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Asiatic Unfair Competition Is Introduced in 2009
Asiatic Unfair Competition Is Introduced in 2009
Asiatic Unfair Competition Is Introduced in 2009
SOURCE: SUNAT
ELABORATION: OWN
TESTS FOUND
1. The National Production Branch suffered a contraction of 18.7% in market share
between 2009 and 2011; while the market share of dumped imports increased by
7%.
2. Peru's demand for garments and clothing accessories increased significantly
from 180,202 million garments in 2009 to 263,968 million garments in 2011,
representing a cumulative growth of 46.5%
3. Imports of garments and clothing from China grew significantly during the period
2009-2011; from importing 119,475 million garments in 2009 to 187,036 million
garments in 2011, representing an increase of 56.5%.
4. Between 2009 and 2011, garments and clothing accessories originating in China
entered our country at dumping prices, being significantly below the selling price
of the similar product manufactured by the National Production Branch. Thus, the
difference between the price of the domestic product and the price of the Chinese
imports investigated remained at levels of 37.1% and 38.4% in the indicated
period.
Once the investigation was completed, Indecopi concluded, through Resolution No. 297-
2013 / CFD-INDECOPI, to apply anti-dumping measures on the aforementioned
products to ensure fair competition, in addition to protecting domestic industry. Said
resolution was issued on December 6, 2013 and entered into force on December 23 of
the same year.
After a year and a half of its validity, the Specialized Chamber in Defense of Competition
issued Resolution No. 293-2015 / SDC-INDECOPI, in which it decided to withdraw the
anti-dumping duties imposed, arguing inter alia that the Commission ruled by failing to
show conclusively that all the articles that make up the products under investigation
(shirts, socks, trousers, underwear and t-shirts) competed in a single market.
It also argued that the similarity of the domestic product to the product in question as
defined by the first instance was not properly determined, since it failed to carry out an
analysis of the existence of a competitive relationship involving consumers' perceptions
and considering an examination of substitution and rivalry of the products. According to
the Chamber, the latter was necessary given the breadth and heterogeneity of the
articles that make up the product under investigation. This resolution came into force on
June 7, 2015.
In order to understand the dimension of the effect of this measure on the Peruvian
market, considering all the countries that supply these same products, including those
from China, back to 2009 and compare the values until 2013. This will allow us to
observe that imports grew at an annual average of 33% (see Table 1) before the anti-
dumping measure is imposed (December 2013). By the year 2014, total imports
contracted by 5%, completely cutting the continued growth they showed. However,
during the year 2015 the behavior changed, returning to show growth rates, although
this only represented 3%. As mentioned, in June 2015 the measure was withdrawn and
the behavior of imports of the two semesters of that year were different. In the first one
was imported $ 71, 183,000 while in the second one was imported $ 110, 361,000, which
is equivalent to a 55% increase over the previous half year.
In view of this, it was considered desirable to further investigate dumping practices of
the main garments imported from China.
With a view to being able to establish the dimensions of this possible distortion, the tariff
headings for each type of product in its value - weight ratio were identified in order to
put an average price per kilogram, which served as a basis for comparison with the
declared values of all importers; and thus determine which of them were bringing
merchandise at a price lower than average. For this it was established that any importer
that imports at a value less than or equal to a quarter of the average value would be
immersed in acts of unfair behavior. As a period of study we limit ourselves to observe
the imports of 2016, for being the most current. It was also considered to identify and
discriminate by type of importer, that is to say if they were natural persons with business
(RUC numbers that start with the number 10) or if it is a business block (RUC numbers
that start with number 20).
Table 2: Main items by type of product with higher import values. 2016
AVERAGE
#
PRODUCT ITEM DESCRIPTION IMPORTERS PRICE PER
KG
SOURCE: SUNAT
ELABORATION: OWN
As can be seen in Table 2, in the case of imports of shirts, the average values of its
main imported tariff (cotton shirts) was $ 56 per kg, for natural persons with business
and $ 41 per kg., for legally constituted companies.
From the analysis of the data obtained, it was determined that those importers of the
said tariff heading, whose average value is an amount less than or equal to a quarter of
the said value, would be dumping.
As a result of this, the number of importing companies was obtained, determining the
number of companies that were dumping.
TABLE 3: COMPANIES THAT REALIZED DUMPING FROM CHINA, BY PRODUCT
SOURCE: SUNAT
ELABORATION: OWN
There would be a greater incidence of importers involved in these bad practices in the
trousers product, with up to 146 importers (representing 12% of the total importers of
that product), followed by shirts (98 importers - 10% of the total) and finally t-shirts (85
importers - 14% of the total).
This results in unfair competition that is reflected in the closure of companies dedicated
to the domestic production and sale of these products.
In this regard, we believe that it is appropriate for the Indecopi authorities to initiate ex
officio the investigation of these products imported from the Republic of China, taking
into account the comments made by the Specialized Chamber in Defense of
Competition, since the latter's decision does not prevent re-initiation of the investigation.