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"BCOUNCIL REGULATION (EC) No 978/2000
of 8 May 2000
imposing a definitive countervailing duty on imports of synthetic fibres of polyester originating in
Australia, Indonesia and Taiwan and collecting definitively the provisional duty imposed
(OJ L 113, 12.5.2000, p. 1)
Amended by:
Official Journal
No page date
"M1 Council Regulation (EC) No 902/2001 of 7 May 2001 L 127 20 9.5.20012000R0978 — EN — 13.05.2000 — 000.002 — 1
COUNCIL REGULATION (EC) No 978/2000
of 8 May 2000
imposing a definitive countervailing duty on imports of synthetic
fibres of polyester originating in Australia, Indonesia and Taiwan
and collecting definitively the provisional duty imposed
THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty establishing the European Community,
Having regard to Council Regulation (EC) No 2026/97 of 6 October
1997 on protection against subsidised imports from countries not
members of the European Community (1), and in particular Article 15
thereof,
Having regard to the proposal submitted by the Commission after
consulting the Advisory Committee,
Whereas:
A. PROCEDURE
1. PROVISIONAL MEASURES AND TERMINATION
(1) By Commission Regulation (EC) No 123/2000 (2) (hereinafter
referred to as ‘the provisional duty Regulation’) provisional
countervailing duties were imposed on imports into the Commu-
nity of polyester staple fibres (hereinafter ‘PSF’) falling within
CN code 5503 20 00 and originating in Australia and Taiwan and
the proceeding covering the same product originating in the
Republic of Korea and Thailand was terminated.
In the absence of conclusive evidence of subsidisation no
provisional countervailing measures were imposed on imports of
PSF originating in Indonesia. Nevertheless it was decided to
continue the investigation into the imports from that country
concerning notably the treatment of non-cooperating companies
and the establishment of the countrywide margin of subsidisation.
(2) As a result of a parallel anti-dumping investigation, provisional
anti-dumping duties were imposed under Commission Regulation
(EC) No 124/2000 (3) on imports into the Community of PSF
originating in Australia, Indonesia and Thailand.
2. SUBSEQUENT PROCEDURE
(3) Subsequent to the imposition of provisional countervailing duty,
several parties submitted comments in writing. In accordance with
the provisions of Article 11(5) of Regulation (EC) No 2026/97
(hereinafter referred to as the ‘basic Regulation’), all interested
parties who requested a hearing were granted such a hearing.
(4) The Commission continued to seek and verify all information
deemed necessary for its definitive findings.
(5) All parties were informed of the essential facts and considerations
on the basis of which it is intended to recommend the imposition
of definitive countervailing duties on imports of PSF originating
in Australia, Taiwan and Indonesia.
They were also granted a period within which they could make
representations subsequent to this disclosure.!B
(1) OJ L 288, 21.10.1997, p. 1.
(2) OJ L 16, 21.1.2000, p. 3.
(3) OJ L 16, 21.1.2000, p. 30.2000R0978 — EN — 13.05.2000 — 000.002 — 2
(6) The oral and written comments submitted by the interested parties
were considered and, where deemed appropriate, taken into
account for the definitive findings.
B. PRODUCT CONCERNED AND LIKE PRODUCT
(7) The product concerned is synthetic staple fibres of polyesters, not
carded, combed or otherwise processed for spinning, which is
currently classifiable under CN code 5503 20 00. It is commonly
referred to as polyester staple fibres (PSF).
(8) As no comments were received following disclosure of provisional
findings regarding the definition of the product concerned and the
like product, the conclusions of recitals 10 to 12 of the provisional
duty Regulation are hereby confirmed.
C. SUBSIDIES
(9) The findings made in the provisional duty Regulation concerning
the countervailable subsidies obtained by the exporting producers
are hereby definitively confirmed, unless it is expressly found
otherwise in this Regulation.
I.AUSTRALIA
1. INTRODUCTION
(10) Following the publication of the provisional duty Regulation, the
Government of Australia (hereinafter referred to as ‘GOA’)
submitted on 17 January 2000, in writing, its comments on the
disclosure document containing the details underlying the essen-
tial facts and considerations on the basis of which provisional
measures have been imposed. Comments from the sole cooper-
ating exporter were received on 14 January 2000. The GOA
requested and was granted a hearing before the Commission
services on 4 February 2000.
2. ISSUES CONCERNING SUBSIDISATION
2.1. General submissions
(11) The GOA claimed that the disclosure documents did not set out
‘the details underlying the essential facts and considerations on
which provisional measures have been imposed’ as set forth in
Article 30 of the basic Regulation. Since the GOA did not receive
the calculation methodology or the method of imposition of
provisional measures, the disclosure documentation was deficient.
In particular, the methodology in relation to non-recurring grants
for capital expenditure/fixed assets was not provided.
(12) In response to this claim, it is considered that the disclosure
document sent to the GOA despite the fact that no request for such
provisional disclosure had been received from the GOA, contained
a detailed analysis concerning subsidisation, injury, causation and
Community interest. Therefore, the said disclosure document in
fact did set out the details underlying the essential facts and
considerations on which provisional measures have been imposed.
An explanation of the methodology used for the calculation of the
subsidy amount was provided in the disclosure document
concerning all subsidy programmes for which benefits have been
countervailed, for non-recuring grants the explanation was
repeated in the provisional duty Regulation in recitals 30 to 32.
(13) It is not considered to be required by Article 30 of the basic
Regulation to provide to a government the actual company-
specific calculations for the amount of subsidy, in particular in the
light of Article 29 of the basic Regulation and the rules on
treatment of confidential information contained therein. Such
information was provided to the cooperating exporter in the
provisional disclosure document. In addition, pursuant to Article 2!B2000R0978 — EN — 13.05.2000 — 000.002 — 3
of the provisional duty Regulation, the parties concerned were
able to make known their views in writing on the contents of that
Regulation, including the level of the countervailing duties.
2.2. Individual schemes
2.2.1. Export market development grants (EMDG) scheme
(14) The GOA argued that the ‘grants entry test’ performed under the
EMDG scheme, which is described in recitals 14 to 17 of the
provisional duty Regulation, does not tie the grant to anticipated
export earnings since the intent of the test is to ensure that the
enterprise must have a prospect of success by ensuring that the
applicant undertakes adequate financial and management plan-
ning.
(15) It was established that under this test, the applicant must show that
he has planned export earnings which are not on the face of it
unachievable. Since this was not disputed by the GOA, it was thus
established that unless it is anticipated that earnings will accrue
from exports, grants under the EMDG scheme will not be made.
Hence, the subsidy is considered to be contingent in fact upon
export performance since the facts verified in the investigation
demonstrated that the granting of the subsidy is in fact tied to
anticipated export earnings in the meaning of Article 3(4)(a) of
the basic Regulation, irrespective of the ‘intent’ of the test.
(16) Furthermore, it should be noted that the GOA and the exporting
producer refused to provide copies of the documents pertaining to
the actual grant received by the company, citing ‘business
confidentiality’ requirements. Therefore, it could not be verified
whether the company in fact provided figures on planned export
earnings to the granting authorities. Both the company and the
GOA have been made aware during the verification visit that this
refusal might lead to the final findings being made on the basis of
the facts available in accordance with Article 28 of the basic
Regulation. Therefore, since it was not disputed that the ‘grant
entry test’ requires the provision of information on planned export
earnings, it is considered that the grant was given on the basis of
such anticipated earnings accruing from exports.
(17) The GOA claimed that the EMDG scheme is not contingent upon
export performance since the grant is calculated as a reimburse-
ment of a percentage of promotional expenditure which is not tied
to the sale of the product. Additionally, the scheme is not specific
since it is not limited to exporters and eligibility is automatic
based on objective criteria.
(18) Since the eligibility for grants under the scheme is in fact tied to
anticipated export earnings, the subsidy is considered contingent
in fact upon export performance within the meaning of Article
3(4)(a) of the basic Regulation, irrespective of the actual
calculation of the amount of the subsidy. Such export subsidies
are deemed to be specific in accordance with Article 3(4) of the
basic Regulation as a matter of law.
(19) The GOA argues that the EMDG scheme does not favour domestic
over imported goods since the legislation allows the promotion of
goods made in Australia or overseas.
(20) In response to this argument, reference is made to Section 24 of
Part 4 of the EMDG Act 1997 which states that ‘goods made in
Australia are eligible goods if they meet the 50 % Australian
content rule’ and ‘goods made outside Australia are eligible goods
if they meet the 75 % Australian content rule’. According to
subsections 3 and 4 of this Section, these Australian content rules
can be deviated from depending on the determination by the
Australian Trade Commission (Austrade) of whether or not ‘the
Australian input in those goods is [...] sufficient to ensure that
Australia will derive a significant net benefit from their export.’
This clearly shows that, regardless of whether goods are made in!B2000R0978 — EN — 13.05.2000 — 000.002 — 4
Australia or outside, they must meet the Australian content
requirement, thus making the subsidy contingent upon the use of
domestic over imported goods as set forth in 3(4)(b) of the basic
Regulation. In addition, a determination by Austrade on whether
the Australian input is sufficient to ensure that significant net
benefits from their exports will be derived, would make this
scheme in fact tied to anticipated export earnings in the meaning
of Article 3(4)(a) of the basic Regulation.
(21) The GOA and the exporting producer claimed that no further
payments have been received because the company is not eligible
anymore for further grants. Furthermore, the exporting producer
argued that since the grant received in the investigation period
related to expenses incurred before the beginning of the
investigation period, it should not be countervailed.
(22) It is considered that even though the company did not receive any
recurring subsidies after the grant in question due to the fact that it
did not meet the eligibility criteria after that date by exceeding the
income threshold, the company was not permanently ineligible for
the grant. Whether or not the company’ s income will reach a level
which is below the respective level set under the EMDG scheme,
is determined by purely commercial developments. This does not
justify a deviation from the general principle that the amount of
countervailable subsidies are to be calculated in terms of the
benefit conferred on the recipient which is found to exist during
the investigation period as prescribed in Article 5 of the basic
Regulation.
(23) As a general rule, the appropriation of a subsidy to the
investigation period is determined by the point in time when the
benefit is received by the company. In this case, since the grant
was paid out to the company during the investigation period, the
benefit was conferred on the company by that date.
(24) Therefore, the claims made by the GOA and the exporting
producer concerning the EMDG scheme are rejected and the
provisional findings are confirmed.
(25) The cooperating exporting producer benefited from this scheme
during the investigation period and obtained subsidies of 0,03 %.
