PROPOSAL FOR A COUNCIL REGULATION ( EEC ) COLLECTING DEFINITIVELY THE PROVISIONAL COUNTERVAILING DUTY ON IMPORTS OF POLYESTER FIBRES AND POLYESTER YARNS ORIGINATING IN TURKEY
Date: 1991-09-09
Institutions: European Commission
Subjects: Türkiye, anti-dumping duty, dumping, man-made fibre, originating product

COMMISSION OF THE EUROPEAN  COMMUNITIES 

C0M(91) 334 final 

Brussels,  9 September  1991 

Proposal  for a 

COUNCIL REGULATION  (EEC) 

collecting definitively  the provisional  countervailing duty 

on  Imports of polyester  fibres and polyester 

yarns originating  In Turkey 

(presented  by the Commission) 

EXPLANATORY  MEMORANDUM 

1. Commission  Regulation  (EEC) No 1432/91  Imposed  a  provisional 

countervailing duty on  Imports of  polyester  fibres and  polyester  yarns 

originating  In Turkey. 

2. The Government  of Turkey  has offered  an undertaking  which  the 

Commission  considered  acceptable. 

3. Examination  of  the facts finally established  has shown  that  imports of 

the subsidized  Turkish  products  have caused material  Injury  to the 

Community  industry. 

4. Accordingly,  pursuant  to Article  12  (2) of Council  Regulation  (EEC) 

No 2423/88, the Commission  Is putting  before  the Council  a draft 

Regulation collecting  definitively  the provisional  countervailing  duty 

imposed  on  the above-mentioned  products  at  the  level  of  the net 

countervailing  duty  established. 

5. The Advisory  Committee  has been consulted  on  this proposal  and  no 

negative comments  have been  received. 

-  1 -

Proposal  for a 

COUNCIL REGULATION  (EEC) No. 

/91 

Of 

1991 

collecting definitively  the provisional  countervailing duty 

on  imports of polyester  fibres and polyester 

yarns originating  In Turkey 

THE COUNCIL OF THE EUROPEAN COMMUNITIES, 

Having  regard  to the Treaty establishing the European Economic Community, 

Having  regard  to Council  Regulation  (EEC) No 2423/88 of  11 July 1988 on 

protection against  dumped or subsidized  imports from countries not 

members of  the European Economic Commun Ity<1), and  in particular  Article 

12 thereof, 

Having  regard  to the Additional  Protocol<2) to the Agreement 

establishing  an Association between  the European Economic Community and 

Turkey, and  In particular  Article 46 thereof, 

Having  regard  to the proposal  submitted by the Commission after 

consultation within the Advisory Committee as provided  for under  the 

above Régulât Ion, 

(1) OJ No L209, 2.8.1988, p.1 
(2) OJ No L 293, 29.12.1972, p.4. 

-  2 -

Whereas : 

A.  PROVISIONAL MEASURES AND SUBSEQUENT  PROCEDURE 

1.  The Commission, by Regulation  (EEC) No 1432/91<2>  (hereinafter 

referred  to as the Commission  Regulation)  Imposed  a provisional 

countervailing duty on  Imports of polyester  fibres and polyester 

yarns originating  In Turkey. 

2.  Following  the  Imposition of  the provisional  countervailing duty, the 

Turkish Government, three exporters and one  importer  made written 

submissions making known  their views on the findings. The Turkish 

Government  and one exporter who so requested were granted an 

opportunity  to be heard by the Commission. 

3.  The oral  and written submissions and comments of  the parties were 

considered  and, where appropriate, the Commission's  findings were 

modified  to take account  of  them. 

B. LENGTH OF  PROCEEDING 

4.  The  initiation of  this proceeding was announced  in a notice published 

in the Official  Journal  of 09.02.89. The  Investigation of  subsidies 

covered  the period  1 July  1987 to 31 December  1988. The  investigation 

exceeded  the normal  time period because of  the volume and  complexity 

of  the data  initially gathered  and  examined. 

(2) OJ No L137, 31.5.91, p.8 

-  3  -

The  Turkish  Government  and  one  Turkish  exporter  argued  that  the 

Commission  has exceeded  a  reasonable  period  to  finalize  this 

proceeding  and  that  some  data  was  therefore  out  of  date. 

