CHILE LAUNCHES WTO CHALLENGES AGAINST EU SALMON SAFEGUARDS

On 8 February, Chile submitted an official request for WTO consultations to the European Commission regarding new EU safeguard measures on farmed salmon that entered into force on 6 February. The measures, which impose minimum import prices and tariff quotas, were implemented in response to pressure from the UK and Ireland to protect the Scottish and Irish salmon industry from cheap, primarily Norwegian imports.

According to the Commission, recent significant increases in low-priced imports of farmed salmon into the EU market have cause "serious injury" to Community producers by pushing down market prices resulting in large financial losses for producers. To protect its domestic industry, the Commission has imposed a minimum import price of EUR 2'700 per tonne of whole fish and 2'592 for frozen salmon. Moreover, in order to ensure that EU producers can remain profitable while keeping the market open, tariff quotas have been established that limit duty-free imports to 10 percent above 2004 volumes. Imports exceeding this level will be subject to an additional duty.

The safeguards will remain in force until 13 August 2008. The Commission noted that the measures should be subject to further liberalisation during that period, for instance through increases in the quota or a reduction in the additional duty, in order to increase the competitive pressure on Community producers. The new measures are targeted primarily at imports from Norway -- which supplies about 60 percent of Europe's annual consumption -- but will also affect Chile since the country supplies more than three percent of total EU imports. Most developing countries have been exempt from the measures.

Chile and Norway reacted angrily to the new measures, prompting Chile to launch a dispute at the WTO with Norway likely to follow suit. In its request for consultations (G/L/728, available at http://docsonline.wto.org/), Chile notes that the measures are having serious adverse effects on Chile's wild salmon exports. The country also asserts that the increase in imports has not been sufficiently recent, sudden, sharp and significant (as required by WTO rules), nor had they caused serious injury to the domestic industry.

While the EU market still receives a relatively small share of Chilean salmon exports (amounting to less then 10 percent), it is feared that the measures will effectively stifle the sector's growth. According to Carlos Vial of the Chilean Salmon Industry Association, the safeguards will "directly limit the development of salmon farming in Chile and close the doors to further growth in the EU market" despite the existence of a free trade agreement between the two trading partners. The Chilean industry also expressed concerns over impacts on the world salmon market in general, including a possible decline in trade volumes and market prices.

The two parties now have 60 days to settle the dispute. If they fail to reach an agreement, Chile can request the establishment of a WTO panel to assess the dispute.

Additional Resource

Further information on the safeguard measures is available here.

"Chile initiates WTO complaint in dispute over EU's safeguards on salmon imports," WTO REPORTER, 10 February 2005; "Chile-EU: Salmon import barriers spawn growing tensions," IPS, 10 February 2005.