G/ADP/Q2/BRA/5  
17 April 2014  
(14-2405)  Page: 1/5  
Committee on Anti-Dumping Practices  Original: Spanish  
 
  ARTICLE 16.4 OF THE AGREEMENT 
SEMI-ANNUAL REPORTS ON ANTI-DUMPING MEASURES 
QUESTIONS POSED BY PERU CONCERNING THE SEMI-ANNUAL REPORT FROM BRAZIL1 
The following communication, dated 15 April 2014, is  circulated at the request of the delegation 
of Peru.  
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  ANTI-DUMPING INVESTIGATION INITIATED BY BRAZIL ON IMPORTS OF UNPRINTED 
BIAXIALLY-ORIENTED POLYPROPILENE (BOPP) FILM FROM VARIOUS COUNTRIES 
 By SECEX Circular No. 76 of 13 December 2013,  technically substantiated by the report 
on the initiation of an investigation, Opinion No. 57 of the Department of Commercial 
Defence (DECOM) (the Brazilian investigatin g authority), the Foreign Trade Secretary 
of the Brazilian Ministry of Development, Industry and Commerce decided to initiate 
an antidumping investigation on unprinted BOPP film from various countries, including Peru. 
 In this connection, Peru considers that compliance with the obligations set out in the Antidumping Agreement (hereinafter the AD Agreement) should be strictly monitored 
in this Committee and would therefore be grateful  if the Government of Brazil would answer 
the following questions:  
1  DETERMINATION OF DUMPING 
Article 2.4 of the AD Agreement provides that fo r the determination of dumping the investigating 
authority shall make a fair comparison between the export price and the normal value, making due 
allowance in each case, on its merits, for differences which affect price comparability, including 
differences in conditions and terms of sale, taxation, levels of trade, quantities, physical characteristics, and any other differences which are also demonstrated to affect price comparability. 
 
In this investigation, DECOM agreed to the app licant's proposal that the normal value should 
be determined on the basis of the export price to a third country. Thus, the normal value was 
obtained from the average export price from Peru to Colombia, not solely, however, of the product 
under investigation (unprinted BOPP film) but of all the products aggregated under tariff 
heading 3920.20.9000. This includes printed BOPP film, which is a different product from the 
product under investigation as it has an added value that significantly increases its market price. 
Consequently, by having unduly taken into consideration the export price of a product other than that which it was investigating, DECOM obtained an overvalued export price from Peru to Colombia: this gave rise to the calculation of a distorted normal value and hence the 
determination of a dumping margin that does not actually exist. 
 Peru has two grounds for concern at this situation: (i) DECOM knew that printed and unprinted 
film are classified under the same tariff heading, as in order to determine the export price 
of the Peruvian product to Brazil and the value and volume of the imports under investigation it filtered the data to take account only of unprinted film; furthermore, (ii) DECOM could have 
                                               
1 G/ADP/N/252/BRA. G/ADP/Q2/BRA/5 
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  accessed official data to determine the normal value as the statistics on exports under each tariff 
heading from Peru are public and freely accessi ble on the website of the Peruvian National 
Customs and Tax Administration Authority ( http://www.sunat.gob.pe ). It cannot therefore 
be argued that this information was not "reasonably available to the applicant", given that there 
was no restriction whatsoever for the applicant or the authority to obtain it in timely fashion. 
 QUESTIONS 
 
1. How did the investigating authority ensure  a fair comparison between export price 
and normal value in accordance with the obligations  of Article 2.4 of the AD Agreement if the basis 
used for the determination of dumping was a co mparison between the export price to Brazil 
of unprinted BOPP film (duly singled out) and a normal value based on exports from Peru 
to Colombia that included diffe rent, higher priced products? 
 
2. How did the investigating authority examine the accuracy and adequacy of this information 
within the meaning of Article 5.3 of the AD Ag reement in order to determine whether there was 
sufficient evidence to justify the initiation of an investigation? 
 
3. How did the investigating authority verify that the statistical information on unprinted BOPP film exports was not reasonably available to the applicant when the statistics are freely available 
to the public on Peru's customs website? 
 
2  DETERMINATION OF INJURY 
Peru considers that the determination that ther e was sufficient evidence of material injury 
did not comply with certain provisions of the AD Agreement. 
 