In this  regard  the Council  has noted  that  for  a considerable  period 

of  time  before  the  imposition  of  countervailing  duties,  the 

Commission  had,  in vain,  discussed  with  the Turkish  authorities  the 

possibility  of  an  undertaking. 

The  Council  confirmed  the explanation of  the Commission  as outlined 

In Recital  6 of  the Commission  Regulation. 

C.  SUBSIDIZATION 

5.  The  Council  considered  in this  specific  case whether  it would  be 

appropriate  to countervail  subsidy  schemes  which  were  abolished  after 

the  Investigation  period. 

The  Council,  taking  Into account  evidence  supplied  by  the  Turkish 

Government  and  being  convinced  that  no  further  benefits  will  accrue 

after  the  abolition  of  these  subsidy  schemes  and  In the  understanding 

of  the  non  re-introductIon of  these  subsidies,  considered  it 

unnecessary  to  Impose countervailing  duties  against  such  schemes. 

Specific  schemes 

6.  The  Commission  Identified  eleven  subsidy  schemes, of  which  a  number 

were  considered  counterva 11 able. 

Specific  arguments  were made  on  the  following  schemes  by  the  Turkish 

Government  and  the Turkish  exporters. 

-  4 -

Corporate tax exemption 

7.  The Turkish  Government  and one Turkish  exporter  did  not  challenge  the 

fact  that  this subsidy  is contingent  upon export  performance, but 

contested  the basis on which  the Commission  had calculated  the  level 

of  counterva I lab 11Ity of  this scheme.  The Turkish  Government 

proposed  to use as a basis the exemption  rate  (14 %) which will  apply 

to export  earnings  In 1992, but will  not  come  Into effect  until  1993. 

The corporate  tax exemption  scheme exempted  from corporate  taxation 

20%  of  the export  earnings of manufacturing  companies  In 1989 and  18% 

of export  earnings  In 1990.  This percentage  has been  lowered  to 16 X 

In 1991, but  It will  not  come  Into effect  until  1992. The Turkish 

Government  has  further  reduced  the exemption  rate  to 14 X of export 

earnings  In 1992, which will  come  Into effect  in 1993. The  Commission 

considered  that, as the present  cost  to the Turkish Government  and 

the benefit  to the companies concerned was based on  the  companies 

1990 export  earnings, the 18X exemption  rate which  is applicable  In 

1991, 

should  form  the basis for calculating  the  level of 

counterval IablIIty of  this scheme.  It would  not  be  justified at  this 

stage  to anticipate a further  reduction  In the cost  and benefit  of 

this scheme  in future years.  The Council  confirmed  this finding. 

Low  Interest  credit  for  Investment  purposes 

8.  The Turkish  Government  and one Turkish exporter  have stated  that  this 

scheme was abolished  In January  1990.  As adequate proof was given 

and  considered  acceptable by  the Council, this scheme was considered 

to be no  longer  countervail able. 

Incentive premium 

9.  The Turkish  Government  and one exporter  have stated  that  this scheme 

was abolished  in November  1989. Leaving  aside  the fact  that  the 

Commission  had not  been  informed of  this fact when  Imposing 

provisional  countervailing  duties,  the actual  benefit  accruing  to the 

-  5  -

companies  which  availed of  this  scheme was negligible  and  therefore 

did  not  and will  not  have  any  effect  on  the duties. The Council  did 

not  take  Into account  the benefits of  this  scheme. 

Investment  Incentive a Ilowance 

10  The  Turkish  Government  and one  Turkish  exporter  alleged  that  the 

Commission  used  for  this  scheme, as well  as  for  the  customs 

exemption,  a  depreciation  period  which  was  not  representative of  the 

normal  depreciation  period  in Turkey.  They  claimed  that  the  normal 

depreciation  period  in Turkey  is from  8  to  10 years, with  companies 

free  to choose  their  own  period. 

11  In this  respect  the Commission  based  its findings on  Information 

obtained  during  the  verification  visits which  showed  the  normal 

depreciation  period  in the  industry  concerned  to be  four  years. 

