12:18 PM Oct 22, 1996

EU TRADE HARASSMENT ON TEXTILE IMPORTS

Geneva 22 Oct (Chakravarthi Raghavan) -- The European Union was accused Monday of "trade harassment" of a number of Asian developing countries through initiation of anti-dumping actions on textile products.

The complaint was made by Indonesia at the WTO Committee on Anti-dumping practices and was supported by Hong Kong, India, Malaysia (on behalf of the ASEAN) members, Egypt, Korea and Japan.

The Indonesian complaint, voicing "grave concern", referred to the initiation of anti-dumping proceedings in January 1994 on imports of cotton fabric originating from the People's Republic of China, India, Indonesia, Pakistan and Turkey, their termination on 19 February 1996, and reinitiation of proceedings, barely two days later, against imports of unbleached cotton fabrics.

The EC Commission flatly denied the charge, claiming that its investigations were strictly in accord with the standards of the anti-dumping agreement. The EC representative said that Indonesia had failed to state what WTO provisions had been violated, and that the EU was not ready to agree to a debate on its intentions, but only on facts.

Other complaints that were voiced at the meeting included Japan's complaint about the EC initiating anti-circumvention investigations under anti-dumping rules in respect of imports of electronic weighing scales -- both those imported from Indonesia, assembled there out of parts imported from Japan and Singapore, as also such electronic weighing scales assembled in the EU out of imported parts.

The EU had earlier imposed anti-dumping duties on electronic weighing scales imported from Japan and Singapore.

Japan also complained against US anti-dumping actions over purchase of super-computers, and levy of anti-dumping duties on large industrial printing presses.

In raising the issue, Indonesia's Herry Seotanto, said it was the understanding of the Indonesian government that the Commission had decided to terminate the investigations initiated on 20 January 1994 without taking any measures due to a lack of support from the EU industry. However, under pressure from some of the member-states and the complainant, Eurocotton, a compromise was reached. Under this Eurocotton agreed to withdraw its complaint in exchange for initiation of a new proceeding covering largely the same range of products.

In view of the trade harassment involved, Indonesia said, it would like to receive confirmation from the EC on the reasons for the withdrawal of the first complaint. Indonesia also posed the question to the AD Committee as to whether it was in the interest of members to allow investigating authorities to follow such practices?

The closing and reopening of cases, Indonesia said, could lead to a systematic trade harassment over several years until such time that the investigating authorities are in a position to prove the allegations made by the complainants.

The initiation of the proceedings on 21 February this year on imports of unbleached cotton fabrics originating from China, India, Indonesia, Pakistan and Turkey, Soetanto said, was on the basis of a complaint from Eurocotton which, in its complaint, has asserted that the causality between the alleged dumping and injured is confirmed in that the imports from countries alleged to be responsible for dumping increased compared with those from third countries.

But this allegation is easily disproven if a reference had been made to the Eurostat (EC statistical organization) figures available at that time, Indonesia pointed out. These figures show that imports from countries alleged to be dumping went down compared with that from third countries.

Article 5 of the Anti-dumping agreement casts on investigating authorities the prior obligation to check the "accuracy and adequacy of the evidence" provided in a complaint to determine whether the opening of proceeding is justified.

"As the allegations pertaining to this causality were based on simple assertion, unsubstantiated by relevant evidence, these proceedings should not have been initiated, since the obligations stemming from Article 5 of the Agreement were not fulfilled," Indonesia contended.

Indonesia sought clarification from the Committee whether a proceeding should be promptly terminated if it be established that the Investigating Authority have not applied Art. 5 of the Agreement.

One of the principle achievements of the revision of the Tokyo Round antidumping code, and the conclusion of the Anti-Dumping Agreement, has been the additional responsibility placed on the investigating authority to ensure complaints are well-founded before initiating proceedings. The importance of Art. 5 is self-evident, taking account of the time invested by all interested parties in responding to allegations. But this is now being undermined.

Indonesia also voiced complaints over the way the EC imposed provisional anti-dumping duty on imports of polyester-textured filament yarn originating from Indonesia and Thailand.

In making this through a EC regulation of 23 May, the Commission made a calculation and established a practice where most of the costs of production are allocated to specific types of products only. This type of calculation resulted in a higher cost of production -- as the overall costs are allocated only on a certain proportion of the output.

This, Indonesia noted, affected the determination of profitability and results in a normal value based on an inflated cost of production. It was Indonesia's understanding that this approach may have been used by the EC Commission in other textile cases also.

Indonesia cited in this connection Article 2.2.1.1 of the Agreement which requires calculation of costs, based on the records kept by the exporter and in accordance with the "generally accepted accounting principles of the exporting country and reasonably reflect the cost associated with the production and sale of the product under consideration."

The Commission's practice, as in this case, went against all the generally accepted accounting principles mentioned in the Article of the agreement. In the polyester filament case, they do not reflect the costs allocation historically used by Indonesian exporters.

Indonesia asked the Commission to comment on the method of calculation thus used, and in particular, explain the circumstances in which the Commission considered it was justified to establish overall cost of manufacturing on any other basis than the total output.

Indonesia and most of the developing country members of the WTO, Soetanto said, felt concerns over the anti-dumping actions that the developed countries continued to take.

"This situation will create unpredictable trade and the successful reduction of tariff levels under the Uruguay round to an average of 0-5 percent in industrialized countries would be meaningless. We certainly have no objection to, and fully recognize, the legitimacy of any action taken to defend domestic industries against the unfair import of products such as dumped or subsidized products. However, a proliferation of anti-dumping measures that result in trade harassment is unnecessary and damaging, particularly when most of these anti-dumping actions are directed against products which are very essential to the economies of Indonesia and other developing countries, such as textiles and clothing."