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
Date: 2000-05-08
Institutions: Council of the European Union
Subjects: Australia, Indonesia, Taiwan, countervailing charge, import, plastics

12.5.2000

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Official Journal of the European Communities

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I

(Acts whose publication is obligatory)

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,

2. SUBSEQUENT PROCEDURE

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) (here-
inafter referred to as ‘the provisional duty Regulation’)
provisional countervailing duties were imposed on
imports into the Community 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 treat-
ment of non-cooperating companies and the establish-
ment 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.

(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.

(3)

(4)

(5)

(6)

(7)

(8)

(9)

Subsequent to the imposition of provisional counter-
vailing 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.

The Commission continued to seek and verify all infor-
mation deemed necessary for its definitive findings.

the essential

All parties were informed of
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 disclo-
sure.

The oral and written comments submitted by the inter-
ested parties were considered and, where deemed appro-
priate, taken into account for the definitive findings.

B. PRODUCT CONCERNED AND LIKE PRODUCT

The product concerned is synthetic staple fibres of poly-
esters, 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).

findings regarding the definition of

As no comments were received following disclosure of
provisional
the
product concerned and the like product, the conclusions
of recitals 10 to 12 of the provisional duty Regulation
are hereby confirmed.

C. SUBSIDIES

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.

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I. AUSTRALIA

2.2. Individual schemes

1. INTRODUCTION

(10)

Following the publication of the provisional duty Regu-
lation, 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 essential facts and considerations
on the basis of which provisional measures have been
imposed. Comments from the sole cooperating exporter
were received on 14 January 2000. The GOA requested
and was granted a hearing before the Commission
services on 4 February 2000.

(11)

(12)

(13)

2. ISSUES CONCERNING SUBSIDISATION

2.1. General submissions

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 Regula-
tion. Since the GOA did not receive the calculation
methodology or the method of imposition of provi-
sional measures, the disclosure documentation was defi-
cient. In particular, the methodology in relation to non-
recurring grants for capital expenditure/fixed assets was
not provided.

In response to this claim, it is considered that the disclo-
sure 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 consid-
erations on which provisional measures have been
imposed. An explanation of the methodology used for
the calculation of the subsidy amount was provided in
the
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.

concerning

document

disclosure

all

for

the

calculations

It is not considered to be required by Article 30 of the
basic Regulation to provide to a government the actual
company-specific
amount of
subsidy, in particular in the light of Article 29 of the
basic Regulation and the rules on treatment of confiden-
tial information contained therein. Such information was
provided to the cooperating exporter in the provisional
disclosure document. In addition, pursuant to Article 2
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.

(14)

(15)

(16)

(17)

(18)

2.2.1. Export market development grants (EMDG) scheme

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.

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
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.

the granting of

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.

The GOA claimed that the EMDG scheme is not contin-
gent upon export performance since the grant is calcu-
lated as a reimbursement 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.

Since the eligibility for grants under the scheme is in fact
tied to anticipated export earnings, the subsidy is consid-
ered 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.

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(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)

(21)

(22)

by

the Australian

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 subsec-
tions 3 and 4 of this Section, these Australian content
rules can be deviated from depending on the deter-
mination
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 Australia or outside, they must meet the Australian
content requirement, thus making the subsidy contin-
gent 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.

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 invest-
igation period,

it should not be countervailed.

that date by exceeding the

It is considered that even though the company did not
receive any recurring subsidies after the grant in ques-
tion due to the fact that it did not meet the eligibility
criteria after
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
is determined by purely
under
commercial developments. This does not justify a devia-
tion from the general principle that the amount of coun-
tervailable 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.

the EMDG scheme,

(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
conferred on the company by that date.

investigation period,

the

the benefit was

(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)

(27)

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-subsidi-
sation 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.

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 invest-
igation, 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
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.

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(28)

The GOA also argued that since the ICS will be termi-
nated on 30 June 2000, the continuation of the subsidy
in the calculation of the countervailing duty is not justi-
fied 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 investi-
gating 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.

