EC, August 21, 1998, No 98-C 264/02

THE COMMISSION OF THE EUROPEAN COMMUNITIES

The Commission has received a complaint pursuant to Article 11 of Council Regulation (EC) No 2026-97 (Î), (hereinafter referred to as the "Basic Regulation'), alleging that imports of polyester textured filament yarn, originating in India and the Republic of Korea, are being subsidised and are thereby causing material injury to the Community industry.

1. Complaint

The complaint was lodged on 7 July 1998 by the International Rayon and Synthetic Fibres Committee (here inafter referred to as the "complainant') on behalf of producers representing a major proportion of the total Community production of polyester textured filament yarn.

2. Product

The product allegedly being subsidised is synthetic filament yarn, not put up for retail sale: textured yarn of polyesters currently classifiable within CN code 5402 33 00. This CN code is only given for information.

3. Allegation of subsidy

(a) India

It has been alleged that Indian producers of the product concerned have benefited from a number of subsidies granted by the Government of India. These alleged subsidies are (a) benefits for industries located in export processing zones or export oriented units, by means of tax and duty exemptions, (b) the duty entitlement passbook scheme (which provides for credits for import duty on materials used by exporters), (c) an income tax exemption on profits earned from exports, (d) the export promotion capital goods scheme (which provides for preferential duty rates on imports of capital goods used for export manufacture) and (e) the advance licence scheme, which also provides for import duty exemptions on products used in relation to exports.

The total amount of subsidy is estimated at 10 to 15 %.

It is alleged that the above schemes are subsidies since they involve a financial contribution from the Government of India and confer a benefit to the recipients i.e. to exporters of polyester textured filament yarn. They are alleged to be contingent on export performance and therefore specific and countervailable.

(b) Republic of Korea

It has been alleged that Korean producers of the product concerned have benefited from a number of subsidies granted by the Government of Korea. These alleged subsidies are grants from a government modernisation fund for textile firms, a drawback of duty on imported materials in excess of the amount of duty normally payable and an income tax deduction to cover foreign currency losses on export transactions. They also involve tax incentives and credits for investments to improve productivity and introduce new technology, with higher amounts being granted if domestically produced products are used, as well as income tax deductions for overseas business expenses and unlimited tax deductions for overseas entertainment expenses, while such domestic expenses are limited by a ceiling. Finally, the complainant has cited subsidised loans for certain strategic industries (including man made fibres) granted through the localisation scheme for the capital goods industry, low interest preferential facility loans to export oriented industries granted by the Korean Development Bank and export credits and advance payment guarantees granted by the Export Import Bank of Korea at below the appropriate interest rate.

The total subsidy is estimated at 10 %.

It is alleged that the above schemes are subsidies because they involve a financial contribution from the Government of Korea and confer a benefit to the recipients i.e. to exporters of polyester textured filament yarn. They are alleged to be either contingent on export performance, contingent on the use of domestic over imported goods, or otherwise specific to the man made fibres industry, and are therefore specific and countervailable.

4. Allegation of injury

The complainant alleges and has provided evidence that imports of the product concerned from India and the Republic of Korea have increased overall in absolute terms and in terms of market share.

It is further alleged that the volume and the prices of the imported product concerned have, among other consequences, had a negative impact on the quantities sold and the level of prices charged by the Community producers, resulting in substantial adverse effects on the overall performance and the financial situation of the Community industry.

5. Procedure for the determination of subsidy and injury

Having determined, after consulting the Advisory Committee, that the complaint has been lodged on behalf of the Community industry and that there is sufficient evidence to justify the initiation of a proceeding, the Commission hereby initiates an investigation pursuant to Article 10 of the Basic Regulation.

(a) Sampling for investigation of subsidy In view of the apparent large number of exporters, importers, types of product or transactions concerned, the Commission may apply sampling techniques, in accordance with Article 27 of the Basic Regulation.