12  In addition, one  Turkish  exporter  noted  that  if the benefit  from  this 

scheme  was  calculated  on  the basis of  polyester  fibre and  yarn 

Investments  only,  rather  than on  all  Investments, a  lower  subsidy 

amount  would  accrue  to  them. The  exporter  was unable  to quantify 

satisfactorily  the amount  of  subsidy  relating  solely  to  Investments 

in polyester  fibre  and  yarns  and  therefore  the  Commission's 

calculations have  been  based  on  the only  reliable evidence  provided 

by  the company  concerned,  I.e. on  all  Its  investments  benefiting  from 

this  scheme. 

In these  circumstances,  the Council  confirmed  all  methods of  the 

Commission's  basis of  calculating  the countervaiI able amount  of 

subsidy  for  this scheme. 

customs  exemption 

13  The  Turkish  Government  and one  Turkish  exporter  have  stated  that  the 

customs  duty  rate on which  exemption  is claimed  was  reduced  from  30 X 

to 5 X  in November  1989. Satisfactory  evidence  has been  provided  to 

that  effect. The Council  has  taken  account  of  this  fact  In 

calculating  the countervaiI able  amount  of  this  subsidy. 

Other schemes 

14  The Council  confirmed  the Commission's  findings not  to take measures 

against  the Resource  Utilisation Support  Fund  (Recital  9 of 

Commission  Regulation),  the Rebate of  Indirect  Taxes  (Recitals  10 and 

11),  because  these  two schemes ended  before  the end of  the 

Investigation period;  against  the Support  and  Price  Stabilisation 

Fund  (Recital  17) because  the products  Involved  are not  eligible  for 

payments  from  this Fund  and  against  the Low  Interest  Credit  for 

Operational  Phase  (Recital  29), because  its benefits were  negligible. 

p. SPECIFICITY 

15  The Turkish  Government  and one Turkish  exporter  have  further  advanced 

the argument  that  domestic  subsidies  can only  be countervaiI able  if 

they  have been  provided  in a specific manner  to the benefiting 

industry.  The Turkish  Government  claimed  the domestic  subsidies 

which  the Commission  has  found  countervaiI able are, however  all 

granted  under  generally  available  incentive schemes. 

16  The Council  noted  the way  domestic  subsidies  are granted  in Turkey. 

A company  must  obtain  an  Incentive certificate  from  the  State 

Planning  Organisation  (S.P.O.). To assist  this decision,  the S.P.O. 

has established  a  list of  non-eligible  Industries for  domestic 

Incentive schemes.  In addition  the S.P.O. carries out  on  a case-by-

case basis, an analysis of  each  investment  application which  Is 

normally  accompanied  by a so-called  feasibility  study, and  decides 

subsequently whether  and  if a company  obtains one or  any of  the 

subsidies under  the domestic schemes  described. 

Under  these circumstances,  there  is every  reason  to believe  that  the 

allocation of  the subsidies  In question was not  carried  out  In 

accordance with  neutral  and objective  criteria. 

The Commission  requested  the Turkish  authorities  to submit  conclusive 

evidence  as  to the general  availability of  the subsidies  In question, 

which  however  was not  supplied. 

- 7 -

Under  these circumstances, the Council  shares the Commission's 

conviction  that  the Turkish system does not entitle  the applying 

companies  to obtain automatically  the subsidies  they claim once the 

crIter la are met. 

17  The consequence of  these arguments  is that  the Council  cannot  accept 

the allegations that  these schemes are generally available. 

Consequently  the Council  considered  these schemes  to be specifically 

granted. 

18  In addition, even  those domestic subsidies which were allocated 

according  to the state of development  of the region  In which  the 

benefiting  company was  located, were  found  to have been granted 

specifically and  In all  cases,  In the most  developed  regions of 

Turkey. 

19  Therefore  it was clear  that  there was no effective general 

availability  of  these subsidies between companies, nor  between 

regions where differing eligible percentages  have been established 

according  to the state of development  of  the region.  The Council 

considered  them countervaiI able. 