C a l c u l a t i o n o f

t h e a m o u n t o f

t h e s u b s i d y

(30)

(31)

The GOA argued, that the amount of the subsidy was
not properly calculated since it is incorrect that only
exports are ‘cross-subsidised’. Therefore,
the correct
denominator should be total sales and not export sales.

for

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 Incen-
tives
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,
the provisional duty Regulation, could not be
of
the information contained therein and an
provided,

explanation on the intent, parameters and operation of
the programmes was provided to the Commission
services. Additionally, Article 28(3) of the basic Regula-
tion 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.

the refusal

(34) During the verification visit the GOA and the cooper-
ating exporter were made aware several times of the
provision contained in Article 28(1) of the basic Regula-
tion that
to provide access to the grant
contract and related supporting documents may lead to
findings being made on the basis of the facts available
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 informa-
tion given by the GOA and the exporting producer on
the two
the intent, parameters and operation of
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 Regu-
lation.

(35)

(36)

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.

Findings concerning conditions of the actual grant under
the IAP had to be made on the basis of the facts avail-
able 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 facilitate, encourage, promote
‘the development of export
and carry out,
capacity of
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.

industry throughout

inter alia,

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(37)

the State’. However,

The pertinent provision for the grant in question, i.e.
Section 13(3) of the Economic Development Act 1981
setting forth the objectives of the IAP does not specifi-
cally mention the development in export capacity, but
rather more general conditions such as ‘the balanced
the
economic development of
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
to Victoria,
offer
particularly in terms of exports’ and ‘investments should
be in trade-exposed, key industry sectors, with priority
being
competing
companies’.

significant net economic benefits

accorded to export or

import

(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.

tion 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 programmes 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
Community's guidelines
the
for
amount of subsidy in countervailing duty investigations.

the calculation of

(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.

C a l c u l a t i o n o f

t h e a m o u n t o f

t h e s u b s i d y

3. AMOUNT OF COUNTERVAILABLE SUBSIDIES

(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 acquisi-

(42)

The amount of countervailable export
in
accordance with the provisions of the basic regulation,
expressed ad valorem, for the investigated exporter is as
follows.

subsidies

EMDGS

IICP

ICS

IAP

Total

Leading Synthetics

0,03 %

1,92 %

3,48 %

0,64 %

6,07 %

(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 applic-
able de minimis margin for subsidisation of 1 %.

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 Indo-
nesian association of exporting producers were also
informed in this regard by the Commission.

(44)

(45)

(46)

II. INDONESIA

1. INTRODUCTION

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.

In accordance with established practice and policy
concerning countries falling under Annex VII to the
WTO Subsidies Agreement,
is considered that no
benefit is conferred by subsidies below 0,3 %. This rule
only applies to cooperating exporting producers who
receive individual treatment.

it

2. SAMPLING

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
proceeding and to provide basic information on their

initiation of

the

(a) Pre-selection of cooperating companies

(47)

in Indonesia came forward and
Seven companies
provided the requested information within the time
limit. These companies were initially considered as coop-
erating 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 counter-
vailing 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.

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(b) Selection of the sample

(50)

Initially, three Indonesian companies were chosen to
constitute the sample in consultation with the Indone-
sian association of exporting producers. The Indonesian
association of exporting producers proposed the replace-
ment of two initially chosen companies by two others
which, however, could not be considered more repres-
entative
chosen. All parties
initially
concerned were informed accordingly.

than those

(51) Questionnaires were sent for completion to all three
companies initially selected for the sampling. Subse-
quently, 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 speci-
fying precisely the nature of the information needed and
were granted extended deadlines to submit this informa-
two companies were
these
tion.
informed in detail of the reasons why they were no
longer considered to be cooperating with the invest-
igation and that the result of the investigation may be
less favourable to them than if they had cooperated.

