but, since total consumption of the fabric in question had not declined, it could equally be
true that the integrated industry had been unable to compete with the cheaper imports and had been
forced increasingly to rely on them in its production processes.
34. The sale of domestic production in the domestic market had been declining rather steadily
since 1996 and the decrease became significant in 1998 (-787 tonnes,  a 13 per cent decline), when
apparent consumption had remained almost stable.
35. On the basis of the detailed examination reflected in paragraphs 26 to 34 above, the TMB
concluded that the Argentinian industry pr oducing products of category 613/617/627 had been
affected by unfavourable developments and that the difficulties experienced did not seem to be over.
36. The TMB recalled that it had already stated the following in its report adopted after the
examination of the safeguard measure applied on imports from Brazil: "It could be argued that the
data related to output, sales, imports and prices pointed to the direction of serious damage caused by
increased quantities of imports, and other indicators either confirmed or did not contradict such a
possible conclusion.  Following this reasoning, the continuous and important increase of the volume
of total imports, coupled with a price level below average domestic prices, had exercised an importantpressure on, and caused difficulties to, the domestic producers of like and/or directly competitive
products.  Domestic output had fallen during the most recent period;  domestic sales of the production
had shown a declining trend both in absolute terms and relative to the output;  inventories had
increased and, as a result of these developments the market share held by imports had increased
significantly.  The domestic producers had tried to adjust to these circumstances, in particular bycutting back the production capacity and also perhaps by making investments.  As a result, there had
also been some positive developments, such as the increase in the average productivity.  However,
                                                     
10 See G/TMB/R/58, paragraph 34.
11 See WT/DS33/RG/TMB/22
Page 15
these efforts did not seem to be sufficient to halt the negative trends affecting the domestic
producers"12.
37. In making an overall assessment of the state of the domestic industry as reflected in changes
in the various economic variables, the TMB was of the view that the present examination reconfirmed
its assessment referred to above.  In addition, the Body noted that some of the difficulties of thedomestic industry had started earlier than the period beginning with January 1998.  The industry had
already been faced with some weakness in terms of competitiveness in 1995 and 1996, as
demonstrated by the relatively high level of inventories and the significant drop in production in 1996,
in spite of an important increase in demand and consumption.  It appeared to the TMB that the
Argentinian producers had tried to react to these unfavourable developments by adjusting their
capacity and, in particular, by making investments with a view to upgrading the production facilities.
These efforts to adjust had brought about temporary results, as reflected in a slight upward trend inoutput in 1997, despite the continued dynamic growth of imports.  However, the industry had been
unable to take real benefit from the substantial increase of the domestic market, and the apparently
fragile recovery of the domestic output reversed to a significant fall, while imports increased further,
taking roughly half of the market.  The above trends indicated to the TMB that, though adjustment
was taking place in the Argentinian industry producing these products, it had not been able as yet toproduce more lasting results.
38. The TMB noted Argentina's explanation that the difficulties facing the domestic producers in
the most recent period had not been caused by such factors as technological changes or changes in
consumer preference.
39. The TMB recalled that, in examining the sa feguard measure affecting imports of these
products from Brazil, it had reached the preliminary conclusion that the difficulties facing the
Argentinian industry could arise from multiple reasons having a mutually reinforcing effect, these
possible reasons being:
(a) a potential serious damage caused by increased quantities of imports;
(b) difficulties of a structural nature;
(c) possible business decisions taken by the integrated industry, such as shifting the
production to other lines, or reduced demand of further processed products, for which
the products of category 613/617/627 were an input;
(d) a general contraction of the economy resulting from a recession.
40. With a view to reaching a definitive conclusion whether imports had been the primary cause
for the industry's difficulties, the TMB decided to reflect further on the arguments as in (b) to (d)
above.
41. Though it could be true that most recently there had been signs of a general contraction of the
Argentinian economy as a result of a recession, the question remained whether this could cause, ornot, the difficulties experienced by the particular industry.  It could be assumed that when the
economy contracts, consumption, output and also imports tend to decline, and as a result of the
decrease in imports, serious damage in the sense of Article 6 cannot be demonstrated.  In the present
case, however, consumption remained relatively stable and output dropped significantly, while
imports continued to increase.  Therefore, it could be concluded that the recession affectingArgentina's economy could not explain the difficulties experienced by the domestic industry
producing category 613/617/627 products.  As to possible difficulties of a structural nature, one could
                                                     
12 See G/TMB/R/58, paragraph 36.G/TMB/22
Page 16
not exclude that they could have existed.  On the basis of the information available, the more precise
nature of such difficulties, if any, could not be defined.  The TMB also noted that in response to
problems, perhaps also of a structural nature, the Argentinian industry had already made efforts to
adjust, but the continued growth in imports had not made it possible as yet to achieve a more lasting
reversal of the unfavourable trends.  Turning to the issue of the impact of possible business decisionstaken by the integrated industry, the TMB recalled that it had already dealt with this matter in the
context of examining the effect on employment, if any, of a possible shift from the production of
category 613/617/627 products to the production of  some other goods, and could not find any
evidence in this regard (see paragraph 30 above).  An analysis of the information and data related to
the five product categories subject to the provisional safeguard measures could not lead, in the view of
the TMB, to a conclusion that a possible shift in the production among these products would explain
the difficulties experienced by the industry producing category 613/617/627 products, all the lesssince the total output in the five categories in question had decreased by more than 10 per cent in
1998, compared to 1997.  Also, there was no evidence to suggest that a possible shift to the
production of goods other than those subject to the provisional safeguard measures could be held
responsible for the overall state of the domestic industry producing this category of products.
