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REPORT OF FINDINGS ON THE ANTI-DUMPING PROTEST AGAINST THE IMPORTATION OF
POLYPROPYLENE RESINS
(H.S. HEADING NO. 3902-10 00) FROM KOREA UNDER SECTION 301 OF THE TARIFF AND
CUSTOMS CODE,
AS AMENDED BY R.A. 8752 (ANTI-DUMPING INV. NO. 99-04)
1. EXECUTIVE SUMMARY AND CONCLUSION
BACKGROUND
On 08 February 1999, Petrochemical Corporation of
Asia-Pacific (Petrocorp) and JG Summit Petrochemical Corporation (JG Summit) jointly filed
with the Department of Trade and Industry (DTI) an Anti-Dumping case against the
importation of Polypropylene (PP) Resins (HS subheading 3902.10 00) from South Korea.
The protest was endorsed by the DOF to the Bureau of Import
Services (BIS) of the Department of Trade and Industry (DTI) on 12 April 1999 for initial
investigation. The DTI-BIS in its report dated 10 November 1999, found the information
supporting the petition of Petrocorp and JG Summit as constituting a prima facie case of
dumping and in view thereof decided to initiate the conduct of preliminary determination
for purposes of imposition of provisional measures (anti-dumping bond). Notice of
initiation of investigation was published in Manila Bulletin and Philippine Star on 16
August 1999.
The DTI-BIS issued its report of positive preliminary findings
on the case against seven (7) exporters of fourteen (14) grades of PP resins from South
Korea with the recommendation for the imposition of a provisional measure (Anti-dumping
bond) ranging from 4.20% to 40.53% of the export price. Pursuant to Section 301 of the
Tariff and Customs Code of the Philippines, as amended by RA 7843, and further amended by
RA 8752, BIS endorsed the case on 10 November 1999 to the Tariff Commission (Commission)
for formal investigation.
In compliance with procedural requirements, notices were sent to
the Philippine Embassy in South Korea and South Korean Embassy in Makati, Philippines,
informing them that the Commission had assumed jurisdiction over the case for formal
investigation. Individual notifications were likewise sent to the Protestants, Korean
exporters, Philippine importers, other importers, and other interested parties.
Invitations to consultations and pre-hearing conferences were also sent to all interested
parties. A notice of public hearing was published in two (2) newspapers of general
circulation on 19 January 2000. All known identified interested parties and concerned
government agencies were likewise sent individual notices.
1.2 PERIOD OF INVESTIGATION
The Commission’s investigation covered imports of PP
resins for the 12-month period, 01 January to 31 December 1998.
1.3 CONCLUSION
1.3.1 On the Determination of Like Product
Having examined the product under consideration and the locally
manufactured product, the Commission is satisfied that the local and the imported PP
resins classified under HS subheading 3902.10 00 are similar as to their manufacturing
process, chemical composition, physical characteristics, and tariff classification but
different however with respect to the additive package, the sole determinant of the
properties of the finished products.
Convinced that there were PP grades with no locally produced
equivalents in terms of additive contents during the POI, the Commission excluded the
resins listed hereunder.
GRADES |
Company |
Code |
| Injection
Grade |
Daelim |
PP137T |
| Fiber |
Honam |
FR160 |
|
Yuhwa |
5016H |
|
Hyosung |
S700 |
| Film |
|
|
| BOPP |
Hyosung |
F300
series |
|
Hyundai |
H2220 |
|
SK/Yukong |
H229 |
|
Yuhwa |
5014L |
|
Honam |
FO120A |
|
Hyundai |
H2210 |
|
SK/Yukong |
H221P |
| IPP |
Yuhwa |
1088B |
|
Honam |
FI-160P |
| Masterbatch |
STC |
SL137H |
|
STC |
SL116T |
|
Yuhwa |
5014L(AB605) |
|
Yuhwa |
5014L(AB405) |
|
Yuhwa |
5014L
(MAT) |
|
STC |
AS237H |
|
STC |
M/B1779 |
|
STC |
PA20H |
1.3.2 On Domestic Industry Support
Petrocorp and JG Summit were the only manufacturers of PP
resins in the Philippines during the POI. As such, the applicants satisfied the
requirement of domestic industry support.