E. TOTAL AMOUNT OF SUBSIDIES 

20  The total  amounts of countervaiI able subsidies determined  by the 

Council  are as follows : 

SASA 

9.99 X 

SONMEZ  FILAMENT 

9.13 X 

SONMEZ ASF 

SI FAS 

POLYLEN 

POLYTEKS 

9.35 X 

9.39 X 

8.79 X 

10.16 X 

The  Individual  amounts of countervaiI able subsidies  found by scheme 

have been notified  to each of  the companies concerned. For  reasons of 

confidentiality  they are not published here. 

- 8 -

F.  INJURY 

21  In  Its provisional  Regulation,  the Commission  found  that  four 

products were  concerned  by  these proceedings  and  that  the  Community 

Industry was manufacturing  like products.  As  far  as  the  assessment 

of  the effect  of  the subsidized  imports was concerned,  it was  however 

argued  that  the polyester  fibres and  yarns exported  by  the Turkish 

companies  and  those of  the Community  producers were  not  similar 

products  since  they were of  different  qualities. These  Imports  could, 

therefore, not  have caused  material  Injury on  the  Community 

production  of  like products.  The Commission  did  not  accept  these 

arguments  in  its Regulation  since  these differences  In quality 

between Turkish  and Community  products,  if any, were  so minor,  that 

no clear  product  distinction between  them  could  be made. This 

conclusion  was  further  supported  by  the similarity  of  the end uses of 

these products. 

22  The Council  confirmed  that  in this case  the basic  physical 

characteristics of  the exported  and Community-produced  products  and 

their  uses were  Identical.  In addition, the end  users  are  the  same 

and  the only  decisive element  of  distinction  between  the  imported  and 

the Community-produced  products  are  the prices.  These  prices are, 

however,  largely  Influenced by  the subsidization by  the  Turkish 

Government.  In these circumstances,  there  Is no clear  and  decisive 

element  of  distinction between  these products. 

23  The Council  confirms  therefore  the Commission  findings  that  the 

Community  production  has  to be considered  as  like  to the  Imported 

subsidized  products. 

24  In  Its provisional  findings, the Commission  concluded  that  the 

Community  fibres and  yarn  Industry  had experienced material  Injury 

due  to  the subsidized  imports  from  Turkey. 

- 9 -

25  These  Injury  findings were based mainly on  the  following  facts : 

As  far  as the volume of  the subsidized  Imports was concerned,  the 

Commission  established  In  Its Regulation  that  Imports of  yarn 

Increased  from  233 T  in 1984 to 13.315 T  In 1988; an  increase  in 

market  share  from 0 X  to 5 X, and  that  that of  fibres  fluctuated 

around  4 X and was  3.3 X  In 1988.  In this respect,  it has  to be 

recalled  that  in June  1988, provisional  antidumping  duties were 
Imposed^3), on  the  imports of most  of  the products concerned  which 

probably  had effects on  the  import  volumes.  No comments  were 

submitted  in this  respect. 

26  The market  share of  the Community  industry  decreased  for  fibres from 

79 X  in 1984 to 75 X  in 1988 and  for  yarns  from 81 X  In 1984 to 69.8 

X  In 1988.  As  far  as prices were concerned  between  1985 and  the 

investigation period,  considerable  price depressions  from  5 X for 

textured  yarn,  12 X  for  polyester  filament  yarn, 20 X  for  fibre and 

26 X  for  POY were established. 

In addition,  it was  found  that  the majority  of  the Community  industry 

suffered  heavy  losses  in 1988,  in some  Instances up  to 26 X for 

fibres and  15 X  for yarns. 

27  The Council  confirms  therefore  the findings of  the Commission  as 

given  in recitals 50 to 53 of  Its Regulation. 

28  The Commission  has  further  established  that  during  the  Investigation 

period  the prices  In the Community  of Turkish  Imported  products  were 

on average  lower  than  the corresponding  prices of  the  Community 

manufactured  like products by  the following  percentages  : for  fibres 

18 to 22 X;  for  Turkish  polyster  filament  yarn  : 65 X;  for  Turkish 

POY  : 30 X, and  for  Turkish  textured  yarn between  25  to 43 X . 

