Council Regulation (EC) No 1994/2000 of 18 September 2000 imposing a definitive countervailing duty and definitively collecting the provisional countervailing duty imposed on imports of styrene-butadiene-styrene thermoplastic rubber originating in Taiwan
Date: 2000-09-18
Institutions: Council of the European Union
Subjects: Taiwan, countervailing charge, import, originating product, synthetic rubber

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COUNCIL REGULATION (EC) No 1994/2000

of 18 September 2000

imposing a definitive countervailing duty and definitively collecting the provisional countervailing
duty imposed on imports of styrene-butadiene-styrene thermoplastic rubber originating in Taiwan

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European
Community,

Having regard to Council Regulation (EC) No 2026/97 of 6
October 1997 on protection against subsidised imports from
countries not members of the European Community (1), and in
particular Articles 14 and 15 thereof,

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

Whereas:

(1)

(2)

(3)

(4)

(5)

A. PROVISIONAL MEASURES

By Commission Regulation (EC) No 1092/2000 (2)
(hereinafter referred to as ‘the provisional duty Regula-
tion’) provisional countervailing duties were imposed on
imports
styrene-butadiene-
styrene thermoplastic rubber (hereinafter referred to as
‘SBS’)
falling within CN codes ex 4002 19 00 and
ex 4002 99 and originating in Taiwan.

into the Community of

As a result of a parallel anti-dumping investigation,
provisional anti-dumping duties were imposed under
Commission Regulation (EC) No 1091/2000 (3) on
imports into the Community of SBS originating in
Taiwan.

B. SUBSEQUENT PROCEDURE

Subsequent to the disclosure of the essential facts and
considerations on the basis of which it was decided to
impose provisional measures, several interested parties
submitted comments in writing. In accordance with the
provisions of Article 11(5) of Council Regulation (EC)
No 2026/97 (hereinafter referred to as the ‘basic Regula-
tion’), all interested parties who requested a hearing were
granted an opportunity to be heard by the Commission.

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 was intended to
recommend the imposition of a definitive countervailing
duty on imports of SBS originating in Taiwan and the
definitive collection of amounts secured by way of the
provisional duty imposed on these imports.

(1) OJ L 288, 21.10.1997, p. 1.
(2) OJ L 124, 25.5.2000, p. 26.
(3) OJ L 124, 25.5.2000, p. 12.

(6)

(7)

(8)

(9)

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.

Having reviewed the provisional findings on the basis of
the information gathered since then, it is concluded that
the main findings as set out in the provisional Regula-
tion should be hereby confirmed.

C. PRODUCT CONCERNED AND LIKE PRODUCT

The product concerned is styrene-butadiene-styrene ther-
moplastic rubber currently falling within CN codes
ex 4002 19 00 and ex 4002 99.

One Community importer claimed that SBS imported
from Taiwan has a different fluidity and resistance than
the
SBS produced in the Community. However,
Commission investigation revealed that producers in
Taiwan produce different types of SBS with exactly the
same composition as those types produced in the
investigation also showed that,
Community. The
although the quality of imports of SBS from Taiwan
may have been lower for one company during the years
1995 and 1996 when this company started its produc-
tion of SBS, the quality quickly attained a level compar-
able to the quality of SBS produced in the Community.
Finally, the investigation showed that Community users
do not make any quality differentiation between SBS
from Taiwan and from the Community. The Commis-
sion concluded that SBS imported from Taiwan and SBS
produced in the Community share the same characteris-
tics and the same level of quality.

(10) Another Community importer claimed that dry and oil-
extended SBS should be considered as two different
products, arguing that dry and oil-extended SBS are used
by different industries. However, different producers and
users of SBS confirmed to the Commission that many
Community users, especially in the footwear industry,
do not differentiate dry and oil-extended SBS. It is there-
fore concluded that the markets of dry and oil-extended
SBS cannot be distinguished.

(11)

The same company also argued that dry and oil-
extended SBS are close to other types of products, such
as styrene-isoprene-styrene (hereinafter referred to as
‘SIS’), which are also produced by the Community
producers of SBS. The company claimed that there is no
justification for distinguishing SBS from these other

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products. However, the investigation showed that dry
and oil-extended SBS have exactly the same physical
composition of butadiene and styrene, the only differ-
ence being the addition of oil at the end of the produc-
tion process. This physical composition clearly distin-
guishes SBS from other products such as SIS. It is there-
fore concluded that dry and oil-extended SBS should be
considered as one distinct product for the purpose of
this investigation within the meaning of Article 1(4) of
the basic Regulation.

