# Official Journal L 127/2023

| | ISSN 1977-0677 |
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| Official Journal
  of the European Union | L 127 |
| | |
| English edition | Legislation | Volume 6612 May 2023 |

ISSN 1977-0677

Official Journal

of the European Union

L 127

English edition

Legislation

Volume 6612 May 2023

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| Contents | | II   Non-legislative acts | page |
| --- | --- | --- | --- |
| | | REGULATIONS |
| | * | Commission Implementing Regulation (EU) 2023/934 of 11 May 2023 imposing a definitive anti-dumping duty on imports of high tenacity yarns of polyesters originating in the People’s Republic of China following an expiry review pursuant to Article 11(2) and a partial interim review pursuant to Article 11(3) of Regulation (EU) 2016/1036 of the European Parliament and of the Council | 1 |
| | * | Commission Implementing Regulation (EU) 2023/935 of 11 May 2023 imposing a definitive anti-dumping duty on imports of high tenacity yarns of polyesters originating in the People’s Republic of China and produced by Zhejiang Hailide New Material Co., Ltd. | 58 |

Contents

II   Non-legislative acts

page

REGULATIONS

*

Commission Implementing Regulation (EU) 2023/934 of 11 May 2023 imposing a definitive anti-dumping duty on imports of high tenacity yarns of polyesters originating in the People’s Republic of China following an expiry review pursuant to Article 11(2) and a partial interim review pursuant to Article 11(3) of Regulation (EU) 2016/1036 of the European Parliament and of the Council

1

*

Commission Implementing Regulation (EU) 2023/935 of 11 May 2023 imposing a definitive anti-dumping duty on imports of high tenacity yarns of polyesters originating in the People’s Republic of China and produced by Zhejiang Hailide New Material Co., Ltd.

58

| EN | Acts whose titles are printed in light type are those relating to day-to-day management of agricultural matters, and are generally valid for a limited period.
  The titles of all other Acts are printed in bold type and preceded by an asterisk. |
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EN

Acts whose titles are printed in light type are those relating to day-to-day management of agricultural matters, and are generally valid for a limited period.

The titles of all other Acts are printed in bold type and preceded by an asterisk.

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II Non-legislative acts

REGULATIONS

| 12.5.2023 | EN | Official Journal of the European Union | L 127/1 |
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12.5.2023

EN

Official Journal of the European Union

L 127/1

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COMMISSION IMPLEMENTING REGULATION (EU) 2023/934

of 11 May 2023

imposing a definitive anti-dumping duty on imports of high tenacity yarns of polyesters originating in the People’s Republic of China following an expiry review pursuant to Article 11(2) and a partial interim review pursuant to Article 11(3) of Regulation (EU) 2016/1036 of the European Parliament and of the Council

THE EUROPEAN COMMISSION,

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

Having regard to Regulation (EU) 2016/1036 of the European Parliament and of the Council of 8 June 2016 on protection against dumped imports from countries not members of the European Union (1), and in particular Article 11(2) and Article 11(3) thereof,

Whereas:

1.   PROCEDURE

PROCEDURE

1.1.   Previous and ongoing investigations, and measures in force

Previous and ongoing investigations, and measures in force

| (1) | Anti-dumping measures on imports of high tenacity yarns of polyesters (‘HTYP’) originating in the People’s Republic of China (‘China’ or ‘country concerned’) were originally imposed by Regulation (EU) No 1105/2010 (2) (‘the original measures’) |
| --- | --- |

(1)

Anti-dumping measures on imports of high tenacity yarns of polyesters (‘HTYP’) originating in the People’s Republic of China (‘China’ or ‘country concerned’) were originally imposed by Regulation (EU) No 1105/2010 (2) (‘the original measures’)

2

| (2) | The original measures imposed took the form of an ad valorem duty and ranged from 5,1 % to 9,8 %. |
| --- | --- |

(2)

The original measures imposed took the form of an ad valorem duty and ranged from 5,1 % to 9,8 %.

| (3) | The original measures applied to all imports of HTYP originating in China, with the exception of imports of HTYP produced by the Chinese exporting producers Zhejiang Hailide New Material Co. Ltd. (‘Hailide’) and Hangzhou Huachun Chemical Fiber Co. Ltd. (‘Huachun’). No duty was imposed on these companies (Regulation (EU) No 1105/2010), as no dumping was found. |
| --- | --- |

(3)

The original measures applied to all imports of HTYP originating in China, with the exception of imports of HTYP produced by the Chinese exporting producers Zhejiang Hailide New Material Co. Ltd. (‘Hailide’) and Hangzhou Huachun Chemical Fiber Co. Ltd. (‘Huachun’). No duty was imposed on these companies (Regulation (EU) No 1105/2010), as no dumping was found.

| (4) | Following the first expiry review pursuant to Article 11(2) of Regulation (EU) 2016/1036 of the European Parliament and of the Council of 8 June 2016 on protection against dumped imports from countries not members of the European Union (3) (the ‘basic Regulation’), the Commission, by Commission Implementing Regulation (EU) 2017/325 (4), as amended notably by Commission Implementing Regulation (EU) 2017/1159 (5) maintained the original measures. In line with the WTO Appellate Body report in case Mexico – Definitive Anti-dumping Measures on Beef and Rice (6) (‘the WTO Appellate Body report’), Hailide and Huachun were not examined in the said expiry review. |
| --- | --- |

(4)

Following the first expiry review pursuant to Article 11(2) of Regulation (EU) 2016/1036 of the European Parliament and of the Council of 8 June 2016 on protection against dumped imports from countries not members of the European Union (3) (the ‘basic Regulation’), the Commission, by Commission Implementing Regulation (EU) 2017/325 (4), as amended notably by Commission Implementing Regulation (EU) 2017/1159 (5) maintained the original measures. In line with the WTO Appellate Body report in case Mexico – Definitive Anti-dumping Measures on Beef and Rice (6) (‘the WTO Appellate Body report’), Hailide and Huachun were not examined in the said expiry review.

3

4

5

6

| (5) | On 30 June 2022, the Commission also initiated an investigation under Article 5 of the basic Regulation with regard to imports of HTYP manufactured and exported to the Union by Hailide (‘the parallel Article 5 investigation’) (7). Imports from Hailide are not subject to the present expiry review and interim review investigations. Huachun, the other exporting producer which also received no duty in the investigation that led to the imposition of the original anti-dumping measures, ceased to exist in 2021. Therefore, Huachun is no longer considered an exporting producer of HTYP. |
| --- | --- |

(5)

On 30 June 2022, the Commission also initiated an investigation under Article 5 of the basic Regulation with regard to imports of HTYP manufactured and exported to the Union by Hailide (‘the parallel Article 5 investigation’) (7). Imports from Hailide are not subject to the present expiry review and interim review investigations. Huachun, the other exporting producer which also received no duty in the investigation that led to the imposition of the original anti-dumping measures, ceased to exist in 2021. Therefore, Huachun is no longer considered an exporting producer of HTYP.

7

1.2.   Request for an expiry review and for a partial interim review

Request for an expiry review and for a partial interim review

| (6) | Following the publication of a Notice of impending expiry (8) of the anti-dumping measures in force on the imports of high tenacity yarns of polyesters originating in China, a request for a review pursuant to Article 11(2) of the basic Regulation was submitted to the Commission on 24 November 2021 (hereinafter referred to as the ‘expiry review’). |
| --- | --- |

(6)

Following the publication of a Notice of impending expiry (8) of the anti-dumping measures in force on the imports of high tenacity yarns of polyesters originating in China, a request for a review pursuant to Article 11(2) of the basic Regulation was submitted to the Commission on 24 November 2021 (hereinafter referred to as the ‘expiry review’).

8

| (7) | In addition, a request for a partial interim review pursuant to Article 11(3) of the basic Regulation was lodged on 1 April 2022 (hereinafter referred to as the ‘partial interim review’). The scope of the request was limited to dumping. Thus, the injury analysis in this regulation relates exclusively to the expiry review. |
| --- | --- |

(7)

In addition, a request for a partial interim review pursuant to Article 11(3) of the basic Regulation was lodged on 1 April 2022 (hereinafter referred to as the ‘partial interim review’). The scope of the request was limited to dumping. Thus, the injury analysis in this regulation relates exclusively to the expiry review.

| (8) | Both requests were lodged by the CIRFS – European Manmade Fibres Association (‘CIRFS’ or ‘the applicant’) on behalf of the Union industry of high tenacity yarn of polyesters in the sense of Article 5(4) of the basic Regulation. |
| --- | --- |

(8)

Both requests were lodged by the CIRFS – European Manmade Fibres Association (‘CIRFS’ or ‘the applicant’) on behalf of the Union industry of high tenacity yarn of polyesters in the sense of Article 5(4) of the basic Regulation.

| (9) | The expiry review request was based on the grounds that the expiry of the measures would be likely to result in continuation of dumping and continuation of injury to the Union industry. |
| --- | --- |

(9)

The expiry review request was based on the grounds that the expiry of the measures would be likely to result in continuation of dumping and continuation of injury to the Union industry.

| (10) | The partial interim review request was based on sufficient evidence provided by the applicant that, as far as dumping is concerned, the circumstances on the basis of which the existing measures were imposed have changed and that these changes are of a lasting nature. |
| --- | --- |

(10)

The partial interim review request was based on sufficient evidence provided by the applicant that, as far as dumping is concerned, the circumstances on the basis of which the existing measures were imposed have changed and that these changes are of a lasting nature.

1.3.   Initiation of an expiry review and partial interim review

Initiation of an expiry review and partial interim review

| (11) | Having determined, after consulting the Committee established by Article 15(1) of the basic Regulation, that sufficient evidence existed for the initiation of an expiry review pursuant to Article 11(2) and an interim review pursuant to Article 11(3) of the basic Regulation, the Commission published notices of initiation of these reviews in the Official Journal of the European Union (9) on 23 February 2022 and 30 June 2022 respectively. |
| --- | --- |

(11)

Having determined, after consulting the Committee established by Article 15(1) of the basic Regulation, that sufficient evidence existed for the initiation of an expiry review pursuant to Article 11(2) and an interim review pursuant to Article 11(3) of the basic Regulation, the Commission published notices of initiation of these reviews in the Official Journal of the European Union (9) on 23 February 2022 and 30 June 2022 respectively.

Official Journal of the European Union

9

| (12) | A user association commented on the initiation of both procedures, emphasising the importance of supply stability for the users. Further it claimed that European producers have increased their HTYP exports to China and cannot at the same time claim to be damaged by Chinese imports. The user association further claims that the damage to the European producers has not been proven. The Commission has analysed all claims regarding the Union interest in section 3.10 below. The general claim that the injury of the Union industry has not been proven in the review request, was not substantiated and therefore rejected. |
| --- | --- |

(12)

A user association commented on the initiation of both procedures, emphasising the importance of supply stability for the users. Further it claimed that European producers have increased their HTYP exports to China and cannot at the same time claim to be damaged by Chinese imports. The user association further claims that the damage to the European producers has not been proven. The Commission has analysed all claims regarding the Union interest in section 3.10 below. The general claim that the injury of the Union industry has not been proven in the review request, was not substantiated and therefore rejected.

| (13) | The Commission decided to conclude on the two separate investigations in the present legal act, setting out (in order in which the investigations were initiated) first the assessment in the expiry review investigation, followed by the findings from the partial interim review investigation. |
| --- | --- |

(13)

The Commission decided to conclude on the two separate investigations in the present legal act, setting out (in order in which the investigations were initiated) first the assessment in the expiry review investigation, followed by the findings from the partial interim review investigation.

1.4.   Review investigation period and period considered in the expiry review and partial interim review investigations

Review investigation period and period considered in the expiry review and partial interim review investigations

| (14) | The examination of dumping and the likelihood of continuation or recurrence of dumping and injury covered the period from 1 January 2021 to 31 December 2021 (the ‘review investigation period’ or ‘RIP’). |
| --- | --- |

(14)

The examination of dumping and the likelihood of continuation or recurrence of dumping and injury covered the period from 1 January 2021 to 31 December 2021 (the ‘review investigation period’ or ‘RIP’).

| (15) | The examination of the trends relevant for the assessment of the likelihood of continuation or recurrence of injury covered the period from 1 January 2018 to the end of the review investigation period (‘the period considered’). |
| --- | --- |

(15)

The examination of the trends relevant for the assessment of the likelihood of continuation or recurrence of injury covered the period from 1 January 2018 to the end of the review investigation period (‘the period considered’).

2.   PRODUCT UNDER REVIEW, PRODUCT CONCERNED AND LIKE PRODUCT

PRODUCT UNDER REVIEW, PRODUCT CONCERNED AND LIKE PRODUCT

2.1.   Product under review in the expiry review and the partial interim review

Product under review in the expiry review and the partial interim review

| (16) | The product subject to the reviews is high tenacity yarn of polyesters not put up for retail sale, including monofilament of less than 67 decitex, (excluding sewing thread and ‘Z’-twisted multiple (folded) or cabled yarn, intended for the production of sewing thread, ready for dyeing and for receiving a finishing treatment, loosely wound on a plastic perforated tube), currently falling under CN Code ex 5402 20 00 (TARIC code 5402200010) (‘the product under review’). The CN and TARIC codes are given for information only without prejudice to a subsequent change in the tariff classification. |
| --- | --- |

(16)

The product subject to the reviews is high tenacity yarn of polyesters not put up for retail sale, including monofilament of less than 67 decitex, (excluding sewing thread and ‘Z’-twisted multiple (folded) or cabled yarn, intended for the production of sewing thread, ready for dyeing and for receiving a finishing treatment, loosely wound on a plastic perforated tube), currently falling under CN Code ex 5402 20 00 (TARIC code 5402200010) (‘the product under review’). The CN and TARIC codes are given for information only without prejudice to a subsequent change in the tariff classification.

| (17) | HTYP are used in a number of diverse applications such as tyre reinforcement, broad fabrics, seatbelts, airbags, ropes, nets and a number of industrial applications. |
| --- | --- |

(17)

HTYP are used in a number of diverse applications such as tyre reinforcement, broad fabrics, seatbelts, airbags, ropes, nets and a number of industrial applications.

2.2.   Product concerned

Product concerned

| (18) | Product concerned by the expiry review and partial interim review investigations is the product under review originating in China. |
| --- | --- |

(18)

Product concerned by the expiry review and partial interim review investigations is the product under review originating in China.

2.3.   Like product

Like product

| (19) | The investigations showed that the following products have the same basic physical, chemical and technical characteristics as well as the same basic uses:






  — | the product concerned; |
| --- | --- | --- |

(19)

The investigations showed that the following products have the same basic physical, chemical and technical characteristics as well as the same basic uses:

—

the product concerned;

| — | the product under review produced and sold on the domestic market of China and |
| --- | --- |

—

the product under review produced and sold on the domestic market of China and

| — | the product under review produced and sold in the Union by the Union industry. |
| --- | --- |

—

the product under review produced and sold in the Union by the Union industry.

| (20) | These products are therefore considered to be like products within the meaning of Article 1(4) of the basic Regulation. |
| --- | --- |

(20)

These products are therefore considered to be like products within the meaning of Article 1(4) of the basic Regulation.

3.   EXPIRY REVIEW INVESTIGATION

EXPIRY REVIEW INVESTIGATION

3.1.   Interested parties and sampling

Interested parties and sampling

| (21) | In the Notice of Initiation of the expiry review investigation, the Commission invited interested parties to contact it in order to participate in the investigation. In addition, the Commission specifically informed the applicant, known Union producers, producers in China, importers and users in the Union known to be concerned, and the Chinese authorities of the initiation of the expiry review investigation and invited them to participate in the investigation. |
| --- | --- |

(21)

In the Notice of Initiation of the expiry review investigation, the Commission invited interested parties to contact it in order to participate in the investigation. In addition, the Commission specifically informed the applicant, known Union producers, producers in China, importers and users in the Union known to be concerned, and the Chinese authorities of the initiation of the expiry review investigation and invited them to participate in the investigation.

| (22) | All interested parties had the opportunity to comment on the initiation of the investigation and to request a hearing with the Commission and/or the Hearing Officer in trade proceedings. |
| --- | --- |

(22)

All interested parties had the opportunity to comment on the initiation of the investigation and to request a hearing with the Commission and/or the Hearing Officer in trade proceedings.

| (23) | In the Notice of Initiation, the Commission stated that it might sample interested parties, in accordance with Article 17 of the basic Regulation. |
| --- | --- |

(23)

In the Notice of Initiation, the Commission stated that it might sample interested parties, in accordance with Article 17 of the basic Regulation.

3.1.1.   
  Sampling of Union producers

Sampling of Union producers

| (24) | In the Notice of Initiation of the expiry review investigation, the Commission stated that it had provisionally selected a sample of Union producers. The Commission selected the sample based on production and sales volumes, taking into account their geographical location. This sample consisted of 3 Union producers. The sampled Union producers accounted for more than 50 % of the estimated total EU production and EU sales volume of the like product. In accordance with Article 17(2) of the basic Regulation, the Commission invited interested parties to comment on the provisional sample. No interested party submitted comments on the provisional sample, which was confirmed as the definitive sample. The sample is representative of the Union industry. |
| --- | --- |

(24)

In the Notice of Initiation of the expiry review investigation, the Commission stated that it had provisionally selected a sample of Union producers. The Commission selected the sample based on production and sales volumes, taking into account their geographical location. This sample consisted of 3 Union producers. The sampled Union producers accounted for more than 50 % of the estimated total EU production and EU sales volume of the like product. In accordance with Article 17(2) of the basic Regulation, the Commission invited interested parties to comment on the provisional sample. No interested party submitted comments on the provisional sample, which was confirmed as the definitive sample. The sample is representative of the Union industry.

3.1.2.   
  Sampling of exporting producers and unrelated importers

Sampling of exporting producers and unrelated importers

| (25) | In order to enable the Commission to decide whether sampling would be necessary in respect of the exporting producers in China and of the unrelated importers in the Union, those parties were requested to make themselves known and to provide the Commission with the information requested in the Notice of Initiation. In addition, the Commission requested the Mission of China to the Union to identify and/or contact other exporting producers, if any, that could be interested in participating in the investigation. No exporting producer came forward. One unrelated importer came forward as an interested party, but did not provide the requested sampling information. Therefore, sampling was not necessary neither for the exporting producers nor the unrelated importers. Since there was no cooperation from the Chinese producers, the findings with regard to the imports from China in relation to the expiry review were made on the basis of the facts available pursuant to Article 18 of the basic Regulation. |
| --- | --- |

(25)

In order to enable the Commission to decide whether sampling would be necessary in respect of the exporting producers in China and of the unrelated importers in the Union, those parties were requested to make themselves known and to provide the Commission with the information requested in the Notice of Initiation. In addition, the Commission requested the Mission of China to the Union to identify and/or contact other exporting producers, if any, that could be interested in participating in the investigation. No exporting producer came forward. One unrelated importer came forward as an interested party, but did not provide the requested sampling information. Therefore, sampling was not necessary neither for the exporting producers nor the unrelated importers. Since there was no cooperation from the Chinese producers, the findings with regard to the imports from China in relation to the expiry review were made on the basis of the facts available pursuant to Article 18 of the basic Regulation.

3.2.   
  Questionnaire replies and verification visits

Questionnaire replies and verification visits

| (26) | The Commission sent a questionnaire concerning the existence of significant distortions in China within the meaning of Article 2(6a)(b) of the basic Regulation to the Government of China (‘GOC’). |
| --- | --- |

(26)

The Commission sent a questionnaire concerning the existence of significant distortions in China within the meaning of Article 2(6a)(b) of the basic Regulation to the Government of China (‘GOC’).

| (27) | The Commission sent questionnaires to the sampled Union producers and to the users. The same questionnaires had also been made available online on the day of initiation. |
| --- | --- |

(27)

The Commission sent questionnaires to the sampled Union producers and to the users. The same questionnaires had also been made available online on the day of initiation.

| (28) | The Commission received questionnaire replies from the three sampled Union producers and 2 users. |
| --- | --- |

(28)

The Commission received questionnaire replies from the three sampled Union producers and 2 users.

| (29) | Verification visits were carried out at the premises of the following companies for the purposes of the expiry review investigation: | Union producers






  — | Glanzstoff Longlaville, Longlaville, France |
| --- | --- | --- | --- |

(29)

Verification visits were carried out at the premises of the following companies for the purposes of the expiry review investigation:

Union producers

—

Glanzstoff Longlaville, Longlaville, France

| — | PHP Fibers GmbH, Obernburg, Germany |
| --- | --- |

—

PHP Fibers GmbH, Obernburg, Germany

| — | Brilen Tech S.A., Zaragoza, Spain |
| --- | --- |

—

Brilen Tech S.A., Zaragoza, Spain

| | Users






  — | Industrias Ponsa S.A., Manresa, Barcelona, Spain |
| --- | --- | --- |

Users

—

Industrias Ponsa S.A., Manresa, Barcelona, Spain

| — | AMOHR Technische Textilien GmbH, Wuppertal, Germany |
| --- | --- |

—

AMOHR Technische Textilien GmbH, Wuppertal, Germany

3.3.   Subsequent procedure

Subsequent procedure

| (30) | On 20 February 2023, the Commission disclosed the essential facts and considerations on the basis of which it intended to maintain the anti-dumping duties in force. All parties were granted a period within which they could make comments on the disclosure. |
| --- | --- |

(30)

On 20 February 2023, the Commission disclosed the essential facts and considerations on the basis of which it intended to maintain the anti-dumping duties in force. All parties were granted a period within which they could make comments on the disclosure.

| (31) | The comments made by interested parties were considered by the Commission and taken into account, where appropriate. The parties who so requested were granted a hearing. |
| --- | --- |

(31)

The comments made by interested parties were considered by the Commission and taken into account, where appropriate. The parties who so requested were granted a hearing.

3.4.   Dumping

Dumping

3.4.1.   
  Preliminary remarks

Preliminary remarks

| (32) | As mentioned in recital (25), none of the exporters/producers cooperated in the expiry review investigation. Therefore, the Commission informed the GOC that due to the absence of cooperation, the Commission might apply Article 18 of the basic Regulation concerning the findings with regard to China. |
| --- | --- |

(32)

As mentioned in recital (25), none of the exporters/producers cooperated in the expiry review investigation. Therefore, the Commission informed the GOC that due to the absence of cooperation, the Commission might apply Article 18 of the basic Regulation concerning the findings with regard to China.

| (33) | Consequently, in accordance with Article 18 of the basic Regulation, the findings in relation to the likelihood of continuation or recurrence of dumping were based on facts available. |
| --- | --- |

(33)

Consequently, in accordance with Article 18 of the basic Regulation, the findings in relation to the likelihood of continuation or recurrence of dumping were based on facts available.

3.4.2.   
  Procedure for the determination of the normal value under Article 2(6a) of the basic Regulation

Procedure for the determination of the normal value under Article 2(6a) of the basic Regulation

| (34) | The evidence available at the initiation of the expiry review investigation pointed to the existence of significant distortions in China within the meaning of Article 2(6a), point (b) of the basic Regulation. The Commission therefore considered it appropriate to initiate the investigation having regard to Article 2(6a) of the basic Regulation. |
| --- | --- |

(34)

The evidence available at the initiation of the expiry review investigation pointed to the existence of significant distortions in China within the meaning of Article 2(6a), point (b) of the basic Regulation. The Commission therefore considered it appropriate to initiate the investigation having regard to Article 2(6a) of the basic Regulation.

| (35) | To collect the necessary data for a possible application of Article 2(6a) of the basic Regulation, the Commission invited all exporting producers in the country concerned to provide information regarding the inputs used for producing HTYP. No relevant information was provided in the context of the expiry review investigation. |
| --- | --- |

(35)

To collect the necessary data for a possible application of Article 2(6a) of the basic Regulation, the Commission invited all exporting producers in the country concerned to provide information regarding the inputs used for producing HTYP. No relevant information was provided in the context of the expiry review investigation.

| (36) | In addition, the Commission invited all interested parties to make their views known, submit information and provide supporting evidence regarding the application of Article 2(6a) of the basic Regulation within 37 days of the date of publication of the respective Notice of Initiation in the Official Journal of the European Union. |
| --- | --- |

(36)

In addition, the Commission invited all interested parties to make their views known, submit information and provide supporting evidence regarding the application of Article 2(6a) of the basic Regulation within 37 days of the date of publication of the respective Notice of Initiation in the Official Journal of the European Union.

Official Journal of the European Union

| (37) | In point 5.3.2 of the Notice of Initiation the Commission informed interested parties that based on the information available at that stage possible appropriate representative countries pursuant to Article 2(6a)(a) of the basic Regulation was Türkiye. |
| --- | --- |

(37)

In point 5.3.2 of the Notice of Initiation the Commission informed interested parties that based on the information available at that stage possible appropriate representative countries pursuant to Article 2(6a)(a) of the basic Regulation was Türkiye.

| (38) | The Commission also stated that it would examine other possibly appropriate representative countries in accordance with the criteria set out in 2(6a)(a) first indent of the basic Regulation. |
| --- | --- |

(38)

The Commission also stated that it would examine other possibly appropriate representative countries in accordance with the criteria set out in 2(6a)(a) first indent of the basic Regulation.

| (39) | On 19 July 2022, the Commission issued a First note on the sources for the determination of the normal value (the ‘First Note’) by which it informed interested parties on the relevant sources it intended to use for the determination of the normal value. |
| --- | --- |

(39)

On 19 July 2022, the Commission issued a First note on the sources for the determination of the normal value (the ‘First Note’) by which it informed interested parties on the relevant sources it intended to use for the determination of the normal value.

| (40) | In the First Note, the Commission provided a preliminary list of all known factors of production (‘FOP’) such as raw materials, labour and energy, used in the production of HTYP. In addition, the Commission identified Türkiye, Brazil and Thailand as possible appropriate representative countries. The Commission gave all interested parties opportunity to comment. The Commission received comments from the applicant in support of Türkiye as the representative country. |
| --- | --- |

(40)

In the First Note, the Commission provided a preliminary list of all known factors of production (‘FOP’) such as raw materials, labour and energy, used in the production of HTYP. In addition, the Commission identified Türkiye, Brazil and Thailand as possible appropriate representative countries. The Commission gave all interested parties opportunity to comment. The Commission received comments from the applicant in support of Türkiye as the representative country.

| (41) | After having analysed the comments and information received, the Commission concluded that Türkiye was an appropriate representative country from which undistorted prices and costs would be sourced for the determination of the normal value. The underlying reasons for that choice are further described in detail in Section 3.4.4.2 below. |
| --- | --- |

(41)

After having analysed the comments and information received, the Commission concluded that Türkiye was an appropriate representative country from which undistorted prices and costs would be sourced for the determination of the normal value. The underlying reasons for that choice are further described in detail in Section 3.4.4.2 below.

3.4.3.   
  Application of Article 18 of the basic Regulation

Application of Article 18 of the basic Regulation

| (42) | In order to obtain information it deemed necessary for its investigation with regard to the alleged significant distortions, the Commission sent a questionnaire to the GOC. No questionnaire reply was received from the GOC. Subsequently, the Commission informed the GOC that it would use facts available within the meaning of Article 18 of the basic Regulation for the determination of the existence of the significant distortions in China. |
| --- | --- |

(42)

In order to obtain information it deemed necessary for its investigation with regard to the alleged significant distortions, the Commission sent a questionnaire to the GOC. No questionnaire reply was received from the GOC. Subsequently, the Commission informed the GOC that it would use facts available within the meaning of Article 18 of the basic Regulation for the determination of the existence of the significant distortions in China.

3.4.4.   
  Normal value

Normal value

| (43) | According to Article 2(1) of the basic Regulation,
  “the normal value shall normally be based on the prices paid or payable, in the ordinary course of trade, by independent customers in the exporting country”. |
| --- | --- |

(43)

According to Article 2(1) of the basic Regulation,
  “the normal value shall normally be based on the prices paid or payable, in the ordinary course of trade, by independent customers in the exporting country”.

“the normal value shall normally be based on the prices paid or payable, in the ordinary course of trade, by independent customers in the exporting country”.

| (44) | However, according to Article 2(6a)(a) of the basic Regulation,
  “in case it is determined [...] that it is not appropriate to use domestic prices and costs in the exporting country due to the existence in that country of significant distortions within the meaning of point (b), the normal value shall be constructed exclusively on the basis of costs of production and sale reflecting undistorted prices or benchmarks”
  , and
  “shall include an undistorted and reasonable amount of administrative, selling and general costs and for profits”
  (
  “administrative, selling and general costs”
  is refereed hereinafter as ‘SG&A’). |
| --- | --- |

(44)

However, according to Article 2(6a)(a) of the basic Regulation,
  “in case it is determined [...] that it is not appropriate to use domestic prices and costs in the exporting country due to the existence in that country of significant distortions within the meaning of point (b), the normal value shall be constructed exclusively on the basis of costs of production and sale reflecting undistorted prices or benchmarks”
  , and
  “shall include an undistorted and reasonable amount of administrative, selling and general costs and for profits”
  (
  “administrative, selling and general costs”
  is refereed hereinafter as ‘SG&A’).

“in case it is determined [...] that it is not appropriate to use domestic prices and costs in the exporting country due to the existence in that country of significant distortions within the meaning of point (b), the normal value shall be constructed exclusively on the basis of costs of production and sale reflecting undistorted prices or benchmarks”

“shall include an undistorted and reasonable amount of administrative, selling and general costs and for profits”

“administrative, selling and general costs”

| (45) | As further explained below, the Commission concluded that, based on the evidence available and given the lack of cooperation of the GOC, the application of Article 2(6a) of the basic Regulation was appropriate. |
| --- | --- |

(45)

As further explained below, the Commission concluded that, based on the evidence available and given the lack of cooperation of the GOC, the application of Article 2(6a) of the basic Regulation was appropriate.

3.4.4.1.   Existence of significant distortions

Existence of significant distortions

3.4.4.1.1.   Introduction

Introduction

| (46) | Article 2(6a)(b) of the basic Regulation stipulates that ‘significant distortions are those distortions which occur when reported prices or costs, including the costs of raw materials and energy, are not the result of free market forces as they are affected by substantial government intervention. In assessing the existence of significant distortions regard shall be had, inter alia, to the potential impact of one or more of the following elements:






  — | the market in question being served to a significant extent by enterprises which operate under the ownership, control or policy supervision or guidance of the authorities of the exporting country; |
| --- | --- | --- |

(46)

Article 2(6a)(b) of the basic Regulation stipulates that ‘significant distortions are those distortions which occur when reported prices or costs, including the costs of raw materials and energy, are not the result of free market forces as they are affected by substantial government intervention. In assessing the existence of significant distortions regard shall be had, inter alia, to the potential impact of one or more of the following elements:

—

the market in question being served to a significant extent by enterprises which operate under the ownership, control or policy supervision or guidance of the authorities of the exporting country;

| — | state presence in firms allowing the state to interfere with respect to prices or costs; |
| --- | --- |

—

state presence in firms allowing the state to interfere with respect to prices or costs;

| — | public policies or measures discriminating in favour of domestic suppliers or otherwise influencing free market forces; |
| --- | --- |

—

public policies or measures discriminating in favour of domestic suppliers or otherwise influencing free market forces;

| — | the lack, discriminatory application or inadequate enforcement of bankruptcy, corporate or property laws; |
| --- | --- |

—

the lack, discriminatory application or inadequate enforcement of bankruptcy, corporate or property laws;

| — | wage costs being distorted; |
| --- | --- |

—

wage costs being distorted;

| — | access to finance granted by institutions which implement public policy objectives or otherwise not acting independently of the state’. |
| --- | --- |

—

access to finance granted by institutions which implement public policy objectives or otherwise not acting independently of the state’.

| (47) | As the list in Article 2(6a)(b) of the basic Regulation is non-cumulative, not all the elements need to be given regard to for a finding of significant distortions. Moreover, the same factual circumstances may be used to demonstrate the existence of one or more of the elements of the list. However, any conclusion on significant distortions within the meaning of Article 2(6a)(a) must be made on the basis of all the evidence at hand. The overall assessment on the existence of distortions may also take into account the general context and situation in the exporting country, in particular where the fundamental elements of the exporting country’s economic and administrative set-up provides the government with substantial powers to intervene in the economy in such a way that prices and costs are not the result of the free development of market forces. |
| --- | --- |

(47)

As the list in Article 2(6a)(b) of the basic Regulation is non-cumulative, not all the elements need to be given regard to for a finding of significant distortions. Moreover, the same factual circumstances may be used to demonstrate the existence of one or more of the elements of the list. However, any conclusion on significant distortions within the meaning of Article 2(6a)(a) must be made on the basis of all the evidence at hand. The overall assessment on the existence of distortions may also take into account the general context and situation in the exporting country, in particular where the fundamental elements of the exporting country’s economic and administrative set-up provides the government with substantial powers to intervene in the economy in such a way that prices and costs are not the result of the free development of market forces.

| (48) | Article 2(6a)(c) of the basic Regulation provides that
  ‘[w]here the Commission has well-founded indications of the possible existence of significant distortions as referred to in point (b) in a certain country or a certain sector in that country, and where appropriate for the effective application of this Regulation, the Commission shall produce, make public and regularly update a report describing the market circumstances referred to in point (b) in that country or sector’. |
| --- | --- |

(48)

Article 2(6a)(c) of the basic Regulation provides that
  ‘[w]here the Commission has well-founded indications of the possible existence of significant distortions as referred to in point (b) in a certain country or a certain sector in that country, and where appropriate for the effective application of this Regulation, the Commission shall produce, make public and regularly update a report describing the market circumstances referred to in point (b) in that country or sector’.

‘[w]here the Commission has well-founded indications of the possible existence of significant distortions as referred to in point (b) in a certain country or a certain sector in that country, and where appropriate for the effective application of this Regulation, the Commission shall produce, make public and regularly update a report describing the market circumstances referred to in point (b) in that country or sector’.

| (49) | Pursuant to this provision, the Commission has issued a country report concerning China (hereinafter ‘the Report’) (10), showing the existence of substantial government intervention at many levels of the economy, including specific distortions in many key factors of production (such as land, energy, capital, raw materials and labour) as well as in specific sectors (such as steel and chemicals). Interested parties were invited to rebut, comment or supplement the evidence contained in the investigation file at the time of initiation. The Report was placed in the investigation file at the initiation stage. |
| --- | --- |

(49)

Pursuant to this provision, the Commission has issued a country report concerning China (hereinafter ‘the Report’) (10), showing the existence of substantial government intervention at many levels of the economy, including specific distortions in many key factors of production (such as land, energy, capital, raw materials and labour) as well as in specific sectors (such as steel and chemicals). Interested parties were invited to rebut, comment or supplement the evidence contained in the investigation file at the time of initiation. The Report was placed in the investigation file at the initiation stage.

