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SUMMARY The Commission decided to impose provisional anti-dumping duties on Korean manufactured small colour televisions (SCTVs) imported into the Community as follows: a. The three main producer/exporters Daewoo ..... 10,2% Goldstar ..... 12,3% Samsung ..... 13,0% b. All other exporters ..... 19,6% This decision follows a detailed investigation which began in February 1988, after a complaint lodged on behalf of the most important Community manufacturers of this product. The provisional findings established by the Commission demonstrate that the Korean companies have adopted marketing and pricing policies in clear violation of GATT provisions on dumping. The Commission finds that the injury caused by the dumped imports has been material - the Community industry lost important market shares and suffered an unsustainable pressure on prices a result. This damage threatens the present viability and future development of the whole Community television industry, and must also be seen in the context of related technologies throughout the consumer electronics sector, such as video cassette recorders (VCRs), which have figured in recent anti-dumping investigations by the Commission. PRODUCT The products covered by the Regulation are all SCTVs with an integral picture tube possessing a diagonal screen measurement of not more than 42 centimetres (or 16 inches). ./. - 2 - PROCEDURE The Commission requested and received detailed information from all the exporters originally named in the complaint, from a majority of complainant producers, and from a number of importers. However, one large exporter and many importers, known to be covered by the terms of the proceeding, failed to collaborate despite the Commission's invitation to do so. Verification of data was carried out at the premises of three Korean producer/exporters, seven Community producers, and ten importers. DUMPING Dumping was determined, as it normally is in these proceedings, by comparing weighted average domestic prices in Korea with the export prices to the Community of equivalent models. In all cases the prices used were based on those charged to independent customers, and the appropriate adjustments were made for directly related selling costs as required by the Community anti-dumping legislation. Where no equivalence could be found on the domestic market for a given export model, the representative domestic price or "normal value" was constructed by the Commission by adding a reasonable profit margin to the full costs of producing and selling that model. This procedure was also used to establish normal value for those models exported in considerable quantities to proprietary brand ("OEM") customers in the Community, since no equivalent channel of sale was found to exist on the Korean domestic market. Where exporters sold to the Community by way of related importers, the price between the related companies was disregarded and the export price was reconstructed as if the sale had been made to an independent importer. INJURY SUFFERED BY THE COMMUNITY INDUSTRY Unlike other consumer electronics products which have been the object of recent anti-dumping measures, such as VCRs and compact disc players (CDPs), colour television is not a new product; on the contrary it is at a mature point on its technology curve. Nevertheless the SCTV sector of the market is relatively fast growing - from 4 million units in 1984 to 6,4 million in 1987, a rise of 60%. Against this background Korean exports to the Community expanded from 23.000 units in 1984 to 781.000 in 1987, a 34-fold increase. Over the same period the Korean market share climbed from zero to 12%, while the Community producers' share fell by 15% (to 46%). In addition to losing market share to the Korean exporters, the Community producers were found to have suffered considerable price depression, as well as price undercutting in 1987 ranging between 1% and 39% according to the national market and model concerned. ./. - 3 - The Community producers also underwent losses in profitability, but these were limited by the radical rationalisation measures adopted by the industry. Unfortunately these defensive measures, which included relocation of assembly outside the Community, also involved a loss of over 1 000 jobs in the industry in 1986/87. After carefully examining the above issues, and the effects of other factors on the health of the Community industry, which have not been negligible, the Commission in its Regulation concludes that dumped imports from Korea, taken in isolation, have caused material injury to that industry. COMMUNITY INTEREST In order to establish whether the general Community interest required that measures should not be applied, despite the combined presence of dumping and related material injury, the Commission had to weigh two main sets of interests: those of producers and those of consumers. After careful consideration it concludes that in this case the benefits of protective measures for the producers outweigh the possibility of very limited and short-term undesirable effects for the consumers. The Regulation points out that, in the absence of measures to counter the injury caused by dumped imports, the Community SCTV industry could disappear, with further substantial job losses. This in turn, by seriously damaging the television industry's general marketing base, would weaken its potential further development even in the large screen sector, and this at a crucial time, given the current advance towards High Definition television technology. There would be knock on effects for the development and commercial exploitation of other new consumer electronics technologies, such as VCRs and laser video disk players, as well as for the general electronics components industry. The application of anti-dumping duties, even if only to a part of the SCTVs imported into the Community, clearly has price implications for the consumer. The Commission considers however that the gravity for Community industry of the injury considerations outweighs the important consumer interests involved. Indeed, in view of the large - and still increasing - number of sources for this product, both within and outside the Community, competition and consumer choice between the various suppliers is unlikely in practice to be materially reduced. In addition the anti-dumping duties provisionally imposed, when translated into higher consumer prices for the Korean models, may modify but not eliminate their exporters' pricing advantages. ./. - 4 - DUTIES In assessing the levels of duties to apply, the Commission compared the dumping margins with an injury threshold conservatively evaluated in terms of the large proportion by which Korean exporters' SCTV prices undercut those of comparable Community producers' models on the EC market. Since the Community legislation limits duties in such cases to the lower of the dumping or the injury found, the measures imposed do not eliminate all the injury which was established in this way, but are intended to eliminate that injury which results from the dumping practices of the Korean exporters. A further noteworthy feature of the measures imposed concerns a conditional exoneration from application of the duties to SCTVs manufactured and exported by certain Hong Kong companies, in the event that Korean origin should be attributed to these products for customs purposes. This exceptional provision reflects that fact that a supplementary investigation is now under way concerning SCTVs from Hong Kong and China, and that doubts have been raised concerning the status of some of these products under the Community's rules of origin. In order to safeguard the interests of the Hong Kong exporters at present collaborating with the investigation taking place, the Commission has extended to them the benefit of this temporary special provision, until all the necessary information is available on which to base any measures which may be required.