1.3.3 On Price Difference
Export Price
T he Commission based its
estimates of export price on import entries submitted by the protestants, the protestees
and those on file with the Commission that were validated with Societe Generale de
Surveillance's (SGS) furnished summary of Clean Report of Findings (CRF).
Export prices were adjusted to ex-works
level (net of ocean freight, insurance, inland freight, handling cost, container tax,
wharfage, duty drawback, brokerage fee, documentation fee, trader’s compensation and
commission, if any).
Normal Value
Hyundai, Daelim, Honam, SK Corp., Hanwha and Samsung provided
sufficient evidence to permit the determination of Normal Value.
Domestic selling prices were adjusted to ex-factory level (net
of inland freight, packing cost, pollution tax, warranty expenses, loading and storage
expenses, trader’s commission, inventory cost, overhead cost and credit interest, if
any). For PP grades sold below cost to produce and sell, normal values were constructed
based on cost of production plus selling, administrative and general expenses, and margin
of profit.
For other exporters and traders, the normal values of the
respective manufacturers were used.
With regard to traders whose exports could not be traced as
originating from any of the identified manufacturers, best information available was used.
Dumping Margin
Dumping margins for each exporter were calculated on the basis
of comparing the calculated weighted average export price against the computed weighted
average normal value.
The estimated dumping margins of specific grades of PP resins per individual
exporter and trader above de minimis ranged from 2.09% to 39.42%.
1.3.4 On Negligible Volume of Dumped Imports
Dumped imports accounted for 9.41% of the total
Philippine PP importation. The volume of dumped imports being above three percent (3%) is
not negligible and therefore, for the purpose of Article 5.8 of the WTO Agreement on
Anti-Dumping Practices, there was no cause for termination of the investigation against
Korea.
1.3.5 On Determination of Material Injury and Causal Linkage
Volume Effect
The share of Korean imports to total PP imports was 48% in 1995,
38% in 1996 and 41% in 1997. The volume of dumped imports constituted 4.09% of
domestic consumption during the POI. Quarterly figures show a surge in dumped imports by
4,891 Mt or 2,037% in the 2nd quarter, before declining in last two quarters.
A comparison between the landed cost of dumped PP resins and the
average ex-factory domestic selling price of local PP show no occurrence of price
undercutting during the POI. The prices of dumped imports were higher by an average
10.41%, 6.81% and 10.72% on injection, yarn and film grade, respectively. No occurrence of
price undercutting was observed because the protestants, from the start of their
operation, were already selling below cost in order to gain market share and remain viable
in the business.
Despite the decreasing trend in the average quarterly selling
prices of the three PP grades, there was no evidence of price depression during the POI.
While selling prices remained below cost, the gap between the average selling price and
the average cost became narrower from the 1st to the 3rd quarters,
and in the 4th quarter, average selling price rose above average cost. Thus,
average selling prices were increasing relative to cost.
Price suppression occurred in all quarters of 1998. While the
gap narrowed from the 1st to the 3rd quarters, and average selling
price was above average cost in the 4th quarter, figures show that average
prices consistently fell below the landed costs of dumped PP.
Market Share
Despite market growth in 1998 and 1999, imports from Korea were
decreasing, while imports from other countries remained relatively constant. The entry of
local producers in 1998, caused a reduction in Korean PP's share to 28%, and further to
13% in the succeeding year. The substantial portion of domestic PP requirements were
already sourced locally, as evidenced by favorable market shares of domestic sales, which
accounted for 56.53% and 71.10% of domestic consumption in 1998 and 1999, respectively.
Apart from market recovery in 1998, the strong market entry and
share movements of local PP were tied with the pricing strategy of the industry. Local
selling prices were pegged at or below landed cost of imports, particularly dumped
imports, and more often resulting in levels which were below production cost.
