WORLD TRADE
ORGANIZATIONG/SG/N/14/IND/1
11 January 2001
(01-0137)
Committee on Safeguards Original:  English
NOTIFICATION UNDER ARTICLE 12.1(a) OF THE AGREEMENT
ON SAFEGUARDS ON INITIATION OF AN INVESTIGATION
(EXTENSION OF EXISTING MEASURE)
AND THE REASONS FOR IT
INDIA
The following communication, dated 10 January 2000, has been received from the Permanent
Mission of India.
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1. Please refer to India's notification (G/S G/N/10/IND/5 dated 13 August 1999) under
Article 12.1(c) of the Agreement on Safeguards regarding imposition of differential safeguard duties
on imports of Phenol into India, viz. 22 per cent on imports made from 30 June 1999 up to
29 February 2000;  and 15 per cent on imports made from 1 March 2000 to 29 June 2001, subject to
conditions listed in Ministry of Finance (Depar tment of Revenue) Notification No. 82/99-CUSTOMS
dated 30 June 1999.
2. I forward herewith a copy of the Notice of Review of Safeguard Duty Imposition on import of
this item (Notification No. SG/I NV/2/98 (Rev) dated 1 January 2001) issued by the Director General
(Safeguards).G/SG/N/14/IND/1
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F.No.SG/INV/2/98(Rev)
Office of the Director General (Safeguards)
5th Floor, Drum Shape Building
I.P. Estate, New Delhi-110002
NOTICE OF REVIEW OF SAFEGUARD DUTY IMPOSITION
New Delhi, 1 January 2001
{Under Rule 18 read with Rule 6 of the Customs Tariff (Identification and Assessment of
Safeguard Duty) Rules, 1997}
Sub:  Review of Safeguard duty imposition on imports of Phenol into India
* * * * *
1. An application has been filed before me under Rule 18 of the Customs Tariff (Identification
and Assessment of Safeguard Duty) Rules, 1997 (hereinafter referred to as the SGD Rules) by
Hindustan Organic Chemicals Ltd. (HOC), Mumbai an d Herdillia Chemicals Ltd. (HCL), Mumbai for
review of Safeguard Duty imposed on imports of Phenol into India to protect the domestic producers
of Phenol against continued serious injury caused by the increased imports of Phenol into India.
2. The notice initiating investigation concerning import of Phenol into India was issued on
2 February 1999 under Rule 6 of the SGD Rules.  Final findings were issued under Rule 11(1) of thesaid Rules (published in the Gazette of India (Extraordinary) Part II-Section-3-Sub-section (i)) on
11 June 1999, recommending safeguard duty to be imposed at 22 per cent ad valorem  during the first
year and at 15 per cent ad valorem  during the second year on imports of Phenol into India being the
minimum necessary for the protection of the domestic industry from the serious injury threatened to
be caused by the increased imports of Phenol.  In exercise of powers conferred by sub section (1) of
section 8B of the Customs Tariff Act, 1975 (51 of 1975) read with Rules 12 and 14 of the SGD Rules
and based on the final findings of the Director General (Safeguards), the Central Government videNotification No. 82/99-Customs dated 30 June 1999 imposed on Phenol, falling under sub-heading
number 2907.11 of the First Schedule to the said Customs Tariff Act, when imported into India, a
safeguard duty at the rate of:
(a) 22 per cent when imported up to and inclusive of 29 February 2000;  and(b) 15 per cent when imported from 1 March 2000 to 29 June 2001 (both days inclusive)3. The aforesaid domestic producers have submitted that:
(i) Phenol is being imported into India primarily from Belgium, Chinese Taipei,
Germany, Italy, Japan, Korea DPR and Korea RP, the Netherlands, Russia,
Singapore, South Africa, the United King dom and the United States.  The imports
have shown an increasing trend in absolute terms as well as compared to domestic
production.  The imports and domestic production of Phenol during 1994-95 to 1999-2000 have been as under:G/SG/N/14/IND/1
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Year Domestic production
(MT)Import
(MT)Imports as percentage
of domestic production
1994-95 57,780 6,664 11.53
1995-96 63,719 21,752 34.14
1996-97 57,466 19,545 34.01
1997-98 69,281 15,352 22.16
1998-99 66,210 26,670 40.28
1999-2000 69,961 28,992 41.44
The imports during the first eight and a half months i.e. April to December (first half)2000 - have been reported to be 18,247 MT.  They have stated that the imports have
been increasing sharply in November and December 2000.
(ii) The capacity utilization of domestic producers to meet with the domestic demand
which increased from 85 per cent in 1996-97 to 89 per cent in 1999-2000 declined to
83 per cent in the first 8 months of 2000-01.
(iii) The market share of domestic producers of Phenol in the total domestic consumption
of Phenol which increased from 74.3 per cent in 1996-97 to 80.25 per cent in 1997-98
declined to 71.13 per cent and 70.75 per cent in the year 1998-99 and 1999-2000respectively, as indicated from the table below:
(In MT)
Year OB Production CB Exports Domestic
sales (2)+(3)-
(4)-(5)
(including
captive
consumption)Apparent
domestic
consumption
including
importsShare of
domestic
production
in apparent
domestic
consumption
(6/7x100%)
1234 56 78
1995-96 3,448 63,719 3,323 2,354 61,490 83,242 73.86
1996-97 3,323 57,466 3,248 1,006 56,535 76,081 74.3
1997-98 3,248 69,281 2,464 7,675 62,390 77,742 80.25
1998-99 2,464 66,210 2,885 86 65,703 92,373 71.13
1999-00 2,885 69,961 1,517 1,184 70,145 99,137 70.75
2000-01(Up toNov. 2000)1,517 45,848 900 - 46,465 64,712 71.80
The domestic producers have also stated that they are facing depressed conditions of
performance in spite of imposition of safeguard duty on Phenol.
4. The domestic producers have requested for continued imposition of safeguard duty on
imports of Phenol for a further period of 3 years from July 2001.
5. The application has been examined and it appears that prima facie the imports of Phenol
continue to cause threat of serious injury to the domestic producers of Phenol and accordingly it has
been decided to initiate review proceedings through this notice for continued imposition of Safeguard
Duty on imports of Phenol.
6. The purpose of the review is to determine whether the safeguard measure is still needed in
order to remedy the serious injury caused by the imports and whether the industry is adjusting so as to
compete with imports by the end of the proposed pe riod.  The initiation of the review for the purposesG/SG/N/14/IND/1
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of extending the safeguard measure will enable an assessment of present needs so that the domestic
industry can complete its restructuring process to stay competitive vis-à-vis  imports of Phenol into
India.
7. All interested parties may make th eir views known by 9 February 2001 to:
The Director General (Safeguards)
5th Floor, 'D' Block
Indraprastha  Bhawan
New Delhi 110 002
India
8. All known interested parties are also being addressed separately.
9. Any other party to these proceedings who wishes to be considered as an interested party may
submit its representation so as to reach the Directorate-General (Safeguards) within 21 days from the
date of this notice.
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