US embassy cable - 04BRASILIA1357

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, Trade 
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