Abstract
Trade policy and subsidies played an overwhelming role in the demise of the colour television industry in Europe. Origin rules, created for the effectiveness of quotas, were blindly applied to situations for which the rules were not intended and even exporters’ fraud was accepted for the sake of calculation of certain parameters in accordance with the rules. The deficiencies in interpretation of the origin rules are explained. During anti-dumping cases, the rules caused serious confusion and harm. Additionally, some European companies preferred short-term benefits from complex trade policy situations to advantages of long-term cooperative behaviour. Various trade policy issues, like definition of the product scope, origin rules, self-inflicted injury, target profit for elimination of profit and complications caused by state-ownership of a CTV producer, Thomson, are discussed in this Chapter. Chaotic, inappropriate and even biased application of the rules finally resulted in the demise of European colour television industry, to which personal interference by officials and European Commissioners strongly but calamitously contributed.
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- 1.
The situation of cathode ray tube rather than an LCD or plasma television set is presented for the sake of instructiveness. An LCD or plasma TV does not have such diversity of components as a cathode ray tube TV. LCD and plasma screens and their chips sets of are generally manufactured by the same suppliers and purchased as a whole. Issues are, however, not very different.
- 2.
This normal value is extremely low as consequence of a mistaken application of Malaysia’s normal value to Beko. If Beko’s Turkish price were normal value, it would be about €135, equalling Vestel’s normal value (see Chap. 12).
- 3.
Note on the Undercutting and Injury Margin Calculations, sent as annexe to a letter of 1 Augustus 2001, number 057867.
- 4.
Council Regulation (EEC) No 2913/92 of 12 October 1992 establishing the Community Customs Code Official Journal L 302, 19/10/1992, pp. 0001–0050, Article 22: “Articles 23 to 26 define the non-preferential origin of goods for the purposes of: (a) applying the Customs Tariff of the European Communities with the exception of the measures referred to in Article 20 (3) (d) and (e); (b) applying measures other than tariff measures established by Community provisions governing specific fields relating to trade in goods…” Clearly the origin rules are not intended for the sake of establishing the necessary measures or parameters before measures are taken.
- 5.
Article 2, 2.1 of the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (Anti-Dumping Agreement or the ADA).
- 6.
Article 1 Principles, paragraph 3 of the ADA.
- 7.
In Article 2.5 of the ADA.
- 8.
This was the conviction of the director of the anti-dumping division, who had also negotiated the Customs Union Protocol between the EC and Turkey with its many deficiencies.
- 9.
If further investigation had been conducted on the Singapore sets, perhaps more sets of Taiwanese origin would have been found. Many components came from other countries than Singapore and the value of the Taiwanese tube (more than 35 % of the value of materials) might have been decisive. On the other hand the Philips forwarding department was extremely well capable in customs matters.
- 10.
The Manufacturer, Leadership and Lean, October 2006.
- 11.
Geddes and Bussey (1991, pp. 392–393).
- 12.
The Minister of State, Department of Industry (Mr. Gerald Kaufman) in Commons Debates 22 January 1976 Orders of the Day [5th allotted day], Public Accounts.
- 13.
House of Commons Debate, 22 January 1976.
- 14.
According to the agreement between Austria as member of the European Free Trade Association (EFTA) and the European Community, consultations should be held in case of duty suspension. This did not occur.
- 15.
Rosenthal and Nicolaïdes (1997, p. 380); Council Regulation (EC) No 318/94 of 7 February 1994 repealing Regulation (EC) No 317/94 of withdrawing tariff concessions in accordance with the provisions of Articles 23 (2) and 27 (3) (a) of the Free Trade Agreement concluded between the Community and Austria (Grundig Austria GmbH), OJ No L 41/20, 12. 2. 94.
- 16.
In Sect. 10.5, reference is made to this case, which became part of negotiations between the Korean manufacturers’ association EIAK and the European association EACEM.
- 17.
Commission Regulation (EEC) No 3232/89 of 24 October 1989 imposing a provisional anti-dumping duty on imports of small screen colour television receivers originating in the Republic of Korea OJ L 314, 28/10/1989 recital (48).
- 18.
In 1993 in a meeting of the economic faculty association of the Free University Amsterdam, Aureus, this possibility was contested by a discussant: “Those Chinese are not crazy, are they?” Chinese people are, of course, not crazy, but the economic system was and is for several reasons. The first is that foreign cash earnings have more attractiveness than domestic Yuans. The other is the problem Chinese have with costing and pricing. See also Chap. 15.
- 19.