In consequence,

(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
questionnaire
responses, with a view to being granted individual exam-
ination, were added to the sample. The Indonesian asso-
companies
ciation
concerned and the Indonesian authorities were informed
accordingly and raised no objection.

and meaningful

producers,

exporting

complete

the

of

(53)

The three companies which finally constituted the
sample and which fully cooperated with the invest-
igation 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
Penanaman 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 supervision 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 compila-

tion 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
full
production.

two years'

(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)

(59)

(60)

(61)

(62)

In addition, PMA companies as well as other companies
are subject to sectoral policies applied by the corre-
sponding Government authorities such as those stipu-
lated in Law No 5/1984 on industry, Law No 5/1967 on
forestry, and Law No 12/1992 on agriculture.

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

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.

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 obli-
gation to enter into a joint venture with an Indonesian
company when investing in certain sectors.

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
Investments in 12 other sectors are only
industries.
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
to the
sectoral/industrial policies applied by the corresponding
ministries.

the companies are subject

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(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,
land title and working
permits.

such as building,

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.

(71)

(65)

(66)

(67)

(c) Conclusion on countervailability

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.

The schemes do not qualify as drawback schemes in
accordance with the provisions of Annexes I to III to the
basic Regulation, since capital goods are not consumed
in the production process, and there is no obligation to
export the finished product containing the raw mate-
rials.

(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. Additionally, 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 condi-
tions of Article 3(2)(b) of the basic Regulation, which
the granting authority must establish
stipulates that
favour
objective criteria which are neutral, do not
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 Regula-
tion, 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,
the
BKPM schemes are, alternatively, also considered specific
under Article 3(2)(c) of the basic Regulation and there-
fore countervailable.

is concluded that

it

(d) Calculation of the subsidy amount

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, exemp-
tion and drawback (Bapeksta) can grant, upon applica-
tion, 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.

(a) Eligibility

(76)

(77)

The Bapeksta schemes are available to exporting produ-
cers in Indonesia upon application to Bapeksta.

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 produc-
tion 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.

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(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.

fore, examine whether there was in fact an excess draw-
back of
import charges on inputs consumed in the
production of the exported product.

(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, accompanied by import and export
documents.

(87)

The Bapeksta schemes constitute a subsidy as the finan-
cial contribution by the GOI in the form of duty exemp-
tion or restitution confers a direct benefit upon the
recipient. It is a subsidy contingent in law upon export
performance (it is an export 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 investigation 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)

Indorama Synthetics TbK availed itself of

PT.
schemes, and obtained a benefit of 1,4 %.

these

(83)

Bapeksta is entitled to verify these documents by
carrying out controls at the premises of the company
concerned.

4. SUBSIDY PROGRAMMES NOT USED BY COOPERATING

EXPORTING PRODUCERS

(c) Conclusion on countervailability

(84)

The GOI claimed that the Bapeksta schemes are normal
duty-drawback schemes in line with international obliga-
tions. 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.

is determined that

(86) Annex II(II)(5) and Annex III(II)(3) to the basic Regula-
tion provide that, where it
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 examination. The Commission did not, there-

(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
Indonesia (No
the Republic of
291/KMK.05/1997, No 547/KMK.01/1997, and No
292/KMK.01/1998).

5. AMOUNT OF COUNTERVAILABLE SUBSIDIES

(91)

that

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,
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 estab-
lished as follows.

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L 113/9

BKPM schemes

BAPEKSTA schemes

Total

PT. Indorama Synthetics TbK

PT. Panasia Indosyntec TbK

PT. Susila Indah Synthetic Fiber Industries

0,0 %

0,0 %

0,0 %

1,41 %

0,0 %

0,0 %

1,41 %

0,0 %

0,0 %

(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 countervail-
able 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.

PT. GT Petrochem Industries TbK

PT. Teijin Indonesia Fiber Corporation

0,0 %

0,0 %

0,45 %

0,45 %

0,45 %

0,45 %

BKPM schemes

BAPEKSTA schemes

Total

(93)

(94)

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 %.

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-cooperating exporting producers. It is considered that the absence of coopera-
tion 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 invest-
igation, and in order to avoid granting a bonus for non-cooperation, the amount of countervailable
subsidies for these two companies is established as follows.