(12) As no other arguments were presented, the findings set
out in recitals 15 to 18 of the provisional duty Regula-
tion are hereby confirmed.

D. SUBSIDIES

(13)

findings

The
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 document.

I. GENERAL ISSUES

(14)

(15)

1. Calculation of prevailing commercial interest rate

It had been provisionally decided to apply a general
interest rate of 9 % for the purpose of this investigation.
This rate was determined on the basis of the information
obtained during the investigation which was considered
appropriate for
this purpose. The Government of
Taiwan (hereinafter referred to as ‘GOT’) challenged the
reliability of this rate.

In view of this claim, the generally applicable interest
rate has been recalculated by the Commission. The rele-
vant benchmark interest rate is set at 7,99 % and has
been obtained by taking the average commercial interest
rates charged during the investigation period by 8 major
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.

(17)

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.
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.

II. INDIVIDUAL SCHEMES

(18)

(19)

1. Loans at preferential interest rates: incentives for

automation and anti-pollution incentives

These schemes were described in recitals 32 to 41 of the
provisional duty Regulation. They are based on Article
21(1) of the Statute for Upgrading Industries (hereinafter
referred to as ‘SUI’).

The GOT claimed that these loans are generally available
to almost all Taiwanese companies and therefore they
are not specific and accordingly not countervailable. It is
claimed that eligibility is not limited to certain enter-
prises; that eligibility for the programme is objective.

(20) As regards these claims, it was verified that the Taiwa-
nese authorities limit access to ‘investment in important
enterprises or projects relating to industrial upgrading or
improvement of industrial structure’ which are ‘in line
with the government industrial policy for assisting the
sound development of industries’ (Article 21 of the SUI).
The provisions of
this Article cannot be considered
objective since the criteria are not neutral, economic in
nature and horizontal in application because it is known
in advance that certain enterprises are more likely than
others to be in a position to benefit from these loans
just by reason of the type of business sector they are in.
Therefore, benefits from this scheme will inevitably be
more relevant to some sectors than to others. Thus, the
above claim is rejected.

(21)

In conclusion, this scheme is considered specific because
it is limited to certain enterprises within the meaning of
Article 3(2)(a) of the basic Regulation. The provisional
findings as described in recital 37 of the provisional duty
Regulation are therefore confirmed.

2. Application of the interest rate in the calculation

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

of the amount of the subsidy

(16)

The GOT argued that the methodology whereby interest
is added to the face value of the subsidy 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 GOT
claimed therefore that no benefit is conferred on them
until this date.

(22)

(23)

The benefits to the exporting producers have been calcu-
lated as explained in recitals 38 to 40 of the provisional
duty Regulation.

The benefits obtained by the two companies mentioned
in the provisional duty Regulation were 0,07 %. This is
now reduced to 0,06 % for Chi Mei due to the change in
the interest rate applied.

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2. Import duty exemption: purchases of new equip-

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

ment and anti-pollution equipment

(24)

(25)

(26)

(27)

(28)

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 & Export Commodi-
ties of the Republic of China (hereinafter referred to as
the ‘Customs Code’).

The GOT claimed that this Customs 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 involved a financial contribution by the GOT in
the form of import duties which are otherwise due being
foregone,
in accordance with Article 2(1)(a)(ii) of the
basic Regulation, and a benefit is conferred thereby.

this scheme, which is
The GOT also claimed that
described in recitals 44 to 54 of the provisional duty
Regulation, is treated as a regular part of the domestic
Customs schedule. Even if the Customs programme were
a subsidy, it is not countervailable under Article 3(2)(a)
of the basic Regulation.

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 cannot
therefore 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.

The provisions of the Additional notes of the Customs
Code are considered not to be economic in nature and
horizontal in application of Article 3(2)(b) of the basic
Regulation since the use of this scheme is limited only to
certain enterprises. In order to benefit from this scheme,
enterprises 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.

(30)

The benefits to the exporting producers have been calcu-
lated as explained in recital 53 of the provisional duty
Regulation.

(31)

The benefits obtained by the two exporting companies
were 0,05 % and 0,04 % respectively.

