CELEX: 51997PC0672
Language: en
Date: 1997-12-08
Title: Proposal for a Council Regulation (EC) extending the definitive anti-dumping duty imposed by Regulation (EC) No 1490/96 on polyester staple fibre originating in Belarus to imports of polyester filament tow from Belarus and levying the extended duty on the latter imports as registered under Commission Regulation (EC) No 693/97

COMMISSION OF THE EUROPEAN COMMUNITIES
                                                  Brussels, 08.12.1997
                                                  COM(97)672 final
                                   Proposal for a
                          COUNCIL REGULATION (EC)
extending the definitive anti-dumping duty imposed by Regulation (EC) No 1490/96
 on polyester staple fibre originating in Belarus to imports of polyester filament tow
   from Belarus and levying the extended duty on the latter imports as registered
                    under Commission Regulation (EC) No 693/97
                           (presented by the Commission)
 ---pagebreak---  ---pagebreak---                          EXPLANATORY MEMORANDUM
1. Attached is a proposal for a Council Regulation extending definitive anti-
   dumping duties in force with respect to imports of polyester staple fibre
   (hereafter "fibre") originating in Belarus1 to imports of polyester filament tow
   (hereafter "tow") from the same country, in accordance with Article 13 of
   Council Regulation (EC) No 384/96 of 22 December 1995 on protection
   against dumped imports from countries not members of the European
   Community (hereafter "the Basic Regulation")2.
   The proposed regulation also provides for the levying of the extended duty on
   imports of tow from Belarus which entered the Community under registration
   imposed by Commission Regulation (EC) No 693/97 of 18 April 1997.3 This
   levy of the extended duty on the registered product is a mandatory corollary of
   the extended duty, pursuant to Article 13 (3) of the Basic Regulation.
2. The proposed regulation is based on an investigation by the Commission
   services, commenced by the aforesaid Commission Regulation (EC) No
   693/97, which has revealed that the anti-dumping measures in force with
   respect to fibre originating in Belarus were being circumvented, in accordance
   with the criteria laid down in Article 13 (1) of the Basic Regulation, by imports
   of tow from Belarus subsequently processed into fibre in the Community.
3. The investigation has shown in particular that tow and fibre imported from
   Belarus are like products which share the same basic characteristics in terms of
   chemical properties and performance, as the only difference between the two
   products consists of the simple, mechanical cutting of tow into fibre.
   In addition, the investigation has established that, following the imposition of
   anti-dumping duties on fibre originating in Belarus, a change in the pattern of
   trade took place as imports of fibre from Belarus were largely substituted by
   imports of tow from that country. The investigation has moreover shown that
   no sufficient due cause or economic justification, other than avoiding the
   payment of the anti-dumping duties in force, exists for the importation and
   cutting of tow in the Community rather than the importation of fibre already
   cut in Belarus, the exporting country.
                                                                                     ../..
   Council Regulation (EC) No 1490/96 of 23 July 1996, OJNo L 189, 30.7.1996, p. 13.
   O J N o L 5 6 , 6.3.1996, p. 1.
   O J N o L 102, 19.4.1997, p. 14.
                                     A
 ---pagebreak--- Finally, it was determined that imports of tow were undermining the remedial
effects of the anti-dumping duty in terms of quantities and prices and that there
was evidence of dumping in relation to the normal values previously
established.
As the Commission services have thus found that all conditions of Article 13
(1) of the Basic Regulation establishing circumvention are met in the present
case, it is proposed that the anti-dumping measures in force with respect to
imports of fibre originating in Belarus be extended to imports of tow from that
country.
In accordance with Article 13 (3) of the Basic Regulation, the Council
regulation extending the anti-dumping measures in force should be adopted and
published not later than 9 months after the initiation of the investigation, i.e. in
the present case not later than 16 January 1998.
                                      ^) <X
 ---pagebreak---                                      Council Regulation (EC) No
                                                 of
 extending the definitive anti-dumping duty imposed by Regulation (EC) No 1490/96
  on polyester staple fibre originating in Belarus to imports of polyester filament tow
      from Belarus and levying the extended duty on the latter imports as registered
                            under Commission Regulation (EC) No 693/97
 THE COUNCIL OF THE EUROPEAN UNION,
                                c
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
Community1 (hereafter the "Basic Regulation"), as amended by Council Regulation (EC)
No 2331/962, and in particular Article 13 (3) thereof,
Having regard to the proposal submitted by the Commission after consulting the Advisory
Committee,
Whereas:
' O J N o L 5 6 , 6. 3 1996, p. 1.