10

| (50) | More specifically, the interim review request alleged that the factors of production, including the main raw materials and energy to produce HTYP are heavily distorted. The request referred to the Report and the distortions identified therein with respect to the chemical sector, including the monoethylene glycol (‘MEG’) and purified terephthalic acid (‘PTA’) industry. Moreover, the request pointed – with reference to the Report – to existing distortions with respect to energy costs. The request also observed that Chinese authorities support implementing preferential fiscal and financial policies for the chemical industry, not least in line with the Chemical Fiber Industry 13th Five-Year Directive Opinion. The request further noted the State interference with respect to the labour market and the land-use rights. |
| --- | --- |

(50)

More specifically, the interim review request alleged that the factors of production, including the main raw materials and energy to produce HTYP are heavily distorted. The request referred to the Report and the distortions identified therein with respect to the chemical sector, including the monoethylene glycol (‘MEG’) and purified terephthalic acid (‘PTA’) industry. Moreover, the request pointed – with reference to the Report – to existing distortions with respect to energy costs. The request also observed that Chinese authorities support implementing preferential fiscal and financial policies for the chemical industry, not least in line with the Chemical Fiber Industry 13th Five-Year Directive Opinion. The request further noted the State interference with respect to the labour market and the land-use rights.

| (51) | As indicated in recital (42), the GOC did not comment or provide evidence supporting or contradicting the existing evidence on the case file, including the Report and the additional evidence provided by the applicant, on the existence of significant distortions and/or on the appropriateness of the application of Article 2(6a) of the basic Regulation in the case at hand. |
| --- | --- |

(51)

As indicated in recital (42), the GOC did not comment or provide evidence supporting or contradicting the existing evidence on the case file, including the Report and the additional evidence provided by the applicant, on the existence of significant distortions and/or on the appropriateness of the application of Article 2(6a) of the basic Regulation in the case at hand.

| (52) | The Commission examined whether it was appropriate or not to use domestic prices and costs in China, due to the existence of significant distortions within the meaning of point (b) of Article 2(6a) of the basic Regulation. The Commission did so on the basis of the evidence available on the file, including the evidence contained in the Report, which relies on publicly available sources. That analysis covered the examination of the substantial government interventions in China’s economy in general, but also the specific market situation in the relevant sector including the product under review. The Commission further supplemented these evidentiary elements with its own research on the various criteria relevant to confirm the existence of significant distortions in China. |
| --- | --- |

(52)

The Commission examined whether it was appropriate or not to use domestic prices and costs in China, due to the existence of significant distortions within the meaning of point (b) of Article 2(6a) of the basic Regulation. The Commission did so on the basis of the evidence available on the file, including the evidence contained in the Report, which relies on publicly available sources. That analysis covered the examination of the substantial government interventions in China’s economy in general, but also the specific market situation in the relevant sector including the product under review. The Commission further supplemented these evidentiary elements with its own research on the various criteria relevant to confirm the existence of significant distortions in China.

3.4.4.1.2.   Significant distortions affecting the domestic prices and costs in China

Significant distortions affecting the domestic prices and costs in China

| (53) | The Chinese economic system is based on the concept of a ‘socialist market economy’. That concept is enshrined in the Chinese Constitution and determines the economic governance of China. The core principle is the ‘socialist public ownership of the means of production, namely, ownership by the whole people and collective ownership by the working people’. The State-owned economy is the
  ‘leading force of the national economy’
  and the State has the mandate
  ‘to ensure its consolidation and growth’ (11). Consequently, the overall setup of the Chinese economy not only allows for substantial government interventions into the economy, but such interventions are expressly mandated. The notion of supremacy of public ownership over the private one permeates the entire legal system and is emphasized as a general principle in all central pieces of legislation. The Chinese property law is a prime example: it refers to the primary stage of socialism and entrusts the State with upholding the basic economic system under which the public ownership plays a dominant role. Other forms of ownership are tolerated, with the law permitting them to develop side by side with the State ownership (12). |
| --- | --- |

(53)

The Chinese economic system is based on the concept of a ‘socialist market economy’. That concept is enshrined in the Chinese Constitution and determines the economic governance of China. The core principle is the ‘socialist public ownership of the means of production, namely, ownership by the whole people and collective ownership by the working people’. The State-owned economy is the
  ‘leading force of the national economy’
  and the State has the mandate
  ‘to ensure its consolidation and growth’ (11). Consequently, the overall setup of the Chinese economy not only allows for substantial government interventions into the economy, but such interventions are expressly mandated. The notion of supremacy of public ownership over the private one permeates the entire legal system and is emphasized as a general principle in all central pieces of legislation. The Chinese property law is a prime example: it refers to the primary stage of socialism and entrusts the State with upholding the basic economic system under which the public ownership plays a dominant role. Other forms of ownership are tolerated, with the law permitting them to develop side by side with the State ownership (12).

socialist market economy

socialist public ownership of the means of production, namely, ownership by the whole people and collective ownership by the working people

‘leading force of the national economy’

‘to ensure its consolidation and growth

11

12

| (54) | In addition, under Chinese law, the socialist market economy is developed under the leadership of the Chinese Communist Party (‘CCP’). The structures of the Chinese State and of the CCP are intertwined at every level (legal, institutional, personal), forming a superstructure in which the roles of CCP and the State are indistinguishable. Following an amendment of the Chinese Constitution in March 2018, the leading role of the CCP was given an even greater prominence by being reaffirmed in the text of Article 1 of the Constitution. Following the already existing first sentence of the provision: ‘[t]he socialist system is the basic system of the People’s Republic of China’ a new second sentence was inserted which reads: ‘[t]he defining feature of socialism with Chinese characteristics is the leadership of the Communist Party of China.’ (13) This illustrates the unquestioned and ever growing control of the CCP over the economic system of China. This leadership and control is inherent to the Chinese system and goes well beyond the situation customary in other countries where the governments exercise general macroeconomic control within the boundaries of which free market forces are at play. |
| --- | --- |

(54)

In addition, under Chinese law, the socialist market economy is developed under the leadership of the Chinese Communist Party (‘CCP’). The structures of the Chinese State and of the CCP are intertwined at every level (legal, institutional, personal), forming a superstructure in which the roles of CCP and the State are indistinguishable. Following an amendment of the Chinese Constitution in March 2018, the leading role of the CCP was given an even greater prominence by being reaffirmed in the text of Article 1 of the Constitution. Following the already existing first sentence of the provision: ‘[t]he socialist system is the basic system of the People’s Republic of China’ a new second sentence was inserted which reads: ‘[t]he defining feature of socialism with Chinese characteristics is the leadership of the Communist Party of China.’ (13) This illustrates the unquestioned and ever growing control of the CCP over the economic system of China. This leadership and control is inherent to the Chinese system and goes well beyond the situation customary in other countries where the governments exercise general macroeconomic control within the boundaries of which free market forces are at play.

he socialist system is the basic system of the People’s Republic of China

he defining feature of socialism with Chinese characteristics is the leadership of the Communist Party of China

13

| (55) | The Chinese State engages in an interventionist economic policy in pursuance of goals, which coincide with the political agenda set by the CCP rather than reflecting the prevailing economic conditions in a free market (14). The interventionist economic tools deployed by the Chinese authorities are manifold, including the system of industrial planning, the financial system, as well as the level of the regulatory environment. |
| --- | --- |

(55)

The Chinese State engages in an interventionist economic policy in pursuance of goals, which coincide with the political agenda set by the CCP rather than reflecting the prevailing economic conditions in a free market (14). The interventionist economic tools deployed by the Chinese authorities are manifold, including the system of industrial planning, the financial system, as well as the level of the regulatory environment.

14

| (56) | First, on the level of overall administrative control, the direction of the Chinese economy is governed by a complex system of industrial planning which affects all economic activities within the country. The totality of these plans covers a comprehensive and complex matrix of sectors and crosscutting policies and is present on all levels of government. Plans at provincial level are detailed while national plans set broader targets. Plans also specify the means in order to support the relevant industries/sectors as well as the timeframes in which the objectives need to be achieved. Some plans still contain explicit output targets. Under the plans, individual industrial sectors and/or projects are being singled out as (positive or negative) priorities in line with the government priorities and specific development goals are attributed to them (industrial upgrade, international expansion etc.). The economic operators, private and State-owned alike, must effectively adjust their business activities according to the realities imposed by the planning system. This is not only because of the binding nature of the plans but also because the relevant Chinese authorities at all levels of government adhere to the system of plans and use their vested powers accordingly, thereby inducing the economic operators to comply with the priorities set out in the plans (see also section 3.4.4.1.5 below) (15). |
| --- | --- |

(56)

First, on the level of overall administrative control, the direction of the Chinese economy is governed by a complex system of industrial planning which affects all economic activities within the country. The totality of these plans covers a comprehensive and complex matrix of sectors and crosscutting policies and is present on all levels of government. Plans at provincial level are detailed while national plans set broader targets. Plans also specify the means in order to support the relevant industries/sectors as well as the timeframes in which the objectives need to be achieved. Some plans still contain explicit output targets. Under the plans, individual industrial sectors and/or projects are being singled out as (positive or negative) priorities in line with the government priorities and specific development goals are attributed to them (industrial upgrade, international expansion etc.). The economic operators, private and State-owned alike, must effectively adjust their business activities according to the realities imposed by the planning system. This is not only because of the binding nature of the plans but also because the relevant Chinese authorities at all levels of government adhere to the system of plans and use their vested powers accordingly, thereby inducing the economic operators to comply with the priorities set out in the plans (see also section 3.4.4.1.5 below) (15).

15

| (57) | Second, on the level of allocation of financial resources, the financial system of China is dominated by the State-owned commercial banks. Those banks, when setting up and implementing their lending policy need to align themselves with the government’s industrial policy objectives rather than primarily assessing the economic merits of a given project (see also section 3.4.4.1.8 below) (16). The same applies to the other components of the Chinese financial system, such as the stock markets, bond markets, private equity markets etc. Also these parts of the financial sector other than the banking sector are institutionally and operationally set up in a manner not geared towards maximizing the efficient functioning of the financial markets but towards ensuring control and allowing intervention by the State and the CCP (17). |
| --- | --- |

(57)

Second, on the level of allocation of financial resources, the financial system of China is dominated by the State-owned commercial banks. Those banks, when setting up and implementing their lending policy need to align themselves with the government’s industrial policy objectives rather than primarily assessing the economic merits of a given project (see also section 3.4.4.1.8 below) (16). The same applies to the other components of the Chinese financial system, such as the stock markets, bond markets, private equity markets etc. Also these parts of the financial sector other than the banking sector are institutionally and operationally set up in a manner not geared towards maximizing the efficient functioning of the financial markets but towards ensuring control and allowing intervention by the State and the CCP (17).

16

17

| (58) | Third, on the level of regulatory environment, the interventions by the State into the economy take a number of forms. For instance, the public procurement rules are regularly used in pursuit of policy goals other than economic efficiency, thereby undermining market-based principles in the area. The applicable legislation specifically provides that public procurement shall be conducted in order to facilitate the achievement of goals designed by State policies. However, the nature of these goals remains undefined, thereby leaving broad margin of appreciation to the decision-making bodies (18). Similarly, in the area of investment, the GOC maintains significant control and influence over destination and magnitude of both State and private investment. Investment screening as well as various incentives, restrictions, and prohibitions related to investment are used by authorities as an important tool for supporting industrial policy goals, such as maintaining State control over key sectors or bolstering domestic industry (19). |
| --- | --- |

(58)

Third, on the level of regulatory environment, the interventions by the State into the economy take a number of forms. For instance, the public procurement rules are regularly used in pursuit of policy goals other than economic efficiency, thereby undermining market-based principles in the area. The applicable legislation specifically provides that public procurement shall be conducted in order to facilitate the achievement of goals designed by State policies. However, the nature of these goals remains undefined, thereby leaving broad margin of appreciation to the decision-making bodies (18). Similarly, in the area of investment, the GOC maintains significant control and influence over destination and magnitude of both State and private investment. Investment screening as well as various incentives, restrictions, and prohibitions related to investment are used by authorities as an important tool for supporting industrial policy goals, such as maintaining State control over key sectors or bolstering domestic industry (19).

18

19

| (59) | In sum, the Chinese economic model is based on certain basic axioms, which provide for and encourage manifold government interventions. Such substantial government interventions are at odds with the free play of market forces, resulting in distorting the effective allocation of resources in line with market principles (20). |
| --- | --- |

(59)

In sum, the Chinese economic model is based on certain basic axioms, which provide for and encourage manifold government interventions. Such substantial government interventions are at odds with the free play of market forces, resulting in distorting the effective allocation of resources in line with market principles (20).

20

3.4.4.1.3.   Significant distortions according to Article 2(6a)(b), first indent of the basic Regulation: the market in question being served to a significant extent by enterprises which operate under the ownership, control or policy supervision or guidance of the authorities of the exporting country

Significant distortions according to Article 2(6a)(b), first indent of the basic Regulation: the market in question being served to a significant extent by enterprises which operate under the ownership, control or policy supervision or guidance of the authorities of the exporting country

| (60) | In China, enterprises operating under the ownership, control and/or policy supervision or guidance by the State represent an essential part of the economy. |
| --- | --- |

(60)

In China, enterprises operating under the ownership, control and/or policy supervision or guidance by the State represent an essential part of the economy.

| (61) | While in the HTYP sector, the degree of state ownership does not appear to be significant, the GOC maintains shareholding in a number of producers, such as a stake of more than 12 % in the Unifull Group. (21) Moreover, the companies pledge to cooperate with government authorities in expectation of advancing their business prospects, as can be seen for instance from the 2021 annual report of Zhejiang Unifull Industrial Fibre, (22) according to which: “The company will continue to strengthen cooperation and exchanges with external stakeholders such as local governments at all levels, external financial institutions, customers and suppliers to achieve a win-win situation for the interests of external stakeholders and shareholders.” In addition, given that CCP interventions into operational decision making have become the norm also in private companies (23), with CCP claiming leadership over virtually every aspect of the country’s economy, the influence of the State by means of CCP structures within companies effectively results in economic operators being under control and policy supervision of the government, given how far the State and Party structures have grown together in China. |
| --- | --- |

(61)

While in the HTYP sector, the degree of state ownership does not appear to be significant, the GOC maintains shareholding in a number of producers, such as a stake of more than 12 % in the Unifull Group. (21) Moreover, the companies pledge to cooperate with government authorities in expectation of advancing their business prospects, as can be seen for instance from the 2021 annual report of Zhejiang Unifull Industrial Fibre, (22) according to which: “The company will continue to strengthen cooperation and exchanges with external stakeholders such as local governments at all levels, external financial institutions, customers and suppliers to achieve a win-win situation for the interests of external stakeholders and shareholders.” In addition, given that CCP interventions into operational decision making have become the norm also in private companies (23), with CCP claiming leadership over virtually every aspect of the country’s economy, the influence of the State by means of CCP structures within companies effectively results in economic operators being under control and policy supervision of the government, given how far the State and Party structures have grown together in China.

21

22

The company will continue to strengthen cooperation and exchanges with external stakeholders such as local governments at all levels, external financial institutions, customers and suppliers to achieve a win-win situation for the interests of external stakeholders and shareholders

23

| (62) | This is apparent also at the level of the China Chemical Fiber Association (‘CCFA’) (24), the sectoral industry association, of which for example Guxiandao is a member, with Guxiandao’s general manager serving as the association’s Vice President. According to Art. 2 of CCFA’s Articles of Association, the organisation’s purpose is, among others, to “implement the country’s industrial policy”. Article 3 confirms CCFA’s subordination to the CCP by stipulating that “[t]he Association adheres to the overall leadership of the Communist Party of China, establishes organizations of the Communist Party of China, develops party activities, and provides the conditions necessary for the activities of the party organizations in accordance with the provisions of the Constitution of the Communist Party of China.” |
| --- | --- |

(62)

This is apparent also at the level of the China Chemical Fiber Association (‘CCFA’) (24), the sectoral industry association, of which for example Guxiandao is a member, with Guxiandao’s general manager serving as the association’s Vice President. According to Art. 2 of CCFA’s Articles of Association, the organisation’s purpose is, among others, to “implement the country’s industrial policy”. Article 3 confirms CCFA’s subordination to the CCP by stipulating that “[t]he Association adheres to the overall leadership of the Communist Party of China, establishes organizations of the Communist Party of China, develops party activities, and provides the conditions necessary for the activities of the party organizations in accordance with the provisions of the Constitution of the Communist Party of China.”

24

implement the country’s industrial policy

he Association adheres to the overall leadership of the Communist Party of China, establishes organizations of the Communist Party of China, develops party activities, and provides the conditions necessary for the activities of the party organizations in accordance with the provisions of the Constitution of the Communist Party of China

| (63) | Consequently, even privately owned producers in the HTYP sector are prevented from operating under market conditions. Indeed, both public and privately owned enterprises in the sector are subject to policy supervision and guidance as also set out in section 3.4.4.1.5 below. |
| --- | --- |

(63)

Consequently, even privately owned producers in the HTYP sector are prevented from operating under market conditions. Indeed, both public and privately owned enterprises in the sector are subject to policy supervision and guidance as also set out in section 3.4.4.1.5 below.

3.4.4.1.4.   Significant distortions according to Article 2(6a)(b), second indent of the basic Regulation: State presence in firms allowing the state to interfere with respect to prices or costs

Significant distortions according to Article 2(6a)(b), second indent of the basic Regulation: State presence in firms allowing the state to interfere with respect to prices or costs

| (64) | Apart from exercising control over the economy by means of ownership of State-owned enterprises (‘SOEs’) and other tools, the GOC is in position to interfere with prices and costs through State presence in firms. While the right to appoint and to remove key management personnel in SOEs by the relevant State authorities, as provided for in the Chinese legislation, can be considered to reflect the corresponding ownership rights, (25) CCP cells in enterprises, State-owned and private alike, represent another important channel through which the State can interfere with business decisions. According to China’s company law, a CCP organisation is to be established in every company (with at least three CCP members as specified in the CCP Constitution (26)) and the company shall provide the necessary conditions for the activities of the party organisation. In the past, this requirement appears not to have always been followed or strictly enforced. However, since at least 2016 the CCP has been reinforcing its claims to control business decisions in companies as a matter of political principle (27), including exercising pressure on private companies to put ‘patriotism’ first and to follow party discipline (28). In 2017, it was reported that party cells existed in 70 % of some 1,86 million privately owned companies, with growing pressure for the CCP organisations to have a final say over the business decisions within their respective companies (29). These rules are of general application throughout the Chinese economy, across all sectors, including to the producers of HTYP and the suppliers of their inputs. |
| --- | --- |

(64)

Apart from exercising control over the economy by means of ownership of State-owned enterprises (‘SOEs’) and other tools, the GOC is in position to interfere with prices and costs through State presence in firms. While the right to appoint and to remove key management personnel in SOEs by the relevant State authorities, as provided for in the Chinese legislation, can be considered to reflect the corresponding ownership rights, (25) CCP cells in enterprises, State-owned and private alike, represent another important channel through which the State can interfere with business decisions. According to China’s company law, a CCP organisation is to be established in every company (with at least three CCP members as specified in the CCP Constitution (26)) and the company shall provide the necessary conditions for the activities of the party organisation. In the past, this requirement appears not to have always been followed or strictly enforced. However, since at least 2016 the CCP has been reinforcing its claims to control business decisions in companies as a matter of political principle (27), including exercising pressure on private companies to put ‘patriotism’ first and to follow party discipline (28). In 2017, it was reported that party cells existed in 70 % of some 1,86 million privately owned companies, with growing pressure for the CCP organisations to have a final say over the business decisions within their respective companies (29). These rules are of general application throughout the Chinese economy, across all sectors, including to the producers of HTYP and the suppliers of their inputs.

25

26

27

28

29

| (65) | In addition, on 15 September 2020 a document titled General Office of CCP Central Committee’s Guidelines on stepping up the United Front work in the private sector for the new era (‘the Guidelines’) (30) was released, which further expanded the role of the party committees in private enterprises. Section II.4 of the Guidelines state: “[w]e must raise the Party’s overall capacity to lead private-sector United Front work and effectively step up the work in this area”; and section III.6 states: “[w]e must further step up Party building in private enterprises and enable the Party cells to play their role effectively as a fortress and enable Party members to play their parts as vanguards and pioneers.” The Guidelines thus emphasise and seek to increase the role of the CCP in companies and other private sector entities (31). |
| --- | --- |

(65)

In addition, on 15 September 2020 a document titled General Office of CCP Central Committee’s Guidelines on stepping up the United Front work in the private sector for the new era (‘the Guidelines’) (30) was released, which further expanded the role of the party committees in private enterprises. Section II.4 of the Guidelines state: “[w]e must raise the Party’s overall capacity to lead private-sector United Front work and effectively step up the work in this area”; and section III.6 states: “[w]e must further step up Party building in private enterprises and enable the Party cells to play their role effectively as a fortress and enable Party members to play their parts as vanguards and pioneers.” The Guidelines thus emphasise and seek to increase the role of the CCP in companies and other private sector entities (31).

General Office of CCP Central Committee’s Guidelines on stepping up the United Front work in the private sector for the new era

30

e must raise the Party’s overall capacity to lead private-sector United Front work and effectively step up the work in this area

e must further step up Party building in private enterprises and enable the Party cells to play their role effectively as a fortress and enable Party members to play their parts as vanguards and pioneers

31

| (66) | The investigation has confirmed that overlaps between managerial positions and CCP membership/Party functions are commonplace in the chemical fibers sector. For example, the general manager of Unifull holds in parallel the position of the Party branch secretary (32) while in Guxiandao, the executive director serves also as secretary of the Party committee. (33) |
| --- | --- |

(66)

The investigation has confirmed that overlaps between managerial positions and CCP membership/Party functions are commonplace in the chemical fibers sector. For example, the general manager of Unifull holds in parallel the position of the Party branch secretary (32) while in Guxiandao, the executive director serves also as secretary of the Party committee. (33)

32

33

| (67) | The State’s presence and intervention in the financial markets (see also section 3.4.4.1.8 below) as well as in the provision of raw materials and inputs further have an additional distorting effect on the market (34). Thus, the State presence in firms, in the HTYP and other sectors (such as the financial and input sectors) allow the GOC to interfere with respect to prices and costs. |
| --- | --- |

(67)

The State’s presence and intervention in the financial markets (see also section 3.4.4.1.8 below) as well as in the provision of raw materials and inputs further have an additional distorting effect on the market (34). Thus, the State presence in firms, in the HTYP and other sectors (such as the financial and input sectors) allow the GOC to interfere with respect to prices and costs.

34

3.4.4.1.5.   Significant distortions according to Article 2(6a)(b), third indent of the basic Regulation: public policies or measures discriminating in favour of domestic suppliers or otherwise influencing free market forces

Significant distortions according to Article 2(6a)(b), third indent of the basic Regulation: public policies or measures discriminating in favour of domestic suppliers or otherwise influencing free market forces

| (68) | The direction of the Chinese economy is, to a significant degree, determined by an elaborate system of planning which sets out priorities and prescribes the goals the central and local governments must focus on. Relevant plans exist on all levels of government and cover virtually all economic sectors. The objectives set by the planning instruments are of binding nature and the authorities at each administrative level monitor the implementation of the plans by the corresponding lower level of government. Overall, the system of planning in China results in resources being driven to sectors designated as strategic or otherwise politically important by the government, rather than being allocated in line with market forces (35). |
| --- | --- |

(68)

The direction of the Chinese economy is, to a significant degree, determined by an elaborate system of planning which sets out priorities and prescribes the goals the central and local governments must focus on. Relevant plans exist on all levels of government and cover virtually all economic sectors. The objectives set by the planning instruments are of binding nature and the authorities at each administrative level monitor the implementation of the plans by the corresponding lower level of government. Overall, the system of planning in China results in resources being driven to sectors designated as strategic or otherwise politically important by the government, rather than being allocated in line with market forces (35).

35

| (69) | The chemical fiber industry is regarded as a key industry by the GOC. This is evident from the 2022 Guiding Opinions on the High-quality Development of Chemical Fiber Industry (‘the Guiding Opinions’) issued by Ministry of Industry and Information Technology National Development and Reform Commission (36), according to which “The chemical fiber industry is an essential pillar of the stable development and continuous innovation of the textile industry chain, an internationally competitive advantage industry, and an important part of the new material industry”. Article I.2. of the Guiding Opinions explicitly articulates the GOC’s intention to determine the geographical and corporate structure of the sector, as well as essential production parameters. (37) The Government intervention may take the form of production sites relocations (“implement the regional development strategy, under the premise of complying with industry, energy, environmental protection and other policies, encourage leading enterprises to build integrated bases for the whole industry chain of chemical fiber textile in Guangxi, Guizhou, Xinjiang and other central and western regions, and form efficient and collaborative supply chain systems with neighbouring countries and regions”), mergers aimed at creating industrial champions (“encourage enterprises to optimize the allocation of production factors through mergers and reorganization, and accelerate business process reengineering and technological upgrading. Support leading enterprises to gather high-quality resources such as technology, brands, channels and talents”), designation of companies as eligible for special support through dedicated Government programs (“promote the integration and development of large, medium and small enterprises, cultivate specialized and specific new "little giant" enterprises and single champion enterprises”) etc. (38) |
| --- | --- |

(69)

The chemical fiber industry is regarded as a key industry by the GOC. This is evident from the 2022 Guiding Opinions on the High-quality Development of Chemical Fiber Industry (‘the Guiding Opinions’) issued by Ministry of Industry and Information Technology National Development and Reform Commission (36), according to which “The chemical fiber industry is an essential pillar of the stable development and continuous innovation of the textile industry chain, an internationally competitive advantage industry, and an important part of the new material industry”. Article I.2. of the Guiding Opinions explicitly articulates the GOC’s intention to determine the geographical and corporate structure of the sector, as well as essential production parameters. (37) The Government intervention may take the form of production sites relocations (“implement the regional development strategy, under the premise of complying with industry, energy, environmental protection and other policies, encourage leading enterprises to build integrated bases for the whole industry chain of chemical fiber textile in Guangxi, Guizhou, Xinjiang and other central and western regions, and form efficient and collaborative supply chain systems with neighbouring countries and regions”), mergers aimed at creating industrial champions (“encourage enterprises to optimize the allocation of production factors through mergers and reorganization, and accelerate business process reengineering and technological upgrading. Support leading enterprises to gather high-quality resources such as technology, brands, channels and talents”), designation of companies as eligible for special support through dedicated Government programs (“promote the integration and development of large, medium and small enterprises, cultivate specialized and specific new "little giant" enterprises and single champion enterprises”) etc. (38)

36

37

38

| (70) | This central Government’s strategy is confirmed in numerous planning documents focused on the chemical fiber industry issued at provincial and municipal level. |
| --- | --- |

(70)

This central Government’s strategy is confirmed in numerous planning documents focused on the chemical fiber industry issued at provincial and municipal level.

| (71) | The Zhejiang, Jiangsu, Fujian and Shandong provinces, as well as the Chongqing municipality provide good examples. |
| --- | --- |

(71)

The Zhejiang, Jiangsu, Fujian and Shandong provinces, as well as the Chongqing municipality provide good examples.

| (72) | The Jiangsu 14th Five year Plan on the high-end development of chemical industry (39) not only contains detailed provisions on development goals for a wide range of subsectors within the chemical sector (40) but it also mirrors the above-mentioned policies of the Guiding Opinions on the industrial structure: | Through the consolidation of resources, accelerate the construction of a number of large enterprises and enterprise groups with leading roles, increase the level industry concentration, and form a number of world-class enterprises and "single champion" enterprises.
   (41)
  [...] |
| --- | --- | --- |

(72)

The Jiangsu 14th Five year Plan on the high-end development of chemical industry (39) not only contains detailed provisions on development goals for a wide range of subsectors within the chemical sector (40) but it also mirrors the above-mentioned policies of the Guiding Opinions on the industrial structure:

14th

39

40

Through the consolidation of resources, accelerate the construction of a number of large enterprises and enterprise groups with leading roles, increase the level industry concentration, and form a number of world-class enterprises and "single champion" enterprises.
   (41)
  [...]

Through the consolidation of resources, accelerate the construction of a number of large enterprises and enterprise groups with leading roles, increase the level industry concentration, and form a number of world-class enterprises and "single champion" enterprises.

41

[...]

| | The layout of the chemical industry in the province abides by the requirements of the national and provincial industrial planning and layout plans, with chemical parks as important development carriers, they are also essential to lead the development of the chemical industry in each district and city. The industrial development orientation abides by the requirements of the relevant industry policies of the state and of Jiangsu province, establishes the development concept led by encouraged industries, and implements the upgrading of traditional chemical industries as well as the coordinated development of industries in new fields.
   (42) |
| --- | --- |

The layout of the chemical industry in the province abides by the requirements of the national and provincial industrial planning and layout plans, with chemical parks as important development carriers, they are also essential to lead the development of the chemical industry in each district and city. The industrial development orientation abides by the requirements of the relevant industry policies of the state and of Jiangsu province, establishes the development concept led by encouraged industries, and implements the upgrading of traditional chemical industries as well as the coordinated development of industries in new fields.
   (42)

The layout of the chemical industry in the province abides by the requirements of the national and provincial industrial planning and layout plans, with chemical parks as important development carriers, they are also essential to lead the development of the chemical industry in each district and city. The industrial development orientation abides by the requirements of the relevant industry policies of the state and of Jiangsu province, establishes the development concept led by encouraged industries, and implements the upgrading of traditional chemical industries as well as the coordinated development of industries in new fields.

42

as well as the geographic distribution of production:

| | The overall layout plan is based on the whole province, according to the characteristics of each city’s industry development, highlighting the advantages of industry development, further improving the development level of characteristic industries, and expanding the industries that meet regional development needs taking into account each city’s relevant industries and local market conditions, ensuring the differentiated development of the chemical industry in each city of the province, and forming a comprehensive industry system with each city having complementary advantages
   (43). |
| --- | --- |

The overall layout plan is based on the whole province, according to the characteristics of each city’s industry development, highlighting the advantages of industry development, further improving the development level of characteristic industries, and expanding the industries that meet regional development needs taking into account each city’s relevant industries and local market conditions, ensuring the differentiated development of the chemical industry in each city of the province, and forming a comprehensive industry system with each city having complementary advantages
   (43).

The overall layout plan is based on the whole province, according to the characteristics of each city’s industry development, highlighting the advantages of industry development, further improving the development level of characteristic industries, and expanding the industries that meet regional development needs taking into account each city’s relevant industries and local market conditions, ensuring the differentiated development of the chemical industry in each city of the province, and forming a comprehensive industry system with each city having complementary advantages

43

| (73) | Similarly, the Special plan for the development of strategic emerging industries in the Fujian Province during the 14th FYP (44)contains a mandate for the provincial authorities to support the chemical fibers sector and guide its development: | Accelerate the development of new textile fabrics, and increase the research and development of functional differentiated fibers, high-performance fiber blends, high-count and high-quality yarns and their fabrics, new heat-bonding composite fibers (ES fibers) for sanitary use, and high-performance metal fibers.
   (45)
  [...] |
| --- | --- | --- |

(73)

Similarly, the Special plan for the development of strategic emerging industries in the Fujian Province during the 14th FYP (44)contains a mandate for the provincial authorities to support the chemical fibers sector and guide its development:

Special plan for the development of strategic emerging industries in the Fujian Province during the 14th FYP

44

Accelerate the development of new textile fabrics, and increase the research and development of functional differentiated fibers, high-performance fiber blends, high-count and high-quality yarns and their fabrics, new heat-bonding composite fibers (ES fibers) for sanitary use, and high-performance metal fibers.
   (45)
  [...]

Accelerate the development of new textile fabrics, and increase the research and development of functional differentiated fibers, high-performance fiber blends, high-count and high-quality yarns and their fabrics, new heat-bonding composite fibers (ES fibers) for sanitary use, and high-performance metal fibers.

45

[...]

| | Support the construction of Fuzhou’s new functional materials industry clusters (membrane materials, advanced textiles, high-performance metal materials, high-performance composite materials, etc.), Xiamen new functional materials industry clusters [...], Putian’s new functional materials industry cluster (new chemical fibers and functional textile materials, etc.) and Xiamen biomedical industry cluster [...]. |
| --- | --- |

Support the construction of Fuzhou’s new functional materials industry clusters (membrane materials, advanced textiles, high-performance metal materials, high-performance composite materials, etc.), Xiamen new functional materials industry clusters [...], Putian’s new functional materials industry cluster (new chemical fibers and functional textile materials, etc.) and Xiamen biomedical industry cluster [...].

Support the construction of Fuzhou’s new functional materials industry clusters (membrane materials, advanced textiles, high-performance metal materials, high-performance composite materials, etc.), Xiamen new functional materials industry clusters [...], Putian’s new functional materials industry cluster (new chemical fibers and functional textile materials, etc.) and Xiamen biomedical industry cluster [...].

| (74) | The interference of Fujian’s authorities with the development of the chemical fibers’ sector is further apparent from the provincial 14th FYP on developing a high quality manufacturing industry which gives the following instruction to the stakeholders: | Promote the construction of Baihong polyester industrial yarn project, and develop special chemical fiber materials used in the automotive sector, marine engineering, military equipment, medical health and other fields. Accelerate the research on cutting-edge fiber technology, focus on breakthroughs in key fiber technologies such as nano-, intelligent, and biomedical fibers, and strive to achieve breakthroughs in high-end fibers such as carbon fiber, aramid fiber, polyphenylene sulfide, and ultra-high molecular weight polyethylene.
   (46) |
| --- | --- | --- |

(74)

The interference of Fujian’s authorities with the development of the chemical fibers’ sector is further apparent from the provincial 14th FYP on developing a high quality manufacturing industry which gives the following instruction to the stakeholders:

14th

Promote the construction of Baihong polyester industrial yarn project, and develop special chemical fiber materials used in the automotive sector, marine engineering, military equipment, medical health and other fields. Accelerate the research on cutting-edge fiber technology, focus on breakthroughs in key fiber technologies such as nano-, intelligent, and biomedical fibers, and strive to achieve breakthroughs in high-end fibers such as carbon fiber, aramid fiber, polyphenylene sulfide, and ultra-high molecular weight polyethylene.
   (46)

Promote the construction of Baihong polyester industrial yarn project, and develop special chemical fiber materials used in the automotive sector, marine engineering, military equipment, medical health and other fields. Accelerate the research on cutting-edge fiber technology, focus on breakthroughs in key fiber technologies such as nano-, intelligent, and biomedical fibers, and strive to achieve breakthroughs in high-end fibers such as carbon fiber, aramid fiber, polyphenylene sulfide, and ultra-high molecular weight polyethylene.

46

| (75) | Also Shandong’s 14th FYP on developing the chemical industry (47) emphasizes the need to ”[focus on the development of ethylene-based polyolefins and synthetic resins as end-use products, propylene-polypropylene, other engineering plastics as well as modified materials, synthetic and rubber materials made of butene and C4, end-products made with high performance polyurethane isocyanate and toluene, new materials, textile and engineering materials made of nylon, benzene and polyamide, PX-PTA-polyester and six other major industry chains” (48), with similar language present also in Zhejiang‘s 14th FYP on developing new materials industry: (49)„In the field of advanced basic materials, implement a number of digital and green transformation projects and production expansion projects for high-end and scarce products; in the fields of key strategic materials such as advanced semiconductor materials, new display materials, biomedical materials, high-performance fibers and composite materials, implement a number of industrialization and application expansion projects” (50) or Chongqing’s 14 FYP on high quality development of manufacturing industry: (51)„Use the raw material bases to encourage relevant enterprises to research, develop and manufacture high-performance PVA (polyvinyl alcohol) functional fibers, differentiated spandex, special polyester fibers, polyamide fibers, PU (polyurethane) microfibers and other products.” (52) |
| --- | --- |

(75)

Also Shandong’s 14th FYP on developing the chemical industry (47) emphasizes the need to ”[focus on the development of ethylene-based polyolefins and synthetic resins as end-use products, propylene-polypropylene, other engineering plastics as well as modified materials, synthetic and rubber materials made of butene and C4, end-products made with high performance polyurethane isocyanate and toluene, new materials, textile and engineering materials made of nylon, benzene and polyamide, PX-PTA-polyester and six other major industry chains” (48), with similar language present also in Zhejiang‘s 14th FYP on developing new materials industry: (49)„In the field of advanced basic materials, implement a number of digital and green transformation projects and production expansion projects for high-end and scarce products; in the fields of key strategic materials such as advanced semiconductor materials, new display materials, biomedical materials, high-performance fibers and composite materials, implement a number of industrialization and application expansion projects” (50) or Chongqing’s 14 FYP on high quality development of manufacturing industry: (51)„Use the raw material bases to encourage relevant enterprises to research, develop and manufacture high-performance PVA (polyvinyl alcohol) functional fibers, differentiated spandex, special polyester fibers, polyamide fibers, PU (polyurethane) microfibers and other products.” (52)

14th

47

ocus on the development of ethylene-based polyolefins and synthetic resins as end-use products, propylene-polypropylene, other engineering plastics as well as modified materials, synthetic and rubber materials made of butene and C4, end-products made with high performance polyurethane isocyanate and toluene, new materials, textile and engineering materials made of nylon, benzene and polyamide, PX-PTA-polyester and six other major industry chains

48

14th

49

In the field of advanced basic materials, implement a number of digital and green transformation projects and production expansion projects for high-end and scarce products; in the fields of key strategic materials such as advanced semiconductor materials, new display materials, biomedical materials, high-performance fibers and composite materials, implement a number of industrialization and application expansion projects

50

14 FYP on high quality development of manufacturing industry:

51

Use the raw material bases to encourage relevant enterprises to research, develop and manufacture high-performance PVA (polyvinyl alcohol) functional fibers, differentiated spandex, special polyester fibers, polyamide fibers, PU (polyurethane) microfibers and other products.