(32)

(33)

(34)

(35)

(36)

3. Import duty exemption: imports of raw material

This alleged countervailable subsidy scheme, which is
described in recitals 55 to 60 of the provisional duty
Regulation has as its legal basis Additional note 6 of
Chapter 29 of the Customs Code.

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 involved a
financial contribution by the GOT in the form of import
duties which are otherwise due being foregone,
in
accordance with Article 2(1)(a)(ii) of the basic Regula-
tion, and a benefit is conferred thereby.

The GOT claimed that this scheme is treated as a regular
part of
the
Customs programme were a subsidy, it is not counter-
vailable under Article 3(2)(a) of the basic Regulation.

the domestic Customs schedule. Even if

It was claimed that such import duty exemptions for
imports of raw materials not produced or sufficiently
available on the local market are not in fact limited to
certain enterprises, because the criteria for allowing such
exemptions are objective and neutral.

This scheme is explicitly limited to given manufacturers,
which are subject to the factory administration rules, for
the importation of specifically listed raw materials,
in
this case chemicals, which are exclusively used in the
manufacturing of plastics, artificial
fibre, rubber and
petrochemical intermediates by chemical reaction, and
provided that, in addition, such chemicals are not yet
produced or sufficiently supplied in Taiwan. As a result,
the Commission finds that
this scheme is explicitly
limited to certain enterprises which comply with the
conditions contained in the provisions of the specific
Additional note of the Customs Code. Such conditions
are not considered to be neutral or economic in nature
and horizontal

in application.

(29)

The above claims are rejected and the provisional find-
ings, as described in recital 52 of the provisional duty
Regulation, confirmed.

(37) One exporter pointed out that it would appear that all
calculations have been made at company level, except
for the import duty exemption for raw materials; the
company therefore argued that the level of this subsidy
should also be calculated at company level.

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(38)

(39)

In reply to this argument it should be clear that if the
benefit of a subsidy is limited to a particular product, the
denominator for allocation of subsidy amount should
reflect only sales (or exports) of that product. If this is
not the case, the denominator should be the recipient's
total sales (or exports).

The Commission, in its calculations, has followed this
approach, as was correctly stated by the companies, for
the import duty exemption on raw materials. In this
particular case, benefits were only identified for the
product concerned and consequently the corresponding
sales denominator was used. For all other described
schemes, it was found that the benefits were not limited
to a particular product and therefore the total sales was
used as denominator.

(40)

The provisional findings as described in recital 60 of the
provisional duty Regulation are therefore confirmed.

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

(41)

The benefits to the exporting producers have been calcu-
lated as explained in recital 62 of the provisional duty
Regulation.

(42)

The benefits obtained by the two exporting companies
concerned range from 0,61 % to 0,97 %.

4. Tax credits and tax exemptions

(43)

Since no comments were received regarding these
schemes, the conclusions of recitals 22 to 31 of the
provisional duty Regulation are hereby confirmed.

5. Amount of countervailable subsidies

(44)

The following domestic subsidy rates for the cooperating
companies were established:

Chi Mei
Corporation

Lee Chang
Yung
Chemical
Industry
Corporation

recital 67 of the provisional duty Regulation are hereby
confirmed.

2. Consumption in the Community

(46)

Since no comments were received on consumption in
the Community, its assessment as indicated in recital 68
of the provisional duty Regulation is hereby confirmed.

3. Imports of SBS from Taiwan to the Community

(a) Volume of
price

imports, market share, and average import

(47)

Since no comments were received concerning the
volume of imports from Taiwan in the Community, the
market share, and the average price of
imports, the
assessments indicated in recitals 69 to 72 of the provi-
sional duty Regulation are hereby confirmed.

(b) Price undercutting

(48)

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
were those to independent customers after deduction of
discounts and rebates.

some comments were
(49) As mentioned in recital 9,
comparability of different
received concerning the
product types but it was found that SBS imported from
Taiwan and SBS produced in the Community share the
same characteristics.

(50)

These comments did not affect the conclusions of the
provisional Regulation, which led to an average price-
undercutting margin, expressed as a percentage of the
Community industry's average selling prices, of 12,3 %.

