The cases were notified by the European Commission (EC) last Saturday and were published in the Official Journal of the European Commission, indicating the beginning of investigations. The EC has acted on a complaint lodged by the PET Committee of the Association of Plastic Manufacturers in Europe (APME), an industry association representing producers who account for over 85 per cent of the PET production in the European Union (EU). The APME complained that the European industry was threatened by the unfair trade practices that the exporters were allegedly indulging in.

The complaint was filed on September 22 and the EC has now notified the cases within the official 45-day deadline for initiating action. The case is very broad-based and includes companies from India, South Korea, Malaysia, Taiwan, Indonesia, and Thailand. Besides Reliance, the Indian companies included in the complaint are the Birla group concern Century Enka, Indian Organics Ltd, Pearl Polymers, Futura and Elquaie. Indian exports of the commodity to the EU in 1998 totalled 37,240 tonnes, valued at 25.4 million euros or nearly Rs 1.25 billion. In the anti-subsidy case, the schemes that have been identified by the complainant include the export promotion zone (EPZ), the export oriented unit (EOU), the duty entitlement passbook scheme (DEPB), export promotion capital goods scheme, advance licences and the income tax exemptions. The complaint says the schemes are subsidies since they involve a financial contribution from the government of India and confer a benefit on the recipients -- the exportingproducers of PET.

The complainants claim that the schemes are contingent upon the export performance and hence specific and countervailable. They claim the total subsidy amounts to 42.9 per cent.

The complaint cites the Indian subsidy as being by far the highest of all the countries named in it as in most other cases it ranges between 10 and 20 per cent. Though the complainants had named Saudi Arabia also, the EU has rejected it on the grounsds that the Arabian market share was less than 4 per cent and hence negligible. The EC claims the complainants have been able to provide evidence that the imports from India and other countries have increased in absolute terms as well as market shares and that the volumes and prices of imported products have had a negative impact on the market share and prices of EU producers.

The commission is now sending out detailed questionnaires to the governments of the countries involved and the companies have been asked to respond within 40 days, failing which they would be charged with the residual duties (the highest level of duty imposed by the Commission), if the case is upheld after investigations by the EC. These schemes have often been the target of anti-subsidy cases launched by the commission and, on most occasions, the EC has upheld the contention of complainants and imposed countervailing duties against the Indian companies involved.

However, India has defended these schemes saying they are compatible with the rules and obligations of the World Trade Organisation (WTO). But so far India has not challenged the imposition of countervailing duties by the EC in such cases and has not moved a dispute settlement panel of the WTO.

Observers say these decisions are likely to be made only at the very highest political level as it would involve taking the battle into the European turf.

-- IANS