2.2.2. Import credit scheme (ICS)
(26) The GOA and the exporting producer claim that PSF is not an
eligible product under the scheme, which is described in recitals
33 to 35 of the provisional duty Regulation, and no payments or
benefits were received by the company in relation to PSF . Benefits
under the ICS related to other products and were expended on
these products. There was no evidence of cross-subsidisation
between the different products. The Commission concluded
erroneously that the funds obtained from the sale of the import
credits benefited all export products as the use of cash was not
linked to a particular product. It was also incorrect to conclude
that PSF exports have benefited from the sale of the import credits
as most of the PSF is sold on the export market. This is not
substantiated by the facts, in particular in the light of the
company’ s substantial domestic sales.
(27) It is considered that the issue of cross-subsidisation does not arise
in this case. The benefits under the ICS are not limited to a
particular product. The company receives credits which it can
convert into cash with no strings attached. There is no requirement
that the cash must be used to benefit only the export, sale or
production of the product for which the credit amount was
calculated. Therefore, since the benefits of the subsidy are not
linked to a particular product not subject to the investigation, they
are considered to benefit all export sales, including export sales of
PSF . Additionally, the statement that the import credits were
‘expended on these [other] products’ is not supported by evidence.
In fact, it was verified that all import credits obtained during the!B2000R0978 — EN — 13.05.2000 — 000.002 — 5
investigation period were converted into cash by the company. It
should also be noted that the European Commission never
concluded that since most of the PSF is exported, PSF exports
benefited from the subsidy. The question whether or not most of
the PSF is sold on the export market is not relevant for the issue of
whether all exports, including exports of PSF , benefited from the
payments under the ICS.
(28) The GOA also argued that since the ICS will be terminated on 30
June 2000, the continuation of the subsidy in the calculation of the
countervailing duty is not justified in the light of Article 19(4) of
the WTO Agreement on Subsidies and Countervailing Measures.
(29) Article 5 of the basic Regulation states that the amount of
countervailable subsidies is calculated in terms of the benefit
conferred on the recipient which is found to exist during the
investigation period for subsidisation. Since the benefits under the
ICS were obtained in the investigation period, they were taken
account in the calculation of the amount of countervailable
subsidies. Information on possible changes relating to subsidy
programmes which might occur after the investigation period are
normally not taken into account for investigating subsidisation in
accordance with Article 11 of the basic Regulation. In this
context, it should be noted that Article 19 of the basic Regulation
provides for the right to request an interim review in which the
Commission may consider, inter alia , whether the circumstances
with regard to subsidisation have changed significantly. The
GOA’ s claim is therefore rejected.
Calculation of the amount of the subsidy
(30) The GOA argued, that the amount of the subsidy was not properly
calculated since it is incorrect that only exports are ‘cross-sub-
sidised’. Therefore, the correct denominator should be total sales
and not export sales.
(31) In response to this argument, reference is made to the reasons for
the rejection of a similar claim concerning the denominator for
non-recurring grants for capital expenditure/fixed assets as set out
below for the Incentives for International Competitiveness
programme (IICP) and the Investment Attraction Programme
(IAP). Since, as shown above, the subsidy is an export subsidy, it
is considered to benefit export sales. Thus, the subsidy must be
calculated by allocating the amount over export sales.
(32) The cooperating exporting producer benefited from this scheme
during the investigation period and obtained subsidies of 3,48 %.
2.2.3. Investment Attraction programme (IAP) and Incentives for
International Competitiveness programme (IICP)
(33) The GOA argued that there was no failure to cooperate during the
investigation. Even though the grant contracts pertaining to the
IICP and IAP , which are described in recitals 24 to 27 and 38 to
41, respectively, of the provisional duty Regulation, could not be
provided, the information contained therein and an explanation on
the intent, parameters and operation of the programmes was
provided to the Commission services. Additionally, Article 28(3)
of the basic Regulation provides that information is not to be
disregarded provided that, inter alia , the party has acted to the best
of its ability, which was the case here. Finally, the reasons for
rejection of such evidence or information was not disclosed and
given in published findings as required by Article 28 of the basic
Regulation.
(34) During the verification visit the GOA and the cooperating exporter
were made aware several times of the provision contained in
Article 28(1) of the basic Regulation that the refusal to provide
access to the grant contract and related supporting documents may
lead to findings being made on the basis of the facts available!B2000R0978 — EN — 13.05.2000 — 000.002 — 6
concerning subsidies granted under the IICP and IAP . The actual
conditions of the grants in question were never disclosed in full to
the Commission services by the GOA and the cooperating
exporting producer, not even orally. In this respect, it should be
noted that information given by the GOA and the exporting
producer on the intent, parameters and operation of the two
programmes and the conditions and amount of the grants in
question was not disregarded to the extent that this information
was verifiable in accordance with Article 28(3) of the basic
Regulation. The reasons for rejecting the unverifiable statement
made by the GOA that neither the grants under the IICP nor under
the IAP were contingent upon export performance are clearly set
forth in the provisional disclosure document and in recitals 28, 29,
40 and 42 of the provisional duty Regulation.
(35) The GOA argued furthermore that information provided by the
Victorian Government in relation to the grant payment under the
IAP had been disregarded, and that the statements by the European
Commission that the Victorian Government grant payment is
contingent on export and that exports are one of the objectives of
the Economic Development Act 1981, are not correct and not
supported by the facts.
(36) Findings concerning conditions of the actual grant under the IAP
had to be made on the basis of the facts available as explained
above. These facts included Section 3(1)(c) of the Economic
Development Act 1981 which states that the functions of the
Ministry for Economic Development shall be to fac ilitate,
encourage, promote and carry out, inter alia , ‘the development
of export capacity of industry throughout the State’, and the report
of the Victorian auditor’s offices cited by the complainant which
contains a reference to expected export growth of the cooperating
exporting producer.
(37) The pertinent provision for the grant in question, i.e. Section 13(3)
of the Economic Development Act 1981 se tting forth the
objectives of the IAP does not specifically mention the
development in export capacity, but rather more general con-
ditions such as ‘the balanced economic development of the State’.
However, the Victorian industry statement of 1 September 1993,
‘Doing Business in Victoria’ made by the Minister for Industry
and Employment outlined the IAP by stating, inter alia , that
‘projects identified for assistance must offer significant net
economic benefits to Victoria, particularly in terms of exports’
and ‘investments should be in trade-exposed, key industry sectors,
with priority being accorded to export or import competing
companies’.
(38) Therefore, it is considered, that the arguments made by the GOA
concerning the IAP and the IICP should be rejected and it is
confirmed that these subsidies are contingent upon export
performance in the meaning of Article 3(4)(a) of the basic
Regulation.
Calculation of the amount of the subsidy
(39) The GOA argued that with regard to grants made under the IICP
and the IAP the denominator for allocation of the subsidy amount
should be total sales and not only export sales since the grants
were linked to the acquisition of fixed assets and therefore
benefited the entire operation.
(40) It is normal practice that subsidies which are contingent upon
export performance, are allocated over export sales regardless of
whether they are granted for the purchase of fixed assets or not. It
is a reasonable assumption that benefits under subsidy pro-
grammes which are intended to benefit exports, are also linked to
such exports and that they should therefore be calculated on the
basis of export sales. This approach is also in line with the!B2000R0978 — EN — 13.05.2000 — 000.002 — 7
Community’ s guidelines for the calculation of the amount of
subsidy in countervailing duty investigations.
(41) The cooperating exporting producer benefited from the IICP and
the IAP during the investigation period and obtained subsidies of
1,92 % and 0,64 %, respectively.
3. AMOUNT OF COUNTERV AILABLE SUBSIDIES
(42) The amount of countervailable export subsidies in accordance
with the provisions of the basic regulation, expressed ad valorem ,
for the investigated exporter is as follows.
EMDGS IICP ICS IAP Total
Leading Synthetics 0,03 % 1,92 % 3,48 % 0,64 % 6,07 %3
(43) Since the investigated exporting producer accounted for virtually
all of the imports of the product concerned into the Community
originating in Australia, the weighted average countrywide
subsidy margin is above the applicable de minimis margin for
subsidisation of 1 %.
II. INDONESIA
1. INTRODUCTION
(44) Following the detailed disclosure of findings and the publication
of the provisional duty Regulation, no submissions or comments
were received within the applicable time limits.
(45) In accordance with established practice and policy concerning
countries falling under Annex VII to the WTO Subsidies
Agreement, it is considered that no benefit is conferred by
subsidies below 0,3 %. This rule only applies to cooperating
exporting producers who receive individual treatment.
2. SAMPLING
(46) In order to enable the Commission services to select a sample,
pursuant to Article 27 of the basic Regulation, exporting
producers were requested to make themselves known within 15
days of the initiation of the proceeding and to provide basic
information on their export and domestic sales, their precise
activities with regard to the production of the product concerned
and the names and activities of all their related companies in the
PSF sector. The Indonesian authorities and the Indonesian
association of exporting producers were also informed in this
regard by the Commission.
(a) Pre-selection of cooperating companies
(47) Seven companies in Indonesia came forward and provided the
requested information within the time limit. These companies
were initially considered as cooperating and were taken into
account in the selection of the sample.
The companies, which made themselves known within the time
limit represented virtually the totality of imports of the product
originating in Indonesia into the Community.
(48) The cooperating companies which were not finally retained in the
sample, were informed that any countervailing duty on their
exports would be calculated in accordance with the provisions of
Article 15(3) of the basic Regulation.
(49) Companies, if any, which did not make themselves known within
the time limit, were considered as non-cooperating companies.!B2000R0978 — EN — 13.05.2000 — 000.002 — 8
(b) Selection of the sample
(50) Initially, three Indonesian companies were chosen to constitute the
sample in consultation with the Indonesian association of
exporting producers. The Indonesian association of exporting
producers proposed the replacement of two initially chosen
companies by two others which, however, could not be considered
more representative than those initially chosen. All parties
concerned were informed accordingly.
(51) Questionnaires were sent for completion to all three companies
initially selected for the sampling. Subsequently, one of these
companies provided an incomplete response, which was moreover
in contradiction to the basic information it had previously
provided for the sampling exercise. A second company did not
provide a complete and meaningful response and failed to inform
the Commission services properly about its relationship with
another Indonesian company. It should be noted that both
companies had received several requests specifying precisely the
nature of the information needed and were granted extended
deadlines to submit this information. In consequence, these two
companies were informed in detail of the reasons why they were
no longer considered to be cooperating with the investigation and
that the result of the investigation may be less favourable to them
than if they had cooperated.
(52) Given the degree of non-cooperation by companies initially
selected in the sample, the Commission services decided to select
a new sample in accordance with Article 27(4) of the basic
Regulation. For this purpose, two other Indonesian cooperating
companies, which had provided complete and meaningful
questionnaire responses, with a view to being granted individual
examination, were added to the sample. The Indonesian
association of exporting producers, the companies concerned
and the Indonesian authorities were informed accordingly and
raised no objection.
(53) The three companies which finally constituted the sample and
which fully cooperated with the investigation were attributed their
own subsidy margin and individual duty rate.
