EU slaps duties on Indian aroma chemical

The European Union (EU) has imposed tariffs on a chemical, used in perfumes and soaps, from India, to help Spanish producers compete against cheaper imports.

The duties, as high as 7.5 per cent, punish Indian exporters of dihydromyrcenol for selling it in the EU below domestic prices or production costs, a practice known as dumping. The anti-dumping duties are for six months and may be prolonged for five years.

Destilaciones Bordas Chinchurreta, Sensient Fragrances and Takasago International Chemicals Europe, three Spain-based producers account for more than 40 percent of the EU's production of dihydromyrcenol. They suffered "material injury'' as a result of dumping by Indian exporters, the European Commission, the EU's regulatory arm in Brussels, said in the Official Journal on July 28. The duties took effect yesterday across the 27-nation bloc.

Indian exporters expanded their combined share in the EU market to about 17 per cent in the 12 months through September 2006 from less than 1 per cent in 2003, according to the commission. The Spanish companies' share of the European market was unchanged at around 34 per cent over the same period, when their businesses became unprofitable, said the regulator.

"The sharply increased presence of dumped imports in recent years caused a strong suppression of the prices,'' the commission said. "Non-imposition of measures may lead to discontinuation of dihydromyrcenol production or even closures'' in the EU. The three Spanish companies had employed a total of about 38 people for dihydromyrcenol production in the 12 months through last September, according to the regulator.

Under the EU practices, the commission can introduce provisional anti-dumping duties for six months and the bloc's national governments - acting on a commission proposal - can impose "definitive'' five-year levies at the same or different rates. The provisional duties on dihydromyrcenol are 7.5 per cent against all Indian exporters except Neeru Enterprises, which faces a 3.3 percent levy.

Separately, the commission closed a probe into whether Indian dihydromyrcenol exporters receive subsidies. That step, also announced in the Official Journal two days ago, ends the threat of EU anti-subsidy duties against the exporters.

The commission opened the anti-dumping and anti-subsidy investigations in November last year after complaints by Destilaciones Bordas Chinchurreta and Sensient Fragrances, which is a unit of Sensient Technologies of the US.