Council Regulation (EC) No 365/2006 of  27 February 2006  amending Regulation (EC) No 1676/2001 imposing a definitive anti-dumping duty on imports of polyethylene terephthalate film originating,  inter alia , in India and terminating the partial interim review of the anti-subsidy measures applicable to imports of polyethylene terephthalate (PET) film originating,  inter alia , in India
Date: 2006-02-27
Institutions: Council of the European Union
Subjects: India, anti-dumping duty, anti-dumping legislation, import, originating product, plastics

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(Acts whose publication is obligatory)

COUNCIL REGULATION (EC) No 365/2006

of 27 February 2006

amending Regulation (EC) No 1676/2001 imposing a definitive anti-dumping duty on imports of
polyethylene terephthalate film originating, inter alia, in India and terminating the partial interim
review of the anti-subsidy measures applicable to imports of polyethylene terephthalate (PET) film
originating, inter alia, in India

THE COUNCIL OF THE EUROPEAN UNION,

(2)

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) (‘the basic
anti-dumping Regulation’), in particular Article 11(3) thereof,
and Council Regulation (EC) No 2026/97 of 6 October 1997 on
protection against subsidised imports from countries not mem-
bers of the European Community (2) (‘the basic anti-subsidy Regu-
lation’), in particular Article 19 thereof,

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

(3)

Whereas:

A. PROCEDURE

1. Existing measures and terminated investigations
concerning the same product

(1)

The Council, by Regulation (EC) No 2597/1999 (3),
imposed a definitive countervailing duty on imports of
polyethylene terephthalate (PET) film falling within CN
codes ex 3920 62 19 and ex 3920 62 90 and originating
in India (‘the definitive countervailing measures’). The mea-
sures took the form of an ad valorem duty ranging between
3,8 % and 19,1 % imposed on imports from individually
named exporters, with a residual duty rate of 19,1 %
imposed on imports from all other companies.

(1) OJ L 56, 6.3.1996, p. 1. Regulation as last amended by Regulation (EC)

No 2117/2005 (OJ L 340, 23.12.2005, p. 17).

(2) OJ L 288, 21.10.1997, p. 1. Regulation as last amended by Regula-

tion (EC) No 461/2004 (OJ L 77, 13.3.2004, p. 12).

(3) OJ L 316, 10.12.1999, p. 1. Regulation as amended by Regulation (EC)

No 1976/2004 (OJ L 342, 18.11.2004, p. 8).

The Council, by Regulation (EC) No 1676/2001 (4),
imposed definitive anti-dumping duties on imports of PET
film originating, inter alia, in India. The measures took the
form of an ad valorem duty ranging between 0 % and 62,6 %
on imports of PET film originating in India (‘the definitive
anti-dumping measures’), with the exception of imports
from five Indian companies (Ester Industries Limited
(Ester), Flex Industries Limited (Flex), Garware Polyester
Limited (Garware), MTZ Polyfilms Limited (MTZ), and
Polyplex Corporation Limited (Polyplex)) from whom
undertakings had been accepted by Commission Decision
2001/645/EC (5) accepting undertakings offered in con-
nection with the anti-dumping proceeding concerning
imports of polyethylene terephthalate film originating inter
alia in India.

The Council, by Regulations (EC) No 1975/2004 and (EC)
No 1976/2004, extended the definitive countervailing and
anti-dumping measures on imports of PET film originat-
ing in India, to imports of the same product consigned
from Brazil and Israel, whether declared as originating in
Brazil or Israel or not.

(4)

(5)

On 4 January 2005 (6), the Commission initiated a partial
interim review of Regulation (EC) No 1676/2001 limited
to the level of the definitive anti-dumping measures. This
investigation has been concluded by Council Regulation
(EC) No 366/2006 (7) which amended the level of the
definitive anti-dumping measures.

On 10 December 2004 (8), the Commission initiated an
expiry review of the definitive countervailing measures.
This investigation has been concluded by Council Regula-
tion (EC) No 367/2006 (9) which maintained the definitive
countervailing measures.

(4) OJ L 227, 23.8.2001, p. 1. Regulation as amended by Regulation (EC)

No 1975/2004 (OJ L 342, 18.11.2004, p. 1).

(5) OJ L 227, 23.8.2001, p. 56.
(6) OJ C 1, 4.1.2005, p. 5.
(7) See page 6 of this Official Journal.
(8) OJ C 306, 10.12.2004, p. 2.
(9) See page 15 of this Official Journal.

