Proposal for a Council Regulation imposing a definitive anti-dumping duty on imports of ethanolamines originating in the United States of America
Date: 2000-07-14
Institutions: European Commission
Subjects: United States, anti-dumping duty, import, organic chemical

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 14.07.2000
COM(2000) 417 final

Proposal for a

COUNCIL REGULATION

imposing a definitive anti-dumping duty on imports of ethanolamines originating in the
United States of America

(presented by the Commission)

EXPLANATORY MEMORANDUM

Following a notice of impending expiry and a request by the “Conseil européen des
fédérations de l’industrie chimique” (CEFIC) to review the measures in force, in February
1999 the Commission opened an anti-dumping investigation in respect of imports of
ethanolamines originating in the United States of America. The investigation was a
combination of an "expiry" review (Art. 11(2) of the -basic Regulation) and an "interim"
review (Art. 11(3) of the basic Regulation), the latter having been initiated to examine
whether the form and level of the measures should be modified.

The investigation has shown that substantial dumping by US exporting producers still existed
and that this situation was not likely to change should the measures in force be allowed to
lapse. Accordingly,
the Commission concluded that dumping would continue for the
foreseeable future. It was also found that exports continued to be made in significant
quantities, that the dumping margins were lower than in the previous investigation and that
these changes were likely to prove lasting. On this basis, the Commission concluded that a
revision of the dumping calculation was warranted.

The investigation has shown that the Community industry has regained some market share
(from 50% to 56%) since the measures were imposed showing that these measures were to a
certain extent effective in restoring the situation of the Community industry. However, the
situation of the Community industry was still found to be fragile as reflected by the losses
incurred.

This situation stemmed from the fact that, though the minimum import prices were apparently
respected,
the measures were not passed on by the US related importers to the first
independent buyers on the Community market. As a direct consequence of this absorption, the
measures could not achieve their aim of fully removing injury, as reflected in the fact that
Community industry’s prices were below break even and losses were incurred. Thus, although
the Community industry’s production capacity (38%), sales volume (24%) and market share
(6 percentage points) improved considerably during the period from 1995 to 1998, a (10%)
drop in sales prices caused profitability to fall from 3,9% to –1,4%. Based on the foregoing,
the Commission services conclude that the Community industry was overall still in an
economically fragile situation.

In terms of recurrence of injury, the investigation indicated that some exporting producers
increased their production capacities in third countries by setting up new production plants.
This is likely to allow a decrease in US exports to these countries and to increase the
production capacity available in the US which could be re-directed to the Community.
Moreover, it was observed that there is a growing gap between capacity and consumption in
the US. With increased investments capacity is rising chile consumption is falling: a situation
which points to the need for additional outlets to be found for the product concerned.

In conclusion, the likelihood of the continuation or recurrence of injurious dumping was
considered to be very high and maintaining the measures would therefore be the interest of
the Community industry by limiting the downward pressure on sales prices. Users of
ethanolamines, which came forward in the investigation, represented a minor share of
Community consumption and were not in a position to substantiate their allegations that
measures were not in the Community interest.

The Commission concluded that anti-dumping measures should be maintained but not in their
current form. Given that most of the US imports are made via related sales companies, it was

2

considered that measures should be imposed in the form of a specific fixed duty which cannot
be absorbed. The attached draft Council Regulation contains detailed information regarding
the data and motivation on the basis of which the proposed measures have been established.

The interested parties were informed of the essential facts and considerations on the basis of
which the Commission proposes to the Council to maintain measures in an amended form,
and were given the opportunity to comment. These comments were taken into account where
appropriate.

In the Anti-Dumping Committee of 23 March 2000 twelve Member States were in favour of
the proposal, one abstained and two did not express an opinion. It is hereby proposed that the
Council adopt the attached proposal for Regulation.

3

Proposal for a

COUNCIL REGULATION

imposing a definitive anti-dumping duty on imports of ethanolamines originating in the
United States of America

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community,

Having regard to Council Regulation (EC) No 384/96 of 22 December 1995 on protection
against dumped imports from countries not members of the European Community 1, and in
particular Articles 11(2) and 11(3) thereof,

Having regard to the proposal submitted by the Commission after having consulted the
Advisory Committee,

Whereas:

A. PROCEDURE

1. Measures in force

1.

In February 1994, the Council imposed definitive anti-dumping duties on imports of
ethanolamines originating in the United States (Regulation (EC) No 229/942). The
duties took the form of minimum-price-based variable duties for the three types of
ethanolamines,
and
triethanolamine (TEA).

i.e. monoethanolamine

diethanolamine

(MEA),

(DEA)

2. Request for a review

2.

3.