PT. Global Fiberindo

PT. Polysindo Eka Perkassa

Any other company

BKPM schemes
(domestic subsidy)

BAPEKSTA schemes
(export subsidy)

5 %

5 %

5 %

5 %

5 %

5 %

Total

10 %

10 %

10 %

(96)

The weighted average countrywide subsidy margin for
all exporting producers investigated (including the two
non-cooperating companies), which represent virtually
the totality of exports of the product concerned to the
Community originating in Indonesia is above the applic-
able de minimis margin for this country of 3 %.

tions 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.

III. TAIWAN

1. INTRODUCTION

2. GENERAL SUBMISSIONS

2.1. Specificity of the schemes concerned

(97)

Following publication of the provisional duty Regula-
tion, 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 considera-

(98)

exporting producers

The
submitted some general
comments concerning the interpretation of the concept
of specificity. The determination of whether an investi-
gated subsidy is specific has been made in accordance
with the provisions of the basic Regulation, notably

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Article 3 thereof. The comments from the exporting
producers have been taken into account when deter-
mining whether or not
each investigated scheme
involves specific subsidies, pursuant to Article 3 of the
basic Regulation, which are 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 provi-
sional Regulation.

(99)

(100)

(101)

2.2. Calculation of prevailing commercial

interest

rate

It had been provisionally decided to apply a general
interest rate of 9,03 % for the purpose of this invest-
igation. 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.

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.

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 invest-
igation 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 methodo-
logy of the calculation of the benchmark interest rate as
explained above is confirmed.

2.3. Application of the interest rate in the calcula-

tion of the amount of the subsidy

sion's Guidelines for the calculation of the amount of
subsidy in countervailing duty investigations.

(104) Pursuant to Article 5 of the basic Regulation, the calcu-
lation 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 Govern-
ment. 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 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,
subsidy amount
for allocation of
the denominator
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).

(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 Commis-

(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 mate-
rials. In this particular case, benefits were only identified
for
the fibre division and consequently the corre-
sponding 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.

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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.

the subsidy is doubled for

(111) Although the programme provides for a tax credit for
imported as well as for domestically produced equip-
the purchase of
ment,
domestic equipment. These two tax credit rates are
considered separate programmes concerning domesti-
cally 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 equip-
ment 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. Addition-
ally, the criteria are not economic in nature or hori-
zontal in application. Hence, the subsidy is specific in
the meaning of Article 3(2)(a) of the basic Regulation.

C a l c u l a t i o n o f

t h e s u b s i d y a m o u n t

(113) As regards the calculation of the amount of countervail-
able subsidies, the exporting producers argued that 15 %
of the 20 % 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
domestically
separate

programmes

concerning

purchased equipment and imported equipment respec-
tively. In the absence of the 20 % tax credit for domesti-
cally produced equipment, a company would not have
received a tax credit. The 10 % credit rate only applies to
imported machinery;
is not a general credit rate.
Therefore, the Commission concluded that the amount
of the subsidy is the total revenue foregone by the GOT.

it

(114) The benefit to the exporting producers has been calcu-
lated 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
it should be
calculated by spreading the subsidy over the normal
depreciation period of
in the industry
concerned.

fixed assets,

the assets

(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
investigation period and obtained subsidies of 0,42 %
and 0,40 % respectively.

3.2. Tax

credit
enterprises

for

investment

in important

(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 govern-
ment revenue results in a benefit for the investing stock-
holders 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.

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(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.

C a l c u l a t i o n o f

t h e a m o u n t o f

t h e s u b s i d y

(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
interest rate from 9,03 % to 8,52 % as
commercial
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

(121) As regards these claims, the Commission found that the
access to this programme is explicitly limited to compa-
nies which invest in certain enterprises, since not all
investments in stocks are eligible for tax credits. Only
i.e.
investments in a limited number of enterprises,
important
investment
enterprises, will qualify for a tax credit.

technology-based or important

(127) As already established in the provisional duty Regulation
(recitals 67 to 72), these tax credits have been consid-
ered 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.

