PSF makers complain of EU cartel price
By Zhan Wei (China Daily)
Updated: 2005-03-07 09:07

China's polyester staple fibres (PSF) manufacturers are complaining that the European Union (EU) Commission chose a cartel price in the anti-dumping case the EU initiated against Chinese PSF.

The information was revealed by Fu Donghui, a lawyer from Beijing-based Allbright Law Offices.

The PSF price of US-based Wellman was taken as an analogue price in the anti-dumping case.

"However it was discovered that Wellman was being sued for violating anti-trust laws in the United States and Canada," Fu said. "The price based on the statistics of the company probably exceeds prices under normal market economy conditions."

In a letter to the EU, the lawyer pointed out that Wellman had been under a US Department of Justice investigation, 32 federal cases (which were consolidated into one federal case), 41 state cases in the United States and three cases in Canada.

The US company, together with eight other companies, was sued of "conspiracy, artificially fixed, raised, maintained, or stabilized PSF prices and having allocated portions of the PSF market and specific PSF customers among themselves."

Although the courts have not yet declared Wellman's formal punishments, one of the co-defendants was pronounced guilty and fined US$28.5 million.

"It is unfair to use Wellman's price, which is likely a cartel price, as a substitute price for an anti-dumping charge," Fu said.

China's enterprises asked the EU whether it knew Wellman had been involved in the violation of anti-trust laws when taking its price as an analogue, but they have yet to receive a direct reply.

The lawyer hopes the EU will make a timely response to the case, which is scheduled to conclude on March 19.

The China Chamber of Commerce for Import and Export of Textiles, the industrial association of the textile industry, is also keeping a close eye on the issue.

"Besides providing the involved enterprises and China's Ministry of Commerce with the latest information, we supervised the entire process of the EU's investigation for further negotiation," said Wang Tao, an official with the chamber.

Wang said if the EU does not change its final ruling, the chamber will suggest the Chinese Government take other measures, such as submitting the case to the European Court or by seeking a dispute solution from the World Trade Organization.

The EU commission launched an anti-dumping investigation against PSF from China and the United Arab Emirates in December 2003.

Over 50 Chinese PSF manufacturing enterprises were involved in the case, with a value of US$25 million.

Among the five Chinese enterprises, who answered the case, only one was granted market economy status and a punitive duty of 4.9 per cent, while three were charged of duties ranging from around 22 per cent to nearly 29 per cent, according to the final draft decision from the EU.

The remaining enterprise of the five respondents and all other Chinese PSF makers were charged a duty of over 80 per cent, a tax rate that will keep nearly all Chinese PSF out the European market.

"The charges are a big blow to Chinese PSF manufacturers, particularly those who answered the case, as Europe is one of their major markets," Wang said.

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