1

2

3

4

Following the publication on 03 February 19993 of a notice of impending expiry of
the anti-dumping measures in force with regard to imports of ethanolamines
originating in the USA, the Commission received a request to review these measures
pursuant to Article 11(2) and 11(3) of Council Regulation (EC) No 384/964 (the
“Basic Regulation”), i.e. a request for an expiry and interim review.

The request was lodged on 30 October 1998 by the “Conseil européen des
fédérations de l’industrie chimique” (CEFIC) on behalf of Community producers
whose collective output constituted a major proportion of the total Community
production of ethanolamines.

OJ L 56, 6.3.96, p.1. Regulation as last amended by Regulation (EC) No 905/98 (OJ No L 128, 30.4.98,
p.18).
OJ L 28, 2.2.94, p.40.
OJ C 231, 23.7.98, p.3.
OJ L 56, 6.3.96, p.1.

4

4.

The CEFIC argued that expiry of the measures would be likely to result
in a
continuation or recurrence of increased dumping and injury to the Community
industry and that there were reasons to review the measures because they lacked
effectiveness. Having determined, after consulting the Advisory Committee, that the
evidence was sufficient, the Commission initiated an investigation5 pursuant
to
Articles 11(2) and 11(3) of the Basic Regulation. The investigation therefore covered
not only the question of what would happen if the measures were allowed to lapse
(cf. Article 11(2)), but also whether a modification of the existing anti-dumping
measures (minimum-price-based variable duties) was warranted (cf. Article 11(3)).

3. Investigation

5.

6.

7.

8.

The Commission officially advised the Community producers supporting the request
for review (the “applicant Community producers”), the exporting producers and their
related importers, as well as the users known to be concerned, and gave them the
opportunity to make their views known in writing and/or to request a hearing.

The Commission sent questionnaires to the parties known to be concerned and
received replies from the four applicant Community producers, four US exporting
producers and five of their related importers. Questionnaires were also sent to a large
number of users of the product; two of their replies were considered complete.

One US exporting producer declared its intention to co-operate in the investigation,
although it had not exported to the Community during the investigation period (IP).
The interest of this producer in the investigation stemmed from its involvement in the
original investigation.

The Commission sought and verified all information deemed necessary for the
determination of the likely continuation and recurrence of dumping and injury and
the analysis of the Community interest. Verification visits were carried out at the
premises of the following companies:

(a) exporting producers

Dow Chemical Company, Midland, Michigan (USA)
Huntsman Chemical Company, Houston, Texas (USA)
Union Carbide Corporation, Danbury, Connecticut (USA)

(b) importers in the Community related to the exporting producers

Huntsman Co. Belgium CVBA, Brussels, Belgium
Union Carbide Benelux, Antwerp, Belgium
Union Carbide Europe SA, Geneva, Switzerland

(c) applicant Community producers

BASF AG, Ludwigshafen, Germany
BP Chemicals Ltd, London, UK and Lavéra, France

(d) Community users

Krems Chemie AG, Krems a.d. Donau, Austria
Synthesia Española SA, Barcelona, Spain

9.

The investigation of continuation and recurrence of dumping covered the period from
1 January to 31 December 1998 (the “investigation period” or “IP”). The

5

OJ C 27, 2.2.99, p.3.

5

examination of continuation and recurrence of injury covered the period from
1 January 1995 to the end of the IP (the “IIP”).

B. PRODUCT CONCERNED AND LIKE PRODUCT

1. Product concerned

10.

types of ethanolamine: mono-

The product concerned here is the same as that covered by the previous investigation.
It is recalled that ethanolamines are obtained by making ethylene oxide react with
ammonia. As a result of this synthesis, three competing reactions occur, resulting in
three different
(DEA) and tri-
ethanolamines (TEA). The proportions of the three types in the total output are
determined by the production installation design, but can, to a certain extent, be
controlled by the choice of the ammonia/ethylene oxide ratio. The product concerned
is used as an intermediate for surfactants (used in detergents and personal care
products), fertilisers, crop protection agents, corrosion inhibitors, lubrication oils,
photographic chemicals, cosmetics and polyurethane, and as a gas scrubber
absorption aid or additive for the cement, metal-works and paper industries. Because
of the combined production process (see above), when DEA is produced, the other
types of ethanolamine (MEA and TEA) are produced as well and in larger quantities.

(MEA), di-

2. Like product

11.

12.

13.

Production installations of the Community industry will typically produce 30-33%
DEA. Either MEA or TEA can account for as much as 54% of total ethanolamines
production. Given the combined production process, the claim of one exporting
producer that the different types of ethanolamine should be treated separately with
respect to the injury analysis cannot be justified.

Since the imposition of the anti-dumping measures under review, the market has
been characterised by strong growth in the demand for DEA, especially in the USA.
This has been triggered by the use of DEA in the production of glyphosate
herbicides, which are suited to crops genetically modified to be resistant to such
herbicides.

