# EUR-Lex - 52013PC0263 - EN

*|*

# 52013PC0263

**Proposal for a COUNCIL REGULATION amending Implementing Regulation (EU) No 990/2011 imposing a definitive anti-dumping duty on imports of bicycles originating in the People's Republic of China following an interim review pursuant to Article 11(3) of Regulation (EC) No 1225/2009 /* COM/2013/0263 final - 2013/0138 (NLE) */**

			*

			*

EXPLANATORY MEMORANDUM

Context of the proposal

|| Grounds for and objectives of the proposal This proposal concerns the application of Council Regulation (EC) No 1225/2009 of 30 November 2009 on protection against dumped imports from countries not members of the European Community (‘the basic Regulation’), in the interim review investigation concerning the anti-dumping duty in force in respect of imports of bicycles originating in the People's Republic of China (‘PRC’). ||

|| General context This proposal is made in the context of the implementation of the basic Regulation and is the result of an investigation which was carried out in line with the substantive and procedural requirements laid out in the basic Regulation.

|| Existing provisions in the area of the proposal By Regulation (EEC) no 2474/93[1] the Council imposed a definitive anti-dumping duty of 30.6% on imports of bicycles originating in the PRC. Following an anti-circumvention investigation pursuant to Article 13 of the basic Regulation, this duty was extended by Council Regulation (EC) No 71/97[2] to imports of certain bicycles parts originating in the PRC. Following an expiry review pursuant to Article 11(2) of the basic Regulation, the Council, by Regulation (EC) No 1524/2000[3], decided that the above mentioned measures should be maintained. Following an interim review pursuant to Article 11(3) of the basic Regulation, the Council, by Regulation (EC) No 1095/2005[4], decided to increase the anti-dumping duty in force to 48.5%. Following an expiry review pursuant to Article 11(2) of the basic Regulation, the Council, by Implementing Regulation (EU) No 990/2011[5], decided that the above mentioned measures should be maintained.

|| Consistency with other policies and objectives of the Union Not applicable.

Consultation of interested parties and impact assessment

|| Consultation of interested parties

|| Interested parties concerned by the proceeding have had the possibility to defend their interests during the investigation, in line with the provisions of the basic Regulation.

|| Collection and use of expertise

|| There was no need for external expertise.

|| Impact assessment This proposal is the result of the implementation of the basic Regulation. The basic Regulation does not provide for a general impact assessment but contains an exhaustive list of conditions that have to be assessed.

Legal elements of the proposal

|| Summary of the proposed action On 9 March 2012, the Commission announced by a notice, published in the Official Journal of the European Union, the initiation of an interim review of the anti-dumping measures applicable to imports of bicycles originating in the PRC. The review was initiated on an ex officio basis. The review investigation found that circumstances with regard to the dumping and injury have not changed significantly and that therefore the continued imposition of the measures was necessary to offset the dumping. It has also established that, should anti-dumping measures be lifted, this would result in a continuation of dumping and material injury to the Union industry. It was further established that the continuation of measures was not against the interest of the Union. As regards the three co-operating exporting producers, the investigation showed that there was a lasting change of circumstances and therefore their individual dumping margins should be amended. Therefore, it is suggested that the Council adopts the attached proposal for a Regulation in order to amend Implementing Regulation (EU) No 990/2011, which should be published in the Official Journal of the European Union by 5 June 2013 at the latest.

|| Legal basis Council Regulation (EC) No 1225/2009 of 30 November 2009 on protection against dumped imports from countries not members of the European Community.

|| Subsidiarity principle The proposal falls under the exclusive competence of the European Union. The subsidiarity principle therefore does not apply.

|| Proportionality principle The proposal complies with the proportionality principle for the following reasons:

|| The form of action is described in the above-mentioned basic Regulation and leaves no scope for national decision.

|| Indication of how financial and administrative burden falling upon the Union, national governments, regional and local authorities, economic operators and citizens is minimized and proportionate to the objective of the proposal is not applicable.

|| Choice of instruments

|| Proposed instruments: regulation.

|| Other means would not be adequate for the following reason: The basic Regulation does not provide for alternative options.

Budgetary implication

|| The proposal has no implication for the Union budget.

2013/0138 (NLE)

Proposal for a

COUNCIL REGULATION

amending Implementing Regulation (EU) No
990/2011 imposing a definitive anti-dumping duty on imports of bicycles
originating in the People's Republic of China following an interim review
pursuant to Article 11(3) of Regulation (EC) No 1225/2009

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the
Functioning of the European Union,

Having regard to Council Regulation (EC) No
1225/2009 of 30 November 2009 on protection against dumped imports from
countries not members of the European Community[6]
(‘the basic Regulation’), and in particular Articles 9(4) and 11(3), (5) and
(6) thereof,

Having regard to the proposal submitted by
the European Commission ('Commission') after consulting the Advisory Committee,

Whereas:

A. PROCEDURE

1.           Measures in force

(1)       By
Regulation (EEC) no 2474/93[7] the Council imposed a definitive anti-dumping duty of 30.6% on
imports of bicycles originating in the People's Republic of China ('the PRC' or 'the country concerned) (the ‘original investigation’). Following an
anti-circumvention investigation in accordance with Article 13 of the basic
Regulation, this duty was extended by Council Regulation (EC) No 71/97[8] to imports of certain bicycles parts originating in the PRC. In
addition, it was decided to create an 'exemption scheme' on the basis of
Article 13(2) of the basic Regulation. The details of the scheme were provided
for in Commission Regulation (EC) No 88/97[9]. In
order to receive an exemption from the extended duty, bicycle producers in the
Union have to respect the conditions of Article 13(2) of the basic Regulation,
namely to respect a ratio of less than 60% of Chinese bicycle parts in their
operation or the addition of more than 25% value to all parts brought into the
operation. To date, more than 250 exemptions have been
granted.

(2)       Following an expiry review
pursuant to Article 11(2) of the basic Regulation, the Council, by Regulation
(EC) No 1524/2000[10],
decided that the above mentioned measures should be maintained.

(3)       Following
an interim review pursuant to Article 11(3) of the basic Regulation ('amending
interim review'), the Council, by Regulation (EC) No 1095/2005[11], decided to increase the anti-dumping duty in force to 48.5%.

(4)       Following a review of the
anti-circumvention measures pursuant to Article 13(4) and 11(3) of the basic
Regulation, the Council, by Regulation (EC) No 171/2008[12], decided to maintain the
extension of the anti-dumping duty imposed on imports of bicycles originating in
the PRC to imports of certain bicycles parts from the PRC.

(5)       Following
an expiry review pursuant to Article 11(2) of the basic Regulation, the
Council, by Implementing Regulation (EU) No 990/2011[13] (the
'previous investigation'), decided that the above mentioned measures should be
maintained.

2.           Ex officio initiation

(6)       Following
the expiry review concluded in October 2011, evidence at the disposal of the
Commission indicated that as far as dumping and injury are concerned, the
circumstances on the basis of which the existing measures were imposed might
have changed and that these changes may be of a lasting nature.

(7)       The prima facie
evidence at the Commission’s disposal indicated that the export quota system
that applied to bicycle producers in the PRC and that hindered the exporting
producers in being granted market economy treatment in the amending interim
review, has been abolished in January 2011.

(8)       Furthermore,
changes to the structure of the Union industry have taken place. In particular,
several Union producers switched from the complete cycle of production to
(partial) assembly operations using imported parts.

(9)       Moreover,
due to the enlargements of the European Union of 2004 and 2007, a significant
number of producers joined the Union bicycle industry. In addition, several
producers which had been part of the Union industry before the two enlargement
rounds moved their production facilities or set up new facilities in the new
Member States. As a result, the cost level of the Union industry might have
changed.

(10)     Finally,
the present injury elimination level was calculated on the basis of bicycles
made out of steel whereas it appears that currently the majority of bicycles
are made of aluminium alloys.

(11)     All these developments
appeared to be of a lasting nature and therefore substantiated the need to
reassess the injury and dumping findings.

(12)     Moreover, the number of
companies benefiting from the exemption scheme is rapidly growing, without the
scheme having been adapted since its introduction in 1997. In addition, the
monitoring system of the imports of parts exempted from the anti-dumping
measures has become highly complex and burdensome, which might endanger its
effectiveness.

(13)     Having determined, after
consulting the Advisory Committee, that sufficient prima facie evidence
existed for the initiation of an investigation pursuant to Article 11(3) of the
basic Regulation, the Commission announced by a notice (‘Notice of initiation’)[14], published in the Official Journal of the European Union on 9 March
2012, the initiation, on an ex officio basis, of an interim review of
the anti-dumping measures applicable to imports of bicycles originating in the
PRC.

3.           Parallel
anti-circumvention investigation

(14)     In 25 September 2012 by
Commission Regulation (EU) No 875/2012[15], the
Commission initiated an investigation concerning the possible circumvention of
anti-dumping measures imposed by Council Implementing Regulation (EU) No
990/2011 on imports of bicycles originating in the PRC by imports of bicycles
consigned from Indonesia, Malaysia, Sri Lanka and Tunisia, whether declared as
originating in Indonesia, Malaysia, Sri Lanka and Tunisia or not, and making
such imports subject to registration ('the
anti-circumvention investigation').

(15)     In
May 2013, the Council by Regulation (EU) No XXX/2013[16] (the 'anti-circumvention Regulation') extended the anti-dumping
measures in force on imports of bicycles originating in the PRC to imports of
bicycles consigned from Indonesia, Malaysia, Sri Lanka and Tunisia, whether
declared as originating in Indonesia, Malaysia, Sri Lanka and Tunisia or not,
as these imports were found to circumvent the measures by transhipment and/or assembly
operations within the meaning of Article 13(1) and (2) of the basic Regulation.

4.           Parallel anti-subsidy
investigation

(16)     On
27 April 2012, the Commission announced by a notice published in the Official
Journal of the European Union[17], the
initiation of an anti-subsidy proceeding with regard to imports into the Union
of bicycles originating in the PRC ('anti-subsidy
investigation').

(17)     In November 2012 the
Commission announced by a notice published in the Official Journal of the
European Union[18], that the findings in the anti-circumvention investigation may be
used in the anti-subsidy investigation mentioned in recital (14) and (15)
above.

(18)     In May 2013 the Commission
by Regulation (EU) No xxx/2013,
terminated the anti-subsidy investigation without imposing measures[19].

5.           Parties concerned by the
investigation

(19)     The
Commission officially notified known Union producers, known associations of
Union producers, the known exporting producers in the PRC and an association of
Chinese producers, the representatives of the country concerned, known
importers and associations of importers, known Union producers of bicycle parts
and their associations and known association of users of the initiation of the
investigation. Interested parties were given the opportunity to make their
views known in writing and to request a hearing within the time limit set in
the Notice of initiation.

(20)     In view of the apparent
high number of exporting producers, Union producers and unrelated importers,
sampling was provided for in the Notice of initiation in accordance with
Article 17 of the basic Regulation. In order to enable the Commission to decide
whether sampling would be necessary and if so, to select samples, all exporting
producers and their known association, all Union producers and unrelated
importers were asked to make themselves known to the Commission and to provide,
as specified in the Notice of initiation, basic information on their activities
related to the product concerned during the period from 1 January 2011 to 31
December 2011.

(21)     Since
the representatives of the country concerned did not come forward at
initiation, the Commission contacted about 70 Chinese companies already known
to the Commission services from the previous investigation. At a later stage,
when the anti-subsidy investigation mentioned in recital (16) above was
initiated, the Commission identified around 300 additional Chinese exporting
producers that were contacted in the context of this interim review as well.

(22)     In
spite of the Commission's efforts to obtain cooperation, only eight Chinese groups
of exporting producers came forward, out of which only four reported exports to
the Union in the review investigation period ('RIP') defined in recital (37)
below, representing less than 4% of the total imports from the PRC of bicycles
in the RIP.

(23)     On the basis of the above
it was decided that sampling was not necessary for exporting producers in the
PRC.

(24)     As
stated in recitals (63) to (64) and (131) below, for one Chinese exporting group,
Giant China, application of Article 18(1) of the basic Regulation was
warranted. Consequently, the cooperation of the Chinese exporting producers
decreased even further.

(25)     As explained in recital (32)
to (35) below, a sample of Union producers was selected.

(26)     As explained in recital (36)
below, it was decided that sampling was not necessary for unrelated importers.

(27)     The Commission sent
questionnaires to all parties known to be concerned and to all other parties
that so requested within the deadlines set out in the Notice of initiation,
namely the sampled Union producers, the cooperating exporting producers in the
PRC, unrelated importers that made themselves known as described in recital (36)
below and to the known producers of bicycle parts in the Union.

(28)     Replies to the
questionnaires and other submissions were received from four groups of Chinese
exporting producers and their representative, eight sampled Union producers,
one association of users and eight associations of the Union producers, 53
bicycle parts producers and one association of producers of bicycle parts. None
of the contacted unrelated importers submitted a questionnaire reply.

(29)     The
Commission sought and verified all the information deemed necessary for a
determination of dumping, resulting injury, causality and Union interest and
carried out verifications at the premises of the following companies:

(a)
Producers of bicycles in the Union

–
Accell Hunland, Hungary

–
Decathlon RGVS, Portugal

–
Denver srl, Italy

–
SC Eurosport DHS, Romania

–
Koninklijke Gazelle, Netherlands

–
Maxcom Ltd, Bulgaria

–
MIFA, Germany

–
Sprick Rowery, Poland

(b)
Producers of bicycle parts in the Union

–
Chimsport, Romania

–
Telai Olagnero, Italy

(c)
Exporting producers in the PRC

–
Ideal (Dong Guan) Bike Co.,

–
Oyama Bicycles (Taicang) Co.,

–
Zhejiang Baoguilai Vehicle Co.,

(30)     In light of the need to
establish a normal value for exporting producers in the PRC to which MET might
not be granted, a verification visit to establish normal value on the basis of
data from an analogue country took place at the premises of the following
companies:

–
Distribuidora de Bicicletas Benotto, S.A. DE
C.V., Mexico City, Mexico,

–
Bicicletas Magistroni, Mexico City, Mexico,

–
Bicicletas Mercurio SA DE CV, San Luis Potosi, Mexico.