(3) Provisional  duty  : O.J. no L 151, 17.06.1988, p. 39 and  47 

- 10 -

29  In this respect,  the Turkish  Government  and one Turkish  exporter 

argued  that  the price undercutting margins were  not  correct,  since  no 

adjustments  of  the Turkish  prices have been made  in order  to  take 

account  of  the alleged  differences  In physical  characteristics 

between  the Turkish  and  the Community  products.  However, no effect 

on  prices of  these  alleged  differences  was proven  to the  satisfaction 

of  the Commission,  neither  by  the Turkish  Government  nor  by  the 

exporter  concerned.  Accordingly,  this claim was  rejected. 

30  In addition,  it has  to be  recalled  that, even  if the alleged 

differences  were  to  have a certain  effect  on  the prices and  thus on 

the price  comparability  of  the products,  this effect  would  never  be 

such  as  to compensate  for  the huge undercutting  margins  established 

and  verified  by  the Commission.  The Council  therefore  confirmed  the 

price-undercutting  analysis of  the  Commission. 

Conclusion 

31  in the  light of  the Commission's  finding  as shown  In recital  53 of 

its Regulation  and  the above-mentioned  considerations,  the Council 

confirmed  that  the Turkish  exporters  had  considerably  Increased  their 

market  presence,  reverted  to price undercutting  and  that  Community 

industry  Is suffering  material  injury. 

G.CAUSALITY 

32  As already  shown  In recital  54 of  the Commission  Regulation,  the 

markets  concerned  were  highly  price-sensitive and  transparent.  The 

huge price undercutting of  the Turkish  exports, which  to a  large 

extent  was covered  by  the substantial  subsidy  margin,  had  thus 

clearly  an effect  on  the prices of  the Community  industry. 

-  11  -

In this  respect,  the Turkish  Government  alleged  that  with  a small 

market  share,  the Turkish  exports  could  not  have  an  Injurious  effect 

on  the prices of  the Community  Industry.  However,  In this particular 

market, where only  a relatively  limited number  of  suppliers exist  and 

the price  situation  Is transparent,  low prices  charged  by  exporters 

which  have only  a relatively  small  market  share  can  nevertheless  have 

a considerably  detrimental  effect  on  the general  price  level, and 

force  the Community  producers  to align  their  prices  to these  low-

priced  imports  at  the expense of  their  profitability. 

33  It was  further  argued  that  the price  depression,  which  as such  is not 

contested,  was mainly  caused  by  falling  raw material  costs.  The 

Council  was  however  of  the opinion,  that  while  falling  raw  material 

prices may  have  had  a decreasing  effect  on  prices,  this does not 

explain  the  fact  that  the Community  Industry was  prevented  from 

selling  at  profitable  prices.  Thus,  the price undercutting  by  the 

subsidized  Imports  increased  the price  depressing  effect,  and  forced 

the prices  down  beyond  the normal  price  development  due  to cost 

reductIons. 

34  The  Turkish  Government  and one  Turkish  exporter  argued  that  the 

material  Injury  of  the Community  Industry  had  been  caused  by  other 

factors, either  by  the dumped  imports  from  several  countries  against 

which  ant I-dumping  duties are  in force, or  by  low prices of  fairly 

priced  Imports. 

In this  respect,  the Council  was aware  that  it had  Imposed  anti 

dumping  duties on  imports of  three of  the  investigated  products  from 

several  countries.  These measures  were  supposed  to eliminate  the 

injury  caused  by  the dumping  of  these exports.  However,  apart  from 

the  fact  that  the  findings  In the ant I-dumping  cases  related  to a 

different  reference  period,  the ant I-dumping duties were  for  most 

Turkish  companies  and most  products  based  on  the dumping  margins 

found  for  Turkey  and  did  not  completely  eliminate  Injury. 

Consequently,  the subsidization of  Imports  had  an  additional 

injurious  impact  on  the Community  industry, which  has not  been 

eliminated  by  these  anti-dumping  measures. 

-  12 -

Indeed, Article  4 of  Regulation  (EEC) No  2423/88 does  not  foresee 

that  Injury  can only  be established  if subsidization  Is the only, or 

the principal  cause of  the overall  injury  suffered  by  an  Industry. 