The product concerned imported from the country under investigation is identical in
terms of physical and technical characteristics to the Community-produced product.
There is no difference in use between the Community-produced products and the
imported products. It has further been found that the product concerned imported
from the country under investigation is identical to that sold on its domestic market.
Therefore, all these products must be considered as one product.

C. LIKELIHOOD OF CONTINUATION OF DUMPING

1. Preliminary remarks

14.

15.

Following the allegation made in the complaint that circumstances had changed since
the original investigation, the level of dumping for the IP was examined.

Of the four US exporting producers who replied to the questionnaire, two had
significant exports to the Community during the IP, while another two declared no or
only very few exports.

6

16.

For the exporting producer which had a small quantity of exports it was decided in
the absence of any other information that a dumping margin could reasonably be
based on this small volume of exports.

2. Normal value

17.

18.

Normal value was established for each type of the product concerned, based on the
price of all actual domestic sales in the USA (cf. Article 2(1) of the Basic
Regulation: “prices paid or payable, in the ordinary course of trade, by independent
customers in the exporting country”). For product types which were not sold in
representative quantities or not in the ordinary course of trade on the domestic
market, the normal value was calculated in accordance with Article 2(3) of the Basic
Regulation.

With regard to the three US exporting producers, the domestic sales of the product
under consideration were found,
in accordance with Article 2(2) of the Basic
Regulation, to represent more than 5% of the sales volume of exports of the product
from the USA to the Community. It was also established that for the same three
exporting producers, sufficient domestic sales of the product had been made in the
ordinary course of trade in accordance with Article 2(4) of the Basic Regulation to
permit the prices of such sales to be used to determine normal value.

3. Export price

19.

In all cases, the imports of the product concerned were made by companies which are
related to the US exporting producers. It was therefore considered that the prices of
the sales from the producing companies to the importing companies were unreliable.
For that reason, and in accordance with the provisions of Article 2(9) of the Basic
Regulation, the export prices were constructed on the basis of the price at which the
imported product was first
resold to independent buyers in the Community.
Allowance was made for all costs incurred between importation and resale, including
commissions and a profit margin of 5%, which was considered reasonable on the
basis of information from interested parties on imports of the product concerned.

4. Comparison

20.

21.

The normal value was compared with the export price on a transaction-by-transaction
basis at ex-works level and at the same level of trade. For the purpose of ensuring a
fair comparison between normal value and export price, differences in factors which
were claimed and demonstrated to affect comparability (cf. Article 2(10) of the Basic
Regulation) were taken into account. Thus, adjustments were made for inland and
ocean freight, insurance, handling,
loading and ancillary costs, credit costs and
commissions.

A comparison of normal values with export prices was made for all types covered by
the present investigation. For the cooperating exporting producers, this comparison
showed the existence of a weighted average dumping margin, expressed as a
percentage of CIF value, of 33% for Dow Chemical, 38,2% for Union Carbide and
40,1% for Huntsman.

7

5. Lasting nature of changed circumstances

22.

The Commission examined whether the changes in dumping margins were likely to
prove lasting. It was found that the lower dumping margins were largely due to
increased export prices, which have applied for at least two years. For this reason,
and as the export quantities involved were viewed as representative, the Commission
concludes that the findings represent a lasting change in the circumstances of these
imports from the USA. No evidence was submitted which contradicted these
findings.

6. Conclusion

23.

24.

The expiry review initiated under Article 11(2) of the Basic Regulation indicated
that, if measures were removed, there would be a likelihood of continuation of
dumping, mainly on the grounds that substantial dumping was found to exist during
the IP and that it was reasonable to conclude that such dumping would continue.

The Article 11(3) interim review,
to revise
measures in order to take into due account the current market conditions, concluded
that the circumstances which led to the existing measures have changed significantly
and that such changes are to be considered sufficiently lasting to warrant a downward
revision of the dumping margins established during the original investigation.

initiated on the basis of a request

D. DEFINITION OF THE COMMUNITY INDUSTRY

1. Total Community production

25.

The complaint was lodged on behalf of four out of the five EU ethanolamine
manufacturers. One company, Union Carbide Ltd. (UK), did not participate in the
investigation, nor did it support the complaint. It should be noted that this company
is related to the US producer Union Carbide Corp. USA. An assessment was made,
therefore, as to whether this company should be excluded from the definition of
Community production in accordance with Article 4(1) of the Basic Regulation. It
was found that the manufacturer concerned itself imported the dumped product in
significant quantities. As there could therefore be no guarantee that the economic
situation of this manufacturer was not affected by its relationship to the US producer,
it was considered that it should be excluded from the determination of Community
production. Total Community production therefore is accounted for by the following
companies: BASF AG, Ludwigshafen, Germany; BP Chemicals Ltd., London, UK;
Condea Chemie GmbH, Marl, Germany and Akzo Nobel Surface Chemistry AB,
Stenungsund, Sweden.