52

| (76) | Through these and other means, the GOC therefore directs and controls virtually every aspect in the development and functioning of the sector. |
| --- | --- |

(76)

Through these and other means, the GOC therefore directs and controls virtually every aspect in the development and functioning of the sector.

| (77) | In sum, the GOC has measures in place to induce operators to comply with the public policy objectives of supporting encouraged industries, including the production the main raw materials used in the manufacturing of HTYP. Such measures impede market forces from operating freely. |
| --- | --- |

(77)

In sum, the GOC has measures in place to induce operators to comply with the public policy objectives of supporting encouraged industries, including the production the main raw materials used in the manufacturing of HTYP. Such measures impede market forces from operating freely.

3.4.4.1.6.   Significant distortions according to Article 2(6a)(b), fourth indent of the basic Regulation: the lack, discriminatory application or inadequate enforcement of bankruptcy, corporate or property laws

Significant distortions according to Article 2(6a)(b), fourth indent of the basic Regulation: the lack, discriminatory application or inadequate enforcement of bankruptcy, corporate or property laws

| (78) | According to the information on file, the Chinese bankruptcy system delivers inadequately on its own main objectives such as to fairly settle claims and debts and to safeguard the lawful rights and interests of creditors and debtors. This appears to be rooted in the fact that while the Chinese bankruptcy law formally rests on principles that are similar to those applied in corresponding laws in countries other than China, the Chinese system is characterised by systematic under-enforcement. The number of bankruptcies remains notoriously low in relation to the size of the country’s economy, not least because the insolvency proceedings suffer from a number of shortcomings, which effectively function as a disincentive for bankruptcy filings. Moreover, the role of the State in the insolvency proceedings remains strong and active, often having direct influence on the outcome of the proceedings (53). |
| --- | --- |

(78)

According to the information on file, the Chinese bankruptcy system delivers inadequately on its own main objectives such as to fairly settle claims and debts and to safeguard the lawful rights and interests of creditors and debtors. This appears to be rooted in the fact that while the Chinese bankruptcy law formally rests on principles that are similar to those applied in corresponding laws in countries other than China, the Chinese system is characterised by systematic under-enforcement. The number of bankruptcies remains notoriously low in relation to the size of the country’s economy, not least because the insolvency proceedings suffer from a number of shortcomings, which effectively function as a disincentive for bankruptcy filings. Moreover, the role of the State in the insolvency proceedings remains strong and active, often having direct influence on the outcome of the proceedings (53).

53

| (79) | In addition, the shortcomings of the system of property rights are particularly obvious in relation to ownership of land and land-use rights in China. (54) All land is owned by the State (collectively owned rural land and State-owned urban land) and its allocation remains solely dependent on the State. There are legal provisions that aim at allocating land use rights in a transparent manner and at market prices, for instance by introducing bidding procedures. However, these provisions are regularly not respected, with certain buyers obtaining their land for free or below market rates (55). Moreover, authorities often pursue specific political goals including the implementation of the economic plans when allocating land (56). |
| --- | --- |

(79)

In addition, the shortcomings of the system of property rights are particularly obvious in relation to ownership of land and land-use rights in China. (54) All land is owned by the State (collectively owned rural land and State-owned urban land) and its allocation remains solely dependent on the State. There are legal provisions that aim at allocating land use rights in a transparent manner and at market prices, for instance by introducing bidding procedures. However, these provisions are regularly not respected, with certain buyers obtaining their land for free or below market rates (55). Moreover, authorities often pursue specific political goals including the implementation of the economic plans when allocating land (56).

54

55

56

| (80) | Much like other sectors in the Chinese economy, the producers of HTYP are subject to the ordinary rules on Chinese bankruptcy, corporate, and property laws. That has the effect that these companies, too, are subject to the top-down distortions arising from the discriminatory application or inadequate enforcement of bankruptcy and property laws. Those considerations, on the basis of the evidence available, appear to be fully applicable also in the chemical fibers sector. The present investigation revealed nothing that would call those findings into question. |
| --- | --- |

(80)

Much like other sectors in the Chinese economy, the producers of HTYP are subject to the ordinary rules on Chinese bankruptcy, corporate, and property laws. That has the effect that these companies, too, are subject to the top-down distortions arising from the discriminatory application or inadequate enforcement of bankruptcy and property laws. Those considerations, on the basis of the evidence available, appear to be fully applicable also in the chemical fibers sector. The present investigation revealed nothing that would call those findings into question.

| (81) | In light of the above, the Commission concluded that there was discriminatory application or inadequate enforcement of bankruptcy and property laws in the chemical fibers sector, including with respect to the product under review. |
| --- | --- |

(81)

In light of the above, the Commission concluded that there was discriminatory application or inadequate enforcement of bankruptcy and property laws in the chemical fibers sector, including with respect to the product under review.

3.4.4.1.7.   Significant distortions according to Article 2(6a)(b), fifth indent of the basic Regulation: wage costs being distorted

Significant distortions according to Article 2(6a)(b), fifth indent of the basic Regulation: wage costs being distorted

| (82) | A system of market-based wages cannot fully develop in China as workers and employers are impeded in their rights to collective organisation. China has not ratified a number of essential conventions of the International Labour Organisation (‘ILO’), in particular those on freedom of association and on collective bargaining (57). Under national law, only one trade union organisation is active. However, this organisation lacks independence from the State authorities and its engagement in collective bargaining and protection of workers’ rights remains rudimentary (58). Moreover, the mobility of the Chinese workforce is restricted by the household registration system, which limits access to the full range of social security and other benefits to local residents of a given administrative area. This typically results in workers who are not in possession of the local residence registration finding themselves in a vulnerable employment position and receiving lower income than the holders of the residence registration. (59) Those findings lead to the distortion of wage costs in China. |
| --- | --- |

(82)

A system of market-based wages cannot fully develop in China as workers and employers are impeded in their rights to collective organisation. China has not ratified a number of essential conventions of the International Labour Organisation (‘ILO’), in particular those on freedom of association and on collective bargaining (57). Under national law, only one trade union organisation is active. However, this organisation lacks independence from the State authorities and its engagement in collective bargaining and protection of workers’ rights remains rudimentary (58). Moreover, the mobility of the Chinese workforce is restricted by the household registration system, which limits access to the full range of social security and other benefits to local residents of a given administrative area. This typically results in workers who are not in possession of the local residence registration finding themselves in a vulnerable employment position and receiving lower income than the holders of the residence registration. (59) Those findings lead to the distortion of wage costs in China.

57

58

59

| (83) | No evidence was submitted to the effect that the chemical fibers sector, including the producers of HTYP, would not be subject to the Chinese labour law system described. The chemical fibers sector is thus affected by the distortions of wage costs both directly (when making the product under review or the main raw material for its production) as well as indirectly (when having access to capital or inputs from companies subject to the same labour system in China). |
| --- | --- |

(83)

No evidence was submitted to the effect that the chemical fibers sector, including the producers of HTYP, would not be subject to the Chinese labour law system described. The chemical fibers sector is thus affected by the distortions of wage costs both directly (when making the product under review or the main raw material for its production) as well as indirectly (when having access to capital or inputs from companies subject to the same labour system in China).

3.4.4.1.8.   Significant distortions according to Article 2(6a)(b), sixth indent of the basic Regulation: access to finance granted by institutions which implement public policy objectives or otherwise not acting independently of the State

Significant distortions according to Article 2(6a)(b), sixth indent of the basic Regulation: access to finance granted by institutions which implement public policy objectives or otherwise not acting independently of the State

| (84) | Access to capital for corporate actors in China is subject to various distortions. |
| --- | --- |

(84)

Access to capital for corporate actors in China is subject to various distortions.

| (85) | Firstly, the Chinese financial system is characterised by the strong position of State-owned banks (60), which, when granting access to finance, take into consideration criteria other than the economic viability of a project. Similarly to non-financial SOEs, the banks remain connected to the State not only through ownership but also via personal relations (the top executives of large State-owned financial institutions are ultimately appointed by the CCP) (61) and, again just like non-financial SOEs, the banks regularly implement public policies designed by the GOC. In doing so, the banks comply with an explicit legal obligation to conduct their business in accordance with the needs of the national economic and social development and under the guidance of the industrial policies of the State (62). This is compounded by additional existing rules, which direct finances into sectors designated by the government as encouraged or otherwise important (63). |
| --- | --- |

(85)

Firstly, the Chinese financial system is characterised by the strong position of State-owned banks (60), which, when granting access to finance, take into consideration criteria other than the economic viability of a project. Similarly to non-financial SOEs, the banks remain connected to the State not only through ownership but also via personal relations (the top executives of large State-owned financial institutions are ultimately appointed by the CCP) (61) and, again just like non-financial SOEs, the banks regularly implement public policies designed by the GOC. In doing so, the banks comply with an explicit legal obligation to conduct their business in accordance with the needs of the national economic and social development and under the guidance of the industrial policies of the State (62). This is compounded by additional existing rules, which direct finances into sectors designated by the government as encouraged or otherwise important (63).

60

61

62

63

| (86) | While it is acknowledged that various legal provisions refer to the need to respect normal banking behaviour and prudential rules such as the need to examine the creditworthiness of the borrower, the overwhelming evidence, including findings made in trade defence investigations, suggests that these provisions play only a secondary role in the application of the various legal instruments. |
| --- | --- |

(86)

While it is acknowledged that various legal provisions refer to the need to respect normal banking behaviour and prudential rules such as the need to examine the creditworthiness of the borrower, the overwhelming evidence, including findings made in trade defence investigations, suggests that these provisions play only a secondary role in the application of the various legal instruments.

| (87) | For example, the GOC has clarified that even private commercial banking decisions must be overseen by the CCP and remain in line with national policies. One of the State’s three overarching goals in relation to banking governance is now to strengthen the Party’s leadership in the banking and insurance sector, including in relation to operational and management issues (64). Also, the performance evaluation criteria of commercial banks have now to, notably, take into account how entities ‘serve the national development objectives and the real economy’, and in particular how they ‘serve strategic and emerging industries’. (65) |
| --- | --- |

(87)

For example, the GOC has clarified that even private commercial banking decisions must be overseen by the CCP and remain in line with national policies. One of the State’s three overarching goals in relation to banking governance is now to strengthen the Party’s leadership in the banking and insurance sector, including in relation to operational and management issues (64). Also, the performance evaluation criteria of commercial banks have now to, notably, take into account how entities ‘serve the national development objectives and the real economy’, and in particular how they ‘serve strategic and emerging industries’. (65)

64

serve the national development objectives and the real economy

serve strategic and emerging industries

65

| (88) | Specifically in the chemical fibers sector, the prioritisation of sectors on criteria related to industrial policies rather than creditworthiness of a given project is apparent from a number of policy documents, such as the Shandong Province’s 14th FYP on developing the chemical industry which provides for the following with respective to chemical industry: (66) | Increase financial support. Strengthen fiscal policy incentives, ensure the overall involvement of special funds, support chemical enterprises to accelerate technological transformation, intelligent transformation, industry transfer, relocation into parks, elimination of obsolete capacities, etc., and implement policies such as tax exemption for imported major technical equipment, value-added tax credits and refunds, additional deductions of research and development expenses, and insurance compensation for the first (set) of technical equipment. Actively guide all kinds of financial institutions and social capital to invest in the chemical industry, give play to the advantages of policy-based finance, development finance and commercial finance, and increase financial support to the key areas of chemical industry and technology.
   (67) |
| --- | --- | --- |

(88)

Specifically in the chemical fibers sector, the prioritisation of sectors on criteria related to industrial policies rather than creditworthiness of a given project is apparent from a number of policy documents, such as the Shandong Province’s 14th FYP on developing the chemical industry which provides for the following with respective to chemical industry: (66)

14th

66

Increase financial support. Strengthen fiscal policy incentives, ensure the overall involvement of special funds, support chemical enterprises to accelerate technological transformation, intelligent transformation, industry transfer, relocation into parks, elimination of obsolete capacities, etc., and implement policies such as tax exemption for imported major technical equipment, value-added tax credits and refunds, additional deductions of research and development expenses, and insurance compensation for the first (set) of technical equipment. Actively guide all kinds of financial institutions and social capital to invest in the chemical industry, give play to the advantages of policy-based finance, development finance and commercial finance, and increase financial support to the key areas of chemical industry and technology.
   (67)

Increase financial support. Strengthen fiscal policy incentives, ensure the overall involvement of special funds, support chemical enterprises to accelerate technological transformation, intelligent transformation, industry transfer, relocation into parks, elimination of obsolete capacities, etc., and implement policies such as tax exemption for imported major technical equipment, value-added tax credits and refunds, additional deductions of research and development expenses, and insurance compensation for the first (set) of technical equipment. Actively guide all kinds of financial institutions and social capital to invest in the chemical industry, give play to the advantages of policy-based finance, development finance and commercial finance, and increase financial support to the key areas of chemical industry and technology.

67

| (89) | Similarly, under the 14th FYP on the high-end development of the chemical industry (68) of the Jiangsu province, the local authorities are obliged to “[g]ive full play to the guiding role of government investment funds, flexibly expand funding channels and guide social capital investments.» (69) |
| --- | --- |

(89)

Similarly, under the 14th FYP on the high-end development of the chemical industry (68) of the Jiangsu province, the local authorities are obliged to “[g]ive full play to the guiding role of government investment funds, flexibly expand funding channels and guide social capital investments.» (69)

14th

68

ive full play to the guiding role of government investment funds, flexibly expand funding channels and guide social capital investments.

69

| (90) | These policies of financial support for strategic industries are then implemented at company level, as evidenced for instance by the agreement between Bank of China and Guxiandao on Party building. As explained on the company’s webpage, the Party building agreement, under which Guxiandao and the local branch of Bank of China would “further deepen cooperation and realize the deep integration of party building work with business development” would only represent a first stage, to be followed by Bank of China “further increas[ing] the credit extension to [Guxiandao] taking into account the actual needs of [the] enterprise[...], so as to further increase the international settlement volume“ which in turn „[...] will ensure new business development under the leadership of the party building”. (70) |
| --- | --- |

(90)

These policies of financial support for strategic industries are then implemented at company level, as evidenced for instance by the agreement between Bank of China and Guxiandao on Party building. As explained on the company’s webpage, the Party building agreement, under which Guxiandao and the local branch of Bank of China would “further deepen cooperation and realize the deep integration of party building work with business development” would only represent a first stage, to be followed by Bank of China “further increas[ing] the credit extension to [Guxiandao] taking into account the actual needs of [the] enterprise[...], so as to further increase the international settlement volume“ which in turn „[...] will ensure new business development under the leadership of the party building”. (70)

further deepen cooperation and realize the deep integration of party building work with business development

further increas

the credit extension to

taking into account the actual needs of

enterprise

so as to further increase the international settlement volume

will ensure new business development under the leadership of the party building

70

| (91) | Furthermore, bond and credit ratings are often distorted for a variety of reasons including the fact that the risk assessment is influenced by the firm’s strategic importance to the GOC and the strength of any implicit guarantee by the government. Estimates strongly suggest that Chinese credit ratings systematically correspond to lower international ratings. (71) |
| --- | --- |

(91)

Furthermore, bond and credit ratings are often distorted for a variety of reasons including the fact that the risk assessment is influenced by the firm’s strategic importance to the GOC and the strength of any implicit guarantee by the government. Estimates strongly suggest that Chinese credit ratings systematically correspond to lower international ratings. (71)

71

| (92) | This is compounded by additional existing rules, which direct finances into sectors designated by the government as encouraged or otherwise important (72). This results in a bias in favour of lending to SOEs, large well-connected private firms and firms in key industrial sectors, which implies that the availability and cost of capital is not equal for all players on the market. |
| --- | --- |

(92)

This is compounded by additional existing rules, which direct finances into sectors designated by the government as encouraged or otherwise important (72). This results in a bias in favour of lending to SOEs, large well-connected private firms and firms in key industrial sectors, which implies that the availability and cost of capital is not equal for all players on the market.

72

| (93) | Secondly, borrowing costs have been kept artificially low to stimulate investment growth. This has led to the excessive use of capital investment with ever lower returns on investment. This is illustrated by the growth in corporate leverage in the State sector despite a sharp fall in profitability, which suggests that the mechanisms at work in the banking system do not follow normal commercial responses. |
| --- | --- |

(93)

Secondly, borrowing costs have been kept artificially low to stimulate investment growth. This has led to the excessive use of capital investment with ever lower returns on investment. This is illustrated by the growth in corporate leverage in the State sector despite a sharp fall in profitability, which suggests that the mechanisms at work in the banking system do not follow normal commercial responses.

| (94) | Thirdly, although nominal interest rate liberalization was achieved in October 2015, price signals are still not the result of free market forces, but are influenced by government-induced distortions. The share of lending at or below the benchmark rate still represented at least one-third of all lending as of the end of 2018 (73). Official media in China have recently reported that the CCP called for ‘guiding the loan market interest rate downwards.’ (74) Artificially low interest rates result in under-pricing, and consequently, the excessive utilization of capital. |
| --- | --- |

(94)

Thirdly, although nominal interest rate liberalization was achieved in October 2015, price signals are still not the result of free market forces, but are influenced by government-induced distortions. The share of lending at or below the benchmark rate still represented at least one-third of all lending as of the end of 2018 (73). Official media in China have recently reported that the CCP called for ‘guiding the loan market interest rate downwards.’ (74) Artificially low interest rates result in under-pricing, and consequently, the excessive utilization of capital.

73

guiding the loan market interest rate downwards

74

| (95) | Overall credit growth in China indicates a worsening efficiency of capital allocation without any signs of credit tightening that would be expected in an undistorted market environment. As a result, non-performing loans have increased rapidly, with the GOC a number of times opting to either avoid defaults, thus creating so called ‘zombie’ companies, or to transfer the ownership of the debt (e.g. via mergers or debt-to-equity swaps), without necessarily removing the overall debt problem or addressing its root causes. |
| --- | --- |

(95)

Overall credit growth in China indicates a worsening efficiency of capital allocation without any signs of credit tightening that would be expected in an undistorted market environment. As a result, non-performing loans have increased rapidly, with the GOC a number of times opting to either avoid defaults, thus creating so called ‘zombie’ companies, or to transfer the ownership of the debt (e.g. via mergers or debt-to-equity swaps), without necessarily removing the overall debt problem or addressing its root causes.

| (96) | In essence, despite the steps that have been taken to liberalize the market, the corporate credit system in China is affected by significant distortions resulting from the continuing pervasive role of the State in the capital markets. Therefore, the substantial government intervention in the financial system leads to the market conditions being severely affected at all levels. |
| --- | --- |

(96)

In essence, despite the steps that have been taken to liberalize the market, the corporate credit system in China is affected by significant distortions resulting from the continuing pervasive role of the State in the capital markets. Therefore, the substantial government intervention in the financial system leads to the market conditions being severely affected at all levels.

3.4.4.1.9.   Systemic nature of the distortions described

Systemic nature of the distortions described

| (97) | The Commission noted that the distortions described in the Report are characteristic for the Chinese economy. The evidence available shows that the facts and features of the Chinese system as described above in Sections 3.4.4.1.1 – 3.4.4.1.5 as well as in Part I of the Report apply throughout the country and across the sectors of the economy. The same holds true for the description of the factors of production as set out above in Sections 3.4.4.1.6-3.4.4.1.8 and in Part II of the Report. |
| --- | --- |

(97)

The Commission noted that the distortions described in the Report are characteristic for the Chinese economy. The evidence available shows that the facts and features of the Chinese system as described above in Sections 3.4.4.1.1 – 3.4.4.1.5 as well as in Part I of the Report apply throughout the country and across the sectors of the economy. The same holds true for the description of the factors of production as set out above in Sections 3.4.4.1.6-3.4.4.1.8 and in Part II of the Report.

| (98) | The Commission recalls that in order to produce HTYP, a range of inputs is needed. When the producers of HTYP purchase/contract these inputs, the prices they pay (and which are recorded as their costs) are clearly exposed to the same systemic distortions mentioned before. For instance, suppliers of inputs employ labour that is subject to the distortions. They may borrow money that is subject to the distortions on the financial sector/capital allocation. In addition, they are subject to the planning system that applies across all levels of government and sectors. |
| --- | --- |

(98)

The Commission recalls that in order to produce HTYP, a range of inputs is needed. When the producers of HTYP purchase/contract these inputs, the prices they pay (and which are recorded as their costs) are clearly exposed to the same systemic distortions mentioned before. For instance, suppliers of inputs employ labour that is subject to the distortions. They may borrow money that is subject to the distortions on the financial sector/capital allocation. In addition, they are subject to the planning system that applies across all levels of government and sectors.

| (99) | As a consequence, not only the domestic sales prices of HTYP are not appropriate for use within the meaning of Article 2(6a)(a) of the basic Regulation, but all the input costs (including raw materials, energy, land, financing, labour, etc.) are also affected because their price formation is affected by substantial government intervention, as described in Parts I and II of the Report. Indeed, the government interventions described in relation to the allocation of capital, land, labour, energy and raw materials are present throughout China. This means, for instance, that an input that in itself was produced in China by combining a range of factors of production is exposed to significant distortions. The same applies for the input to the input and so forth. No evidence or argument to the contrary has been adduced by the GOC or the exporting producers in the present investigation. |
| --- | --- |

(99)

As a consequence, not only the domestic sales prices of HTYP are not appropriate for use within the meaning of Article 2(6a)(a) of the basic Regulation, but all the input costs (including raw materials, energy, land, financing, labour, etc.) are also affected because their price formation is affected by substantial government intervention, as described in Parts I and II of the Report. Indeed, the government interventions described in relation to the allocation of capital, land, labour, energy and raw materials are present throughout China. This means, for instance, that an input that in itself was produced in China by combining a range of factors of production is exposed to significant distortions. The same applies for the input to the input and so forth. No evidence or argument to the contrary has been adduced by the GOC or the exporting producers in the present investigation.

3.4.4.1.10.   Conclusion

Conclusion

| (100) | The analysis set out in sections 3.4.4.1.2. to 3.4.4.1.9., which includes an examination of all the available evidence relating to China’s intervention in its economy in general as well as in the chemical fibers sector (including the product under review) showed that prices or costs of the product under review, including the costs of raw materials, energy and labour, are not the result of free market forces because they are affected by substantial government intervention within the meaning of Article 2(6a)(b) of the basic Regulation as shown by the actual or potential impact of one or more of the relevant elements listed therein. On that basis, and in the absence of any cooperation from the GOC, the Commission concluded that it is not appropriate to use domestic prices and costs to establish normal value in this case. |
| --- | --- |

(100)

The analysis set out in sections 3.4.4.1.2. to 3.4.4.1.9., which includes an examination of all the available evidence relating to China’s intervention in its economy in general as well as in the chemical fibers sector (including the product under review) showed that prices or costs of the product under review, including the costs of raw materials, energy and labour, are not the result of free market forces because they are affected by substantial government intervention within the meaning of Article 2(6a)(b) of the basic Regulation as shown by the actual or potential impact of one or more of the relevant elements listed therein. On that basis, and in the absence of any cooperation from the GOC, the Commission concluded that it is not appropriate to use domestic prices and costs to establish normal value in this case.

| (101) | Consequently, the Commission proceeded to construct the normal value exclusively on the basis of costs of production and sale reflecting undistorted prices or benchmarks, that is, in this case, on the basis of corresponding costs of production and sale in an appropriate representative country, in accordance with Article 2(6a)(a) of the basic Regulation, as discussed in the following section. |
| --- | --- |

(101)

Consequently, the Commission proceeded to construct the normal value exclusively on the basis of costs of production and sale reflecting undistorted prices or benchmarks, that is, in this case, on the basis of corresponding costs of production and sale in an appropriate representative country, in accordance with Article 2(6a)(a) of the basic Regulation, as discussed in the following section.

3.4.4.2.   Representative country

Representative country

3.4.4.2.1.   General remarks

General remarks

| (102) | The choice of the representative country was based on the following criteria pursuant to Article 2(6a) of the basic Regulation:






  — | A level of economic development similar to China. For this purpose, the Commission used countries with a gross national income per capita similar to China on the basis of the database of the World Bank (75); |
| --- | --- | --- |

(102)

The choice of the representative country was based on the following criteria pursuant to Article 2(6a) of the basic Regulation:

—

A level of economic development similar to China. For this purpose, the Commission used countries with a gross national income per capita similar to China on the basis of the database of the World Bank (75);

75

| — | Production of the product under review in that country (76); |
| --- | --- |

—

Production of the product under review in that country (76);

76

| — | Availability of relevant public data in the representative country. |
| --- | --- |

—

Availability of relevant public data in the representative country.

| — | Where there is more than one possible representative country, preference should be given, where appropriate, to the country with an adequate level of social and environmental protection. |
| --- | --- |

—

Where there is more than one possible representative country, preference should be given, where appropriate, to the country with an adequate level of social and environmental protection.

| (103) | The Commission’s assessment on the selection of appropriate representative country can be summarised as follows. |
| --- | --- |

(103)

The Commission’s assessment on the selection of appropriate representative country can be summarised as follows.

3.4.4.2.2.   A level of economic development similar to China and production of the product under review

A level of economic development similar to China and production of the product under review

| (104) | In the review investigation period, the World Bank classified countries with a similar level of economic development as China as ‘upper-middle income’ countries on a gross national income basis. In the First Note, a sizeable production of the product under review was found to exist only in five of these countries, namely in Belarus, Brazil, Mexico, Thailand and Türkiye. |
| --- | --- |

(104)

In the review investigation period, the World Bank classified countries with a similar level of economic development as China as ‘upper-middle income’ countries on a gross national income basis. In the First Note, a sizeable production of the product under review was found to exist only in five of these countries, namely in Belarus, Brazil, Mexico, Thailand and Türkiye.

| (105) | However, in view of the fact that Belarus is not a WTO-member and not a market economy, the said country was not examined further as a potential representative country. |
| --- | --- |

(105)

However, in view of the fact that Belarus is not a WTO-member and not a market economy, the said country was not examined further as a potential representative country.

| (106) | The Commission therefore further analysed in more detail Brazil, Mexico, Thailand and Türkiye as potential representative countries. |
| --- | --- |

(106)

The Commission therefore further analysed in more detail Brazil, Mexico, Thailand and Türkiye as potential representative countries.

3.4.4.2.3.   Availability of relevant public data in the representative country

Availability of relevant public data in the representative country

| (107) | For the countries considered and mentioned above, the Commission further verified the availability of the public data, including the data on imports of factors of production as well as of financial data from the producers of the product under review in the potential representative countries. |
| --- | --- |

(107)

For the countries considered and mentioned above, the Commission further verified the availability of the public data, including the data on imports of factors of production as well as of financial data from the producers of the product under review in the potential representative countries.

| (108) | The analysis of imports of the main factors of production showed that Türkiye imported overall more significant and representative undistorted volumes of the key inputs for production of the HTYP (namely PTA, MEG and Polyethylene terephthalate (‘PET’) chips) compared to Brazil, Mexico or Thailand. |
| --- | --- |

(108)

The analysis of imports of the main factors of production showed that Türkiye imported overall more significant and representative undistorted volumes of the key inputs for production of the HTYP (namely PTA, MEG and Polyethylene terephthalate (‘PET’) chips) compared to Brazil, Mexico or Thailand.

| (109) | The analysis further showed that Turkish imports were not materially affected by imports from China or any of the countries listed in Annex I to Regulation (EU) 2015/755 of the European Parliament and of the Council (77). Furthermore, the HTYP production is significant in Türkiye and no particular trade distortions on the factors of production nor on HTYP exist in the country. Moreover, detailed and sufficiently representative data on import prices of the material inputs are readily available in the Global Trade Atlas (‘GTA’) for Türkiye. |
| --- | --- |

(109)

The analysis further showed that Turkish imports were not materially affected by imports from China or any of the countries listed in Annex I to Regulation (EU) 2015/755 of the European Parliament and of the Council (77). Furthermore, the HTYP production is significant in Türkiye and no particular trade distortions on the factors of production nor on HTYP exist in the country. Moreover, detailed and sufficiently representative data on import prices of the material inputs are readily available in the Global Trade Atlas (‘GTA’) for Türkiye.

77

| (110) | Regarding the producers in representative countries and availability of their data, the Commission identified a HTYP producer KORDSA TEKNIK TEKSTIL A.S. (‘Kordsa Türkiye’) for which consolidated 2021 financial results are available. On the other hand, the financial data for Brazilian (KORDSA BRASIL S.A.), Mexican (Monosuisse, Performance Fibers Mexico Operations and Akra Polyester SA DE CV) and Thai companies (THAI TORAY SYNTHETICS CO LTD and TEIJIN POLYESTER (THAILAND) CO LTD.) producing HTYP are not readily available for the full investigation period and are not fully compliant with the International Financial Reporting Standards (for the Thai producers). |
| --- | --- |

(110)

Regarding the producers in representative countries and availability of their data, the Commission identified a HTYP producer KORDSA TEKNIK TEKSTIL A.S. (‘Kordsa Türkiye’) for which consolidated 2021 financial results are available. On the other hand, the financial data for Brazilian (KORDSA BRASIL S.A.), Mexican (Monosuisse, Performance Fibers Mexico Operations and Akra Polyester SA DE CV) and Thai companies (THAI TORAY SYNTHETICS CO LTD and TEIJIN POLYESTER (THAILAND) CO LTD.) producing HTYP are not readily available for the full investigation period and are not fully compliant with the International Financial Reporting Standards (for the Thai producers).

| (111) | It is observed that Kordsa Türkiye does not produce solely HTYP, but approximately 86 % of its 2021 revenues were in the segment covering HTYP (78). The Commission noted in this respect that if no financial information is readily available specifically and only in relation to the product under review (which is nearly always the case), the Commission seeks the closest readily available proxy, including consolidated information of producer(s) active, among others in the business covering the product under review. In these circumstances, the consolidated SG&A and profit identified for Kordsa Türkiye are therefore deemed sufficiently representative to be applied for the purposes of the present investigations. |
| --- | --- |

(111)

It is observed that Kordsa Türkiye does not produce solely HTYP, but approximately 86 % of its 2021 revenues were in the segment covering HTYP (78). The Commission noted in this respect that if no financial information is readily available specifically and only in relation to the product under review (which is nearly always the case), the Commission seeks the closest readily available proxy, including consolidated information of producer(s) active, among others in the business covering the product under review. In these circumstances, the consolidated SG&A and profit identified for Kordsa Türkiye are therefore deemed sufficiently representative to be applied for the purposes of the present investigations.

78

| (112) | Given the public availability of Kordsa Türkiye’s full and comprehensive annual report for 2021 (79), the Commission therefore resorted to the use of the information included therein. |
| --- | --- |

(112)

Given the public availability of Kordsa Türkiye’s full and comprehensive annual report for 2021 (79), the Commission therefore resorted to the use of the information included therein.

79

3.4.4.2.4.   Level of social and environmental protection

Level of social and environmental protection

| (113) | Having established that Türkiye was an appropriate representative country based on all of the above elements, there was no need to carry out an assessment of the level of social and environmental protection in accordance with the last sentence of Article 2(6a)(a) first indent of the basic Regulation. |
| --- | --- |

(113)

Having established that Türkiye was an appropriate representative country based on all of the above elements, there was no need to carry out an assessment of the level of social and environmental protection in accordance with the last sentence of Article 2(6a)(a) first indent of the basic Regulation.

3.4.4.2.5.   Conclusion

Conclusion

| (114) | In view of the above analysis, Türkiye met the criteria laid down in Article 2(6a)(a), first indent of the basic Regulation in order to be considered as an appropriate representative country. |
| --- | --- |

(114)

In view of the above analysis, Türkiye met the criteria laid down in Article 2(6a)(a), first indent of the basic Regulation in order to be considered as an appropriate representative country.

3.4.5.   
  Dumping margin

Dumping margin

| (115) | In the absence of cooperation from Chinese exporting producers, and thus in the absence of specific information on Chinese price the dumping margin was determined on the basis of facts available in accordance with Article 18 of the basic Regulation. |
| --- | --- |

(115)

In the absence of cooperation from Chinese exporting producers, and thus in the absence of specific information on Chinese price the dumping margin was determined on the basis of facts available in accordance with Article 18 of the basic Regulation.

| (116) | To calculate the dumping margin, the Commission would generally construct the normal value multiplying the consumption volumes for each factor of production (as provided by the applicant) by the undistorted costs per unit established in Türkiye, as outlined in Section 4.5.4, further applying the manufacturing overheads to the undistorted costs of manufacturing (see Section 4.5.9) and the SG&A and profit established for Türkiye (see Section 4.5.8). Furthermore, the export price would be determined based on the publicly available import statistics. |
| --- | --- |

(116)

To calculate the dumping margin, the Commission would generally construct the normal value multiplying the consumption volumes for each factor of production (as provided by the applicant) by the undistorted costs per unit established in Türkiye, as outlined in Section 4.5.4, further applying the manufacturing overheads to the undistorted costs of manufacturing (see Section 4.5.9) and the SG&A and profit established for Türkiye (see Section 4.5.8). Furthermore, the export price would be determined based on the publicly available import statistics.

| (117) | However, instead of relying on the information provided by the applicant and/or on import statistics in this case, in light of the interim review investigation (with high level of cooperation covering significant part of the HTYP Union imports) (80), the Commission relied on the published outcome of the said interim review investigation and dumping margins established therein (see recital (356)). |
| --- | --- |

(117)

However, instead of relying on the information provided by the applicant and/or on import statistics in this case, in light of the interim review investigation (with high level of cooperation covering significant part of the HTYP Union imports) (80), the Commission relied on the published outcome of the said interim review investigation and dumping margins established therein (see recital (356)).

80

| (118) | On this basis, the weighted average dumping margins expressed as a percentage of the CIF Union frontier price, duty unpaid, were in the range of 9,7 % to 23,7 %. It was therefore concluded that dumping continued during the review investigation period. |
| --- | --- |

(118)

On this basis, the weighted average dumping margins expressed as a percentage of the CIF Union frontier price, duty unpaid, were in the range of 9,7 % to 23,7 %. It was therefore concluded that dumping continued during the review investigation period.

3.5.   Likelihood of continuation of dumping

Likelihood of continuation of dumping

| (119) | In accordance with Article 11(2) of the basic Regulation, it was examined whether it was likely that dumping established based on Article 18 of the basic Regulation would continue should the measures lapse. |
| --- | --- |

(119)

In accordance with Article 11(2) of the basic Regulation, it was examined whether it was likely that dumping established based on Article 18 of the basic Regulation would continue should the measures lapse.

| (120) | To that end, the Chinese production capacity and spare capacity, the behaviour of Chinese exporters on other markets, the situation on the domestic market of China and the attractiveness of the Union market were considered. |
| --- | --- |

(120)

To that end, the Chinese production capacity and spare capacity, the behaviour of Chinese exporters on other markets, the situation on the domestic market of China and the attractiveness of the Union market were considered.

3.5.1.   
  Production capacity and spare capacity in China

Production capacity and spare capacity in China

| (121) | Given the lack of cooperation of the Chinese exporting producers in the expiry review, the spare capacity in China has been determined principally based on the publicly available statistical information (information extracted from Eurostat), the expiry review request, interim review request and on an independent industry report issued by a widely recognised global research and consultancy firm (81) (hereinafter ‘Wood Mac’) active, among others in the chemical sector. Reliability of the figures provided in the Wood Mac industry report was verified against and their accuracy was largely confirmed by the findings from the previous HTYP expiry review investigation (82) (‘2017 expiry review’). |
| --- | --- |

(121)

Given the lack of cooperation of the Chinese exporting producers in the expiry review, the spare capacity in China has been determined principally based on the publicly available statistical information (information extracted from Eurostat), the expiry review request, interim review request and on an independent industry report issued by a widely recognised global research and consultancy firm (81) (hereinafter ‘Wood Mac’) active, among others in the chemical sector. Reliability of the figures provided in the Wood Mac industry report was verified against and their accuracy was largely confirmed by the findings from the previous HTYP expiry review investigation (82) (‘2017 expiry review’).

