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Cablegate: Update of Brazil's Antidumping Cases Against The

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 02 BRASILIA 001357

SIPDIS

STATE FOR WHA/BSC
USDOC FOR 3134/USFCS/OIO/EOLSON/DDEVITO
USDOC FOR 4332/ITA/MAC/WH/OLAC/DMCDOUGALL/ADRISCOLL/
JANDERSON/WBASTIAN

E.O. 12958: N/A
TAGS: ETRD EIND ECON PGOV BR
SUBJECT: UPDATE OF BRAZIL'S ANTIDUMPING CASES AGAINST THE
U.S.

REFS: A) Brasilia 1097 B) Brasilia 76 C) 2003 Brasilia

3826 D) 2003 Brasilia 3260

1. Summary: Brazil has five antidumping (AD)
investigations open against the U.S. and applies AD
measures against five U.S. origin products. The
products concerned are largely chemicals used in
industrial applications. A safeguard measure against
imported toys, extended in December 2003 until the end
of 2004, also applies to the U.S. End summary.

CURRENT INVESTIGATIONS
----------------------

2. Out of a total of 28 current cases worldwide,
Brazil has commenced five antidumping (AD)
investigations against the U.S. since September 2003,
two of which are five-year sunset reviews of pre-
existing AD cases. All of the cases target chemical
products used in industrial processes and finished
goods with a wide range of applications. The current
status of each case and a product description, gleaned
from www.petrochemistry.net, follow.

A. Polycarbonate resins, five-year sunset review
initiated on 9/11/2003. However, the review was
suspended by a court decision on 12/17/2003 pending a
final judicial determination. Polycarbonate resins,
derived from bisphenol A, are used for structural
parts, impact resistant glazing, street-light bulbs,
household appliance parts, components of
electrical/electronic devices, automotive applications,
reusable bottles, food and drink containers, optical
media devices (CD/DVD) and medical applications. It
is also a building block used to make epoxy resins for
coatings, electrical laminants, composites and
adhesives.

B. Ethyleneglycol monobuthyl ether (a.k.a.
buthylcellosolve), case initiated 11/10/2003 (ref D);
On-site verification of local industry in process from
May 2-4 and 11-14. This ether is used in cleaning
products, preservatives, and as a fixative for
perfumes, germicides, bactericides, insect repellents
and antiseptics. It is also used as an additive for
jet fuel to prevent ice buildup.

C. Polyvinyl chloride - (PVC), five year sunset
review initiated 12/15/2003 (ref B), GoB currently
awaits clarification and complementary information
regarding the responses to the questionnaires. PVC is
a polymer of vinyl chloride used to make a diverse
range of cost-effective products with various levels of
technical performance suited to a wide range of
applications. Many of these PVC products are used
everyday and include everything from medical devices
such as medical tubing and blood bags, to footwear,
electrical cables; packaging, stationery, and toys.

D. PET resins (Polyethylene tereftalate), case
initiated 03/03/2004 (ref C); GoB awaits responses from
questionnaires sent 03/05/2004 through 05/14/2004.
Polyethylene terephthalate (PET) is derived from xylene
and is one of the most widely used industrial
polyesters. It is used in lightweight, recyclable soft
drink bottles, as fibres in clothing, as a filling for
anoraks and duvets, in car tire cords and conveyor
belts. It can also be made into a film used in video,
audio and x-ray.

E. Methyl methacrylate (MMA), case initiated on
04/23/2004 (ref A). GoB awaits responses to
questionnaires sent 04/28/2004 and due by 06/09/2004.
Methyl methacrylate is a chemical derived from
propylene, used for the manufacture of polymethyl
methacrylate and also for polymer dispersions and other
resins.

CURRENT AD AND SAFEGUARD MEASURES
---------------------------------

3. Brazil applies AD measures on 31 products from
several countries, and has three safeguard measures in
effect on toys, shredded coconut and powdered milk.
There are currently five AD measures in place against
U.S. products, in addition to the safeguard measure on
toys applied to the U.S. and many other countries. The
AD margins and/or price agreements are applied to four
chemical products and one pharmaceutical, and are as
follows:

A. Polycarbonate resins, AD duty of 19%, expires
07/26/2004.

B. Hydroxyethyl cellulose - (HEC), AD duty 19.8%,
expires 04/19/2005.

C. Medicine containing insulin, petitioners and
exporters reached a price agreement, expires
03/06/2006.

D. Phenol, AD duty 41.4%-68.2%, expires 10/16/2007.

E. Polyvinyl chloride (PVC), AD duty 16%, duty will
continue to be applied during the review mentioned in
paragraph 1C.

4. The safeguard measure on toys, an additional 10%
above the 20% tariff, was extended until 12/31/2004
late last year. The measure has been in effect since
1996, and was extended one additional year instead of
two as allowed by WTO rules for developing countries
(maximum of ten years.)

5. Comment: A trade specialist at the Ministry of
Development, Industry and Foreign Trade's Commercial
Defense Division explained the preponderance of
chemical products in Brazil's AD cases against the U.S.
He noted that the chemical industry worldwide is a non-
stop business highly dependent on scale. Inventories
grow rapidly during times of low seasonal demand, and
the excess inventory is then exported at very low
prices. As a result, countries where the chemical
industry is relatively small will tend to have a high
percentage of AD cases on such products.

HRINAK

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