Therefore,  Injury  caused  by  subsidization may  Justify  protective 

measures, even  if  it  Is only  a part  of  a  larger  Injury  due  also  to 

other  factors.  In this particular  case,  the  Investigation  has  indeed 

shown  that  in spite of  the ant I-dumping measures  taken  the situation 

of  the Community  Industry  is still  precarious  and  that,  thus,  the 

measures  against  dumped  Imports  have  not  fully  remedied  the  injury 

caused  by unfair  pricing. 

35  It was  further  claimed  by  the Turkish  authorities  that  the 

difficulties encountered  by  the Community  industry  were  predominantly 

caused  by  fundamental  structural  problems. 

36  The Council  acknowledged  that  the Community  industry  had  suffered 

major  economic  problems  In the past. To overcome  these  problems,  the 

Community  producers  had  taken  a number  of  restructuring  measures, 

which  had  Improved  their  performance. This restructuring of  the 

Community  Industry  has  however  now been  jeopardized  by unfair  and 

injurious pricing  from  different  imports  by  a number  of  countries,  as 

evidenced  by  the profitability  figures  set  out  in recital  52 of  the 

Commission  Regulation.  The Council  considered  it therefore  Incorrect 

to blame  structural  problems  for  the  Injury  actually  caused  by  unfair 

pricing. 

37  The Turkish  Government  argued  further,  that  as  the effect  of  dumped 

Imports  from  Turkey  were  considered  together  with  those of  dumped 

Imports  from  five other  countries  in assessing  Injury  in these  anti 

dumping  cases,  the Council  would  - a contrario  - not  have  the 

possibility  in this anti-subsidies case  to determine  whether  the 

subsidized  imports  from  Turkey  have caused  injury. 

-  13 -

38  However,  for  the reasons given  in recitals 56 - 58 of  the  Commission 

Regulation  and  In view of  the considerations above, the Council 

confirms  that  the subsidized  Turkish  Imports  have caused  material 

injury  to the Community  Industry. 

H.COMMUNITY  INTEREST 

39  The Commission  has stated  In recitals 59 to 63 of  its Regulation  the 

reasons why  the  interest  of  the Community  called  for  Intervention  to 

prevent  Injury  during  the proceeding.  The Council  considered  these 

reasons  to be val id. 

One Turkish  exporter  and  the Turkish Government  argued,  however, 

that  duties would  prevent  price competition on  the Community  market, 

which would  not  be  In the Community  interest. 

40  In this  respect,  the Council  recalls that  countervailing duties  are 

Intended  to re-establish  a fair  competitive situation and  that  it  Is 

therefore  necessary  to eliminate  the effect  of  the subsidy on  the 

imports,  resulting  in the Community  industry  being  further  exposed 

to fair  competition,  also  from exports by  the Turkish  companies, on 

the Community  market.  Therefore,  the Council  confirmed  the 

Commission  findings concerning  the Community  interest. 

I. THE ADDITIONAL  PROTOCOL  TQ THE  EEC - TURKEY ASSOCIATION  AGREEMENT 

41  The Turkish  Government  contended  that  the Commission  did  not  use  the 

appropriate  Instrument  against  the Turkish  subsidy  schemes  by 

Imposing  duties under  Regulation  (EEC) No 2423/88, as special  rules 

exist  under  the Additional  Protocol  to the  EEC-Turkey  Association 

Agreement  of  23 November  1970. 

- 14 -

42  Article  43  (2) of  this Additional  Protocol, which  allows Turkey  to be 

considered  as being  in a situation  specified  In Article 92  (3) (a) of 

the EEC Treaty,  considers  such  aid  compatible with  the proper 

functioning of  the Association only  If  it does not  alter  the 

conditions of  trade  to an extent  Inconsistent  with  the mutual 

interest  of  the contracting  parties. 

The Turkish  Government  was of  the opinion  that  hence  it was  entitled 

under  Article  43  (2) to grant  these  subsidies. 

43  The Council  considered  however  that  the Commission  has  correctly 

assessed  its findings on  injury  and  causality  and  it  further 

confirmed  that  by  the subsidization of  the Turkish  Imports,  the 

conditions of  trade  have been  altered  In a manner  which  is 

Inconsistent  with  the mutual  Interest  of  the contracting  parties. 