81

Wood Mac

82

| (122) | The Commission performed a detailed spare capacity calculation, taking into account the production capacity of Chinese producers subject to measures, their production volumes, their exports to other countries and domestic consumption. |
| --- | --- |

(122)

The Commission performed a detailed spare capacity calculation, taking into account the production capacity of Chinese producers subject to measures, their production volumes, their exports to other countries and domestic consumption.

| (123) | While in 2018, the production capacity was around [2 126 000 – 2 716 000] tonnes (consistent with the capacity in 2015 as outlined in the 2017 expiry review), it rose to [2 508 000 – 3 205 000] tonnes in the RIP. In fact, HTYP capacity of Chinese producers subject to measures in the RIP has superseded the worldwide HTYP consumption in the same period. Such sharp increase in production capacity is however coupled with a stagnant production, which oscillated at around [1 187 000 – 1 746 000] tonnes in the period 2018-2021, production volume being comparable to the review investigation period from the 2017 expiry review. At the same time the domestic consumption in the period 2018-RIP was stable, at around [1 048 000 –1 566 000] tonnes, moving in the same range as in 2015. |
| --- | --- |

(123)

While in 2018, the production capacity was around [2 126 000 – 2 716 000] tonnes (consistent with the capacity in 2015 as outlined in the 2017 expiry review), it rose to [2 508 000 – 3 205 000] tonnes in the RIP. In fact, HTYP capacity of Chinese producers subject to measures in the RIP has superseded the worldwide HTYP consumption in the same period. Such sharp increase in production capacity is however coupled with a stagnant production, which oscillated at around [1 187 000 – 1 746 000] tonnes in the period 2018-2021, production volume being comparable to the review investigation period from the 2017 expiry review. At the same time the domestic consumption in the period 2018-RIP was stable, at around [1 048 000 –1 566 000] tonnes, moving in the same range as in 2015.

| (124) | Concerning the Chinese exports of HTYP, in the light of the Chinese export statistics, exports grew from 458 246 tonnes in 2018 to 514 141 tonnes in RIP. Compared to the increase of the production capacity, this modest rise had a negligible, if any effect on the ability to absorb the massive Chinese production capacity. |
| --- | --- |

(124)

Concerning the Chinese exports of HTYP, in the light of the Chinese export statistics, exports grew from 458 246 tonnes in 2018 to 514 141 tonnes in RIP. Compared to the increase of the production capacity, this modest rise had a negligible, if any effect on the ability to absorb the massive Chinese production capacity.

| (125) | As a result, the stagnant levels of domestic consumption and production in China and the modest growth in exports coupled with a sharp rise of the production capacity led to an increase of already enormous spare capacities of the Chinese HTYP producers. |
| --- | --- |

(125)

As a result, the stagnant levels of domestic consumption and production in China and the modest growth in exports coupled with a sharp rise of the production capacity led to an increase of already enormous spare capacities of the Chinese HTYP producers.

| (126) | More specifically and in terms of magnitude, the spare capacity of the Chinese HTYP producers subject to measures was between [1,3 – 1,5] million tonnes in RIP, which corresponds to around 6 times the 2021 Union HTYP consumption and around 12 times the production volumes of Union producers. |
| --- | --- |

(126)

More specifically and in terms of magnitude, the spare capacity of the Chinese HTYP producers subject to measures was between [1,3 – 1,5] million tonnes in RIP, which corresponds to around 6 times the 2021 Union HTYP consumption and around 12 times the production volumes of Union producers.

| (127) | Furthermore, the production capacity is projected to be maintained in the period beyond 2021 up until 2025, remaining at [2 508 000- 3 210 000] tonnes. |
| --- | --- |

(127)

Furthermore, the production capacity is projected to be maintained in the period beyond 2021 up until 2025, remaining at [2 508 000- 3 210 000] tonnes.

| (128) | Therefore, the Commission concluded that compared to the size of the Union market, Chinese producers dispose of vast overcapacity, which is unlikely to be absorbed by domestic consumption or by exports to other third countries. If only portion of these capacities was fully directed to the Union market, significant volumes would be exported to the Union. |
| --- | --- |

(128)

Therefore, the Commission concluded that compared to the size of the Union market, Chinese producers dispose of vast overcapacity, which is unlikely to be absorbed by domestic consumption or by exports to other third countries. If only portion of these capacities was fully directed to the Union market, significant volumes would be exported to the Union.

3.5.2.   
  Attractiveness of the Union market

Attractiveness of the Union market

| (129) | The Union market has been consistently considered by China among the most attractive export markets, representing the first export destination in the RIP, with or without the exports not subject to the measures currently in place. Not only were the Chinese exports (subject to measures) to the Union constantly high between 2018-RIP, accounting in total for over 25 % of the market share in the Union; in fact, they almost doubled for the Chinese exports subject to measures between the RIP of the original investigation and 2021. Moreover on the global scale, the sales to the Union represented also nearly 25 % (83) of the total Chinese HTYP exports. |
| --- | --- |

(129)

The Union market has been consistently considered by China among the most attractive export markets, representing the first export destination in the RIP, with or without the exports not subject to the measures currently in place. Not only were the Chinese exports (subject to measures) to the Union constantly high between 2018-RIP, accounting in total for over 25 % of the market share in the Union; in fact, they almost doubled for the Chinese exports subject to measures between the RIP of the original investigation and 2021. Moreover on the global scale, the sales to the Union represented also nearly 25 % (83) of the total Chinese HTYP exports.

83

| (130) | Considering individually the prices in big export destinations for Chinese HTYP, the Chinese producers decreased their export prices to the Union by more than 13 % to keep their export volume steady in the period 2018-RIP. It further follows from the statistics that, while the price in the US (second biggest export market in the RIP) has been at a similar level with the Union prices, the price on the Korean market was approximately 10 % lower than the export prices to the Union. At the same time, the export quantities to Korea rose by more than 50 % in the period 2018-2021. Such behaviour is a manifestation of aggressive pricing policies in the export markets pursued with the objective of increasing the capacity utilisation. |
| --- | --- |

(130)

Considering individually the prices in big export destinations for Chinese HTYP, the Chinese producers decreased their export prices to the Union by more than 13 % to keep their export volume steady in the period 2018-RIP. It further follows from the statistics that, while the price in the US (second biggest export market in the RIP) has been at a similar level with the Union prices, the price on the Korean market was approximately 10 % lower than the export prices to the Union. At the same time, the export quantities to Korea rose by more than 50 % in the period 2018-2021. Such behaviour is a manifestation of aggressive pricing policies in the export markets pursued with the objective of increasing the capacity utilisation.

| (131) | Furthermore, India, which was the fourth largest export market for Chinese HTYP during the RIP, imposed an anti-dumping duty (still in force) on imports of HTYP from China (84) in 2018. These trade defence measures in other export markets further increase the attractiveness of the Union market and would incentivize the Chinese exporting producers to direct their exports at the Union, if the anti-dumping measures in the Union were allowed to lapse. |
| --- | --- |

(131)

Furthermore, India, which was the fourth largest export market for Chinese HTYP during the RIP, imposed an anti-dumping duty (still in force) on imports of HTYP from China (84) in 2018. These trade defence measures in other export markets further increase the attractiveness of the Union market and would incentivize the Chinese exporting producers to direct their exports at the Union, if the anti-dumping measures in the Union were allowed to lapse.

84

| (132) | Moreover, two major Chinese HTYP industry players (85), companies Fujian Billion Polymerization Fiber Technology Industrial Co., Ltd. and Zhejiang Sanwei Material Technology Co., Ltd. have requested and were granted a new exporting producer treatment by the Commission in June 2022 (86), which further shows how attractive the Union market is for the Chinese exporting producers. |
| --- | --- |

(132)

Moreover, two major Chinese HTYP industry players (85), companies Fujian Billion Polymerization Fiber Technology Industrial Co., Ltd. and Zhejiang Sanwei Material Technology Co., Ltd. have requested and were granted a new exporting producer treatment by the Commission in June 2022 (86), which further shows how attractive the Union market is for the Chinese exporting producers.

85

86

| (133) | Therefore, it is likely that, if the measures were allowed to lapse, the Chinese exporting producers would keep engaging in aggressive pricing practices, in order to increase their (already high) market share in the Union and to direct their significant over-capacity towards the Union market. |
| --- | --- |

(133)

Therefore, it is likely that, if the measures were allowed to lapse, the Chinese exporting producers would keep engaging in aggressive pricing practices, in order to increase their (already high) market share in the Union and to direct their significant over-capacity towards the Union market.

3.6.   Conclusion on dumping and likelihood of continuation of dumping

Conclusion on dumping and likelihood of continuation of dumping

| (134) | The investigation showed that Chinese HTYP producers have been dumping during the review investigation period. |
| --- | --- |

(134)

The investigation showed that Chinese HTYP producers have been dumping during the review investigation period.

| (135) | It was further established, consistently with the 2017 expiry review that in China vast spare capacity exists in comparison with the size of the Union market. |
| --- | --- |

(135)

It was further established, consistently with the 2017 expiry review that in China vast spare capacity exists in comparison with the size of the Union market.

| (136) | Moreover, given the stagnant consumption in the Chinese market and long-standing high attractiveness of the Union market for the Chinese exporting producers, it is likely that the Chinese HTYP producers would keep entering the Union market with increasingly large quantities of HTYP at dumped prices, in the absence of the measures. |
| --- | --- |

(136)

Moreover, given the stagnant consumption in the Chinese market and long-standing high attractiveness of the Union market for the Chinese exporting producers, it is likely that the Chinese HTYP producers would keep entering the Union market with increasingly large quantities of HTYP at dumped prices, in the absence of the measures.

| (137) | Therefore, the Commission concluded that there is a likelihood of continuation of dumping should the measures lapse. |
| --- | --- |

(137)

Therefore, the Commission concluded that there is a likelihood of continuation of dumping should the measures lapse.

3.7.   Injury

Injury

3.7.1.   
  Definition of the Union industry and Union production

Definition of the Union industry and Union production

| (138) | The like product was manufactured by six producers in the Union during the period considered. They constitute the ‘Union industry’ within the meaning of Article 4(1) of the basic Regulation. |
| --- | --- |

(138)

The like product was manufactured by six producers in the Union during the period considered. They constitute the ‘Union industry’ within the meaning of Article 4(1) of the basic Regulation.

| (139) | The total Union production during the review investigation period was established at around 117 000 tonnes. The Commission established the figure on the basis of all the available information concerning the Union industry, such as figures provided by the Union producers. As indicated in recital (24), three Union producers were selected in the sample representing more than 50 % of the total Union production of the like product. |
| --- | --- |

(139)

The total Union production during the review investigation period was established at around 117 000 tonnes. The Commission established the figure on the basis of all the available information concerning the Union industry, such as figures provided by the Union producers. As indicated in recital (24), three Union producers were selected in the sample representing more than 50 % of the total Union production of the like product.

3.7.2.   
  Union consumption

Union consumption

| (140) | The Commission established the Union consumption on the basis of the sales volume of the Union industry on the Union market, plus the volume of all imports of HTYP. Since imports of HTYP from China were subject to measures during the period considered, the Commission used the statistics collected pursuant to Article 14(6) (87) of the basic Regulation (‘Article 14(6) database’) to establish the volume and average prices of imports from this country during the period considered, as it contained sufficiently detailed information at the level of the 10-digit TARIC codes and TARIC additional codes per company. |
| --- | --- |

(140)

The Commission established the Union consumption on the basis of the sales volume of the Union industry on the Union market, plus the volume of all imports of HTYP. Since imports of HTYP from China were subject to measures during the period considered, the Commission used the statistics collected pursuant to Article 14(6) (87) of the basic Regulation (‘Article 14(6) database’) to establish the volume and average prices of imports from this country during the period considered, as it contained sufficiently detailed information at the level of the 10-digit TARIC codes and TARIC additional codes per company.

87

| (141) | Union consumption developed as follows:

  Table 1


  Union consumption (tonnes) | 2018 | 2019 | 2020 | Review Investigation Period |
| --- | --- | --- | --- | --- | --- |
| Total Union consumption | 244 112 | 228 168 | 208 516 | 253 039 |
| Index | 100 | 93 | 85 | 104 |
| Captive market | 16 046 | 13 911 | 16 563 | 22 322 |
| Index | 100 | 87 | 103 | 139 |
| Free market | 228 065 | 214 256 | 191 953 | 230 717 |
| Index | 100 | 94 | 84 | 101 |
| Source: | Verified data provided by the Union industry and verified questionnaire replies of the sampled Union producers, Eurostat and Article 14(6) database. |

(141)

Union consumption developed as follows:

Table 1

Table 1

Union consumption (tonnes)

Union consumption (tonnes)

2018

2019

2020

Review Investigation Period

Total Union consumption

244 112

228 168

208 516

253 039

Index

Index

100

100

93

93

85

85

104

104

Captive market

16 046

13 911

16 563

22 322

Index

Index

100

100

87

87

103

103

139

139

Free market

228 065

214 256

191 953

230 717

Index

Index

100

100

94

94

84

84

101

101

Source:

Source:

Verified data provided by the Union industry and verified questionnaire replies of the sampled Union producers, Eurostat and Article 14(6) database.

| (142) | The Union free market consumption within the period considered first decreased by 6 percentage points from 2018 until 2019, followed by a steep decrease of 10 percentage points due to COVID in 2020. However, consumption then recovered and in the RIP was 1 percentage point higher than in 2018. |
| --- | --- |

(142)

The Union free market consumption within the period considered first decreased by 6 percentage points from 2018 until 2019, followed by a steep decrease of 10 percentage points due to COVID in 2020. However, consumption then recovered and in the RIP was 1 percentage point higher than in 2018.

3.7.2.1.   Volume and market share of the imports from the country concerned

Volume and market share of the imports from the country concerned

| (143) | The Commission established the volume of imports as well as the market share of the imports on the basis of the import statistics from the country concerned of Article 14(6) database which provides data per 10-digit TARIC code and per exporting producer (TARIC additional code). |
| --- | --- |

(143)

The Commission established the volume of imports as well as the market share of the imports on the basis of the import statistics from the country concerned of Article 14(6) database which provides data per 10-digit TARIC code and per exporting producer (TARIC additional code).

| (144) | Imports into the Union from the country concerned developed as follows for the exporters currently subject to duties:

  Table 2


  Import volume (tonnes) and market share | 2018 | 2019 | 2020 | Review Investigation Period |
| --- | --- | --- | --- | --- | --- |
| Volume of imports from exporters currently subject to duties (tonnes) | [58 000 – 63 000 ] (88) | [59 000 – 64 000 ] | [58 000 – 63 000 ] | [69 000 – 74 000 ] |
| Index | 100 | 101 | 99 | 117 |
| Market share | [25  % -30  %] | [27  % –32  %] | [30  % –35  %] | [29  % –34  %] |
| Index | 100 | 107 | 118 | 115 |
| Source: | Article 14(6) database. |

(144)

Imports into the Union from the country concerned developed as follows for the exporters currently subject to duties:

Table 2

Table 2

Import volume (tonnes) and market share

Import volume (tonnes) and market share

2018

2019

2020

Review Investigation Period

Volume of imports from exporters currently subject to duties (tonnes)

[58 000 – 63 000 ] (88)

88

[59 000 – 64 000 ]

[58 000 – 63 000 ]

[69 000 – 74 000 ]

Index

Index

100

100

101

101

99

99

117

117

Market share

[25  % -30  %]

[27  % –32  %]

[30  % –35  %]

[29  % –34  %]

Index

Index

100

100

107

107

118

118

115

115

Source:

Source:

Article 14(6) database.

| (145) | The Chinese exporters currently subject to the duties under review increased their export volume during the period considered by 17 %. The temporary decline in export volume in 2020 is linked to the lower consumption in that year. Nevertheless, these exporters were able to further extend their market share over the period concerned by 4 percentage points. The slight decrease in market share from 2020 to the RIP can be explained by the shortage of transport containers for shippings from China and the connected steep increase in transport costs for these shippings. |
| --- | --- |

(145)

The Chinese exporters currently subject to the duties under review increased their export volume during the period considered by 17 %. The temporary decline in export volume in 2020 is linked to the lower consumption in that year. Nevertheless, these exporters were able to further extend their market share over the period concerned by 4 percentage points. The slight decrease in market share from 2020 to the RIP can be explained by the shortage of transport containers for shippings from China and the connected steep increase in transport costs for these shippings.

3.7.2.2.   Prices of the imports from the country concerned: price undercutting and price suppression

Prices of the imports from the country concerned: price undercutting and price suppression

| (146) | In the absence of cooperation of exporting producers in the expiry review, the Commission established the prices of imports on the basis of the import statistics of the Article 14(6) database. Price undercutting of the imports was established on the basis of the comparison of the figures in the Article 14(6) database with the verified prices of the sampled Union producers. |
| --- | --- |

(146)

In the absence of cooperation of exporting producers in the expiry review, the Commission established the prices of imports on the basis of the import statistics of the Article 14(6) database. Price undercutting of the imports was established on the basis of the comparison of the figures in the Article 14(6) database with the verified prices of the sampled Union producers.

| (147) | The weighted average price of imports into the Union from the country concerned developed as follows for the exporters currently subject to duties as well as in total for all exporters:

  Table 3


  Import prices (EUR/tonne) | 2018 | 2019 | 2020 | Review Investigation Period |
| --- | --- | --- | --- | --- | --- |
| China (exporters currently subject to duties) | 1 655 | 1 531 | 1 195 | 1 440 |
| Index | 100 | 92 | 72 | 87 |
| Source: | Article 14(6) database. |

(147)

The weighted average price of imports into the Union from the country concerned developed as follows for the exporters currently subject to duties as well as in total for all exporters:

Table 3

Table 3

Import prices (EUR/tonne)

Import prices (EUR/tonne)

2018

2019

2020

Review Investigation Period

China (exporters currently subject to duties)

1 655

1 531

1 195

1 440

Index

Index

100

100

92

92

72

72

87

87

Source:

Source:

Article 14(6) database.

| (148) | The import price of the Chinese exporters currently subject to duties was volatile, decreasing by 28 % to a price of 1 195 EUR/ton in 2020 and then increasing by 15 percentage points in the RIP. Despite the price recovery in the RIP to 1 440 EUR/ton, this still shows an overall decrease of 13 % throughout the period considered. While the general decreasing price trend is linked to the strategy of gaining market shares, the increase in the RIP was caused by increased transport costs and a high demand in the RIP. |
| --- | --- |

(148)

The import price of the Chinese exporters currently subject to duties was volatile, decreasing by 28 % to a price of 1 195 EUR/ton in 2020 and then increasing by 15 percentage points in the RIP. Despite the price recovery in the RIP to 1 440 EUR/ton, this still shows an overall decrease of 13 % throughout the period considered. While the general decreasing price trend is linked to the strategy of gaining market shares, the increase in the RIP was caused by increased transport costs and a high demand in the RIP.

| (149) | The Commission determined the price undercutting during the RIP by comparing:






  (a) | the weighted average sales prices per product type of the three sampled Union producers charged to unrelated customers on the Union market, adjusted to an ex-works level; and |
| --- | --- | --- |

(149)

The Commission determined the price undercutting during the RIP by comparing:

(a)

the weighted average sales prices per product type of the three sampled Union producers charged to unrelated customers on the Union market, adjusted to an ex-works level; and

| (b) | the corresponding weighted average prices per product type of the Chinese imports. Since in the expiry review there was no cooperation, the Commission used the best facts available. Since in the parallel interim review there was cooperation, the prices from the sampled Chinese producers in that procedure to the first independent customer on the Union market, established on a Cost, Insurance, Freight (CIF) basis, including the anti-dumping duty, with appropriate adjustments for customs duties and post-importation costs, were taken as facts available. |
| --- | --- |

(b)

the corresponding weighted average prices per product type of the Chinese imports. Since in the expiry review there was no cooperation, the Commission used the best facts available. Since in the parallel interim review there was cooperation, the prices from the sampled Chinese producers in that procedure to the first independent customer on the Union market, established on a Cost, Insurance, Freight (CIF) basis, including the anti-dumping duty, with appropriate adjustments for customs duties and post-importation costs, were taken as facts available.

| (c) | The price comparison was made on a type-by-type basis for transactions at the same level of trade, duly adjusted where necessary, and after deduction of rebates and discounts. The result of the comparison was expressed as a percentage of the sampled Union producers’ turnover during the review investigation period. It showed a weighted average undercutting margin of 26 % by the imports from the country concerned, done by the exporters currently subject to duties, on the Union market. Without the anti-dumping duties, the undercutting amounted to 29 %. |
| --- | --- |

(c)

The price comparison was made on a type-by-type basis for transactions at the same level of trade, duly adjusted where necessary, and after deduction of rebates and discounts. The result of the comparison was expressed as a percentage of the sampled Union producers’ turnover during the review investigation period. It showed a weighted average undercutting margin of 26 % by the imports from the country concerned, done by the exporters currently subject to duties, on the Union market. Without the anti-dumping duties, the undercutting amounted to 29 %.

| (150) | In addition, the Union industry was unable to raise its prices above the level of its cost of production because of the price pressure from the Chinese exporting producers, whose prices remained below the Union industry’s cost of production during the entire period concerned |
| --- | --- |

(150)

In addition, the Union industry was unable to raise its prices above the level of its cost of production because of the price pressure from the Chinese exporting producers, whose prices remained below the Union industry’s cost of production during the entire period concerned

3.7.3.   
  Economic situation of the Union industry

Economic situation of the Union industry

3.7.3.1.   General remarks

General remarks

| (151) | In accordance with Article 3(5) of the basic Regulation, the assessment of the economic situation of the Union industry included an evaluation of all economic indicators having a bearing on the state of the Union industry during the period considered. |
| --- | --- |

(151)

In accordance with Article 3(5) of the basic Regulation, the assessment of the economic situation of the Union industry included an evaluation of all economic indicators having a bearing on the state of the Union industry during the period considered.

| (152) | As mentioned in recital (24), sampling was used for the assessment of the economic situation of the Union industry. |
| --- | --- |

(152)

As mentioned in recital (24), sampling was used for the assessment of the economic situation of the Union industry.

| (153) | For the injury determination, the Commission distinguished between macroeconomic and microeconomic injury indicators. The Commission evaluated the macroeconomic indicators on the basis of the verified data provided by the Union industry and verified questionnaire replies of the sampled Union producers. The data related to all Union producers. The Commission evaluated the microeconomic indicators on the basis of data contained in the questionnaire replies from the sampled Union producers. The data related to the sampled Union producers. Both sets of data were found to be representative of the economic situation of the Union industry. |
| --- | --- |

(153)

For the injury determination, the Commission distinguished between macroeconomic and microeconomic injury indicators. The Commission evaluated the macroeconomic indicators on the basis of the verified data provided by the Union industry and verified questionnaire replies of the sampled Union producers. The data related to all Union producers. The Commission evaluated the microeconomic indicators on the basis of data contained in the questionnaire replies from the sampled Union producers. The data related to the sampled Union producers. Both sets of data were found to be representative of the economic situation of the Union industry.

| (154) | The macroeconomic indicators are: production, production capacity, capacity utilisation, sales volume, market share, growth, employment, productivity, magnitude of the dumping margin, and recovery from past dumping. |
| --- | --- |

(154)

The macroeconomic indicators are: production, production capacity, capacity utilisation, sales volume, market share, growth, employment, productivity, magnitude of the dumping margin, and recovery from past dumping.

| (155) | The microeconomic indicators are: average unit prices, unit cost, labour costs, inventories, profitability, cash flow, investments, return on investments, and ability to raise capital. |
| --- | --- |

(155)

The microeconomic indicators are: average unit prices, unit cost, labour costs, inventories, profitability, cash flow, investments, return on investments, and ability to raise capital.

3.7.3.2.   Macroeconomic indicators

Macroeconomic indicators

3.7.3.2.1.   Production, production capacity and capacity utilisation

Production, production capacity and capacity utilisation

| (156) | The total Union production, production capacity and capacity utilisation developed over the period considered as follows:

  Table 4


  Production, production capacity and capacity utilisation | 2018 | 2019 | 2020 | Review Investigation Period |
| --- | --- | --- | --- | --- | --- |
| Production volume (tonnes) | 104 834 | 100 373 | 90 470 | 116 803 |
| Index | 100 | 96 | 86 | 111 |
| Production capacity (tonnes) | 128 826 | 133 544 | 134 426 | 133 517 |
| Index | 100 | 104 | 104 | 104 |
| Capacity utilisation | 81  % | 75  % | 67  % | 87  % |
| Index | 100 | 92 | 83 | 108 |
| Source: | Verified data provided by the Union industry and verified questionnaire replies of the sampled Union producers. |

(156)

The total Union production, production capacity and capacity utilisation developed over the period considered as follows:

Table 4

Table 4

Production, production capacity and capacity utilisation

Production, production capacity and capacity utilisation

2018

2019

2020

Review Investigation Period

Production volume (tonnes)

104 834

100 373

90 470

116 803

Index

Index

100

100

96

96

86

86

111

111

Production capacity (tonnes)

128 826

133 544

134 426

133 517

Index

Index

100

100

104

104

104

104

104

104

Capacity utilisation

81  %

75  %

67  %

87  %

Index

Index

100

100

92

92

83

83

108

108

Source:

Source:

Verified data provided by the Union industry and verified questionnaire replies of the sampled Union producers.

| (157) | The production volume first decreased by 14 % from 2018 to 2020 and then increased by 25 percentage points from 2020 to the RIP, showing an overall increase of 11 % over the period considered. The capacity utilisation decreased from 2018 to 2020 by 17 %, but increased overall 8 % over the period considered. |
| --- | --- |

(157)

The production volume first decreased by 14 % from 2018 to 2020 and then increased by 25 percentage points from 2020 to the RIP, showing an overall increase of 11 % over the period considered. The capacity utilisation decreased from 2018 to 2020 by 17 %, but increased overall 8 % over the period considered.

3.7.3.2.2.   Sales volume and market share

Sales volume and market share

| (158) | The Union industry’s sales volume and market share developed over the period considered as follows:

  Table 5


  Sales volume and market share (tonnes) | 2018 | 2019 | 2020 | Review Investigation Period |
| --- | --- | --- | --- | --- | --- |
| Sales volume on the Union market (tonnes) | 70 753 | 64 150 | 59 880 | 67 335 |
| Index | 100 | 91 | 85 | 95 |
| Market share | 31  % | 30  % | 31  % | 29  % |
| Source: | Verified data provided by the Union industry and verified questionnaire replies of the sampled Union producers. |

(158)

The Union industry’s sales volume and market share developed over the period considered as follows:

Table 5

Table 5

Sales volume and market share (tonnes)

Sales volume and market share (tonnes)

2018

2019

2020

Review Investigation Period

Sales volume on the Union market (tonnes)

70 753

64 150

59 880

67 335

Index

Index

100

100

91

91

85

85

95

95

Market share

31  %

30  %

31  %

29  %

Source:

Source:

Verified data provided by the Union industry and verified questionnaire replies of the sampled Union producers.

| (159) | Total sales volume of the Union industry in the Union market decreased by 5 % during the period considered. The Union industry’s market share decreased by 2 percentage points during the period considered. The market share shows a declining trend over the period considered, interrupted by an intervening upward trend in 2020, which can be explained by the COVID-pandemic and the container shortage in 2020, which made shipping from East Asian countries more difficult. |
| --- | --- |

(159)

Total sales volume of the Union industry in the Union market decreased by 5 % during the period considered. The Union industry’s market share decreased by 2 percentage points during the period considered. The market share shows a declining trend over the period considered, interrupted by an intervening upward trend in 2020, which can be explained by the COVID-pandemic and the container shortage in 2020, which made shipping from East Asian countries more difficult.

3.7.3.2.3.   Growth

Growth

| (160) | Between 2018 and the RIP, the Union free market consumption increased by 1 %. The sales volume of the Union industry decreased by 5 %, which translated into a loss in market share of 2 percentage points over the period considered. |
| --- | --- |

(160)

Between 2018 and the RIP, the Union free market consumption increased by 1 %. The sales volume of the Union industry decreased by 5 %, which translated into a loss in market share of 2 percentage points over the period considered.

3.7.3.2.4.   Employment and productivity

Employment and productivity

| (161) | Employment and productivity developed over the period considered as follows:

  Table 6


  Employment and productivity | 2018 | 2019 | 2020 | Review Investigation Period |
| --- | --- | --- | --- | --- | --- |
| Number of employees | 1 024 | 1 014 | 993 | 1 034 |
| Index | 100 | 99 | 97 | 101 |
| Productivity (tonnes/employee) | 102 | 99 | 91 | 113 |
| Index | 100 | 97 | 89 | 110 |
| Source: | Verified data provided by the Union industry and verified questionnaire replies of the sampled Union producers. |

(161)

Employment and productivity developed over the period considered as follows:

Table 6

Table 6

Employment and productivity

Employment and productivity

2018

2019

2020

Review Investigation Period

Number of employees

1 024

1 014

993

1 034

Index

Index

100

100

99

99

97

97

101

101

Productivity (tonnes/employee)

102

99

91

113

Index

Index

100

100

97

97

89

89

110

110

Source:

Source:

Verified data provided by the Union industry and verified questionnaire replies of the sampled Union producers.

| (162) | Due to the recovery of the demand in the RIP, the employment of the Union industry increased by 1 % during the period considered, despite showing a negative trend from 2018 to 2020. Similarly, the productivity also decreased from 2018 to 2020. However, for the entire period considered, productivity shows an increase. |
| --- | --- |

(162)

Due to the recovery of the demand in the RIP, the employment of the Union industry increased by 1 % during the period considered, despite showing a negative trend from 2018 to 2020. Similarly, the productivity also decreased from 2018 to 2020. However, for the entire period considered, productivity shows an increase.

3.7.3.2.5.   Magnitude of the dumping margin and recovery from past dumping

Magnitude of the dumping margin and recovery from past dumping

| (163) | All dumping margins were above the de minimis level. The impact of the magnitude of the actual margins of dumping on the Union industry was substantial, given the volume and prices of imports from Chinese exporters, currently subject to duties. |
| --- | --- |

(163)

All dumping margins were above the de minimis level. The impact of the magnitude of the actual margins of dumping on the Union industry was substantial, given the volume and prices of imports from Chinese exporters, currently subject to duties.

de minimis

| (164) | Continuous unfair pricing by exporters from China, currently subject to duties, made it also impossible for the Union industry to recover from the past dumping practices. With an average price of 1 440 EUR/tonne their price was also 31 % lower than the import price from South Korea, 6 % lower that the import price from Vietnam and 21 % lower than the import price from Taiwan. |
| --- | --- |

(164)

Continuous unfair pricing by exporters from China, currently subject to duties, made it also impossible for the Union industry to recover from the past dumping practices. With an average price of 1 440 EUR/tonne their price was also 31 % lower than the import price from South Korea, 6 % lower that the import price from Vietnam and 21 % lower than the import price from Taiwan.

3.7.3.3.   Microeconomic indicators

Microeconomic indicators

3.7.3.3.1.   Prices and factors affecting prices

Prices and factors affecting prices

| (165) | The weighted average unit sales prices of the sampled Union producers to unrelated customers in the Union developed over the period considered as follows:

  Table 7


  Sales prices and cost of production in the Union (EUR/tonne) | 2018 | 2019 | 2020 | Review Investigation Period |
| --- | --- | --- | --- | --- | --- |
| Average unit sales price in the Union (EUR/tonne) | 2 042 | 1 974 | 1 713 | 1 957 |
| Index | 100 | 97 | 84 | 96 |
| Unit cost of production (EUR/tonne) | 2 371 | 2 357 | 2 039 | 2 246 |
| Index | 100 | 99 | 86 | 95 |
| Source: | Verified questionnaire replies of the sampled Union producers. |

(165)

The weighted average unit sales prices of the sampled Union producers to unrelated customers in the Union developed over the period considered as follows:

Table 7

Table 7

Sales prices and cost of production in the Union (EUR/tonne)

Sales prices and cost of production in the Union (EUR/tonne)

2018

2019

2020

Review Investigation Period

Average unit sales price in the Union (EUR/tonne)

2 042

1 974

1 713

1 957

Index

Index

100

100

97

97

84

84

96

96

Unit cost of production (EUR/tonne)

2 371

2 357

2 039

2 246

Index

Index

100

100

99

99

86

86

95

95

Source:

Source:

Verified questionnaire replies of the sampled Union producers.

| (166) | The Union industry’s average unit sales price to unrelated customers in the Union decreased from 2018 to 2020 by 16 % and only partially recovered 12 percentage points in the RIP reaching 1 957 EUR/tonne. The decline of the sales price is mostly linked to the pricing pressure from Chinese exports. In addition, in 2019 and 2020, the global economic slowdown has been affecting the prices of raw materials and, as a consequence, of industrial polyester yarn downwards. |
| --- | --- |

(166)

The Union industry’s average unit sales price to unrelated customers in the Union decreased from 2018 to 2020 by 16 % and only partially recovered 12 percentage points in the RIP reaching 1 957 EUR/tonne. The decline of the sales price is mostly linked to the pricing pressure from Chinese exports. In addition, in 2019 and 2020, the global economic slowdown has been affecting the prices of raw materials and, as a consequence, of industrial polyester yarn downwards.

| (167) | The cost of production developed in a similar trend, partially due to decreasing raw material prices during the global economic slowdown in 2019 and 2020 and partially due to rationalisations like reducing staff during these years. In 2019 and 2020, the Unit cost decreased by 1 percentage point and 13 percentage points respectively. However, the prices decreased at a higher rate of 16 percentage points over these two years. This shows that the Union industry could not benefit from these cost decreases. In the RIP, unit costs increased by 9 percentage points whereas the sales price increased by 12 percentage points. However, compared to the beginning of the period considered the prices decreased almost at the same percentage as the unit costs, showing that the prices were suppressed. The Union industry was not able to benefit from the cost decrease, it could not raise prices, and could not even maintain prices at their original level. |
| --- | --- |

(167)

The cost of production developed in a similar trend, partially due to decreasing raw material prices during the global economic slowdown in 2019 and 2020 and partially due to rationalisations like reducing staff during these years. In 2019 and 2020, the Unit cost decreased by 1 percentage point and 13 percentage points respectively. However, the prices decreased at a higher rate of 16 percentage points over these two years. This shows that the Union industry could not benefit from these cost decreases. In the RIP, unit costs increased by 9 percentage points whereas the sales price increased by 12 percentage points. However, compared to the beginning of the period considered the prices decreased almost at the same percentage as the unit costs, showing that the prices were suppressed. The Union industry was not able to benefit from the cost decrease, it could not raise prices, and could not even maintain prices at their original level.

3.7.3.3.2.   Labour costs

Labour costs

| (168) | The average labour costs of the sampled Union producers developed over the period considered as follows:

  Table 8


  Average labour costs per employee | 2018 | 2019 | 2020 | Review Investigation Period |
| --- | --- | --- | --- | --- | --- |
| Average labour costs per employee (EUR) | 48 153 | 49 499 | 46 821 | 51 680 |
| Index | 100 | 103 | 97 | 107 |
| Source: | Verified questionnaire replies of the sampled Union producers. |

(168)

The average labour costs of the sampled Union producers developed over the period considered as follows:

Table 8

Table 8

Average labour costs per employee

Average labour costs per employee

2018

2019

2020

Review Investigation Period

Average labour costs per employee (EUR)

48 153

49 499

46 821

51 680

Index

Index

100

100

103

103

97

97

107

107

Source:

Source:

Verified questionnaire replies of the sampled Union producers.

| (169) | The average labour costs per employee continuously increased, over the period considered by 7 %. This trend was only interrupted in 2020, partially due to rationalisations and partially due to COVID-pandemic specific measures like short-time work. |
| --- | --- |

(169)

The average labour costs per employee continuously increased, over the period considered by 7 %. This trend was only interrupted in 2020, partially due to rationalisations and partially due to COVID-pandemic specific measures like short-time work.