2. Community industry

26.

The Commission sent questionnaires to the applicant Community producers and
received replies from three of them. One reply that failed to provide cost of
production data for the period 1995-1997 was accepted on the grounds that the
company took over the ethanolamines business on 1 July 1998 from another
company and therefore did not have access to the data. The forth producer sent only
an incomplete questionnaire reply and was consequently considered a non-co-
operator. The three applicant Community producers which co-operated in the
investigation constitute the Community industry within the meaning of Article 4(1)

8

of the Basic Regulation, as they represent 77,5% of the total Community production.
They are referred to below as the “Community industry”.

3. Determination of the relevant Community market

27.

i.e.
Part of the Community industry’s production (around 28%) is for internal,
captive, use. Of this amount, the great majority (around 95%) is for use at one
Community producer’s plant, earmarked and used for that sole purpose. The
investigation confirmed that the applicant Community producers do not purchase the
product concerned from independent parties, either inside or outside the Community,
for their captive use. Ethanolamines intended for captive use are therefore not
considered to be in competition with ethanolamines otherwise available in the
the latter being the relevant Community market for the product
Community,
concerned.

E. ANALYSIS OF THE SITUATION ON THE COMMUNITY MARKET

1. Community consumption

28.

29.

Community consumption was based on the volume of sales of the Community
industry, the sales volume of the non-co-operating Community producer, Eurostat-
information on the import volume and an estimate of the sales of the Community-
based manufacturer related to the US exporting producer Union Carbide6 on this
market.

Consumption calculated on this basis increased by 14% during the IIP: from around
152000 tonnes in 1995 to around 172000 tonnes in the IP. This increase is attributed
to DEA and TEA sales, which rose by 19% and 21% respectively. The demand for
MEA has remained stable. MEA and DEA each represent around 29% of overall
consumption in the IP and TEA around 42%.

2. Imports from the country concerned

a) Volume, price trend and market share

30.

31.

6

Imports from the USA increased by 14% over the IIP, in line with the trend of
overall Community consumption. However,
the figures contain an underlying
downward trend in DEA-imports (-38% over the IIP), which accounted for only
12,6% of total imports in the IP. This should be seen in light of the high DEA
demand on the US domestic market. On the other hand, notwithstanding the stable
demand for MEA on the Community market during the IIP, imports from the USA
increased by 86% over the same period. Imports of TEA during this period grew by
11%.

Since imports are made by related importers, prices for imports from the USA,
whether established on the basis of information submitted by the exporting producers
or Eurostat figures, were not deemed reliable for the purpose of establishing price
trends. In order to establish more reliably the pricing behaviour of the exporting
producers concerned, their related importers’ resale prices were analysed - more

Based on the complaint and information from the US exporting producer. The sales correspond to 10%
of the total sales of all ethanolamines produced within the Community market.

9

specifically prices to industrial end-users found to be representative for overall sales.
These prices declined 10% on average from 1995 to 1996 and were found to be
substantially lower than the Community industry sales prices during both those
years. This trend was most pronounced for MEA, with a 14% decrease of the resale
price. Towards the end of the IIP, the resale price of TEA was back at the 1995 level,
whereas DEA became 13% more expensive and MEA was still 4% cheaper. In the
IP, the price levels of the related importers and the Community industry were
comparable.

32.

The overall market share for imports from the USA is stable over the IIP at 29%.
However, the figures contain an underlying increase in market share for MEA from
17% to 32% and a decrease of DEA market share from 25% to 13%. TEA decreased
slightly from 42% to 39%.

b) Price behaviour of exporting producers

33.

34.

35.

36.

In order to assess the price behaviour of US exporting producers, their sales as well
as those of the Community industry were analysed. In a first step, sales prices to first
independent customers were compared on the Community market. Given that the
Community industry sells only to industrial end-users, and that these customers also
cover a significant share (over 50%) of the sales of the US exporting producers, a
comparison at
the
determination of dumping, this comparison was made on the basis of data for the two
main US exporting producers.

trade was considered representative. For

level of

this

Since all imports into the Community originating in the USA were made via related
importers, the above comparison used the prices charged to the first independent
buyers in the Community at an ex-related-importer level, i.e. after deduction of
freight costs in the Community, discounts and rebates. The comparison showed that
during the IP, the overall average price levels for imports from the USA and
Community industry sales were comparable.

In a second step, an analysis was made of the import prices of ethanolamines
originating in the USA, i.e. the prices between the exporting producers and their
related importers, as compared to the minimum prices determining the variable
duties. This showed that no significant amounts of anti-dumping duties had been
collected, as these import prices were significantly above minimum prices for most
of the IIP.