(31)     Following the disclosure of
essential facts and considerations ('the disclosure') some parties argued that
an inadequate period was provided for the parties to comment. In this respect it
is noted that the parties were provided sufficient time to comment in
accordance with Article 20(5) of the basic Regulation. The comment is therefore
dismissed.

6.           Sampling of Union
Producers

(32)     The Commission announced in the
Notice of initiation that it had provisionally selected a sample of Union
producers. This sample consisted of eight companies, out of over 380 Union
producers that were known prior to the initiation of the investigation,
selected in particular on the basis of the largest representative volume of
production and sales that can reasonably be investigated within the time
available taking into account the geographical spread. The sample covered the largest producing countries ranked according
to the production volumes. For each of these countries, the companies included
in the sample were among the largest representative cooperating producers. The
sample also captured entities from the largest cooperating groups. Particular
attention was given in this case to sampling an equal number of companies from
the old and the new Member States.

(33)     The
sample represented around 25% of the total estimated Union production and sales
during the RIP. Interested
parties were invited to consult the file and to comment on the appropriateness
of this choice within 15 days of the date of publication of the Notice of
initiation. All interested parties, who so requested
and showed that there were particular reasons why they should be heard, were
granted a hearing.

(34)     Certain
interested parties raised objections concerning the sampling of Union
producers. They claimed that: (i) the provisional sample included only certain
legal entities pertaining to groups of related companies rather than all legal entities making up the full economic entity
producing the product at issue; and (ii) the proposal included a company that
has been recently operating at a loss, whereas the Union producers were
thriving during that period. In addition, it was claimed that these losses were not linked
to the product concerned.

(35)     These
arguments were dismissed on the following grounds: (i) The entities
belonging to larger groups that were found to operate independently from other
subsidiaries of the same group were considered representative of the Union
industry and there was therefore no need to investigate the entire group on a
consolidated basis. (ii) The interested
party concerned did not substantiate its claim that the company selected in the
sample and which allegedly realised losses would indeed not be representative
for the Union industry. Finally, while the selected sample should be
representative for the Union industry, the companies selected do not
necessarily need to be homogeneous. The claim of this party had to be therefore
rejected.

7.           Sampling of Unrelated
Importers

(36)     Sampling of unrelated importers was also provided for in the Notice
of Initiation. All known unrelated importers were contacted upon initiation.
Given the small number of replies received in the framework of the sampling
exercise, no sample was selected. All unrelated importers that came forward
were invited to cooperate and received a questionnaire. None of the unrelated importers provided a questionnaire reply,
nor did they cooperate further in the present investigation.

8.           Investigation period

(37)     The
investigation of dumping and injury covered the period from 1 January 2011 to
31 December 2011 (the 'review investigation period' or 'RIP'). The examination
of trends in the context of the analysis of injury covered the period from
January 2008 to the end of the RIP (the 'period considered').

B. PRODUCT CONCERNED AND LIKE
PRODUCT

1.           Product concerned

(38)     The product subject to this review investigation is bicycles and
other cycles (including delivery tricycles but excluding unicycles), not
motorised ('the product under review') originating in the PRC, currently falling within CN codes 8712 00
30 and ex 8712 00 70.

(39)     As
in the previous investigation,
the bicycles were classified in the following categories:

–
(A) ATB (al-terrain bicycles including mountain
bicycles 24′′ or 26′′),

–
(B) trekking/city/hybrid/VTC/touring bicycles
26′′ or 28′′,

–
(C) junior action (BMX) and children's bicycles
16′′ or 20′′,

–
(D) other bicycles/cycles (excluding unicycles).

(40)     All types of bicycles as
defined above have the same basic physical and technical characteristics.
Furthermore, they are sold through similar distribution channels such as
specialised retailers, sport chains and mass merchandisers on the Union market.
The basic application and use of bicycles being identical, they are largely
interchangeable and models from different categories therefore compete with
each other. On this basis, it was concluded that all the categories form one
single product.

(41)     One
party argued that the different types of bicycles have significantly
different characteristics and intended uses and also significantly different prices,
while from the consumers’ perspective these different types of bicycle are not
interchangeable. Furthermore, it was argued that steel
and aluminium bicycles are not considered interchangeable and that their prices
are different as well.

(42)     In
support of its argument, the party submitted a study about the basic physical
and technical characteristics and uses of five different product types as well
as their interchangeability. It should be noted that the study was allegedly
based on the replies of 36 individuals, however it is not clear how the
respondents have been chosen. It seems furthermore that it was prepared
specifically for the current investigation. The study does not include any
quantifiable data. It is noted that the content of this study is apparently
based on statements of customers and/or bicycles producers rather than
verifiable evidence. Therefore, the representativity of the results of this
study is questionable.

(43)     The party has not brought
any other evidence in support of its claim.

(44)     The
investigation has confirmed that all types of bicycles, as defined
above, have the same basic physical and technical characteristics. In
particular, it was found that the use of different raw materials did not have
an impact on the basic characteristics of a bicycle. Although steel and
aluminium have some different technical properties like weight, the basic
characteristics of the bicycles made of steel and aluminium remain similar.

(45)     Likewise, there was no
specific evidence provided by the party that bicycles made of steel on one hand
and those made of aluminium on the other hand had indeed different basic
physical and technical characteristics.

(46)     Regarding the specific
application, use and consumer perception, the current investigation has
confirmed that all bicycles have the same basic applications and perform
essentially the same function. While it is true that different categories are
in principal intended to meet different end users requirements, end-users will
regularly put a bicycle in a particular category to a variety of uses.

(47)     There are consequently no
clear dividing lines based on end-users' use and consumers' perceptions of
different categories.

(48)     Furthermore, Union
producers themselves often make no distinction among the bicycles classified in
different categories with regard to production, distribution and accounting.
Indeed, they often have a similar manufacturing process for all categories of
bicycles.

(49)     In addition, the bicycles
in the various categories are sold through similar distribution channels such
as specialised retailers, sport chains and mass merchandisers on the Union
market.

(50)     On this basis, it was
concluded that all the categories form one single product.

(51)     One party raised the point
that the current investigation covers two CN codes as stated in recital (38)
above while the previous investigation stated in recital (5) above covered
three CN codes, i.e. ex 8712 00 10, 8712 00 30 and ex 8712 00 80. In this
regard, it is noted that the changing of the codes was due to amendments to the
Combined Nomenclature imposed by Regulation (EU) No 1006/2011 with the effect
as from 1.1.2012[20].

(52)     In this context, the party
claimed that bicycles without ball bearings should not be considered a single
product with the bicycles with ball bearings. However, the investigation showed
that bicycles with ball bearings and bicycles without ball bearing share the
same technical characteristics and uses. Furthermore, the party has not
substantiated its claim with any supporting evidence and therefore, the claim
is rejected.

(53)     Moreover, the party argued
that there is a significant difference in the average import prices as recorded
in Eurostat between the two CN codes covering the product concerned. In this
regards, it is highlighted that as stated in recital (157) below due to the
product mix, the average price as recorded in Eurostat can only serve as an
indicator of price trends, but is not useful when comparing sales prices
between various countries and the Union.

(54)     After
the disclosure one party reiterated its claim that the different types of
bicycles covered by the scope of this investigation are not like products and
claimed that it had submitted positive evidence in support of the differences
in raw materials, physical characteristics, technological features, end-uses
that allegedly exist among the different type of bicycles.

(55)     In this respect, it should
be noted that the positive evidence that the party claims to have submitted is
actually the study assessed by the Commission in the recital (42) above. After
duly assessment, the Commission concluded that the representativity
of the results of this study was questionable for the reasons mentioned in
recital (42) above.

(56)     The parties claimed that
children's bicycles defined by the party as bicycles with the size of the wheel
of less than and including 16 inch should be excluded from the product scope of
the investigation. These claims were based on the assumption that in particular
duration of uses and simplicity in characteristics clearly divided these
bicycles from other type of bicycles falling within the scope of the current
investigation.

(57)     However, these claims were
deemed insufficient to exclude bicycles with the size of the wheel of less than
and including 16 inch from the definition of the product concerned because they
were not substantiated with sufficient evidence showing that in this
investigation a clear dividing line could be drawn between bicycles with the
size of the wheel of less than and including 16 inch and other bicycles types
within the scope of the investigation. In fact, to the contrary it was found
that the essential physical and technical characteristics of the bicycles with
the size of the wheel of less than and including 16 inch which were common to
those of the product concerned – a human-powered, pedal-driven vehicle having
more than one wheel attached to a frame – were much more important than any
differences (i.e. essentially size of the wheel). Furthermore, it appeared that
production, sales channels and consumer service were not fundamentally
different from other bicycles types under investigation. Just the mere fact
that bicycles with the size of the wheel of less than and including 16 inch
form a distinctive product sub-group within the scope of the product concerned
does not warrant the exclusion from the product scope. Indeed, it was found
that there is no clear dividing line between bicycles with the size of the
wheel of less than and including 16 inch and the product concerned, but that
there is rather a large overlap regarding the definition of the product
concerned, notably that it is a human-powered, pedal-driven vehicle having more
than one wheel used essentially for transportation and spot. In this regard,
the investigation revealed that one of the co-operating Chinese exporting
producers was actually exporting to the Union bicycles with the wheel size of
12 inch which were not considered necessarily bicycles for children but they
were actually folding bicycles used by adults for which storage was an
important feature of the bicycles.

(58)     Therefore the request to
exclude bicycles with the size of the wheel of less than and including 16 inch
from the product scope of the investigation is rejected.

2.           Like product

(59)     Bicycles produced and sold
by the Union industry on the Union market, those produced and sold on the
analogue country market and those imported into the Union market originating in
the PRC have the same basic physical and technical characteristics and the same
uses and are, therefore, considered to be alike within the meaning of Article
1(4) of the basic Regulation.

C. DUMPING

1.           Market Economy Treatment

1.1.        MET assessment

(60)     Pursuant to Article 2(7)(b)
of the basic Regulation, in anti-dumping investigations concerning imports
originating in the PRC, normal value shall be determined in accordance with
paragraphs 1 to 6 of the said Article for those producers which were found to
meet the criteria laid down in Article 2(7)(c) of the basic Regulation. Briefly
and for ease of reference only, these criteria are set out in summarised form
below:

–
Business decisions are made in response to
market signals, without significant State interference, and costs reflect
market values;

–
Firms have one clear set of basic accounting
records, which are independently audited in line with international accounting
standards (IAS) and are applied for all purposes;

–
There are no significant distortions carried
over from the former non-market economy system;

–
Bankruptcy and Property laws guarantee stability
and legal certainty; and

–
Exchange rate conversions are carried out at
market rates.

(61)     In the present
investigation, all exporting groups that initially cooperated with the
investigation requested MET pursuant to Article 2(7)(b) of the basic Regulation
and replied to the MET claim form within the given deadlines.

(62)     For all exporting groups
that initially cooperated with the investigation, the Commission sought all
information deemed necessary and verified information submitted in the MET
claim at the premises of the groups in question.

(63)     The
reply of one group, Giant China, was considered as being significantly
deficient as it did not include all the required information on the structure
of the group, notwithstanding the Commission’s efforts to obtain the necessary
information from the group.

(64)     As
required by Article 18(1) of the basic Regulation, Giant China was informed of
the likely application of facts available to it and invited to provide
comments. As Giant China, however, refused to provide the Commission with the
necessary information, Article 18(1) of the basic Regulation was applied and
the claim for MET was rejected.

(65)     Furthermore, the
investigation revealed that MET could not be granted to any of the Chinese
company groups as none of them fulfilled all the criteria set out in Article
2(7)(c) of the basic Regulation, for the following reasons.

Criterion 1

(66)     All cooperating exporting
groups failed to demonstrate that they fulfil Criterion 1 because of State
interference in decisions concerning the main raw materials (steel &
aluminium). The cost of steel and aluminium for the cooperating exporting
groups represents at least around 20% to 25% of the cost of production of the
product concerned. Many companies are fully vertically integrated, meaning that
they purchase the aluminium ingots or steel to produce tubes which then are
used to produce frames/forks and finally the bicycles.

(67)     The investigation
demonstrated that the three cooperating Chinese groups of exporting producers
acquired the steel and aluminium used for the production of the product
concerned on the Chinese domestic market.

(68)     Prices are based on the
quotation of aluminium in the State-controlled Shanghai Non-ferrous Metal
Exchange market (‘the Exchange’ or ‘SHFE’). The SHFE is a closed exchange for
Chinese-registered companies and Chinese citizens and it is controlled by the
State Securities Regulatory Commission. Several rules governing the functioning
of the Exchange contribute to low volatility and prices
which do not reflect the market value at the SHFE: daily price
fluctuations are limited to 4% above or below the settlement price of the
previous trading day, trading happens at a low frequency (until the 15th day of
each month), futures contracts are limited to a duration of up to 12 months,
and transaction fees are charged by both the Exchange and brokers.

(69)     Moreover, as concerns SHFE
transactions, physical deliveries can only take place in an approved warehouse
within the PRC, unlike international exchanges, where delivery can take place
worldwide. Moreover, as the SHFE is a platform for physical exchanges only (no
derivatives are sold), this completely insulates the Chinese aluminium market.
As a consequence, arbitrage with the worldwide benchmark, the London Metals
Exchange (‘LME’) or other markets is practically not possible and the exchange
works in isolation from other world markets. Therefore, an arbitrage among
these markets cannot take place. During the RIP primary aluminium prices were
around 7% lower on the SHFE (excluding VAT) as compared to the LME (also
excluding VAT), compared on a spot price basis.

(70)     The State also interferes
with the price setting mechanisms in the SHFE as it is both a seller and a
purchaser, via the State Reserve Bureau and other State Bodies, of primary
aluminium. In addition, the State sets daily price limits via the rules of the
SHFE which have been approved by the State Regulator, the China Securities
Regulatory Commission (‘the CSRC’).