42. On the basis of the above considerations, the TMB reached the conclusion that the difficulties
identified with respect to the domestic industry producing category 613/617/627 products had been
caused by the increased quantities in imports.  The TMB therefore determined, pursuant to
Articles 6.2 and 6.3, that the increased imports of products of this category had caused serious damage
to the domestic industry producing like and/or directly competitive products.
43. The TMB next turned to the examination of th e determination made by Argentina according
to which the serious damage caused by increased total imports of category 613/617/627 products
could be attributed, inter alia , to the imports originating in Pakistan.
44. The representative of Argentina stated, inter alia , the following:
It appeared from the data contained in the market statement that imports from
Pakistan had shown an upward trend from 1995 to 1998, increasing by 387 per cent.In the period May 1998 to April 1999 imports from Pakistan had amounted to about
52 per cent of all imports by Argentina.  It could also be seen from the additional data
submitted by Argentina in reply to a question put by the TMB that imports from
Pakistan of that category had increased by 27 per cent from the period May 1997 to
April 1998 to the period May 1998 to April 1999, amounting to 52 per cent of the
Argentinian domestic production for that period.  The share held by Pakistan in total
imports of the products of category 613/617/627 in the period May 1998 to April1999 stood at 52 per cent, compared to a share of 28 per cent for China and 5 per cent
for Brazil.  Also, the share of apparent domestic consumption held by imports from
Pakistan had increased from 6 per cent in 1995 to 23 per cent in 1998, and to
26 per cent in the period May 1998 to April 1999.  There was no difference between
the products made in Argentina and those imported from Pakistan except with respectto prices, Pakistani prices being on average 10 per cent lower than the Argentinian
domestic prices.  Both domestic average price and the average price of the imported
products had dropped constantly from 1995 to April 1999.  For all these reasons
Argentina had found that the serious damage experienced by the Argentinian industry
producing products of category 613/617/627 could be attributed to imports from
Pakistan.G/TMB/22
Page 17
45. The representative of Pakistan stated, inter alia , the following:
- The products in question were not being imported into Argentina in such increased
quantities as to cause serious damage to its domestic industry producing like
products.
- The information submitted by Argentina related only to 42 per cent of its domestic
industry and, although it had been claimed that these 42 per cent represented the
whole of the industry, in the past the TMB had reached the conclusion that this claim
could not be sustained and that partial information could not be deemed to pertain to
the entire domestic industry concerned.
- No information had been made available under Article 6.16.
- The prices of imports from Pakistan had been much higher than those from other
sources such as Brazil.  It was Pakistan’s view, therefore, that these importedproducts were not alike.
- Despite the fact that apparent consumption had consistently been on the increase, the
Argentinian industry had not increased its production capacity, indicating that it had
made a conscious decision to shift to other lines of products such as products not
included in the market statement.  Since the domestic industry could not expect tosatisfy the increase in demand, it could  not be claimed that imports, including those
from Pakistan, were causing any damage to the Argentinian industry.
- Pakistan expected that, in accordance with the TMB’s view and practice as well as
with those of dispute settlement panels, th e TMB would review this case consistently
with the standards and parameters already established.
46. The TMB recalled that according to Article 6.4, "[t]he Member or Members to whom serious
damage, or actual threat thereof, referred to in paragraphs 2 and 3 [of Article 6], is attributed, shall be
determined on the basis of a sharp and substantial increase in imports, actual or imminent, from such a
Member or Members individually, and on the basis of the level of imports as compared with imports
from other sources, market share, and import and domestic prices at a comparable stage ofcommercial transaction;  none of these factors, either alone or combined with other factors, can
necessarily give decisive guidance".  The TMB was of the view that some of the arguments made by
Pakistan (see paragraph 45 above) were not fully relevant in the context of the examination of the
attribution of serious damage to imports in the sense of Article 6.4.  As to the issue whether the
information provided by Argentina had been related only to 42 per cent of its domestic industry or to
100 per cent of it, the TMB recalled that it had already addressed this question (see paragraph 17
above).  As regards the observation that the Argentinian industry had not made any addition to itscapacity, despite the consistently increasing consumption, the TMB noted that it had already dealt
with the economic variables listed in Article 6.3, in cluding capacity, capacity utilization and apparent
consumption at a previous stage.  The TMB could not agree with a contention that, unless production
capacity is increased in order to match the increase in consumption, it cannot be demonstrated that
increased imports could cause serious damage to the domestic industry.  Had Argentina decided,contrary to what it had done, to increase the production capacity, the problems identified in its
domestic industry would have been aggravated.  Finally, with respect to the possible shift to other
lines of production, including perhaps to products not subject to the safeguard measures, the TMB
referred to its discussion as reflected in paragraph 41 above.