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(6)

(7)

(8)

2. Requests for reviews

Request for a review as regards countervailing measures

In 2002, a request for a partial interim review, limited in
scope to the form of the countervailing measures in respect
of one company, was lodged by (Polyplex), an Indian
exporting producer from whom an undertaking had
already been accepted by Decision 2001/645/EC in con-
nection with the anti-dumping measures in force. Polyplex
provided information that an undertaking of the same
nature would remove the injurious effects of subsidisation
and could be monitored. Therefore, it was warranted to
review the form of the countervailing measure.

Request for a review as regards countervailing measures

In October 2003, a request for a partial interim review lim-
ited to the form of the anti-dumping measures was lodged
by the following Community producers: Du Pont Teijin
Films, Mitsubishi Polyester Film GmbH and Nuroll SpA
(the applicants). The applicants represent a major propor-
tion of the Community production of PET film. Toray Plas-
tics Europe indicated its support for the request, although
it was not a formal applicant.

The applicants alleged that the form of the measures
(i.e. the existing undertakings as accepted by Decision
2001/645/EC) was no longer effective in removing the
injurious dumping. The applicants alleged that, since the
acceptance of the existing undertakings, which are based
on minimum import prices, the range of products sold by
the exporters concerned had developed, notably to include
more technically sophisticated film, so that the minimum
prices under which some products may be categorised no
longer reflected their true value, and thus the mechanism
of the measures was no longer adequate in view of the new
technological developments. Consequently, the undertak-
ings were said to be no longer adequate to eliminate the
injurious effects of dumping.

(10) Given that a partial interim review of the form of the anti-
dumping measures (i.e. the existing undertakings) was ini-
tiated in November 2003, as mentioned in recitals (12)
and (13) below, the question of the acceptability of Poly-
plex’s offer of an undertaking was kept open in order
to complete both reviews at the same time. The Commis-
sion officially informed Polyplex of its intentions in this
regard. No comments were made by the applicant in this
respect.

Review of the form of the anti-dumping measures

(11) On 22 November 2003, the Commission announced by a
notice of initiation published in the Official Journal of the
European Union (2), the initiation of a partial interim review
in accordance with Article 11(3) of the basic anti-dumping
Regulation.

(12)

(13)

(14)

The review was limited in scope to the form of the mea-
sures applicable to the five Indian exporting producers
from whom undertakings had been accepted. The investi-
gation period was from 1 October 2002 to 30 September
2003 (the current IP).

The Commission officially informed the exporting produc-
ers, the representatives of the exporting country and the
Community producers about the initiation of the review.
Interested parties were given the opportunity to make their
views known in writing and to request a hearing within the
time limit indicated in the notice of initiation.

In order to obtain the information deemed necessary for its
investigation, the Commission sent questionnaires to the
exporting producers concerned, which all cooperated by
replying to the questionnaire. Verification visits were car-
ried out at the premises of the following exporting produc-
ers in India:

— Ester Industries Limited, New Delhi,

— Flex Industries Limited, New Delhi,

— Garware Polyester Limited, Aurangabad,

3.

Investigations

— MTZ Polyfilms Limited, Mumbai,

Review regarding countervailing measures

— Polyplex Corporation Limited, New Delhi.

(9)

On 28 June 2002, the Commission announced by a notice
of initiation published in the Official Journal of the European
Union (1), the initiation of a partial interim review of the
anti-subsidy measures limited in scope to the examination
of the acceptability of an undertaking offered by the Indian
exporting producer Polyplex, pursuant to Article 19 of the
basic anti-subsidy Regulation.

B. PRODUCT CONCERNED

(15)

The product concerned is, as defined in the original inves-
tigation, polyethylene terephthalate (PET) film originating
in India, normally declared under CN codes ex 3920 62 19
and ex 3920 62 90.

(1) OJ C 154, 28.6.2002, p. 2.

(2) OJ C 281, 22.11.2003, p. 4.

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C.

FINDINGS

Request regarding countervailing measures

(16)

(17)

(18)

(19)

(20)

Review of the form of the anti-dumping measures

corona

including

PET film has specific physical, chemical and technical char-
acteristics, which include thickness, coating properties, sur-
face treatment and mechanical properties among others,
which determine various types of PET film through differ-
ent treatments of base film during or after the production
process,
treatment, metallisation
or chemical coating. It therefore exists in many different
forms or types. Given the existence of the large number of
different product presentations (product types), and for the
purpose of facilitating the monitoring of the undertakings,
the products were grouped under different categories
(groupings) based on technical characteristics. These
groupings served as the basis for establishing the minimum
import prices (MIPs) set out in the undertakings. In the
original investigation, the number of MIPs established on
the basis of those groupings ranged from 10 to 32 per
exporter.

