Pakistan managed to halt the continuation of countervailing duties (CVD) on the export of PET (Polyethylene Terephthalate) imposed by the European Union (EU) after Pakistan made it clear that the duties would be challenged at the World Trade Organization (WTO).
An official source said that after countless informal and formal attempts to get the duty either removed or reduced to the de-minimus level, Pakistan finally intimated the EU authorities that it would initiated formal dispute settlement proceedings against EU at the WTO.
Pakistan’s share of the total PET exports to 27 member states was negligible yet the EU continued to impose duties on PET from the country since May 2010, the source said adding that it was clear that EU would continue with the duties after their lapse as per the law of the EU on September 30, 2015.
EU had said in May 2013 that “the European PET industry was not suffering injury and the long period of ‘contingent protection’ had been enough to allow [the] European industry to adapt to global competition and recover substantially”.
The only possibility to restrain the EU from re-imposing countervailing duties on PET exports from Pakistan for another five years was filing a possible sunset review at the WTO. Traditionally, the only time that the EU has not re-imposed duties in the sunset review is when it has been challenged at the WTO, the source said.
According to official statistics, exports of PET from Pakistan to the EU were a major value-added product. PET accounted for 1 per cent of Pakistan exports ($250 million) to the trading block. The PET resin exports of Pakistan to EU in 2008-09 and 2009-10 were above 85,000 tons, approximately $124 million before imposition of CVD. Subsequent to the imposition of CVD, PET exports to EU reduced from over 85,000 tons to below 15,000 tons per annum.
The EU had imposed preliminary and final countervailing duties respectively due to which Pakistan lost approximately $615 million on PET exports to member countries in the last five years. Pakistan considers EU investigations flawed and unfair that resulted in lowering the annual exports.
The duty imposed on PET exports which were less than 15,000 tons per annum were covered under the GSP plus scheme awarded to Pakistan in 2013. Even though there were no actual government subsidies being granted to the PET industry, the EU considered Pakistan’s final income tax regime, long-term financing schemes and manufacturing under bond schemes as subsidies and justified the imposition of duties.
On September 3, 2009 the European Commission initiated an investigation against imports of PET originating in Iran, Pakistan and the United Arab Emirates. The complaint was lodged on July 20, 2009 by the PET Committee of Plastics Europe on behalf of producers representing more than 50 per cent of the EU production. The product subject to investigation is classified under the following HS code: 3907.6020.
On May 31 2010, the European Commission decided to impose a preliminary duty. The amount of the duty differed according to the country affected: €42.34 per tonne for UAE’s companies, €83.64 per tonne for Pakistani companies and €142.97 per tonne for Iranian companies.
The duty was applicable for a period of 4 months, starting on June 2, 2010. On September 27, 2010 the European Commission imposed a definitive CVD duty on imports of PET originating in Iran, Pakistan and the United Arab Emirates. The amount of the duty again differed according to the country affected: €42.34 per tonne for UAE’s companies, €44.02 per tonne for Pakistani companies and €139.70 per tonne for Iranian companies. The duty went into effect on September 30, 2010.
After a number of informal and formal attempts to get the duty either removed or reduced to the de minimus level, Pakistan initiated formal dispute settlement proceedings against EU at the WTO in November 2014 and consultations were held in December 2014 in Geneva.