2
  O J N o L 3 1 7 , 6.12.1996, p. 1.
                                                     A Kre,
 ---pagebreak---                                       A.     PROCEDURE
(1)       On 19 April 1997, by Regulation (EC) No 693/973, the Commission initiated an
          investigation, pursuant to Article 13 of the Basic Regulation, concerning the
          alleged circumvention of the anti-dumping duties imposed by Council Regulation
          (EC) No 1490/964 (hereafter the "original investigation") on imports of polyester
          staple fibre originating in Belarus, by imports of polyesterfilamenttow originating
          in that country which are subsequently converted into PSF in the Community and
          directed customs authorities, pursuant to Article 13 (3) of the Basic Regulation, to
          register imports of such PFT. The investigation was initiated following a
          complaint lodged on 4 March 1997 by the International Committee of Rayon and
          Synthetic Fibres (C.I.F.R.S) on behalf of Community producers whose output is
          considered to represent over 90 % of the total Community production of PSF.
(2)       The product concerned by this investigation is polyester filament tow (hereafter
          "PFT"), falling under CN code 5501 20 00, used for conversion in the Community
          into polyester staple fibre (hereafter "PSF"), the latter product being currently
          classifiable under CN code 5503 20 00.
3
  O J N o L 9 8 , 19.4. 1997, p. 3.
4
  O J N o L 189, 30.7.1996, p. 1.
 ---pagebreak--- (3) The Commission officially advised the authorities of Belarus about the initiation of
    the investigation and sent questionnaires to the Community companies concerned
    mentioned in the complaint. No additional companies made themselves known
    within the prescribed time limit.
(4) The investigation covered the period 1 January 1996 to 31 March 1997 (hereafter
    "the investigation period").
(5) The Commission received complete repliesfromthe following companies:
    (a)     Germany
    - Barnet Europe W. Barnet GmbH & Co. KG
    - Rheinische Faser<jmbH
    - Kemokomplex GmbH
    (b)     Italy
    - SALT & Co. Snc
    - TA.SFI Snc
    - S.I.M.P. Sri (formerly CO.FI.S SpA)
 ---pagebreak---     The Commission requested and examined all information it deemed necessary and
    carried out verification visits at the premises of the companies located in Italy and
    of one company located in Germany (Barnet).
(6) All companies mentioned above made their views known in writing and requested
    and were granted a hearing by the Commission.
                   B.      SCOPE OF THE INVESTIGATION
(7) Article 13 (1), first sentence of the Basic Regulation provides that, if certain
    conditions establishing circumvention are met, anti-dumping measures in force
    may be extended to imports of like products or parts thereof from a third country.
    The scope of the present investigation was to examine whether anti-dumping
    measures on imports of PSF originating in Belarus are being circumvented by
    means of imports of PFT originating in that country which are used in conversion
    operations in the Community.
 ---pagebreak--- (8) The importers and converters have argued that the present investigation could not
    be initiated under Article 13 of the Basic Regulation because an investigation
    under this provision would only be possible with regard to a "third country",
    which would exclude the exporting country in respect of which thé anti-dumping
    measures were imposed. This argument is rejected because the term "third
    country", as used in Article 13 (1) of the Basic Regulation is, also in view of its
    legislative history, a broad term which simply refers to any country outside the
    European Community as opposed to trade between two or more Member States of
    the Community.
(9) It was considered that the alleged circumvention practice had to be assessed on the
    basis of the second sentence of Article 13 (1) of the Basic Regulation.        The
    objective of the investigation was in particular to examine whether the operation
    described above fulfilled all conditions set out in that provision, so that anti-
    dumping measures in force with respect to PSF could be extended to PFT
    pursuant to Article 13 (1), first sentence of the Basic Regulation.
 ---pagebreak--- In this respect, it should be noted that PFT and PSF share the same basic physical
and chemical characteristics. Indeed, the only difference between PFT and PSF
results from a simple cutting process. The imported PFT has therefore to be
viewed as a product which has been slightly altered in order to avoid the anti-
dumping measures currently applicable to PSF. Differences of this nature, which
can be created or eliminated by minor alterations, cannot put into question the fact
that PSF and PFT are essentially the same product. Such differences are therefore
not sufficient to avoid payment of anti-dumping duties on PFT. As far as the uses
of PFT and PSF are concerned, the investigation has also shown that all PFT
imported from Belarus was used for cutting into PSF rather than for worsted
spinning to produce tops, the other recognised application of PFT.         Worsted
spinning is a considerably more complex process requiring special technology.