(71)     The PRC supports the
processing of aluminium products by granting a partial VAT refund on the export
of many aluminium products (for bicycles, the rate is 15%); in case of exports
of primary aluminium instead, there is no refund. This is an incentive for
Chinese industry to further process aluminium and has a direct bearing on the
availability and price of primary aluminium on the domestic market. In
addition, the investigation demonstrated that primary aluminium for export is
subject to a 17 % tax, while no export tax is applied on exports of bicycles.
This strengthens the finding of interference of the Chinese State on the domestic market of aluminium. These tools have a downward impact on domestic
prices encouraging domestic industry to manufacture finished goods
incorporating aluminium (such as the product concerned) for both the domestic
and export markets.

(72)     A further distortion by the
  Chinese State is in the form of interventions in the market by the State
Reserves Bureau (‘SRB’) which is part of the National Development Reform
Commission (‘NDRC’). At the end of 2008 and the beginning of 2009 the SRB
started buying up stocks of primary aluminium from Chinese aluminium smelters,
in order to stimulate the price of the commodity. The SRB sold primary
aluminium back onto the market such as at the start of November 2010 as
reported by Bloomberg[21].
The Xinhua News Agency reported the stockpiling measures in December 2008,
explaining that it was planned to accumulate 300 000 tonnes of aluminium at
prices which were 10% higher than the market price in a measure designed to
prop up prices[22].
The SRB stockpiling plan involved buying from several Chinese smelters although
around half was to be bought from the Aluminium Corporation of China Ltd. The
above demonstrates that the Chinese State has a primary role in the setting of
prices of primary aluminium and that it interferes in the market.

(73)     That the significant State
interference, as described above, is clearly targeted is, inter alia,
corroborated by the 12th 5 Year Development Plan for Aluminium
(2011-2015) in which the Government of the PRC explicitly states its intention
of ‘adjusting tax and export tax rebates and other economic levers, and
strictly control the total amount of expansion and exports of primary
products’. This plan continues the policy which existed in the previous
Aluminium Plan. Furthermore these plans have been implemented over many years
and, as demonstrated above, during the RIP several implementing measures were
in operation.

(74)     Thus, the multiple
State-induced distortions in the Chinese primary aluminium prices affect the
raw material prices. In addition, the producers enjoy an advantage from these
distortions, in the sense that they normally make their purchases in the
Chinese market from local suppliers using Chinese spot markets prices (or SHFE)
as a benchmark. During the RIP, these prices were around 7 % lower than the
world market prices. In theory, Chinese companies can also buy certain
quantities at LME prices when prices in the Chinese market are higher as a
result of State intervention – whilst the opposite is impossible for
non-Chinese operators.

(75)     It was therefore concluded
that the Chinese aluminium market is distorted due to significant intervention
of the State.

(76)     Interference by the Chinese
State in the steel sector is demonstrated by the fact that a large majority of
the large Chinese steel producers are State-owned and steel installed capacity
and output are influenced by the various five-year Industrial Plans, in
particular the current 12th Five-Year Plan (2011-2015) for the iron and steel
sector.

(77)     The State also exercises
significant control over the market of raw materials. Coke (together with iron
ore the major raw material to produce steel) is subject to quantitative
restrictions on exports and to an export duty of 40%. It may therefore be
concluded that the Chinese steel market is distorted due to significant State
interference.

(78)     An anti-dumping
investigation which has been conducted by the Commission[23], confirmed the importance of
the State intervention also in the specific sector of pipes and tubes, which
are the main raw material used for the production of steel bicycles.

(79)     It was therefore concluded
that the Chinese steel market is distorted due to significant intervention of
the state.

(80)     Under such circumstances,
neither of the companies has been in a position to prove that their business
decisions regarding acquisition of raw materials are not subject to significant
State interference and that costs of major inputs substantially reflect market
values. Therefore, they could not demonstrate that they fulfil criterion 1.

(81)     Concerning the other four
criteria, the three co-operating Chinese exporting producers were able to
demonstrate that they met the remaining criteria.

(82)     In view of the above
findings on criterion 1, it was considered, after consultation of the Advisory
Committee, that MET should be rejected for the three cooperating Chinese group
of exporting producers.

(83)     The
Commission officially disclosed the results of the MET findings to the
companies concerned in the PRC and to the complainant. They were also given an
opportunity to make their views known in writing and to request a hearing if
there were particular reasons to be heard.

1.2.        Comments of the parties

(84)     Following the MET
disclosure, one company argued that the refusal to grant MET is based on the
Chinese bicycle industry as a whole, rather than on an individual company
basis. In this respect it is noted that although the Commission made an
assessment of the steel and aluminium sectors in China, there is a clear link
between the steel and aluminium markets in the PRC and the purchases of steel
and aluminium products as a raw material by the co-operating groups.

(85)     Moreover it was argued that
the cost advantage for the Chinese bicycle producers concerning steel and
aluminium is insignificant as it represents only between 1.4% and 1.75% when
considering that primary aluminium and steel account for 20%-25% of the manufacturing
cost of bicycles and that the price difference between LME and SHFE prices was
7% during the RIP.

(86)     In this respect it is
highlighted that the pivotal factor in the analysis is the proportion of the
raw material in the manufacturing cost (which in this case was significant as
it accounted for at least 20%-25% of the manufacturing costs) and the fact that
the raw material market is distorted in the PRC. The exact quantitative impact
of the distortion in the company's cost is not considered as a decisive factor.

(87)     Furthermore, it was argued
that in another investigation the Commission has analysed the prices of the
direct raw materials used in the manufacturing of the product concerned rather
than the price of the primary raw material and, therefore, in the current case,
the Commission should have assessed the State interference in prices of direct
raw material, i.e. aluminium alloy extrusion, rather than in the primary
aluminium which is the primary raw material.

(88)     In this respect it is noted
that each investigation is analysed on its own merits. Moreover, the fact that
the market of primary aluminium is controlled by the State indicates that the
market of intermediary aluminium products also does not operate under market
economy conditions, i.e. responding to supply and demand. The claim was
therefore rejected.

(89)     It was also argued that any
price difference for primary aluminium between SHFE and LME may not lead to a
price difference for aluminium alloy extractions between the respective markets,
and that factors such as production efficiency, residual capacity, and cost of
environmental obligations need to be taken into account.

(90)     In this respect, it is
highlighted that no evidence was submitted in support of this allegation. In
the absence of supporting evidence, the Commission was not in the position to
analyse and verify this allegation, which was therefore rejected.

(91)     In addition, it was claimed
that, by ignoring the fact that there are a number of subsequent intermediary
products, the Commission ignored the actual characteristics and factors for
pricing the bicycle finish products. In particular, as the bicycle is sold
directly to the end-consumer (unlike the primary aluminium), other factors than
the price of the raw material determine the price of the bicycles such as the
specific technical features of the bicycle and the demand of the consumers.

(92)     However, no concrete
details were provided on these characteristics and factors that should be taken
into consideration and therefore it was not possible for the Commission to
comment on them.

(93)     It was further alleged that
the Commission made a wrong assessment of the principles under which the SHFE
operates. It was argued that the CSRC regulates SHFE functions similarly to, among
others, the Autorité des marchés financiers ('AMF') in France or the Financial
Services Authority ('FSA') in UK and that CSRC's role and specific
regulatory/supervision measures are consistent with the G-20 principles. As a
consequence the MET conclusions that are based on the role of the CSRC and
operation of the SHFE are without merit.

(94)     It is noted that the
company failed to take into account the fact that while FSA[24] and AMF[25] are independent non-governmental bodies, CSRC is a ministry level
unit operating directly under the State Council[26]. The
State Council is the highest executive organ of State power, as well as the
highest organ of State administration[27]. This
is another example of the fact that the State is actively involved in the
regulation of the aluminium market in the PRC. As concerns the compliance to
G-20 principles, the company merely provided a statement, without really
explaining the principles to which it referred. The argument was therefore
rejected.

(95)     Moreover, one company
disagreed with the Commission's assessment that arbitrage between the worldwide
benchmark, the LME, or other markets and SHFE prices is practically not
possible and that therefore SHFE works in isolation from other world markets.

(96)     It is noted that this contradicts
the company's acceptance of the price difference between the SHFE and the LME
during the period when the SHFE price was higher than LME prices by arguing
that during that period of time the Chinese producers paid more for the
aluminium products than the Union producers.

(97)     Furthermore, the company
argued that as from 2010 the SHFE started to allow aluminium physical delivery
to bonded warehouses in Shanghai's free trade zone. It follows that this
statement does not contradict, but rather confirms the Commission's assessment
that physical deliveries can take place only in a warehouse within the PRC
which has been approved by the SHFE, unlike international exchanges, where
delivery can take place worldwide.

(98)     It was also argued that the
SHFE is a futures market and aluminium futures contracts have been traded on
the SHFE since 1991 and therefore the Commission's assessment that no
derivatives are sold on the SHFE is wrong.

(99)     Indeed the SHFE is a
futures market. However, the futures contracts traded on SHFE are settled by
physical delivery. Derivatives products without physical delivery, i.e. not
actually exercised but traded before their delivery date, are limited in the
PRC and therefore the SHFE is merely a platform for physical exchanges which
insulates the Chinese aluminium market.

(100)   It was also argued that the
Commission's reasoning relating to the effects on bicycle pricing of the
VAT/tax measures and inventory measures relating to primary aluminium are
economically dubious and insufficiently reasoned.

(101)   However, since the company
did not explain which elements the Commission is missing in its analysis, nor
did it further substantiate this claim, it was not possible for the Commission
to comment.

(102)   Furthermore, it was argued
that there are similarities between the industrial policy in the PRC and the EU
policies and that the Commission has not demonstrated that the industrial
policy in the PRC has any direct or significant impact on the input decisions,
bicycles production or sales operation of the Chinese bicycles exporting
producers.

(103)   In this respect it is noted
that it was not specified to which EU policies the company was referring and
therefore the Commission cannot comment on this allegation. In addition,
concerning the statement that it has not been demonstrated that the industrial
policy in the PRC has a significant impact on the input decisions, production
or sales of the Chinese exporting producers of bicycles, it is noted that the
existence of a 5-year Plan in the Aluminium sector in the PRC, the distortions
of the aluminium price which is traded on an isolated Exchange when aluminium
represents 20-25% of the total manufacturing costs of a bicycle, indicate a
clear link between the industrial policy in the PRC and the input decisions,
production and sales of the Chinese exporting producers of bicycles.

(104)   It was also argued that the
Commission breached the three-month deadline specified in the basic Regulation.
In this respect it is noted that due to the fact that the cooperation of the
Chinese exporters was very low, the Commission made extra efforts to obtain
more cooperation by contacting a large number of additional exporters that were
identified later in the investigation. As a result, it was not possible to make
the MET determination within the stipulated period. Moreover, it is recalled
that the General Court[28] has recently held that a MET determination made outside the three
month deadline laid down in Article 2(7)(c) of the basic Regulation is not in
itself sufficient to lead to an annulment of a regulation imposing anti-dumping
measures. It is also noted that Article 2(7) of the basic Regulation has
meanwhile been amended with the effect that the Commission shall only make MET
determinations in respect of companies included in a sample and that such a
determination shall normally be made within seven months of, but in any event
not later than eight months after the initiation of the investigation[29]. This amendment is applicable to all new and pending investigations,
including the present one. The determinations were made within eight months
from the date of the initiation.

(105)   In view of the above, the
claim relating to breach of the three month deadline is herewith rejected.

1.3.        Request of parties

(106)   One party requested that
Market Economy Treatment ('MET') claims of producers in the PRC which stopped
exporting to the Union should also be analysed. It was alleged that those
producers only stopped exporting to the Union due to the anti-dumping duties in
place since 2005.

(107)   In this regard it is
highlighted that the findings with regard to dumping and injury relate to the
review investigation period ('RIP') fixed in accordance with the Article 6(1)
of the basic Regulation. This means that data collected from the exporting
producers in view of establishing normal value and the export price also
strictly relate only to that period. The MET analysis is carried out in the
context of determining normal value of exporting producers in the PRC which is
then compared to the export price during the same period. If a producer did not
export the product concerned during the RIP, no export price can be established
and no dumping margin can be calculated. Therefore, there is no reason to
examine MET for a producer which did not export the product concerned during
the RIP. Nevertheless, it is recalled that all exporting producers have the
possibility to request an "interim review" to have their situation
revised pursuant to Article 11.3 of the basic Regulation or, those exporting
producers who have not exported the product concerned during the period of
investigation on which the measures were based, have the possibility to request
a "new exporter review" pursuant to Article 11.4 of the same
Regulation.

(108)   Moreover, in its request,
the party also mentioned the Brosmann Judgement[30] of the
Court of Justice of the European Communities and seemed to imply that on that
basis, producers in the PRC should be allowed to submit MET claim forms even if
they did not export the product concerned to the Union during the current
investigation period. It is noted that the judgement does not address the
situation of MET claims by exporting producers who did not export during the
investigation period and is therefore not relevant in the present context.

(109)   Consequently, the request
was rejected.

(110)   It was also argued that
export prices for the companies without exports to the Union in the RIP should
be determined on the basis of Article 2(9) of the basic Regulation, i.e. on any
other reasonable basis.

(111)   In this regard it is noted
that Article 2(9) of the basic Regulation does not positively imply that an
export price shall be constructed for producers of the concerned country in the
case that they did not export any quantity to the Union. To the contrary,
Article 2(9) of the basic Regulation refers to the re-sales price of the
imported product as a basis to construct the export price, and to adjustments
for all costs incurred between importation and resale, which implies that imports
to the Union were in fact made. The "any other reasonable basis" in
the first sentence of this provision refers to specific cases where the
preceding methodologies mentioned therein cannot be applied. It does not
detract from the fact that the Article implies that imports into the Union have taken place during the RIP.

1.4.        Conclusion

(112)   On the basis of the above,
none of the Chinese groups that had requested MET could show that they
fulfilled the criteria set out in Article 2(7)(c) of the basic Regulation. It
was therefore considered that MET should be rejected for all these groups.

2.           Individual Treatment

(113)   By
Regulation (EU) No 765/2012[31], which
entered into force on 6th September 2012, the European Parliament
and the Council amended Article 9(5) of the basic Regulation. Article 2 of
Regulation (EU) No 765/2012 stipulated that the amendment shall only apply to
investigations initiated following its entry into force. Consequently, as the
current investigation was initiated on 9th March 2012, the amendment
did not apply to the current investigation.