In order to enable the Commission to decide whether sampling is necessary and, if so, to select a sample, all exporting producers, or representatives acting on their behalf, are hereby requested to make themselves known by contacting the Commission and by providing the following information on their company or companies within 15 days of publication of the present notice:

-name, address, telephone and fax numbers, contact person,

-the turnover in local currency and the volume of the product concerned sold for export to the Community during the period 1 July 1997 to 30 June 1998,

-the turnover in local currency and the volume of the product concerned sold on the domestic market during the period 1 July 1997 to 30 June 1998,

-the precise activities of the company with regard to the production of the product concerned,

-the names and the precise activities of all related companies (i.e. companies with which there is an association or a compensatory arrangement) involved in the production and/or selling (export and/or domestic) of the product concerned, including any related importers in the Community,

-any other relevant information that would assist the Commission in the selection of the sample,

-an indication of whether the companies agree to their inclusion in the sample which implies replying to a questionnaire and accepting an on the spot investigation of their responses.

In order to obtain the information it deems necessary for the selection of the sample of exporting producers, the Commission will in addition contact the authorities of the exporting countries, the known exporters and any known associations of exporters.

The Commission may also decide to select a sample of importers.

Any other party concerned who wishes to submit any relevant information regarding the selection of the sample is also requested to make itself known by contacting the Commission and to submit the information within 15 days of publication of the present notice.

(b) Final selection of sample

The Commission intends to make the final selection of the sample for each exporting country after having consulted the parties concerned that have expressed their willingness to be included in the sample.

Companies included in the sample must reply to a questionnaire and cooperate within the framework of the verification visit.

If sufficient cooperation is not forthcoming, the Commission will base its findings, in accordance with Articles 27(4) and 28 of the Basic Regulation, on the facts available.

(c) Questionnaires

In order to obtain the information it deems necessary for its investigation, the Commission will send questionnaires to the complainant Community producers, to any known representative association of exporters or importers and to the authorities of the countries concerned.

Once the final selection of the relevant sample has been made, the Commission will send questionnaires to the companies included in this sample.

Exporting producers in the countries concerned who submit a request for individual treatment, with a view to the application of Articles 27(3) and 15(3) of the Basic Regulation, have to submit a duly completed questionnaire within the general time limit set in paragraph 7(a) of the present notice. It is in their interest, therefore, to immediately request a questionnaire from the Commission or alternatively, from the national authorities. However, such parties should be aware that, if sampling is applied to exporters, the Commission may decide not to grant them individual treatment if it considers that such treatment would be unduly burdensome and would prevent the timely completion of the investigation.

Importers wishing to reply to a questionnaire should request the questionnaire from the Commission within 15 days of the publication of the present notice.

(d) Collection of information and holding of hearings

All interested parties, provided that they can show that they are likely to be affected by the results of the investigation, are hereby invited to make their views known in writing and to provide supporting evidence.

Furthermore, the Commission may hear interested parties, provided that they make a request in writing and show that there are particular reasons why they should be heard.

6. Community interest

In accordance with Article 31 of the Basic Regulation, and in order that a decision may be reached as to whether, in the event that the allegations of subsidy and injury are substantiated, the adoption of anti-subsidy measures would be in the Community interest, the complainants, importers and their representative associations, and/or representative users may, within the general time limit specified in this notice, make them selves known and provide the Commission with information. It should be noted that any information submitted pursuant to this Article will only be taken into account if supported by factual evidence at the time of submission.

7. Time limits

(a) General time limit

Interested parties, if their representations are to be taken into account during the investigation, must make themselves known, present their views in writing and submit information, unless otherwise specified, within 40 days of the date of the publication of this notice in the Official Journal of the European Communities. Interested parties may also apply to be heard by the Commission within the same time limit. This time limit applies to all interested parties, including the parties not named in the complaint, and it is consequently in the interest of these parties to contact the Commission without delay.

(b) Specific time limit in respect of sampling All information relevant for the selection of the sample should be submitted to the Commission within 15 days of the publication of this notice, given that the Commission intends to consult parties concerned that have expressed their willingness to be included therein on the final selection of the sample within a period of 21 days of the publication of this notice.

(c) Commission address for correspondence

European Commission Directorate General - External Relations, Attn: Mr A. J. Stewart, Directorate E, Rue de la Loi/Wetstraat 200, BÜ1049 Brussels. Fax (32Ü2) 295 65 05 Telex COMEU B 21877.

8. Non cooperation

In cases in which any interested party refuses access to or does not provide the necessary information within the time limits, or significantly impedes the investigation, provisional or final findings, affirmative or negative, may be made in accordance with Article 28 of the Basic Regulation, on the basis of the facts available.

(Î)ÙOJ L 288, 21.10.1997, p. 1.