(a)  Contradictions in the information used as indicators of injury 
 
The injury analysis is distorted because of differences between the data taken into consideration in a number of the indicators contained in Opinion No. 57 and Circular No. 76.  
The two documents include contradictory information on the variation in specific indicators 
(such as production costs, income statements, employment, and wages). Without knowing which of the two documents contains the correct information, exporters cannot properly understand 
the conclusions of the investigating authorit y or prepare a proper defence with respect 
to the injury.  
The existence of contradictory indicators specifically infringes three major obligations under 
the AD Agreement: (i) the obligation to examin e the accuracy and adequacy of the evidence 
considered in order to determine whether there is sufficient evidence of injury; (ii) the obligation 
to carry out an objective examination based on po sitive evidence that has been duly verified; 
and (iii) the obligation to reach detailed conclusions substantiated by sufficient evidence of injury, 
which can hardly be done on the basis of contradictory information.  
It should be pointed out that to date the Brazilian authorities have not submitted a revised 
or corrected version of the above-mentioned injury indicators. This is a matter of concern, since the procedure provides that a preliminary determination should be made within a maximum 
period of 120 days from the initiation of the in vestigation, on the basis of evidence submitted 
within a period of 60 days running from the date of initiation of the investigation.  QUESTIONS 
 
1. How did the investigating authority comply with the obligation to examine the accuracy and adequacy of the injury indicators and determ ine that sufficient evidence of injury existed, 
if the information for various indicators contained in Opinion No. 57 and Circular No. 76 
is inconsistent and contradictory and does not allow for an objective examination based on positive evidence on the basis of which detailed and substantiated conclusions can be drawn? 
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  2. How did it comply with the obligations laid down in Articles 6.2 and 6.4 of the AD Agreement 
to allow parties a full opportunity for the defence of their interests and provide them with timely opportunities to see the relevant information and submit arguments in their defence when, in this case, the circular initiating the investigation and the technical report of the investigating authority 
contain inconsistent and contradictory information? 
 
(b)  Consideration of unverified informat ion from other domestic producers 
 
Vitopel do Brasil S.A. was the only enterprise that requested the initiation of the investigation, claiming to represent 56% of total domestic production. The Brazilian investigating authority therefore asked the other four producers of BOPP fi lm in Brazil to submit information on their 
production and domestic sales, but only two of them did so. Consequently, DECOM initiated 
the investigation considering only the aggregate information on production of the product under investigation which the applicant submitted, stating that the information had been obtained 
through the Asociación Brasileña de Plásticos  (Brazilian Plastics Association, ABIPLAST). 
This information was not verified by the investigating authority.  
Taking into account that a new producer began operations in the Brazilian BOPP film market 
in the final year of the analysis period, it was important for the authority to check the information submitted by the applicant, firstly in order to know total production of the investigated product and verify the applicant's representativeness, and secondly in order to assess whether the competition 
generated by this producer could have affected the situation of Vitopel do Brasil S.A. 
 QUESTIONS 
 
1. How did the investigating authority fulfil the obligation to examine the accuracy and adequacy of the information submitted by the applicant in order to determine the situation 
and evolution of the rest of the Brazilian national producers of BOPP film as required under 
Article 5.3 of the AD Agreement, and determine pr ecisely the total production of the like product 
produced by the Brazilian industry as requir ed under Article 5.4 of the AD Agreement 
for the examination of the degree of support  for or opposition to the application? 
 
2. How was it able to determine the existence of a major proportion of the domestic BOPP film industry if it did not have precise information on the total production of that industry? 
 
3. How does Brazil claim to have complied with the obligation under Article 5.2 to the effect that "simple assertion, unsubstantiated by relevant evidence," is not sufficient to substantiate 
the existence of injury to the domestic industry, if it is accepting the applicant's information 
obtained through ABIPLAST on the situation of th e other enterprises without additional evidence 
from these enterprises?  
(c)  Positive indicators are not sufficient evidence of injury 
 During the period analysed, the applicant recorded 16% growth in its domestic sales, was able 
to set prices above its costs throughout the period and increased its installed capacity utilization 
up to almost 93%.  
QUESTIONS 
 1. How can the enterprise be suffering mate rial injury despite the positive evolution 
of the above-mentioned indicators? 
 