47. As to the increase of imports from Pakistan, the TMB observed that this increase had been
significant in 1998, compared to the previous year (from 3,218 tonnes to 4,745 t onnes, +47 per cent)
and it did not appear that this trend had been reversed during the most recent period.  The increase hadG/TMB/22
Page 18
been a significant one from 1996 onwards:  +376 tonnes in 1996 and +1.868 tonnes in 1997.  The
TMB was of the view that imports by Argentina from Pakistan had increased sharply and
substantially.  The share of imports from Pakistan  in total imports had shown a substantial growth:
27 per cent in 1996, 39 per cent in 1997, 49 per cent in 1998.  Imports from Pakistan held an
increasingly important share of the domestic market in Argentina:  this share in apparent consumptionwas 6 per cent in 1995, 8 per cent in 1996, 16 per cent in 1997, 23 per cent in 1998 and 26 per cent in
the period May 1998 to April 1999.  Regarding prices, it could be observed that Argentina's average
domestic prices had remained higher throughout the period investigated than the average entered
prices of imports from Pakistan.  The TMB noted that comparing its prices to the average prices of
imports from Brazil, Pakistan was of the view that the products in question were not alike.  The TMB
understood that the contention of Pakistan had been that the products imported from Pakistan had to
be of a different kind, if compared to those imported from Brazil, as they were more expensive, andthat, consequently, one could not otherwise explain why the Argentinian importers had decided to
import from Pakistan and not to increase imports of cheaper products from Brazil. The TMB observed
in this regard that there could be other possible explanations to such a phenomenon, such as, for
example, the unavailability of larger quantities of products to be imported from Brazil. The TMB was
of the view that the differences in the average price level of the respective Argentine production, theimports from Pakistan and those from Brazil did not provide sufficient grounds to question the
"likeness" of the products produced by the Argentine industry and those imported from Pakistan.
48. On the basis of the above analysis, the TMB found that there had been a sharp and substantial
increase in imports from Pakistan and that these impor ts held a majority share in total imports as well
as an increasing share of the Argentinian apparent consumption.  Also, the average price of theimported goods from Pakistan was below the average domestic price prevailing for Argentinian
products.  Recalling that, according to Article 6.4, none of the above-listed factors, either alone or
combined with other factors, can necessarily give decisive guidance in determining the attribution of
serious damage to a Member, the TMB reached the overall conclusion that the serious damage caused
to the Argentine industry producing products of category 613/617/627 could be attributed, inter alia ,
to imports from Pakistan.
49. The TMB recalled that the safeguard measure on imports of category 613/617/627 products
had been taken provisionally by Argentina, pursuant to the provisions of Article 6.11, which states,
inter alia , that "[i]n highly unusual and critical circumstances, where delay would cause damage
which would be difficult to report, action under paragraph 10 [of Article 6] may be taken
provisionally on the condition that the request for consultations and notification to the TMB shall be
effected within no more than five working days after taking the action,".  It was also recalled that in
the view of Pakistan, the very basis of Argentina's recourse to this provision had been invalid (see
paragraph 15 above).
50. The TMB recalled that it had already addressed in detail the issue of recourse to Article 6.11
during the examination of the safeguard measure applied on imports of the same products from
Brazil
13.  On these occasions the Body had already found that the recourse by Argentina to
Article 6.11 had not been appropriate.  It was recalled, in particular, that during its consideration of
the matter under Article 8.10 "[t]he TMB noted the statement of Argentina that it had adopted a
prudent position, and that developments in total imports 'would have fully justified taking action
earlier according to [Article 6]'.  The TMB underst ood that this statement was meant to justify the
recourse to the provisions of Article 6.11 which requires the existence of 'highly unusual and criticalcircumstances, where delay would cause damage which would be difficult to repair'.  The TMB
observed that Argentina's contention that the changes in the economic variables had taken place over
several years was difficult to reconcile with the provisions requiring 'highly unusual and critical
circumstances'.  In this connection, the TMB continued to be of the view that in cases where the
                                                     
13 See G/TMB/R/58, paragraphs 41 to 45 and G/TMB/R/60, paragraph 22.G/TMB/22
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provision of Article 6.11 were to be invoked, the expectation was that the elements envisaged in
Articles 6.2, 6.3 and 6.4 would indicate as unambiguously as possible the highly unusual and critical
nature of the circumstances.  The TMB was of the view that unless such circumstances were met, any
action taken under Article 6 should be preceded by consultations between the parties".