(114)   Pursuant to Article 2(7)(a)
of the basic Regulation a country-wide duty, if any, is established for
countries falling under Article 2(7) of the basic Regulation, except in those
cases where companies are able to demonstrate, in accordance with Article 9(5)
of the basic Regulation, that their export prices and quantities as well as the
conditions and terms of the sales are freely determined, that exchange rates
are carried out at market rates, and that any State interference is not such as
to permit circumvention of measures if exporters are given different rates of
duty.

(115)   The
three cooperating exporting groups which requested MET also claimed individual
treatment in the event they would not be granted MET. On the basis of the
information available, it is established that all three groups in the PRC meet
all the requirements for individual treatment.

3.           Normal Value

3.1.        Analogue country

(116)   According to Article 2(7)(a)
of the basic Regulation, normal value for the exporting producers not granted
MET has to be established on the basis of the domestic prices or constructed
normal value in an analogue country.

(117)   For this purpose, in the
Notice of initiation the Commission suggested Mexico, which was also the
analogue country used in the previous investigation concerning the PRC.

(118)   All interested parties were
given the opportunity to comment on the choice of analogue country envisaged.

(119)   One party argued that Mexico did not represent the best choice of analogue country, but that Taiwan was a better option
due to the fact that Taiwan is a major producer of bicycles, had greater
commonality with the PRC than Mexico and is likely to result in a more reliable
normal value.

(120)   The Commission tried to
obtain cooperation from 15 countries, namely Bangladesh, Canada, Cambodia, India, Indonesia, Malaysia, Mexico, Norway, Philippines, Sri Lanka, Taiwan, Thailand, Tunisia, Turkey and USA.

(121)   The Commission received
replies to the questionnaire only from three Mexican producers of bicycles
which also accepted a verification of their response at their premises. No
other companies from any contacted countries cooperated. These three producers
had domestic sales representing more than 30% of the Mexican market, which was
estimated at about 1.7 million units in 2011. More than 14 producers and
several importers were found to operate in a competitive environment. The
imports of bicycles in 2011 were originating principally in the PRC (more than 60%)
and Taiwan (20%). These imports represented some 5% of the domestic market
(source: annual report of ANAFABI, the Mexican association of bicycle
manufacturers).

(122)   The Mexican market profile
for the product concerned, number of operators, domestic competition and the
features of production process confirmed that Mexico was still an appropriate
analogue country. In view of the above, the Mexican market could be considered
to be representative and competitive. It was therefore concluded that Mexico was an appropriate analogue country.

3.2.        Determination of normal
value in the analogue country

(123)   Pursuant to Article 2(7)(a)
of the basic Regulation, normal value was established on the basis of verified
information received from the producers in the analogue country as set out
below.

(124)   The investigation showed
that the product concerned was sold in representative quantities on the Mexican
domestic market.

(125)   Furthermore, it was analysed
whether it could be considered as being sold in the ordinary course of trade
pursuant to Article 2(4) of the basic Regulation. This was done by establishing
for each product type the proportion of profitable sales to independent
customers on the domestic market during the RIP.

(126)   Where sales volume of a
product type, sold at net sales price equal to or above the calculated cost of
production, represented more than 80 % of the total sales volume of that type,
and where the weighted average price of that type was equal to or above the
cost of production, normal value was based on the actual domestic price. This
price was calculated as a weighted average of the prices of all domestic sales
of that type made during the RIP, irrespective of whether the sales were
profitable or not.

(127)   Where the volume of
profitable sales of a product type represent 80 % or less of the total sales
volume of that type, or where the weighted average price of that type was below
the cost of production, normal value was based on the actual domestic price,
calculated as a weighted average of profitable sales of that type only.

(128)   Moreover, the investigation
did not reveal any product type where no profitable sales were made.

4.           Export price

(129)   In all cases where the
product concerned was exported to independent customers in the Union, the
export price was established in accordance with Article 2(8) of the basic
Regulation, namely, on the basis of export prices actually paid or payable.

(130)   In cases where sales were
made via a related importer or trader, the export prices were constructed in
accordance with Article 2(9) of the basic Regulation on the basis of the resale
prices of that related importer to first independent customers in the Union.
Adjustments were made for all costs incurred between importation and resale
including sales, general and administrative expenses and profit. With respect
to profit margin, the profit realised by an unrelated importer/trader of the
product concerned was used since the actual profit of the related
importer/trader was not considered reliable because of the relationship between
the exporting producers and the related importer/trader.

(131)   As
stated in recitals (63) and (64) above, Giant China refused to provide the
Commission's services with the necessary information on the structure of the
group and essential information concerning production, export sales volume and
prices of the product concerned to the Union in the RIP of the companies part
of Jinshan Development and Construction Ltd group ('Jinshan Group') involved in
the production and sale of the product concerned in the PRC and consequently,
Article 18(1) of the basic Regulation was applied concerning the export price.

(132)   Giant China challenged the
application of Article 18(1) of the basic Regulation both in respect of refusal
of MET and application of facts available to the export price calculations. It
argued that the information requested by the Commission was not necessary for
the calculation of the dumping margin. In this regard, Giant China argued that
the information requested from Jinshan Group located in the PRC was not pertinent
for the MET assessment or export price calculations as it was only very
indirectly related to Giant China and its related companies ('Giant Group').

(133)   However, the investigation
has confirmed that one of Giant Group's subsidiaries, actively producing and
exporting the product concerned to the Union during part of the RIP, namely
Shanghai Giant & Phoenix Bicycles Co Ltd ('GP'), was related, via common
shareholding, structural and management links to Jinshan Group and that this
group was involved in the production and sales of the product concerned. In the
absence of a reply to the MET claim form and the anti-dumping questionnaire
from the companies part of Jinshan Group that were involved in the production
and sales of the product concerned in the PRC, it could not be assessed to what
extent the production and sales of the product concerned of Jinshan Group had
an impact on the export price determination with regard to GP and as a
consequence for the Giant as a whole group. It could further not be
investigated whether the conditions of Article 2(7)(c ) of the basic Regulation
were met. In the absence of cooperation in this respect, Giant China’s claims
had to be rejected.

(134)   Furthermore, Giant China argued
that there is no need to take into account price information relating to other
exporting producers when calculating the individual margin of an exporting
producer unless Giant Group and Jinshan Group form a single entity in view of
the existing close financial, commercial and management links.

(135)   The evidence on the file
supports the finding that GP and Jinshan Group are related and have close shareholding,
structural and management links. In the absence of complete information on all
parties related to GP, in particular on the Chinese bicycle exporting producers
that are subsidiaries of Jinshan Group, it is impossible to perform complete
and reliable calculations on the export price and therefore to obtain an
individual margin determination for GP and as a consequence for the Giant Group
as a whole.

(136)   It was also claimed that the
information requested placed an unreasonable burden on Giant China and that it
acted to the best of its ability in the investigation. In this regard it should
be noted that no evidence was submitted, until comments to definitive
disclosure, showing that Giant China made any efforts to collect the
information required in the MET claim form and the anti-dumping questionnaire
for the companies part of Jinshan Group, involved in the production and sale of
the product concerned. During the investigation Giant China claimed that it was
unnecessary to provide the information requested but did not claim that
obtaining such information was unreasonable burdensome. Giant China submitted evidence of alleged efforts only after final disclosure, at a stage where
such information was unverifiable. It could therefore not be taken into account
anymore.

(137)   Giant China claimed that
there was in any event no risk of circumvention of any potential anti-dumping
measures by, for example, shifting production between the two groups as GP, the
only link between the two groups, has ceased all operations in September 2011.
In this regards, it should be noted that at the end of RIP, GP still existed as
an entity as also confirmed by Giant China. Therefore, the production activity
could have resumed at any moment in the future and the fact the GP allegedly
ceased all operations in September 2011 is not relevant. In addition, Giant
China argued that the risk of circumvention could have been addressed in a
different manner i.e. the monitoring clause mentioned in recitals (276) and (277)
below. In this regard, it should be noted that the monitoring clause only
applies to unrelated companies, so the risks involved are not of similar nature
and the same remedies could not have been applied.

(138)   Moreover, Giant China argued
that an on-spot verification at GP's premises in the PRC should have taken
place in order to check the production and sales activities of GP after
September 2011. In this regard, it should be noted that it was not considered
relevant whether GP ceased its activities after September 2011. Indeed, even if
this would have been the case, GP could have resumed its bicycles production
and sales activities anytime and an on-spot verification would not have
decreased such risk.

(139)   Furthermore, Giant China submitted
some evidence showing that Giant Group's shares in GP have been sold on 30
March 2013. However, it is to be noted that this transaction occurred after the
RIP and in conjunction with the advanced stage of the investigation, this
information cannot be verified nor is pertinent in the framework of this
investigation. In this regard, should Giant request a review of their situation
following the sale of the shares, this can be considered in due time in line
with the provisions of the basic Regulation.

(140)   In the same submissions Giant
China provided other clarifications to the Commission assessment warranting application
of Article 18(1) of the basic Regulation. However, they were not as such as to
change the Commission's initial assessment.

(141)   Therefore, the findings concerning
application of Article 18(1) of the basic Regulation in relation to Giant Group
are confirmed.

5.           Comparison

(142)   The normal value and export
price were compared on an ex-works basis. For the purpose of ensuring a fair
comparison between the normal value and the export price, due allowance in the
form of adjustments was made for differences affecting prices and price
comparability in accordance with Article 2(10) of the basic Regulation.
Adjustments were made, where appropriate, in respect of indirect taxes,
discounts, level of trade, transport, insurance, handling and ancillary costs,
packing, credit, bank charges and commissions in all cases where they were
found to be reasonable, accurate and supported by evidence.

6.           Dumping margin

6.1.        For the cooperating
exporting producers

(143)   For
the three cooperating companies, dumping margins were established by comparing
the weighted average normal value established for the co-operating Mexican
producers with each company's weighted average export price to the Union, as
provided for in Article 2(11) and 2(12) of the basic Regulation.

(144)   The dumping margins expressed
as a percentage of the CIF Union frontier price, duty unpaid, are:

Company ||             Dumping margin

Zhejiang Baoguilai Vehicle Co. Ltd. ||             19.2%

Oyama Bicycles (Taicang) Co. Ltd. ||             20.9%

Ideal (Dongguan) Bike Co., Ltd. ||             0%

6.2.        For all other exporting producers

(145)   Given that cooperation from the PRC was very low as stated
in recitals (22) and (24) above, the findings for the cooperating companies
cannot be considered to be representative for the country. Therefore, the
country-wide dumping margin applicable to all other exporting producers in the
PRC cannot be revised.

(146)   Therefore, the country-wide
dumping margin is hereby maintained unchanged as established by Council
Regulation (EC) No 1095/2005, i.e. 48.5%.

D. DEFINITION OF THE UNION INDUSTRY

1.           Union production and Union industry

(147)   The
like product is estimated to be manufactured by around 380 known producers in
the Union. Furthermore, six
national associations of Union producers made themselves known.

(148)   All available information,
including data collected from Union producers and national associations, as
well as production statistics available to the Commission were used in order to
establish total Union production, which amounted to around 11 million bicycles
in RIP.

(149)   The Union producers
accounting for the total Union production constitute the Union industry within
the meaning of Articles 4(1) and 5(4) of the basic Regulation and will be
hereafter referred to as the ‘Union industry’.

(150)   As indicated above, given
the high number of cooperating Union producers a sample of eight Union
producers was selected, representing around 25% of the total production and
sales of the Union industry of the like product in the RIP. All sampled Union
producers were benefiting from the exemption scheme described in recital (1)
above.

E. SITUATION ON THE UNION MARKET

1.           Union
consumption

(151)   The Union industry’s sales were assessed on the
basis of data collected from producers in the reply to the sampling forms and data collected from various associations
of bicycle producers in the Union.

(152)   The Union consumption was established on the basis of the sales of all
Union industry on the Union market, as estimated in recital (151), plus imports
from all countries as reported by Eurostat.

(153)   Total Union consumption
declined from 22,459,062 units in 2008 to 20,116,602 units in the RIP, i.e. by
10% over the period considered. This is mainly a result of a drop of 8% between
2008 and 2009, while consumption remained stable afterwards and only slightly
decreased in the RIP (by 2%). In 2009, the market was in particular influenced
by the impact of the economic crisis and it has not recovered since. Further drop in 2011 was mainly
caused by the continued cautious consumer spending at the current economic climate.

Table 1

Consumption

|| 2008 || 2009 || 2010 || 2011

Volume (units) || || || ||

- Total imports || 10,017,616 || 8,974,906 || 9,734,143 || 8,840,362

- Union production sold on the Union market || 12,441,446 || 11,604,072 || 10,946,875 || 11,276,240

= Consumption || 22,459,062 || 20,578,978 || 20,681,018 || 20,116,602

Index (2008=100) || 100 || 92 || 92 || 90

Source: Eurostat, questionnaire replies

2.           Imports from the PRC

2.1.        Volumes of dumped imports and market share of bicycles
originating in the PRC

(154)   The volume of imports of the product concerned
originating in the PRC was established on the basis of statistical information
provided by Eurostat. The volume of imports from the PRC
declined sharply between 2008 and 2009 from 941,522 units to 597,339 units
respectively, i.e. by 37%. In 2010 imports were increasing, but in the RIP
decreasing again where they reached 581,459 units. The significant decrease in
Chinese imports coincided with the economic crisis and did not recover since.
Overall, Chinese imports decreased by 38% during the period considered.

(155)   The Chinese market share decreased accordingly from 4.2% in 2008 to 2.9%
in the RIP. The decline in market
share was partly
offset by the reduction of the Union consumption.

(156)   However,
it is to be emphasised that the relatively low and decreasing market share of
Chinese imports must be seen in the context of the findings in the parallel
on-going anti-circumvention investigation mentioned in recital (14) and (15)
above (see recitals (223) and (224) below).