(122)

In addition, although the Commission agrees that the
definition of the eligible enterprises is clear and objec-
tive, eligibility is not neutral, as required by Article
3(2)(b) of
limits the
the basic Regulation, since it
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 manufac-
turing industry and technical-service industry limits the
tax credit to 11 specific types of investments. Conse-
the access to this programme is dependent
quently,
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)

the product concerned. Benefits under

It is also argued that that the benefit of the tax credit
does not accrue to a company as a result of its produc-
tion of
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 bene-
fits 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 consid-
ered to benefit all sales, including sales of PSF. Hence,
the above claim made by the exporting producers must
be rejected.

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 provi-
sion 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’.

C a l c u l a t i o n o f

t h e s u b s i d y a m o u n t

(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 conservation incentives

(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.

(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’).

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(133) The GOT and the exporting producers claimed that
these loans are available to almost all Taiwanese compa-
nies and therefore they are not specific and are accord-
ingly not countervailable. Concretely, it is claimed that
eligibility is not limited to certain enterprises; that eligi-
bility 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 posi-
tion 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, expli-
citly 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 Regula-
tion.

(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 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.

represents

subsidy

the

(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’.

C a l c u l a t i o n o f

t h e s u b s i d y a m o u n t

(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 compa-
nies 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 Regu-
lation no such comparable loan was identified for the
exporting producers concerned. Therefore, the Commis-
sion confirms the application of the benchmark interest
rate as calculated for Taiwan and explained above.

(142)

arose

even where

In addition, one exporting producer first claimed that
the Commission included in its calculation benefits
company
which allegedly
concerned did not pay interest during the whole invest-
igation 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.

the

(143) The company specifically refers to three loans for which
the information provided in the reply to the question-
naire, and verified during the on-the-spot visit, in the
sense that no interest payments had been made during
these loans, was not
the investigation period for
this
contested until after
company in response to the disclosure of the provisional
findings.

submission of

first

the

(137)

It was also argued that with respect to loans at preferen-
tial interest rates, the countervailable subsidy only would
represent the difference in interest rates between the
government's practice and commercial practice.

(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 calcu-
lated the alleged subsidy amounts as explained in the
provisional Regulation.

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(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)

(147)

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 substantiated
by objective and/or verifiable evidence. The Commission
therefore confirms its original calculation methodology
with regard to those loans.

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 normally payable. The Commission therefore
confirms
its original calculation methodology with
regard to these loans.

(148) The benefits to the exporting producers have been calcu-
lated 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 %.

(153)

(154)

subsidy and consequently of the countervailability of the
alleged subsidy.

it was claimed that

In particular,
the access to this
import duty exemption scheme is available to all Taiwa-
nese 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.

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 manufac-
turers or technical service industries who will use this
scheme to import machinery, equipment and instru-
ments for prevention of air pollution, water contamina-
tion, 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 Taiwa-
nese 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.

3.7. Import duty exemption: purchases of new
equipment and anti-pollution equipment

(155) The above claims are rejected and the provisional find-
ings, as described in recital 97 of the provisional duty
Regulation, confirmed.

(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 commodi-
ties 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
the Commission in terms of

the specificity of

C a l c u l a t i o n o f

t h e s u b s i d y a m o u n t

(156) The benefits to the exporting producers have been calcu-
lated 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 classi-
fication of
the
Republic of China (hereinafter referred to as ‘Customs
Code’).

import and export commodities of

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(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 Commis-
sion with regard to this programme until the verification
visits.

as

duty

alleged

complaint,

(160) Both the complaint and the notice of initiation referred
to ‘import
subsidy
exemptions’
programmes benefiting the product concerned. There-
fore, it is considered that the complaint contained suffi-
cient prima facie evidence to initiate an investigation and
that both the notice of initiation and the questionnaires
and related documents sent by the Commission were
sufficiently clear in requesting information on exemp-
tion of import duty, including on raw materials. Addi-
tionally, when lodging a
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 complai-
nant also made allegations concerning import duty
exemptions for purchases of new equipment and anti-
pollution equipment. In view of the nature of the subsi-
dies and in particular the fact that import duty exemp-
such equipment and raw materials were
tions
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 coun-
tervailing action if appropriate.

for

(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.