3.7.3.3.3.   Inventories

Inventories

| (170) | Stock levels of the sampled Union producers developed over the period considered as follows:

  Table 9


  Inventories | 2018 | 2019 | 2020 | Review Investigation Period |
| --- | --- | --- | --- | --- | --- |
| Closing stocks (tonnes) | 7 721 | 8 052 | 6 510 | 6 991 |
| Index | 100 | 104 | 84 | 91 |
| Closing stocks as a percentage of production | 14 | 16 | 13 | 12 |
| Source: | Verified questionnaire replies of the sampled Union producers. |

(170)

Stock levels of the sampled Union producers developed over the period considered as follows:

Table 9

Table 9

Inventories

Inventories

2018

2019

2020

Review Investigation Period

Closing stocks (tonnes)

7 721

8 052

6 510

6 991

Index

Index

100

100

104

104

84

84

91

91

Closing stocks as a percentage of production

14

16

13

12

Source:

Source:

Verified questionnaire replies of the sampled Union producers.

| (171) | The level of closing stocks of the sampled Union producers decreased by 9 % over the period considered. In the RIP, the level of stocks represented around 12 % of their production. |
| --- | --- |

(171)

The level of closing stocks of the sampled Union producers decreased by 9 % over the period considered. In the RIP, the level of stocks represented around 12 % of their production.

3.7.3.3.4.   Profitability, cash flow, investments, return on investments and ability to raise capital

Profitability, cash flow, investments, return on investments and ability to raise capital

| (172) | Profitability, cash flow, investments and return on investments of the sampled Union producers developed over the period considered as follows:

  Table 10


  Profitability, cash flow, investments and return on investments | 2018 | 2019 | 2020 | Review Investigation Period |
| --- | --- | --- | --- | --- | --- |
| Profitability of sales in the Union to unrelated customers (% of sales turnover) | -10 | -15 | -17 | -8 |
| Index | 100 | 153 | 174 | 86 |
| Cash flow (EUR) | -8 902 195 | -4 318 803 | -2 067 021 | -5 374 726 |
| Index | 100 | 49 | 23 | 60 |
| Investments (EUR) | 12 926 148 | 7 405 795 | 2 087 298 | 4 495 812 |
| Index | 100 | 57 | 16 | 35 |
| Return on investments | -4  % | -6  % | -6  % | -4  % |
| Index | 100 | 158 | 154 | 101 |
| Source: | Verified questionnaire replies of the sampled Union producers. |

(172)

Profitability, cash flow, investments and return on investments of the sampled Union producers developed over the period considered as follows:

Table 10

Table 10

Profitability, cash flow, investments and return on investments

Profitability, cash flow, investments and return on investments

2018

2019

2020

Review Investigation Period

Profitability of sales in the Union to unrelated customers (% of sales turnover)

-10

-15

-17

-8

Index

Index

100

100

153

153

174

174

86

86

Cash flow (EUR)

-8 902 195

-4 318 803

-2 067 021

-5 374 726

Index

Index

100

100

49

49

23

23

60

60

Investments (EUR)

12 926 148

7 405 795

2 087 298

4 495 812

Index

Index

100

100

57

57

16

16

35

35

Return on investments

-4  %

-6  %

-6  %

-4  %

Index

Index

100

100

158

158

154

154

101

101

Source:

Source:

Verified questionnaire replies of the sampled Union producers.

| (173) | The Commission established the profitability of the sampled Union producers by expressing the pre-tax net profit of the sales of the like product to unrelated customers in the Union as a percentage of the turnover of those sales. The profitability of the Union industry was negative throughout the period considered. It started at -10 % in 2018 and extended the loss until 2020 at -17 %. In the RIP, it could slightly improve to -8 % due to high demand. |
| --- | --- |

(173)

The Commission established the profitability of the sampled Union producers by expressing the pre-tax net profit of the sales of the like product to unrelated customers in the Union as a percentage of the turnover of those sales. The profitability of the Union industry was negative throughout the period considered. It started at -10 % in 2018 and extended the loss until 2020 at -17 %. In the RIP, it could slightly improve to -8 % due to high demand.

| (174) | The net cash flow is the ability of the Union producers to self-finance their activities. The trend in net cash flow was negative throughout the period considered. While it gradually improved from 2018 to 2020, it dropped again in the RIP. While it showed a 40 % improvement over the period considered it continued to be negative. Consequently, the improvement in cash flow does not indicate a stabilizing of the financial situation of the Union industry as it still remains negative. |
| --- | --- |

(174)

The net cash flow is the ability of the Union producers to self-finance their activities. The trend in net cash flow was negative throughout the period considered. While it gradually improved from 2018 to 2020, it dropped again in the RIP. While it showed a 40 % improvement over the period considered it continued to be negative. Consequently, the improvement in cash flow does not indicate a stabilizing of the financial situation of the Union industry as it still remains negative.

| (175) | Investments decreased by 65 % over the period considered. Investments related to compliance improvements in relation to health, safety and environmental requirements, increase in the capacity and effectiveness of the production plants. While in 2018, investments in a capacity increase were possible, in the following years this was no longer possible. |
| --- | --- |

(175)

Investments decreased by 65 % over the period considered. Investments related to compliance improvements in relation to health, safety and environmental requirements, increase in the capacity and effectiveness of the production plants. While in 2018, investments in a capacity increase were possible, in the following years this was no longer possible.

| (176) | The return on investments is the profit in percentage of the net book value of investments. The return on investment from the production and sale of the like product followed similar trend as the profitability. It dropped from 2018 to 2020 and then in the RIP returned to a level closer to 2018. It stayed negative throughout the entire period considered. Consequently, the return on investment indicates a negative financial situation of the Union industry over the entire period considered. |
| --- | --- |

(176)

The return on investments is the profit in percentage of the net book value of investments. The return on investment from the production and sale of the like product followed similar trend as the profitability. It dropped from 2018 to 2020 and then in the RIP returned to a level closer to 2018. It stayed negative throughout the entire period considered. Consequently, the return on investment indicates a negative financial situation of the Union industry over the entire period considered.

3.7.4.   
  Conclusion on the situation of the Union industry

Conclusion on the situation of the Union industry

| (177) | On a macro level, the investigation showed that the situation of the Union industry did not improve and even the increased demand in the RIP did not lead to higher sales on the EU market than in the beginning of the period considered. Despite investments into a capacity increase, the Union was not able to even maintain its market share. |
| --- | --- |

(177)

On a macro level, the investigation showed that the situation of the Union industry did not improve and even the increased demand in the RIP did not lead to higher sales on the EU market than in the beginning of the period considered. Despite investments into a capacity increase, the Union was not able to even maintain its market share.

| (178) | The investigation has also shown that the situation of the industry on a micro level was not reaching a sustainable level and the industry incurred losses in all years of the period considered, even in the RIP in which the demand had recovered. The economic situation of the Union industry was thus injurious despite the existence of anti-dumping measures at the current levels on the imports of the product under review from the Chinese exporters currently subject to duties. |
| --- | --- |

(178)

The investigation has also shown that the situation of the industry on a micro level was not reaching a sustainable level and the industry incurred losses in all years of the period considered, even in the RIP in which the demand had recovered. The economic situation of the Union industry was thus injurious despite the existence of anti-dumping measures at the current levels on the imports of the product under review from the Chinese exporters currently subject to duties.

| (179) | The imported volumes of the Chinese exporters currently subject to duties over the period considered increased by 17 % while their price further dropped by 13 %. |
| --- | --- |

(179)

The imported volumes of the Chinese exporters currently subject to duties over the period considered increased by 17 % while their price further dropped by 13 %.

| (180) | On the basis of the above, the Commission concluded that the Union industry continued to suffer material injury within the meaning of Article 3(5) of the basic Regulation during the review investigation period. |
| --- | --- |

(180)

On the basis of the above, the Commission concluded that the Union industry continued to suffer material injury within the meaning of Article 3(5) of the basic Regulation during the review investigation period.

3.8.   Causation

Causation

3.8.1.   
  Effects of the dumped imports

Effects of the dumped imports

| (181) | During the entire period considered, the exports of the Chinese exporters currently subject to duties represented a substantial share of the imports to the EU. They even increased their market share by 4 percentage points from 27 % to 31 %. The price level of their exports decreased by 13 % over the period considered: during the RIP at 1 440 EUR/tonne it undercut the Union industries’ price by 26 %. The Chinese exporters currently subject to duties thereby suppressed the price level for the Union industry, contributing to a situation of continued losses over the period considered for the Union industry. There was a clear coincidence in time between the price pressure of these imports representing an important market share of 31 % and the injury of the Union industry. Therefore, due to the significant volume and price pressure exercised by these exports there was a genuine and substantial relationship of cause and effect between the imports of HTYP from China that were subject to the anti-dumping duties and the injury suffered by the Union industry. |
| --- | --- |

(181)

During the entire period considered, the exports of the Chinese exporters currently subject to duties represented a substantial share of the imports to the EU. They even increased their market share by 4 percentage points from 27 % to 31 %. The price level of their exports decreased by 13 % over the period considered: during the RIP at 1 440 EUR/tonne it undercut the Union industries’ price by 26 %. The Chinese exporters currently subject to duties thereby suppressed the price level for the Union industry, contributing to a situation of continued losses over the period considered for the Union industry. There was a clear coincidence in time between the price pressure of these imports representing an important market share of 31 % and the injury of the Union industry. Therefore, due to the significant volume and price pressure exercised by these exports there was a genuine and substantial relationship of cause and effect between the imports of HTYP from China that were subject to the anti-dumping duties and the injury suffered by the Union industry.

3.8.2.   
  Effects of other factors

Effects of other factors

3.8.2.1.   Imports from Chinese exporters currently not subject to duties

Imports from Chinese exporters currently not subject to duties

| (182) | Hangzhou Huachun Chemical Fiber ceased to exist in 2021. Its exports have decreased by 99 % during the period considered and were negligible (below 0,01 % of the Union market share) in the RIP. Furthermore, the export price was significantly above of the Union industry price, as well as above the cost of production of the Union industry. Therefore, these exports did not contribute to the injury in the RIP. |
| --- | --- |

(182)

Hangzhou Huachun Chemical Fiber ceased to exist in 2021. Its exports have decreased by 99 % during the period considered and were negligible (below 0,01 % of the Union market share) in the RIP. Furthermore, the export price was significantly above of the Union industry price, as well as above the cost of production of the Union industry. Therefore, these exports did not contribute to the injury in the RIP.

| (183) | Hailide’s imports into the Union from the country concerned developed as follows:

  Table 11


  Import volume (tonnes) and market share | 2018 | 2019 | 2020 | Review Investigation Period |
| --- | --- | --- | --- | --- | --- |
| Volume of imports into the Union from Hailide China (tonnes) | [50 000 – 55 000 ] | [51 000 – 56 000 ] | [43 000 – 48 000 ] | [43 000 – 48 000 ] |
| Index | 100 | 102 | 86 | 86 |
| Market share | [20  % – 25  %] | [23  % – 28  %] | [21  % – 26  %] | [18  % – 23  %] |
| Index | 100 | 109 | 102 | 85 |
| Source: | Article 14(6) database. |

(183)

Hailide’s imports into the Union from the country concerned developed as follows:

Table 11

Table 11

Import volume (tonnes) and market share

Import volume (tonnes) and market share

2018

2019

2020

Review Investigation Period

Volume of imports into the Union from Hailide China (tonnes)

[50 000 – 55 000 ]

[51 000 – 56 000 ]

[43 000 – 48 000 ]

[43 000 – 48 000 ]

Index

Index

100

100

102

102

86

86

86

86

Market share

[20  % – 25  %]

[23  % – 28  %]

[21  % – 26  %]

[18  % – 23  %]

Index

Index

100

100

109

109

102

102

85

85

Source:

Source:

Article 14(6) database.

| (184) | Hailide’s weighted average price of imports into the Union developed as follows:

  Table 12


  Import prices (EUR/tonne) | 2018 | 2019 | 2020 | Review Investigation Period |
| --- | --- | --- | --- | --- | --- |
| Hailide | [1 700 – 1 800 ] | [1 600 – 1 700 ] | [1 300 – 1 400 ] | [1 500 – 1 600 ] |
| Index | 100 | 96 | 77 | 91 |
| Source: | Article 14(6) database. |

(184)

Hailide’s weighted average price of imports into the Union developed as follows:

Table 12

Table 12

Import prices (EUR/tonne)

Import prices (EUR/tonne)

2018

2019

2020

Review Investigation Period

Hailide

[1 700 – 1 800 ]

[1 600 – 1 700 ]

[1 300 – 1 400 ]

[1 500 – 1 600 ]

Index

Index

100

100

96

96

77

77

91

91

Source:

Source:

Article 14(6) database.

| (185) | By maintaining a high export volume to the European Union during the period considered representing in the RIP a market share of [18 % – 23 %], at prices below the Union industry’s prices, Hailide has contributed to the injury of the Union Industry. Hailide sold at [1 500 – 1 600] EUR/tonne in the review investigation period, and showed an overall price decrease of 9 % throughout the period considered. |
| --- | --- |

(185)

By maintaining a high export volume to the European Union during the period considered representing in the RIP a market share of [18 % – 23 %], at prices below the Union industry’s prices, Hailide has contributed to the injury of the Union Industry. Hailide sold at [1 500 – 1 600] EUR/tonne in the review investigation period, and showed an overall price decrease of 9 % throughout the period considered.

| (186) | However, these imports did not attenuate the link found between the dumped imports from the exporters currently subject to duties and the material injury suffered by the Union industry such that this link can no longer be characterized as a genuine and substantial relationship of cause and effect. The exports of the exporters currently subject to duties represented a market share of [29 % – 34 %] on the Union market during the RIP. This high market share, coupled with low prices has such an important weight on the market, that it exercised a significant independent price pressure on the Union industry. |
| --- | --- |

(186)

However, these imports did not attenuate the link found between the dumped imports from the exporters currently subject to duties and the material injury suffered by the Union industry such that this link can no longer be characterized as a genuine and substantial relationship of cause and effect. The exports of the exporters currently subject to duties represented a market share of [29 % – 34 %] on the Union market during the RIP. This high market share, coupled with low prices has such an important weight on the market, that it exercised a significant independent price pressure on the Union industry.

| (187) | Accordingly, the effects of exports from Hailide, even if they contributed to the injury, did not materially diminish the relative importance of the dumped imports of the exporters currently subject to duties in continuing the injury. |
| --- | --- |

(187)

Accordingly, the effects of exports from Hailide, even if they contributed to the injury, did not materially diminish the relative importance of the dumped imports of the exporters currently subject to duties in continuing the injury.

3.8.2.2.   Imports from third countries

Imports from third countries

| (188) | The imports into the Union of HTYP from third countries other than China were mainly from South Korea, Vietnam and Taiwan. |
| --- | --- |

(188)

The imports into the Union of HTYP from third countries other than China were mainly from South Korea, Vietnam and Taiwan.

| (189) | The (aggregated) volume of imports into the Union as well as the market share and price trends for imports of HTYP from other third countries developed as follows:

  Table 13


  Imports from third countries











  Country | | 2018 | 2019 | 2020 | Review Investigation Period |
| --- | --- | --- | --- | --- | --- | --- |
| South Korea | Volume (tonnes) | 15 150 | 13 025 | 9 259 | 15 167 |
| | Index | 100 | 86 | 61 | 100 |
| | Market share | 7  % | 6  % | 5  % | 7  % |
| | Average price (EUR/tonne) | 2 024 | 2 051 | 1 803 | 2 077 |
| | Index | 100 | 101 | 89 | 103 |
| Vietnam | Volume (tonnes) | 500 | 129 | 776 | 12 231 |
| | Index | 100 | 26 | 155 | 2 444 |
| | Market share | 0  % | 0  % | 0  % | 5  % |
| | Average price (EUR/tonne) | 2 340 | 4 136 | 2 276 | 1 537 |
| | Index | 100 | 177 | 97 | 66 |
| Taiwan | Volume (tonnes) | 6 776 | 4 485 | 3 795 | 7 375 |
| | Index | 100 | 66 | 56 | 109 |
| | Market share | 3  % | 2  % | 2  % | 3  % |
| | Average price (EUR/tonne) | 1 874 | 1 858 | 1 636 | 1 816 |
| | Index | 100 | 99 | 87 | 97 |
| Other third countries | Volume (tonnes) | 19 759 | 15 261 | 11 917 | 11 364 |
| | Index | 100 | 77 | 60 | 58 |
| | Market share | 9  % | 7  % | 6  % | 5  % |
| | Average price (EUR/tonne) | 2 586 | 2 780 | 2 683 | 2 740 |
| | Index | 100 | 108 | 104 | 106 |
| Total of all third countries except the country concerned | Volume (tonnes) | 42 185 | 32 900 | 25 747 | 46 137 |
| | Index | 100 | 78 | 61 | 109 |
| | Market share | 18  % | 15  % | 13  % | 20  % |
| | Average price (EUR/tonne) | 2 267 | 2 371 | 2 200 | 2 055 |
| | Index | 100 | 105 | 97 | 91 |
| Source: | Eurostat. |

(189)

The (aggregated) volume of imports into the Union as well as the market share and price trends for imports of HTYP from other third countries developed as follows:

Table 13

Table 13

Imports from third countries

Imports from third countries

Country

2018

2019

2020

Review Investigation Period

South Korea

Volume (tonnes)

15 150

13 025

9 259

15 167

Index

Index

100

100

86

86

61

61

100

100

Market share

7  %

6  %

5  %

7  %

Average price (EUR/tonne)

2 024

2 051

1 803

2 077

Index

Index

100

100

101

101

89

89

103

103

Vietnam

Volume (tonnes)

500

129

776

12 231

Index

Index

100

100

26

26

155

155

2 444

2 444

Market share

0  %

0  %

0  %

5  %

Average price (EUR/tonne)

2 340

4 136

2 276

1 537

Index

Index

100

100

177

177

97

97

66

66

Taiwan

Volume (tonnes)

6 776

4 485

3 795

7 375

Index

Index

100

100

66

66

56

56

109

109

Market share

3  %

2  %

2  %

3  %

Average price (EUR/tonne)

1 874

1 858

1 636

1 816

Index

Index

100

100

99

99

87

87

97

97

Other third countries

Volume (tonnes)

19 759

15 261

11 917

11 364

Index

Index

100

100

77

77

60

60

58

58

Market share

9  %

7  %

6  %

5  %

Average price (EUR/tonne)

2 586

2 780

2 683

2 740

Index

Index

100

100

108

108

104

104

106

106

Total of all third countries except the country concerned

Volume (tonnes)

42 185

32 900

25 747

46 137

Index

Index

100

100

78

78

61

61

109

109

Market share

18  %

15  %

13  %

20  %

Average price (EUR/tonne)

2 267

2 371

2 200

2 055

Index

Index

100

100

105

105

97

97

91

91

Source:

Source:

Eurostat.

| (190) | In the RIP, 46 137 tonnes of HTYP were imported from third countries excluding China – this volume represents 20 % of the Union market. In total, their market share decreased from 2018 to 2020 from 18 % to 13 % and then increased to 20 % in the RIP. This follows the trend of EU consumption, but in a more pronounced way. The average import price from third countries excluding China increased in 2019 by 5 %, then decreased 8 percentage points in 2020 and further decreased 6 percentage points in the RIP. These imports mainly stem from South Korea (7 % of the Union Market), Vietnam (5 % of the Union market) and Taiwan (3 % of the Union market). Due to the fact that all these countries are located in East Asia, they were affected by the shipping container shortage and the resulting high shipping costs, which explains that in 2020 the market share of these third countries decreased. |
| --- | --- |

(190)

In the RIP, 46 137 tonnes of HTYP were imported from third countries excluding China – this volume represents 20 % of the Union market. In total, their market share decreased from 2018 to 2020 from 18 % to 13 % and then increased to 20 % in the RIP. This follows the trend of EU consumption, but in a more pronounced way. The average import price from third countries excluding China increased in 2019 by 5 %, then decreased 8 percentage points in 2020 and further decreased 6 percentage points in the RIP. These imports mainly stem from South Korea (7 % of the Union Market), Vietnam (5 % of the Union market) and Taiwan (3 % of the Union market). Due to the fact that all these countries are located in East Asia, they were affected by the shipping container shortage and the resulting high shipping costs, which explains that in 2020 the market share of these third countries decreased.

| (191) | Imports from all third countries together have increased their market share on the Union Market by 2 percentage points. However, the average price of all third country imports in the RIP, but also in all previous years of the period considered was substantially above the average EU sales price. Therefore, all third countries together have not contributed to the injury of the Union Industry. The Commission therefore analysed if imports from a specific third country have contributed to the injury of the Union industry. |
| --- | --- |

(191)

Imports from all third countries together have increased their market share on the Union Market by 2 percentage points. However, the average price of all third country imports in the RIP, but also in all previous years of the period considered was substantially above the average EU sales price. Therefore, all third countries together have not contributed to the injury of the Union Industry. The Commission therefore analysed if imports from a specific third country have contributed to the injury of the Union industry.

| (192) | Imports form South Korea followed the trend of the EU consumption in a more accentuated way, decreasing from 2018 to 2020 and in the RIP recovering closely above the level of 2018. The market share gradually decreased from 2018 to 2020 from 7 % to 5 % and then recovered to 7 % in the RIP. The price level of South Korean imports gradually increased over the period concerned, with the exception of 2020, which shows a price decrease that can be linked to the low demand in that year. |
| --- | --- |

(192)

Imports form South Korea followed the trend of the EU consumption in a more accentuated way, decreasing from 2018 to 2020 and in the RIP recovering closely above the level of 2018. The market share gradually decreased from 2018 to 2020 from 7 % to 5 % and then recovered to 7 % in the RIP. The price level of South Korean imports gradually increased over the period concerned, with the exception of 2020, which shows a price decrease that can be linked to the low demand in that year.

| (193) | The price level of imports from South Korea during the RIP as well as in the two preceding years was higher than the Union industry’s sales price. Due to the higher price level, the Commission concluded that imports from South Korea have not contributed to the injury. |
| --- | --- |

(193)

The price level of imports from South Korea during the RIP as well as in the two preceding years was higher than the Union industry’s sales price. Due to the higher price level, the Commission concluded that imports from South Korea have not contributed to the injury.

| (194) | Imports from Vietnam where at a very low level from 2018 until 2020 representing a market share clearly below 1 % in that period, they increased in the RIP to a quantity representing 5 % of the Union market share. This coincided with a price decrease from levels above the Union Industry’s average sales price to a price of 1 537 EUR/tonne in the RIP, which is substantially lower than the Union Industry’s sales price. |
| --- | --- |

(194)

Imports from Vietnam where at a very low level from 2018 until 2020 representing a market share clearly below 1 % in that period, they increased in the RIP to a quantity representing 5 % of the Union market share. This coincided with a price decrease from levels above the Union Industry’s average sales price to a price of 1 537 EUR/tonne in the RIP, which is substantially lower than the Union Industry’s sales price.

| (195) | However, imports to the EU from the Chinese exporters currently subject to duties in the RIP were substantially higher. They amounted to [69 000 – 74 000] tonnes, whereas imports from Vietnam only amounted to 12 231 tonnes, thereby only representing a small share of imports to the EU from China. |
| --- | --- |

(195)

However, imports to the EU from the Chinese exporters currently subject to duties in the RIP were substantially higher. They amounted to [69 000 – 74 000] tonnes, whereas imports from Vietnam only amounted to 12 231 tonnes, thereby only representing a small share of imports to the EU from China.

| (196) | Therefore, the Commission concluded that while imports from Vietnam may have contributed to the injury of the Union industry, they do not attenuate the causal link as the volume of imports from Vietnam represent only a small fraction of the exports from the Chinese exporters currently subject to duties to the Union and do not have a comparable weight to put pressure on Union industry. |
| --- | --- |

(196)

Therefore, the Commission concluded that while imports from Vietnam may have contributed to the injury of the Union industry, they do not attenuate the causal link as the volume of imports from Vietnam represent only a small fraction of the exports from the Chinese exporters currently subject to duties to the Union and do not have a comparable weight to put pressure on Union industry.

| (197) | Imports from Taiwan represented a market share of 3 % in the beginning of the period considered as well as in the RIP. While the import price of 1 816 EUR/tonne in the RIP was slightly lower than the Union Industry’s sales price, it was substantially higher than the price of the Chinese exporters currently subject to duties of 1 440 EUR/tonne. |
| --- | --- |

(197)

Imports from Taiwan represented a market share of 3 % in the beginning of the period considered as well as in the RIP. While the import price of 1 816 EUR/tonne in the RIP was slightly lower than the Union Industry’s sales price, it was substantially higher than the price of the Chinese exporters currently subject to duties of 1 440 EUR/tonne.

| (198) | Therefore, the Commission concluded that while imports from Taiwan may have contributed to the injury of the Union Industry, they do not attenuate the causal link as the volume of imports from Taiwan represent only a fraction of imports from the Chinese exporters currently subject to duties, their price was substantially above the price for imports from the Chinese exporters currently subject to duties and do not have a comparable weight to put pressure on Union industry. |
| --- | --- |

(198)

Therefore, the Commission concluded that while imports from Taiwan may have contributed to the injury of the Union Industry, they do not attenuate the causal link as the volume of imports from Taiwan represent only a fraction of imports from the Chinese exporters currently subject to duties, their price was substantially above the price for imports from the Chinese exporters currently subject to duties and do not have a comparable weight to put pressure on Union industry.

| (199) | Imports from Taiwan and Vietnam, when considered together with the imports from Hailide, did not attenuate the link found between the dumped imports from exporting producers subject to the duties and the injury suffered by the Union industry such that this link cannot be characterized as a genuine and substantial relationship of cause and effect. Exports of exporting producers subject to the duties represented a market share of [29 % – 34 %] on the Union market during the RIP and were sold, on average, substantially below the costs of production of the Union industry. Considering this magnitude and the resulting price pressure imports from Taiwan, Vietnam and Hailide did not materially diminish the relative importance of the dumped imports from the exporting producers subject to the duty in bringing about the injury. |
| --- | --- |

(199)

Imports from Taiwan and Vietnam, when considered together with the imports from Hailide, did not attenuate the link found between the dumped imports from exporting producers subject to the duties and the injury suffered by the Union industry such that this link cannot be characterized as a genuine and substantial relationship of cause and effect. Exports of exporting producers subject to the duties represented a market share of [29 % – 34 %] on the Union market during the RIP and were sold, on average, substantially below the costs of production of the Union industry. Considering this magnitude and the resulting price pressure imports from Taiwan, Vietnam and Hailide did not materially diminish the relative importance of the dumped imports from the exporting producers subject to the duty in bringing about the injury.

3.8.2.3.   Export performance of the Union industry

Export performance of the Union industry

| (200) | The volume of exports of the sampled Union producers developed over the period considered as follows:

  Table 14


  Export performance of the sampled Union producers | 2018 | 2019 | 2020 | Review Investigation Period |
| --- | --- | --- | --- | --- | --- |
| Export volume (tonnes) | 21 674 | 19 603 | 18 729 | 21 299 |
| Index | 100 | 90 | 86 | 98 |
| Average price (EUR/tonnes) | 2 208 | 2 161 | 1 767 | 2 272 |
| Index | 100 | 98 | 80 | 103 |
| Source: | Verified data provided by the Union industry and verified questionnaire replies of the sampled Union producers. |

(200)

The volume of exports of the sampled Union producers developed over the period considered as follows:

Table 14

Table 14

Export performance of the sampled Union producers

Export performance of the sampled Union producers

2018

2019

2020

Review Investigation Period

Export volume (tonnes)

21 674

19 603

18 729

21 299

Index

Index

100

100

90

90

86

86

98

98

Average price (EUR/tonnes)

2 208

2 161

1 767

2 272

Index

Index

100

100

98

98

80

80

103

103

Source:

Source:

Verified data provided by the Union industry and verified questionnaire replies of the sampled Union producers.

| (201) | While export volumes over the period considered followed a similar trend than the sales on the Union market, in the RIP, the volumes were only 2 % below the 2018 figures and recovered stronger than sales on the Union market, which were still 5 % below the 2018 volumes. |
| --- | --- |

(201)

While export volumes over the period considered followed a similar trend than the sales on the Union market, in the RIP, the volumes were only 2 % below the 2018 figures and recovered stronger than sales on the Union market, which were still 5 % below the 2018 volumes.

| (202) | The average price for exports in every year was clearly above the sales price on the EU market, in the RIP it was more than 10 % higher. The average price for exports followed a trend similar to the prices on the EU market. However, while in 2020 the export price fell stronger, in the RIP it recovered quicker than the prices on the EU market, reaching a level 3 % higher than the 2018 average price, whereas the sales price on the EU market in the RIP was still 4 % below the 2018 price. |
| --- | --- |

(202)

The average price for exports in every year was clearly above the sales price on the EU market, in the RIP it was more than 10 % higher. The average price for exports followed a trend similar to the prices on the EU market. However, while in 2020 the export price fell stronger, in the RIP it recovered quicker than the prices on the EU market, reaching a level 3 % higher than the 2018 average price, whereas the sales price on the EU market in the RIP was still 4 % below the 2018 price.

| (203) | The comparison shows that the Union producers are strongly committed to the Union market, while being able to reach higher prices for export sales. |
| --- | --- |

(203)

The comparison shows that the Union producers are strongly committed to the Union market, while being able to reach higher prices for export sales.

| (204) | Therefore, the Commission concluded that the export performance of the Union industry has not contributed to the injury, but to the contrary contributed to limiting the loss. |
| --- | --- |

(204)

Therefore, the Commission concluded that the export performance of the Union industry has not contributed to the injury, but to the contrary contributed to limiting the loss.

3.8.2.4.   Captive consumption

Captive consumption

| (205) | The captive consumption of the Union industry has substantially increased in the RIP. Over the period considered it increased by 39 %. However, the decision to increase the captive consumption in order to sell downstream products at a higher manufacturing level, is a direct result of not being able to reach a fair market price on the free market for HTYP due to the pricing pressure from the dumped imports. Therefore, the Commission concluded that this is not a factor contributing to the injury. |
| --- | --- |

(205)

The captive consumption of the Union industry has substantially increased in the RIP. Over the period considered it increased by 39 %. However, the decision to increase the captive consumption in order to sell downstream products at a higher manufacturing level, is a direct result of not being able to reach a fair market price on the free market for HTYP due to the pricing pressure from the dumped imports. Therefore, the Commission concluded that this is not a factor contributing to the injury.

3.8.2.5.   High energy prices and inflation

High energy prices and inflation

| (206) | As a reaction to a submission of the applicant on post-RIP developments, several users together with a user association claimed that rising energy costs and inflation crisis breaks the causal link between imports of Chinese HTYP and the injury experienced by the Union industry. The rising energy costs and inflation, as submitted by the applicant, have however occurred post-RIP. The users have not detailed that any such development occurred during the RIP. Therefore, the Commission rejected this argument. |
| --- | --- |

(206)

As a reaction to a submission of the applicant on post-RIP developments, several users together with a user association claimed that rising energy costs and inflation crisis breaks the causal link between imports of Chinese HTYP and the injury experienced by the Union industry. The rising energy costs and inflation, as submitted by the applicant, have however occurred post-RIP. The users have not detailed that any such development occurred during the RIP. Therefore, the Commission rejected this argument.

3.8.3.   
  Conclusion on causation

Conclusion on causation

| (207) | There was a clear coincidence in time between the substantial exports from China of the exporters currently subject to duties and the deterioration of the situation of the Union industry. |
| --- | --- |

(207)

There was a clear coincidence in time between the substantial exports from China of the exporters currently subject to duties and the deterioration of the situation of the Union industry.

| (208) | The Commission has also investigated other factors of injury and has not found any other factor which would attenuate the causal link between these exports from China and the material injury suffered by the Union industry. |
| --- | --- |

(208)

The Commission has also investigated other factors of injury and has not found any other factor which would attenuate the causal link between these exports from China and the material injury suffered by the Union industry.

| (209) | On the basis of the above, the Commission concluded that the dumped exports from the Chinese exporters currently subject to duties materially contributed to the injury of the Union industry and that no other factors, considered individually or collectively, are attenuating the causal link between the dumped exports of the Chinese exporters currently subject to duties and the injury suffered by the Union industry. |
| --- | --- |

(209)

On the basis of the above, the Commission concluded that the dumped exports from the Chinese exporters currently subject to duties materially contributed to the injury of the Union industry and that no other factors, considered individually or collectively, are attenuating the causal link between the dumped exports of the Chinese exporters currently subject to duties and the injury suffered by the Union industry.

3.9.   Likelihood of continuation of injury

Likelihood of continuation of injury

| (210) | The Commission concluded in recital (180) that the Union industry suffered material injury during the review investigation period. Therefore, the Commission assessed, in accordance with Article 11(2) of the basic Regulation, whether there would be a likelihood of continuation of injury caused by the dumped imports from China if the measures were allowed to lapse. |
| --- | --- |

(210)

The Commission concluded in recital (180) that the Union industry suffered material injury during the review investigation period. Therefore, the Commission assessed, in accordance with Article 11(2) of the basic Regulation, whether there would be a likelihood of continuation of injury caused by the dumped imports from China if the measures were allowed to lapse.

| (211) | In this respect the following elements were analysed by the Commission: the production capacity and spare capacity in China and the relation between Chinese export prices to third countries and the price level in the Union. |
| --- | --- |

(211)

In this respect the following elements were analysed by the Commission: the production capacity and spare capacity in China and the relation between Chinese export prices to third countries and the price level in the Union.

3.9.1.   
  The production capacity and spare capacity in China

The production capacity and spare capacity in China

| (212) | As analysed in detail in section 3.5.1, compared to the size of the Union market, Chinese producers dispose of vast overcapacities, which are unlikely to be absorbed by domestic consumption or by exports to other third countries. |
| --- | --- |

(212)

As analysed in detail in section 3.5.1, compared to the size of the Union market, Chinese producers dispose of vast overcapacities, which are unlikely to be absorbed by domestic consumption or by exports to other third countries.

3.9.2.   
  Relation between Chinese export prices to third countries and the price level in the Union

Relation between Chinese export prices to third countries and the price level in the Union

| (213) | As analysed in detail in section 3.5.2 the Union market remains the largest export market for Chinese exporters also due to its attractive price level. Indeed, even with anti-dumping duties in place, Chinese prices are still undercutting Union industry prices on average by 26 %. While the price in the US (second biggest export market in the RIP) has been at a level similar to the Union prices, the Chinese export price on the Korean market was approximately 10 % lower than the Union export prices. Trade defence measures in other export markets further increase the attractiveness of the Union market. |
| --- | --- |

(213)

As analysed in detail in section 3.5.2 the Union market remains the largest export market for Chinese exporters also due to its attractive price level. Indeed, even with anti-dumping duties in place, Chinese prices are still undercutting Union industry prices on average by 26 %. While the price in the US (second biggest export market in the RIP) has been at a level similar to the Union prices, the Chinese export price on the Korean market was approximately 10 % lower than the Union export prices. Trade defence measures in other export markets further increase the attractiveness of the Union market.

| (214) | Therefore, it is likely that if the measures were allowed to lapse, the Chinese exporting producers would keep engaging in aggressive pricing practices, in order to increase their (already high) market share in the Union and to accommodate their significant over-capacity on the Union market. |
| --- | --- |

(214)

Therefore, it is likely that if the measures were allowed to lapse, the Chinese exporting producers would keep engaging in aggressive pricing practices, in order to increase their (already high) market share in the Union and to accommodate their significant over-capacity on the Union market.

3.9.3.   
  Conclusion

Conclusion

| (215) | In view of the above, the Commission concluded that the repeal of the measures would in all likelihood result in a significant increase of dumped imports from China at injurious price levels and would therefore further aggravate the injury suffered by the Union industry. As a consequence, the viability of the Union industry would be at serious risk. |
| --- | --- |

(215)

In view of the above, the Commission concluded that the repeal of the measures would in all likelihood result in a significant increase of dumped imports from China at injurious price levels and would therefore further aggravate the injury suffered by the Union industry. As a consequence, the viability of the Union industry would be at serious risk.