Table 2

Imports from the PRC

|| 2008 || 2009 || 2010 || RIP

Volume of imports from the country concerned (units) || 941,522 || 597,339 || 627,120 || 581,459

Index (2008=100) || 100 || 63 || 67 || 62

Market share of imports from the country concerned || 4.2% || 2.9% || 3.0% || 2.9%

Source: Eurostat

3.           Prices of the imports
concerned

3.1.        Evolution of prices

(157)   As
it was established in the Council Regulation (EC) No 1095/2005[32], Eurostat data could only be used to a limited extent for
establishing the price trends of dumped imports for the period between 2008 and
the RIP for the following reasons:

(158)   The import prices based on
Eurostat data do not take into account the various product types and the
substantial price differences among the various types of the product concerned.
The average prices per country are strongly influenced by the product mix of
each country. Moreover, when comparing model by model of imports from the
cooperating exporters that even within the same product types and models there
exist substantial price differences depending on the components of the
bicycles. Therefore, the prices found in Eurostat continue to be inconclusive
for the purpose of this investigation. The import prices of Eurostat for the
PRC, hereafter indicated by index, can only serve as an indicator of price
trends, but are not useful when comparing sales prices between various
countries and the Union.

(159)   According to Eurostat data,
the weighted average import prices, hereafter indicated by index, from the PRC
increased significantly during the period considered as showed in Table 3.
However, without knowing the type of the bicycles that were imported from the
PRC and whether there was any shift in the product mix from one year to the
other, no conclusion can be drawn.

Table 3

Imports price from the PRC

|| 2008 || 2009 || 2010 || RIP

Import Price from the PRC || || || ||

Index (2008=100) || 100 || 173 || 217 || 214

Source: Eurostat

3.2.        Price undercutting

(160)   Price undercutting of the cooperating exporting producers for which
dumping was found was calculated on the basis of their actual verified export
price (CIF Union frontier) both with and without the anti-dumping duty. The
relevant sales prices of the Union industry were those to independent customers
in the Union adjusted, when necessary, to ex-works
level. During the RIP, based on different product types defined in the
questionnaire, undercutting was only found for one of the exporting producers
which amounted to 61% without the anti-dumping duty and 44% with the
anti-dumping duty.

(161)   Given
that the cooperation from the Chinese exporting producers was very low and the
findings for the cooperating companies could not be considered to be
representative for the country as well as the fact that the average price in
Eurostat could not be considered as conclusive, it was considered that undercutting
levels as established during the last expiry review concluded by Council
Regulation (EC) No 1095/2005 mentioned in recital (3) should be taken as a
reference when establishing the country-wide undercutting for the PRC, as no
other more reliable information was available, i.e. 53% after deduction of the
anti-dumping duty and of 39% with the duty .

4.           Economic situation of the
Union industry

(162)   As indicated in recitals (8), (9)
and (10) above, the present investigation analysed whether there was a change
in the situation of the Union industry justifying a need to reassess the injury
findings of the amending interim review. The investigation has confirmed that:
(i) Following the global trend, the production of bicycles in the Union
consists mainly of labour intensive assembly of bicycle parts that are designed
according to the customers’ specifications and sourced from various origins.
(ii) In order to cut the cost of production the investigation has shown a
continued effort of the Union industry to automatize and to streamline the
assembly process. In addition, some Union producers benefitted from the
comparatively lower labour costs in Central and Eastern
 Europe as compared to the investigation period of the amending
interim review. The production statistics available to the Commission confirm
this trend. (iii) The investigation confirmed the preference for aluminium alloy
as a raw material, while the steel remained the main raw material for lower end
models and children's' bicycles. In light of these changes the economic
situation of the Union industry was examined as described below.

(163)   Pursuant to Article 3(5) of the basic Regulation, the Commission examined
all relevant economic factors and indices having a bearing on the state of the
Union industry.

(164)   For the purpose of the injury analysis, the injury indicators have been
established as follows:

·
macroeconomic indicators (production, production
capacity, capacity utilisation, sales volume, market share, employment,
productivity, growth, magnitude of dumping margins and recovery from the
effects of past dumping) were assessed at the level of the whole Union
production for all Union producers, on the basis of the information collected
from the national associations of Union producers and individual Union
producers. These factors were cross-checked, where possible, with the overall
information provided by the relevant official statistics.

·
microeconomic indicators (stocks, unit sales
price, cost of production, cash flow, profitability, return on investments,
ability to raise capital, investments and wages) were assessed for the sampled
Union producers on the basis of the information they submitted.

Macro-economic indicators

(a)
Production,
production capacity and capacity utilisation

(165)   During the period considered, the Union industry’s production decreased continuously and at a
faster pace than the Union consumption as shown above in table 1 under recital (153).
Thus, production decreased from 13,541,244 units in 2008 to 11,026,646 units in
the RIP, which reflected a 19% decline.

Table 4

Total Union production

|| 2008 || 2009 || 2010 || RIP

Volume (units) || || || ||

Production ||  13,541,244 ||  12,778,305 ||  11,682,329 ||  11,026,646

Index (2008=100) || 100 || 94 || 86 || 81

Source: Questionnaire replies, relevant official statistics

(166)   Production
capacity was reduced by 5% between 2008 and the RIP, which partly offset the
impact of the 19% decline of production on the capacity utilisation rate. The
later dropped by 14% points over the same period, reaching 74% in the RIP.

Table 5

Production capacity and capacity utilisation

|| 2008 || 2009 || 2010 || RIP

Volume (units) || || || ||

Production capacity ||  15,804,000 ||  15,660,000 ||  15,150,000 ||  15,000,000

Index (2008=100) || 100 || 99 || 96 || 95

Capacity utilisation || 86% || 82% || 77% || 74%

Index (2008=100) || 100 || 95 || 90 || 86

Source: Questionnaire replies, relevant official statistics

(b)
Sales volume

(167)   Overall, the sales volume of the
Union industry on the Union market declined in a similar way as the Union
consumption, showing a decrease of 9% over the period considered, from
12,441,446 units in 2008 to 11,276,240 units in the RIP. Between 2009 and 2010 however, sales continue to decrease while
consumption had remained stable, which is reflected in the loss of market share
of the Union industry in 2010 as shown below in table 7 under recital (168)
below. In RIP the volumes of sales increased again but have not reached their
2008 level.

Table 6

Sales of the Union industry in the Union

|| 2008 || 2009 || 2010 || RIP

Volume (units) ||  12,441,446 ||  11,604,072 ||  10,946,875 ||  11,276,240

Index (2008=100) || 100 || 93 || 88 || 91

Source: Questionnaire replies, relevant official statistics

(c)
Market share

(168)   The market share held by the
Union industry increased from 55.4% in 2008 to 56.1% in the RIP, i.e. an
increase of 0.7 percentage points during the RIP. This slight improvement of
0.7 percentage points over the period considered included a significant drop
from 56.4% in 2009 to 52.9% in 2010. The overall
increase of market share of the Union industry, against the background of falling
volumes of sales (see recital (167) above), can be explained by the overall
drop in consumption (see recital (153) above).

Table 7

Union industry market share

|| 2008 || 2009 || 2010 || RIP

Union market share || 55.4% || 56.4% || 52.9% || 56.1%

Index (2008=100) || 100 || 102 || 96 || 101

Source: Questionnaire replies, relevant official statistics

(d)
Employment and productivity

(169)   Direct
employment decreased by 17%, from 14 197 employees in 2008 to 11 783 during the
RIP. This decline followed the reduction of the
production volume.

(170)   Overall, the productivity decreased
by 2% over the period considered. The decline of production between 2008 and
2009 combined with constant employment over the same period caused a drop in
productivity between 2008 and 2009. This was followed by an increase of
productivity between 2009 and 2010, which can be explained by the restructuring
of the industry and investments into more efficient production processes over
the same period. Further decline in production volume in RIP coupled with less
sharp decline in employment resulted in another decrease of productivity in
RIP.

Table 8

Total Union employment and productivity

|| 2008 || 2009 || 2010 || RIP

Number of employees ||  14,197 ||  14,147 ||  12,067 ||  11,783

Index (2008=100) || 100 || 100 || 85 || 83

Productivity (units/year) || 954 || 903 || 968 || 936

Index (2008=100) ||  100 || 95 || 102 || 98

Source: Questionnaire replies, relevant official statistics

(e)
Growth

(171)   Over the period considered
the consumption decreased by 10%. The market share of the Union industry
remained relatively constant (increasing only slightly, i.e. by +0.7percentage
points over the period considered as outlined in recital (168) above). The
declining Union market indicates that the Union producers have not opportunity
to benefit from any growth.

(f)
Magnitude of dumping margin

(172)   Dumping from the PRC
continued during the RIP as explained in recitals (143) to (145) above. Given
the large spare capacity in the PRC (see recital (203) below) and the
established circumvention (see recital (223) and (224) below), the impact on
the Union industry of the actual margins of dumping cannot be considered to be
negligible.

(g)
Recovery from past dumping

(173)   It
was analysed whether the Union industry recovered from the effects of past
dumping. It was concluded that the expected recovery of the Union industry from
the effects of past dumping has not happened as shown, in particular, by the
persistently low profitability and a decrease in the capacity utilisation. The
recovery of the Union industry has also been hampered by established
circumvention practices (see recital (223) and (224) below).

Micro-economic indicators

(h)
Stocks

(174)   The stocks of bicycles for
the Union producers stood at 517,977 units by the end of the RIP, broadly
stable in relation to their level in 2008 despite a 25% decline between 2008
and 2009.

(175)   Some of the Union producers
had very limited levels of stocks because they were selling their entire
production to related companies within their respective group. In addition, the
Union producers were found to produce mostly on customer orders. The
development of stocks over the period considered was distorted by all these
factors and, therefore, this indicator cannot be regarded as meaningful.

Table 9

Stocks

|| 2008 || 2009 || 2010 || RIP

Volume (units) || || || ||

Closing stocks ||  519,832 ||  390,398 ||  522,779 ||  517,977

Index (2008=100) || 100 || 75 || 101 || 100

Source: Questionnaire replies

(i)
Sales prices and costs

(176)   The average ex-works sales
price in the Union remained stable over the period considered despite an
increase of 3% between 2008 and 2009. Sale price in the RIP dropped again to
the level of 2008.

Table 10

Unit sales price in the Union

|| 2008 || 2009 || 2010 || RIP

Unit sales price in the EU (EUR) || 144 || 149 || 146 || 144

Index (2008=100) || 100 || 103 || 102 || 100

Source: Questionnaire replies

(177)   The cost of production was
calculated on the basis of the weighted average of all types of the like
product produced by the Union producers. The cost of production increased slightly
by 2% over the period considered as showed in Table 11 below.

Table 11

Unit cost of production

|| 2008 || 2009 || 2010 || RIP

Unit cost of production (EUR per unit) || 141 || 147 || 146 || 145

Index (2008=100) || 100 || 104 || 103 || 102

Source: Questionnaire replies

(j)
Profitability

(178)   The
profitability levels were established on the basis of the sales to unrelated
customers. The Union industry was close to break-even between 2010 and RIP.
Overall, profitability deteriorated during the period considered, showing a
decrease from 1.9% in 2008 to -0.1% in RIP.

Table 12

Profitability

|| 2008 || 2009 || 2010 || RIP

Profitability Union sales || 1.9% || 1.6% || 0.3% || -0.1%

Index (2008=100) || 100 || 100 || 98 || 98

Source: Questionnaire replies

(k)
Investments and return on investment

(179)   Investments significantly
increased by 16% over the period considered from EUR 7,952,150 in 2008 to EUR
9,263,184 during the RIP. This reflects the continued efforts of the Union
industry to increase the efficiency of the manufacturing process and to remain
competitive.

(180)   Return on investment
followed a similar trend as profitability. In 2008 the return on investment was
positive (14%) but decreased to a - 1 % during the RIP.

Table 13

Investments and Return on Investment

|| 2008 || 2009 || 2010 || RIP

Investments (EUR '000) ||  7,952,150 ||  9,421,745 ||  19,288,284 ||  9,263,184

Index (2008=100) || 100 || 118 || 243 || 116

Return on investment || 14% || 11% || 2% || -1%

Source: Questionnaire replies

(l)
Cash flow and ability to raise capital

(181)   The cash flow followed a
similar development as profitability but remained positive throughout the
period considered. It is expressed in the table 14 below as a percentage of
turnover.

(182)   Only Union producers that
were part of larger groups did not report any particular problems to raise
capital. Union producers that were not part of larger groups reported increased
pressure on their cash situation linked to the low profitability and the
deterioration of the business terms with both suppliers and customers. The
ability to raise capital was further compromised by the reluctance of banks to
finance the bicycle market in the current economic climate.

Table 14

Cash flow

|| 2008 || 2009 || 2010 || RIP

Cash flow || 3.2% || 3.1% || 1.8% || 1.3%

Index (2008=100) || 100 || 97 || 99 || 98

Source: Questionnaire replies

(m)
Wages

(183)   During
the period considered, the wage cost per employee remained
broadly stable, an increase only showing in 2009. This is mainly due the impact
of the reduction of staff on companies’ salary scales while retaining trained
employees in order to maintain efficiency and quality.

Table 15

Wages

|| 2008 || 2009 || 2010 || RIP

Wage cost per employee (in EUR) || 15,747 || 17,393 || 17,383 || 16,581

Index (2008=100) || 100 || 110 || 110 || 105

Source: Questionnaire replies

5.           Conclusion on injury

(184)   Despite
the measures in place, the majority of the
injury indicators relating to the performance of the Union industry
deteriorated during the period considered. In particular, the macroeconomic
indicators such as production volumes (-19%), production capacity (-5%),
capacity utilization rate (-14%) and employment (-17%) decreased considerably.
Moreover, the profit related microeconomic indicators declined over the period
considered, with a profitability of -0.1% in the RIP.

(185)   The above shows that the Union industry remains in a fragile
situation, with declining profits and close to breaking even situation in 2010 and
RIP. In addition, any possibility for further growth and profits has
been undermined by the pressure of dumped imports from the PRC and by
circumventing imports (see recitals (223) and (224) below).

(186)   Notwithstanding, the Union
industry managed to maintain and even slightly increase its market share in a
shrinking market. The increased investments over the period considered (+16%) show the
efforts of the Union industry to remain competitive. This together with the
latest innovations of the Union industry described in recital (248) below shows
its underlying vitality and economic viability.

(187)   On
this basis, it is concluded that the Union Industry continued to suffer
material injury within the meaning of Article 3 of the basic Regulation and
remained in a vulnerable state.