In a third step, given the relation between exporting producers and the importers, it
was established for the IP whether the resale prices received by these importers from
their first independent customers and the respective actual import prices reflected the
related importers’ costs between importation and resale. All costs actually incurred
between importation and resale, such as freight from the Community border,
handling, insurance, packaging, credit expenses, import duties, SGA costs and a 5%
profit margin were therefore deducted from the resale prices. This resulted in import
prices constructed independently of the relationship between the exporting producers
and their related importers.

37.

These constructed import prices for both exporting producers were not only
significantly lower than the actual import prices declared by their related importers,
but were also significantly lower than the applicable minimum prices for the various

10

types of ethanolamine. This finding is confirmed by the fact
the related
importers incurred significant financial losses during the IP. Indeed, the margins they
import price) and resale price on the
realised between purchase price (actual
Community market were not sufficient
the costs incurred between
to cover
importation and resale. It should be noted that the pattern established for the IP has
also been observed for the remainder of the period considered, i.e. 1995 to1997.

that

38.

On the basis of the above three-step analysis, it is concluded that the resale prices of
US exporting producers on the Community market were in line with those of the
Community industry. Furthermore, it has been found that actual import price levels
were situated above the minimum prices. However, these actual import prices have
not, or at least not fully, reflected the anti-dumping measures in force if account is
taken of the costs incurred between importation and resale. Therefore, it can be
concluded that the US exporting producers and their related importers absorbed the
anti-dumping measures, at least partially, by setting artificially high actual import
prices which constitute transfer prices.

3. Situation of the Community industry

a) Production, production capacity and capacity utlisation

39.

40.

Production increased by 38% during the IIP, particularly from 1996 to 1997,
following an expansion of capacity from roughly 117000 to 139000 tonnes. The
increase in production, combined with the more moderate increase in capacity,
improved the overall Community industry’s capacity utilisation from 81,8% to
91,1% over the IIP.

As mentioned above, the capacity installed at one Community producer’s plant in
1997 accounts for around 95% of Community production for captive purposes and
was designed to serve only that purpose. The above mentioned increase in production
capacity, however, is a result of this investment in captive use production as this
reduced the captive use at another plant of the same company. This in turn liberated
capacity for free market sales.

b) Sales volume

41.

The sales volume of the Community industry on the Community market increased by
27% over the IIP to approximately 96000 tonnes, driven by the increase of DEA and
TEA sales (by 32% and 28% respectively) over this period.

c) Market share

42.

The Community industry increased its market share overall from 50% to 56% during
the period 1995-1997, gaining 11% for MEA, 5% for DEA and 3% for TEA.
Between 1997 and the IP market share overall and for TEA remained stable,
increased further for DEA (from 61% to 63%), but fell for MEA (from 53% to 49%).

d) Stocks

43.

Stocks increased by 10% over the IIP. This increase is lower than the production
increase of 38%.

11

e) Development of sales price and manufacturing cost

44.

45.

46.

47.

Overall sales price dropped 17% from 1995 to 1996. This was followed by increases
in 1997 and 1998 respectively of 3% and 9% over 1996 prices. In contrast to the
minimum prices and the situation in 1995, DEA has become the most expensive
product over the IIP.

Resale prices of US imports in the Community were substantially below the
Community industry’s sales prices in 1995 and 1996. The downward pressure of
17% on the Community industry’s sales prices from 1995 to 1996 occurred at the
same time MEA imports from the USA almost doubled and the resale price of US
imports of MEA dropped by 14% to ECU 605 per tonne, lowering the Community
industry’s sales price by 22% to ECU 647 per tonne.

Apart from market conditions, sales prices are essentially driven by the cost of raw
materials. The overall manufacturing cost dropped by 7% from 1995 to 1996 and,
compared to 1996, increased slightly by between 1% and 2% for the year 1997 and
the IP. Over the whole period, manufacturing costs fell by 6% but prices declined by
10%. DEA is the only exception here: the average price fell by only 1% while
manufacturing costs decreased by 4%.

It should also be underlined that the production of ethanolamines for the Community
industry is important since it allows to use own-produced upstream ethylene oxide,
providing economies of scale for this upstream production process, and to use the
ethanolamines as an intermediate for other products (captive use). It was claimed that
purchase prices for ethylene oxide were overstated causing a downward pressure on
the ethanolamines business. It was found, however, that the companies involved
organise their ethylene oxide and ethanolamines businesses as separate profit centres,
making cross-subsidisation unlikely, and checks were carried out as to whether the
transfer price at which this raw material was incorporated in the cost of production of
ethanolamines reflected market value. In all cases it was found that the transfer
prices used reflected the sales prices of ethylene oxide quoted to independent
customers purchasing similar quantities.

f) Profitability

48.