3.10.   Union interest

Union interest

| (216) | In accordance with Article 21 of the basic Regulation, the Commission examined whether maintaining the existing anti-dumping measures at the revised duty level following the combined interim review would be against the interest of the Union. The determination of the Union interest was based on an appreciation of all the various interests involved, including those of the Union industry, importers, users. |
| --- | --- |

(216)

In accordance with Article 21 of the basic Regulation, the Commission examined whether maintaining the existing anti-dumping measures at the revised duty level following the combined interim review would be against the interest of the Union. The determination of the Union interest was based on an appreciation of all the various interests involved, including those of the Union industry, importers, users.

| (217) | All interested parties were given the opportunity to make their views known pursuant to Article 21(2) of the basic Regulation. |
| --- | --- |

(217)

All interested parties were given the opportunity to make their views known pursuant to Article 21(2) of the basic Regulation.

| (218) | On this basis, the Commission first examined whether, despite the conclusions on the likelihood of a continuation of dumping and continuation of injury, compelling reasons existed which would lead to the conclusion that it was not in the Union interest to maintain the existing measures. It is recalled that, in the original investigation, the adoption of measures was considered not to be against the interest of the Union. |
| --- | --- |

(218)

On this basis, the Commission first examined whether, despite the conclusions on the likelihood of a continuation of dumping and continuation of injury, compelling reasons existed which would lead to the conclusion that it was not in the Union interest to maintain the existing measures. It is recalled that, in the original investigation, the adoption of measures was considered not to be against the interest of the Union.

| (219) | In addition, the Commission examined the impact of the change of the level of the measures resulting from the interim review on the users. Indeed, while the interim review itself does not include a Union Interest analysis, prolonged measures following the expiry review will necessarily take effect at the level of duties as determined by the interim review, since both procedures coincide in timing. The Commission has therefore also taken the level of duties as determined by the interim review into account, when analysing if compelling reasons existed which would lead to the conclusion that it was not in the Union interest to maintain the existing measures. |
| --- | --- |

(219)

In addition, the Commission examined the impact of the change of the level of the measures resulting from the interim review on the users. Indeed, while the interim review itself does not include a Union Interest analysis, prolonged measures following the expiry review will necessarily take effect at the level of duties as determined by the interim review, since both procedures coincide in timing. The Commission has therefore also taken the level of duties as determined by the interim review into account, when analysing if compelling reasons existed which would lead to the conclusion that it was not in the Union interest to maintain the existing measures.

3.10.1.   
  Interest of the Union industry

Interest of the Union industry

| (220) | As explained in recital (215) the repeal of the measures would in all likelihood result in a significant increase of dumped imports from China at injurious price levels, and would therefore further aggravate the injury suffered by the Union industry. As a consequence, the viability of the Union industry would be at serious risk. |
| --- | --- |

(220)

As explained in recital (215) the repeal of the measures would in all likelihood result in a significant increase of dumped imports from China at injurious price levels, and would therefore further aggravate the injury suffered by the Union industry. As a consequence, the viability of the Union industry would be at serious risk.

| (221) | Therefore, the continuation of the measures against China would benefit the Union industry. |
| --- | --- |

(221)

Therefore, the continuation of the measures against China would benefit the Union industry.

3.10.2.   
  Interest of unrelated importers

Interest of unrelated importers

| (222) | No unrelated importers cooperated in the current review investigations. |
| --- | --- |

(222)

No unrelated importers cooperated in the current review investigations.

| (223) | The Commission concluded that there were no compelling reasons from the position of unrelated importers against the prolongation of the measures. |
| --- | --- |

(223)

The Commission concluded that there were no compelling reasons from the position of unrelated importers against the prolongation of the measures.

3.10.3.   
  Interest of users

Interest of users

| (224) | HTYP is used in numerous applications. There are two main groups of different HTYP users: tire producers who account for an estimated 50 % of the HTYP demand in the Union, as well as technical fabrics, tapes, webbings, straps, ropes and belt producers, who also account for around 50 % of the HTYP demand in the Union. Technical fabrics, webbings, straps, ropes and belts are used in automotive, lifting, transport securing and all kinds of machine applications. Due to the high number of applications, the user industry in this segment is quite fragmented. |
| --- | --- |

(224)

HTYP is used in numerous applications. There are two main groups of different HTYP users: tire producers who account for an estimated 50 % of the HTYP demand in the Union, as well as technical fabrics, tapes, webbings, straps, ropes and belt producers, who also account for around 50 % of the HTYP demand in the Union. Technical fabrics, webbings, straps, ropes and belts are used in automotive, lifting, transport securing and all kinds of machine applications. Due to the high number of applications, the user industry in this segment is quite fragmented.

| (225) | Upon initiation of the expiry review, 64 known users and user associations in the Union were contacted and invited to cooperate. |
| --- | --- |

(225)

Upon initiation of the expiry review, 64 known users and user associations in the Union were contacted and invited to cooperate.

| (226) | Two users replied to the questionnaire in the expiry review and their data was verified by the Commission. Following the initiation of the interim review, five more users came forward together with a user’s association (representing 9 users in total) to participate in the parallel procedures. The users that came forward belong to the segment of technical fabrics, tapes, webbings, straps, ropes and belt producers. The participating users represent more than 10 % of the Union consumption of HTYP. No user of the tire producer segment came forward. |
| --- | --- |

(226)

Two users replied to the questionnaire in the expiry review and their data was verified by the Commission. Following the initiation of the interim review, five more users came forward together with a user’s association (representing 9 users in total) to participate in the parallel procedures. The users that came forward belong to the segment of technical fabrics, tapes, webbings, straps, ropes and belt producers. The participating users represent more than 10 % of the Union consumption of HTYP. No user of the tire producer segment came forward.

| (227) | Following the final disclosure, ten users, a user’s association as well as one integrated producer, which also produces woven products, commented on the final disclosure and opposed the Commission’s intention to increase the level of anti-dumping duties in comparison with the original measures. |
| --- | --- |

(227)

Following the final disclosure, ten users, a user’s association as well as one integrated producer, which also produces woven products, commented on the final disclosure and opposed the Commission’s intention to increase the level of anti-dumping duties in comparison with the original measures.

| (228) | Several users together with the user’s association claimed that the analysis of the Commission is based on incomplete facts, since the Commission only verified responses from two sampled users and ignored the submissions from the other user companies, who are SMEs, despite their offer for their data to be verified on the spot or via a remote verification. |
| --- | --- |

(228)

Several users together with the user’s association claimed that the analysis of the Commission is based on incomplete facts, since the Commission only verified responses from two sampled users and ignored the submissions from the other user companies, who are SMEs, despite their offer for their data to be verified on the spot or via a remote verification.

| (229) | The Commission disagreed with this claim. In fact, the Commission took into account the submissions of all users when analysing the Union interest. However, since the two users that the Commission verified also fall within the category of SMEs, and since their business models, supply needs and financial situation were comparable to the companies represented by the association, the Commission found that no additional verification was required to reach its conclusions. |
| --- | --- |

(229)

The Commission disagreed with this claim. In fact, the Commission took into account the submissions of all users when analysing the Union interest. However, since the two users that the Commission verified also fall within the category of SMEs, and since their business models, supply needs and financial situation were comparable to the companies represented by the association, the Commission found that no additional verification was required to reach its conclusions.

3.10.3.1.   Financial impact

Financial impact

| (230) | The participating users mainly opposed an increased duty. Several users argued that when the measures were imposed in the original procedure, the Commission struck the right balance between the interests of EU producers of HTYP and user industries. Therefore, a continuation of the measures at the original levels could be absorbed by the user industry. |
| --- | --- |

(230)

The participating users mainly opposed an increased duty. Several users argued that when the measures were imposed in the original procedure, the Commission struck the right balance between the interests of EU producers of HTYP and user industries. Therefore, a continuation of the measures at the original levels could be absorbed by the user industry.

| (231) | On the other hand, a material increase of the level of the duties would significantly harm the segment of technical fabrics, tapes, webbings, straps, ropes and belt producers. While the tyre industry has not provided data, the Commission has gathered information from HTYP producers that indicate that HTYP only represents a lower percentage of the production cost of tyres. Therefore, the Commission concluded that the financial impact of the measures on that user industry will be minor. |
| --- | --- |

(231)

On the other hand, a material increase of the level of the duties would significantly harm the segment of technical fabrics, tapes, webbings, straps, ropes and belt producers. While the tyre industry has not provided data, the Commission has gathered information from HTYP producers that indicate that HTYP only represents a lower percentage of the production cost of tyres. Therefore, the Commission concluded that the financial impact of the measures on that user industry will be minor.

| (232) | From the sampled users, it is visible that belt products incorporating HTYP have a low profit level. However, the Commission also found that moderate price increases were possible in the past due to increases of raw material costs. Also, none of the sampled users exclusively produces products incorporating HTYP, and their overall financial situation is stable. This was not contradicted by the unverified information brought forward by the non-sampled users. The revised duties range from 9,7 % to 23,7 %, which represents a meaningful increase compared to the existing duties, ranging from 5,1 % to 9,8 %. However, the Commission noted that the users still have the choice of an exporting producer at the lower end of the duties. |
| --- | --- |

(232)

From the sampled users, it is visible that belt products incorporating HTYP have a low profit level. However, the Commission also found that moderate price increases were possible in the past due to increases of raw material costs. Also, none of the sampled users exclusively produces products incorporating HTYP, and their overall financial situation is stable. This was not contradicted by the unverified information brought forward by the non-sampled users. The revised duties range from 9,7 % to 23,7 %, which represents a meaningful increase compared to the existing duties, ranging from 5,1 % to 9,8 %. However, the Commission noted that the users still have the choice of an exporting producer at the lower end of the duties.

| (233) | Therefore, the Commission concluded that the financial impact on the users by the revised duty range does not constitute a compelling reason against the continuation of the measures at the revised level either. |
| --- | --- |

(233)

Therefore, the Commission concluded that the financial impact on the users by the revised duty range does not constitute a compelling reason against the continuation of the measures at the revised level either.

| (234) | Following the final disclosure, ten users, the user’s association as well as the integrated producer argued that an additional cost increase coming from increased duties on their main raw material will further erode their competitive position as EU based manufacturers. They provided multiple examples of offers from Chinese manufacturers of downstream products made with HTYP to European clients, whose prices were very close or even below the price of HTYP after addition of the proposed duties. They argued that the biggest problem of increased anti-dumping duties on HTYP is that they do not extend to downstream products like fabrics, belts, lashing straps, round slings and webbing slings. |
| --- | --- |

(234)

Following the final disclosure, ten users, the user’s association as well as the integrated producer argued that an additional cost increase coming from increased duties on their main raw material will further erode their competitive position as EU based manufacturers. They provided multiple examples of offers from Chinese manufacturers of downstream products made with HTYP to European clients, whose prices were very close or even below the price of HTYP after addition of the proposed duties. They argued that the biggest problem of increased anti-dumping duties on HTYP is that they do not extend to downstream products like fabrics, belts, lashing straps, round slings and webbing slings.

| (235) | Following the final disclosure, the applicants also argued that the main concern of the users are related to the unfair competition they are facing from China in downstream markets. This concern would be further exacerbated if the level of the anti-dumping duties on HTYP imports is increased. Indeed, users repeatedly indicated that they did not oppose a prolongation of the original anti-dumping measures. |
| --- | --- |

(235)

Following the final disclosure, the applicants also argued that the main concern of the users are related to the unfair competition they are facing from China in downstream markets. This concern would be further exacerbated if the level of the anti-dumping duties on HTYP imports is increased. Indeed, users repeatedly indicated that they did not oppose a prolongation of the original anti-dumping measures.

| (236) | In order to address the issue of unfair competition on downstream products, five users together with a user’s association requested the Commission to extend the duties to HTYP contained in imported webbings ropes and fire hoses. They referred to the Commission’s Regulation on steel wind towers from China (89), in which the anti-dumping duty applied not only to wind towers, but also to wind turbines, which incorporate steel wind towers. |
| --- | --- |

(236)

In order to address the issue of unfair competition on downstream products, five users together with a user’s association requested the Commission to extend the duties to HTYP contained in imported webbings ropes and fire hoses. They referred to the Commission’s Regulation on steel wind towers from China (89), in which the anti-dumping duty applied not only to wind towers, but also to wind turbines, which incorporate steel wind towers.

89

| (237) | First, the Commission acknowledged that the competition from Chinese exporters of downstream products limits the users’ possibility to increase prices and pass on the additional costs of increased duties. However, a potential unfair competition on the level of the users cannot by itself constitute a compelling reason for not addressing the injurious dumping found on the upstream market. While the users have demonstrated that the increased duties on HTYP cause a competitive disadvantage against the Chinese manufacturers of the same product, they have also indicated that a protection against these imports of downstream products could be reached by anti-dumping duties on these products. They have not demonstrated that it is not feasible for the user industry to file a complaint to initiate an investigation against potentially dumped imports of HTYP based fabrics or other secondary products. |
| --- | --- |

(237)

First, the Commission acknowledged that the competition from Chinese exporters of downstream products limits the users’ possibility to increase prices and pass on the additional costs of increased duties. However, a potential unfair competition on the level of the users cannot by itself constitute a compelling reason for not addressing the injurious dumping found on the upstream market. While the users have demonstrated that the increased duties on HTYP cause a competitive disadvantage against the Chinese manufacturers of the same product, they have also indicated that a protection against these imports of downstream products could be reached by anti-dumping duties on these products. They have not demonstrated that it is not feasible for the user industry to file a complaint to initiate an investigation against potentially dumped imports of HTYP based fabrics or other secondary products.

| (238) | In addition, the users still have the choice of a Chinese exporting producer at the lower end of the duties, and they have the option to source from other third countries like South and Korea, Taiwan and Vietnam, which are increasing their production capacity. |
| --- | --- |

(238)

In addition, the users still have the choice of a Chinese exporting producer at the lower end of the duties, and they have the option to source from other third countries like South and Korea, Taiwan and Vietnam, which are increasing their production capacity.

| (239) | Concerning the proposal to extend the measures to the HTYP incorporated in the downstream products, the Commission noted that contrary to the steel wind towers case, the products to which the duties would be extended were not included in the product scope of the investigation. Indeed, the definition of the product concerned in the steel wind towers case already included the towers imported as part of a wind turbine: “The product concerned is certain utility scale wind towers of steel, [...], currently falling under CN codes ex 7308 20 00 (TARIC code 7308200011), and ex 7308 90 98 (TARIC code 7308909811)

  and, when imported as part of a wind turbine

  , currently falling under CN codes ex 8502 31 00, ...” The Commission cannot in principle impose duties on a product that was not within the scope of the investigation. In this case particularly, the Commission considered that the multitude of possible transformations covered within the suggested CN codes would expand the application of the duties beyond the scope of the investigation. |
| --- | --- |

(239)

Concerning the proposal to extend the measures to the HTYP incorporated in the downstream products, the Commission noted that contrary to the steel wind towers case, the products to which the duties would be extended were not included in the product scope of the investigation. Indeed, the definition of the product concerned in the steel wind towers case already included the towers imported as part of a wind turbine: “The product concerned is certain utility scale wind towers of steel, [...], currently falling under CN codes ex 7308 20 00 (TARIC code 7308200011), and ex 7308 90 98 (TARIC code 7308909811)

  and, when imported as part of a wind turbine

  , currently falling under CN codes ex 8502 31 00, ...” The Commission cannot in principle impose duties on a product that was not within the scope of the investigation. In this case particularly, the Commission considered that the multitude of possible transformations covered within the suggested CN codes would expand the application of the duties beyond the scope of the investigation.

The product concerned is certain utility scale wind towers of steel, [...], currently falling under CN codes ex 7308 20 00 (TARIC code 7308200011), and ex 7308 90 98 (TARIC code 7308909811)

and, when imported as part of a wind turbine

, currently falling under CN codes ex 8502 31 00, ...

| (240) | Therefore, the Commission found that the request of the users would have expanded the scope of the investigation beyond the application. The request was thus rejected. |
| --- | --- |

(240)

Therefore, the Commission found that the request of the users would have expanded the scope of the investigation beyond the application. The request was thus rejected.

| (241) | Consequently, the Commission confirmed its initial position on the revised duty level. |
| --- | --- |

(241)

Consequently, the Commission confirmed its initial position on the revised duty level.

3.10.3.2.   Supply stability

Supply stability

| (242) | The users have also pointed out a lack of capacity of the Union producers. The Union consumption of HTYP was 230 000 tonnes in the RIP, 73 % higher than the production capacity of the Union industry, which amounts only to 134 ktonnes. This demonstrates the overall need for imports. |
| --- | --- |

(242)

The users have also pointed out a lack of capacity of the Union producers. The Union consumption of HTYP was 230 000 tonnes in the RIP, 73 % higher than the production capacity of the Union industry, which amounts only to 134 ktonnes. This demonstrates the overall need for imports.

| (243) | Furthermore, following the RIP, in 2022 several Union producers have temporarily reduced or fully stopped their production as a reaction to the increase in energy prices in Europe. However, this was only a temporary measure and it is not visible that this will lead to a long-term reduction of the production volume of the Union producers. |
| --- | --- |

(243)

Furthermore, following the RIP, in 2022 several Union producers have temporarily reduced or fully stopped their production as a reaction to the increase in energy prices in Europe. However, this was only a temporary measure and it is not visible that this will lead to a long-term reduction of the production volume of the Union producers.

| (244) | All cooperating users have argued that for their segment, only one Union producer provides the quality of HTYP used within their products, whereas other Union producers are to a large extent focused on supplying the tire industry or are integrated competitors. The users have further argued that other third countries either produce expensive specialised grades, like South Korea, or do not offer sufficient capacity or quality, with the exception of Vietnam. |
| --- | --- |

(244)

All cooperating users have argued that for their segment, only one Union producer provides the quality of HTYP used within their products, whereas other Union producers are to a large extent focused on supplying the tire industry or are integrated competitors. The users have further argued that other third countries either produce expensive specialised grades, like South Korea, or do not offer sufficient capacity or quality, with the exception of Vietnam.

| (245) | Exports from Vietnam during the RIP had a 5 % Union market share. However, Vietnamese exports only amounted to 12 000 tonnes and cover only a fraction of the needed imports to satisfy the demand on the Union market. The Commission therefore noted that imports from China are generally needed to ensure the supply stability on the Union Market. |
| --- | --- |

(245)

Exports from Vietnam during the RIP had a 5 % Union market share. However, Vietnamese exports only amounted to 12 000 tonnes and cover only a fraction of the needed imports to satisfy the demand on the Union market. The Commission therefore noted that imports from China are generally needed to ensure the supply stability on the Union Market.

| (246) | The Commission, however, concluded in the previous section that the revised duties ranging from 9,7 % to 23,7 %, will not have a prohibitive effect to continue to source from China especially in view of the fact that the users still have the choice of an exporting producer at the lower end of the duties. Consequently, the supply stability will not be endangered by the prolongation of the duties at the revised duty level. |
| --- | --- |

(246)

The Commission, however, concluded in the previous section that the revised duties ranging from 9,7 % to 23,7 %, will not have a prohibitive effect to continue to source from China especially in view of the fact that the users still have the choice of an exporting producer at the lower end of the duties. Consequently, the supply stability will not be endangered by the prolongation of the duties at the revised duty level.

| (247) | Therefore, the Commission concluded that the interest of the users for supply stability does not lead to a compelling reason against the continuation of the measures. |
| --- | --- |

(247)

Therefore, the Commission concluded that the interest of the users for supply stability does not lead to a compelling reason against the continuation of the measures.

3.10.3.3.   Risk of transferring production capacities outside the EU

Risk of transferring production capacities outside the EU

| (248) | Several users and the integrated producer emphasized the importance of the HTYP weaving and coating industry for the job market and the fact that the increased duties on HTYP may lead to a transfer of production capacities outside of the EU. The integrated producer argued that the workforce in the EU involved in the production of downstream products made out of HTYP consists of around 100 000 skilled workers. |
| --- | --- |

(248)

Several users and the integrated producer emphasized the importance of the HTYP weaving and coating industry for the job market and the fact that the increased duties on HTYP may lead to a transfer of production capacities outside of the EU. The integrated producer argued that the workforce in the EU involved in the production of downstream products made out of HTYP consists of around 100 000 skilled workers.

| (249) | The Commission recognized that the HTYP weaving and coating industry is an important employer for the EU job market. However, as stated in recitals (238) and (240), the users still have sourcing options at the lower range of the duties or from other third countries and the expected financial impact of the revised duties does not constitute a compelling reason for not imposing the duties. In addition, no concrete evidence was submitted to support these claims. |
| --- | --- |

(249)

The Commission recognized that the HTYP weaving and coating industry is an important employer for the EU job market. However, as stated in recitals (238) and (240), the users still have sourcing options at the lower range of the duties or from other third countries and the expected financial impact of the revised duties does not constitute a compelling reason for not imposing the duties. In addition, no concrete evidence was submitted to support these claims.

| (250) | The Commission therefore maintained its conclusions. |
| --- | --- |

(250)

The Commission therefore maintained its conclusions.

3.10.4.   
  Conclusion on Union interest

Conclusion on Union interest

| (251) | On the basis of the above, the Commission concluded that there were no compelling reasons of the Union interest against the maintenance of the measures on imports of HTYP originating in China and their extension at the revised levels. |
| --- | --- |

(251)

On the basis of the above, the Commission concluded that there were no compelling reasons of the Union interest against the maintenance of the measures on imports of HTYP originating in China and their extension at the revised levels.

| (252) | Following the above comments of user, the user’s association and one integrated producer, the Commission confirmed its assessment. |
| --- | --- |

(252)

Following the above comments of user, the user’s association and one integrated producer, the Commission confirmed its assessment.

3.11.   Claims for suspension by Unifull and OTIZ

Claims for suspension by Unifull and OTIZ

| (253) | Two Chinese exporting producers, Unifull and OTIZ, have claimed that the conditions for the suspension of the measures according to Article 14(4) of Regulation (EU) 2016/1036 were met. The claim is based on the increase of Chinese import prices post-RIP, as well as the argument that the Union industry’s injury was caused by the energy crisis, the shortage of semiconductors for the automotive industry (leading to a fall in demand of HTYP products for the Union industry), and a decrease of international ocean freight costs. |
| --- | --- |

(253)

Two Chinese exporting producers, Unifull and OTIZ, have claimed that the conditions for the suspension of the measures according to Article 14(4) of Regulation (EU) 2016/1036 were met. The claim is based on the increase of Chinese import prices post-RIP, as well as the argument that the Union industry’s injury was caused by the energy crisis, the shortage of semiconductors for the automotive industry (leading to a fall in demand of HTYP products for the Union industry), and a decrease of international ocean freight costs.

| (254) | According to these two exporters, imports from China could help the EU downstream industry to overcome a current supply shortage and avoid the increase in the HTYP prices of Union producers post-RIP. |
| --- | --- |

(254)

According to these two exporters, imports from China could help the EU downstream industry to overcome a current supply shortage and avoid the increase in the HTYP prices of Union producers post-RIP.

| (255) | According to Article 14(4) of the basic Regulation, measures may only be suspended where market conditions have temporarily changed to an extent that injury would be unlikely to resume as a result of the suspension and the suspension is in the Union Interest. |
| --- | --- |

(255)

According to Article 14(4) of the basic Regulation, measures may only be suspended where market conditions have temporarily changed to an extent that injury would be unlikely to resume as a result of the suspension and the suspension is in the Union Interest.

| (256) | It is correct that Chinese prices have increased post-RIP by 36 %. However, these increased Chinese prices are still at a level below the COP of the Union industry during the RIP. Therefore, the higher Chinese prices post-RIP have not led to a changed situation, in which injury is unlikely to resume. To the contrary, a suspension of the measures would lead to a situation in which the current injurious situation of the Union producers, on top of high energy prices, would be worse off by facing dumped prices from Chinese competitors. While it is in the interest of the users to get access to cheaper HTYP, Unifull and OTIZ have not detailed an overriding Union interest to suspend the measures. In any event, the interest of the users is analysed in detail below in section 3.10. |
| --- | --- |

(256)

It is correct that Chinese prices have increased post-RIP by 36 %. However, these increased Chinese prices are still at a level below the COP of the Union industry during the RIP. Therefore, the higher Chinese prices post-RIP have not led to a changed situation, in which injury is unlikely to resume. To the contrary, a suspension of the measures would lead to a situation in which the current injurious situation of the Union producers, on top of high energy prices, would be worse off by facing dumped prices from Chinese competitors. While it is in the interest of the users to get access to cheaper HTYP, Unifull and OTIZ have not detailed an overriding Union interest to suspend the measures. In any event, the interest of the users is analysed in detail below in section 3.10.

| (257) | Unifull and OTIZ also do not elaborate how the alleged decrease of international ocean freight cost relate to the Union industry’s injurious situation. |
| --- | --- |

(257)

Unifull and OTIZ also do not elaborate how the alleged decrease of international ocean freight cost relate to the Union industry’s injurious situation.

| (258) | The Commission therefore rejected this claim. |
| --- | --- |

(258)

The Commission therefore rejected this claim.

3.12.   Conclusion

Conclusion

| (259) | On the basis of above, the Commission found that there was continuation of injurious dumping so that, it was in the Union interest to maintain the anti-dumping measures on imports of HTYP originating in China following an expiry review pursuant to Article 11(2) of the basic Regulation. |
| --- | --- |

(259)

On the basis of above, the Commission found that there was continuation of injurious dumping so that, it was in the Union interest to maintain the anti-dumping measures on imports of HTYP originating in China following an expiry review pursuant to Article 11(2) of the basic Regulation.

4.   PARTIAL INTERIM REVIEW INVESTIGATION

PARTIAL INTERIM REVIEW INVESTIGATION

4.1.   Interested parties and sampling

Interested parties and sampling

| (260) | In the Notice of Initiation of the partial interim review investigation, the Commission invited interested parties to contact it in order to participate in the investigation. In addition, the Commission specifically informed the applicant, the producers in China, the importers in the Union known to be concerned, and the Chinese authorities of the initiation of the partial interim review investigation and invited them to participate in the investigation. |
| --- | --- |

(260)

In the Notice of Initiation of the partial interim review investigation, the Commission invited interested parties to contact it in order to participate in the investigation. In addition, the Commission specifically informed the applicant, the producers in China, the importers in the Union known to be concerned, and the Chinese authorities of the initiation of the partial interim review investigation and invited them to participate in the investigation.

| (261) | All interested parties had the opportunity to comment on the initiation of the partial interim review and to request a hearing with the Commission and/or the Hearing Officer in trade proceedings. |
| --- | --- |

(261)

All interested parties had the opportunity to comment on the initiation of the partial interim review and to request a hearing with the Commission and/or the Hearing Officer in trade proceedings.

| (262) | In the Notice of Initiation, the Commission stated that it might sample interested parties, in accordance with Article 17 of the basic Regulation. |
| --- | --- |

(262)

In the Notice of Initiation, the Commission stated that it might sample interested parties, in accordance with Article 17 of the basic Regulation.

4.1.1.   
  Sampling of exporting producers and unrelated importers

Sampling of exporting producers and unrelated importers

| (263) | In order to decide whether sampling was necessary and, if so, to select a sample, the Commission asked all known exporting producers in China and unrelated importers in the Union to provide the information specified in the respective Notice of Initiation. In addition, the Commission asked the Mission of China to the Union to identify and/or contact other exporting producers, if any, that could be interested in participating in the investigation. |
| --- | --- |

(263)

In order to decide whether sampling was necessary and, if so, to select a sample, the Commission asked all known exporting producers in China and unrelated importers in the Union to provide the information specified in the respective Notice of Initiation. In addition, the Commission asked the Mission of China to the Union to identify and/or contact other exporting producers, if any, that could be interested in participating in the investigation.

| (264) | One unrelated importer came forward as an interested party, but did not provide the requested sampling information. Eight exporting producers in the country concerned provided the requested information and agreed to be included in the sample. In accordance with Article 17(1) of the basic Regulation, the Commission selected a sample of four companies pertaining to two corporate groups on the basis of the largest representative volume of exports to the Union that could reasonably be investigated within the time available. These companies represented over 70 % of the estimated total Union imports of the product under review subject to measures. In accordance with Article 17(2) of the basic Regulation, all known exporting producers concerned and the authorities of the country concerned were given the opportunity to comment on the selection of the sample. No comments were received. |
| --- | --- |

(264)

One unrelated importer came forward as an interested party, but did not provide the requested sampling information. Eight exporting producers in the country concerned provided the requested information and agreed to be included in the sample. In accordance with Article 17(1) of the basic Regulation, the Commission selected a sample of four companies pertaining to two corporate groups on the basis of the largest representative volume of exports to the Union that could reasonably be investigated within the time available. These companies represented over 70 % of the estimated total Union imports of the product under review subject to measures. In accordance with Article 17(2) of the basic Regulation, all known exporting producers concerned and the authorities of the country concerned were given the opportunity to comment on the selection of the sample. No comments were received.

4.1.2.   
  Individual examination request

Individual examination request

| (265) | One exporting producer in China (Oriental Industries (Suzhou) Ltd, (‘OTIZ’)) requested an individual examination under Article 17(3) of the basic Regulation and submitted a questionnaire reply within the deadline set. It is noted that the interim review investigation was conducted in parallel with the expiry investigation and an investigation initiated on the basis of Article 5 of the basic Regulation. Given the added complexity of concurrent and distinct assessments in three HTYP investigations, the Commission considered that the examination of the request, also at definitive stage of the investigation would have been unduly burdensome and disproportionate and would prevent the proper completion of the investigation in good time. Therefore, no individual examination was granted to OTIZ. |
| --- | --- |

(265)

One exporting producer in China (Oriental Industries (Suzhou) Ltd, (‘OTIZ’)) requested an individual examination under Article 17(3) of the basic Regulation and submitted a questionnaire reply within the deadline set. It is noted that the interim review investigation was conducted in parallel with the expiry investigation and an investigation initiated on the basis of Article 5 of the basic Regulation. Given the added complexity of concurrent and distinct assessments in three HTYP investigations, the Commission considered that the examination of the request, also at definitive stage of the investigation would have been unduly burdensome and disproportionate and would prevent the proper completion of the investigation in good time. Therefore, no individual examination was granted to OTIZ.

4.2.   Questionnaire replies and remote cross-checks

Questionnaire replies and remote cross-checks

| (266) | The Commission sent a questionnaire concerning the existence of significant distortions in China within the meaning of Article 2(6a)(b) of the basic Regulation to the GOC. |
| --- | --- |

(266)

The Commission sent a questionnaire concerning the existence of significant distortions in China within the meaning of Article 2(6a)(b) of the basic Regulation to the GOC.

| (267) | The Commission sent questionnaires to the sampled exporting producers. The same questionnaires had also been made available online on the day of initiation. |
| --- | --- |

(267)

The Commission sent questionnaires to the sampled exporting producers. The same questionnaires had also been made available online on the day of initiation.

| (268) | The Commission received questionnaire replies from three groups of exporting producers (from sampled exporting producers and from OTIZ). |
| --- | --- |

(268)

The Commission received questionnaire replies from three groups of exporting producers (from sampled exporting producers and from OTIZ).

| (269) | In view of the outbreak of Covid-19 and the confinement measures put in place by various third countries, the Commission could not carry out verification visits pursuant to Article (16) of the basic Regulation at the exporting producers’ premises. |
| --- | --- |

(269)

In view of the outbreak of Covid-19 and the confinement measures put in place by various third countries, the Commission could not carry out verification visits pursuant to Article (16) of the basic Regulation at the exporting producers’ premises.

| (270) | The Commission instead cross-checked remotely all the information deemed necessary for its determinations in line with its Notice on the consequences of the Covid-19 outbreak on anti-dumping and anti-subsidy investigations (90). |
| --- | --- |

(270)

The Commission instead cross-checked remotely all the information deemed necessary for its determinations in line with its Notice on the consequences of the Covid-19 outbreak on anti-dumping and anti-subsidy investigations (90).

90

| (271) | The Commission carried out remote crosschecks of the following exporting producers:






  — | Huzhou Unifull Industrial Fibre Co., Ltd., Zhejiang Unifull Industrial Fibre Co., Ltd. and Zhejiang Unifull Hi-Tech Industry Co., Ltd. (hereinafter collectively ‘Unifull’) |
| --- | --- | --- |

(271)

The Commission carried out remote crosschecks of the following exporting producers:

—

Huzhou Unifull Industrial Fibre Co., Ltd., Zhejiang Unifull Industrial Fibre Co., Ltd. and Zhejiang Unifull Hi-Tech Industry Co., Ltd. (hereinafter collectively ‘Unifull’)

| — | Zhejiang Guxiandao Polyester Dope Dyed Yarn Co., Ltd. (‘Guxiandao’) |
| --- | --- |

—

Zhejiang Guxiandao Polyester Dope Dyed Yarn Co., Ltd. (‘Guxiandao’)

4.3.   Suspension request

Suspension request

| (272) | As stated above in recital (253) two Chinese exporters, Unifull and OTIZ, claimed that the conditions to suspend the measures under Article 14(4) of Regulation (EU) 2016/1036 were met. |
| --- | --- |

(272)

As stated above in recital (253) two Chinese exporters, Unifull and OTIZ, claimed that the conditions to suspend the measures under Article 14(4) of Regulation (EU) 2016/1036 were met.

| (273) | The Commission rejected this claim also with regard to the Interim Review for the reasons explained in recitals (253) to (258). |
| --- | --- |

(273)

The Commission rejected this claim also with regard to the Interim Review for the reasons explained in recitals (253) to (258).

4.4.   Subsequent procedure

Subsequent procedure

| (274) | On 20 February 2023, the Commission disclosed the essential facts and considerations on the basis of which it intended to revise the level of anti-dumping duties. All parties were granted a period within which they could make comments on the disclosure. |
| --- | --- |

(274)

On 20 February 2023, the Commission disclosed the essential facts and considerations on the basis of which it intended to revise the level of anti-dumping duties. All parties were granted a period within which they could make comments on the disclosure.

| (275) | The comments made by interested parties were considered by the Commission and taken into account, where appropriate. The parties who so requested were granted a hearing. |
| --- | --- |

(275)

The comments made by interested parties were considered by the Commission and taken into account, where appropriate. The parties who so requested were granted a hearing.