Tax credits and tax exemptions

0,42 %

0,32 %

4. Economic situation of the Community industry

Loans at preferential

interest rates

0,06 %

0,07 %

Import duty exemption

1,02 %

0,65 %

Total amount of subsidy

1,50 %

1,04 %

E. INJURY

1. Definition of the Community industry

(45)

Since no comments were received regarding the defini-
tion of the Community industry, the conclusions of

(51) One Community importer pointed out that stocks and
profitability have not been calculated for 1995. As
stated in recitals 81 and 82 of the provisional duty
Regulation, the exact figures of stocks and profitability
could not be obtained accurately because of changes of
accounting systems in one company and changes of
structure in another company. In any event, the invest-
igation showed that the profitability was higher in 1995
than in 1996. This reinforces the injury determination.

(52)

Since no other comments were received regarding the
figures for production, capacity, sales volume, sales
price, market share, stocks, profitability, investments and
employment of the Community industry, the conclu-
sions of recitals 76 to 84 of the provisional duty Regula-
tion are hereby confirmed.

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(53) On the basis of the above it was concluded that the
Community industry has suffered material injury as set
out in recital 90 of the provisional duty Regulation.

level over the period 1995 to 1999, the Community
producers sales value decreased dramatically (by 39 %)
due to the decrease in prices.

F. CAUSATION

3. Conclusion

(54)

(55)

(56)

1. Effect of the subsidised imports

The GOT and one Community importer claimed that
the high level of market share of
the Community
industry (89 % during the investigation period) showed
that the Community industry could not suffer injury
caused by imports from Taiwan, with a much smaller
market share (6,1 %). In the present case it has been
determined that the imports from Taiwan, with a strong
pressure on prices in a competitive and transparent
market (12,3 % undercutting during the investigation
period),
represented a considerable pressure on the
Community industry. In order to maintain its market
share, the Community industry had to follow the down-
ward price trend (– 47 % price reduction from 1995 to
the investigation period). As a result, the Community
industry suffered heavy losses (profitability shifted from
+ 14,9 % to – 9,8 % from 1996 to the investigation
it is considered that the high market
period). Finally,
share of the Community industry did not protect it from
the unfair subsidised competition of Taiwan, and that
the price pressure due to Taiwanese imports is a major
cause of the injury suffered by this industry.

2. Other factors

The GOT claimed that the increased investments made
by Community producers have created a stronger
competition amongst those producers and resulted in
injury caused by such competitive forces. However, the
investigation revealed that investments have fluctuated
since 1995, as stated in recital 83 of the provisional
duty Regulation, and do not show any upward trend as
claimed by the GOT. The investments remained at a
rather low level, which would correspond to normal
upgrading of machinery. The most important invest-
ments were made by the producers prior to 1995 at the
time they were establishing their production units.

The GOT also claimed that the injury suffered by the
Community industry could be caused by an increase in
the prices of raw materials. However, the prices of raw
materials, as stated in recital 108 of the provisional duty
Regulation, have been fluctuating since 1995 and do not
show any particular trend. It is more likely that their
variation is cyclical, and therefore they cannot reason-
ably explain the constant depreciation of SBS prices
since 1995.

(57) One Community importer argued that

the injury
suffered by the Community industry could be caused by
an increase of production and selling costs and general
administration costs. However, the investigation revealed
that, while these costs remained roughly at the same

(58) Given that no other arguments were received regarding
the injury suffered by the Community
the cause of
industry,
imports of SBS from
Taiwan have caused injury to the Community industry,
as stated in recitals 110 and 111 of the provisional duty
Regulation,

is hereby confirmed.

the conclusion that

G. COMMUNITY INTEREST

1. Interest of the Community industry

(59)

Since no comments were received regarding the interest
of the Community industry, the conclusions of recitals
113 to 117 of
the provisional duty Regulation are
hereby confirmed.

2. Impact on users

(60)

two Community

the Regulation imposing
Following the adoption of
provisional measures,
importers
expressed concerns about the impact of the counter-
vailing measures on their customers. It should be noted
that one of these companies imported from a Taiwanese
producer which did not cooperate in this proceeding,
and this importer was subject to a provisional cumulated
subsidy and dumping duty rate of 28,2 %. However, if
definitive measures are imposed, all importers will have
the option to purchase SBS from Community producers,
from one of the cooperating producers in Taiwan, or
from another source not subject to measures.

