Bloomberg News

EU Scraps Polyester-Fiber Tariffs on Taiwan, Malaysia

June 21, 2007

The European Union ended polyester- fiber tariffs against Taiwan and Malaysia to lower prices for users, a policy reversal that denies protection for EU producers such as La Seda de Barcelona SA and Wellman International Ltd.

The EU imposed the duties six months ago to punish Taiwanese and Malaysian exporters for selling polyester staple fibers, used in clothes, bed linen and furniture fillings, at below cost in Europe's 1.2 billion-euro ($1.6 billion) market. The bloc said today it would scrap the levies of as much as 29.5 percent on Taiwan and as high as 23 percent on Malaysia.

``Users, mainly bedding and upholstering-material manufacturers, fear serious shortages,'' the European Commission, the 27-nation EU's regulatory arm in Brussels, said in a decision published in the Official Journal. EU producers may be unable to meet demand because they are converting to other products, according to the commission, which said a fire at a Trevira GmbH plant and ``financial difficulties'' at Tergal Industries had accentuated the problem.

The EU is increasingly heeding the interests of European users of polyester staple fibers when deciding on tariffs to counter below-cost -- or ``dumped'' -- imports. In October, two months before introducing the anti-dumping duties against Taiwan and Malaysia, the EU scrapped similar levies on the product from India, Indonesia, Thailand and Australia while leaving in place levies against China, South Korea, Saudi Arabia and Belarus.

Market Share

EU policy toward Taiwan itself has also reflected this approach. The bloc had imposed anti-dumping duties on polyester staple fibers from Taiwan until March 2005, when it ended the measures after finding that dumping by Taiwanese exporters including Nan Ya Plastics Corp. (1303) and Far Eastern Textile Ltd. (1402) had become too limited to justify the trade protection.

Taiwanese and Malaysian exporters doubled their combined share of the EU market to about 15 percent in 2005 compared with 2002, hurting the sales and market share of Europe's industry, the commission said in December when imposing the duties that are now being scrapped. In 2005, Taiwan's share of the EU market was 13 percent and Malaysia's 2 percent, the commission said.

European pillow, quilt, cushion and upholstery manufacturers, for which polyester staple fibers represent as much as 30 percent of production costs, face the threat of those costs increasing 6 percent to 8 percent as a result of the duties, the regulator said today. These producers have a profit margin below 5 percent on average, it said.

`Seriously Affected'

``With such an increase in costs, the bedding industry will be seriously affected by the increasing competition they are facing from China on finished products,'' the commission said. ``They will not be able to make attractive offers to their clients, namely the large chains of retailers with extremely strong buying power.''

Under EU procedures, the commission can impose provisional anti-dumping duties for six months and the EU's national governments can turn those measures into ``definitive'' five- year duties unless regulators decide against such a step. Provisional duties usually lead to five-year tariffs.

In deciding against definitive tariffs on polyester staple fibers from Taiwan and Malaysia, the EU will refund the provisional levies collected. The duties range from 14.7 percent to 29.5 percent for Taiwan and from 12.4 percent to 23 percent for Malaysia.

To contact the reporter on this story: Jonathan Stearns in Brussels at jstearns2@bloomberg.net

To contact the editor responsible for this story: Edward Buckle at ebuckle@bloomberg.net


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