4.5.   Dumping

Dumping

4.5.1.   
  Determination of the normal value

Determination of the normal value

| (276) | As set out in Section 3.4.4.1 above, the Commission concluded that it was not appropriate to use domestic prices and costs in China to establish normal value with respect to the imports of HTYP from China, due to the existence of significant distortions within the meaning of point (b) of Article 2(6a) of the basic Regulation. |
| --- | --- |

(276)

As set out in Section 3.4.4.1 above, the Commission concluded that it was not appropriate to use domestic prices and costs in China to establish normal value with respect to the imports of HTYP from China, due to the existence of significant distortions within the meaning of point (b) of Article 2(6a) of the basic Regulation.

| (277) | Consequently, the Commission proceeded in the partial interim review investigation to construct the normal value exclusively on the basis of costs of production and sale reflecting undistorted prices or benchmarks, that is, on the basis of corresponding costs of production and sale in an appropriate representative country, in accordance with Article 2(6a)(a) of the basic Regulation. |
| --- | --- |

(277)

Consequently, the Commission proceeded in the partial interim review investigation to construct the normal value exclusively on the basis of costs of production and sale reflecting undistorted prices or benchmarks, that is, on the basis of corresponding costs of production and sale in an appropriate representative country, in accordance with Article 2(6a)(a) of the basic Regulation.

| (278) | As it follows from the analysis set out in Section 3.4.4.2, Türkiye met the criteria laid down in Article 2(6a)(a), first indent of the basic Regulation in order to be considered as an appropriate representative country. |
| --- | --- |

(278)

As it follows from the analysis set out in Section 3.4.4.2, Türkiye met the criteria laid down in Article 2(6a)(a), first indent of the basic Regulation in order to be considered as an appropriate representative country.

| (279) | In addition to the First Note (see recitals (39)-(40)), and after having analysed the comments received thereto, the Commission issued the Second note on the sources for the determination of the normal value on 30 November 2022 (the ‘Second Note’) (the First Note and Second Note are collectively referred to as the ‘Notes‘). |
| --- | --- |

(279)

In addition to the First Note (see recitals (39)-(40)), and after having analysed the comments received thereto, the Commission issued the Second note on the sources for the determination of the normal value on 30 November 2022 (the ‘Second Note’) (the First Note and Second Note are collectively referred to as the ‘Notes‘).

| (280) | In the Second Note, the Commission updated the list of factors of production and informed interested parties of its intention to use Türkiye as the representative country under Article 2(6a)(a), first indent of the basic Regulation. It also informed interested parties that it would establish selling, general and administrative costs and profits based on publicly available financial statements of an HTYP producer in Türkiye. Furthermore, an additional note with revised exchange rates for a number of benchmarks as well as including a more detailed disclosure of benchmark for labour cost calculation was issued and placed on the open file on 16 December 2022. |
| --- | --- |

(280)

In the Second Note, the Commission updated the list of factors of production and informed interested parties of its intention to use Türkiye as the representative country under Article 2(6a)(a), first indent of the basic Regulation. It also informed interested parties that it would establish selling, general and administrative costs and profits based on publicly available financial statements of an HTYP producer in Türkiye. Furthermore, an additional note with revised exchange rates for a number of benchmarks as well as including a more detailed disclosure of benchmark for labour cost calculation was issued and placed on the open file on 16 December 2022.

| (281) | The Commission invited interested parties to comment on the Notes. Comments were received from all sampled exporting producers as well as from the applicant (in support of Türkiye as the representative country) and a group of users (IVGT, Delcotex, Gleistein, Guth&Wolf, Heytex and Jakob Eschbach). The arguments of the parties are addressed in Section 4.5.3 below. |
| --- | --- |

(281)

The Commission invited interested parties to comment on the Notes. Comments were received from all sampled exporting producers as well as from the applicant (in support of Türkiye as the representative country) and a group of users (IVGT, Delcotex, Gleistein, Guth&Wolf, Heytex and Jakob Eschbach). The arguments of the parties are addressed in Section 4.5.3 below.

4.5.2.   
  Comments by interested parties on existence of significant distortions

Comments by interested parties on existence of significant distortions

| (282) | Further to the establishment of existence of significant distortions in accordance with Article 2(6a) of the basic Regulation, outlined in Section 3.4.4.1 above, the following comments were received in the context of the partial interim review investigation and were addressed by the Commission as follows. |
| --- | --- |

(282)

Further to the establishment of existence of significant distortions in accordance with Article 2(6a) of the basic Regulation, outlined in Section 3.4.4.1 above, the following comments were received in the context of the partial interim review investigation and were addressed by the Commission as follows.

| (283) | In the course of the investigation, comments were received from the sampled exporting producers, OTIZ and a group of users. |
| --- | --- |

(283)

In the course of the investigation, comments were received from the sampled exporting producers, OTIZ and a group of users.

| (284) | In their comments on the First Note, Guxiandao, apart from stating that the application of Article 2(6a) of the basic Regulation would be WTO incompatible, alleged that the analysis in the request pertaining to the existence of significant distortions – in China in general as well as concerning Guxiandao specifically – was flawed for the following reasons: (i) the interim review request’s allegations are general in nature – for example when referring to energy or labour costs – and they concern China or its chemical sector, rather than the HTYP market; the allegations also rely exclusively on the Report, rather than being based on positive evidence; (ii) the applicant, in assessing whether significant distortions exist, relies on supporting evidence that is either irrelevant – typically outdated – or factually wrong – quoting past distortive obligations which no longer exist under Chinese law; (iii) the raw materials PTA and MEG are two commodity goods traded globally and priced in a transparent manner and in line with international prices, for which reason the request’s claims about their prices being distorted in China is flawed; (iv) the applicant failed to provide any positive and concrete evidence as regard the factors listed in Article 2(6a)(b) of the basic Regulation and therefore no valid conclusion can be drawn concerning the existence of significant distortions. |
| --- | --- |

(284)

In their comments on the First Note, Guxiandao, apart from stating that the application of Article 2(6a) of the basic Regulation would be WTO incompatible, alleged that the analysis in the request pertaining to the existence of significant distortions – in China in general as well as concerning Guxiandao specifically – was flawed for the following reasons: (i) the interim review request’s allegations are general in nature – for example when referring to energy or labour costs – and they concern China or its chemical sector, rather than the HTYP market; the allegations also rely exclusively on the Report, rather than being based on positive evidence; (ii) the applicant, in assessing whether significant distortions exist, relies on supporting evidence that is either irrelevant – typically outdated – or factually wrong – quoting past distortive obligations which no longer exist under Chinese law; (iii) the raw materials PTA and MEG are two commodity goods traded globally and priced in a transparent manner and in line with international prices, for which reason the request’s claims about their prices being distorted in China is flawed; (iv) the applicant failed to provide any positive and concrete evidence as regard the factors listed in Article 2(6a)(b) of the basic Regulation and therefore no valid conclusion can be drawn concerning the existence of significant distortions.

| (285) | Similarly, Unifull and OTIZ expressed their opinion that Article 2(6a) of the basic Regulation is not compatible with Article 2.2 and 2.2.1.1 of the ADA and the WTO jurisprudence, as well as that there is lack of evidence with regard to the alleged significant distortions in relation to the Chinese HTYP industry. A group of users made a similar claim in support of the exporting producers. |
| --- | --- |

(285)

Similarly, Unifull and OTIZ expressed their opinion that Article 2(6a) of the basic Regulation is not compatible with Article 2.2 and 2.2.1.1 of the ADA and the WTO jurisprudence, as well as that there is lack of evidence with regard to the alleged significant distortions in relation to the Chinese HTYP industry. A group of users made a similar claim in support of the exporting producers.

| (286) | The arguments raised by the parties could not be accepted. At the outset, the Commission emphasized its position that the provisions of Article 2(6a) of the basic Regulation are fully consistent with the European Union’s WTO obligations. As to the arguments concerning the allegedly flawed significant distortions analysis in the interim review request, the Commission recalled, first of all, that Article 2(6a)(e) of the basic Regulation lays down an obligation to collect the data necessary for the application of this methodology when the investigation has been initiated on this basis. Consequently, far from drawing conclusions concerning the existence of significant distortions, the Commission merely deemed the evidence submitted by the applicant on the significant distortions sufficient to initiate the investigation. Moreover, the Commission pointed out that certain types of distortions present in China – such as distortion related to energy or labour – are cross-cutting, affecting the entire Chinese economy and therefore also prices and/or the raw materials and costs of production of the product under review. Further, concerning the claim that allegations in the interim review request rely exclusively on the Report and are at any rate based on outdated or inaccurate information, the Commission pointed out that the request may be striving to demonstrate the unchanged nature of the significant distortions by referring to policy documents of the 12th or 13th planning cycle. In addition, the Commission recalled that Article 2(6a)(d) of the basic Regulation explicitly provides the Union industry with the possibility to rely on the information contained in the Report when bringing a complaint or a review request. The Commission therefore considered that the evidence identified in the request and referred to in the respective Notice of Initiation was sufficient to warrant initiation of an investigation on the basis of Article 2(6a) of the basic Regulation. As to the claim that raw materials PTA and MEG are traded internationally and their prices in China are therefore not being distorted, this argument has to be dismissed (without prejudice for the assessment of a specific claim on undistorted nature of raw materials sourced from abroad, as outlined in recitals (309)-(310) for the reasons set out above, in particular in recitals (98)-(100). |
| --- | --- |

(286)

The arguments raised by the parties could not be accepted. At the outset, the Commission emphasized its position that the provisions of Article 2(6a) of the basic Regulation are fully consistent with the European Union’s WTO obligations. As to the arguments concerning the allegedly flawed significant distortions analysis in the interim review request, the Commission recalled, first of all, that Article 2(6a)(e) of the basic Regulation lays down an obligation to collect the data necessary for the application of this methodology when the investigation has been initiated on this basis. Consequently, far from drawing conclusions concerning the existence of significant distortions, the Commission merely deemed the evidence submitted by the applicant on the significant distortions sufficient to initiate the investigation. Moreover, the Commission pointed out that certain types of distortions present in China – such as distortion related to energy or labour – are cross-cutting, affecting the entire Chinese economy and therefore also prices and/or the raw materials and costs of production of the product under review. Further, concerning the claim that allegations in the interim review request rely exclusively on the Report and are at any rate based on outdated or inaccurate information, the Commission pointed out that the request may be striving to demonstrate the unchanged nature of the significant distortions by referring to policy documents of the 12th or 13th planning cycle. In addition, the Commission recalled that Article 2(6a)(d) of the basic Regulation explicitly provides the Union industry with the possibility to rely on the information contained in the Report when bringing a complaint or a review request. The Commission therefore considered that the evidence identified in the request and referred to in the respective Notice of Initiation was sufficient to warrant initiation of an investigation on the basis of Article 2(6a) of the basic Regulation. As to the claim that raw materials PTA and MEG are traded internationally and their prices in China are therefore not being distorted, this argument has to be dismissed (without prejudice for the assessment of a specific claim on undistorted nature of raw materials sourced from abroad, as outlined in recitals (309)-(310) for the reasons set out above, in particular in recitals (98)-(100).

th

th

4.5.3.   
  Comments of the parties on the choice of representative country

Comments of the parties on the choice of representative country

| (287) | With respect to the choice of the representative country, a group of users suggested in response to the Second Note that Republic of Korea is the most appropriate representative country, given the level of economic development similar to China, production of HTYP, availability of relevant public data, and its adequate level of social and environmental protection. |
| --- | --- |

(287)

With respect to the choice of the representative country, a group of users suggested in response to the Second Note that Republic of Korea is the most appropriate representative country, given the level of economic development similar to China, production of HTYP, availability of relevant public data, and its adequate level of social and environmental protection.

| (288) | It is recalled that for the purpose of identifying countries with a level of economic development similar to China, the Commission considers on the basis of the database of the World Bank (91) only ‘upper-middle income’ countries on a gross national income basis. However, Republic of Korea has been classified, in and prior to RIP, as a ‘high income’ country by the World Bank and hence cannot be considered as a potential representative country. |
| --- | --- |

(288)

It is recalled that for the purpose of identifying countries with a level of economic development similar to China, the Commission considers on the basis of the database of the World Bank (91) only ‘upper-middle income’ countries on a gross national income basis. However, Republic of Korea has been classified, in and prior to RIP, as a ‘high income’ country by the World Bank and hence cannot be considered as a potential representative country.

91

| (289) | Guxiandao claimed in its response to the Notes that the GTA data concerning the main raw materials for HTYP production is inaccurate, when compared to the statistics from the official data portal of the Turkish Statistical Institute. The Commission noted that, the data reported in GTA system for Türkiye is based on the general trade view while the data that was gathered from the official Turkish statistics is based on a special trade view (which excludes goods that enter or exit a free trade zone or bonded warehouse). Hence the differences in figures are duly justified and cannot render the GTA data unreliable. Therefore, Guxiandao cannot validly claim that the GTA data are inaccurate and its argument has to be dismissed. |
| --- | --- |

(289)

Guxiandao claimed in its response to the Notes that the GTA data concerning the main raw materials for HTYP production is inaccurate, when compared to the statistics from the official data portal of the Turkish Statistical Institute. The Commission noted that, the data reported in GTA system for Türkiye is based on the general trade view while the data that was gathered from the official Turkish statistics is based on a special trade view (which excludes goods that enter or exit a free trade zone or bonded warehouse). Hence the differences in figures are duly justified and cannot render the GTA data unreliable. Therefore, Guxiandao cannot validly claim that the GTA data are inaccurate and its argument has to be dismissed.

| (290) | Guxiandao further submitted in response to the Second Note that the prices for raw materials in Türkiye disclosed in Annex I (List of factors of production and their prices in Türkiye) are inconsistent with the prices disclosed for Türkiye in Annex II (Comparison of import statistics for potential representative countries). The Commission noted that the statistics in Annex II are only raw data for the purposes of comparison between different countries, aggregated at the common HS6 level without including the applicable customs duties for individual importing countries. The data in Annex I on the other hand outlines values at the level of Turkish national tariff codes and includes the customs duties as well. Therefore, the price levels in Annex I and Annex II are not intended to be identical and the argument of the party has to be dismissed as unfounded. |
| --- | --- |

(290)

Guxiandao further submitted in response to the Second Note that the prices for raw materials in Türkiye disclosed in Annex I (List of factors of production and their prices in Türkiye) are inconsistent with the prices disclosed for Türkiye in Annex II (Comparison of import statistics for potential representative countries). The Commission noted that the statistics in Annex II are only raw data for the purposes of comparison between different countries, aggregated at the common HS6 level without including the applicable customs duties for individual importing countries. The data in Annex I on the other hand outlines values at the level of Turkish national tariff codes and includes the customs duties as well. Therefore, the price levels in Annex I and Annex II are not intended to be identical and the argument of the party has to be dismissed as unfounded.

| (291) | Further to the final disclosure, Guxiandao claimed that no calculation worksheet was provided in relation to the adjustment for import duties in Annex I, which led to an inadequate disclosure by the Commission. It was observed by the Commission that the data including prices of factors of production in Türkiye has been generated automatically from GTA at the level of Turkish national tariff codes (including all conventional and preferential customs duties based on the Market Access Map database – MacMap), it was duly disclosed and was used in this case by the Commission without further modification. It was noted that no additional calculation worksheet or the like was produced by the Commission for this purpose. Hence, Guxiandao’s claim has to be dismissed |
| --- | --- |

(291)

Further to the final disclosure, Guxiandao claimed that no calculation worksheet was provided in relation to the adjustment for import duties in Annex I, which led to an inadequate disclosure by the Commission. It was observed by the Commission that the data including prices of factors of production in Türkiye has been generated automatically from GTA at the level of Turkish national tariff codes (including all conventional and preferential customs duties based on the Market Access Map database – MacMap), it was duly disclosed and was used in this case by the Commission without further modification. It was noted that no additional calculation worksheet or the like was produced by the Commission for this purpose. Hence, Guxiandao’s claim has to be dismissed

| (292) | Guxiandao claimed that Türkiye is not appropriate to be selected as a representative country. The company submitted that, first, the currency depreciation and high inflation led to abnormal market conditions in Türkiye which inevitably impacted the local costs and which in turn made Türkiye manifestly unsuitable as a representative country. Guxiandao reiterated its claim in response to the final disclosure, adding that local prices and/or import prices affected by significant local currency depreciation into Türkiye cannot reflect undistorted prices or benchmarks. Second, according to Guxiandao, Kordsa Türkiye cannot be considered a producer of HTYP destined to the open market, as its limited polyester yarn production capacity is mainly, if not exclusively, used for captive use in its own downstream tire cord fabric production. This view was supported also by a group of users claiming that Kordsa Türkiye uses HTYP mostly for its own production for pre-tire materials. Guxiandao claimed that HTYP is only marginal and subordinate business in support of cord fabric and that the biggest majority, if not all, of the external revenues in the segment “Industrial yarn and cord fabric” relate to revenue from sales of industrial fabrics and nylon yarn, and not of HTYP. Guxiandao reiterated this argument in its response to the final disclosure. The parties concluded that the financial result of the company is thus not representative of a HTYP producer and hence there is no financial information readily available for HTYP operation in Türkiye. Third, Guxiandao maintained in the Second Note that Kordsa Türkiye produces only one specific type of HTYP (high value-added HMLS for automotive use), which makes it unsuitable for representative country purpose, as the operational result from one single product type, is not representative of that concerning Chinese HTYP producers which produce a wide range of product types. In conclusion, Guxiandao submitted that the Commission should disregard the profit margin of Kordsa Türkiye and use a more reasonable profit margin representative of Chinese HTYP producers. Guxiandao maintained in its response to the final disclosure that the profit level of 15,3 % established by the Commission is excessively high for an HTYP producer and that a maximum of 6 % (equal to the target profit margin for sampled Union producers in the present case, established by applying Article 7(2c) of the basic Regulation) is thus a reasonable proxy for the undistorted and reasonable profit that an HTYP producer can normally achieve. |
| --- | --- |

(292)

Guxiandao claimed that Türkiye is not appropriate to be selected as a representative country. The company submitted that, first, the currency depreciation and high inflation led to abnormal market conditions in Türkiye which inevitably impacted the local costs and which in turn made Türkiye manifestly unsuitable as a representative country. Guxiandao reiterated its claim in response to the final disclosure, adding that local prices and/or import prices affected by significant local currency depreciation into Türkiye cannot reflect undistorted prices or benchmarks. Second, according to Guxiandao, Kordsa Türkiye cannot be considered a producer of HTYP destined to the open market, as its limited polyester yarn production capacity is mainly, if not exclusively, used for captive use in its own downstream tire cord fabric production. This view was supported also by a group of users claiming that Kordsa Türkiye uses HTYP mostly for its own production for pre-tire materials. Guxiandao claimed that HTYP is only marginal and subordinate business in support of cord fabric and that the biggest majority, if not all, of the external revenues in the segment “Industrial yarn and cord fabric” relate to revenue from sales of industrial fabrics and nylon yarn, and not of HTYP. Guxiandao reiterated this argument in its response to the final disclosure. The parties concluded that the financial result of the company is thus not representative of a HTYP producer and hence there is no financial information readily available for HTYP operation in Türkiye. Third, Guxiandao maintained in the Second Note that Kordsa Türkiye produces only one specific type of HTYP (high value-added HMLS for automotive use), which makes it unsuitable for representative country purpose, as the operational result from one single product type, is not representative of that concerning Chinese HTYP producers which produce a wide range of product types. In conclusion, Guxiandao submitted that the Commission should disregard the profit margin of Kordsa Türkiye and use a more reasonable profit margin representative of Chinese HTYP producers. Guxiandao maintained in its response to the final disclosure that the profit level of 15,3 % established by the Commission is excessively high for an HTYP producer and that a maximum of 6 % (equal to the target profit margin for sampled Union producers in the present case, established by applying Article 7(2c) of the basic Regulation) is thus a reasonable proxy for the undistorted and reasonable profit that an HTYP producer can normally achieve.

| (293) | The Commission observed that the choice of the representative country was based on the three criteria: level of economic development, production of the product concerned and availability of relevant public data. A potential impact of a devaluing currency or inflation level is not among those criteria. In any event, the submitting party has not demonstrated how the depreciation of the Turkish Lira and high inflation would actually have affected the prices of inputs sourced in Türkiye, and if so what the real impact on the normal value that is calculated in CNY would be. Moreover, the parties did not provide any information indicating that (and to what extent) Turkish lira would be used in import transactions for raw materials forming a basis for establishing the undistorted cost benchmarks in this case. In addition, when establishing benchmarks on the basis of import prices for the calculation of normal value under Article 2 (6a)(a) of the basic Regulation, the import values into the representative countries are ultimately converted into the currency of the exporting country, i.e. in this case CNY. Therefore, the Commission found that this claim was unsubstantiated and rejected it. |
| --- | --- |

(293)

The Commission observed that the choice of the representative country was based on the three criteria: level of economic development, production of the product concerned and availability of relevant public data. A potential impact of a devaluing currency or inflation level is not among those criteria. In any event, the submitting party has not demonstrated how the depreciation of the Turkish Lira and high inflation would actually have affected the prices of inputs sourced in Türkiye, and if so what the real impact on the normal value that is calculated in CNY would be. Moreover, the parties did not provide any information indicating that (and to what extent) Turkish lira would be used in import transactions for raw materials forming a basis for establishing the undistorted cost benchmarks in this case. In addition, when establishing benchmarks on the basis of import prices for the calculation of normal value under Article 2 (6a)(a) of the basic Regulation, the import values into the representative countries are ultimately converted into the currency of the exporting country, i.e. in this case CNY. Therefore, the Commission found that this claim was unsubstantiated and rejected it.

| (294) | Regarding Kordsa Türkiye’s product portfolio and source of revenues, the Commission noted that in the event when no financial information is readily available specifically and solely in relation to product concerned by investigation (in this case HTYP), which is rarely the case, the Commission seeks to identify the closest readily available proxy, including consolidated information of producer(s) active, among others in the business of the product concerned. In this case, as outlined in recital (111) approximately 86 % of Kordsa Türkiye’s external revenues in 2021 were generated in the segment covering HTYP. Furthermore, contrary to what the parties submit, Kordsa Türkiye does indeed generate external revenue by producing and selling also polyester yarn (92). In fact, Kordsa is “[o]ne of the leaders of the [...] HMLS polyester yarn market”, with “a portfolio of yarns that are suitable for use in such applications as cord fabrics, heavy-duty textiles, industrial fabrics, chafer fabrics, single-end cords and ropes” (93), hence for use also in industries other than the automotive industry. This makes the parties’ argument on captive use of HTYP unfounded. Moreover, tire reinforcement is one of the main applications for HTYP and the Chinese HTYP producers, including Guxiandao also produce HMLS yarn and serve customers in the automotive industry. Hence it would be misleading to state that Kordsa Türkiye’s HTYP business is unrepresentative of the business activities of the Chinese HTYP producers. Lastly, the parties did not propose as an alternative to Kordsa Türkiye any other suitable HTYP producer with readily available financial data specifically and solely for HTYP, let alone a HTYP producer with wider HTYP portfolio than that of Kordsa Türkiye. |
| --- | --- |

(294)

Regarding Kordsa Türkiye’s product portfolio and source of revenues, the Commission noted that in the event when no financial information is readily available specifically and solely in relation to product concerned by investigation (in this case HTYP), which is rarely the case, the Commission seeks to identify the closest readily available proxy, including consolidated information of producer(s) active, among others in the business of the product concerned. In this case, as outlined in recital (111) approximately 86 % of Kordsa Türkiye’s external revenues in 2021 were generated in the segment covering HTYP. Furthermore, contrary to what the parties submit, Kordsa Türkiye does indeed generate external revenue by producing and selling also polyester yarn (92). In fact, Kordsa is “[o]ne of the leaders of the [...] HMLS polyester yarn market”, with “a portfolio of yarns that are suitable for use in such applications as cord fabrics, heavy-duty textiles, industrial fabrics, chafer fabrics, single-end cords and ropes” (93), hence for use also in industries other than the automotive industry. This makes the parties’ argument on captive use of HTYP unfounded. Moreover, tire reinforcement is one of the main applications for HTYP and the Chinese HTYP producers, including Guxiandao also produce HMLS yarn and serve customers in the automotive industry. Hence it would be misleading to state that Kordsa Türkiye’s HTYP business is unrepresentative of the business activities of the Chinese HTYP producers. Lastly, the parties did not propose as an alternative to Kordsa Türkiye any other suitable HTYP producer with readily available financial data specifically and solely for HTYP, let alone a HTYP producer with wider HTYP portfolio than that of Kordsa Türkiye.

92

ne of the leaders of the

HMLS polyester yarn market

a portfolio of yarns that are suitable for use in such applications as cord fabrics, heavy-duty textiles, industrial fabrics, chafer fabrics, single-end cords and ropes

93

| (295) | In these circumstances, the consolidated SG&A and profit identified for Kordsa Türkiye are therefore deemed sufficiently representative and suitable to be applied for the purposes of the present investigation and the arguments of the parties have to be dismissed. It was further observed that, the target profit of 6 % proposed to be used by Guxiandao and the profit in the representative country refer to different concepts governed by different rules prescribed in different legal provisions. In particular, the target profit is the profit achieved by the Union industry for domestic sales in the Union under normal conditions of competition and it is used to calculate the injury margin under Article 9(4) of the basic Regulation. The profit in the representative country was used in the calculation of normal value by reference to the appropriate representative country pursuant to Article 2(6a)(a) of the basic Regulation. This profit must reflect the profit achieved by a company producing the product under investigation or a similar product, in a representative country. Since the concept of the target profit and of profit in a representative country are not comparable, the claim of Guxiandao was dismissed as irrelevant. Moreover, Guxiandao provided no evidence suggesting that the amount for profit included in the constructed normal value was not undistorted and reasonable within the meaning of Article 2(6a)(a). |
| --- | --- |

(295)

In these circumstances, the consolidated SG&A and profit identified for Kordsa Türkiye are therefore deemed sufficiently representative and suitable to be applied for the purposes of the present investigation and the arguments of the parties have to be dismissed. It was further observed that, the target profit of 6 % proposed to be used by Guxiandao and the profit in the representative country refer to different concepts governed by different rules prescribed in different legal provisions. In particular, the target profit is the profit achieved by the Union industry for domestic sales in the Union under normal conditions of competition and it is used to calculate the injury margin under Article 9(4) of the basic Regulation. The profit in the representative country was used in the calculation of normal value by reference to the appropriate representative country pursuant to Article 2(6a)(a) of the basic Regulation. This profit must reflect the profit achieved by a company producing the product under investigation or a similar product, in a representative country. Since the concept of the target profit and of profit in a representative country are not comparable, the claim of Guxiandao was dismissed as irrelevant. Moreover, Guxiandao provided no evidence suggesting that the amount for profit included in the constructed normal value was not undistorted and reasonable within the meaning of Article 2(6a)(a).

| (296) | Guxiandao took the view that the Commission should select Brazil as the suitable representative country instead of Türkiye, given that financial data are readily available for Kordsa group company in Brazil and because Brazil had hardly any imports from China concerning the key inputs for production of the HTYP (PTA, MEG, PET chips) compared to Türkiye in 2021 and therefore is less likely affected by the alleged distortions. Guxiandao reiterated this argument in its response to the final disclosure, adding that if Kordsa Türkiye’s annual report for 2021 at company group consolidated level was acceptable as source for establishing the undistorted SG&A and profit in Türkiye, the same equally applied to Kordsa Brazil since the consolidated accounts also included the operational result of Kordsa Brazil. |
| --- | --- |

(296)

Guxiandao took the view that the Commission should select Brazil as the suitable representative country instead of Türkiye, given that financial data are readily available for Kordsa group company in Brazil and because Brazil had hardly any imports from China concerning the key inputs for production of the HTYP (PTA, MEG, PET chips) compared to Türkiye in 2021 and therefore is less likely affected by the alleged distortions. Guxiandao reiterated this argument in its response to the final disclosure, adding that if Kordsa Türkiye’s annual report for 2021 at company group consolidated level was acceptable as source for establishing the undistorted SG&A and profit in Türkiye, the same equally applied to Kordsa Brazil since the consolidated accounts also included the operational result of Kordsa Brazil.

| (297) | First, financial data for Kordsa Brazil is only available for 2019, while the period under review in the present case, which is of primary relevance, covers the year 2021. In addition, as outlined above, readily available and profitable data exist in relation to Kordsa Türkiye for 2021. While the financial statement of Kordsa Türkiye for 2021 used for the purposes of this case consolidated also the data of its subsidiaries, including Kordsa Brazil, it was evident that the profit and SG&A figures in the consolidated statement were more representative of Kordsa Türkiye’s operations rather than operations of Kordsa Brazil. This is because, the revenue generated by the Europe-Middle East-Africa geographical segment (covering solely operations in Turkey) was almost three times higher than the revenues generated by Kordsa Brazil (representing the South American segment) (94). In any event, Article 2(6a)(a) of the basic Regulation requires that the amount for administrative, selling and general costs and for profits included in the constructed normal value is undistorted and reasonable. Guxiandao adduced no evidence demonstrating that this is not the case. Second, while the proportion of undistorted import quantities on the total imports for PET chips, PTA and MEG into Türkiye was lower than that of the undistorted imports into Brazil, the total quantity of undistorted imports for each of these inputs into Türkiye was significantly higher than the total quantity of undistorted imports into Brazil. In fact, while Brazil may have sufficiently representative data on PET chips and MEG imports available, this does not apply to the PTA imports, which were insignificant compared to Türkiye and accounted only for around 7 % of the PTA imports into Türkiye. The argument submitted by Guxiandao therefore has to be rejected. |
| --- | --- |

(297)

First, financial data for Kordsa Brazil is only available for 2019, while the period under review in the present case, which is of primary relevance, covers the year 2021. In addition, as outlined above, readily available and profitable data exist in relation to Kordsa Türkiye for 2021. While the financial statement of Kordsa Türkiye for 2021 used for the purposes of this case consolidated also the data of its subsidiaries, including Kordsa Brazil, it was evident that the profit and SG&A figures in the consolidated statement were more representative of Kordsa Türkiye’s operations rather than operations of Kordsa Brazil. This is because, the revenue generated by the Europe-Middle East-Africa geographical segment (covering solely operations in Turkey) was almost three times higher than the revenues generated by Kordsa Brazil (representing the South American segment) (94). In any event, Article 2(6a)(a) of the basic Regulation requires that the amount for administrative, selling and general costs and for profits included in the constructed normal value is undistorted and reasonable. Guxiandao adduced no evidence demonstrating that this is not the case. Second, while the proportion of undistorted import quantities on the total imports for PET chips, PTA and MEG into Türkiye was lower than that of the undistorted imports into Brazil, the total quantity of undistorted imports for each of these inputs into Türkiye was significantly higher than the total quantity of undistorted imports into Brazil. In fact, while Brazil may have sufficiently representative data on PET chips and MEG imports available, this does not apply to the PTA imports, which were insignificant compared to Türkiye and accounted only for around 7 % of the PTA imports into Türkiye. The argument submitted by Guxiandao therefore has to be rejected.

94

| (298) | Regarding the SG&A of Kordsa Türkiye, which is to be applied in the present case to construct the normal value for the exporting producers, Guxiandao submitted that to ensure fair comparison between the constructed normal value and the export price, the packaging expenses, which according to Guxiandao form part of the SG&A (based on the Note 21 to the Kordsa Türkiye financial statements) should be excluded. |
| --- | --- |

(298)

Regarding the SG&A of Kordsa Türkiye, which is to be applied in the present case to construct the normal value for the exporting producers, Guxiandao submitted that to ensure fair comparison between the constructed normal value and the export price, the packaging expenses, which according to Guxiandao form part of the SG&A (based on the Note 21 to the Kordsa Türkiye financial statements) should be excluded.

| (299) | First, the Commission took the profit and loss statement and operating items listed therein as a basis for calculating the SG&A costs for Kordsa Türkiye. Note 21 to the financial statements, referred to by Guxiandao lists ‘Expenses by nature’, which evidently cover not only the operating expenses, but also the material costs, including packaging costs included in the cost of goods sold. Simple comparison of the total of operating expenses in the profit and loss statement and of the total of the expenses in Note 21 also shows that the latter amount is significantly higher. It would therefore be manifestly wrong to extrapolate from the mere reference to Note 21 in the profit and loss statement part listing operating items that all expenses outlined in Note 21 correspond to the operating expenses. In view of the above, the argument made by Guxiandao has to be rejected. |
| --- | --- |

(299)

First, the Commission took the profit and loss statement and operating items listed therein as a basis for calculating the SG&A costs for Kordsa Türkiye. Note 21 to the financial statements, referred to by Guxiandao lists ‘Expenses by nature’, which evidently cover not only the operating expenses, but also the material costs, including packaging costs included in the cost of goods sold. Simple comparison of the total of operating expenses in the profit and loss statement and of the total of the expenses in Note 21 also shows that the latter amount is significantly higher. It would therefore be manifestly wrong to extrapolate from the mere reference to Note 21 in the profit and loss statement part listing operating items that all expenses outlined in Note 21 correspond to the operating expenses. In view of the above, the argument made by Guxiandao has to be rejected.

Expenses by nature

| (300) | Furthermore, a group of users urged the Commission to use Chinese exporting producers’ own SG&A and profit to calculate the normal value. |
| --- | --- |

(300)

Furthermore, a group of users urged the Commission to use Chinese exporting producers’ own SG&A and profit to calculate the normal value.

| (301) | The Commission noted that once the existence of significant distortions for the exporting country is established in accordance with Article 2(6a)(b) of the basic Regulation, the normal value is constructed by reference to undistorted prices or benchmarks in an appropriate representative country (in this instance Türkiye) for each exporting producer according to Article 2(6a)(a). The Commission underlines that this provision also specifically requires that the constructed normal value includes a reasonable amount for undistorted SG&A costs and profit in the appropriate representative country. Once the Commission establishes the existence of the significant distortions affecting the product under review in the exporting country, it is prevented from using the actual SG&A costs and profit of individual exporting producers as they were found to be distorted. The interested parties did not provide any evidence that the actual SG&A costs and profit of the Chinese exporting producers were undistorted. Therefore, this claim is rejected. |
| --- | --- |

(301)

The Commission noted that once the existence of significant distortions for the exporting country is established in accordance with Article 2(6a)(b) of the basic Regulation, the normal value is constructed by reference to undistorted prices or benchmarks in an appropriate representative country (in this instance Türkiye) for each exporting producer according to Article 2(6a)(a). The Commission underlines that this provision also specifically requires that the constructed normal value includes a reasonable amount for undistorted SG&A costs and profit in the appropriate representative country. Once the Commission establishes the existence of the significant distortions affecting the product under review in the exporting country, it is prevented from using the actual SG&A costs and profit of individual exporting producers as they were found to be distorted. The interested parties did not provide any evidence that the actual SG&A costs and profit of the Chinese exporting producers were undistorted. Therefore, this claim is rejected.

| (302) | Unifull, while agreeing with the choice of Türkiye as the appropriate representative country, disputed the choice of data on electricity/natural gas. The party argued that depreciation of the Turkish lira against the euro and the US dollars pushed up the import price of natural gas/electricity, that the Russia’s 2022 invasion of Ukraine affected the Türkiye’s natural gas and electricity price and that extraordinary weather in Türkiye in 2021 also had pushed up electricity price. Unifull submitted that, as a result, the Commission should abandon using Türkiye’s natural gas/electricity price data and replace it with data from Brazil or other appropriate countries, for a fair reflection of the actual and normal energy price. |
| --- | --- |

(302)

Unifull, while agreeing with the choice of Türkiye as the appropriate representative country, disputed the choice of data on electricity/natural gas. The party argued that depreciation of the Turkish lira against the euro and the US dollars pushed up the import price of natural gas/electricity, that the Russia’s 2022 invasion of Ukraine affected the Türkiye’s natural gas and electricity price and that extraordinary weather in Türkiye in 2021 also had pushed up electricity price. Unifull submitted that, as a result, the Commission should abandon using Türkiye’s natural gas/electricity price data and replace it with data from Brazil or other appropriate countries, for a fair reflection of the actual and normal energy price.

| (303) | The Commission noted that while the depreciation might have contributed to an increase in gas/electricity prices in Türkiye, such price increase would not be unusual as it corresponded with a wider European trend, as confirmed by the very article quoted by Unifull in support of its claim. Furthermore, dry weather conditions in 2021 and the Russia’s 2022 invasion of Ukraine are developments that would have affected, if at all, energy prices in 2022 rather than in the review investigation period. This would transpire from the articles quoted by Unifull as well as from the fact that invasion of Ukraine by Russia took place in February 2022. Moreover, as outlined by Unifull, Türkiye imported some 45 % of gas from Russia in 2021, hence not being entirely reliant on the imports from Russia. Therefore, Unifull failed to substantiate its claim calling for replacement of gas/electricity price and hence such claim has to be dismissed. |
| --- | --- |

(303)

The Commission noted that while the depreciation might have contributed to an increase in gas/electricity prices in Türkiye, such price increase would not be unusual as it corresponded with a wider European trend, as confirmed by the very article quoted by Unifull in support of its claim. Furthermore, dry weather conditions in 2021 and the Russia’s 2022 invasion of Ukraine are developments that would have affected, if at all, energy prices in 2022 rather than in the review investigation period. This would transpire from the articles quoted by Unifull as well as from the fact that invasion of Ukraine by Russia took place in February 2022. Moreover, as outlined by Unifull, Türkiye imported some 45 % of gas from Russia in 2021, hence not being entirely reliant on the imports from Russia. Therefore, Unifull failed to substantiate its claim calling for replacement of gas/electricity price and hence such claim has to be dismissed.

| (304) | The applicant submitted that Türkiye has a level of economic development similar to the People’s Republic of China and has a much more representative dataset for the factors of production compared to the other countries. The applicant thereby supported the conclusion of the Commission. |
| --- | --- |

(304)

The applicant submitted that Türkiye has a level of economic development similar to the People’s Republic of China and has a much more representative dataset for the factors of production compared to the other countries. The applicant thereby supported the conclusion of the Commission.

