CELEX: 51981PC0823
Language: en
Date: 1981-12-22
Title: Proposal for a COUNCIL REGULATION (EEC) imposing a definitive anti-dumping duty on phenol originating in the United States of America (submitted by the Commission to the Council)

ARCHIVES HISTORIQUES
DE LA COMMISSION
COLLECTION RELIEE DES
DOCUMENTS "COM"
COM (81) 823
Vol. 1981/0231
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 ---pagebreak--- COMMISSION OF THE EUROPEAN COMMUNITIES
                                                                    COM ( 81 ) 823 final
                                                                    Brussels . 22 december 19°1
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                                     Proposal for a
                               COUNCIL REGULATION ( EEC )
               imposing a definitive anti-dumping duty
               on phenol originatinggin the United States
                                             of America
                ( submitted by the Commission to the Council)
 CCM(?r) 823 final
 ---pagebreak---                             iXPLANATORY MÉMORANDUM
 In July 1981 / the Cojwmssion imposed a provisional anti-dumping duty
of 19 / 9% on imports of phenol originating in the United States of
Americad ) with the exception of some companies for which the rate
pf duty was lower and others which were excluded from the duty .          The
period of validity of this provisional duty was subsequently extended
until 18 January 1982 by a Council Regulation of 9 November 1981X2 ).
The facts as finally established show a dumping margin of 14,1% for all
export § of phenol to the Community except for certain companies which
had the following dumping margins :
Allied Corporation 12,2%
ICC Industries Inc 10,5%
Monsanto Company 6,5 A
Shell Chemical Company 0%
As regards injury to the Community industry this consists essentially of
an increase in the market share held by U.S. phenol to the detriment of
Community producers and in severe price depression , particularly in the
second half of 1980 , when Community producers made sharply decreased
profits or severe losses .
In order to protect the Community 's interests it is therefore proposed
to impose a definitive anti-dumping duty of 14,1% on phenol of American
origin .   Exclusion from this duty is proposed for Georgia Pacific
Corporation and Shell Chemical Company , which were found not to have
dumped and Dow Chemical Company , General Electric Company and United
States Steel Corporation which have given undertakings as to future exports
to the Community which the Commission considers acceptable .
                          ■
It is further proposed that the amounts secured        by way of provisional
duty should be definitively collected up to the rates definitively determined ,
( 1 ) Regulation ( EEC ) No 2017 /81 , 0J No L 195 , 18.7.1981 , p . 22 .
( 2 ) 0J No L 322 , 9.11.1981 , p. 1
 ---pagebreak---                  COUNCIL RI6UUTI0N ( IIC ) N 8
                 °f
imposing a definitive anti-dumping duty on phenol originating in the
United States of America
THE COUNCIL OF THE EUROPEAN COMMUNITIES ,
                    I
Having regard to the Treaty establishing the European Economic Community ,
Having regard to Council Regulation ( EEC ) N° 3017 /79 of 20 December 1979
on protection against dumped or subsidized imports from countries not
members of the European Economic Community , and in particular Article 12
thereof,              !