Commission Regulation (EEC) No 129/91 of 11 January 1991 imposing a provisional anti-dumping duty on imports of small-screen colour television receivers originating in Hong Kong and the people’s Republic of China, Official Journal L 014, 19/01/1991, pp. 31–45, recital 10. Quotations below on this page are from the same source.
- 20.
Commission Regulation (EEC) No 129/91 of 11 January 1991 (provisional Hong Kong China), recital 10.
- 21.
Since QRs were still operative toward China in France, Italy and Spain, correct origin declaration made a difference and incorrect origin reporting was significant. It was fraud.
- 22.
The Commission repeated these disastrous and unworthy practices in the case of Turkey. See below. The European industry should have, of course, started a Court case against deception, but this would not result in higher duties. Such cases have never resulted in any positive result for a complainant.
- 23.
Because the British Radio and Electronic Equipment Manufacturers’ Association (BREMA) with its Japanese membership objected to this comprehensive complaint covering inter alia some Japanese subsidiaries in Asia, it was impossible for the European Association of Consumer Electronics Manufacturers (EACEM) to act a as complainant. The Society for Coherent Anti-Dumping Norms (SCAN) was formed outside EACEM and, at request of the majority of the producers supporting the complaint, an executive of the Philips trade policy department assumed management of the proceeding. Supporters were, apart from Thomson and Philips, Grundig, Nokia, Bang & Olufsen and Seleco, and some Italian producers expressed their sympathy with the complaint.
- 24.
Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (the Anti-Dumping Agreement, ADA) Article 2, 2.2.1.1.
- 25.
Regulation (EC) No 384/96 on protection against dumped imports from countries not members of the European Community. It is doubtful whether Thomson was really still in a start-up stage.
- 26.
Initially, the European Commission found a dumping of about 28 %. The reduction of this margin to 14.7 is a miracle.
- 27.
Percentages of undercutting are given. The price of the European product has been put at 100. The undercutting as % CIF is 100 minus the CIF export price to which the level of trade (LoT) adjustment has been added. Since the level of trade adjustment is 19 % and the customs duty is zero, except for China, and the insurance and freight is 2 %, the export price can be found. Since the dumping margins are given, normal values can also be found. An increase of the LoT adjustment by 10% points results in a decrease of underselling by 1 %.
- 28.
Commission Regulation (EC) No 2376/94 of 27 September 1994 imposing a provisional anti-dumping duty on imports of colour television receivers originating in Malaysia, the people’s Republic of China, the Republic of Korea, Singapore and Thailand Official Journal L 255, 01/10/1994, pp. 0050–0069, recital (141): “For the establishment of this amount the Commission’s practice is to take account of specific circumstances of individual cases. In this case the Commission has considered it appropriate for the purposes of the preliminary determination to limit such amount to that sufficient to eliminate price undercutting.”
- 29.
OJ 2376/94 of 27 September 1994, Recital 128.
- 30.
Press coverage on the closure of Creutzwald; Commission Decision of 16 November 1999 on aid granted by France to Gooding Consumer Electronics Ltd in connection with the purchase of the former Grundig plant at Creutzwald (notified under document number C (1999) 4230) Official Journal L 165, 06/07/2000, pp. 25–32. Imports from Thailand increased from 29,000 in 1988 to more than a million in 1991, which represented transfer of production from Europe.
- 31.
Council Regulation (EC) No 1531/2002 of 14 August 2002 definitive CTVs China, Korea, Malaysia and Thailand, OJ L 231, 29/08/2002, pp. 1–28, recitals 231 and 232.
- 32.
Commission Decision of 1 October 1997 concerning aid granted by France to Thomson SA and Thomson Multimedia OJ L 67/32 of 7.3.98: “Despite acknowledged technological know-how, the group suffered in the 1990s from inadequate industrial competitiveness, essentially because its production plants were widely scattered. At the same time its trading positions in Europe were being eroded. In a market that had reached maturity, on which the leading producers were engaged in a price war, the group's industrial and commercial fragility caused considerable losses, generally in excess of FRF 1 billion a year since 1992, and even higher in 1996.”
- 33.
General Disclosure Document AD No 433, R No 232, 1 August 2001.
- 34.
Commission Decision of 1 October 1997 concerning aid granted by France to Thomson SA and Thomson Multimedia OJ L 67/32 of 7.3.98.
- 35.
Commission Regulation (EC) No 2376/94 of 27 September 1994 imposing a provisional anti-dumping duty on imports of colour television receivers originating in Malaysia, the people’s Republic of China, the Republic of Korea, Singapore and Thailand, OJ L 255, 01/10/1994, pp. 50–69, recital 68.