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 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 incor-
porated 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-coun-
tervailable 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 prob-
ably 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 consti-
tutes 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 exemp-
tions granted in accordance with Annexes I to III are not
to deemed to be subsidies. Therefore, the regular defini-
tion 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.

(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 countervailability of the alleged subsidy.

(167) The Commission therefore confirms its provisional find-
ings as described in recital 104 of the provisional duty
Regulation.

(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.

C a l c u l a t i o n o f

t h e a m o u n t o f

t h e s u b s i d y

(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

(168) The benefits to the exporting producers have been calcu-
lated 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 %.

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3.9. Matching funds and assistance funds

C a l c u l a t i o n o f

t h e a m o u n t o f

t h e s u b s i d y

(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 substan-
tiated 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.

(172) Two companies availed themselves of this scheme. One
company did not obtain benefits, the other received a
benefit of 0,01 %.

(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’.

(173) The following domestic subsidy rates for the cooperating

companies were established:

4. AMOUNT OF COUNTERVAILABLE SUBSIDIES

Nan Ya Plastics Corp.

Far Eastern Textile Ltd

Shinkong Synthetic Fibres
Corp.

Tuntex Distinct Corp.

Tax
credits

1,14

0,40

0

0

Loans

0,06

0,31

0,04

0,20

Import duty
exemptions

Matching
funds

Total
subsidy

0,32

0,36

0,68

0,34

0,00

0

0,01

0

1,52

1,08

0,73

0,54

(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 %.

1. DEFINITION OF THE COMMUNITY INDUSTRY

D. INJURY

(175) Since no comments were received regarding the definition of the Community industry, the conclu-

sions 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;

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(c) the analysis of the conditions of competition on the Community market between imported PSF
and the Community product and the conditions of competition between imported PSF indicated
that:

— imported PSF from all exporting countries and Community-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.

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 cumu-

lating the imports from Australia, Taiwan and Indonesia.

(b) Volume 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:

Imports

1996

1997

1998

IP

(in tonnes)

Australia

Taiwan

Indonesia

Total countries

Source: Eurostat

Index

Index

Index

Index

62

100

20 213

100

4 696

100

24 971

100

1 248

2 007

26 811

133

12 238

260

40 297

161

11 254

18 093

35 524

176

25 276

538

72 054

288

11 799

18 969

34 878

173

22 871

487

69 548

278

(182) The above table shows that the volume of imports from the countries concerned increased signifi-
cantly, 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

All countries concerned

1996

5,5 %

100

1997

7,8 %

142

1998

IP

12,3 %

224

12,0 %

218

Index

(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

All countries concerned

Index: 1996 = 100

100

94

82

IP

77

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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.

(190)

(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 deduc-
tion 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 undercutting calculations,
the undercutting margins are hereby confirmed.

(191)

(192)

(187) The same methodology was applied with regard to Indo-
nesia. Based on the information provided by the cooper-
ating exporting producers and on the best facts available
for
producers
in Indonesia, the result of the comparison showed a
weighted-average undercutting margin of 33,9 % for that
country.

non-cooperating

exporting

the

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 prod-
ucts 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 circum-
stances, 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.

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 strength-
ened by the subsequent findings of the investigation,
which
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 showed that several PSF production sites were
closed down during the period considered.

the Community

confirmed

that

It should also be noted that the switch from the produc-
tion 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
link
more specifically for the analysis of
between the subsidised import and the injury suffered by
the Community industry discussed below.

the causal

4. ECONOMIC SITUATION OF THE COMMUNITY INDUSTRY

(a) Production, capacity and capacity utilisation

(188) The GOA contested the method used by the Commis-
sion 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 produc-
tion 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
firstly
because this reduction did not allow the Community
industry to participate in the considerable growth of the
market
(+27 %) during the period considered; and
secondly, because the reduction in capacity was moti-
vated by the fact that other products were more profit-
able than PSF.

injury:

(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. Conse-
quently, the GOA claimed that no proper assessment
could be made as to whether the injury suffered by the
Community industry was material.