Having regard to the proposal submitted by the Commission after consultation
with the Advisory Committee set up under Article 6 of Regulation ( EEC )
N° 3017/79,           |
Whereas the Commission by Regulation ( EEC ) N° 2017/81 ^ imposed a provisional
anti-dumping duty of 19.9% on imports of phenol originating in the United
States of America , with the exception of exports made by the following
companies for which the rate of duty was :
- Allied Corporation , Morristown , New Jersey :                12.2%
- ICC Industries Inc ., New York , NY :                         10.5%
- Monsanto Company , St Louis , Missouri :                       9.7%
- Shell Chemical Company , Houston , Texas :                     8.8%
Whereas   exports made by    Dow Chemical Company and Georgia Pacific
 Corporation were excluded from the provisional anti-dumping duty ;
 Whereas the period of validity of this provisional duty was extended for
 a period not exceeding two months by Council Regulation ( EEC) N° 3197/81 ^;
  0J N° L 339 , 31.12.1979 , p.  1
 20J N° L 195, 18.07.1981 , p. 22
 30J N° L 322, 09.11.1981 , p. 1
 ---pagebreak---                                         - 2 -
          Whereas , in the course of the subsequent examination of the matter , the
          interested parties had the opportunity to make known their views in writing ,
          to be heard by the Commission and to develop their views orally , to
          inspect non-confidential information relevant to the defence of their
          interests and to be informed of the essential facts and considerations on
          the basis of which it was intended to make a final determination ; whereas
          the complainants and most of the exporters and importers concerned availed
L 129 / 1
15.5.81
          themselves of thes'e possibilities by making known their views in writing
          and orally ; whereas the Commission , after a careful analysis of the
          information available decided to carry out further inspections at the
          premises of Allied Corporation ( New Jersey ), Shell, Chemical Company ( Texas ),
          U S Steel Corporation ( Pennsylvania ), Monsanto Europe SA ( Brussels , Belgium )
          and Shell International Chemical Company ( London , UK );
          Whereas Georgia Pacific Corporation which had been excluded from the
          provisional duty because its export sales were effected at prices above
          normal value provided information showing that no exports to the Community
          had been made since imposition of the provisional duty ;     whereas in these
          circumstances the preliminary determination and the exclusion of this firm
          from the application of the duty is confirmed by the Commission ;
          Whereas Dow Chemical Company , the second company excluded from the provisional
          duty because of its price undertaking given to the Commission , whilst
          maintaining this undertaking , contests the validity of the preliminary
          determination of dumping made by the Commission on the grounds that its
          phenol exports to the Community are manufactured from cumene of Community
          origin , which in view of the small value added to it in the United States
          of America retains its Community origin; whereas the Commission considers
          that , in accordance with Article 5 of Regulation ( EEC ) N° 802/ 68^ concerning
          the common defini tion of the idea of origin of merchandise, the phenol
          exported by the company is of American origin because the last process by
          which it becomes a new product takes place in the USA ; whereas , moreover ,
          upon entering the product for consumption in the Community the company
           itself declares the product to be of American origin ; whereas , in these
           circumstances the preliminary determination of dumping is now considered
          by the Commission to be definitive ;
            0J N° L 148 , 28.6.1968 , p. 2
 ---pagebreak---                              - 3 -
Whereas , in seeking to determine the existence of dumping for the other
companies whose exports had not been excluded the Commission compared the
export prices to the Community with the normal value of the product in .
question ;
Whereas , the Commission determined normal value on the basis of the domestic
prices excluding , however , certain sales from the calculation of normal
value , such sales having been considered not to have been in the normal
course of trade either because of special conversion arrangements or of
the particular competitive situation relating to a customer ; whereas for
those exporters who did not sell on the domestic market , normal value was
determined on the basis of the .weighted average selling prices of their
suppliers ;
Whereas export prices were determined on the price actually paid for on-
specif ication products exported to the Community, except for Dow Chemical
Company and Monsanto Company , whose exports were made to subsidiary companies
in the Community and for which export prices were constructed on the basis
of the prices at which the imported product was first resold to an independent
buyer , suitably adjusted to take account of actual costs incurred , as
established during the investigation, and a profit margin of 5% before
taxation considered reasonable by the Commission;
Whereas , however , the Monsanto Company                   has contested
the profit margin used by the Commission and has presented eight different
sources of information purporting to show that normal profit on phenol
sales is less than 5%; whereas five of these sources are not engaged in
dealing in phenol whilst one of them is a Community producer who has given