An analysis of pricing strategy and market shares showed the
domestic industry capturing the highest share in the 3rd quarter of 1998 when
price suppression was at its peak. Similarly, narrower gaps between the landed cost of
dumped PP and local selling prices, which can be observed in the 1st and 2nd
quarters of the POI, resulted in smaller market shares.
Price suppression, which is dumping related, contributed
significantly to the domestic industry's market dominance in 1998.
Production, Sales and Inventory
Production supported sales. The increase in inventory in the 4th
quarter of 1999 was in anticipation of increase in demand in the succeeding quarter.
Capacity Utilization (CU)
During the POI, Petrocorp and JG Summit utilized 52% and 22% of
their capacities, respectively . Their Combined CU within the POI was 36%. Petrocorp and
JG Summit were able to increase their respective capacity utilization to 64% and 45% in
1999. By then, their combined CU was registered at 54%.
Cost of Production
The cost of propylene monomer, the basic raw material,
was decreasing, despite the fluctuation in the exchange rate during the POI. Production
cost at the end of the year was cheaper by 23.83% compared with the 1st
quarter.
Declining material cost could have presented the opportunity for
the industry to increase selling prices. The industry achieved this in part, as the gap
between quarterly average selling prices vis-à-vis cost narrowed from the 1st
to the 3rd quarter, resulting in declining negative EBITs. In the 4th
quarter, selling price overtook cost thus posting positive EBIT. The pressure of dumped
imports however tempered the domestic industry’s ability to raise its prices
significantly. Industry opted to maintain selling prices below landed cost of dumped
imports in order to defend its market share.
Profitability and Return on Sales
The negative impact of price suppression on
profitability was more apparent for Petrocorp than for JG Summit, since the former entered
the market in the first quarter of 1998, selling its products at a loss for the first
three quarters of the year. Income statements from the start of commercial operations,
May for Petrocorp and August for JG Summit, showed a 14.6% operating loss for the
former and a 5.8% operating income for the latter. JG Summit benefited more from low
monomer prices, with cost of sales representing 80.1% of sales. With respect to Petrocorp,
cost of sales was 107.2% of sales.
Financial Performance
Both companies suffered losses in operation, primarily
due to the selling of PP resin at prices below cost. Selling below cost affected their
ability to support interest and financing charges contributing to larger net losses.
Dumping, through price suppression, impacted negatively on the
profitability and financial performance of the industry.
Cash Flow
The company’s ability to raise prices because of
declining production cost was tempered by the presence of dumped imports. Had prices been
reflective of cost, sufficient revenue from sales would have been generated to fund
industry’s working capital requirements.
Investment and Ability to Raise Capital
Combined total assets of JG Summit and Petrocorp in 1998
were P16.5 billion, a 34.08% increase from the previous year. Both JG Summit and Petrocorp
had an authorized capital stock of P3 billion.
Foreign Currency Losses
The high cost of money for the servicing of foreign
currency denominated loans, as a result of the peso devaluation, had a negative impact on
the industry's financial position. However, the impact could have been mitigated had the
industry been able to generate revenues from operations.
Employment and Wages
Total workforce for both Petrocorp and JG Summit in the
PP operations grew from 334 in 1998 to 361 in 1999. Salaries and employees benefits
improved in both firms from 1998 to 1999.
Factors Other Than Dumping Which Caused Injury
a.Competition From Normal (Undumped) Imports
During the POI, domestic industry had a price advantage over
that of dumped and undumped imports from Korea, and from other countries . The industry
was forced however to lower its price in order to defend its market share, resulting in
operating losses.
b. High Cost of Production
JG Summit and Petrocorp's cost to produce PP resin was
relatively higher than the imported counterpart’s. The industry had to import its
propylene monomer requirements. High manufacturing cost in 1998 was attributed to huge
start-up expenses.
On the other hand, Korean PP manufacturers enjoyed a comparative
advantage since they had a naphtha cracker which produced their propylene monomer
requirements.
During the first two quarters of 1998, domestic industry’s
cost to produce and sell was higher than the price of undumped imports. On the other hand,
when propylene prices and conversion cost decreased further in the 3rd and 4th
quarters, the industry's cost to produce and sell fell below the price of
undumped imports by 11.08% and 17.6%, for yarn, and 22.56% and 21.78% for film.
