Tue, 15 Aug 2000

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JAKARTA (JP): The European Commission has withdrawn its threat to impose antisubsidy measures on Indonesia's polyethylene terephthalate (PET) products due to a lack of evidence.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