Profitability has been affected by sales prices and manufacturing costs. Profits fell
from 3,94% in 1995 to loss-making levels of –8,64% in 1996 and –8,49% in 1997.
The price recovery in the IP was insufficient to generate a profit and profitability
remained negative at -1,37%.

g) Investments

49.

Investment in ethanolamines for the free market remained fairly stable between 1995
and 1998 at around ECU 4 million a year, except for 1996, when the figure was
twice that. In that year, major changes were made to one plant after the group’s
captive production was taken over by another plant belonging to the same
Community producer.

h) Employment

50.

The production of ethanolamines is not a labour
employment rose by 23% and reached 166 persons in 1998.

intensive process. Overall,

12

4. Import volumes and prices from other third countries

51.

On the basis of Eurostat information, Bulgarian export prices are lower than actual
US import prices from the same source. As explained above, it should however be
noted that Eurostat prices for imports originating in the US are not considered
reliable. One Bulgarian producer, Burgas, has had a stable 3% share of the
Community market since 1996. Based on Eurostat information, approximately 70%
of its exports are MEA - a market share of 6% in this segment during the IP
the Community industry and 32% for US exporting
(compared to 49% for
producers).

52.

The market share of all other countries declined to 2% across all
types of
ethanolamines and 6% for MEA. However, these imports originate from a variety of
sources, none of which holds a significant market share.

5. Conclusion on the situation of the Community market

53.

54.

Production volume and capacity of the Community industry show a positive trend.
Sales volumes increased, especially for DEA and TEA. Market share increased
overall but dropped for MEA, when compared with 1997. Although better than in
1996 and 1997, profitability remained insufficient in 1998 because of continued
pressure on sales prices. Indeed, the initial fall in sales prices from 1995 to 1996 has
still not been compensated and there is still price pressure from the imports
concerned.

The continuation of the downward pressure on the Community industry’s sales prices
and the consequent negative profitability are directly linked to the pricing behaviour
of the US exporting producers, in particular the absorption of the measures in force
and the resulting price pressure.

F. LIKELIHOOD OF CONTINUATION OF INJURIOUS DUMPING

1. Analysis of demand for ethanolamines

55.

56.

Because of the combined production process, the increased consumption of DEA and
TEA in the Community leads to a significant supply of MEA. Upward price pressure
has been most pronounced for DEA, accentuated by the gradual withdrawal by the
US exporting producers from this market (illustrated by a corresponding drop in US
market share from 25% to 13% over the IIP).

At the same time, worldwide ethanolamine production capacity is further increasing
in anticipation of continued growth in demand for DEA, with major producers both
in the Community and in the USA investing at similar rates. High demand for DEA
has led to corresponding upward price adjustments in this segment, while DEA
consumption - and thus prices - during the previous investigation were low. The
effect on sales prices (and consequently on profitability) of increasing capacity and
increasing demand for DEA remains unclear, but the (world-wide) excess production
of MEA, in particular, threatens to depress market conditions.

2. Analysis of the situation of the US exporting producers

57.

The world-wide capacity increase threatens to create excess production, especially of
MEA, while the Community market, with a price level higher than other third

13

58.

59.

60.

61.

62.

63.

countries, is attractive for US exporting producers. US production capacity increased
by more than one third over the 1995-1998 period. From 1997 to the IP, capacity
installed rose 19,9% to 524000 tonnes for the three US producers Union Carbide,
Huntsman and Dow Chemical and, although production increased by 9%,
the
capacity utilisation rate fell from 90,4% to 83%. New capacity installed is generally
aimed at DEA, bringing excess production of MEA.

the investigation showed that US producers exported significant
Furthermore,
the period
quantities of the product concerned to the Community throughout
examined, indicating that the Community market is an important outlet for their
production. From 1997 to the IP corresponding US exports to the Community
increased by 12,4%, whereas domestic sales increased only 4,9% and exports to
third countries decreased by 2,7%. During the IP, US domestic sales
other
represented 67,1% of total sales by the three US producers mentioned above, exports
to the Community 13,6% and exports to third countries 19,3%.

The investigation also demonstrated that US domestic prices are at a higher level
than sales prices in the Community market. The higher price level in the USA can be
directly attributed to the high consumption of DEA on the US market.

Finally, it should be noted that South Korea has imposed measures against imports of
ethanolamines from the USA. While it is not considered that the quantities involved,
even if they were entirely deflected, are such as to disrupt the Community market,
the fact that anti-dumping measures have been imposed shows that US exporting
producers are prepared to carry out exports at dumped prices.