3. SUBSIDY PROGRAMMES USED BY COOPERATING
EXPORTERS
BKPM schemes
(54) The Investment Coordinating Board (Badan Koordinasi Pen-
anaman Modal — BKPM) is a Government agency serving
directly under the President of the Republic of Indonesia. The
function of the BKPM is to assist the President in formulating
Government policies in respect of investment, and is responsible
for the planning and promotion of investment, as well as the
processing of investment approvals and licences and the super-
vision of the investment implementation. The BKPM plays a
central role in coordinating investment activities with other
Government agencies. The BKPM is equally involved in regional
development as well as the compilation and management of the
negative list of investment (Daftar Negative Investasi — DNI),
which contains the sectors that are closed for investments as well
as those that are regulated.
(55) The BKPM approves both foreign (Penanaman Modal Asing —
PMA) and domestic (PMDN) investments. Companies that are
approved by BKPM as PMA or PMDN companies will be granted
exemption or relief from import duty and levies on the importation
of capital goods, namely machinery, equipment, spare parts and
auxiliary equipment, as well as on the importation of raw
materials for the purpose of two years’ full production.!B2000R0978 — EN — 13.05.2000 — 000.002 — 9
(56) Foreign investment (PMA) is governed primarily by the Foreign
Capital Investment Law No 1 of 1967, as amended by Law No 11
of 1970.
(57) Domestic investment (PMDN) is governed by Law No 6/1968 on
domestic capital investment as amended by Law No 12/1971.
(58) In addition, PMA companies as well as other companies are
subject to sectoral policies applied by the corresponding Govern-
ment authorities such as those stipulated in Law No 5/1984 on
industry, Law No 5/1967 on forestry, and Law No 12/1992 on
agriculture.
(59) The legal basis for the import duty exemption or relief instruments
themselves is contained in a number of Minister of Finance
Decrees (No 297/KMK.01/1997, No 545/KMK.01/1997, No
546/KMK.01/1997 and No 252/KMK.04/1998).
(a) Eligibility
(60) Investment projects that are approved by BKPM, PMA as well as
PMDN projects, including existing PMA and PMDN companies
expanding their projects to produce similar products by more than
30 % of installed capacity or diversifying their products, will be
granted these facilities.
(61) The criteria for eligibility are set by BKPM and appear to be
updated frequently. These criteria include certain restrictions for
foreign investment, most notably an obligation to enter into a joint
venture with an Indonesian company when investing in certain
sectors.
(62) Investments in the sectors indicated in the negative list of
investment are as such not eligible and include certain chemical
industries such as the cyclamate and saccharine industries.
Investments in 12 other sectors are only eligible if they fulfil
certain additional criteria. These sectors are enumerated in the
‘Technical manual — implementation of capital investment 1998’
published by BKPM and contain, inter alia , the iodised consumer
salt, ethyl alcohol and the fertiliser industries.
(63) With regard to the way the programme is administered, it was
stated that the companies are subject to the sectoral/industrial
policies applied by the corresponding ministries.
(b) Practical implementation
(64) As a first step, applications are submitted to BKPM where they
will be evaluated in terms of their suitability to various aspects
such as sectoral policies, technology, market and finance. In the
case of approval, BKPM then also assists the companies in
obtaining other necessary permits, such as building, land title and
working permits.
(65) The import duty facilities themselves are obtained at a later stage.
For this purpose, a so-called master list denominating capital
goods and raw materials to be imported must be submitted through
PT. Sucofindo, a technical inspection agency, which evaluates the
list and then forwards it to BKPM after approval. The BKPM will
then issue an approval letter and an import licence.
(c) Conclusion on countervailability
(66) The BKPM schemes constitute a subsidy as the financial
contribution by the Government of Indonesia (GOI) in the form
of unpaid duties confers a direct benefit upon the recipient.
(67) The schemes do not qualify as drawback schemes in accordance
with the provisions of Annexes I to III to the basic Regulation,!B2000R0978 — EN — 13.05.2000 — 000.002 — 10
since capital goods are not consumed in the production process,
and there is no obligation to export the finished product
containing the raw materials.
(68) The BKPM schemes are not contingent in law upon export
performance or the use of domestic goods over imported goods.
(69) While these schemes appear to be available for a wide range of
investments, they explicitly limit access to the subsidy to certain
enterprises which are not operating in certain sectors. Addi-
tionally, the number and quality of the restrictions applicable to
certain sectors, most notably those restricting eligibility to either
certain types of enterprises, or to geographical area, or completely
exclude certain sectors, are not in line with the conditions of
Article 3(2)(b) of the basic Regulation, which stipulates that the
granting authority must establish objective criteria which are
neutral, do not favour certain enterprises over others, and which
are economic in nature and horizontal in application. Hence, these
programmes are considered to be specific in the meaning of
Article 3(2)(a) of the basic Regulation since they explicitly limit
access to the subsidy to certain enterprises.
(70) Even if there were no specificity in law under Article 3(2)(a) of
the basic Regulation, the scheme would be de facto specific under
Article 3(2)(c) of the basic Regulation, since it has not been shown
that eligibility is automatic, but rather based on a case-by-case
decision in which a certain number of government authorities are
involved which follow sectoral/industrial policies applied by the
corresponding Ministries. No information was provided on the
actual use of the subsidy programme and the manner in which
discretion was exercised by the granting authorities. Hence, it is
concluded that the BKPM schemes are, alternatively, also
considered specific under Article 3(2)(c) of the basic Regulation
and therefore countervailable.
(d) Calculation of the subsidy amount
(71) The determination of the obtained benefit was based on the
amount of duties unpaid during the investigation period as far as
raw materials and spare parts are concerned, and over the period
from 1 January 1988 up to the end of the period of investigation
for capital goods, for which the normal depreciation period of 17
years in that industry has been applied. Since the schemes are not
contingent upon export performance, total benefits were allocated
to total turnover. The obtained amount was then adjusted by the
average commercial interest rate for bank loans during the period
of investigation, which was determined to be 24,61 %.
(72) Two exporting producers availed themselves of these schemes, but
obtained no benefit under these schemes in accordance with the
policy explained above.
Bapeksta schemes
(73) The Centre for administration of import duty, exemption and
drawback (Bapeksta) can grant, upon application, the exemption
or restitution of import duty as well as the non-imposition of value
added tax (PPN) and sales tax on luxury goods (PPnBM) on the
import of goods for further processing for export.
(74) The exemption scheme covers duty on imports that will take place
in the future, whereas the restitution scheme applies to imported
inputs that have already been used in an exported product.
(75) The legal basis is the Decree of the Minister of Finance No
615/KMK.01/1997 of 1 December 1997.!B2000R0978 — EN — 13.05.2000 — 000.002 — 11
(a) Eligibility
(76) The Bapeksta schemes are available to exporting producers in
Indonesia upon application to Bapeksta.
(77) In order to obtain the exemption facilities, a company is required
to re-export 100 % of the imported materials in the form of
finished goods, within a period of 12 months starting at the date of
import, unless the production period is longer than 12 months. In
this case, an exception can be granted. A company must also
submit a security in the form of a bank guarantee covering the
amount of duty exemption and PPN and PPnBM normally
payable.
(78) In order to obtain the restitution facilities, a company must already
have exported the finished goods. The import must have taken
place no earlier than 12 months before the shipment of the
exported goods.
(79) For both facilities, exports may also take place to bonded zones
within Indonesia.
(b) Practical implementation
(80) For the exemption facility, companies must submit a form
containing the expected export performance in the future, the
projected need for imported goods, and an estimate of duty and
taxes normally payable. Afterwards, they are under obligation to
submit a report on export to Bapeksta every six months.
(81) Bapeksta may later proceed with a verification by auditing the
reports of the company concerned.
(82) For the restitution facility, a company must submit a form
providing a link between the goods of imported origin, on which
duty and taxes have been paid, and the goods exported, accom-
panied by import and export documents.
(83) Bapeksta is entitled to verify these documents by carrying out
controls at the premises of the company concerned.
(c) Conclusion on countervailability
(84) The GOI claimed that the Bapeksta schemes are normal
duty-drawback schemes in line with international obligations.
Companies that were found to misuse these schemes and obtain
excess exemption or restitution amounts would face penalties. It
was also claimed that computer systems were in place to match
import and export transactions and to confirm which inputs are
consumed in the production of the exported products and in what
amounts.
(85) However, the GOI was not able to produce sufficient evidence for
the existence of an effective verification system.
(86) Annex II(II)(5) and Annex III(II)(3) to the basic Regulation
provide that, where it is determined that the Government of the
exporting country does not have such a system in place, a further
examination by the exporting country based on actual inputs
involved, or actual transactions, respectively, will normally need to
be carried out in the context of determining whether an excess
payment occurred. The GOI did not carry out such an examin-
ation. The Commission did not, therefore, examine whether there
was in fact an excess drawback of import charges on inputs
consumed in the production of the exported product.
(87) The Bapeksta schemes constitute a subsidy as the financial
contribution by the GOI in the form of duty exemption or
restitution confers a direct benefit upon the recipient. It is a
subsidy contingent in law upon export performance (it is an export!B2000R0978 — EN — 13.05.2000 — 000.002 — 12
subsidy according to the provisions of Annex I(I) to the basic
Regulation) and is therefore deemed to be specific under Article
3(4)(a) of the basic Regulation.
(d) Calculation of the subsidy amount
(88) The benefit to the exporters has been calculated on the basis of the
amount of customs-duty exemption granted during the investi-
gation period, allocated over total export turnover during the
investigation period. This amount was then adjusted by adding
half of 24,61 %, the average interest rate for commercial bank
loans during the period of investigation.
(89) PT. Indorama Synthetics TbK availed itself of these schemes, and
obtained a benefit of 1,4 %.
4. SUBSIDY PROGRAMMES NOT USED BY COOPER-
ATING EXPORTING PRODUCERS
(90) It was found that the cooperating exporting producers did not
benefit from any countervailable subsidies under the following
programmes:
— income tax facility based on Government Regulation No 45 of
8 July 1996 and Presidential Decree No 7 of 14 January 1999,
— bonded zones under Government Regulation No 33/1996 of 4
June 1996 and Decisions of the Minister of Finance of the
Republic of Indonesia (No 291/KMK.05/1997, No
547/KMK.01/1997, and No 292/KMK.01/1998).
5. AMOUNT OF COUNTERV AILABLE SUBSIDIES
(91) The Commission limited its examination by applying sampling in
accordance with Article 27 of the basic Regulation. It was decided,
under Article 27(4) of the basic Regulation, that there was a
degree of non-cooperation by two companies selected in the
sample which was likely to materially affect the outcome of the
investigation, and thus a new sample had to be selected. The
amount of countervailable subsidies for cooperating exporting
producers included in the sample is established as follows.
