Proposal for a Council Regulation amending Regulation (EC) No 2603/2000 imposing a definitive countervailing duty on imports of certain polyethylene terephtalate originating, inter alia, in Thailand
Date: 2004-03-25
Institutions: European Commission
Subjects: Thailand, anti-dumping duty, import, originating product, plastics

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 25.03.2004 
COM(2004) 198 final 

Proposal for a 

COUNCIL REGULATION 

amending Regulation (EC) No 2603/2000 imposing a definitive countervailing duty on 
imports of certain polyethylene terephtalate originating, inter alia, in Thailand  

(presented by the Commission) 

EN 

   EN 

 
 
 
  
EXPLANATORY MEMORANDUM 

In July 2003, the Commission, by a notice published in the Official Journal of the European 
Union, upon request of a new exporter, announced the initiation of an accelerated review of 
Council Regulation (EC) N° 2603/2000 imposing a definitive countervailing duty on imports 
of certain polyethylene terephtalate originating, inter alia, in Thailand. The new exporter also 
simultaneously requested a review of the anti-dumping duties applicable to the same imports. 
This proceeding is subject to a separate draft Council Regulation.  

The investigation showed that the Thai exporting producer requesting the accelerated review 
met the criteria to be considered a new exporter in the sense of Article 20 of the basic anti-
subsidy  Regulation.  It  also  revealed  that  it  benefited  from  countervailable  subsidies.  It  is 
consequently  decided  to  set  the  duty  for  that  exporter  at  the  level  of  the  individual  margin 
established for it, corresponding to EUR 23.9 per tonne.  

It is therefore proposed that the Council adopt the attached proposal for a Regulation, in view 
of its publication in the Official Journal of the European Union no later than 19 April 2004. 

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Proposal for a 

COUNCIL REGULATION 

amending Regulation (EC) No 2603/2000 imposing a definitive countervailing duty on 
imports of certain polyethylene terephtalate originating, inter alia, in Thailand  

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  Community1  (the 
‘basic Regulation’), and in particular Article 20 thereof, 

Having  regard  to  the  proposal  submitted  by  the  Commission  after  consulting  the  Advisory 
Committee,2 

Whereas: 

A. Measures in force 

(1) 

The measures currently in force are definitive countervailing duty imposed by Council 
Regulation (EC) No 2603/20003, under which imports into the Community of certain 
polyethylene terephtalate (“the product concerned”) originating in Thailand are subject 
to a duty, in the form of a specific amount per tonne, i.e. EUR 49.1 per tonne.  

(2) 

It should be noted that the same imports are also subject to a definitive anti-dumping 
duty of EUR 83.2 per tonne, as imposed by Council Regulation (EC) No 2604/20004.  

1. Request for a review 

B. Current investigation 

(3) 

The Commission subsequently received a request to initiate an accelerated review of 
Regulation (EC) No 2603/2000, pursuant to Article 20 of the basic Regulation, from 
the Thai producer Indo Pet (Thailand) Ltd. (‘Indo Pet’). This company claimed that it 
was not individually investigated during the original period of investigation (i.e. form 
1 October 1998 to 30 September 1999) for reasons other than the refusal to co-operate 
with the Commission. 

1 

2 
3 
4 

OJ L 288, 21.10.1997, p.1., as last amended by Regulation (EC) No 1973/2002 (OJ L 305, 7.11.2002, p. 
4). 
OJ C […] […], p. […] 
OJ L 301, 30.11.2000, p. 1. 
OJ L 301, 30.11.2000, p. 21. 

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(4) 

It should be noted that the Commission simultaneously received, from the same Thai 
producer,  a  request  to  initiate  a  ‘new  exporter’  review  of  Regulation  (EC)  No 
2604/2000. This parallel proceeding is subject to a separate Council Regulation.  

2. Initiation of an accelerated review 

(5) 

The  Commission  examined  the  evidence  submitted  by  the  Thai  exporting  producer 
concerned and considered it sufficient to justify the initiation of an accelerated review 
in  accordance  with  the  provisions  of  Article  20  of  the  basic  Regulation.  After 
consultation of the Advisory Committee and after the Community industry concerned 
had  been  given  the  opportunity  to  comment,  the  Commission  initiated,  by  a  notice 
published in the Official Journal of the European Union5, a review of Regulation (EC) 
No  2603/2000  with  regard  to  the  company  concerned  and  commenced  its 
investigation. 

3. Product concerned 

(6) 

The product covered by the current review is the same as in the original investigation, 
i.e.  polyethylene  terephthalate  (‘PET’)  with  a  coefficient  of  viscosity  of  78  ml/g  or 
higher, according to DIN (Deutsche Industrienorm) 53728. It is currently classifiable 
within CN code 3907 60 20. 