The prices of both the Community industry and the exporting producers over the IIP
have constantly been above the minimum-price-based variable anti-dumping
measures. It has been shown that actual import prices do not reflect the resale prices
of the related importers concerned and that import prices reflecting costs incurred
between importation and resale have systematically been below minimum prices,
indicating that the US exporting producers have partially absorbed the anti-dumping
measures imposed. At the same time, the Community industry has not been able to
recover
faces an
from the negative situation it has experienced and still
unsatisfactory situation in terms of profits during the IP.

The investigation confirmed that, as in the previous investigation period (1991-1992)
before imposition of measures, US producers exported significant quantities onto the
Community market. From 48000 tonnes in the previous IP, these dropped to 44000
tonnes at the beginning of the IIP, before resing to 51000 tonnes at the end. They
represent 40% of total Community production during the IP.

It was found that in line with growing demand for DEA in the USA which put
upward pressure on US sales prices fro DEA and ethanolamines in general, a
somewhat less pronounced price change was observed on the Community market.
This trend in consumption has at the same time meant that MEA is produced in
increasing quantities, with the risk that due to a lack of commensurate demand it will
be sold at lower and lower prices. The effect on the price of TEA is expected to be
less, as smaller production surpluses are predicted.

64.

One US exporting producer contended that the Community industry itself has an
overcapacity of MEA that creates a downward pressure on prices. It was, however,

14

unable to substantiate this claim. It should also be noted that one US producer
alleged that the Community industry undercut its prices for DEA in 1998. The
investigation showed, however, that the Community company quoted did not sell any
DEA to the client mentioned.

3. Conclusion on likelihood of continuation of injurious dumping

65.

66.

67.

The investigation showed that, despite the anti-dumping measures in force and
the
increased production, production capacity, consumption and sales volumes,
Community industry is still in a fragile state, in particular as far as its sales prices and
profitability are concerned. The Community industry was allowed to fill the gap left
by the partial retreat by US exporting producers from the DEA Community market.
However, due to the partial absorption by US exporting producers of the measures in
force, their excess production of MEA and the resulting growth in EU imports of
MEA from the USA at dumped prices, prices for all ethanolamines remained too low
to restore the profitability of the Community industry, even with anti-dumping
measures.

The investigation established that the imports concerned are still taking place at
significantly dumped prices. It has been found that domestic US prices have
increased since the previous investigation, although to a lesser extent than the prices
of US exports to the Community. This has led to smaller dumping margins than
those in the initial investigation, not least because of the absorption. It was further
to 40% of total
found that export quantities are significant, being equivalent
Community production during the IP.

The Community industry has been unable to recover from the negative situation
affecting it since the previous investigation; prices of imports from the USA have
been below minimum prices, (given actual costs between importation and resale),
thereby partially absorbing the anti-dumping measures in force and preventing the
Community industry from improving its situation; capacity increases in the USA are
likely to depress market conditions in the Community, in particular due to excess
MEA; and the Community market, as compared to other markets, remains attractive
to the US exporting producers, who continue to export significant quantities to the
Community at dumped prices - it is therefore concluded that there is a likelihood of
continuation of injurious dumping.

G. COMMUNITY INTEREST

1. Introduction

68.

the interest of the Community. The present

In the previous investigation, the adoption of measures was considered not to be
against
investigation is a review,
analysing a situation in which anti-dumping measures were already in place and its
remit is thus to assess any undue negative impact of the measures on the parties
concerned. It was therefore examined whether, despite the conclusions on the
likelihood of continuation of injurious dumping, there were compelling reasons to
conclude that it was not in the Community interest to maintain measures. For this

15

purpose, and pursuant to Article 21(1) of the Basic Regulation, account was taken of
the impact on all parties involved in the proceedings of maintaining the existing
measures, imposing alternative measures or dropping the measures.

2. Interest of the Community industry

69.

The existing measures have not led to a price level on the Community market that
would allow the Community producers to regain profitability. The investigation
showed that the measures have never become fully effective - while actual import
prices have been above the minimum prices set, the latter have not been reflected in
related importers’ resale prices. The outlook for the situation in the Community
market is not favourable given the distinct possibility of an inflow of MEA, produced
in recently-installed production sites, and continuing pressure on prices, which in
1999 in some instances even went below set minimum prices.

70.

In view of the above, continuing measures to limit
ethanolamine prices would be in the interest of the Community industry.

the downward pressure on

3. Interest of users

71.

72.

73.

The Commission received four questionnaire replies from ethanolamines users, two
of which were considered complete and were followed up by an on-site investigation.
As those four users represent only 1,4% of Community consumption during the IP,
the information submitted could not be considered representative. The users argued
that any increase in their cost of production should be avoided, since this affects their
profitability.

Information collected in the course of the investigation indicated an incidence of the
purchase price of ethanolamines in the cost of production of the finished product
during the IP ranging from 2,21% to 18,82% (the latter figure relating to an extreme
case, for a product for which ethanolamine can be perfectly substituted by another
unrelated chemical). The overall weighted average stands at 4,33% of the cost of
production. The maximum impact of the measures proposed is on average less than
one percent and can therefore be considered limited.