(188)   After disclosure, parties
argued, by referring to the Preserved Mandarins[33] case,
that the Commission was obliged to take any steps to remedy the lack of certain
information caused by the low cooperation of the Chinese exporting producers and
in failing to do so the Commission has breached its procedural obligations
under the basic Regulation. Furthermore, the parties suggested to use the
Chinese export statistics, which break down the major types of bicycles
exported to the EU market unlike Eurostat, or to request the national customs
authorities of the largest importing Member States pursuant to Article 6(3) or
(4) of the basic Regulation to carry an analysis of the different types
imported from the PRC.

(189)   As mentioned in recitals (19)
and (21) above the Commission officially notified the known exporting producers
in the PRC, an association of Chinese producers, and the representatives of the
country concerned of the initiation of the investigation. The Commission
contacted about 70 Chinese companies already known to the Commission services
from the previous investigation and at a later stage, when the anti-subsidy
investigation mentioned in recital (16) above was initiated, the Commission
identified around 300 additional Chinese exporting producers that were
contacted in the context of this interim review as well. Moreover, the
representatives of the country concerned were notified at the initiation of the
investigation that in case sufficient cooperation on the part of exporting
producers is not forthcoming, the Commission may base its findings on the facts
available, in accordance with Article 18 of basic Regulation. It was stressed
that a finding based on facts available may be less advantageous to the party
concerned.

(190)   In the Preserved Mandarins
case the element analysed by the Court was the degree of the efforts the
Commission should have made in obtaining pertinent information concerning the
calculation of normal value based on the price or constructed value from domestic
producers in a market economy third country by seeking cooperation from
identified potential analogue markets.

(191)   In the present
investigation, the lack of information is due to the extensive non-cooperation
of the parties that are actually subject to the investigation. As mentioned in
recital 186 above the parties were repeatedly invited to cooperate but failed
to do so. Thus unlike in the Preserved Mandarins case the Commission actively
and repeatedly sought the cooperation from the parties concerned. The parallel
between Preserved Mandarins case and the current investigation is therefore not
substantiated.

(192)   The Commission assessed the
usefulness of other sources, including the Chinese export statistics. It was
concluded that the alternative sources were not appropriate for this
investigation due to the fact that the level of details
was not sufficient to allow for calculation of new margins. In addition, the
Chinese statistics were also found inconsistent with the Eurostat statistics
showing, for example, significantly higher level of imports than those reported
in Eurostat. The proposed alternative sources therefore could not be used. Some parties
also suggested for the Commission to seek a cooperation from the national
customs authorities of the largest importing Member States to carry out an
analysis of the different product categories imported from the PRC. In response
to this claim it is considered that apart from the practical
impossibility, even if such data was collected, it could have not supplemented
the information gap caused by the non-cooperation. This is because, in
particular, the level of analysis required could not have
been simply based on invoices, lacking relevant product type description at the
level of detail necessary for meaningful product type comparability.

(193)   Several
parties also argued that the Commission had not carried out a product mix
analysis of the imports from the PRC, in order to achieve a fair comparison of
the imports with bicycles produced in the Union for purposes of making an
objective and fair comparison in its injury and the price undercutting
determination. In addition the parties argued that the Commission referred to
the price undercutting figure determined in the previous investigation mentioned
in recital (5) above which was calculated with reference to average prices from
Eurostat, without knowing the actual composition of the imports. Furthermore it
was argued that the Commission did not make any effort to determine whether the
imported products were actually comparable to the Union-produced bicycles and,
therefore, the Commission’s price undercutting analysis with respect to
non-cooperating producers is defective. For these reasons, the partied argued
that it must also be concluded that the Commission has failed to make an
objective assessment and adequate explanation of its determination that the
Union industry continues to suffer material injury.

(194)   In
this regard, it should be noted that as mentioned in recital (160) above the price undercutting of the cooperating exporting
producers for which dumping was found was calculated on the basis of their
actual verified export price (CIF Union frontier) both with and without the
anti-dumping duty taking into account the product mix of their exports during
the RIP. However, as cooperation of the Chinese exporting producers was very
low and, consequently, the findings of the cooperating Chinese exporting
producers could not be considered representatives for the PRC as a whole as
mentioned recital (145) above, the undercutting levels as established in the
amending interim review mentioned in recital (3) above could not be modified.

(195)   In
face of extensive non-cooperation the Commission had to rely on facts available
for the determination of the country-wide dumping, undercutting and injury
elimination levels. In this context the Commission considered alternative
sources of information that for the reasons stated in recitals (192) to (194)
above could not be used. Therefore, in the absence of contradicting findings,
the country-wide dumping, undercutting and injury elimination levels
established in the
amending interim review mentioned in recital (3) above were
taken as a reference for
the purpose of this investigation.

(196)   It
is confirmed that contrary to the claim of the parties the reference levels
used were those established during the expiry review
concluded by Council Regulation (EC) No 1095/2005 mentioned in recital (3)
above and not those established in the expiry review concluded by Implementing
Regulation (EU) No 990/2011 mentioned in recital (5) above.

(197)   In addition, it was argued that the Commission failed to analyse the
claimed national customs errors preventing a fair comparison of Chinese import
prices. It is recalled that no meaningful price comparison could have been
carried out in the present investigation due to the extensive non-cooperation,
therefore, under these circumstances the claim was considered irrelevant.

F. LASTING NATURE OF CHANGED
CIRCUMSTANCES AND LIKELIHOOD OF CONTINUATION OF DUMPING AND INJURY

1.           Dumping

(198)   It was analysed in accordance with Article 11(3) of the basic Regulation,
whether the circumstances with regard to dumping and injury have changed
significantly, and if this change could reasonably be said to be of a lasting
nature.

(199)   The three co-operating Chinese exporting producers were subject to the
residual duty rate in the previous investigation while in the current
investigation individual duty rates were calculated for them. As mentioned above
in recitals (113) and (115), all three exporting producers in the PRC
meet all the requirements for individual treatment. There was no information in the file which would have shown that the
situation of the cooperating exporting producers concerned could change in the
foreseeable future.

(200)   Moreover, the investigation has shown that the Chinese export
quota system applicable during the amending interim review, was abolished by
the Government of the PRC and is not likely to be re-installed, in particular
also given the export oriented government policies for the bicycle sector
addressed below in recital (203). Furthermore, the investigation did not reveal
any evidence that the export price behaviour of these three companies will
significantly change in the foreseeable future.

(201)   Therefore, it is considered that the changed circumstances which
lead to the dumping margins calculated for the three co-operating Chinese
exporting producers are of a lasting nature.

(202)   Regarding the country-wide duty for the PRC, the investigation did not
reveal any changed circumstances and it is proposed to maintain the same duty
level as established during the amending interim review.

(203)   It was also examined whether the continued
imposition of the measure is no longer necessary to offset dumping. According
to the Chinese Bicycles Association, total bicycle output in the PRC amounted
to 83.45 million units in 2011, showing an increase of 2.3% as compared to
2010. Moreover, the Chinese bicycle industry continues to be export oriented.
Thus in 2011, the PRC exported 55.72 million bicycles or 67% of the total
production, a decrease of 4.2% from 2010. Domestic sales were approximately
23.73 million units in 2011. The most important production region in the PRC is
Tianjin which produced about half of the
total output in 2011. According to Tianjin Municipal
Light Industry and Textile Industry Development Plan for the 12th Five-Year
Plan, new
industrial parks specialised in the production of bicycles are being developed
in this area. It follows that by 2015 the production capacity of bicycle in Tianjin area is estimated to reach 55 million bicycles, an increase of 44% as compared to
2011 while about half of the output will be for export (more than the total
consumption of bicycles in the Union in the RIP).

(204)   Furthermore, the three cooperating companies reported a capacity
utilization rate between 72% and 81% during the RIP. Extrapolating, we can
estimate a spare capacity of the Chinese industry of more than 25 million bicycles,
which is more than double the Union industry’s total production during the RIP
and 24% higher than the total Union consumption. In addition, as the production
of bicycles is labour intensive, it seems that due to the significant cheap
labour force available in the PRC, Chinese producers are able build up new
capacity rather quickly.

(205)   Moreover, in volume terms, the Union market is the second largest
world-wide, after the Chinese market which makes the Union very attractive in
terms of potential demand.

(206)   The findings in the
anti-circumvention investigation (see recital (14) above) confirms that the
Union market continues to be an attractive market for Chinese exporting
producers and that in the absence of any measures they would very likely re-direct
significant volumes to the Union.

(207)   Moreover, other potential important export markets for the PRC have
anti-dumping measures in place (Canada[34]) which is reducing the potential third
countries markets available for the Chinese exports without duties.

(208)   It is recalled that US used to have a domestic production of bicycles in
the past and had anti-dumping duties in place against the PRC. However, after
the anti-dumping duties were repealed at the end of the '90s, Chinese imports
entered the US market massively. Domestic production almost disappeared in the
following years. In 2011 it was estimated that 99% of the bicycles sold in the US were imported; 93% from the PRC and 6% from Taiwan. Domestic production of bicycles in the US is estimated at approximately 56,000 units per year with an annual consumption of about
16 million bicycles. The total US bicycles market (including sales of related
parts and accessories) was valued at USD 6 billion in 2011.

(209)   In conclusion, the Chinese bicycles industry is an export oriented
industry with a precedence of unfair pricing behaviour in several markets
world-wide. Moreover, the findings in the anti-circumvention investigation
confirmed the continued interest of the Chinese exporters in the Union market.
Moreover, this behaviour suggests that if the measures were repealed, the Union
market would be very likely targeted by low priced Chinese imports with a view
of taking over the domestic market. Therefore it can be concluded that the
continued imposition of the measures is still necessary to offset the dumping.

(210)   Following the disclosure it was argued that the analysis overlooked the
fact that the production growth in the PRC is being restricted by labour
availability and that the PRC is losing its labour cost advantage to other
south-Asian countries operating under preferential trade agreements. In face of
non-cooperation the claim was unverifiable and was therefore disregarded.

2.           Injury

(211)   As
regards the grounds for opening the ex officio interim review, the
investigation examined the following
changes in the structure of the EU bicycle industry: (i) switch from the
complete cycle of production to (partial) assembly operations using imported parts; (ii) change in the cost
level due to the enlargement and relocation and setting up of new production
facilities in Central and Eastern Europe; (iii) increasing change in the use of
raw material from steel to alloy following consumer trends. As a result of the
findings spelt out in recital (162) above, all the above-mentioned developments
are on-going and of global nature and are therefore not likely to change in the
foreseeable future.

(212)   As regards the assessment of the likelihood of continuation of the
injury, given the already fragile situation of the Union industry, described in
recitals (184) to (187), it is also likely that the Union producers will not be
able to resist the further price pressure that would be exerted by the Chinese
dumped imports and, as a consequence, will be forced to exit the Union market
with the consequence of a loss of employment and investments, technology and
know-how (see recitals (247) and (248) below). Therefore it can be
concluded that there is a likelihood of continuation of injury should the
measures be repealed in this case.

Comments of the parties

(213)   Some parties argued that the
Union industry is not suffering material injury as publicly available
information suggests that its financial situation is good. It is to be noted
that the financial situation of the Union industry is assessed based on the
information gathered and verified during the investigation from a
representative sample of Union producers. This assessment cannot be substituted
by publicly available information related to some Union producers even if their
production and sales value is allegedly large. Therefore, the findings of the
investigation analysed in recitals (162) to (187) above contradict the
information submitted by these parties. Therefore, their arguments were
considered unfounded.

(214)   It was also argued that the
continuation of the anti-dumping measures against the PRC would be
discriminatory as imports from other third countries are allegedly dumped and
causing injury in particular from Sri Lanka while no anti-dumping measures are
in force on imports from these countries. As a result of the anti-circumvention
investigation, the anti-dumping measures have been extended to imports of
bicycles inter alia from Sri Lanka. In addition, no evidence was submitted
showing that the genuine producers in the country concerned would be dumping.
Therefore, the argument from the party was considered unfounded and it was
rejected.

G. CAUSATION

1.           Introduction

(215)   In accordance with Article
3(6) and (7) of the basic Regulation it was examined whether the material
injury suffered by the Union industry had been caused by the dumped imports
concerned. Known factors other than the dumped imports, which could at the same
time have injured the Union industry, were also examined to ensure that the possible injury caused by these
factors was not attributed to the dumped imports. In particular the results of
the anti-circumvention investigation were analysed.

2.           Effect of the dumped
Chinese imports

(216)   The Chinese imports declined over the period considered,
representing 2.9% of market share in the RIP. This relatively low and
decreasing market share is to be seen in the context of the circumventing
imports from, Indonesia,
Malaysia Sri Lanka and Tunisia (see recital (223) and (224) below)

(217)   As mentioned in recital (160)
above, it was concluded that imports from the PRC continued to significantly
undercut the Union industry's sales price on the Union market, thus exerting a
significant pressure on the price level on the Union market.

(218)   At the same time, most of
the injury indicators showed a decreasing trend, in particular the production
(-19%) and sales volume (-9%), capacity (-5%) and capacity utilisation (-14%).

(219)   The profitability of the
Union industry declined throughout the period considered with the Union industry
close to breaking even due to the Chinese price pressure. Because of this the
Union industry was not able to raise the prices to profitable levels without
losing significant market share.

(220)   It
is therefore concluded that the pressure exerted by the imports of bicycles at
dumped prices had a decisive impact on the current vulnerable economic
situation of the Union industry.

(221)   Following the disclosure it
was argued that the relevance of declining production levels and capacity
utilisation was not adequately reasoned, in particular, in the light of the
fact that the decline in production was considered to have no impact on
profitability. It is noted that all the injury elements are relevant for the
assessment of the economic situation of the Union industry whether or not they
have an impact on the profitability levels in the particular case. As explained
in recital (237) below the decline in profitability and of other profit related
indicators was not caused by the shrinking market but can be attributed to the
continued pressure of dumped Chinese imports. The argument is therefore
rejected.