In the framework of the current review, a comparison was
made, within groupings, of the mix of model types and of
price variations between the investigation period used in
the original investigation (original IP) and the current IP.

The analysis showed that the mix of model types sold
under certain product groupings have changed since the
acceptance of the undertakings. For several companies
under investigation these changes have been very signifi-
cant, to the extent that for some groupings most of the
product presentations exported to the Community during
the IP no longer correspond to the products exported dur-
ing the original IP. Examples of changes which were noted
within groupings were the dropping of lower value prod-
ucts, the addition of new apparently higher value products,
and sometimes a combination of both of these.

The analysis also showed that for certain product group-
ings the price variance (the range of product values) within
the grouping has changed significantly since the accep-
tance of the undertakings. In this context it should also be
noted that there has been a significant change in the pat-
tern of sales between the different product groupings fol-
lowing the acceptance of undertakings. In particular, there
appears to have been a tendency to concentrate sales on
those groupings with a lower minimum price.

Since the MIPs and the undertakings were established on
the basis of the mix of product types and their correspond-
ing values within the product groupings during the origi-
nal IP, it is clear that the changes found in relation to the
actual mix of products and values within those product
groupings have rendered those specific MIPs, and therefore
the undertakings, inappropriate to counteract the injurious
effect of dumping.

(21) As regards the review limited in scope to the examination
of the acceptability of an undertaking offered by Polyplex,
the analysis showed that the corporate structure of that
company would render monitoring of an undertaking
complex, thus making an undertaking inappropriate as a
form of effective countervailing measure. The complexity
arises from the fact that the product concerned is also
manufactured by a related company of Polyplex in a third
country (Thailand), which creates a risk of cross-
compensation of prices should the company in Thailand
also export the product concerned to the Community.
Monitoring and therefore enforcement would be too diffi-
cult to guarantee a proper functioning of the undertaking.

D. CONCLUSIONS

(22)

(23)

(24)

Review of the form of the anti-dumping measures

The undertakings as they are, with MIPs based on groups
of products, permit a large degree of flexibility for the
exporters to change the technical characteristics of the
products within the group. The product concerned com-
prises numerous and evolving differentiating features,
which largely determine sales prices. Changes in those fea-
tures consequently have a significant impact on prices. The
only viable way to make the groupings more homoge-
neous in terms of physical characteristics and prices would
be to subdivide the groupings. However, the consequence
would be a multiplication of groupings that would render
monitoring unworkable, in particular, by making it diffi-
cult for customs authorities to discern the difference
between product types and the classification of products
by grouping upon importation. Moreover, the number of
groupings per company might increase by a factor of 5
to 11 compared to those in the undertakings if more char-
acteristics of the different product types were considered in
order to arrive at a more accurate classification. Currently,
product types already fall into more than several hundred
detailed groupings, thus rendering undertakings unwork-
able. This number might increase with further develop-
ments of the product characteristics.

For certain companies subject to the review, the model
types sold under a particular product grouping did not
change significantly since the acceptance of the undertak-
ings. However, the likely increase in the number of prod-
uct groupings due to further developments in the product
groupings, as mentioned in recital (22), could arise at any
future stage and in the case of any exporting producer.

It can therefore be concluded that, in order to enable effec-
tive monitoring of the undertakings, the groupings of
products should be considerably more homogeneous in
terms of physical characteristics and prices. These charac-
teristics should be stable throughout the duration of the
undertaking. The investigation has confirmed that this has
not been the case as regards PET-film.

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(25) On the basis of the above facts and considerations, it is
considered that the undertakings are not appropriate
to counteract the injurious effect of dumping, since they
present both considerable monitoring and enforcement
difficulties and unacceptable risks. In these circumstances,
the undertakings accepted from the five Indian producers
subject to the review of the form of the anti-dumping mea-
sures should be withdrawn.

(29)

In this context, the fact that one exporting producer had
not yet introduced any new product types, does not change
the fact that the undertakings for the product concerned
have been found to be inappropriate and their monitoring
not feasible, as explained in recital 28 above.

(26) All parties concerned were informed of the essential facts
and considerations on the basis of which the decision to
withdraw the existing undertakings was made, and were
given the opportunity to comment.

(27)

Further to disclosure, some parties indicated that they con-
sidered that there were no monitoring or enforcement dif-
ficulties related to the undertakings and therefore there
were no risks associated with the form of the measures.
Furthermore many of the exporting producers indicated
that they had not violated their undertaking agreements.
One of the exporting producers concerned indicated that
whereas the Notice of Initiation referred to the significance
of the development of new product types, they had not
introduced any new product types into the EU between the
time of the offer of the existing undertaking and the cur-
rent IP.