4. Parties concerned 

(7) 

(8) 

The Commission officially advised the company concerned and the representatives of 
the exporting country of the initiation of the review. Furthermore, it gave other parties 
directly  concerned  the  opportunity  to  make  their  views  known  in  writing  and  to 
request a hearing. No such request was however received. 

The Commission also sent out a questionnaire to the Government of Thailand and to 
the  company  concerned  and  received  a  reply  within  the  deadline.  The  Commission 
sought  and  verified  all  the  information  deemed  necessary  for  the  determination  of 
subsidisation, and a verification visit was carried out at the premises of the company 
concerned. 

5. Investigation period 

(9) 

The  investigation  of  subsidisation  covered  the  period  from  1  January  2002  to  31 
March 2003 (‘investigation period’ or IP). 

6. Methodology 

(10)  The  same  methodology  as  that  used  in  the  original  investigation  was  applied  in  the 

current investigation. 

C. Scope of the review 

(11)  As no request for a review of the findings on injury was made in the request for the 

investigation, the review was limited to subsidies granted to Indo Pet.  

5 

OJ C 170, 19.07.2003, p.2. 

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(12)  The  Commission  examined  the  same  subsidy  schemes  that  were  analysed  in  the 
original  investigation.  It  also  examined  whether  the  new  exporter  had  used  any 
subsidy  schemes  that  were  alleged  to  be  granted  in  the  original  complaint  but  not 
found to have been used during the original investigation period. 

(13) 

It  was  finally  examined  whether  the  new  exporters  had  made  use  of  any  subsidy 
schemes that were established after the end of the original investigation period, or had 
received ad-hoc subsidies after this date.  

D. Results of the investigation 

1. New exporter qualification 

(14)  The  investigation  confirmed  that  the  company  concerned  was  not  individually 
investigated  during  the  original  investigation  for  reasons  other  than  a  refusal  to 
cooperate with the Commission.  

(15)  Accordingly, it is confirmed that the company concerned should be considered a new 
exporter in accordance with Article 20 of the basic Regulation, and thus an individual 
amount of subsidy could be determined for it. 

2. Subsidisation  

(16)  The original investigation showed that the following schemes – under the Investment 
Promotion  Act  (“IPA”)  –  from  which  the  applicant  may  potentially  benefit,  were 
specific within the meaning of Articles 3(2)(a) and 3(2)(b) of the basic Regulation and 
thus countervailable6: 

•  Exemption or reduction on duties on imports of machinery, 

•  Exemption from corporate income tax, 

•  Additional incentives under the form of a double deduction of certain expenses for 

enterprises located in special investment promotion zones, 

•  Exemption of import duties on raw and essential materials. 

(17)  The  current  investigation  revealed  that,  since  the  end  of  the  original  period  of 
investigation,  no  change  occurred  that  would  alter  the  conclusions  that  the  above 
schemes are still countervailable. Additionally, the investigation did not reveal that the 
company benefited from any other than the above subsidy schemes. 

Exemption or reduction on duties on imports of machinery 

(18)  Section  28  of  the  IPA  is  the  legal  basis  to  grant  the  exemption  of  import  duties  on 
machinery,  provided  that  such  machinery  is  not  being  produced  or  assembled  in 
Thailand, and provided that it will be used in the promoted activity, as defined by the 
IPA. Section 29 of the IPA provides the legal basis for the 50% reduction on import 
duties on imported machinery. 

6 

Commission Regulation (EC) No 1741/2000 (OJ L 199, 5.8.2000, p. 6.), recitals (181) to (201) 

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(19)  The benefit to the exporter should be calculated on the basis of the amount of unpaid 
customs duty due on imported capital goods, by spreading this amount across a period 
which  reflects  the  normal  depreciation  of  such  capital  goods  in  the  industry  of  the 
product concerned, pursuant to article 7(3) of the basic Regulation.  

(20)  On this basis, the benefit received by Indo Pet is of less than 0.1% which is considered 

immaterial. 

Exemption from corporate income tax and additional incentives for enterprises located in 
special investment promotion zones 

(21)  These two countervailable schemes are defined by Sections 31 and 35(3) of the IPA.  

(22)  By  virtue  of  Section  31  of  the  IPA,  exemptions  from  the  corporate  income  tax  are 
authorised for a period ranging between 3 to 8 years, depending on the location of the 
investments.  Different  eligibility  criteria  are  applied  to  different  geographical  zones 
(zones 1 to 3, as defined by the IPA). Indo Pet, being located in the so-called zone 3, 
has been granted an 8-year corporate income tax exemption pursuant to Section 31 of 
the IPA. Indo Pet was further granted additional incentives under the form of a double 
deduction of transportation, electricity and water supply costs, as provided by Section 
35(3) of the IPA.  