One additional user of the product concerned claimed that it planned to produce a
chemical product, glyphosate intermediate, in the Community using DEA. This
company claimed it was unable to do so because of the artificially high import prices
(due to anti-dumping measures) and the absence of local (Community) supply of
DEA. It should be noted here that the minimum price on which the variable duty is
based was always lower than the purchase prices established for the various
interested parties during the IP. This showed that this user’s first claim did not reflect
reality. The investigation further showed that DEA was not sufficiently available in
the USA and that exports to the Community decreased as a result. It took some time
for the Community producers to adapt to the increase in demand, but DEA supply
has never been so short that prices were affected significantly and the company’s
second claim must be considered as ill-founded.

4. Conclusion on Community interest

74.

Maintaining measures would be in the interest of the Community industry in
ensuring that prices, especially for MEA, are raised to a non-injurious level. The

16

users of the product which came forward did not represent an important share of
Community consumption and/or could not substantiate their claims. In any event, the
incidence of measures on their cost of production is limited. On the basis of these
considerations,
there were no compelling reasons not to
continue measures, in order to ensure competitive conditions of fair pricing and
avoid the continuation of injury to the Community industry.

it was concluded that

H. ANTI-DUMPING MEASURES

75.

76.

77.

78.

79.

Since it was determined that US exporting producers absorbed the measures over an
extended period and the import volume remained significant, it was concluded that
the underlying trends were lasting. In these circumstances, it had to be decided on
which basis the investigation carried out pursuant to both Article 11(2) and 11(3) of
the Basic Regulation had to be concluded. As the measures presently in force had not
led to the anticipated positive effect for the Community industry, it was decided that:

• the anti-dumping measures should be renewed;

• their form should be revised;

• their level should be adapted to the level of dumping and injury found.

It should be noted here that actual
import prices are used in anti-dumping
proceedings to determine both dumping and injury margins. The investigation
demonstrated that the actual import prices do not reflect the related importers’ resale
prices. Using such data would underestimate the actual dumping and injury margins
for the IP. Therefore,
the dumping and injury margins
determined pursuant to Article 11(3) of the Basic Regulation needed to be based on
the constructed import price.

it was concluded that

In order to calculate the injury threshold, a non-injurious sales price for the
Community industry was determined, allowing for an 8% profit margin, and
compared with the US related importers’ resale prices. Any difference was expressed
as a percentage of the constructed CIF import value. On the basis of this
methodology the underselling margins, which were lower than the corresponding
dumping margins, were 10,4% for Union Carbide Corporation, 13,9% for Dow
Chemical Company and 20,5% for Huntsman Chemical Company. In the previous
investigation, by comparison, the minimum-price-based variable duties were based
on overall underselling margins of 45,2% for Union Carbide, 53,5% for Dow
Chemical and 39,5% for Huntsman.

€

Specific fixed duties based on the difference between the non-injurious price and the
US related importers’ resale prices, amount to
59,25 per tonne for Union Carbide
€
Corporation,
111,25 per tonne
for Huntsman Chemical Company. This type of measure is considered appropriate,
as imports from the USA take place mainly through related sales companies. The
residual specific fixed duty is set at

69,40 per tonne for Dow Chemical Company and

111,25 per tonne.

€

€

All parties concerned were informed of the essential facts and considerations on
which the continuation of measures at an updated level and in an updated form is
based. They were granted a period within which to make representations subsequent
to disclosures.

17

HAS ADOPTED THIS REGULATION:

Article 1

(1)

A definitive anti-dumping duty is hereby imposed on imports of ethanolamines
currently classifiable within CN codes ex 2922 11 00 (monoethanolamine) (TARIC
code 2922 11 00 10), ex 2922 12 00 (diethanolamine) (TARIC code 2922 12 00 10)
and 2922 13 10 (triethanolamine), originating in the United States of America.

(2)

The rate of the definitive duty applicable to the net free-at-Community-frontier price,
before duty, for the following companies’ products shall be as follows:

Country
U.S.A.

Company
Union Carbide Corporation
Old Ridgebury Road
Danbury
Connecticut 06817
(TARIC additional code: A115)

Huntsman Chemical Corporation
3040 Post Oak Boulevard
PO Box 27707
Houston
Texas 77056
(TARIC additional code: A116)
Dow Chemical Company
2040 Dow Center
Midland
Michigan 48674
(TARIC additional code: A145)

All other companies
(TARIC additional code: A999)

Specific fixed duty
€

59,25 per tonne

€

€

€

111,25 per tonne

69,40 per tonne

111,25 per tonne

(3)

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

Article 2

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

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

Done at Brussels,

For the Council
The President

18