Tops are sold in a small and relatively stable niche market commanding a price
premium.
 ---pagebreak--- In any event, it should be borne in mind that, as in the case of parts destined for
assembly, the imports of PFT ultimately end up as a product which is not only
alike but identical to the imports subject to the original investigation, i.e. PSF.
Thus, although the alteration process from PFT into PSF is not as such an
assembly operation, it is of such a nature that it has to be considered as a practice
which is carried out to avoid the measures in force.
It follows from the foregoing that PFT and PSF are alike within the meaning of
Article 1 (4) of the Basic Regulation.
 ---pagebreak---                                   C.      RESULTS
                   1.     Nature of the circumvention operation
(10) The investigation has established that all the PFT concerned is produced by a
     single company in Belarus and exported to the Community mainly via two
     channels. Afirstchannel concerns a German trader which purchases the PFT from
     the Belarus exporter and sells it, for the major part, to an Italian importer. The
     PFT thus imported is subsequently processed into PSF by Italian sub-contractors
     and thereafter sold by the Italian importer in the Community, mainly on the Italian
     market. A second channel involves a Swiss trader which sells the PFT it purchases
     from the Belarus exporter to a German importer. The German importer itself
     processes the PFT into PSF and sells the PSF in the Community, mainly on the
     German market.
(11) The question as to whether Belarus can be considered as a "third country" in terms
     of Article 13 (1) of the Basic Regulation has already been addressed in recital 8.
     The question of whether PSF and PFT can be considered to be like products has
     been addressed in recital 9.
 ---pagebreak---                       2.       Conditions of Article 13 (1), second sentence
          (a)      Circumvention
                   Change in the pattern of trade
(12) Immediately following the imposition in March 1996 of a provisional anti-dumping
        duty of 43,5 % on PSF originating in Belarus by Commission Regulation (EC) No
        394/96 of 4 March 19965, imports of PSF from Belarus were almost entirely
        substituted by imports of PFT from that country. While in the period subsequent
        to the initiation of the original anti-dumping investigation (August 1994) PFT
        imports from Belarus only represented at most 1 % of combined PFT-PSF imports
        from that country, the PFT-PSF mix changed radically and abruptly immediately
        following the imposition of provisional anti-dumping measures in March 1996: in
        the period April to June 1996, PSF accounted for 3,02 % only while PFT
        represented 96,98 %. This marked change in the pattern of trade continued and
        even increased throughout the entire 15 month investigation period as volumes of
        PFT were increasing rapidly ana PSF imports were further phased out. At the end
        of the investigation period (period January-March 1997), PFT accounted for
        99,27 % and PSF merely for 0,73 % of the PSF-PFT mix.
O J N o L 5 4 , 5.3.1996, p. 10.
 ---pagebreak--- In addition, import levels of PFT from Belarus as such increased rapidly and
reached significant levels: while imports of PFT from Belarus in 1995 amounted to
merely 169 tonnes, such imports rose to 13 619 tonnes in the 12-month period
following the imposition of the provisional anti-dumping measures on PSF from
Belarus.
The companies involved have argued that no change in the pattern of trade
occurred because PFT imports have not substituted for imports of PSF at the same
import levels of PSF in 1994 and 1995. This argument is to be rejected. It is not
required that the substitution is found to have attained the highest import levels
which the substituted product ever reached in a particular segment in the
benchmark period - i.e. since or just prior to the initiation of the original anti-
dumping investigation (August 1994) - provided, as was found to be the case in
the present investigation, that there is a clear and consistent trend of substitution
over an extended period. In this respect, it should be noted that a particularly long
investigation period of 15 months was deliberately selected so as to increase its
representativity.
                                       10
 ---pagebreak---               Insufficient due cause or economic justification
(13) The above-mentioned substitution of PSF by PFT following the imposition of a
     significant provisional anti-dumping duty (see recital 12) must reasonably be
     considered to have stemmed from the anti-dumping measures rather than from any
     other sufficient due cause or economic justification within the meaning of Article
     13 (1), second sentence of the Basic Regulation.
     If there were to exist a sufficient due cause or economic justification - other than
     the anti-dumping measures in force - for importing PFT and cutting it into PSF in
     the Community rather than directly importing PSF already cut in the exporting
     country, then it might be expected that at least some PFT would have been
     imported for conversion in the Community prior to imposition of the provisional
     measures. However, as imports of PFT originating in Belarus prior to imposition
     of the provisional measures were negligible, it must be concluded that the
     substitution of PSF by PFT and the strong increase of PFT imports stem from a
     practice lacking sufficient due cause or economic justification and were in fact
     primarily prompted by the imposition of anti-dumping measures.