(23)  The benefit obtained by a company in the case of tax exemptions and tax reductions is 
calculated  by  reference  to  the  amount  of  tax  that  would  have  been  payable  by  the 
recipient company during the investigation period, had it not been able to benefit from 
a subsidy scheme. In the current case, the amount of tax normally payable during the 
IP  is  the  tax  payable  during  the  tax  year  2002  (no  data  regarding  any  tax  payable 
amount concerning the first three months of the tax year 2003 being available during 
the  on-spot  investigation),  and  these  taxes  due  are  incurred  in  respect  of  revenue 
earned  in  2001.  On  this  basis,  it  was  established  that  further  to  the  provisions  of 
Sections  35(3)  of  the  IPA,  the  company  concerned  offset  a  significant  part  of  its 
relevant  taxable  profit,  the  remaining  part  of  which  was  totally  exempted  from 
corporate  income  tax  pursuant  to  Section  31  of  the  IPA.  The  benefit  granted  to  the 
company  therefore  consists of  the  amount of corporate  income tax that the company 
did not have to pay during the IP by making use of the two countervailable schemes 
concerned.  

(24)  The subsidy obtained through the two above schemes was not granted by reference to 
quantities  manufactured,  produced,  exported  or  transported.  Therefore,  pursuant  to 
article  7(2)  of  the  basic  Regulation,  the  amount  of  countervailable  subsidy  was 
determined by allocating the value of the total benefit, as described under recital (23), 
over the level of total sales of the company during the IP (annualised in this case). 

(25)  On this basis, it was found that Indo Pet received a benefit of 2.6%.  

Exemption of import duties on raw and essential materials 

(26)  Section 36(1) of the IPA provides the legal basis for exemption of import duties on the 
raw  and  essential  materials  imported  for  use  specifically  in  producing,  mixing,  or 
assembling products or commodities for export. 

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(27) 

In the present case, it was established that the import duty exemption did not result in 
an excess remission of import duties for the exporter concerned. Therefore, there is no 
subsidy according to Article 2 of the basic Regulation and it is not necessary to further 
evaluate this scheme since no benefit was conferred on the exporting producer. 

E. Amounts of countervailable subsidies 

(28)  Taking  account  of  the  definitive  findings  relating  to  the  various  schemes  as  set  out 
above, the amount of countervailable subsidy for the investigating exporting producer 
is as follows: 

Company 

Income tax exemption 
and additional incentives

Indo Pet 

2.6% 

Total 

2.6% 

F. Amendment of the measures being reviewed 

(29) 

(30) 

In  the  light  of  the  foregoing,  it  is  considered  that  a  definitive  countervailing  duty 
should  be  imposed  at  the  level  of  the  subsidy  margin  found.  In  accordance  with 
Article 15(1) of the basic Regulation, the countervailing duty should however not be 
higher  than  the  countrywide  injury  margin  established  for  Thailand  by  Council 
Regulation (EC) No 2603/2000 during the original anti-dumping investigation.  

It was considered appropriate during the original investigation to impose duties in the 
form  of  a  specific  amount  per  tonne,  since  PET  prices  can  fluctuate  in  line  with 
fluctuations in crude oil prices, thus significantly affecting the level of the duty. The 
same methodology should be applied in the current investigation. This specific amount 
should  result  from  the  application  of  the  countervailing  duty  rate  to  the  CIF  export 
prices.  

(31)  This  leads  to  a  countervailing  duty  rate  (EUR  per  tonne)  for  the  exporting  producer 

concerned of EUR 23.9 per tonne.  

(32)  Council Regulation (EC) No 2603/2000 should therefore be amended accordingly. 

G. Disclosure and duration of the measures 

(33)  The company concerned and all other interested parties were informed of the facts and 
considerations on the basis of which it was intended to impose the amended definitive 
countervailing duty on the imports of the company concerned. 

(34)  This review does not affect the date on which Council Regulation (EC) No 2603/2000 

will expire pursuant to Article 18(1) of the basic Regulation. 

HAS ADOPTED THIS REGULATION: 

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Article 1 

The  table  in  Article  1(3)  of  Council  Regulation  (EC)  No  2603/2000  is  hereby  amended  by 
adding the following: 

Country 

Company 

Definitive duty  
(EUR per tonne) 

TARIC 
additional code 

Thailand 

Indo Pet (Thailand) Ltd 

23.9 

A468 

Article 2 

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

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

Done at Brussels,  

For the Council 
The President 

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