51. In addressing this aspect further during the present examination, the TMB noted that
Article 6.11 involves procedural and substantive elements.  In the view of the TMB, the procedural
requirements, in particular the notification of the measure within a narrowly defined time period, had
been met.  As to the substantive elements, they can be summarized as follows:
- it has to be demonstrated that a particular product is being imported into a Member’s
territory in such increased quantities as to cause serious damage, or actual threat
thereof, to the domestic industry producing like and/or directly competitive products.
In this context the TMB noted that Article 6 defines only one set of criteria fordemonstrating serious damage and, therefore, they were the same whether
Article 6.10 or 6.11 is invoked;
- in addition, the invoking Member has to provide explanations that would convince the
Member affected by the measure, as well as the TMB, regarding the existence of
highly unusual and critical circumstances where delay in taking action would causedamage which would be difficult to repair.
52. The TMB reiterated that Argentina had not provided any explanation in the factual
information of the reasons why it had considered that the circumstances were highly unusual and
critical.  Subsequently, Argentina had explained that  developments in total imports could have, in its
view, fully justified taking action pursuant to Article 6 earlier, and that the continued increases ofsuch imports during the period investigated had created a situation that was one as described in
Article 6.11.  The TMB had not found this argument to  be a convincing one.  It noted, among other
things, that the rate of increase of total imports seemed to have decelerated since the beginning of
1999.  Consequently, the circumstances could not be highly unusual and critical, since some of the
difficulties experienced by the industry had started earlier and the situation had, perhaps, graduallyworsened throughout the period investigated.
53. In light of the above, the TMB continued to be of the view that Argentina's recourse to the
procedures laid down in Article 6.11 had not been appropriate.  Whether such an inappropriate
recourse to Article 6.11 can invalidate a transitional safeguard measure or not, was, in the view of the
TMB, a decision to be taken case-by-case, on the basis of the consideration of all the relevant
elements involved.  In the present case the TMB found, on the one hand, that serious damage caused
by increased imports had been demonstrated and that it could be attributed, inter alia , to imports from
Pakistan.  Furthermore, the procedural requirements under Article 6.11 had been met.  On the other
hand, the detailed examination of the determination of serious damage as well as the lack of
convincing explanations pursuant to Article 6.11 revealed that the recourse to this provision, i.e. to
apply the restraint provisionally, without having exhausted the possibility of prior consultations, had
not been justified.  The TMB came to the overall conclusion, however, that in this particular case theinappropriate recourse to Article 6.11, although it constituted an important shortcoming, would not
lead to the conclusion that the safeguard measure should be rejected on that basis.
Conclusions and recommendations
(a) Categories 218, 219/220, 224 and 313/317
54. The TMB reiterated its previous conclusions according to which Argentina had not
demonstrated that the products of category 218, 219/220, 224 and 313/317 were being imported into
Argentina, at the time it had decided to introduce safeguard measures on them pursuant to theG/TMB/22
Page 20
provisions of Article 6.11, in such increased quantities as to cause serious damage to the domestic
industry producing like and/or directly competitive products.  The TMB recommended, therefore, that
Argentina rescind the provisional safeguard measures introduced on imports of these products from
Pakistan.
(b) Category 613/617/627
55. On the basis of its detailed examination the TMB concluded that it had been demonstrated
that products of category 613/617/627 were being imported into Argentina, at the time Argentina had
decided to introduce a safeguard measure pursuant to the provisions of Article 6.11, in such increased
quantities as to cause serious damage to its domestic industry producing like and/or directly
competitive products.  The TMB found also that the serious damage caused to the Argentinian
industry could be attributed, inter alia , to increased imports from Pakistan.
56. The TMB noted, however, that the Argentinian industry producing products of category
613/617/627 had already started to make adjustments and that these efforts had already produced
temporary results, such as a slight increase in output in 1997.  Hence, the TMB was of the view that a
shorter period of time than the maximum timeframe envisaged in Article 6.12(a) seemed to be
sufficient for the Argentinian industry to adjust.
57. Therefore, the TMB recommended that Argentina rescind the transitional safeguard measure
on imports from Pakistan of category 613/617/627 products by 31 January 2001.
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58. The sixty-third meeting of the TMB is scheduled for 14 to 16 February 2000.
59. The full report of the sixty-second meeting will be circulated at a later stage.
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