BKPM schemesBAPEKSTA
schemesTotal
PT. Indorama Synthetics TbK 0,0 % 1,41 % 1,41 %
PT. Panasia Indosyntec TbK 0,0 % 0,0 % 0,0 %
PT. Susila Indah Synthetic Fiber
Industries0,0 % 0,0 % 0,0 %3
(92) In accordance with Article 15(3) of the basic Regulation, any
countervailing duty applied to imports from exporters or
producers which have made themselves known in accordance
with Article 27 but were not included in the examination shall not
exceed the weighted average amount of countervailable subsidies
established for the parties in the sample. Thus, the amount of
countervailable subsidies for cooperating exporting producers not
included in the sample is established as follows.
BKPM schemesBAPEKSTA
schemesTotal
PT. GT Petrochem Industries TbK 0,0 % 0,45 % 0,45 %
PT. Teijin Indonesia Fiber
Corporation0,0 % 0,45 % 0,45 %3!B2000R0978 — EN — 13.05.2000 — 000.002 — 13
(93) The amount of countervailable subsidies in accordance with the
provisions of the basic Regulation, expressed ad valorem , for the
cooperating exporting producers varies from 0 % to 1,0 % and are
therefore below the de minimis threshold of subsidisation for
Indonesia, i.e. under 3 %.
(94) The two companies which were excluded from the sample, namely
PT. Global Fiberindo and PT. Polysindo Eka Perkasa, represented
a substantial share (i.e. over 30 %) of imports of the product
concerned into the Community. Therefore, definitive findings as
regards these two companies and any other company that did not
cooperate in the present proceeding are made on the basis of the
facts available in accordance with Article 28 of the basic
Regulation.
(95) On such a basis, the investigation has evidenced the existence of
countervailable subsidies which are available to the non-cooper-
ating exporting producers. It is considered that the absence of
cooperation is the result of the use and benefit by those producers
of the countervailable subsidies at a level above the de minimis
level for Indonesia. In accordance with the provisions of Article
28 of the basic Regulation and based on the information found in
the complaint and the findings of the investigation, and in order to
avoid granting a bonus for non-cooperation, the amount of
countervailable subsidies for these two companies is established as
follows.
BKPM schemes
(domestic
subsidy)BAPEKSTA
schemes
(export subsidy)Total
PT. Global Fiberindo 5 % 5 % 10 %
PT. Polysindo Eka Perkassa 5 % 5 % 10 %
Any other company 5 % 5 % 10 %3
(96) The weighted average countrywide subsidy margin for all
exporting producers investigated (including the two non-cooper-
ating companies), which represent virtually the totality of exports
of the product concerned to the Community originating in
Indonesia is above the applicable de minimis margin for this
country of 3 %.
III. TAIW AN
1. INTRODUCTION
(97) Following publication of the provisional duty Regulation, the
Government of Taiwan (hereinafter referred to as ‘GOT’)
submitted in letters dated 17 and 19 January 2000 its views on
the disclosure document containing the details underlying the
essential facts and considerations on the basis of which
provisional measures have been imposed. Numerous written
submissions were received from the exporting producers, all of
whom requested and were granted a hearing on 15 February 2000.
2. GENERAL SUBMISSIONS
2.1. Specificity of the schemes concerned
(98) The exporting producers submitted some general comments
concerning the interpretation of the concept of specificity. The
determination of whether an investigated subsidy is specific has
been made in accordance with the provisions of the basic
Regulation, notably Article 3 thereof. The comments from the
exporting producers have been taken into account when determin-
ing whether or not each investigated scheme involves specific
subsidies, pursuant to Article 3 of the basic Regulation, which are!B2000R0978 — EN — 13.05.2000 — 000.002 — 14
countervailable. Thus, the manner in which the determination of
specificity has been made for individual schemes is explained,
under the section relating to each scheme where relevant, and in
supplement to the findings contained in the provisional Regu-
lation.
2.2. Calculation of prevailing commercial interest rate
(99) It had been provisionally decided to apply a general interest rate of
9,03 % for the purpose of this investigation. This rate was
determined on the basis of the information obtained during the
investigation which was considered appropriate for this purpose.
GOT and the exporting producers challenged the reliability of this
rate.
(100) In view of this claim, the generally applicable interest rate has
been recalculated by the Commission services. The relevant
benchmark interest rate is set at 8,52 % and was obtained by
taking the monthly commercial interest rates charged during the
investigation period by 37 domestic banks in Taiwan. These
interest rates are publicly available and are part of the monthly
financial statistics published by the Economic Research Depart-
ment of the Central Bank of the Republic of China.
(101) It was also claimed that the interest rate used for the provisional
findings should have been the one which is used for comparable
loans and that anyway, the interest rate applied by the Commission
is not commensurate with the interest rate which the companies
are capable of obtaining on the market and that commercial loans
were in fact made to the companies during the investigation
period. A comparable loan should be a loan of a similar amount,
purpose and with a similar repayment period. No such comparable
loan was identified for the exporting producers concerned.
Therefore, the methodology of the calculation of the benchmark
interest rate as explained above is confirmed.
2.3. Application of the interest rate in the calculation of the
amount of the subsidy
(102) The exporting producers claimed that the Commission is wrong in
adding interest, at the average commercial interest rate in Taiwan
during the investigation period, to the programmes which are
found to be subsidies.
(103) The legal bases for the addition of interest to the face value of the
subsidy are Articles 5, 6 and 7 of the basic Regulation, which
contain provisions on the calculation of the amount of subsidy, as
developed by the Commission’ s Guidelines for the calculation of
the amount of subsidy in countervailing duty investigations.
(104) Pursuant to Article 5 of the basic Regulation, the calculation of the
benefit shall reflect the amount of subsidy found to exist during
the investigation period and not simply the face value of the
amount at the time it is transferred to the recipient or foregone by
the Government. Such an approach is specifically provided for in
the Commission’ s guidelines for the calculation of the amount of
subsidy in countervailing-duty investigations, where it is stated
that the face value of the amount of subsidy has to be transformed
into the value prevailing during the investigation period through
the application of the normal commercial interest rate.
(105) It was also argued that this methodology cannot be applied to the
alleged subsidisation amounts on tax credits since the tax credits,
which the companies have claimed, are only utilised in the annual
tax return which is made by 31 March of the following year. The
exporting producers claim therefore that no benefit is conferred on
them until this date.
(106) In response to this argument, it is considered that since the benefit
consists of a reduction of direct tax which is payable every year,
the benefit itself will recur annually as well. Therefore, the benefit!B2000R0978 — EN — 13.05.2000 — 000.002 — 15
should also include the interest element of not having to borrow an
amount equal to such tax savings on the open market.
2.4. Assessment of the subsidies in relation to the product
concerned
(107) The GOT and the exporting companies submitted that the
Commission should have linked the alleged subsidy schemes to
the product concerned in order to calculate any subsidisation rate
by attributing benefits which can be specifically linked to product
lines to the extent that they are directly linked to the product
concerned.
(108) The Commission’ s guidelines explicitly mention that if the benefit
of a subsidy is limited to a particular product, the denominator for
allocation of subsidy amount should reflect only sales (or export
sales) of that product. If this is not the case, the denominator
should be the recipient’s total sales (or export sales).
(109) The Commission, in its calculations, has followed this approach,
as was correctly stated by the exporting producers, for the import
duty exemption on raw materials. In this particular case, benefits
were only identified for the fibre division and consequently the
corresponding sales denominator was used. For all other described
schemes, it was found that the benefits were not limited to a
particular product and therefore the total sales were used as
denominator.
3. INDIVIDUAL SCHEMES
3.1. Tax credit for the purchase of automation and pollution
control equipment
(110) The GOT and the exporting producers claimed that this scheme,
which is described in recitals 49 to 58 of the provisional duty
Regulation was wrongly assessed by the Commission in terms of
the specificity of the subsidy. In particular, it was claimed that the
alleged subsidy of tax credits for automation and pollution control
equipment is not contingent upon the use of domestic over
imported goods and cannot therefore be regarded as specific
within the terms of Article 3(4)(b) of the basic Regulation.
(111) Although the programme provides for a tax credit for imported as
well as for domestically produced equipment, the subsidy is
doubled for the purchase of domestic equipment. These two tax
credit rates are considered separate programmes concerning
domestically purchased equipment and imported equipment
respectively. In the absence of the 20 % tax credit for domestically
produced equipment, a company would have received no tax
credit. The 10 % credit rate cannot be considered the standard rate
of tax, because it is only available for imported equipment. Since
the 20 % credit rate is only available for domestically produced
equipment but not for imported equipment, it is contingent upon
the use of domestic over imported goods. This tax credit is
therefore a specific import substitution subsidy in the meaning of
Article 3(4)(b) of the basic Regulation.
(112) By the same token, the 10 % credit rate is only available for
imported machinery and is therefore limited to enterprises which
purchase such imported machinery. Such a limitation is not
considered to be neutral within the meaning of Article 3(2)(b) of
the basic Regulation since it favours certain enterprises over
others. Additionally, the criteria are not economic in nature or
horizontal in application. Hence, the subsidy is specific in the
meaning of Article 3(2)(a) of the basic Regulation.
Calculation of the subsidy amount
(113) As regards the calculation of the amount of countervailable
subsidies, the exporting producers argued that 15 % of the 20 %!B2000R0978 — EN — 13.05.2000 — 000.002 — 16
tax credit for the purchase of domestically produced goods cannot
be countervailable, because such a tax credit would be obtained
irrespective of the origin of the goods. This claim is not
considered justified. The amount of countervailable subsidies
consists of the full amount of tax credits, since the tax credit of
20 % for domestically purchased equipment cannot be considered
as a deviation from a standard tax credit rate of 10 %. As
explained above, the two tax credit rates are considered separate
programmes concerning domestically purchased equipment and
imported equipment respectively. In the absence of the 20 % tax
credit for domestically produced equipment, a company would not
have received a tax credit. The 10 % credit rate only applies to
imported machinery; it is not a general credit rate. Therefore, the
Commission concluded that the amount of the subsidy is the total
revenue foregone by the GOT.
(114) The benefit to the exporting producers has been calculated as
explained in recital 57 of the provisional duty Regulation,
correcting however the average commercial interest rate which
was added to the amount of taxes unpaid during the investigation
period as explained above.
(115) The GOT claimed furthermore, that since the subsidy is linked to
the purchase of fixed assets, it should be calculated by spreading
the subsidy over the normal depreciation period of the assets in the
industry concerned.
(116) It is considered that benefits in the form of savings of direct taxes
are generally not considered to be linked to the purchase of fixed
assets. Benefits related to direct taxes are linked rather to the
reduction in direct tax liability than to the purchase of fixed assets,
since such a direct tax liability normally exists whether or not
fixed assets are purchased. This approach is also in line with the
Commission’ s guidelines for the calculation of the amount of
subsidy in countervailing duty investigations as set forth in
particular in Table 2 which is attached to the said guidelines.