44  The Community  has,  in accordance  with Article  45 of  the  Additional 

Protocol, further  submitted  to the Association  Council  for  Its 

approval,  the countervailing  duties which  the Community  intends  to 

collect  definitively  on  Imports of  fibres and  yarns  from  Turkey.  In 

the absence  however  of  any  decision, under  Article 45 by  the 

Association  Council,  the Community  is further  allowed under  Article 

46 of  the Additional  Protocol  to take safeguard  measures which  it 

feels appropriate  In order  to overcome  difficulties  due  to  this 

absence of  a decision of  the Association Council. 

J. GATT - SUBSIDIES COPE - DEVELOPING COUNTRIES 

45  The Turkish  Government  alleged  further  that, contrary  to recitals  36 

and  37 of  the Commission  Regulation,  the requirements of Article  14 

of  the Agreement  on  Interpretation and Application of Articles VI, 

XVI  and XXIII  of  the General  Agreement  on Tariffs and  Trade 

(Subsidies Code) had  been  violated. 

-  15 -

46  Concerning  domestic  subsidies, the special  provisions  for  developing 

countries  (Art. 14 Subsidies Code) however  do not  restrict  the 

possibility  for  another  signatory  to apply  Its countervaiIing-duty 

laws,  in case subsidized exports  from  a developing  country  cause 

material  Injury  to  Its domestic  industry  (Article  14 (7) GATT 

Subsidies  Code). 

In addition,  insofar  as export  subsidies  are concerned,  the Council 

has noted  in this respect  that  Turkey  has entered  into a  commitment 

vis-a-vis  the signatories of  the GATT  Subsidies Code  (Article  14  (5) 

and  (6) refers)to  phase out  Its export  subsidies  at  the end of  1989. 

Turkey  has not  respected  this commitment. 

47  The Council  considered  that  the Community  is entitled  under  the 

Subsidies  Code  to apply  countervailing duties. 

K.INJURY THRESHOLD 

48  The Commission  has calculated  the amount  of  the duty, necessary  to 

remove  the  Injury  by comparing,  for each of  the  four  products,  the 

prices of  the Turkish  products  in the Community  during  the 

Investigation period with  a target  price of  the Community  industry 

calculated  on  the average production costs  for each  product  of 

representative Community  producers  plus a reasonable  profit margin  (6 

X  for  fibre and 7 X  for  yarns).  The differences  between  these  two 

prices were considered  to constitute  the amount  by which  the prices 

of  the Turkish  products should  be  increased  at  the Community  frontier 

in order  to remove  the  Injury caused  by  the subsidized  Imports. 

-  16 -

The Turkish  Government  and one Turkish  exporter  considered  that,  In 

calculating  the  injury  threshold,  a profit  margin of  3 X  is a more 

realistic margin  to apply  to Community  producers. No basis has been 

provided,  however,  to  justify  applying  a 3 X profit  margin. The 

Council  noted  that  the Commission  established  the profit  margin  on 

the basis of  the average  profit  margin of  Community  producers  in 1985 

and  1986 since  for most  of  that  period  the  Injurious  impact  on 

Community  producers of unfairly  priced  third  country  imports was 

st111  moderate. 

In these  circumstances,  the Council  confirmed  the basis of  selecting 

the  level  of  profit  margin  used  in this  Instance  and  thus  the 

findings of  the Commission  under  Recitals 64 and 65 of  the  Commission 

Regulation. 

L.  UNDERTAKING 

49  Following  the parties being  informed of  the essential  facts and 

considerations on  the basis of which  It was  intended  to recommend  the 

imposition  of  definitive  duties and  the definitive  collection  of 

amounts secured  by way of  a provisional  duty,  the Government  of 

Turkey  offered  an undertaking  which  Is considered  to be  acceptable. 

The effect  of  this undertaking  will  be  to phase out  the most 

important  export-subsidy  (the Corporate Tax  Exemption) which will 

remedy  the material  injury  caused  by  the Turkish  subsidies. 