completely contradictory information to the Commission; whereas the
remaining two companies who have supplied information are        customers of
 ---pagebreak--- Monsanto Company who apart from their statements regarding profit margins
made to Monsanto Company refused all cooperation with the Commission in the
proceeding ;        whereas the Commission has itself requested and received
information from independent importers and other sources which indicate that
normal profit levels for importers or traders in phenol in the Communi tyf^ary
between V/, and 102 ;         the Commission concluded , therefore , that in
view of the widely divergent views presented, it is impossible to make a
general estimate of profit margins since the amount depends on specific
circumstances ;           in this context the size and structure of Monsanto 's
operations in the Community , the degree of capital investment , and the
services which they carry out has to be borne in mind and compared with the
 less sophisticated and more rudimentary organization of smaller brokers
or traders ;           taking all this into account the Commission considered
that the minimum profit level which should be reasonably used would be
the average of the range of margins which it obtained as a result of its
enquiries ;
Whereas in those cases where producers did not sell directly to the Community
the export price was taken as being that at which they sold to traders or
dealers for onward export to the Community ;              *■
Whereas the comparisons made for the year 1980 showed that dumping occurred
in both semesters of the year ; whereas , however , since the most serious
injury was shown to have taken place during the last half of 1980 , it was
considered that the dumping margins established for this period should be
determinant in calculating the anti-dumping duty applicable to those
companies which exported to the Community during this period ; whereas , for
those companies which had only exported to the Community during the first
six months of 1980 this latter period was considered to be the investigation
period ; whereas account was taken , where appropriate , of differences
affecting price comparability such as differences in conditions and terms
of sale and differences .in level of trade relating in particular to transport ,
payment terms and selling costs ;
 ---pagebreak---                             - 4a-
Whereas for those companies which only exported to the Community during the
first semester of 1980 the following weighted average dumping margins were
finally established :
filled Corporation                 12.2%
ICC Industries Inc                 10 . 5%
Mqpsanto Company                    6.5%
Whereas for these companies which exported during both semesters of t980
the following weighted average dumping margins were finally established :
                                   Tst half .         2nd half
                                      1980              1980
£hell Chemical Company               A. 2%               0
0 S Steel Corporation                6.2%               14.1%
ï
 ---pagebreak---                                         - 5 -
           Whereas, for those exporters who neither repined to the Commission 's
           questionnaire nor made themselves known otherwise in the course of the
           preliminary investigations , dumping was determined on the basis of 'the
           facts available ; whereas , in this context , it had to be borne in mind that
           the complaint alleged dumping margins varying from 25 to 32% ; whereas ,
L 195 / 22 however , the Commission considered that the results of its investigation
18.7.81    provided a more accurate determination of the level of dumping ; whereas ,
           therefore , in making its choice between the different dumping margins
           determined the Commission considered that it would constitute a bonus for
           non-cooperation to assume that the dumping margin for these exporters was
           any lower than the highest dumping margin of 14.1% determined with regard
           to an exporter who had fully cooperated;                  >
           Whereas , with regard to injury caused by the dumped imports to the Community
           industry , the Commission has re-examined and where necessary revised all
           the relevant data for 1980 ;
           Whereas imports of phenol of US origin increased from 50 683 tonnes in
           1979 to 72 173 tonnes in 1980 ; whereas it was shown that the majority of
           the imports during 1980 were made at dumped prices ; whereas the share of
           the free , i.e. , non-captive market , held by US imports amounted to 20.5%
           in^978 , 16.4% in 1979 and 24.0% in 1980; whereas the total market share
           of /these   imports rose from 6.7% in 1978 to 8.8% in 1980;
           Whereas this increase in imports amounted to approximately ^7% -j n the first
           half of 1980 and 34% in the second half of 1980 compared with the same periods
           in 1979 ; whereas the Community producers' share
           of the free market fell from 78.1% in 1979 to 52.5% in the first half of
           1980 as a result of    the increased imports ; whereas this increase in imports
           at mainly dumped prices led to severe price depression on the Community
           market ; whereas despite assertions to the contrary by U S Steel the
 ---pagebreak---                               - 6 -
Commission has established that the selling prices of US producers undercut
 EEC producers during every month of 1980 and that undercutting was most
severe during the second half of 1980 ; whereas despite its attempts to