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(195) The above statement rightly suggests that an improve-
ment 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 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.

the assessment as

to whether

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
the economic indicators pertaining to that
most of
industry: market
sales
investments, employment
volume, sales prices, stocks,
and significant price undercutting by subsidised imports
from the countries concerned.

share, production capacity,

(197) As far as profitability is concerned, the present invest-
igation 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
it was emphasised
from 1998 onwards. Nevertheless,
that
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.

this improvement

(198) Notwithstanding this,

it

should be noted that

the
Commission indicated in recital 179 of the provisional
duty Regulation that a margin of 10 % should be added
to the full cost of production in order to obtain the
non-injurious price of the Community industry. Conse-
quently, 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 elimi-
nation 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
the market share during the period
development of
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 exclu-
sively based on the data pertaining to the companies
constituting the Community industry. The suggestion
that
the Community industry
includes information of companies which disappeared or
withdrew from the market is therefore unfounded.

the market share of

(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. Accord-
ingly, the GOA suggested that injury, if any, was caused
by large imports from other third countries.

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(205) The GOT similarly argued that

the market share of
approximately 6 % held by Taiwanese exports,
in
conjunction with the low price-undercutting level estab-
lished for these imports, could not objectively have had
an impact on the situation of the Community industry
share of over 50 % in the
which has a market
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 addi-
tion,
it was found that all conditions required for a
cumulated analysis were met. In these circumstances,
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, there-
fore, 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 contra-
dict the provisional finding that the Community industry
suffered material injury as a result of low-priced subsi-
dised imports. Accordingly, the conclusion that subsi-
dised imports, taken in isolation, had caused material
injury to the Community industry is hereby confirmed.

2. CURRENCY FLUCTUATIONS

3. CONCLUSION

(212) Given that no new other arguments were received
the injury suffered by the
regarding the cause of
the conclusion that subsidised
Community industry,
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 INDUSTRY

(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,
submitted their
a number of users and importers
comments in writing. Furthermore, one users' associa-
tion reacted to the provisional duty Regulation and
asked for and was granted a hearing before the Commis-
sion.

(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.

(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.

(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 assess-
ment of the impact of the measures on the activities of
users and importers was determined according to the
information available.

(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)

it

that

should be pointed out

In any event,
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.

(217) The submissions made by the interested parties were
examined and it was concluded that their main argu-
ment 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.

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Official Journal of the European Communities

L 113/21

(218)

if no measures are taken to correct

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 consid-
the
ered that,
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 disap-
pear 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 imported PSF.

(219)

In any event, the information available on the cost struc-
ture 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
total cost of production of downstream

users'
products,

— the average countervailing duty is about 3 % for the

countries concerned,

(220) Consequently, the conclusion of recital 172 of the provi-
sional 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 deter-
mination of the Community interest, are not considered
to be such as to reverse the conclusion that no compel-
ling reasons exist against the imposition of counter-
vailing measures. The provisional findings are therefore
confirmed.

G. DEFINITIVE DUTIES

(222)

In view of the conclusions reached regarding subsidies,
injury, causation and Community interest, it is consid-
ered 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. INJURY ELIMINATION LEVEL

(223) As explained in recital 179 of the provisional duty Regu-
lation, 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.

— the share of subsidised imports is 12 % of

total

consumption of PSF.

2. FORM AND LEVEL OF THE DUTY

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.

(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:

Company

Leading Synthetics

Other companies

Export
subsidy
margin

6,0 %

6,0 %

Total subsidy
margin

6,0 %

6,0 %

Proposed
countervailing
duty rate

6,0 %

6,0 %

(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-cooperation.
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 %.