                                            11
 ---pagebreak---      This inference would be displaced if a new significant factor - other than the anti-
     dumping measures - arising around the time when the substitution took place,
     could be identified, which is not the case and no interested party has put forward
     any such claim.
(14) This conclusion is corroborated by the following findings. Importing PFT for
     conversion in the Community into PSF, as opposed to directly importing PSF
     already cut in a continuous, integrated operation - as is standard practice - in the
     exporting country, generates a number of extra costs in terms of packaging and
     labour which are not offset by any significant cost savings or price premiums but
     which are even compounded by the higher hourly labour cost in the Community, if
     compared with that in Taiwan, selected in the original investigation as analogue
     country to calculate normal value. In addition, exports of PFT were found to be
     targeting the Community since other export markets continued to be supplied with
     PSF by the Belarus exporter concerned, which shows a lack of economic
     justification because, if the practice were economically justified, it might
     reasonably be expected that it would also have occurred in other industrialised
      markets similar to the Community.
                                           12
 ---pagebreak--- (15) The importers and converters have argued that there is sufficient due cause or
     economic justification for the importation for conversion in the Community of PFT
     rather than direct importation of PSF already cut in the exporting country because
     this entails certain cost savings in terms of stock keeping and allows for greater
     flexibility to meet customer demand for various sizes and small orders of PSF.
(16) This argument was rejected as such benefits were not quantified by the importers
     and even if such benefits do exist, they would appear not to outweigh the
     additional cost in terms of packaging and labour referred to above. In any event,
     such alleged benefits would also have existed prior to the imposition of the anti-
     dumping measures and, if significant, it could reasonably be expected that some
     operators in the Community or in other comparable markets would have availed
     themselves, at least to some extent, of this opportunity prior to the imposition of
     the anti-dumping measures. As this was found not to be the case (PFT imports
     from Belarus prior to the imposition of the provisional anti-dumping measures
     were statistically negligible), it must be concluded that the benefits claimed are, at
     most, of secondary importance only.
                                             13
 ---pagebreak--- (17)   The converters and importers also submitted that it was economically justifiable
       for them to convert PFT imported from Belarus since the necessary cutting
       capacity did already exist in the Community so that no special, new investments
       were required (absence of "opportunity cost"). It was also argued that the fact
       that PFT from sources other than Belarus was converted prior to the initiation of
       the anti-dumping investigation showed that importation of PFT from Belarus for
       conversion in the Community was also justifiable. This argument was rejected for
       the following reasons.
       Except for a limited trial production during the first three months of 1996, the
       particular circumvention practice under investigation (importation of PFT from
       Belarus for conversion into PSF in the EU) only began after the imposition of the
       provisional anti-dumping measures in March 1996.             It follows that it can
       reasonably be concluded that prior to imposition of the anti-dumping measures it
     • was not considered justifiable to use this cutting capacity to convert PFT imported
       from Belarus rather than directly importing PSF.
                                             14
 ---pagebreak--- In addition, imports of PFT from countries other than Belarus have been small and
even declining. It would also appear that such imports concern, to a large extent,
PFT used to produce tops - which, as stated above (see recital 9) is a stable and
small niche market requiring more complex processing and commanding a price
premium - rather than PFT for cutting into PSF, which is a commodity product. In
this respect, it should be noted that imports of PFT from other countries remained
stable but were dwarfed in relative terms by the massive influx of PFT from
Belarus which in itself accounted for 70 % of all PFT imports in 1996.
In any event, the argument is factually flawed since it was established during the
verifications that at least one converter in Italy specifically invested in additional
cutting equipment in order to meet growing supplies of PFT from Belarus. This
contradicts the alleged absence of opportunity cost mentioned above.
                                        15
 ---pagebreak---      (b)      Undermining of the remedial effects of the duty and evidence of dumping
              Undermining
(18) The Commission first determined whether the remedial effects of the duty are
     being undermined in terms of prices. To that end, a comparison was made
     between the average sales price in the Community of PSF cut from PFT
     originating in Belarus during the investigation period, and the "undumped" export
     price to the Community of PSF originating from Belarus as established in the
     original investigation period.
     The "undumped" export price of PSF was calculated at a CIF Community border
     level on the basis of the export price as established in the initial investigation. To
     this price customs duties (5,5 %) and anti-dumping duties (43,5 %) were added to
     arrive at an "undumped" level.