meet low prices from US suppliers in the second half of 1980 the Community
industry only regained part of the free market lost in the first six months
of the year and finished the year 1980 with only 69.4% of this market ;
whereas as a result of the above Community producers suffered very heavy
losses or greatly reduced profits ; whereas the Commission found that for
the majority of these producers the average profit before tax ofi5%    oh
turnover earned in 1979 became a loss of 10% on turnover in 1980;
Whereas production of phenol in the Community fell from 944 639 tonnes in
1978 to 816 781 tonnes in 1980 and capacity utilization fell from 72% to
59% during the same period ;
Whereas the Commission has considered the injuries caused by other factors
which , individually or in combination , are also affecting the Community
industry ; whereas it has determined that whilst total consumption in the
Community has diminished from 913 904 tonnes in 1978 to 820 020 tonnes in
1980 , production has fallen more than could be accounted for by the
decrease in consumption ; whereas meanwhile free market consumption has
increased during the same period from 298 000 tonnes to 301 000 tonnes ;
whereas , moreover , whilst imports from countries other than that named in
the complaint have increased , from 3 512 tonnes in 1978 to 19 950 tonnes
in 1980 , they have been at considerably lower volume than those from the
United States of America and have been at prices similar to those obtained
by the Community industry ; whereas the volume of non-dumped imports
represented only 31% of total imports of phenol for 1980 ;
Whereas the impact of the non-dumped imports on the phenol market in the
Community and the effect of the contraction in demand have been isolated
from the impact of the dumped imports ; whereas the substantial and sharp
increase of imports of dumped phenol since 1978 , and in particular in 1980 ,
and the extremely low prices at which the product has been offered for sale
in the Community in the second half of 1980 by American exporters has led
the Commission to conclude that the injury caused to the Community industry
concerned by the dumped imports taken in isolation should be regarded as
 ---pagebreak---                                  - 7 -
   Whereas , in these circumstances , protection of the Community 's interests
   call for the imposition of a definitive anti-dumping duty on imports of
   phenol originating in the United States of America which , having regard
   to the extent of the injury caused , should be equal to the dumping margins
   established , and for the definitive collection up to the rates definitely
   determined , of the amounts secured by way of provisional anti-dumping duty ;
   Whereas , prior to the introduction of the provisional anti-dumping duty ,
   the Commission accepted an undertaking entered into by Dow Chemical Company ;
   whereas it is , consequently , appropriate to continue to exclude imports
   of the products manufactured and exported by this company from the
   application of the anti-dumping duty ;
                                                                      Whereas
   United States Steel Corporation meanwhile has undertaken to cease its
   exports to the Community ; whereas the Commission considers this    under­
   taking   to be acceptable ; whereas it is consequently appropriate to exclude
   the imports of the products manufactured and exported by this     company
   from the application of the duty ; whereas another American producer ,
   General Electric Co ( Massachussets ), which has never exported to the EEC ,
   offered an undertaking not to export in the future at a price below the
   prevailing normal value at the time of export ; whereas the Commission ,
   considers this undertakjng to be acceptable; whereas it is, consequently,
   appropriate to exclude for the future the products manufactured and
   exported by this company from the application of the duty ,
   HAS ADOPTED THIS REGULATION :                     I
                                                 ' M
                                 Article 1
                            i
   1.   A definitive anti-dumping duty is hereby . imposed on phenol falling
   within Common Customs Tariff subheading ex 29.06 A I and corresponding to
   NIMEXE code ex 29.06-11 , originating in the United States of America .
   2.   This duty shall not apply to phenol manufactured and exported by
Dow Chemical Company ,   General Electric Company , Georgia Pacific Corporation,
   Shell Chemical Company and United States Steel Corporation .
 ---pagebreak--- 3.  The rate of the duty shall be 14.1 /i on the basis of the customs value
determined in accordance with Council Regulation ( EEC ) N° 1224 / 80 of
                                                            1
28 May 1980 on the valuation of goods for customs purposes , except for
exports made by the following companies for which the rate of duty shall be
- Allied Corporation          12.2%
- ICC Industries Inc           10.5 A
- Monsanto Company        i     6.5%
4.  The provisions in force concerning customs duties shall apply for the
application of this duty .
                               Article 2
The amounts secured by way of provisional duty pursuant to Regulation ( EEC )
N° 2017 / 81 shall be definitively collected up to the rates set out in
paragraph 3 of Article 1 above .               ,
                               Article 3
This Regulation shall enter into force on the day of its publication in
the Official Journal of the European Communities .
This Regulation shall be binding in its entirety and directly applicable
in all Member States .
Done at Brussels ,                             For the Council