Therefore, the benefits under the scheme were calculated on the
basis of income tax saved in the investigation period in
accordance with Article 7(4) of the basic Regulation.
(117) Two companies benefited from this scheme during the investi-
gation period and obtained subsidies of 0,42 % and 0,40 %
respectively.
3.2. Tax credit for investment in important enterprises
(118) The GOT claimed that this scheme does not constitute a subsidy
since there is no financial contribution to invested companies. Tax
deductions are only given to investing stockholders, not stock-
issuing companies.
(119) It is considered that there is a financial contribution by the GOT to
the companies claiming the tax credit, i.e. the companies investing
in important enterprises. This financial contribution in the form of
foregone government revenue results in a benefit for the investing
stockholders in the form of a reduced tax liability. It is this benefit
to the investing company which is countervailed, not benefits to
the companies in which the investment is made.
(120) The GOT and the exporting producers claimed that this scheme,
which was described in recitals 59 to 66 of the provisional duty
Regulation, concerns a tax credit which is generally available and
therefore not specific, as this programme is open to any legal or
moral person investing in certain enterprises. In particular, it is
alleged that the eligibility of the scheme is not limited to certain
enterprises; that it is objective, automatic and neutral and that the
benefit of the tax credit does not accrue to a company as a result
of its production of the product concerned.
(121) As regards these claims, the Commission found that the access to
this programme is explicitly limited to companies which invest in!B2000R0978 — EN — 13.05.2000 — 000.002 — 17
certain enterprises, since not all investments in stocks are eligible
for tax credits. Only investments in a limited number of
enterprises, i.e. important technology-based or important invest-
ment enterprises, will qualify for a tax credit.
(122) In addition, although the Commission agrees that the definition of
the eligible enterprises is clear and objective, eligibility is not
neutral, as required by Article 3(2)(b) of the basic Regulation,
since it limits the number of investments which may result in a tax
credit, on the basis of the activity of the firms concerned. If an
investing enterprise wishes to obtain the subsidy, its freedom of
choice is restricted on a sector-specific basis. Article 2 of the
criteria for determining the scope of major technology enterprises
with respect to manufacturing industry and technical-service
industry limits the tax credit to 11 specific types of investments.
Consequently, the access to this programme is dependent upon
making investments in certain enterprises and it is not generally
available. Thus, the claims of the exporting producers in this
respect have to be rejected.
(123) It is also argued that that the benefit of the tax credit does not
accrue to a company as a result of its production of the product
concerned. Benefits under this scheme are not limited to the
production of a particular product. There is no requirement that
the credit be used to benefit only the export, sale or production of
another product. The company receives a tax credit which benefits
the production and exports of PSF . Therefore, since the benefits of
the subsidy are not linked to a particular product not subject to the
investigation, they are considered to benefit all sales, including
sales of PSF . Hence, the above claim made by the exporting
producers must be rejected.
(124) In conclusion, the finding that this scheme is considered specific
in accordance with Article 3(2)(a) of the basic Regulation and
involves countervailable subsidies is confirmed.
Calculation of the amount of the subsidy
(125) The benefit to the only exporting producer concerned has been
calculated as explained in recital 57 of the provisional duty
Regulation, correcting the average commercial interest rate from
9,03 % to 8,52 % as explained above which was added to the
amount of taxes unpaid during the investigation period.
(126) This company obtained a benefit of 0,71 %.
3.3. Tax credits for R & D and personnel training
(127) As already established in the provisional duty Regulation (recitals
67 to 72), these tax credits have been considered not to be
specific. No written comments were received from the parties
concerned disputing this finding. Thus, this scheme is found not to
be specific in the meaning of Article 3 of the basic Regulation,
and thus not countervailable.
3.4. Tax credit for investments in scanty natural resources
areas
(128) The GOT made a green-light claim under Article 4(3) of the basic
Regulation for this scheme arguing that it fulfils the criteria for
non-countervailable subsides to disadvantaged regions. However,
this claim was not substantiated with verifiable evidence. Since it
could not be established that the requirements in the said provision
are in fact fulfilled, this claim must be rejected.
(129) The GOT also argued that no benefits linked to PSF were received
by the exporting companies. This argument has to be rejected in
accordance with the reply above in the section on the ‘Assessment
of the subsidies in relation to the product concerned’.!B2000R0978 — EN — 13.05.2000 — 000.002 — 18
Calculation of the subsidy amount
(130) One company availed itself of this scheme and obtained a benefit
of 0,01 %.
3.5. Tax credits for establishing international brands
(131) As was described in recital 81 of the provisional duty Regulation,
one exporting producer availed itself of this scheme but obtained
no benefit. No comments were received from the parties
concerned.
3.6. Loans at preferential interest rates: incentives for
automation, anti-pollution incentives and energy con-
servation incentives
(132) These schemes, which were described in recitals 82 to 91 of the
provisional duty Regulation, are based on Article 21(1) of the
Statute for upgrading industries (hereinafter referred to as ‘SUI’).
(133) The GOT and the exporting producers claimed that these loans are
available to almost all Taiwanese companies and therefore they are
not specific and are accordingly not countervailable. Concretely, it
is claimed that eligibility is not limited to certain enterprises; that
eligibility for the programme is objective and that, even if
eligibility is not objective, it does not automatically follow that the
programme is specific.
(134) As regards these claims, it is a fact that the provisions of Article
21(1) of the abovementioned SUI explicitly limit the benefits
thereunder to certain enterprises which comply with a number of
criteria or conditions. Those criteria or conditions, such as
investments in specific equipment under specific conditions set by
the Executive Yuan of the Development Fund, are not considered
to be objective within the meaning of Article 3(2)(b) of the basic
Regulation. The provisions of Article 21(1) of the SUI cannot be
considered objective since the criteria are not neutral or economic
in nature or horizontal in application because it is known in
advance that certain enterprises are more likely than others to be
in a position to benefit from these loans just by reason of the type
of business sector they are in. Therefore, benefits from this
scheme will inevitably be more relevant to some sectors than to
others.
(135) A basic principle of specificity is that a subsidy that distorts the
allocation of resources within an economy, by favouring certain
enterprises over others, should be subject to countervailing
measures if it causes injury. Where eligibility for subsidies is
limited within an economy, on the basis of non-neutral criteria
such a distortion in the allocation of resources is presumed to
occur. This principle is at the basis of Article 3(2)(a) of the basic
Regulation, which provides that a subsidy is specific if the
granting authority, or the legislation pursuant to which the
granting authority operates, explicitly limits access to a subsidy
to certain enterprises. Thus, the above claims are rejected.
(136) It was claimed that, even if eligibility is not objective, it does not
automatically follow that the programme is specific. This claim
should also be rejected because no automatic finding of
specificity has been made. This scheme is considered specific
because it is limited to certain enterprises within the meaning of
Article 3(2)(a) of the basic Regulation, as explained above. The
Commission therefore confirms its provisional findings as
described in recital 87 of the provisional duty Regulation.
(137) It was also argued that with respect to loans at preferential interest
rates, the countervailable subsidy only would represent the
difference in interest rates between the government’s practice
and commercial practice.!B2000R0978 — EN — 13.05.2000 — 000.002 — 19
(138) The Commission guidelines for the calculation of the amount of
subsidy in countervailing duty investigations, however, specify
that in the case of loans from the government the subsidy
represents the difference between the amount of interest paid on
the government loan and the interest normally payable on a
comparable commercial loan during the investigation period.
(139) The GOT also claimed that only two companies had benefited
under this programme for the development of PSF . This claim has
to be rejected in accordance with the reply above in the section on
the ‘Assessment of the subsidies in relation to the product
concerned’.
Calculation of the subsidy amount
(140) The exporting producers claimed that the interest rate used for the
provisional findings should have been the one which is used for
comparable loans and that anyway, the interest rate applied by the
Commission is not commensurate with the interest rate which the
companies are capable of obtaining on the market and that
commercial loans were in fact made to the companies during the
investigation period.
(141) A comparable loan should be a loan of a similar amount, purpose
and with a similar repayment period. As was mentioned in recital
89 of the provisional Regulation no such comparable loan was
identified for the exporting producers concerned. Therefore, the
Commission confirms the application of the benchmark interest
rate as calculated for Taiwan and explained above.
(142) In addition, one exporting producer first claimed that the
Commission included in its calculation benefits which allegedly
arose even where the company concerned did not pay interest
during the whole investigation period since the loan was only
taken up in tranches over the investigation period. In subsequent
letters, the same exporting producer claimed, on the contrary, that
interest payments had been made during the investigation period.
(143) The company specifically refers to three loans for which the
information provided in the reply to the questionnaire, and
verified during the on-the-spot visit, in the sense that no interest
payments had been made during the investigation period for these
loans, was not contested until after the first submission of this
company in response to the disclosure of the provisional findings.
(144) These loans were reported as loans without any interest payments
by the company during the investigation period and where the
principal amounts of the loans were granted in one-off grants. The
Commission calculated the alleged subsidy amounts as explained
in the provisional Regulation.
(145) After disclosure of the provisional findings, the company claimed
that for those loans several interest payments occurred during the
investigation period and that the principal loan amount was
granted to them in a series of grants.
(146) It is found that the information provided in this respect contradicts
the statements explicitly made by the company in its response to
the questionnaire and during the verification visit. In addition, the
new allegations do not correspond to earlier verified data.
Furthermore, such allegations have not been sufficiently sub-
stantiated by objective and/or verifiable evidence. The Commis-
sion therefore confirms its original calculation methodology with
regard to those loans.
(147) It was also argued that in calculating the amount of the subsidy,
the Commission should take into account the fact that no
repayments of principal were made during the investigation period
due to a two-year period of grace. This claim does not change the
calculation of the benefit made by the Commission, on the basis of
the difference between the amount of the interest paid and that!B2000R0978 — EN — 13.05.2000 — 000.002 — 20
normally payable. The Commission therefore confirms its original
calculation methodology with regard to these loans.
(148) The benefits to the exporting producers have been calculated as
explained in recitals 88 to 90 of the provisional duty Regulation.
(149) The benefits obtained by these four companies range from 0,04 %
to 0,31 %.
3.7. Import duty exemption: purchases of new equipment
and anti-pollution equipment
(150) The legal bases for this alleged countervailable subsidy scheme
are: additional notes 3 and 9 of Chapter 84, additional notes 4 and
5 of Chapter 85 and additional notes 1 and 2 of Chapter 90 of the
Customs import tariff and classification of import and export
commodities of the Republic of China (hereinafter referred to as
‘Customs Code’).
(151) The GOT claimed that this programme does not meet any of the
definitions of a subsidy as set forth in Article 2 of the basic
Regulation, notably because there is no direct transfer of funds,
there are no goods or services provided and there is no price or
income support. This claim has to be rejected because this scheme
involves a financial contribution by the GOT in the form of import
duties foregone, in accordance with Article 2(1)(a)(ii) of the basic
Regulation, and a benefit is conferred thereby.
(152) The GOT and the exporting producers claimed that this scheme,
which is described in recitals 92 to 99 of the provisional duty
Regulation, was wrongly assessed by the Commission in terms of
the specificity of the subsidy and consequently of the counter-
vailability of the alleged subsidy.
(153) In particular, it was claimed that the access to this import duty
exemption scheme is available to all Taiwanese companies who
wish to purchase equipment which is not produced locally and it
can therefore not be considered specific because the range of
companies who wish to take advantage of such an exemption is
not limited and is administered on the basis of objective and
neutral criteria.
(154) It is considered that this criterion is not objective within the sense
of Article 3(2)(b) of the basic Regulation. This Article requires
that objective criteria or conditions must be neutral and also
economic in nature and horizontal in application. The provisions
of the additional notes of the Customs Code mentioned above, are
considered not to be economic in nature and horizontal in
application since the use of this scheme is limited only to certain
enterprises. The enterprises that may benefit from this scheme
must be incorporated and qualified manufacturers or technical
service industries who will use this scheme to import machinery,
equipment and instruments for prevention of air pollution, water
contamination, noise or vibration, or for environmental inspection
and test or wastage disposal, research and experiment or for
examination and analysis under the headings of the specific
Chapters of the Customs Code. In addition it should also be
stressed that the specified equipment, after fulfilling these
requirements, can only be exempted from import duty if it has
been verified by the Taiwanese authorities that this equipment has
not yet been manufactured in Taiwan. Therefore, only companies
which are active in an industry where the machinery is not made
in Taiwan will benefit from this scheme.
(155) The above claims are rejected and the provisional findings, as
described in recital 97 of the provisional duty Regulation,
confirmed.!B2000R0978 — EN — 13.05.2000 — 000.002 — 21
Calculation of the subsidy amount
(156) The benefits to the exporting producers have been calculated as
explained in recital 98 of the provisional duty Regulation.
(157) The benefits obtained by the four exporting companies concerned
range from 0,12 % to 0,20 %.
3.8. Import duty exemption: imports of raw material
(158) The legal basis for this alleged countervailable subsidy scheme,
which is described in recitals 100 to 106 of the provisional duty
Regulation, is additional note 6 of Chapter 29 of the Customs
import tariff and classification of import and export commodities
of the Republic of China (hereinafter referred to as ‘Customs
Code’).
(159) The exporting producers argued that this scheme should not have
been included in the investigation since there was no reference to
this scheme in the complaint and because no information was
requested by the Commission with regard to this programme until
the verification visits.
(160) Both the complaint and the notice of initiation referred to ‘import
duty exemptions’ as alleged subsidy programmes benefiting the
product concerned. Therefore, it is considered that the complaint
contained sufficient prima facie evidence to initiate an investi-
gation and that both the notice of initiation and the questionnaires
and related documents sent by the Commission were sufficiently
clear in requesting information on exemption of import duty,
including on raw materials. Additionally, when lodging a
complaint, complainants cannot be expected to have knowledge
of every last detail of alleged subsidy programmes in a third
country. Indeed, Article 10(2) of the basic Regulation specifies
that the complaint shall contain such information as is reasonably
available to the complainant. The complainant also made
allegations concerning import duty exemptions for purchases of
new equipment and anti-pollution equipment. In view of the nature
of the subsidies and in particular the fact that import duty
exemptions for such equipment and raw materials were granted
under the same umbrella of ‘additional notes’ to the Customs
Code, it is concluded that the Commission is entitled to investigate
them and to recommend countervailing action if appropriate.
(161) The GOT claimed that this programme does not meet any of the
definitions of a subsidy as set forth in Article 2 of the basic
Regulation, notably because there is no direct transfer of funds,
there are no goods or services provided and there is no price or
income support. This claim has to be rejected because this scheme
involves a financial contribution by the GOT in the form of import
duties foregone, in accordance with Article 2(1)(a)(ii) of the basic
Regulation, and a benefit is conferred thereby.
(162) The GOT and the exporting producers claimed that this scheme
was wrongly assessed by the Commission in terms of the
specificity of the subsidy and consequently of the counter-
vailability of the alleged subsidy.
(163) It was claimed that such import duty exemptions are not in fact
limited to certain enterprises, because the criteria for allowing
such exemptions are objective and neutral.
(164) This scheme is explicitly limited to given manufacturers, which
are subject to the factory administration rules, for the importation
of specifically listed raw materials, in this case chemicals, which
are exclusively used in the manufacturing of plastics, artificial
fibre, rubber and petrochemical intermediates by chemical
reaction, and provided that, in addition, such chemicals are not
yet produced or sufficiently supplied in Taiwan. As a result, the
Commission finds that this scheme is explicitly limited to certain
enterprises which comply with the conditions contained in the!B2000R0978 — EN — 13.05.2000 — 000.002 — 22
provisions of the specific additional note of the Customs Code.
Such conditions are not considered to be neutral or economic in
nature or horizontal in application.
(165) It was also argued by the exporting producers that this scheme
cannot be considered a subsidy because it does not involve the
granting of benefits in excess of the import charges levied, for
imports which are fully incorporated in the product concerned.
Given that, according to Annex I to the basic Regulation, such an
exemption would not be regarded as a countervailable subsidy
when it is contingent upon export, it is claimed that a similar
exemption, which is not contingent upon export performance,
must a fortiori be regarded as a non-countervailable subsidy.
(166) Annex I to the basic Regulation contains an illustrative list of
export subsidies, including item (i) which pertains to duty
drawback schemes to which the argument probably refers.
However, under the scheme in question, there is no remission or
drawback of import charges since it was not claimed that there is a
requirement to use the imported goods as input for the production
of the final exported product. It considered, therefore, that Annex I
as an illustrative list of export subsidies, does not apply to the
issue whether this programme constitutes a subsidy, in particular
since the scheme is not considered to be an export subsidy. Article
2(1)(a)(ii) of the basic Regulation requires explicitly that only
exemptions granted in accordance with Annexes I to III are not to
deemed to be subsidies. Therefore, the regular definition of a
subsidy contained in Article 2 of the basic Regulation applies.
This scheme constitutes a subsidy since there is a financial
contribution of the GOT in the form of import duty foregone,
which confers a benefit on the recipient by not having to pay the
import duty otherwise due.
(167) The Commission therefore confirms its provisional findings as
described in recital 104 of the provisional duty Regulation.
Calculation of the amount of the subsidy
(168) The benefits to the exporting producers have been calculated as
explained in recital 105 of the provisional duty Regulation.
(169) The benefits obtained by the four exporting companies concerned
range from 0,16 % to 0,51 %.
3.9. Matching funds and assistance funds
(170) The GOT made a green-light claim under Article 4(2) of the basic
Regulation for this scheme arguing that it fulfils the criteria for
non-countervailable subsidies for research activities. However,
this claim was not substantiated with verifiable evidence. Since it
could not be established that the requirements in the said provision
are in fact fulfilled, this claim must be rejected.
(171) The GOT also claimed that this programme is not related to the
production of PSF . This claim has to be rejected in accordance
with the reply above in the section on the ‘Assessment of the
subsidies in relation to the product concerned’.
Calculation of the amount of the subsidy
(172) Two companies availed themselves of this scheme. One company
did not obtain benefits, the other received a benefit of 0,01 %.
4. AMOUNT OF COUNTERV AILABLE SUBSIDIES
(173) The following domestic subsidy rates for the cooperating
companies were established:!B2000R0978 — EN — 13.05.2000 — 000.002 — 23
Tax credits LoansImport duty
exemptionsMatching
fundsTotal
subsidy
Nan Y a Plastics Corp. 1,14 0,06 0,32 0,00 1,52
Far Eastern Textile Ltd 0,40 0,31 0,36 0 1,08
Shinkong Synthetic Fibres
Corp.0 0,04 0,68 0,01 0,73
Tuntex Distinct Corp. 0 0,20 0,34 0 0,543
(174) The weighted-average countrywide subsidy margin for all the
exporting producers investigated which virtually represent the
totality of exports of the product concerned to the Community
originating in Taiwan is above the applicable de minimis margin of
1% .
D. INJURY
1. DEFINITION OF THE COMMUNITY INDUSTR Y
(175) Since no comments were received regarding the definition of the
Community industry, the conclusions of recital 133 of the
provisional duty Regulation are hereby confirmed.
2. CONSUMPTION IN THE COMMUNITY
(176) Since no comments were received on consumption in the
Community, its assessment as indicated in recital 134 of the
provisional duty Regulation is hereby confirmed.
3. IMPORTS OF PSF INTO THE COMMUNITY FROM THE
COUNTRIES CONCERNED
(a) Cumulative assessment of imports
(177) It was provisionally considered that there were sufficient grounds
for cumulating the imports from Australia and Taiwan and to
exclude from the analysis the imports from the Republic of Korea,
Thailand and Indonesia.
(178) Since, at the present stage of the investigation countervailable
subsidies above the de minimis threshold were found to exist with
respect to Indonesia, the question had to be examined whether, in
accordance with Article 8(4) of the basic Regulation, imports of
PSF originating in Indonesia should be assessed cumulatively with
imports from Australia and Taiwan.
(179) The results of the subsequent examination showed that:
(a) the countrywide margins of subsidy relating to Australia,
Taiwan and Indonesia were above the de minimis level;
(b) the volume of imports from these countries was not negligible
when compared to Community consumption;
(c) the analysis of the conditions of competition on the
Community market between imported PSF and the Commu-
nity product and the conditions of competition between
imported PSF indicated that:
— imported PSF from all exporting countries and Commu-
nity-produced PSF are like products,
— imported PSF from all exporting countries was sold
through similar sales channels to the same customers,
— imported PSF from all countries was sold at similar
prices.!B2000R0978 — EN — 13.05.2000 — 000.002 — 24
It was found that sales prices of the imports from the countries
concerned were undercutting those of the Community industry.
(180) Based on the above considerations, it was concluded that there
were sufficient grounds for cumulating the imports from
Australia, Taiwan and Indonesia.
(b) V olume of imports and market share
(181) With the cumulation of Indonesia, between 1996 and the IP the
imports of PSF from the counties concerned developed as follows:(in tonnes)
Imports 1996 1997 1998 IP
Australia 62 1 248 11 254 11 799
Index 100 2 007 18 093 18 969
Taiwan 20 213 26 811 35 524 34 878
Index 100 133 176 173
Indonesia 4 696 12 238 25 276 22 871
Index 100 260 538 487
Total countries 24 971 40 297 72 054 69 548
Index 100 161 288 278 3
Source: Eurostat
(182) The above table shows that the volume of imports from the
countries concerned increased significantly, particularly between
1997 and 1998 when it almost doubled. The slight decline between
1998 and the IP is due to a low level of imports in the first quarter
of 1999 as compared to the first quarter of 1998.
Market share 1996 1997 1998 IP
All countries concerned 5,5 % 7,8 % 12,3 % 12,0 %
Index 100 142 224 2183
(183) The above figures include imports from Indonesia. The trend
confirms the increase of imports from the countries concerned on
the Community market, both in absolute terms and in terms of
market share.
(c) Evolution of average import price
(184)
Average import price 1996 1997 1998 IP
All countries concerned
Index: 1996 = 100 100 94 82 773
The above table shows a significant decrease in average import
price, particularly between 1997 and 1998 (–12 %). Import prices
further decreased by 6 % between 1998 and the IP . This negative
evolution coincides with the surge of imports from the countries
concerned during the period 1997 to the IP .!B2000R0978 — EN — 13.05.2000 — 000.002 — 25
(d) Price undercutting
(185) It is recalled that price undercutting was provisionally established
on the basis of a comparison between the export price (cif
Community frontier, duties paid) and prices charged by the
Community industry (ex-works). The sales prices considered for
similar product types of PSF were those to independent customers
after deduction of discounts and rebates. Where necessary the
export prices were adjusted to reflect the same level of trade as
those of the Community industry.
(186) The results of the comparison (on a weighted-average to
weighted-average basis) showed that price-undercutting margins,
expressed as a percentage of the Community industry’ s average
selling prices, were on average 21 % for Australia and 6,1 % for
Taiwan. As no comments were received regarding these under-
cutting calculations, the undercutting margins are hereby con-
firmed.
(187) The same methodology was applied with regard to Indonesia.
Based on the information provided by the cooperating exporting
producers and on the best facts available for the non-cooperating
exporting producers in Indonesia, the result of the comparison
showed a weighted-average undercutting margin of 33,9 % for that
country.
4. ECONOMIC SITUATION OF THE COMMUNITY INDUS-
TRY
(a) Production, capacity and capacity utilisation
(188) The GOA contested the method used by the Commission to assess
the production capacity of the Community industry for the product
concerned. In its opinion, the decrease in production capacity by
7 % for PSF was determined with regard to capacity used for the
production of other products and was thus incorrect. The GOA
considered that production capacity for PSF should have been
assessed exclusively on the actual production of the PSF covered
by the investigation.
(189) In any event, the GOA considered that the reduction in the
Community industry’ s production capacity was not compatible
with a finding of material injury: firstly because this reduction did
not allow the Community industry to participate in the consider-
able growth of the market (+27 %) during the period considered;
and secondly, because the reduction in capacity was motivated by
the fact that other products were more profitable than PSF .
(190) In respect of the assessment of production capacity, it should be
underlined that the product concerned is produced on the same
production lines as other products of the same family. It is
therefore impossible to identify the actual capacity exclusively
installed for one product as compared to all the products produced
on one and the same production line. In these circumstances, the
assessment of production capacity for PSF was based on a ratio
comparing the actual production of PSF to the total actual
production of all products produced on the same production lines.
Consequently, contrary to the claim made by the GOA, the
assessment of production capacity for PSF takes into account the
actual production of PSF .
(191) It also follows that the decrease in production capacity of the
Community industry was not determined by the inclusion of other
products. This statement is strengthened by the subsequent
findings of the investigation, which confirmed that the Commu-
nity industry converted several production lines formerly
attributed to the production of PSF to other types of fibres not
covered by the present investigation. The investigation also!B2000R0978 — EN — 13.05.2000 — 000.002 — 26
showed that several PSF production sites were closed down during
the period considered.
(192) It should also be noted that the switch from the production of PSF
to the production of other products was motivated mainly by the
long-term losses incurred by the Community industry on
production and sales of PSF facing continued unfair competition
from dumped and subsidised imports from third countries. The
reduction in capacity, which indeed did not allow the Community
industry to participate in the market growth, is therefore
particularly relevant for the determination of injury but more
specifically for the analysis of the causal link between the
subsidised import and the injury suffered by the Community
industry discussed below.
(193) On this basis, the GOA’ s claims are considered to be unfounded.
Accordingly, the data provided, the method described for assessing
production capacity for PSF and the conclusions contained in
recitals 141 and 142 of the provisional duty Regulation are hereby
confirmed.
(b) Profitability of the Community industry
(194) The GOA pointed out that the Community industry’ s profitability
significantly improved over the period considered, namely from a
loss of around 4 % to a profit of over 6 %. It was also claimed that
while it was mentioned in the provisional duty Regulation that the
level of profitability was still inadequate, no figures were provided
as to what the profitability of the industry was prior to the
appearance of subsidised imports. Consequently, the GOA claimed
that no proper assessment could be made as to whether the injury
suffered by the Community industry was material.
(195) The above statement rightly suggests that an improvement in
profitability during the period considered does not automatically
lead to the conclusion that the Community industry did not suffer
material injury. In addition, the assessment as to whether the
injury suffered by the Community industry was material cannot
only be based on profitability nor can it be based on a comparison
of profitability between 1996 up to the IP .
Indeed, the provisions of the basic Regulation enumerate a number
of factors among which are the volume of dumped imports and the
effect of dumped imports on prices on the Community market for
like products and specifies no one or more of these factors can
necessarily give decisive guidance for a negative finding on injury.
(196) As indicated below in the conclusions on the economic situation
of the Community industry, the conclusion of material injury was
not only justified by the inadequate profitability achieved by the
Community industry but also based on the negative developments
observed for most of the economic indicators pertaining to that
industry: market share, production capacity, sales volume, sales
prices, stocks, investments, employment and significant price
undercutting by subsidised imports from the countries concerned.
(197) As far as profitability is concerned, the present investigation
showed that its improvement was mainly the result of both the
restructuring process undertaken by the Community industry and
the resulting reduction in sales, general and administrative costs
and the decrease of the raw materials purchase prices. Production
costs were reduced faster than sales prices decreased, thus
allowing the Community industry to return to profit from 1998
onwards. Nevertheless, it was emphasised that this improvement
in profitability may only be temporary and any adverse factors
such as unfavourable development in raw material prices could,
have serious implications for the current situation.
(198) Notwithstanding this, it should be noted that the Commission
indicated in recital 179 of the provisional duty Regulation that a!B2000R0978 — EN — 13.05.2000 — 000.002 — 27
margin of 10 % should be added to the full cost of production in
order to obtain the non-injurious price of the Community industry.
Consequently, it is considered that this margin represents the
minimum profit the Community industry could expect in the
absence of subsidised imports from the countries concerned.
(199) Based on the foregoing, since no further comments were received
regarding the profitability of the Community industry, the
conclusion that profitability during the IP is inadequate is hereby
confirmed.
(c) Market share
(200) The GOT argued that one of the consequences of the restructuring
of the Community industry was the elimination of a number of
inefficient Community producers of PSF on the Community
market. It further claimed that the remaining producers thus not
only became more competitive due to international competition
but did not face a loss in market share which can be considered as
material.
(201) Regarding this claim, it should be pointed out that the
development of the market share during the period considered
was consistently assessed on the basis of the same companies that
constitute the Community industry in the present case. Therefore,
contrary to the GOT’ s claim, the loss in market share (–17 %)
experienced by the Community industry from 1996 to the IP is
exclusively based on the data pertaining to the companies
constituting the Community industry. The suggestion that the
market share of the Community industry includes information of
companies which disappeared or withdrew from the market is
therefore unfounded.
(d) Conclusion
(202) In the light of the above and in view of the fact that the cumulation
of imports from Indonesia did not give grounds such as to change
the provisional findings and the conclusion that the Community
industry suffered material injury during the IP , the contents of
recitals 151 and 152 of the provisional duty Regulation regarding
the conclusion on the situation of the Community industry are
hereby confirmed.
E.CAUSATION
1. EFFECT OF SUBSIDISED IMPORTS
(203) Both the GOA and the GOT stated that there is no evidence that
the injury suffered by the Community industry was caused by the
limited volumes imported from Taiwan and Australia.
(204) The GOA claimed that the market share of Australian imports was
too limited (2 % of consumption) to have any influence on prices
on the Community market. Rather, they had to follow the price
trends imposed by the large operators on the Community market.
Accordingly, the GOA suggested that injury, if any, was caused by
large imports from other third countries.
(205) The GOT similarly argued that the market share of approximately
6 % held by Taiwanese exports, in conjunction with the low
price-undercutting level established for these imports, could not
objectively have had an impact on the situation of the Community
industry which has a market share of over 50 % in the Community.
(206) Regarding the arguments raised by the GOA and the GOT on their
respective market share, it is recalled that imports from Australia
and Taiwan were found to be clearly above the de minimis level
during the IP . In addition, it was found that all conditions required
for a cumulated analysis were met. In these circumstances,!B2000R0978 — EN — 13.05.2000 — 000.002 — 28
comments concerning individual market shares held by individual
countries are irrelevant.
(207) In addition, the prices at which the PSF imported from these
countries was sold on the Community market were undercutting
the Community industry’ s prices. Accordingly, subsidised PSF
imported from Australia and Taiwan, together with low-priced
subsidised PSF imported from Indonesia had a significant
negative impact on the economic situation of the still vulnerable
Community industry. This finding is reinforced by the fact that the
PSF market is transparent and that, therefore, price differentials or
low-priced offers can have a price-depressing effect.
(208) Consequently, it is considered that the GOA and the GOT did not
provide any evidence which would contradict the provisional
finding that the Community industry suffered material injury as a
result of low-priced subsidised imports. Accordingly, the con-
clusion that subsidised imports, taken in isolation, had caused
material injury to the Community industry is hereby confirmed.
2. CURRENCY FLUCTUATIONS
(209) The GOA argued that the Commission failed to look at the effect
that exchange-rate fluctuations have had on import price from
Australia, specifying that during the investigation period PSF
imported from Australia had benefited from a favourable
exchange rate appreciation.
(210) In this respect it should be noted that imports from this country
were invoiced in USD, DEM and GBP and not in AUD on the
Community market. The parity of the Australian currency was
therefore not relevant in the relevant determinations.
(211) In any event, it should be pointed out that the Australian currency
depreciated during the first seven months of the IP and
subsequently appreciated during the next five months, as
compared to its parity to the ECU/EUR of the first month of
the IP . Consequently, there was no constant decreasing trend of the
Australian currency during the investigation period.
3. CONCLUSION
(212) Given that no new other arguments were received regarding the
cause of the injury suffered by the Community industry, the
conclusion that subsidised imports, taken in isolation, had caused
injury to the Community industry, as stated in recital 168 of the
provisional duty Regulation, is hereby confirmed.
F.COMMUNITY INTEREST
1. INTEREST OF THE COMMUNITY INDUSTR Y
(213) Since no comments were received regarding the above issues, the
findings on the interest of the Community industry cited in recital
170 of the provisional duty Regulation are hereby confirmed.
2. IMPACT ON USERS
(214) Following the publication of the provisional Regulation, a number
of users and importers submitted their comments in writing.
Furthermore, one users’ association reacted to the provisional duty
Regulation and asked for and was granted a hearing before the
Commission.
(215) It should be pointed out that most of the above users and importers
either did not make themselves known within the time limit set out
in the notice of initiation of the proceeding, or did not reply to the
questionnaire sent to them by the Commission. Consequently,
most of them cannot be considered as interested parties under
Article 31(2) of the basic Regulation and their views should not
normally be taken into account at this stage of the proceeding.!B2000R0978 — EN — 13.05.2000 — 000.002 — 29
(216) In addition, as stated in recital 171 of the provisional Regulation,
the overall low level of cooperation in the Community interest
investigation meant that the assessment of the impact of the
measures on the activities of users and importers was determined
according to the information available.
(217) The submissions made by the interested parties were examined
and it was concluded that their main argument was that the
imposition of countervailing duties would have negative effects on
their competitiveness on downstream products and would
ultimately threaten their survival on Community PSF market.
Indeed, the imposition of duties would, as a first step, trigger
increases in PSF prices from the countries concerned, forcing
Community PSF users in turn to increase the prices of downstream
products. In their opinion this development would be the cause of
the increase in imports of low-priced downstream products from
other third countries and from the countries concerned in this
investigation.
(218) In the light of the contents of recitals 171 and 172 of the
provisional Regulation, the investigation showed that certain users
completely shifted from purchasing PSF from the Community
industry to exclusively purchasing PSF from the countries
concerned. It is therefore considered that, if no measures are
taken to correct the distorting effects caused by the presence of
low-priced subsidised imported PSF , this situation will amplify
and the overall market will suffer in the long term: firstly, because
a number of Community producers will disappear leading to
reduced competition on the Community market; secondly, because
it will encourage more low-priced subsidised PSF to enter the
Community market putting the users of such imports in a more
favourable competitive situation compared to those using other
sources of supply. Consequently, it is considered that the interest
of all the operators on the Community market requires the
existence of effective trade competition and therefore the
imposition of countervailing measures against subsidised im-
ported PSF .
(219) In any event, the information available on the cost structure of the
user industry, the level of the proposed measures and the share
between subsidised imports and the other sources of supply
indicate that:
— PSF may represent between 25 % and 45 % of the users’ total
cost of production of downstream products,
— the average countervailing duty is about 3 % for the countries
concerned,
— the share of subsidised imports is 12 % of total consumption
of PSF .
The proposed measures may have the impact of increasing the
cost of production of users by between 0,1 % to a maximum of
0,16 %. This likely maximum increase is considered to be
negligible when compared to the positive impact of the proposed
measures in restoring effective competition on the Community
market.
(220) Consequently, the conclusion of recital 172 of the provisional duty
Regulation that the impact of the proposed measures on the users’
profitability and survival on the market will be limited is hereby
confirmed.
3. CONCLUSION
(221) The new arguments received regarding the determination of the
Community interest, are not considered to be such as to reverse
the conclusion that no compelling reasons exist against the
imposition of countervailing measures. The provisional findings
are therefore confirmed.!B2000R0978 — EN — 13.05.2000 — 000.002 — 30
G. DEFINITIVE DUTIES
(222) In view of the conclusions reached regarding subsidies, injury,
causation and Community interest, it is considered that definitive
countervailing measures should be taken in order to prevent
further injury being caused to the Community industry by
subsidised imports from Australia, Indonesia and Taiwan.
1. INJUR Y ELIMINATION LEVEL
(223) As explained in recital 179 of the provisional duty Regulation, a
non-injurious level of prices was determined which would cover
the Community industry’ s cost of production and a reasonable
profit which would be obtained in the absence of subsidised
imports from the countries concerned.
2. FORM AND LEVEL OF THE DUTY
(224) In accordance with Article 15(1) of the basic Regulation the
countervailing duty rates correspond to the subsidy margins, as the
injury margins are found to be higher for all exporters in the
countries concerned.
(a) Australia
(225) This led to the following countervailing duty rates for the
cooperating exporting producer in Australia:
CompanyExport subsidy
marginTotal subsidy
marginProposed counter-
vailing duty rate
Leading Synthetics 6,0 % 6,0 % 6,0 %
Other companies 6,0 % 6,0 % 6,0 %3
(226) Given the high level of cooperation, which covered virtually all
imports of the product concerned originating in Australia, it was
considered appropriate to establish the residual duty rate at the
same rate as the highest rate that has been established for the
cooperating company i.e. 6,0 %.
(b) Indonesia
(227) Given the high level of non-cooperation in Indonesia, which was
determined to be above 30 %, it was considered appropriate to
apply a method which avoided granting a bonus for non-cooper-
ation. Accordingly, the duty rate for non-cooperating companies
was established on the basis of the facts available in accordance
with Article 28 of the basic Regulation, i.e. at 10 %.
CompanyExport subsidy
marginTotal subsidy
marginProposed counter-
vailing duty rate
PT. Indorama Synthetics TbK 1,4 % 1,4 % 0 %
PT. Panasia Indosyntec TbK 0 % 0 % 0 %
PT. Susila Indah Synthetic Fiber
Industries0% 0% 0%
PT. GT Petrochem Industries TbK 0,4 % 0,4 % 0 %
PT. Teijin Indonesia Fiber
Corporation0,4 % 0,4 % 0 %
Other companies 5 % 10 % 10 %3!B2000R0978 — EN — 13.05.2000 — 000.002 — 31
(c) Taiwan
(228) It is recalled that anti-dumping measures are already in place with
regard to imports of PSF originating in Taiwan. However, the
subsidies found in this investigation are not export subsidies and
are therefore considered not to have affected the export price and
the corresponding dumping margin. Consequently, countervailing
duties can be imposed in cumulation with the existing anti-dump-
ing measures. Accordingly, this would lead to the following
countervailing duty rates for the cooperating exporting producers
in Taiwan:
CompanyExport subsidy
marginTotal subsidy
marginProposed counter-
vailing duty rate
Nan Y a Plastics Corp. 0 % 1,5 % 1,5 %
Far Eastern Textile Ltd 0 % 1,0 % 1,0 %
Shinkong Synthetic Fibres Corp. 0 % 0 % 0 %
Tuntex Distinct Corp. 0 % 0 % 0 %
Other companies 0 % 1,5 % 1,5 %3
(229) Given the high level of cooperation, which has covered virtually
all imports into the Community of the product concerned
originating in Taiwan, it was considered appropriate to establish
the residual duty rate at the same rate as the highest rate that has
been established for the cooperating companies i.e. 1,5 %.
(230) The individual company countervailing duty rates specified in this
Regulation were established on the basis of the findings of the
present investigation. Therefore, they reflect the situation found
during that investigation with respect to these companies. These
duty rates (as opposed to the countrywide duty applicable to ’all
other companies are thus exclusively applicable to imports of
products originating in the country concerned and produced by the
companies and thus by the specific legal entities mentioned.
Imported products produced by any other company not specifi-
cally mentioned in the operative part of this Regulation with its
name and address, including entities related to those specifically
mentioned, cannot benefit from these rates and shall be subject to
the duty rate applicable to ‘all other companies’.
(231) Any claim requesting the application of these individual company
countervailing duty rates (e.g. following a change in the name of
the entity or following the setting-up of new production or sales
entities) should be addressed to the Commission (1) forthwith with
all relevant information, in particular any modification in the
company’ s activities linked to production, domestic and export
sales associated with for example that name change or that change
in production and sales entities. The Commission, if appropriate,
will, after consultation of the Advisory Committee, amend the
Regulation accordingly by updating the list of companies
benefiting from individual duty rates.
H. COLLECTION OF THE PROVISIONAL DUTY
(232) In view of the magnitude of the countervailing subsidies found for
the exporting producers, and in light of the seriousness of the
injury caused to the Community industry, it is considered
necessary that the amounts secured by way of provisional
countervailing duty under Regulation (EC) No 123/2000 be
definitively collected to the extent of the amount of definitive
duties imposed,!B
(1) European Commission, Directorate-General for Trade, Directorate C,
DM 24 — 8/38, Rue de la Loi/Wetstraat 200, B-1049 Brussels.2000R0978 — EN — 13.05.2000 — 000.002 — 32
HAS ADOPTED THIS REGULATION:
Article 1
1. A definitive countervailing duty is hereby imposed on imports of
synthetic staple fibres of polyesters, not carded, combed or otherwise
processed for spinning, falling within CN code 5503 20 00 and
originating in Australia and Indonesia.
2. The duty rate applicable to the net, free-at-Community-frontier,
before duty, for products produced by the companies indicated shall be as
follows for products originating in:
1.Australia
CompanyRate of duty
(%)TARIC additional code
Leading Synthetics Pty Ltd, Melbourne, Victoria 6,0 A059
All other Australian companies 6,0 A9993
2.Indonesia
CompanyRate of duty
(%)TARIC additional code
PT. Indorama Synthetics TbK
Graha Irama, 17thfloor
Jl. H. R. Rasuna Said Blok X-1 Kav. 1-2
PO Box 3375
Jakarta 129500 A051
PT. Panasia Indosyntec TbK
Jl. Garuda 153/74
Bandung 401840 A052
PT. Susilia Indah Synthetic Fiber Industries
Jl. Kh. Zainul Arifin Kompleks
Ketapang Indah
Blok B 1 n. 23
Jakarta 111400 A054
PT. GT Petrochem Industries TbK
Exim Melati Building, 9thfloor
Jl. M.H. Thamrin Kav. 8-9
Jakarta 102300 A053
PT. Teijin Indonesia Fiber Corporation TbK
5thfloor Mid Plaza 1
Jl. Jend. Sudiman Kav. 10-11
Jakarta 102200 A055
All other companies 10 A9993
3. Unless otherwise specified, the provisions in force concerning
customs duties shall apply.
Article 2
1."M1The amounts secured by way of the provisional countervail-
ing duty on imports originating in Australia under Regulation (EC) No
123/2000 shall be collected at the rate of the duty definitively imposed
by this Regulation. Amounts secured in excess of the rate of definitive
countervailing duty shall be released. 3!B
!M1
!B2000R0978 — EN — 13.05.2000 — 000.002 — 33
2. The provisions referred to in Article 1(3) shall also apply to the
definitive collection of the amounts secured by way of the provisional
countervailing duties.
Article 3
This Regulation shall enter into force on the day following its publication
in the Official Journal of the European Communities .
This Regulation shall be binding in its entirety and directly applicable in
all Member States.!B2000R0978 — EN — 13.05.2000 — 000.002 — 34