(222)   The same party also argued
that the market share evolution of the Chinese imports was not adequately
analysed as the analysis failed to address the sharp decline of imports over
the period considered. Also it was argued that the causality analysis failed to
take into account the increasing price trends of these exports. In response to
this argument it is recalled that the declining volume of Chinese imports must
be seen in the context of the findings of the parallel anti-circumvention
investigation (see recital (216) above). The price trend of the Chinese imports
established on the basis of Eurostat is not meaningful as it does not take into
account the price development of the imports of the Chinese bicycles via the
circumventing countries. On these grounds, the argument was therefore rejected.

3.           Effect of circumventing
imports

(223)   As mentioned in recital (15)
above, the anti-circumvention investigation established circumvention of
the measures in force against the PRC by assembly operation and transhipment
via Indonesia, Malaysia, Sri Lanka and Tunisia. Based on these findings the
difference between the volumes of imports from the countries in question
reported in Eurostat and the volumes exported by known genuine producers i.e.
those that qualified for exemption from the extended measures for the
reasons set out in Regulation (EU) No XX/2013
were considered as imports circumventing the measures in force ('circumventing
imports').

(224)   In the context of the
causality analysis, these imports were considered as effectively coming from
China and should therefore be considered together with the direct imports from
China. On this basis the volume of Chinese imports thus established reached
1,904,761 units in the RIP. In 2008, imports reached 2,321,240 units. They were
declining in 2009 to 1,802,101 units, i.e. by 22% and increasing in 2010 to
almost the same levels than in 2008, reaching 10.6% of the market share.
Finally, imports decreased again in the RIP by 13%, reaching a market share of
9.5%. Over the period considered, import volumes decreased by 18%. In the context of the shrinking market (see recital (153) above)
the described decrease of import volumes did not result in a significant loss
in market share as the latter has declined by only 0.8% over the period
considered. Since the product mix of the imports from
the PRC and the circumventing imports is unknown, it is not meaningful to
compare prices of these imports with those of the Union industry on the Union
market.

Table 16

Imports from the PRC together with circumventing imports from, Indonesia, Malaysia, Sri Lanka and Tunisia

|| 2008 || 2009 || 2010 || RIP

Volume of imports (units) || 2,321,240 || 1,802,101 || 2,194,354 || 1,904,761

Index (2008=100) || 100 || 78 || 95 || 82

Market share || 10.3% || 8.8% || 10.6% || 9.5%

Source: Eurostat

(225)   Following the disclosure some parties argued that the analysis of the
impact of the circumventing imports was deficient as solely based on the volume
effects and thus lacking any price comparison based on a product mix analysis. It
was alleged that this lack of analysis was a result of procedural failure as
the product mix analysis was omitted despite cooperation of exporting producers
from the countries concerned. In addition, it was alleged that the imports from
these countries into the Union concern low-cost children or other bicycles that
do not compete with the bicycles produced in the Union. In response to this
argument it is noted that the product mix analysis could not have been carried
out for the reasons explained in recital (192) above. Also, the majority of the
circumventing imports were transhipments in cases of which no information on
the product mix was available. Finally, it is noted that the Union producers
were found to produce all product segments; therefore, the argument on alleged
non-competing imports of the children and low end bicycles was found
unsubstantiated.

4.           Effect of other factors

4.1.        Imports from other countries

(226)   Total imports from other third countries amounted
to 6,931,333 units during the RIP. This level of imports reflected a small
increase of 1% over the period considered.

(227)   Given the contraction of the Union consumption, the market share of the
imports from other third countries
remained broadly stable, reaching 34% in the RIP.

(228)   Taiwan remained the main
exporting country to the Union with a relatively constant market share over the
period considered and representing 14% of the Union consumption during the RIP.

(229)   Thailand is the second
largest exporting country into the Union. Its market share decreased by 2
percentage points during the period considered, i.e. form 7% in 2008 to 5% in
the RIP.

(230)   As stated in recital (157)
above, the prices in Eurostat do not take into consideration the various
product mixes from each country and therefore only indexes are used to indicate
the price trends. Since the product mix of the imports from other third
countries is unknown, it is not meaningful to compare prices of these imports
with those from the Union industry on the Union market.

(231)   However,
it should be noted that only the imports from Taiwan exceed the volume of the Chinese imports
(circumventing imports included). In this regard, it should be noted that the
imports of bicycles from Taiwan are usually aimed for the high-end market and
no evidence was submitted otherwise. Therefore it is concluded that these
imports cannot be considered as a cause of injury to the Union industry.

(232)   Several parties claimed that
imports from other third countries were made at lower prices than the Chinese
imports and therefore the Chinese imports have not caused the material injury
suffered by the Union industry. This argument could not be accepted because the
average import prices could not be determined on the basis of Eurostat for the
reasons explained in recital (157) above and therefore no conclusion could be
drawn on this basis.

(233)   Another party claimed that
imports from third countries subject to General System of Preferences (GSP)
from 1 January 2011 onwards are expected to increases (Cambodia and
Bangladesh). However, the impact on import prices and quantities and the effect
on the Union market cannot be evaluated a priori. In addition, no information
was available as to the ability of these countries to increase the production
capacity and the sales volume to the Union market. Therefore, no firm
conclusion can be drawn on this basis and this claim had to be rejected.

(234)   Following the disclosure the
parties claimed that the analysis of the impact of the imports from the third
countries with preferential trade agreements was not adequately addressed as
the imports from these counties were claimed to be significant in volumes as compared
to the Chinese imports and some of them also significantly lower prices. In
this context it is recalled that the PRC is the second
largest importer into the Union. The imports from other third countries were
all below the import volumes of the Chinese bicycles. Also, no allegations of
dumping were brought forward against these countries. Therefore, it was
concluded that the imports from these countries could not have an impact so as
to break the established causal link between the large volumes of dumped
imports from China that coincided with the continuation of material injury of
the Union industry. On these grounds, the argument was rejected.

Table 17

Imports from other third countries*

|| 2008 || 2009 || 2010 || RIP

|| Units || Market share || Price EUR/unit || Units || Market share || Price EUR/unit || Units || Market share || Price EUR/unit || Units || Market share || Price EUR/unit

Taiwan || 3,428,043 || 15% || || 2,949,433 || 14% || || 3,458,448 || 17% || || 2,864,114 || 14% ||

Indexed || 100 || 100 || 100 || 86 || 94 || 126 || 101 || 110 || 125 || 84 || 93 || 151

Thailand || 1,522,209 || 7% || || 1,384,410 || 7% || || 1,234,123 || 6% || || 993,952 || 5% ||

Indexed || 100 || 100 || 100 || 91 || 99 || 118 || 81 || 88 || 114 || 65 || 73 || 113

Others || 2,746,124 || 12% || 66 || 2,838,962 || 14% || 73 || 2,847,164 || 14% || 80 || 3,077,535 || 15% || 80

Indexed || 100 || 100 || 100 || 103 || 113 || 111 || 104 || 113 || 122 || 112 || 125 || 121

Total || 7,696,376 || 34% || 99 || 7,172,805 || 35% || 116 || 7,539,735 || 36% || 122 || 6,935,601 || 34% || 132

Indexed || 100 || 100 || 100 || 93 || 102 || 118 || 98 || 106 || 124 || 90 || 101 || 134

*Circumventing imports from Indonesia, Malaysia, Sri Lanka and Tunisia excluded Source: Eurostat

4.2.        Development of consumption

(235)   As
mentioned in recital (153) above, from 2008 to the RIP the consumption
decreased by 10%. However, the Union industry maintained and even slightly
increased its market share (see recital (168) above). Therefore, shrinking
market cannot be a source of injury.

4.3.        Economic crisis and
climatic conditions

(236)   Some parties claimed that
the prevailing negative economic conditions in the Union had an impact on the
consumers' purchase behaviour over the period considered. It was also claimed
that the poor weather conditions in the Union in 2011 had at least partly an
effect on the situation of the Union industry. These factors allegedly resulted
in the overall decrease of consumption of bicycles in the Union.

(237)   Indeed the investigation
revealed a decrease of the Union consumption during the period considered.
However, as mentioned above in recital (234), the shrinking of the market
cannot be considered a source of injury.

(238)   These
parties also claimed that production and employment only decreased to follow
the consumption trend and not because of the dumped imports. However, as the
bicycle industry does not have high fixed costs, the decline in production did
not have an impact on the profitability of the Union bicycles industry. As far
as employment in concerned this is due to the restructuring process undertaken
by the Union industry. In any event this development does not explain the
negative trends for other injury indicators.

4.4.        Non-dumped imports

(239)   The non-dumped imports from
one co-operating exporting producer represented negligible quantities, i.e.
close to 0% of the total imports from the PRC and therefore they could not have
a discernible effect on the situation on the Union industry.

4.5.        Electric bicycles

(240)   It was argued that the
injury suffered by the Union industry was caused by the development of electric
bicycles which allegedly were replacing the product concerned. However, the
development of the electric bicycles is very recent and represented only
marginal sales volumes during the RIP. Therefore, they could have not had an
impact on the situation of the Union industry.

4.6.        Effect of the structural
changes

(241)   Following the disclosure one party argued that the Commission failed to
analyse the impact of the recognised structural changes of the market and of
the Union industry in its injury and causation analysis. As an example it was claimed that Commission failed
to address the impact of the shift of production towards the eastern European
countries in its production cost analysis. In
response to this claim, it is noted that the analysis of the lasting nature of
the changes has been carried out (see recital (162)) and it was concluded that
the changes were of lasting nature (see recital (211) above). For this reason,
new injury analysis was carried out based on a sample of the Union producers
chosen to reflect the structural changes. Therefore, it is considered that the
impact of such changes was duly taken into account in the injury and causation analysis.
The argument is therefore rejected.

4.7.        Conclusion

(242)   Despite the shrinking Union
consumption, substantial volumes of direct or circumventing dumped imports of
Chinese bicycles were found entering the Union market. The rather stable and
significant market share of these imports over the period considered coincided
with a period of continued economic vulnerability of the Union industry (see
recitals (184) to (187) above). It is concluded, therefore, that there is a
causal link between the imports from the PRC (direct and circumventing) and the
material injury suffered by the Union industry.

(243)   Other factors were
considered such as impact of imports from other third countries, development of
consumption, economic crisis and the climatic conditions, the non-dumped
imports, the development of the electronic bicycles. None of these factors was
found significant enough to break the causal link established between the
dumped Chinese imports and the material injury suffered.

(244)   Based on the above analysis,
which has properly distinguished and separated the effects of all known factors
on the situation of the Union industry from the injurious effects of the dumped
exports, it was concluded that the dumped imports from the PRC together with
the circumventing imports have caused material injury to the Union industry
within the meaning of Article 3(6) of the basic Regulation.

H. UNION INTEREST

1.           Introduction

(245)   In accordance with Article
21 of the basic Regulation, it has been examined whether, despite the
conclusion on injurious dumping, compelling reasons existed for clearly
concluding that it would not be in the Union interest to impose the
anti-dumping measures against imports from the PRC at the rates set out below
(see recital (279)).

(246)   It should be recalled that,
in the previous investigations, the adoption of measures was considered not to
be against the interest of the Union. Furthermore,
the fact that the present investigation is an interim review pursuant to
Article 11(3) of the basic Regulation, thus analysing a situation in which anti-dumping
measures have already been in place, allows the assessment of any undue
negative impact on the parties concerned by the current anti-dumping measures.

(247)   The determination of the
Union interest was based on an appreciation of the various interests involved, i.e. those of the Union industry,
producers of bicycle parts, unrelated importers and users.

2.           Interest of the Union
industry

(248)   The investigation showed that the industry is still in a fragile
situation. Given the substantial volume of dumped imports from the PRC and
likelihood of continuation of dumping and injury, there is a strong likelihood
that Union production would disappear should measures be repealed.

(249)   The
Union industry contributes significantly to technological innovation and spin
offs, such as the recently developed EPACs (Electronically Power Assisted
Cycles) and electronic bicycles that would not be economically viable without
having a bicycle industry in the Union. Moreover, the Union industry contributes to the environmental
goals such as greening of transport and decarbonisation.

(250)   The Union industry is also a
driving force for related industries, such as production of bicycle parts,
bicycle accessories and related services. In total the Union industry generates
directly and indirectly between 60 000 and 70 000 jobs in the Union market.

(251)   The
Union industry had undertaken efforts to restructure and invested in innovation
which would be lost should the Union industry disappear. To the contrary, with
the measures in place, the Union industry would be able to maintain and even increase sales volume and thereby generating the necessary return on investments which would
enable it to continue to reinvest in new technology and innovation.

(252)   In view of the conclusions
on the situation of the Union industry as set out at recitals (184) to (187)
above, it can be expected that without measures the financial situation of the
Union industry would likely
deteriorate significantly and ultimately risk the closure of production.
Therefore, the anti-dumping measures are in the interest on the Union industry.

3.           Interest of producers of
bicycle parts

(253)   The Association of the
Bicycles Parts Producers (COLIPED) made itself known during the investigation.
COLIPED provided information that there are about 370 companies in the Union, which are supplying components to the bicycle producers and employ about 16,000
people. The suppliers industry is depending on the continuation of the bicycles
production in the Union.

(254)   53 producers of bicycle
parts came forward in favour of the measures, representing 39% of the estimated
1.2 billion EUR of total turnover of the bicycle part industry. The bicycles
parts producers are benefiting from the extension of the existing measures to
essential bicycle parts (see recital (1) above). The existing exemption scheme
(see recital (1) above) encourages local production of bicycle parts by
restricting the Chinese content of bicycle parts used to less than 60% of the
total value. Due to the measures in place the Union industry was able to
develop and invest in new projects aiming to resume production of certain
essential parts in the Union.

(255)   In this respect, it was
found that without the measures and the expected closure of bicycles production
in the Union, the bicycle parts industry in the Union will also suffer negative
consequences as they will lose their customers. It is therefore concluded that
the imposition of anti-dumping measures would be in the interest of the bicycle
parts industry.

4.           Interest of users/
consumers

(256)   The European Cyclists' Federation (ECF), an umbrella
federation of the national cyclists' associations in Europe supported the continuation of the
anti-dumping measures in force. The ECF argued that local production is in the
interest of the consumers as it ensures quality and safety as well as
specialised customer services.

(257)   The ECF argued that an
increase of imports from the PRC would have a negative impact on the high
quality and safety standards in the Union at the expense of the consumer.