                                           16
 ---pagebreak--- A weighted average price ex-converter was determined for PSF cut frofn PFT
originating in Belarus. Adjustments to this price ("netbacking") were made in
order to ensure that a comparison was established at the, same level (CIF
Community border). To this aim, discounts, SG&A and intra-EC transport cost
(not included in SG&A) were deducted. Subsequently, it was established to which
extent the average price of PSF converted from PFT originating in Belarus has
undercut the "undumped" export price thus undermining the remedial effects of
the duties.
The total undermining amounts were expressed as a percentage of the total CIF
Community border value of imports of PSF at the "undumped" price level. The
comparison showed that the average sales price of PSF converted from PFT
originating in Belarus has undercut the "undumped" export price of PSF imported
from Belarus by 19,45 %.
The Commission has also verified whether the remedial effects of the duty are
being undermined in terms of quantities. As explained in detail above (see recital
12), PSF imports from Belarus were nearly totally substituted by imports of PFT
from that country immediately after imposition of provisional anti-dumping duties
on PSFfromBelarus.
                                      17
 ---pagebreak---      In the light of the foregoing, it must be concluded that the sales of PSF converted
     from PFT originating in Belarus have undermined the remedial effect of the anti-
     dumping duties both in terms of prices and quantities.
             Evidence of Dumping
(19) In order to determine whether evidence of dumping could be found with respect to
     the PFT imported in the Community for conversion into PSF during the
     investigation period, the following methodology was followed.
     Delivered duty unpaid purchase prices charged to the importers for PFT from
     Belarus were used as a point of departure. In order to increase the comparability
     of this price with the normal value established for PSF during the original anti-
     dumping investigation, the conversion cost in the Community established in the
     present investigation was added so as to effectively construct a PSF price. From
     this price, intra-ECfreight/handlingcosts and credit costs were then deducted to
     calculate a CIF Community border price for PSF.
                                            18
 ---pagebreak--- This CIF price was then netted back to FOB Belarus level by deductingfreightand
handling cost from Belarus to the EU border and by deducting the respective
mark-up of intermediary trading houses. The difference between this FOB Belarus
price and the FOB Taiwan normal value as established in the original anti-dumping
investigation - Taiwan having been selected in the original investigation as
analogue country to calculate normal value - was then expressed as a percentage
of the CIF Community border price for PSF.
The aggregated, weighted average dumping margin thus established was found to
be 12,31 %. It is therefore concluded that there is evidence of dumping in relation
to the normal value previously established.
                                       19
 ---pagebreak---                          D.      PROPOSED MEASURES
               1.      Nature of the measures: extension of the duty
(20) In view of the abovefindingsand considerations, the anti-dumping duty in force
     with respect to PSF originating in Belarus should be extended to PFT originating
     in that country.
         2.     Levy of the extended duty on imports entered under registration
(21) The extended duty should be levied on the PFT which entered the Community
     under registration, as described in recital (1).
                                E.      PROCEDURE
(22) Interested parties were informed of the essential facts and considerations on the
     basis of which the Commission intended to propose the extension of the definitive
     anti-dumping duty in force to the PFT concerned and have been given the
     opportunity to comment and their comments have been duly considered.
                                            20
 ---pagebreak--- HAS ADOPTED THIS REGULATION
                                        Article 1
1.      The definitive anti-dumping duty imposed by Regulation (EC) No 1490/96 on
imports of polyester staplefibrefalling within CN code 5503 20 00 originating in Belarus
is hereby extended to imports of polyester filament tow falling within CN code
5501 20 00 originating in Belarus.
2.      The duty extended by paragraph 1 of the present article shall also apply to imports
of polyesterfilamenttow originating in Belarus which have been registered in accordance
with Article 2 of Commission Regulation (EC) No 693/97 and Articles 13 (3) and 14 (5)
of Regulation (EC) No 384/96.
                                        Article 2
Customs authorities are hereby directed to discontinue registration of polyester filament
tow originating in Belarus and classifiable within CN code 5$01 20 00 pursuant to
Article 2 of Commission Regulation (EC) No 693/91.
                                             21
 ---pagebreak---                                         Article 3
This Regulation shall enter into force on the day following 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,   .          1998
                                                                           For the Council
                                                                             The President
                                            22
 ---pagebreak---  ---pagebreak---                                                                   ISSN 0254-1475
                                                           COM(97) 672 final
                                              DOCUMENTS
EN                                                                02  08   11
                                    Catalogue number : CB-CO-97-694-EN-C
                                                             ISBN 92-78-28918-3
Office for Official Publications of the European Communities
L-2985 Luxembourg
                                          23