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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

      The 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.

Price Effect

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.

Inventories

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:

  1. 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;

  2. ascertaining the difference, if any, between the export price and the normal value of the article; and

  3. 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:

bulletidentification of all parties concerned;
bulletnotification 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;
bulletconduct of consultation, pre-hearing conferences and public hearings;
bulletacceptance of memoranda and counter-memoranda of the parties;
bulletgathering of economic and financial data such as production, sales, inventory, employment, etc.;
bulletconduct of ocular inspection and verification of information submitted by parties concerned;
bulletconduct of on-the –spot investigation in the territory of the exporting country;
bulletevaluation and analysis of all information submitted/gathered to determine the existence of dumping, material injury and causal link;
bulletdisclosure to all interested parties of the essential facts which form the basis for the decision to apply definitive measures; and
bulletPreparation 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 (