L 113/22

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Official Journal of the European Communities

12.5.2000

Company

Export subsidy
margin

Total subsidy
margin

PT. Indorama Synthetics TbK

PT. Panasia Indosyntec TbK

PT. Susila Indah Synthetic Fiber Industries

PT. GT Petrochem Industries TbK

PT. Teijin Indonesia Fiber Corporation

Other companies

1,4 %

0 %

0 %

0,4 %

0,4 %

5 %

1,4 %

0 %

0 %

0,4 %

0,4 %

10 %

Proposed
countervailing
duty rate

0 %

0 %

0 %

0 %

0 %

10 %

(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-
dumping measures. Accordingly, this would lead to the following countervailing duty rates for the
cooperating exporting producers in Taiwan:

Company

Export subsidy
margin

Total subsidy
margin

Proposed
countervailing duty rate

Nan Ya Plastics Corp.

Far Eastern Textile Ltd

Shinkong Synthetic Fibres Corp.

Tuntex Distinct Corp.

Other companies

0 %

0 %

0 %

0 %

0 %

1,5 %

1,0 %

0 %

0 %

1,5 %

1,5 %

1,0 %

0 %

0 %

1,5 %

(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 specifically
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.

(1) European Commission, Directorate-General for Trade, Directorate C, DM 24 — 8/38, Rue de la Loi/Wetstraat 200,

B-1049 Brussels.

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L 113/23

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,

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 origin-
ating in Australia, Indonesia and Taiwan.

The duty rate applicable to the net free-at-Community-frontier, before duty, for products produced by

2.
the companies indicated shall be as follows for products originating in:

(1) Australia

Company

Rate of duty
(%)

TARIC
additional code

Leading Synthetics Pty Ltd, Melbourne, Victoria

All other Australian companies

6,0

6,0

A059

A999

(2) Indonesia

Company

Rate of duty
(%)

TARIC
additional code

PT. Indorama Synthetics TbK
Graha Irama, 17th floor
Jl. H. R. Rasuna Said Blok X-1 Kav. 1-2
PO Box 3375
Jakarta 12950

PT. Panasia Indosyntec TbK
Jl. Garuda 153/74
Bandung 40184

PT. Susilia Indah Synthetic Fiber Industries
Jl. Kh. Zainul Arifin Kompleks
Ketapang Indah
Blok B 1 n. 23
Jakarta 11140

PT. GT Petrochem Industries TbK
Exim Melati Building, 9th floor
Jl. M.H. Thamrin Kav. 8-9
Jakarta 10230

PT. Teijin Indonesia Fiber Corporation TbK
5th floor Mid Plaza 1
Jl. Jend. Sudiman Kav. 10-11
Jakarta 10220

0

0

0

0

0

A051

A052

A054

A053

A055

All other companies

10

A999

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(3) Taiwan

Company

Rate of duty
(%)

TARIC additional code

Nan Ya Plastics Corp.,
201 Tung Kwa N.Road,
Taipei

Far Eastern Textile Ltd,
33rd floor, no 207 Tun-Hwa South Road, Sec. 2,
Taipei

Shinkong Synthetic Fibres Corp.,
7, 8th floor, 123 Sec. 2, Nanking E. Road,
Taipei

Tuntex Distinct Corp.,
15th floor, no 376, Sec. 4, Jen Ai road,
Taipei

1,5

1,0

0

0

8193

8192

8194

A063

All other companies

1,5

8195

3.

Unless otherwise specified, the provisions in force concerning customs duties shall apply.

Article 2

1.
The amounts secured by way of the provisional countervailing duty on imports originating in
Australia and Taiwan 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.

The provisions referred to in Article 1(3) shall also apply to the definitive collection of the amounts

2.
secured by way of the provisional countervailing duties.

This Regulation shall enter into force on the day following its publication in the Official Journal of the
European Communities.

Article 3

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels, 8 May 2000.

For the Council

The President

J. PINA MOURA