On Determination of Threat of
Material Injury
Significant Rate of Increase of Dumped Imports
There was no significant increase in the volume of
dumped and undumped PP imports from Korea. In absolute terms, import volume for the period
of 1995-1997 was recorded within the 70,000 MT level. With the presence of local PP
manufacturers from 1998, Korean imports decreased.
As a percentage of total imports, Korean imports in 1998 and
1999 remained constant at about 50%.
Exporters Production Capacity
Data shows that South Korea’s actual production
output was increasing, averaging at 17.04% annual growth rate. Exports accounted for about
46% of production while domestic sales had an average share of 40%. These figures indicate
the export orientation of the manufacturers and the exporters flexibility to divert excess
production to other countries including the Philippines.
During the POI domestic demand of PP resins in South Korea was
only 737,000 MT. With an actual production of 2.3 million MT of which 1.2 million
MT were exported, the estimated freely disposable volume amounted to 411,000 MT .
As of 1999, the combined rated capacity of Korean PP
manufacturers was recorded at 2.5 million metric tons per year, which was projected to
expand to 2.8 million metric tons per annum.
Price Effect
A comparison between the landed cost of dumped PP resins and the
average ex-factory domestic selling price of local PP showed no occurrence of price
undercutting during the POI. The prices of dumped imports were higher by an average
10.41%, 6.81% and 10.72% on injection, yarn and film grade, respectively. No occurrence of
price undercutting was observed because the protestants, from the start of their
operation, were already selling below cost in order to gain market share and remain viable
in the business.
Despite the decreasing trend in the average quarterly selling
prices of the three PP grades, there was no evidence of price depression during the POI.
While selling prices remained below cost, the gap between the average selling price and
the average cost became narrower from the 1st to the 3rd quarters,
and in the 4th quarter, average selling price rose above average cost. Thus,
average selling prices were increasing relative to cost.
Price suppression occurred in all quarters of 1998. While the
gap narrowed from the 1st to the 3rd quarters, and average selling
price was above average cost in the 4th quarter, figures show that average
prices consistently fell below the landed costs of dumped PP.
As a percentage of production, quarterly inventory levels were
relatively higher during the 1st and 4th quarters of 1998 and 1999.
1.4 APPLICATION OF PROCEDURAL MATTERS UNDER RA 8752
(Anti-Dumping Act of 1999)
On 12 August 1999, RA 8752 was signed by the President amending
Section 301 of the Tariff and Customs Code of the Philippines. The aforesaid law became
effective on 04 September 1999 following its publication in Malaya and Philippine Standard
on 19 August 1999.
Procedural provisions of RA 8752 are applicable to the instant
anti-dumping case. In Republic vs. Court of Appeals, G.R. No. 92326, 24 January 1992, the
Court held:
"Procedural matters are governed by the law in force
when they arise, and procedural statutes are generally retroactive in that they apply to
pending proceedings and are not confined to those that begun after their enactment
although, with respect to such pending proceedings, they affect only procedural steps
taken after their enactment" (205 SCRA 356)
1.5 FINAL DETERMINATION
The Commission finds positive evidence of price differences and
is satisfied that dumping per se has caused material injury and threatens to cause more
material injury to the domestic industry.
It is therefore ordered that definitive anti-dumping duties be
imposed on the following exporters of polypropylene resins originating from South Korea.
Exporter(s) |
PP
Grade |
Dumping
Margin |
(US$/MT) |
(% of
Export Price) |
| |
|
|
|
Daelim Corp. |
PP101 |
14.63 |
3.90 |
| |
PA164V |
7.91 |
2.09 |
| |
PP164 |
0 |
0 |
| |
PP137V |
0 |
0 |
| |
|
|
|
Hanwha Corp. |
PH630 |
34.17 |
8.46 |
| |
PH460 |
23.38 |
5.49 |
| |
|
|
|
Kolon
Int’l |
SFC150B |
71.82 |
18.83 |
| |
|
|
|
Hyundai Corp. |
H3400 |
28.93 |
6.73 |
| |
H5300 |
10.48 |
2.51 |
| |
H4540 |
8.78 |
2.11 |
| |
H1500 |
0 |
0 |
| |
H4500 |
0 |
0 |
Samsung Gen.
Chemicals |
HY300 |
0 |
0 |
| |
|
|
|
SK Global |
H150F |
84.96 |
20.89 |
| |
H150N |
80.89 |
18.30 |
| |
H235W |
44.58 |
11.07 |
|
H360F |
35.61 |
8.89 |
| |
H730F |
27.19 |
6.85 |
| |
H380F |
0 |
0 |
| |
H870F |
0 |
0 |
| |
|
|
|
Do-One
Marketing |
H5300 |
0 |
0 |
| |
|
|
|
Jinwon
Trading |
H5300 |
12.75 |
3.16 |
| |
|
|
|
LG
International |
H550 |
148.62 |
39.42 |
| |
|
|
|
Sekitoku |
H550 |
128.15 |
32.19 |
| |
|
|
|
Sewon Corp. |
Note 1 |
28.94 |
9.32 |
| |
|
|
|
STC Corp. |
H150F |
0 |
0 |
| |
H320L |
0 |
0 |
| |
FC150B |
0 |
0 |
| |
SFC150B |
0 |
0 |
| |
|
|
|
Hyosung T
& C |
J700 |
73.67 |
18.03 |
| |
J600P |
46.52 |
10.51 |
| |
F600H |
46.14 |
11.51 |
| |
F600 |
39.33 |
9.24 |
| |
F501 |
29.16 |
6.77 |
| |
|
|
|
Note 1 – grade not determined
During the POI, it was established that there were no locally
produced equivalents for the PP resin grades listed below. Hence, the following were
excluded from the dumping protest:
GRADES |
Company |
Code |
| Injection Grade |
Daelim |
PP137T |
| Fiber |
Honam |
FR160 |
|
Yuhwa |
5016H |
|
Hyosung |
S700 |
| Film |
|
|
| BOPP |
Hyosung |
F300 series |
|
Hyundai |
H2220 |
| Film |
SK/Yukong |
H229 |
| BOPP |
Yuhwa |
5014L |
|
Honam |
FO120A |
|
Hyundai |
H2210 |
|
SK/Yukong |
H221P |
| IPP |
Yuhwa |
1088B |
|
Honam |
FI-160P |
| Masterbatch |
STC |
SL137H |
|
STC |
SL116T |
|
Yuhwa |
5014L(AB605) |
|
Yuhwa |
5014L(AB405) |
|
Yuhwa |
5014L (MAT) |
|
STC |
AS237H |
|
STC |
M/B1779 |
|
STC |
PA20H |
Should the Protestants be able to produce the equivalents of the aforementioned PP
resin grades during the effectivity of the dumping decision, the Commission will conduct
the corresponding review upon formal notification.
With regard to those exporters or producers in the exporting
country in question who have not exported the product to the Philippines during the POI,
their individual margins of dumping shall be determined following a review which shall be
initiated and carried out on an accelerated basis, provided that said exporters or
producers can show that they are not related to any of the exporters or producers in the
exporting country who are subject to the anti-dumping duties on the product. No
anti-dumping duties shall be levied on imports from such exporters or producers while the
review is being carried out.
1.6 REVIEW OF THE ANTI-DUMPING DUTY
Paragraph (O), Section 301 of the TCCP, as amended by RA 8752,
states:
"However, the need for the continued imposition of the
anti-dumping duty may be reviewed by the Commission when warranted ‘motu
propio’, or upon the direction of the Secretary, taking into consideration the need
to protect the domestic industry against dumping."
"If the Commission determine that the anti-dumping duty is no
longer necessary or warranted, the Secretary shall, upon its recommendation issue a
Department Order immediately terminating the imposition of anti-dumping."
2. LEGENDS AND ABBREVIATIONS
| Bestchem |
Best Chemicals &
Plastics Inc. |
| BIS |
Bureau of Import Services |
| BOC |
Bureau of Customs |
| BOPP |
Bi-axially Oriented
Polypropylene |
| Commission |
Tariff Commission |
| CPP |
Cast Polypropylene |
| CRF |
Clean Report of Findings |
| DAECO |
Daelim Corporation |
| DIC |
Daelim Industrial Co. Ltd. |
| DO |
Department Order |
| DOF |
Department of Finance |
| DTI |
Department of Trade and
Industry |
| EG |
Ethylene Glycol |
| EVA |
Ethylene Vinyl Acetate |
| GATT / Agreement |
General
Agreement on Tariffs and Trade |
| HDPE |
High Density Polyethylene |
| Honam |
Honam Petroleum Corp. |
| HPC |
Hyundai Petrochemical Co.
Ltd. |
| IPP |
Inflated Polypropylene |
| ISO |
International Organization
for Standards |
| JG Summit / JG |
JG Summit Petrochemical
Corp. |
| LC |
Letter of Credit |
| LDPE |
Low Density Polyethylene |
| LLDPE |
Low Linear Density
Polyethylene |
| NCC |
Naphtha Cracking Center |
| NSO |
National Statistics Office |
| PE |
Polyethylene |
| PetroCorp / Petro |
Petrochemical Corp. of Asia
Pacific |
| POI |
Period of Investigation |
| PP |
Polypropylene |
| PPIA |
Phil. Plastic Industry
Association |
| PVC |
Polyvinyl Chloride |
| RA 7843 |
Anti-Dumping Act of 1994 |
| RA 8752 |
Anti-Dumping Act of 1999 |
| SGS |
Societe Generale de
Surveillance |
| SM |
Styrene Monomer |
| TCCP |
Tariff and Customs Code of
the Phils. |
| VC |
Vinyl Chloride
Monomer |
3. INTRODUCTION
3.1 THE ANTI-DUMPING PROTEST
On 8 February 1999, Petrochemical Corporation of Asia-Pacific
(Petrocorp) and JG Summit Petrochemical Corporation (JG Summit) jointly filed with the
Department of Finance (DOF) an anti-dumping protest against the importation of
Polypropylene (PP) resins from South Korea on the ground that said products were imported
at dumped prices and were causing material injury to the domestic industry.
The protest was endorsed by the DOF to the Bureau of Import
Services (BIS) of the Department of Trade and Industry (DTI) on 12 April 1999 for initial
investigation. The DTI-BIS in its report dated 10 November 1999, found the information
supporting the petition of Petrocorp and JG Summit as constituting a prima facie case of
dumping and in view thereof decided to initiate the conduct of preliminary determination
for purposes of imposition of provisional measures (anti-dumping bond).
On 16 August 1999, the BIS sent notices of initiation of
investigation to all identified parties involved such as Korean exporters, manufacturers
and Philippine importers. Likewise, they were requested to submit responses to the BIS
questionnaires, to afford them the opportunity to present their positions. Notice of
initiation of investigation was published in Manila Bulletin and Philippine Star on 16
August 1999.
On 10 November 1999, the BIS issued its report of positive
preliminary findings. Based on the documents submitted, the total volume of dumped goods
from South Korea constituted 11.09% of the total Philippine imports, hence, not
negligible. Margin of dumping was calculated to range from 4.20% to 40.53% of the
export price.
Pursuant to Section 301 of the Tariff and Customs Code of the
Philippines, the DTI-BIS endorsed the protest together with its findings to the Tariff
Commission (Commission) for formal investigation on 10 November 1999.
On 01 December 1999, the Bureau of Customs issued Customs
Memorandum Circular No 504-99, subjecting specific PP resin grades from South Korea to
dumping bonds as calculated by the BIS.
3.2 ROLE OF THE COMMISSION
Pursuant to Section 301 (b) of the Tariff and Customs Code of
the Philippines (TCCP), as amended by Republic Act (RA) No. 7843 as implemented by
Department Order (DO) No. 150-95 of the DOF, and further amended by RA 8752, otherwise
known as Anti-Dumping Act of 1999 and in accordance with Article VI of General Agreement
on Tariff and Trade (GATT) 1994, the Commission, upon receipt of the endorsement of the
case, conducted formal investigation to determine the merits of imposing a definitive
anti-dumping duty by:
verifying if the kind or class of the article in question was imported into or
sold or was likely to be sold in the Philippines at a price less than its normal value;
ascertaining the difference, if any, between the export price and the normal
value of the article; and
determining if the domestic industry producing like articles suffered or was
threatened with material injury, or if the alleged dumping caused retardation of the
establishment of a domestic industry in the Philippines.
3.3 THE COMMISSION’S APPROACH TO THE ANTI-DUMPING CASE
The Commission’s investigation included the following
courses of action:
 | identification of all parties concerned; |
| notification of the government of South Korea, through its Embassy in Makati
city; trading firms that exported PP resins from South Korea; and all other interested
parties, both domestic and foreign; |
| conduct of consultation, pre-hearing conferences and public hearings; |
| acceptance of memoranda and counter-memoranda of the parties; |
| gathering of economic and financial data such as production, sales, inventory,
employment, etc.; |
| conduct of ocular inspection and verification of information submitted by parties
concerned; |
| conduct of on-the –spot investigation in the territory of the exporting
country; |
| evaluation and analysis of all information submitted/gathered to determine the
existence of dumping, material injury and causal link; |
| disclosure to all interested parties of the essential facts which form the basis
for the decision to apply definitive measures; and |
| Preparation of report of final determination and submission to the DTI for the
issuance of a Department Order for the imposition of the definitive anti-dumping duty, if
affirmative, or the release of cash bond, if negative. |
3.4 INTERLOCUTORY MATTERS
On 08 February 2000, importer-protestee Dart Philippines, Inc.
through counsel, filed a motion to dismiss the anti-dumping case against its importation
of PP resins from South Korea, on the following grounds: i) negligible volume of
importation i.e. 0.024% of the total PP imports; ii) type of resin imported is of
different quality and grade than that of the subject of the instant protest; and iii)
protestant’s application of an unstable pricing scheme which is inefficient in the
long term.
In an Order issued on 14 February 2000, the Commission denied
Dart’s motion ruling that the Commission only allows dismissal of an anti-dumping
case at any stage of its formal investigation on three grounds de minimis dumping
margin (estimated margin of dumping is less than two percent (2%) of export price); volume
of dumped imports is negligible (i.e., dumped imports account for less than three percent
(3%) of the total imports); and the protestant lacks standing.
The reasons cited by Dart, not being any of the three (3)
grounds for the termination of the anti-dumping investigation against importation of PP
resins from South Korea and the exclusion of its imported product from the anti-dumping
case can be best established in a full-blown investigation. (AnnexA)
3.5 SCOPE OF THE ANTI-DUMPING INVESTIGATION
The investigation covered the importation of polypropylene resin
from South Korea, the importation or sale of which might have caused material injury or is
likely to cause material injury, or retard the establishment of an industry producing like
product in the Philippines.
4. THE COMMISSION'S INQUIRY
4.1 PRODUCT UNDER CONSIDERATION
In the anti-dumping protest, Petrocorp and JG Summit identified
the alleged dumped products as PP resin classified under HS subheading No. 3902.10 00 of
the Tariff and Customs Code. Said subheading is described in the Code to cover PP in
primary forms.
The DTI-BIS, in its preliminary findings, included all shipments
of PP resins from South Korea falling under HS subheading No. 3902.10 00.
PP resins are used to produce films and sheets for packaging,
woven sacks, filaments, ropes, and molded products such as household articles and
appliance parts.
4.2 PERIOD OF INVESTIGATION (POI)
For dumping determination, the Commission’s investigation
covered imports of PP resins for the 12-month period from 01 January to 31 December 1998.
With respect to injury, the period considered were 1995 to 1999.
4.3 NOTIFICATION
4.3.1 Formal Investigation
On 12 November 1999, notification was sent to Ambassador Sung Du
Shin of the South Korean Embassy at 10th Floor, The Pacific Star Bldg., Makati
Ave., Makati City (Annex B-1) and to the Philippine Ambassador to South Korea, Hon.