4.5.4.   
  Sources used to establish undistorted costs

Sources used to establish undistorted costs

| (305) | On the basis of the information submitted by interested parties (eight exporting producers submitted information on HTYP inputs) and other relevant information available on the file, the Commission established, in the First Note, an initial list of factors of production such as materials, energy and labour, used for the production of the product under review. |
| --- | --- |

(305)

On the basis of the information submitted by interested parties (eight exporting producers submitted information on HTYP inputs) and other relevant information available on the file, the Commission established, in the First Note, an initial list of factors of production such as materials, energy and labour, used for the production of the product under review.

| (306) | In accordance with Article 2(6a)(a) of the basic Regulation, the Commission also identified sources to be used for establishing undistorted prices and benchmarks. The main source that the Commission proposed to use included the Global Trade Atlas (‘GTA’). Finally, the Commission identified the Harmonised System (‘HS’) codes of the FOPs which in the First Note were initially considered to be used for the GTA analysis on the basis of information provided by the interested parties. |
| --- | --- |

(306)

In accordance with Article 2(6a)(a) of the basic Regulation, the Commission also identified sources to be used for establishing undistorted prices and benchmarks. The main source that the Commission proposed to use included the Global Trade Atlas (‘GTA’). Finally, the Commission identified the Harmonised System (‘HS’) codes of the FOPs which in the First Note were initially considered to be used for the GTA analysis on the basis of information provided by the interested parties.

| (307) | The Commission invited the interested parties to comment and propose publicly available information on undistorted values for each of the FOP mentioned in the First Note. Subsequently, in the Second Note, the Commission updated tariff classification information on and expanded the list by a number of FOPs based on the comments received from the interested parties. |
| --- | --- |

(307)

The Commission invited the interested parties to comment and propose publicly available information on undistorted values for each of the FOP mentioned in the First Note. Subsequently, in the Second Note, the Commission updated tariff classification information on and expanded the list by a number of FOPs based on the comments received from the interested parties.

| (308) | In view of the above, the following FOPs and their sources were identified with regard to Türkiye, in order to determine the normal value in accordance with Article 2(6a)(a) of the basic Regulation:

  Table 15


  Factors of production of HTYP









  Factor of Production | Tariff line | Source of data the Commission intends to use
  Raw materials | Prices (CNY) |
| --- | --- | --- | --- | --- |
| |
| Purified terephthalic acid (PTA) | 291736 00 0011 | Global Trade Atlas (GTA) (95)

  Market Access Map, International Trade Centre (MacMap) (96) | 4,91 CNY/Kg |
| Mono-ethylene glycol (MEG) | 290531 | Global Trade Atlas (GTA)
  Market Access Map, International Trade Centre (MacMap) | 4,73 CNY/Kg |
| Poly(ethylene terephthalate) (PET) chips | 390769 | Global Trade Atlas (GTA)
  Market Access Map, International Trade Centre (MacMap) | 7,14 CNY/Kg |
| Spinning Finish Oil | 340311
  340391 | Global Trade Atlas (GTA)
  Market Access Map, International Trade Centre (MacMap) | 17,41 CNY/Kg |
| Labour |
| Labour | [N/A] | Turkish Statistical Institute (97) | 37,83 CNY/Manhour |
| Energy |
| Electricity | [N/A] | Turkish Statistical Institute | Consumption bands (MWh)






  20 000 ≤ T < 70 000 | 0,50 CNY/kWh |
| T > 150 000 | 0,47 CNY/kWh |

(308)

In view of the above, the following FOPs and their sources were identified with regard to Türkiye, in order to determine the normal value in accordance with Article 2(6a)(a) of the basic Regulation:

Table 15

Table 15

Factors of production of HTYP

Factors of production of HTYP

Factor of Production

Tariff line

Source of data the Commission intends to use

Raw materials

Prices (CNY)

Purified terephthalic acid (PTA)

291736 00 0011

Global Trade Atlas (GTA) (95)

95

Market Access Map, International Trade Centre (MacMap) (96)

96

4,91 CNY/Kg

Mono-ethylene glycol (MEG)

290531

Global Trade Atlas (GTA)

Market Access Map, International Trade Centre (MacMap)

4,73 CNY/Kg

Poly(ethylene terephthalate) (PET) chips

390769

Global Trade Atlas (GTA)

Market Access Map, International Trade Centre (MacMap)

7,14 CNY/Kg

Spinning Finish Oil

340311

340391

Global Trade Atlas (GTA)

Market Access Map, International Trade Centre (MacMap)

17,41 CNY/Kg

Labour

Labour

[N/A]

Turkish Statistical Institute (97)

97

37,83 CNY/Manhour

Energy

Electricity

[N/A]

Turkish Statistical Institute

Consumption bands (MWh)

20 000 ≤ T < 70 000

0,50 CNY/kWh

T > 150 000

0,47 CNY/kWh

Gas

[N/A]

Turkish Statistical Institute

Consumption bands (m3)

3

| T < 26 100 | 1,34 CNY/m3 |
| --- | --- |
| 261 000 ≤ T < 2 610 000 | 1,66 CNY/m3 |

T < 26 100

1,34 CNY/m3

3

261 000 ≤ T < 2 610 000

1,66 CNY/m3

3

Coal

270111

270112 10

270112 90

270119

Global Trade Atlas (GTA)

Market Access Map, International Trade Centre (MacMap)

716,59 CNY/MT

By-product/Waste

Waste yarn

550510 30 0011

550510 30 0019

Global Trade Atlas (GTA)

Market Access Map, International Trade Centre (MacMap)

3,15 CNY/Kg

| (309) | Guxiandao claimed that two of its directly or indirectly imported materials have been purchased at undistorted values from third countries. Guxiandao further considered that the value of another principal raw material is not to be affected by the alleged significant distortions because the purchase prices were negotiated with suppliers based on prices on international markets which are very transparent and the purchase prices are in line with international prices. Guxiandao also considered that the materials whose suppliers’ ownership is private and the electricity cost from solar energy shall not be considered to be distorted. |
| --- | --- |

(309)

Guxiandao claimed that two of its directly or indirectly imported materials have been purchased at undistorted values from third countries. Guxiandao further considered that the value of another principal raw material is not to be affected by the alleged significant distortions because the purchase prices were negotiated with suppliers based on prices on international markets which are very transparent and the purchase prices are in line with international prices. Guxiandao also considered that the materials whose suppliers’ ownership is private and the electricity cost from solar energy shall not be considered to be distorted.

| (310) | Guxiandao provided supporting evidence (i.e. purchase invoices, import documents and contracts) for the two raw materials mentioned in recital (309) above. The evidence showed that the purchases for vast majority of one and a small proportion of the other material were made in USD and directly from markets free from distortions. Therefore, the Commission accepted this claim to the extent that these undistorted imports of the two raw materials into China for this particular exporting producer during the RIP, are concerned. However, for the other costs related to materials purchased in China (irrespective of the supplier’s ownership or source of energy), the Commission was unable to positively establish, on the basis of the evidence on the file, that they were not distorted. The claim was therefore rejected. As stated in recital (114), Türkiye was established as the representative country in this case and, therefore, the undistorted costs of the factors of production must be based on the corresponding undistorted import prices in Türkiye. |
| --- | --- |

(310)

Guxiandao provided supporting evidence (i.e. purchase invoices, import documents and contracts) for the two raw materials mentioned in recital (309) above. The evidence showed that the purchases for vast majority of one and a small proportion of the other material were made in USD and directly from markets free from distortions. Therefore, the Commission accepted this claim to the extent that these undistorted imports of the two raw materials into China for this particular exporting producer during the RIP, are concerned. However, for the other costs related to materials purchased in China (irrespective of the supplier’s ownership or source of energy), the Commission was unable to positively establish, on the basis of the evidence on the file, that they were not distorted. The claim was therefore rejected. As stated in recital (114), Türkiye was established as the representative country in this case and, therefore, the undistorted costs of the factors of production must be based on the corresponding undistorted import prices in Türkiye.

| (311) | CIRFS argued in its response to the final disclosure that the Commission should explain how it could ensure that the two raw materials imported by Guxiandao and used for the normal value calculation were not affected by any significant distortion. CIRFS noted that it was not in a position to fully exercise its rights of defence to provide useful comments with respect to this specific treatment applied to Guxiandao. |
| --- | --- |

(311)

CIRFS argued in its response to the final disclosure that the Commission should explain how it could ensure that the two raw materials imported by Guxiandao and used for the normal value calculation were not affected by any significant distortion. CIRFS noted that it was not in a position to fully exercise its rights of defence to provide useful comments with respect to this specific treatment applied to Guxiandao.

| (312) | Reference was made to the Commission assessment of Guxiandao’s claim and criteria used in examining and accepting such claim. The Commission maintained that it sufficiently disclosed the facts, while respecting the confidentiality of Guxiandao’s purchasing data. Approach applied in assessing Guxiandao’s claim (and explained by the Commission) involved careful examination of purchasing records and contracts as well as analysis of variety of parameters such as the sales channels used, certificates of origin, invoice currency as well as other sales terms. CIRFS was thus in a position to comment on the approach applied and exercise duly its rights of defence. |
| --- | --- |

(312)

Reference was made to the Commission assessment of Guxiandao’s claim and criteria used in examining and accepting such claim. The Commission maintained that it sufficiently disclosed the facts, while respecting the confidentiality of Guxiandao’s purchasing data. Approach applied in assessing Guxiandao’s claim (and explained by the Commission) involved careful examination of purchasing records and contracts as well as analysis of variety of parameters such as the sales channels used, certificates of origin, invoice currency as well as other sales terms. CIRFS was thus in a position to comment on the approach applied and exercise duly its rights of defence.

4.5.5.   
  Raw materials used in the production process

Raw materials used in the production process

| (313) | In order to establish the undistorted price of raw materials, the Commission used as a basis the weighted average import price (CIF) to the representative country, as reported in the GTA, from all third countries excluding China and countries that are not members of the WTO and listed in Annex I of Regulation (EU) 2015/755. The Commission decided to exclude imports from China as it concluded that it is not appropriate to use domestic prices and costs in China due to the existence of significant distortions in accordance with Article 2(6a)(b) of the basic Regulation (see recital (100) above). In the absence of any evidence showing that the same distortions do not equally affect products intended for export, the Commission considered that the same distortions affected exports. The weighted average import price was adjusted for import duties, where applicable. After excluding imports from the PRC and countries which are not members of the WTO into the representative country, the volume of imports from other third countries remained representative. |
| --- | --- |

(313)

In order to establish the undistorted price of raw materials, the Commission used as a basis the weighted average import price (CIF) to the representative country, as reported in the GTA, from all third countries excluding China and countries that are not members of the WTO and listed in Annex I of Regulation (EU) 2015/755. The Commission decided to exclude imports from China as it concluded that it is not appropriate to use domestic prices and costs in China due to the existence of significant distortions in accordance with Article 2(6a)(b) of the basic Regulation (see recital (100) above). In the absence of any evidence showing that the same distortions do not equally affect products intended for export, the Commission considered that the same distortions affected exports. The weighted average import price was adjusted for import duties, where applicable. After excluding imports from the PRC and countries which are not members of the WTO into the representative country, the volume of imports from other third countries remained representative.

| (314) | The Commission expressed the transport cost incurred by the cooperating exporting producers for the supply of raw materials as a percentage of the actual cost of such raw materials and then applied the same percentage to the undistorted cost of the same raw materials in order to obtain the undistorted transport costs. The Commission considered that, in the context of this investigation, the ratio between the exporting producer’s raw material and the reported transport costs could be reasonably used as an indication to estimate the undistorted transport costs of raw materials when delivered to the company’s factory. |
| --- | --- |

(314)

The Commission expressed the transport cost incurred by the cooperating exporting producers for the supply of raw materials as a percentage of the actual cost of such raw materials and then applied the same percentage to the undistorted cost of the same raw materials in order to obtain the undistorted transport costs. The Commission considered that, in the context of this investigation, the ratio between the exporting producer’s raw material and the reported transport costs could be reasonably used as an indication to estimate the undistorted transport costs of raw materials when delivered to the company’s factory.

| (315) | For a small number of FOPs, due to their insignificant share in the total raw material costs in the RIP, regardless of the source used, the Commission treated those FOPs as consumables, as explained in recital (334). |
| --- | --- |

(315)

For a small number of FOPs, due to their insignificant share in the total raw material costs in the RIP, regardless of the source used, the Commission treated those FOPs as consumables, as explained in recital (334).

| (316) | In their comments on the final disclosure, Unifull argued that MEG purchased and used by this group was imported from abroad through traders and, consequently, this MEG was not affected by the distortions on the Chinese market. Unifull therefore argued that its cost, instead of benchmarks described above, should be used when establishing the normal value. |
| --- | --- |

(316)

In their comments on the final disclosure, Unifull argued that MEG purchased and used by this group was imported from abroad through traders and, consequently, this MEG was not affected by the distortions on the Chinese market. Unifull therefore argued that its cost, instead of benchmarks described above, should be used when establishing the normal value.

| (317) | The Commission pointed out that the anti-dumping questionnaire explicitly requests the exporting producer to indicate whether it considers that any of the factors of production has been made at undistorted values and, in such case, submit all relevant evidence to support such claim. However, at no point during the investigation before its comments to the final disclosure had Unifull made any specified or substantiated claim that any of the materials were purchased at undistorted values nor did it identify any transactions that would have been made at undistorted values. On the contrary, Unifull had reported that all purchases of MEG were made from a Chinese domestic supplier without any reference to imports. The documents sent after the final disclosure, essentially purchase contracts and invoices from Chinese trader of MEG, do not provide substantiated reasoning why the purchase price of MEG would not be affected by distortions. Therefore, this claim, which was based on an assertion that was unsupported and could not be verified during the investigation, was rejected. |
| --- | --- |

(317)

The Commission pointed out that the anti-dumping questionnaire explicitly requests the exporting producer to indicate whether it considers that any of the factors of production has been made at undistorted values and, in such case, submit all relevant evidence to support such claim. However, at no point during the investigation before its comments to the final disclosure had Unifull made any specified or substantiated claim that any of the materials were purchased at undistorted values nor did it identify any transactions that would have been made at undistorted values. On the contrary, Unifull had reported that all purchases of MEG were made from a Chinese domestic supplier without any reference to imports. The documents sent after the final disclosure, essentially purchase contracts and invoices from Chinese trader of MEG, do not provide substantiated reasoning why the purchase price of MEG would not be affected by distortions. Therefore, this claim, which was based on an assertion that was unsupported and could not be verified during the investigation, was rejected.

| (318) | In their comments on the final disclosure Unifull also claimed that the benchmark price for PTA was inflated due to exceptional circumstances (exceptionally high shipping rates from Asia to Türkiye in 2021) that do not reflect normal market conditions while at the same time Unifull did not incur any international shipping costs for PTA as it was sourcing domestic PTA in China. Consequently, Unifull considered that the PTA benchmark price should be adjusted downwards by 0,24 CNY/Kg or at the very least 0,15 CNY/Kg to compensate the high shipping cost. |
| --- | --- |

(318)

In their comments on the final disclosure Unifull also claimed that the benchmark price for PTA was inflated due to exceptional circumstances (exceptionally high shipping rates from Asia to Türkiye in 2021) that do not reflect normal market conditions while at the same time Unifull did not incur any international shipping costs for PTA as it was sourcing domestic PTA in China. Consequently, Unifull considered that the PTA benchmark price should be adjusted downwards by 0,24 CNY/Kg or at the very least 0,15 CNY/Kg to compensate the high shipping cost.

| (319) | The Commission disagreed with this claim. Pursuant to Article 2(6a)(a) of the basic Regulation, the normal value shall be constructed using benchmarks corresponding to costs of production in appropriate representative country. In contrast to what Unifull claimed, the methodology used by the Commission is in strict compliance with this principle and the Commission applied the corresponding undistorted cost of PTA in Türkiye in establishing the benchmark. Together with its comments Unifull provided an analysis of Turkey’s import data extracted from UN COMTRADE. However, this analysis merely illustrates CIF and FOB import prices and thus deduces the shipping cost, but provides no evidence to support Unifull’s claim that the import prices in Türkiye would be distorted or that they would not reflect normal market conditions. |
| --- | --- |

(319)

The Commission disagreed with this claim. Pursuant to Article 2(6a)(a) of the basic Regulation, the normal value shall be constructed using benchmarks corresponding to costs of production in appropriate representative country. In contrast to what Unifull claimed, the methodology used by the Commission is in strict compliance with this principle and the Commission applied the corresponding undistorted cost of PTA in Türkiye in establishing the benchmark. Together with its comments Unifull provided an analysis of Turkey’s import data extracted from UN COMTRADE. However, this analysis merely illustrates CIF and FOB import prices and thus deduces the shipping cost, but provides no evidence to support Unifull’s claim that the import prices in Türkiye would be distorted or that they would not reflect normal market conditions.

| (320) | The Commission also noted that, according to Article 2(6a)(a) of the basic Regulation, the normal value should reflect the undistorted price of the raw materials in the representative country, in this case Türkiye. It should therefore reflect the price that a producer of HTYP would pay in Türkiye for a raw material delivered at the factory gate. The methodology applied by the Commission reflects this approach. If the adjustments suggested by the Unifull were made, the resulting price would not reflect the undistorted price on the Turkish market but rather an arbitrary price between the price that a producer of HTYP would pay in Türkiye and EXW price (when sold for export) in the countries that sell to Türkiye. This would be contrary to Article 2(6a)(a) of the basic Regulation and thus this claim is rejected. |
| --- | --- |

(320)

The Commission also noted that, according to Article 2(6a)(a) of the basic Regulation, the normal value should reflect the undistorted price of the raw materials in the representative country, in this case Türkiye. It should therefore reflect the price that a producer of HTYP would pay in Türkiye for a raw material delivered at the factory gate. The methodology applied by the Commission reflects this approach. If the adjustments suggested by the Unifull were made, the resulting price would not reflect the undistorted price on the Turkish market but rather an arbitrary price between the price that a producer of HTYP would pay in Türkiye and EXW price (when sold for export) in the countries that sell to Türkiye. This would be contrary to Article 2(6a)(a) of the basic Regulation and thus this claim is rejected.

4.5.6.   
  Labour

Labour

| (321) | To establish the benchmark for labour costs the Commission used the most recent statistics published by the Turkish Statistical Institute (98). This institute publishes detailed information on labour costs in different economic sectors in Türkiye. The Commission established the benchmark based on hourly labour costs for 2020 for the economic activity “Manufacture of chemicals” NACE code 20 according to NACE Rev.2 classification. The values were further adjusted for inflation using the domestic consumer price index (99) to reflect the costs for the review investigation period. Compared to the Second Note and following a claim raised by Guxiandao, the benchmark value for labour was modified to take account of the annual average inflation rate. |
| --- | --- |

(321)

To establish the benchmark for labour costs the Commission used the most recent statistics published by the Turkish Statistical Institute (98). This institute publishes detailed information on labour costs in different economic sectors in Türkiye. The Commission established the benchmark based on hourly labour costs for 2020 for the economic activity “Manufacture of chemicals” NACE code 20 according to NACE Rev.2 classification. The values were further adjusted for inflation using the domestic consumer price index (99) to reflect the costs for the review investigation period. Compared to the Second Note and following a claim raised by Guxiandao, the benchmark value for labour was modified to take account of the annual average inflation rate.

98

99

4.5.7.   
  Energy

Energy

| (322) | To establish the benchmark price for electricity and gas, the Commission used prices for companies (industrial users) in Türkiye published by the Turkish Statistical Institute (100). The benchmark was established based on the price for electricity and gas, published on 31 March 2022. The price referred to is the average for 2021. The Commission used the data on the industrial electricity and gas prices in the corresponding consumption bands, net of VAT. |
| --- | --- |

(322)

To establish the benchmark price for electricity and gas, the Commission used prices for companies (industrial users) in Türkiye published by the Turkish Statistical Institute (100). The benchmark was established based on the price for electricity and gas, published on 31 March 2022. The price referred to is the average for 2021. The Commission used the data on the industrial electricity and gas prices in the corresponding consumption bands, net of VAT.

100

| (323) | Guxiandao argued that in addition to the VAT applied on electricity and gas prices identified for Türkiye, the electricity prices include additional taxes and fees (consumption tax, TRT and Energy Fund fees), which should be deducted by the Commission for the purposes of establishing benchmark cost of electricity. First, it was noted that there is no evidence on the file showing that (and to what extent, if any) companies in Türkiye would have recovered any of the said taxes and fees, hence meriting any deduction from the benchmark costs. Moreover, Guxiandao failed to substantiate its claim specifically with respect to the dataset published by the Turkish Statistical Institute and used for the purposes of this case. |
| --- | --- |

(323)

Guxiandao argued that in addition to the VAT applied on electricity and gas prices identified for Türkiye, the electricity prices include additional taxes and fees (consumption tax, TRT and Energy Fund fees), which should be deducted by the Commission for the purposes of establishing benchmark cost of electricity. First, it was noted that there is no evidence on the file showing that (and to what extent, if any) companies in Türkiye would have recovered any of the said taxes and fees, hence meriting any deduction from the benchmark costs. Moreover, Guxiandao failed to substantiate its claim specifically with respect to the dataset published by the Turkish Statistical Institute and used for the purposes of this case.

| (324) | With respect to coal, the Commission used the average price of coal in Türkiye in 2021 based on the GTA statistics (101). |
| --- | --- |

(324)

With respect to coal, the Commission used the average price of coal in Türkiye in 2021 based on the GTA statistics (101).

101

| (325) | In their comments on the final disclosure the applicant, CIRFS questioned the use of coal as an energy source in establishing the normal value and also whether the environmental cost of coal is fairly reflected in the undistorted price of coal. |
| --- | --- |

(325)

In their comments on the final disclosure the applicant, CIRFS questioned the use of coal as an energy source in establishing the normal value and also whether the environmental cost of coal is fairly reflected in the undistorted price of coal.

| (326) | The Commission recalled that following the methodology laid down in the basic Regulation and pursuant to Article 2(6a)(a) of it, the normal value shall be constructed exclusively on the basis of costs of production and sale reflecting undistorted prices or benchmarks. It followed from this that, notwithstanding of substitution the prices of factors of production with undistorted benchmarks, the consumption of the factors of production shall reflect the actual consumption by each exporter and producer separately. Consequently, the Commission did not have any discretion to choose alternative sources of energy to substitute those used by each exporting producer or to add arbitrary elements to the undistorted prices observed in the appropriate representative country. Doing so would be contrary to Article 2(6a)(a) of the basic Regulation. Regarding the reflection of environmental costs in the undistorted price of coal, it was noted that in establishing the constructed normal value in accordance with Article 2(6a)(a) of the basic Regulation, environmental costs are not specifically accounted for. Therefore, this claim was rejected. |
| --- | --- |

(326)

The Commission recalled that following the methodology laid down in the basic Regulation and pursuant to Article 2(6a)(a) of it, the normal value shall be constructed exclusively on the basis of costs of production and sale reflecting undistorted prices or benchmarks. It followed from this that, notwithstanding of substitution the prices of factors of production with undistorted benchmarks, the consumption of the factors of production shall reflect the actual consumption by each exporter and producer separately. Consequently, the Commission did not have any discretion to choose alternative sources of energy to substitute those used by each exporting producer or to add arbitrary elements to the undistorted prices observed in the appropriate representative country. Doing so would be contrary to Article 2(6a)(a) of the basic Regulation. Regarding the reflection of environmental costs in the undistorted price of coal, it was noted that in establishing the constructed normal value in accordance with Article 2(6a)(a) of the basic Regulation, environmental costs are not specifically accounted for. Therefore, this claim was rejected.

| (327) | Furthermore, in response to the final disclosure, CIRFS requested the Commission that, in view of the Commission’s report on significant distortions in Russia (102), coal imports from Russia into Türkiye be excluded from the average import price of coal into Türkiye considered for the purposes of constructing the normal value under Article 2(6a) of the basic Regulation. More specifically, CIRFS argued with reference to the Commission report that while the Russian coal industry has been privatized to a large extent, the market is concentrated and prices are influenced by applicable fiscal measures and by railway costs (set by the state owned railways companies). Moreover, CIRFS made an additional submission six days after the deadline for comments on the final disclosure, reiterating its request and additionally arguing for exclusion of Colombian coal imports from the import price of coal for Türkiye. The Commission, taking into consideration the negligible impact the acceptance or rejection of this claim would have on the measures, decided that there was no need to analyse it further. Regarding the additional claim made in relation to imports of Colombian coal, reference was made to point 7 of the Notice of Initiation. Under the said provision, in order to complete the investigation within the mandatory deadlines, the Commission will not accept submissions from interested parties after the deadline to provide comments on the final disclosure. Therefore, CIRFS claims were dismissed. |
| --- | --- |

(327)

Furthermore, in response to the final disclosure, CIRFS requested the Commission that, in view of the Commission’s report on significant distortions in Russia (102), coal imports from Russia into Türkiye be excluded from the average import price of coal into Türkiye considered for the purposes of constructing the normal value under Article 2(6a) of the basic Regulation. More specifically, CIRFS argued with reference to the Commission report that while the Russian coal industry has been privatized to a large extent, the market is concentrated and prices are influenced by applicable fiscal measures and by railway costs (set by the state owned railways companies). Moreover, CIRFS made an additional submission six days after the deadline for comments on the final disclosure, reiterating its request and additionally arguing for exclusion of Colombian coal imports from the import price of coal for Türkiye. The Commission, taking into consideration the negligible impact the acceptance or rejection of this claim would have on the measures, decided that there was no need to analyse it further. Regarding the additional claim made in relation to imports of Colombian coal, reference was made to point 7 of the Notice of Initiation. Under the said provision, in order to complete the investigation within the mandatory deadlines, the Commission will not accept submissions from interested parties after the deadline to provide comments on the final disclosure. Therefore, CIRFS claims were dismissed.

102

| (328) | CIRFS submitted in response to the final disclosure that the Commission should explain, why the 2021 price of gas in Türkiye selected for the purpose of the normal value calculation has significantly decreased, while according to the Turkish Statistical Institute, the average unit price of natural gas in Türkiye sharply increased in 2021 compared with 2020. As already outlined in the disclosed Second Note, the Commission sourced the data on gas prices directly from the database of the Turkish Statistical Institute, using average prices for 2021 for the respective consumption bands, while converting the figures from Turkish Lira to the RMB using the applicable official exchange rate to construct the normal value for the exporting producers. |
| --- | --- |

(328)

CIRFS submitted in response to the final disclosure that the Commission should explain, why the 2021 price of gas in Türkiye selected for the purpose of the normal value calculation has significantly decreased, while according to the Turkish Statistical Institute, the average unit price of natural gas in Türkiye sharply increased in 2021 compared with 2020. As already outlined in the disclosed Second Note, the Commission sourced the data on gas prices directly from the database of the Turkish Statistical Institute, using average prices for 2021 for the respective consumption bands, while converting the figures from Turkish Lira to the RMB using the applicable official exchange rate to construct the normal value for the exporting producers.

| (329) | Furthermore, CIRFS stated in response to the final disclosure that the Commission should explain with respect to gas the methodology used to select the most appropriate consumption band for each Chinese producer. It was noted in this respect that, as outlined in recital (322), the Commission attributed to each sampled producer the gas cost in the consumption band corresponding to its actual total gas consumption over the RIP. |
| --- | --- |

(329)

Furthermore, CIRFS stated in response to the final disclosure that the Commission should explain with respect to gas the methodology used to select the most appropriate consumption band for each Chinese producer. It was noted in this respect that, as outlined in recital (322), the Commission attributed to each sampled producer the gas cost in the consumption band corresponding to its actual total gas consumption over the RIP.

4.5.8.   
  SG&A and profits

SG&A and profits

| (330) | According to Article 2(6a)(a) of the basic Regulation, “the constructed normal value shall include an undistorted and reasonable amount for administrative, selling and general costs and for profits”. In addition, a value for manufacturing overhead costs needs to be established to cover costs not included in the factors of production referred to above. |
| --- | --- |

(330)

According to Article 2(6a)(a) of the basic Regulation, “the constructed normal value shall include an undistorted and reasonable amount for administrative, selling and general costs and for profits”. In addition, a value for manufacturing overhead costs needs to be established to cover costs not included in the factors of production referred to above.

the constructed normal value shall include an undistorted and reasonable amount for administrative, selling and general costs and for profits

| (331) | For establishing an undistorted and reasonable amount for SG&A and profits, the Commission used the SG&A (6,6 %) and profit (15,3 %) of the HTYP producer in Türkiye, Kordsa Türkiye, for which figures relating to 2021 financial data (i.e. for the period fully overlapping with the RIP) were readily available. |
| --- | --- |

(331)

For establishing an undistorted and reasonable amount for SG&A and profits, the Commission used the SG&A (6,6 %) and profit (15,3 %) of the HTYP producer in Türkiye, Kordsa Türkiye, for which figures relating to 2021 financial data (i.e. for the period fully overlapping with the RIP) were readily available.

4.5.9.   
  Calculation of the normal value

Calculation of the normal value

| (332) | Based on the undistorted prices and benchmarks described above, the Commission constructed the normal value per product type on an ex-works basis in accordance with Article 2(6a)(a) of the basic Regulation. |
| --- | --- |

(332)

Based on the undistorted prices and benchmarks described above, the Commission constructed the normal value per product type on an ex-works basis in accordance with Article 2(6a)(a) of the basic Regulation.

| (333) | First, the Commission established the undistorted costs of manufacturing for each legal entity manufacturing and exporting the product under review based on the factors of production purchased by each of the companies and identified in Table 15. The Commission then applied the undistorted unit costs to the actual consumption of the individual factors of production of each of the sampled exporting producers. The Commission reduced the costs of manufacturing by the undistorted revenues generated for by-product (in this case waste yarn) resold. |
| --- | --- |

(333)

First, the Commission established the undistorted costs of manufacturing for each legal entity manufacturing and exporting the product under review based on the factors of production purchased by each of the companies and identified in Table 15. The Commission then applied the undistorted unit costs to the actual consumption of the individual factors of production of each of the sampled exporting producers. The Commission reduced the costs of manufacturing by the undistorted revenues generated for by-product (in this case waste yarn) resold.

| (334) | Second, to arrive at a total undistorted cost of manufacturing, the Commission added manufacturing overheads. Manufacturing overheads incurred by the sampled exporting producers were increased by the costs of consumables referred to in recital (315) and subsequently expressed as a share of the costs of manufacturing actually incurred by each of the exporting producers. This percentage was applied to the undistorted costs of manufacturing. |
| --- | --- |

(334)

Second, to arrive at a total undistorted cost of manufacturing, the Commission added manufacturing overheads. Manufacturing overheads incurred by the sampled exporting producers were increased by the costs of consumables referred to in recital (315) and subsequently expressed as a share of the costs of manufacturing actually incurred by each of the exporting producers. This percentage was applied to the undistorted costs of manufacturing.

| (335) | Finally, the Commission added SG&A and profit, determined on the basis of the Turkish HTYP producer (see recital (331)). SG&A and profit, both expressed as a percentage of the cost of goods sold and applied to the undistorted total cost of manufacturing, amounted to 6,6 % and 15,3 % respectively. |
| --- | --- |

(335)

Finally, the Commission added SG&A and profit, determined on the basis of the Turkish HTYP producer (see recital (331)). SG&A and profit, both expressed as a percentage of the cost of goods sold and applied to the undistorted total cost of manufacturing, amounted to 6,6 % and 15,3 % respectively.

| (336) | On that basis, the Commission determined the normal value per product type on an ex-works basis in accordance with Article 2(6a)(a) of the basic Regulation. |
| --- | --- |

(336)

On that basis, the Commission determined the normal value per product type on an ex-works basis in accordance with Article 2(6a)(a) of the basic Regulation.

| (337) | Guxiandao claimed in response to the final disclosure that the Commission groundlessly linked the value of consumables and manufacturing overheads to that of other inputs. According to Guxiandao, the Commission shall identify the benchmark for the consumables and manufacturing overheads separately from other inputs or, otherwise accept the company’s actual cost for consumables and manufacturing overheads. Similar claim was raised by Guxiandao with respect to the construction of the transport cost for the supply of raw materials. |
| --- | --- |

(337)

Guxiandao claimed in response to the final disclosure that the Commission groundlessly linked the value of consumables and manufacturing overheads to that of other inputs. According to Guxiandao, the Commission shall identify the benchmark for the consumables and manufacturing overheads separately from other inputs or, otherwise accept the company’s actual cost for consumables and manufacturing overheads. Similar claim was raised by Guxiandao with respect to the construction of the transport cost for the supply of raw materials.

| (338) | As explained in recital (100) the investigation found that prices or costs of the product under investigation, including the costs of raw materials, energy and labour, are not the result of free market forces because they are affected by substantial government intervention within the meaning of Article 2(6a)(b) of the basic Regulation. Guxiandao failed to demonstrate that the prices of its consumables, its manufacturing overheads or its transport cost are not distorted. It could not be positively established that these costs are not distorted and therefore, in view of third indent of the second paragraph of Article 2(6a)(a) they cannot be used in the construction of the normal value. The Commission was unable to find any reasonable benchmark for these costs, nor any reasonable benchmark for these costs were suggested by Guxiandao or any other interested party. When appropriate benchmarks cannot be found for a cost, the Commission may in principle establish them as a ratio to the cost group they relate to (be it cost of all raw materials or the manufacturing costs). Once the undistorted costs of raw materials or manufacturing costs are established, the Commission will apply the benchmark to estimate the undistorted cost in question, thereby preserving the exporting producer’s cost structure. This means that if, for instance, consumables represent 1 % of all raw materials costs in the accounts of an exporting producer, following construction of the normal value they will still represent 1 % of the raw material costs. |
| --- | --- |

(338)

As explained in recital (100) the investigation found that prices or costs of the product under investigation, including the costs of raw materials, energy and labour, are not the result of free market forces because they are affected by substantial government intervention within the meaning of Article 2(6a)(b) of the basic Regulation. Guxiandao failed to demonstrate that the prices of its consumables, its manufacturing overheads or its transport cost are not distorted. It could not be positively established that these costs are not distorted and therefore, in view of third indent of the second paragraph of Article 2(6a)(a) they cannot be used in the construction of the normal value. The Commission was unable to find any reasonable benchmark for these costs, nor any reasonable benchmark for these costs were suggested by Guxiandao or any other interested party. When appropriate benchmarks cannot be found for a cost, the Commission may in principle establish them as a ratio to the cost group they relate to (be it cost of all raw materials or the manufacturing costs). Once the undistorted costs of raw materials or manufacturing costs are established, the Commission will apply the benchmark to estimate the undistorted cost in question, thereby preserving the exporting producer’s cost structure. This means that if, for instance, consumables represent 1 % of all raw materials costs in the accounts of an exporting producer, following construction of the normal value they will still represent 1 % of the raw material costs.

| (339) | As set out in recital (334), in order to arrive at an undistorted cost of consumables and overheads, the sampled producers’ share of cost of consumables as well as manufacturing overheads on the costs of manufacturing actually incurred was applied to the undistorted costs of manufacturing. As explained in recital (338), in the absence of a specific data concerning undistorted overhead in the available financial data of the producer(s) in the representative country, the Commission determined the undistorted overhead data for the exporting producer following this method. Furthermore, given that numerous factors of production typically accounting for an insignificant share on the total raw material costs were identified in this case, the Commission deemed it reasonable to include such inputs (using the producers’ actual costs) among consumables and treat them accordingly. Moreover, regarding the transport costs, as outlined in recital (314) and in the absence of data in the file on the undistorted transport costs in the representative country, the Commission considered the ratio between the exporting producer’s raw material and the reported transport costs could be reasonably used as an indication to estimate the undistorted transport costs of raw materials when delivered to the company’s factory. