PET exporters escape EC antisubsidy investigation

PET exporters escape EC antisubsidy investigation

JAKARTA (JP): The European Commission has withdrawn its threat
to impose antisubsidy measures on Indonesia's polyethylene
terephthalate (PET) products due to a lack of evidence.

According to a letter sent by the Indonesian Ministry of
Industry and Trade to the association of Indonesian PET
manufacturers, the EC considered the subsidy level received by
the Indonesian PET exporters insignificant enough to cause
"material injury" to European Union markets.

"The subsidy margin for Indonesia is considered to be
negligible and, therefore, it is proposed to terminate the
proceedings with regard to imports of PET originating from
Indonesia without the imposition of measures," according the
letter, dated Aug. 2, a copy of which made available to The
Jakarta Post.

Indonesia's PET producers have been accused of taking
advantage of export subsidies given by the government through the
Export Service Facilitating Agency (Bapeksta) and Investment
Coordinating Board (BKPM) schemes.

The agency scheme grants, upon application, the exemption or
restitution of import duty, value-added tax and sales tax on
luxury goods and on the imports of raw materials for further
processing for exports.

In order to obtain the exemption facilities, companies are
required to reexport 100 percent of the imported materials in the
form of finished goods within a period of one year starting from
the date of import.

In its investigation disclosure, the commission considered
BKPM's scheme a subsidy program but not Bapeksta's scheme.

The investigation found three companies, namely PT Bakrie
Kasei Corp., PT Indorama Synthetic and PT Polypet Karyapersada,
had benefited from BKPM's export subsidy scheme, with a subsidy
level of 0.07 percent, 0.22 percent and 1.46 percent
respectively.

However, the commission decided not to impose antisubsidy
duties on Indonesia's PET exporters duties because the average
amount of total subsidies received by the firms were considered
insignificant and the BKPM subsidy program itself was not among
the subsidies prohibited by the World Trade Organization's (WTO)
Basic Regulations.

As part of the antisubsidy charge, the European Trade
Commission recently said it was finalizing a separate
investigation on antidumping charges, also over Indonesia's PET
products.

The body said the decision on whether to impose countervailing
measures on Indonesia's PET exports would be announced this
month.

The commission has so far imposed antidumping duties on at
least seven of Indonesia's exports to European Union member
states' markets.

Indonesian bicycles and polyester fibers have been saddled
with antidumping duties since 1996, polyolefin woven bags and
footwear made from textiles in 1997, footwear made of leather in
1998, microdisks in 1999 and last month the synthetic staple
fibers of polyester.

The Indonesian Synthetic Fiber Makers Association (APSyFI),
whose members were charged by the commission with antidumping
duties of between 8.4 percent and 15.8 percent, plans to file
suit at the WTO against the commission over the sanction.

The association said the sanction, which it called baseless,
would cause local producers a potential loss of about US$60
million during the first year of duty imposition alone. (cst)