After  consultation  with  the Advisory  Committee,  this undertaking  was 
accepted  by Commission  Decision  91/.../EEC^3*.  The Council  has 
further  noted  that  the  investigation  in this case  has been 

terminated. 

(3) See page  ... of  this Official  Journal. 

-  17 -

50  Since part  of  these  rates of  definitive  countervailing  duties would 

have been suspended  In view of  the ant I-dumping duties  imposed  by 
Regulations  (EEC) No 3905/88<1>  and  3946/99<2>, only  net  definitive 

countervailing  duties would  have been  Imposed  as  listed  in Article 1 

of  this Regulation. 

M. CUMULATION OF ANT I-DUMPING DUTIES 

AND COUNTERVAILING  DUTIES 

51  The Commission  has set out  in recitals 67  to 70 of  the  Commission 

Regulation,  the question  as to whether  ant I-dumping  duties and 

countervailing  duties can be cumulated  in accordance with Article  13 

(9) of  Regulation  (EEC) No 2423/88 and Article VI  (5) of  the GATT. 

52  The Council  accepted  the Commission  reasoning  as set out  In Recitals 

67 to 70 of  the Commission  Regulation and  it confirmed  that  Art.  13 

(9) does not  preclude  that  countervailing  duties  are  Imposed  in 

addition  to ant I-dumping duties against  the domestic subsidies  found, 

as well  as against  export  subsidies which  cannot  have  influenced  the 

anti-dumping  duty  since  the companies  concerned  first  availed of  them 

after  the anti-dumping  duties were  Imposed. 

53  While  the ant I-dumping  duties are  in force, that  part  of  the 

countervailing  duty which  corresponds  to the export  subsidies which 

will  have  influenced  the dumping  margin, should only  be  Imposed  to 

the extent  that  It exceeds  the ant I-dumping  duty. 

(1) OJ  No L 347, 16.12.1988, p. 10. 
(2) OJ  No L 348, 17.12.1988, p. 49. 

- 18 -

N. COLLECTION OF PROVISIONAL  DUTIES 

54  in view of  the subsidy  level  definitively  established  as mentioned 

above and  the seriousness of  the  Injury  caused  to the  Community 

Industry,  the Council  considered  it necessary  that  amounts collected 

by way of provisional  countervailing duties should  be definitively 

collected at  the  level  of  the net  countervailing duty  established 

(Article  1 of  this Regulation). 

HAS ADOPTED THIS REGULATION : 

Article 1 

The amounts collected  or  secured  by way of provisional  countervailing 

duty  pursuant  to Regulation  (EEC) No  1432/91  shall  be collected  at  the 

following  rates of  duty. 

(i) Polyester  staple  fibres 

- 

3.19X 

(TARIC additional  code: 8527) 

For  the company  hereunder,  the following  rate shall  apply: 

Sonmez Filament 

- 

0.58X 

(TARIC additional  code: 8526) 

(ii) 

Polyester  textured  filament  yarn -  1.98X 

(TARIC additional  code: 8532) 

- 19 -

For the companies hereunder, the following rates shall apply: 

SASA 

- 

1.31% 

(TARIC additional code: 8531) 

Sonmez Filament  - 

0.58X 

(TARIC additional code: 8530) 

Sonmez ASF 

- 

0.58X 

(TARIC additional code: 8529) 

Pôlyteks 

- 

1.48X 

(TARIC additional  code: 8528) 

(ill)  Polyester  filament yarn 

-  9.99X 

(TARIC additional  code: 8534) 

The following company  is exempted from this rate: 

Sonmez Filament 

(TARIC additional code: 8533) 

(iv) 

Partially Oriented Polyester Yarn (POY)  -  7.29X 

(TARIC additional code: 8536) 

The following company  is exempted from this rate: 

Sonmez ASF 

(TARIC additional code: 8535) 

Amounts provisionally collected or secured which are not covered by the 

above rates shall be released. 

-  20  -

Article  2 

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 a 11 Member  States. 

Done  at  Brussels, September  1991 

For  the  Council, 

ISSN 0254-1475 

COM(91) 334 final 

DOCUMENTS 

EN 

02 

Catalogue number : CB-CO-91-385-EN-C 

ISBN 92-77-75625-X 

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