2. How can it be stated that a major factor of injury is the loss of market share when the applicant was operating at its full installed capa city and could not keep up with market growth 
during the final years of the period analysed? 
 3  DETERMINATION OF A CAUSAL RELATIONSHIP 
Article 3.5 of the AD Agreement provides that th e demonstration of a causal relationship between 
the dumped imports and the injury to the domest ic industry shall be based on an examination 
of all relevant evidence before the authorities. The authorities shall also examine any known G/ADP/Q2/BRA/5 
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  factors other than the dumped imports which at the same time are injuring the domestic industry, 
and the injuries caused by these other factors must not be attributed to the dumped imports.  In the present investigation, the authority failed to analyse factors that contributed to the growth 
and competitiveness of the investigated imports and affected the applicant's situation. 
 
(a)  Tariff preferences benefitted the imports under investigation in the 
period analysed 
 In the anti-dumping investigation carried out by DECOM on imports of BOPP film from Peru and other countries in 2008, the Brazilian authority explicitly recognized that tariff cutting under 
Economic Complementarity Agreement 58 caused Peruvian imports to enter the Brazilian market 
at low prices (a preferential margin of 100% with respect to the MFN tariff of 16%) and so forced down the domestic industry's prices: it therefore determined that there was no causal relationship 
and decided not to impose anti-dumping duties. 
 This time, the Brazilian investigating authority has asserted that in the case of Chile, Argentina 
and Peru there is no causal relationship with  the tariff preference those countries enjoy 
in the framework of LAIA because those preferences were granted prior to the opening of the investigation period, and no variation was recorded. Clearly, however, with a 16% 
preference compared with other countries, import s will be concentrated on the preferential 
countries, which explains their greater competitiveness on the Brazilian market. 
Again, the Brazilian authority is failing to take in to consideration that in 2013 the MFN tariff for this 
tariff heading was raised temporarily from 16% to 25%, and that this change affected the last 
year of the analysis period. Thus the advantag e conferred by a 100% preference was greater in 
2013 owing to the higher MFN tariff.  
QUESTIONS 
 1. In determining the existence of sufficient evidence of a causal relationship justifying the initiation of the investigation, why did Brazil  disregard the advantages of the tariff preferences 
granted to Peru, as this is a factor that significantly increases its competitiveness and its potential 
to displace domestic producers?  
2. If in 2009 the tariff preferences granted by Br azil to Peru were considered a sufficiently 
important factor to justify terminating the investigation on this same product, why in this case is it assumed that preferences were not another relevant causal factor because there was 
no nominal variation during the period, when the authority was aware that the advantage 
conferred by the preferences increased signific antly owing to the raising of the MFN tariff 
from 16% to 25% in the final year of the period?  
(b)  Competition from other domestic producers reduced the applicant's 
market share 
 
As stated above, another causal factor which the Brazilian authority did not take into consideration 
is the strong competition that the applicant faces from other major BOPP film producers in the country. These Brazilian producers have invested in modern machinery on a sufficient scale 
to be able to compete with the applicant and have increased their installed capacity to levels even 
above that of the applicant.  In its analysis of apparent consumption and ma rket share the Brazilian authority noted that 
in the second year of the period, when the mark et grew, it was the other Brazilian producers who 
benefitted most from the growth of demand, increasing their sales by 13,000 MT compared with only 3,000 MT in the case of the applicant. Thus, its sales only increased by 6%, whereas the sales 
of the other producers increased by 35%, a situ ation that continued after the period analysed. 
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  QUESTION 
 1. Why did the investigating authority not take into consideration the stiff competition faced by the applicant from other major Brazilian BOPP film producers in its analysis at the opening 
of the investigation, when it was these other prod ucers that strongly affected the applicant's loss 
of market share in the initial part of the period (when the applicant was still not approaching full capacity utilization)? 
 
(c)  The substantial increase in the cost of resin, the main input for BOPP film 
production, adversely affected the applicant's production costs and 
profit margins 
 
T h e  G o v e r n m e n t  o f  B r a z i l  h a s  m a i n t a i n e d  r e l a t i v e l y  h i g h  t a r i f f s  o n  p o l y p r o p y l e n e  r e s i n s  and applied provisional and definitive anti-dumping duties on four major suppliers of these resins 
in recent years. According to statements fr om ABIPLAST, this has meant that the cost 
of polypropylene resin in Brazil is up to 35% higher than on the world market.  
Considering that resins account for between 70%  and 75% of the cost of BOPP film, the excess 
price paid by Brazilian manufacturers for this input necessarily has a major impact on their competitiveness and their ability to compete on an equal footing with imported film which enters Brazil duty-free. 
 
QUESTION  
1. Why was the high cost of the inputs used by  Brazilian producers of BOPP film not considered 
another causal factor?  
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