- 36.
Equations \( \mathrm{ Dumping}\quad\mathrm{ margin} = \frac{{\mathrm{ Normal}\quad\mathrm{ value}\text{--}\mathrm{ Export}\quad\mathrm{ price}}}{{\mathrm{ CIF}\quad\mathrm{ export}\quad\mathrm{ price}}} \) and \( \mathrm{ Undercutting}\quad\mathrm{ margin} = \frac{{\mathrm{ European}\quad\mathrm{ price}\quad\mathrm{ minus}\quad\mathrm{ export}\quad\mathrm{ resale}\quad\mathrm{ price}}}{{\mathrm{ CIF}\quad\mathrm{ export}\quad\mathrm{ price}}} \) with a given level of trade percentage (the margin between CIF price and resale price or Level of Trade Adjustment) and CIF 2 % give the normal value.
- 37.
Basic Regulation Article 20.4: “Final disclosure shall be given in writing. It shall be made, due regard being had to the protection of confidential information, as soon as possible and, normally, not later than 1 month prior to a definitive decision”. This information is not confidential.
- 38.
Since the bosses of this person appreciated this pro-French behaviour, the career went into a rapid.
- 39.
None of the allegations resulting in the 0 % profit was supported by facts. Factual evidence submitted by the industry was neglected. See also Table 11.7: A “mature product” growing (1995–1999) by 24 %.
- 40.
Commission Regulation (EC) No 2376/94 of 27 September 1994, OJ L 255, 01/10/1994, pp. 50–69, recital 30.
- 41.
Council Regulation (EC) No 1531/2002 of 14 August 2002 (CTV Asia 3), recital 180 and 189.
- 42.
Council Regulation (EC) No 1531/2002 of 14 August 2002 (CTV Asia 3), recital (124).
- 43.
Council Regulation (EC) No 1531/2002 of 14 August 2002 (CTV Asia 3), recital (79).
- 44.
Note on the Undercutting and Injury Margin Calculations, sent as annex to a letter of 1 August 2001, number 057867.
- 45.
Decision No 1/95 of the EC-Turkey Association Council of 22 December 1995 on implementing the final phase of the Customs Union, OJ L 035, 13/02/1996, pp. 1–47.
- 46.
Retail prices and quantities sold are from the German market research firm GfK. The data concern October-November 1999. For Turkey data were available on the period December 1999/January 2000.
- 47.
These data were submitted during the proceeding. Before the opening the file contained similar information.
- 48.
Bob Raikes (2008, p. 12).
- 49.
Council Regulation (EC) No 1531/2002 of 14 August 2002 imposing a definitive anti-dumping duty on imports of colour television receivers originating in the People’s Republic of China, the Republic of Korea, Malaysia and Thailand and terminating the proceeding regarding imports of colour television receivers originating in Singapore Official Journal L 231, 29/08/2002, pp. 1–28, recital 51.
- 50.
The president of the temporary producers association Producers Of European Televisions in Co-operation (POETIC) had the support of the television cathode ray tube industry and had detailed information at its disposal that was not available to individual members, such as Philips. The Consumer Electronics Division of Philips never accepted the market data of the tube division because the latter estimated the market greater and, consequently, the market share of the television business of Philips lower than management in the CTV business unit preferred to report. People within the television unit systematically served individual interests by overstatement of their market share.
- 51.
Taking the figures of Table 11.3, the export value is €80.33 ex-works and €81.93 on CIF (2 % CIF) basis. A 3 % anti-dumping duty on a CTV originating in Thailand would imply a price increase by €2.46 over the set, but also over the tube, which is 7.4 % over the value (€33.06) of the tube, by which the Thai tube has become more expensive than the tube of Korean and Malaysian origin resulting in a zero per cent duty for Thomson.
- 52.
Data from the tube industry’s intelligence.
- 53.
Financial Times Friday, 3 September, 2004.
References
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Raikes B (2008) The European display market – exciting times for the display industry. German Flat Panel Forum: European Technology: Flat Panel Displays, 6
Rosenthal DE, Nicolaïdes P (1997) Harmonizing antitrust: the less effective way to promote international competition. In: Montgomery G, Richardson D (eds) Global competition policy. Institute for International Economic, Washington, DC, pp 355–383
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van Marion, M. (2014). Blurred Picture: Trade Policy and Television’s Future in the Dark. In: International Trade Policy and European Industry. Contributions to Economics. Springer, Heidelberg. https://doi.org/10.1007/978-3-319-00392-4_11
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