Juanito P. Jarasa, at the 9th Floor, Diplomatic Center 1376-1 Seocho-Dong,
Seocho-Ku, Seoul, South Korea (Annex B-2), informing them that the Commission had assumed
jurisdiction over the anti-dumping protest for formal investigation. Also notified,
through their embassies in Manila, were governments of the trading firms who exported PP
from South Korea.
Individual notifications were likewise sent to the two (2) local
manufacturers/protestants, sixteen (16) foreign manufacturers/exporters and seventy-one
(71) importers. Parties were given thirty (30) days from receipt to submit their
respective positions and the required information to the Commission.
4.3.2 Consultations/ Pre-Hearing
Conference
The Commission conducted consultations and pre-hearing
conference on 18 November 1999 for the purpose of exploring the possibility of amicable
settlement/price undertaking, and to apprise the parties on the procedures of
investigation and other related matters necessary for the speedy disposition of the case.
Attendees included representatives and/or counsels for the
domestic manufacturers/protestants, importers/protestees and exporters/ protestees.
The parties agreed on the schedule of the marathon hearings set
on 7- 11 February 2000.
4.3.3 Public Hearing
Notice of public hearing was published in the Philippine Star
and Today on 19 January 2000. All known interested parties and concerned government
agencies were also sent individual notices.
The Commission conducted a total of four (4) hearings commencing
on 7 February 2000. The protestants, one (1) Korean protestee/manufacturer (Daelim) and
the protestees/importers were represented at the hearings.
The hearings were terminated on 10 February 2000. The
protestants and the protestees submitted their memoranda and counter-memoranda within the
period of 18 to 27 February 2000.
4.3.4 Ocular Inspection and/or
On-the-Spot Investigation and Verification of Information
Agreement to conduct ocular inspections, examination of books of
accounts and verification of information was requested from all concerned domestic
parties. Both protestants, Petrocorp and JG Summit granted the request. Calypso, Jason
Manufacturing, Robton, Dart Phils., Filipinas Polypropylene, Millers Packaging, BestChem,
Manila Cordage, Union Industries and Uni-Ipel were among the protestees/importers that
were visited for inspection and verification.
Request for the conduct of an on-the-spot investigation and
verification of information in South Korea, was granted by only four (4) Korean
manufacturers/exporters, namely: Honam, SK, Daelim and Hyundai.
4.4 INQUIRY
For purposes of final determination, the Commission limited its
investigation according to the provisions of Section 6.10 of the WTO Agreement which
state:
"Authorities may limit their examination either to a
reasonable number of interested parties or products by using samples which are
statistically valid on the basis of information available to the authorities at the time
of the selection, or to the largest percentage of volume of the exports from the country
in question which can be reasonably investigated".
Parties who failed to submit answers to questionnaire were
governed by the provisions of Section 6.8 of the Agreement, to wit:
‘In cases in which any interested party refuses access
to, or otherwise does not provide, necessary information within a reasonable period or
significantly impedes the investigation, preliminary and final determinations, affirmative
or negative, may be made on the basis of the facts available . . . "
4.5 DOMESTIC
PRODUCERS
4.5.1 PROTESTANTS
Company Profile
Petrocorp, with office address at Chemphil Bldg., Arnaiz
St., Legaspi Village, Makati City, is a duly registered manufacturer of polypropylene
homopolymer resin with a rated capacity of 160,000 metric tons per year. Its manufacturing
plant which employs the BASF Novolen process is located in Mariveles, Bataan.
JG Summit with office address in E. Rodriguez Jr. Ave., Bagong
Ilog, Pasig City. It produces PE and PP resins at its plant in Bo. Simlong, Batangas City,
Batangas. The rated capacity for its PP plant, using the Unipol process of Union Carbide
is 180,000 metric tons per year.
Petrocorp and JG Summit started commercial operations in May
1998 and in August 1998, respectively. However, their respective plants had already been
producing PP resins since July 1997 and June 1998 ( |