(61) As a result, it is estimated that the average price increase
caused by definitive measures should be 1,1 %. It was
confirmed during the investigation that such an increase
in prices would likely have a limited impact on users.
The impact of duties on several typical users was exam-
ined, where SBS accounted for 40 % of their cost of
production. It was found that the imposition of meas-
ures would bring down the profitability by 0,3 % on
average for that part of their business relating to SBS.

(62)

(63)

Furthermore, as most Community users purchase the
main part of their SBS from Community producers, they
would not experience any price increase for the greater
part of their purchases.

Finally, since no further evidence was provided by the
Community importers, and since the Community users
did not make any comments, the conclusion of recital
123 of
the provisional duty Regulation is hereby
confirmed.

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(64)

(65)

3. Conclusion

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.

H. DEFINITIVE COURSE OF ACTION

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
Taiwan.

above the de minimis level. In accordance with the provi-
sions of Article 28 of the basic Regulation and based on
the information contained in the complaint and the
findings of
the investigation, and in order to avoid
rewarding non-cooperation, it is considered appropriate
level of countervailing duty at
to establish a residual
8,2 %.

I. COLLECTION OF THE PROVISIONAL DUTY

(72)

In view of the amount of the countervailable subsidies
found for the exporting producers, and in light of the
the injury caused to the Community
seriousness of
it is considered necessary that the amounts
industry,
secured by way of provisional countervailing duty under
Regulation (EC) No 1092/2000 should be definitively
collected at the rate of the duties definitively imposed,

1. Injury elimination level

HAS ADOPTED THIS REGULATION:

(66) As explained in recital 127 of the provisional duty Regu-
lation, the non-injurious level of prices was determined
by adding to the sales price of the Community industry
its average actual
loss and by further adding a profit
margin of 8 % which would cover the Community
industry's production costs and allow a reasonable profit
to be obtained in the absence of subsidised imports from
the country concerned.

2. Form and level of the duty

(67)

In accordance with Article 24(1) of the basic Regulation
no product shall be subject to both anti-dumping and
countervailing duties for the purpose of dealing with
one and the same situation arising from dumping or
schemes
from export
concerned by this proceeding did not constitute export
subsidies within the meaning of Article 3(4)(a) of the
basic Regulation. As such, the subsidies affect both the
export prices and the domestic prices of the exporting
producers, thus not affecting the margin of dumping.

subsidisation. The

subsidy

(68)

In accordance with Article 15(1) of the basic Regulation
the countervailing duty rate should correspond to the
subsidy margin, unless the injury margin is lower.

(69)

This led to the following countervailing duty rates for
the cooperating producers in Taiwan:

— Chi Mei Corporation
— Lee Chang Yung Chemical

Industry Corporation

1,5 %

1,0 %

the

(70) As explained in recital 129 of the provisional duty Regu-
lation,
companies
accounted for less than 30 % of the SBS imported into
the European Community during the period of invest-
igation and originating in Taiwan.

two cooperating

exporting

Article 1

A definitive countervailing duty is hereby imposed on
1.
imports of
styrene-butadiene-styrene thermoplastic rubber,
falling within CN codes ex 4002 19 00 and ex 4002 99
and
(TARIC
4002 99 90 91) and originating in Taiwan.

4002 19 00 10,

4002 99 10 10

codes:

2.
The rate of the definitive countervailing duty applicable
to the net free-at-Community-frontier price, before duty, for
products produced by the following companies, shall be as
follows:

Company

Rate of duty

TARIC additional
code

Chi Mei Corporation, Tainan, Taiwan

1,5 %

A127

Lee Chang Yung Chemical
Corporation, Taipei, Taiwan

Industry

1,0 %

A128

All other Taiwanese companies

8,2 %

A999

3.
Unless otherwise specified,
concerning customs duties shall apply.

the provisions

in force

Article 2

The amounts secured by way of the provisional countervailing
duty imposed on imports originating in Taiwan under Regula-
tion (EC) No 1092/2000 shall be collected at the rate of the
duty definitively imposed. Amounts secured in excess of the
definitive rate of countervailing duties shall be released.

(71)

The investigation has revealed the existence of counter-
vailable subsidies which are available to the non-cooper-
ating exporters.
It is considered that the absence of
cooperation is the result of the use and benefit by those
the countervailable subsidies at a level
producers of

Article 3

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

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

Done at Brussels, 18 September 2000.

For the Council

The President

H. VÉDRINE