(258)   The
impact of the anti-dumping duties on the consumer price is estimated not to be
significant as the majority of Union producers of bicycles operate under the
exemption scheme whereas the essential bicycle parts can be imported from the
PRC without any duty up to 60% of the total value of the parts used.

(259)   It is recalled that, in the
previous investigations, it was found that the impact of measures would not be
significant for the users/consumers. Despite the existence of measures, the
supply of bicycles from the PRC, as well as countries without any measures is
available. It is therefore concluded that the anti-dumping measures do not have
a significant negative impact on users in the Union.

(260)   Following the disclosure one
party argued that the analysis failed to take into account the negative impact
of the measures on the users in form of additional costs brought by the
measures. It is noted that the ECF representing the consumers came forward in support
of the measures for the quality and safety reasons (see recital (255)above).
Also, thanks to exemptions scheme the consumers already benefit from the
reduced price of certain bicycle parts (see recital (257) above). Therefore,
the argument was found unsubstantiated.

5.           Interest of unrelated
importers

(261)   None of the unrelated importers co-operated in the investigation.
Therefore, it was not possible to make an assessment of the impact of the
measures during the RIP. It should also be recalled that the purpose of the
anti-dumping measures is not to prevent imports, but to restore fair trade and
ensure that imports are not made at injuriously dumped prices.

(262)   It is recalled that there
are other sources of imports and around 45% of the consumption of bicycles are
in fact imported bicycles.

(263)   As
fairly-priced imports from the PRC would still be allowed to enter the Union
market, and as imports from third countries would also continue, it is likely
that the traditional business of the importers would continue even if the
anti-dumping measures with regard to the PRC were maintained. The amended
anti-dumping measures for the three cooperating exporting producers would
increase the import possibilities from the PRC at 0% or reduced rate.
Therefore, it is concluded that the anti-dumping measures do not have a
significant impact on unrelated importers in the Union.

6.           Effectiveness of the
measures

(264)   One party argued that
measures would not be effective given that the Union industry is still
suffering injury after the anti-dumping measures being in force for almost 20
years. It is noted that despite the measures in force, it has been confirmed
that Chinese exporting producers were circumventing the measures via other
third countries which explained at least partly the situation of the Union
industry during the RIP. Therefore, the argument was rejected.

(265)   Following the disclosure
some parties argued that the measures existing for over twenty-three years are
not justified on either legal or trade policy grounds. In response to this
claim it is noted that no time limits restrict the
duration of the measures as long as the conditions for their imposition or
maintenance are met. Also, in the case at hand the measures are justified as
the findings confirmed existence of injurious dumping. Furthermore, the
situation of the Union industry is further undermined by circumvention.
Therefore, the argument is rejected.

7.           Conclusion

(266)   The continuation of measures
on imports of bicycles originating in the PRC would clearly be in the interest
of the Union industry and the Union suppliers of bicycle parts. It will allow
the Union industry to grow and
improve its situation caused by the dumped imports. Furthermore, the importers would not be substantially affected since
fairly priced bicycles would still be available on the market from the PRC and
other third counties. Also, due to the extensive use of the existing exemption
scheme by the Union industry, it was concluded that the existing measures had
no significant negative impact on the users/consumers. In contrast, if measures
were repealed, Union bicycles producers will likely close production, thus also
threatening the existence of Union bicycle parts producers.

(267)   In view of the above, it is
concluded that based on the information available concerning the Union
interest, there are no compelling reasons against imposing the measures at the
rates indicated below (279) on imports of the product concerned originating in
the PRC.

I. PROPOSED
DUTIES

1.           Injury elimination level

(268)   In view of the conclusions
reached with regard to dumping, resulting injury and Union interest, the existing measures, as imposed by Council
Regulation (EU) No 990/2011, should be maintained except as provided herein
below.

(269)   For the purpose of
determining the level of these measures, account was taken of the dumping
margins found and the amount of duty necessary to eliminate the injury
sustained by the Union producers.

(270)   The measures should be
imposed at a level sufficient to eliminate the injury caused by the imports in
question without exceeding the dumping margin found. When calculating the
amount of duty necessary to remove the effects of the injurious dumping, it was
considered that any measures should allow the Union industry to cover its costs
of production and to obtain overall a profit before tax that could be
reasonable achieved by an industry of this type in the sector under normal
conditions of competition, i.e. in the absence of dumped imports, on the sales
of the like product in the Union. The pre-tax profit margin used for this
calculation was 8% of turnover of the sales of bicycles. It is the same as in
the previous investigation since there was no indication found that this rate
should be changed.

(271)   Given that cooperation from
the PRC was very low as stated in recitals (22) and (24) above, the findings
for the cooperating companies cannot be considered to be representative for the
country. Consequently, the country-wide injury margin is hereby maintained
unchanged as established by Council Regulation (EC) No 1095/2005[35].

(272)   For the two cooperating
exporters, for which dumping was found, the injury margins were established on
the basis of their own export prices compared, at the same level of trade, to
the non-injurious prices of the Union industry for the corresponding product
type. No injury margin was calculated for the
third company, for which no dumping was found. For Oyama
Bicycles (Taicang) Co. Ltd., no injury margin was
identified. However, a substantial injury margin higher than the dumping margin
was found for Zhejiang Baoguilai Vehicle Co. Ltd.

(273)   Following the disclosure one
party argued that the 8% target profit was fixed at the
market conditions that do not correspond to the current situation and the Commission
failed to provide adequate reasoning to justify why the target profit
determined in the previous investigation mentioned in
recital (5) above is still justified. It is noted that
there was no indication found under the current review that the rate of the
target profit should be changed. The party in question did not submit any
substantiated calculation of an alternative target profit level to be used.
Therefore, the argument was rejected.

2.           Definitive measures

(274)   As regards the three
co-operating Chinese exporting groups, the individual company anti-dumping duty
rates specified in this Regulation were established on the basis of the
findings of the present investigation. Therefore, they reflect the situation
found during that investigation with respect to these groups. These duty rates
(as opposed to the country-wide duty applicable to ‘all other companies’) are
thus exclusively applicable to imports of products originating in the People’s
Republic of China and produced by these groups and thus by the specific legal
entities mentioned. Imported products produced by any other group not
specifically mentioned in the operative part of this Regulation including
entities related to those specifically mentioned, cannot benefit from these
rates and shall be subject to the duty rate applicable to ‘all other
companies’.

(275)   Any claim requesting the
application of these individual company anti-dumping duty rates (e.g. following
a change in the name of the entity or following the setting up of new production
or sales entities) should be addressed to the Commission[36] forthwith with all relevant
information, in particular any modification in the company’s activities linked
to production, domestic and export sales associated with, for example, that
name change or that change in the production and sales entities. If
appropriate, the Regulation will accordingly be amended by updating the list of
companies benefiting from individual duty rates.

(276)   In order to ensure a proper
enforcement of the anti- dumping duty, the residual duty level should not only
apply to the non-cooperating exporting producers but also to those producers
which did not have any exports to the Union during the RIP.

(277)   In
order to minimise the risks of circumvention due to the high difference in the
duty rates, it is considered that special measures are needed in this case to
ensure the proper application of the anti-dumping duties. These special
measures include the following: The presentation to the Customs authorities of
the Member States of a valid commercial invoice, which shall conform to the
requirements set out in the Annex to this Regulation. Imports not accompanied
by such an invoice shall be made subject to the residual anti-dumping duty
applicable to all other exporting producers.

(278)   Should
the exports by one of the companies benefiting from lower individual duty rates
increase significantly in volume after the imposition of the measures
concerned, such an increase in volume could be considered as constituting in
itself a change in the pattern of trade due to the imposition of measures
within the meaning of Article 13(1) of the basic Regulation. In such
circumstances and provided the conditions are met an anti-circumvention
investigation may be initiated. This investigation may, inter alia, examine the
need for the removal of individual duty rates and the consequent imposition of
a country-wide duty.

(279)   In accordance with Article
7(2) of the basic Regulation, the duty rates for the cooperating exporters are
established at the level adequate to remove the injury to the Union industry.
For Zhejiang Baoguilai Vehicle Co. Ltd and Ideal (Dongguan) Bike Co., Ltd the
duty rates are based on dumping margins established by the investigation since
they were lower than the injury margins. For Oyama Bicycles (Taicang) Co. Ltd.
the injury margin was lower than the dumping margin, therefore, the duty is
established at the injury margin level.

(280)   The
individual duty rates calculated for the RIP should be as follows:

Company ||             Definitive duty

Zhejiang Baoguilai Vehicle Co. Ltd. ||             19.2%

Oyama Bicycles (Taicang) Co. Ltd. ||             0%

Ideal (Dongguan) Bike Co., Ltd. ||             0%

All other companies ||             48.5%

(281)   It is noted that pursuant to
Article 2(1) of Council Regulation (EC) No 71/97, the anti-dumping duty of
48,5% imposed to all other companies by this Regulation (see recital (279)
above) applies also to imports of essential bicycle parts, as defined in
Article 1 of Council Regulation (EC) No 71/97, originating in the PRC,

HAS ADOPTED THIS REGULATION:

Article 1

1. A definitive anti-dumping duty is hereby
imposed on imports of bicycles and other cycles (including delivery tricycles,
but excluding unicycles), not motorised, falling within CN codes 8712 00 30 and ex 8712 00 70 (TARIC codes 8712 00 70 91 and
8712 00 70 99), originating in the Peoples' Republic of
China.

2. The rate of the definitive anti-dumping
duty applicable to the net, free-at-Union-frontier price, before duty, of the
products described in paragraph 1 and manufactured by the companies listed
below shall be as follows:

Company || Definitive duty || TARIC Additional Code

Zhejiang Baoguilai Vehicle Co. Ltd. || 19.2% || B772

Oyama Bicycles (Taicang) Co. Ltd. || 0% || B773

Ideal (Dongguan) Bike Co., Ltd. || 0% || B774

All other companies || 48.5% || B999

3. The application of the individual duty
rates specified for the companies referred to in paragraph 2 shall be
conditional upon presentation to the customs authorities of the Member States
of a valid commercial invoice, which shall conform to the requirements set out
in Annex. If no such invoice is presented, the duty applicable to "all
other companies" shall apply.

4. Unless otherwise specified, the
provisions in force concerning customs duties shall apply.

Article 2

The extension of the antidumping duty
imposed on imports of bicycles originating in the People’s Republic of China to imports of certain bicycle parts originating in the People’s Republic of China by Regulation (EC) No 71/97, is hereby maintained.

The definitive anti-dumping duty referred
to in Article 2(1) of Regulation (EC) No 71/97 shall be the "all other
companies" anti-dumping duty imposed by Article 1(2) herein above.

This Regulation shall enter into force on
the day following that of its publication in the Official Journal of the
European Union.

This Regulation shall be binding in its
entirety and directly applicable in all Member States.

Done at Brussels, xxx 2013.

For the Council

The President

ANNEX

A declaration signed by an official of the
entity issuing the commercial invoice, in the following format, must appear on
the valid commercial invoice referred to in Article 1(3):

(1) the name and function of the official
of the entity issuing the commercial invoice;

(2) the following declaration:

‘I, the undersigned, certify that the
(volume) of bicycles sold for export to the European Union covered by this
invoice was manufactured by (company name and registered seat) (TARIC
additional code) in (country concerned). I declare that the information
provided in this invoice is complete and correct.

Date and signature’.

[1]               OJ L 228, 9.9.1993, p. 1

[2]               OJ L 16, 18.1.1997, p. 55

[3]               OJ L 175, 14.7.2000, p. 39

[4]               OJ L 183, 14.7.2005, p. 1

[5]               OJ L 261, 6.10.2011, p. 2

[6]               OJ L 343, 22.12.2009, p. 51.

[7]               OJ L 228, 9.9.1993, p. 1

[8]               OJ L 16, 18.1.1997, p. 55

[9]               OJ L 17, 21.1.1997, p. 17

[10]             OJ L 175, 14.7.2000, p. 39

[11]             OJ L 183, 14.7.2005, p. 1

[12]             OJ L 55, 28.2.2008, p. 1

[13]             OJ L 261, 6.10.2011, p. 2

[14]             OJ
C 71, 9.3.2012, p. 10

[15]             OJ
L 258, 26.9.2012, p.21.

[16]             OJ L XXX, date, page

[17]             OJ C 122, 27.4.2012, p. 9.

[18]             OJ C 346, 14.11.2012, p.7

[19]             OJ L XXX, date, page

[20]             OL L 282, 28.10.2011, p.1.

[21]             www.bloomberg.com

[22]             http://news.xinhuanet.com/english/2008-12/26/content_10564812.
htm

[23]             Commission Regulation (EU) 627/2011 imposing
provisional anti-dumping duties and Council Implementing Regulation 1331/2011,
imposing definitive anti-dumping duties on imports of seamless pipes and tubes
from the People's Republic of China

[24]             http://www.fsa.gov.uk/about/who

[25]             http://www.amf-france.org/affiche_page.asp?urldoc=lesmissionsamf.htm&lang=en&Id_Tab=0

[26]             http://www.csrc.gov.cn/pub/csrc_en/about/

[27]             http://english.gov.cn/links/statecouncil.htm

[28]             General Court judgment of 18 September 2012 in case
T-156/11, Since Hardware (Guangzhou) Co., Ltd v.Council, paragraph 167 (not yet
published) and General Court judgment of 10 October 2012 in case T-150/09
Ningbo Yonghong Fasteners Co., Ltd v. Council, paragraph 53 (not yet published)

[29]             Regulation (EU) 1168/2012 of the European Parliament
and of the Council amending Council Regulation (EC) No 1225/2009 on protection
against dumped imports from countries not members of the European Community, OJ
L 344, 14.12.2012, p. 1.

[30]             Case C-249/10 P

[31]             OJ L 237, 3.9.2012, p.1

[32]             OJ L183, 14.07.2005, p.1

[33]             Case C-338/10 of 22 March 2012

[34]             SIMA – Notice of Conclusion of re-investigation –
Bicycles - 2011

[35]             OJ L183, 14.7.2005, p. 1.

[36]             European Commission, Directorate-General for Trade,
Directorate H, 1049 Brussels, Belgium