(28) As regards the technical aspects, the sheer number of varia-
tions of this product, coupled with product development
possibilities, makes this product unsuited to undertakings
as product developments would require a constant update
of the MIPs which is not feasible (see recital 22). In this
respect, it should be recalled that Article 8(3) of the basic
Regulation indicates that undertakings offered need not be
accepted if
the authorities consider their acceptance
impractical, for example, if the number of actual or poten-
tial exporters is too great, or for other reasons. In regard to
the claim by exporters that they have not violated the terms
of the undertakings, there is no suggestion that violation
took place. The decision to withdraw the undertakings is
based on evidence assembled during the investigation that
changes in the mix of products make the undertaking inap-
propriate and that monitoring of sales of this product are
unsuited to undertaking agreements (see recitals 18 to 20
and 22). Finally, the investigation showed that films differ-
ent from the mix of products on which the MIPs were
based were now widely sold in the Community under the
undertaking agreements and that potentially that number
and variety of products could grow. Thus, the market situ-
ation on which the undertakings had been established, as
regards the products sold, is no longer representative in the
current review and therefore the undertakings MIPs have
become inappropriate.

(30)

In addition, some exporting producers made reference to
Article 15 of the Agreement on the implementation of
Article VI of the General Agreement on Tariffs and Trade
(GATT) 1994, hereinafter referred to as ‘WTO Anti-
dumping Agreement’ and the requirement therein for
developed countries to assist developing countries, indicat-
ing that the exporting producers should be given the
opportunity to offer new undertaking agreements. It was
suggested that the withdrawal of the undertakings was
being made on speculative, non-material grounds which
was devaluing the spirit of Article 15 of the WTO Anti-
dumping Agreement and that withdrawal of the undertak-
ings was a violation of the principle of proportionality.

(31) Article 15 of the WTO Anti-Dumping Agreement refers
to the need to explore constructive remedies before apply-
ing anti-dumping duties. The existing undertakings were
accepted in the spirit of seeking a constructive remedy to
the injurious dumping. However, it should be recalled
that Article 8.3 of the WTO Anti-dumping Agreement
indicates that undertakings offered need not be accepted
if the authorities consider their acceptance impractical,
for example, if the number of actual of potential export-
ers is too great, or for other reasons. Far from withdraw-
ing the undertakings on speculative grounds,
the
investigation has revealed that the products on which the
Indian producers agreed to fix undertaking prices (i.e. the
MIPs) are largely different from the products currently
being sold into the Community. The withdrawal of the
undertakings is therefore not disproportionate but a con-
sidered response to developments in the market place
brought about by the exporting producers themselves.

Request for an undertaking as regards countervailing
measures

(32)

The conclusions of the review of the form of the anti-
dumping measures that undertakings are not appropriate
to counteract the injurious effect of dumping since they
present both considerable monitoring and enforcement
difficulties and unacceptable risks are equally valid as con-
cerns countervailing measures. It was also found that the
corporate structure of the Polyplex Group would lead to
monitoring and enforcement difficulties vis-à-vis an under-
taking. For this reason the acceptance of the undertaking
is considered impractical within the meaning of Article 8(3)
of the basic anti-subsidy Regulation.

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(33)

In the light of the above, it was concluded that the review
investigation on the form of the anti-subsidy measures,
limited to the acceptability of the undertaking offered by
Polyplex, should be terminated and the undertaking in
question not be accepted, since the conditions set out in
Article 13(1) of the basic anti-subsidy Regulation regard-
ing the acceptance of an undertaking are not met.

(34)

The reasons why the undertaking offered could not be
accepted were disclosed to the applicant concerned,

HAS ADOPTED THIS REGULATION:

Article 1

Article 1(3) of Regulation (EC) No 1676/2001 as in force on

1.
the day of publication of this Regulation shall be deleted.

2.
Article 1(4) of Regulation (EC) No 1676/2001 as in force on
the day of publication of this Regulation shall be renumbered
Article 1(3).

Article 2 of Regulation (EC) No 1676/2001 as in force on

3.
the day of publication of this Regulation shall be deleted.

4.
Articles 3 and 4 of Regulation (EC) No 1676/2001 as in
force on the day of publication of this Regulation shall be renum-
bered Articles 2 and 3.

Article 2

The partial interim review of Regulation (EC) No 2597/1999 is
hereby terminated with the non acceptance of the undertaking.

Article 3

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, 27 February 2006.

For the Council
The President
U. PLASSNIK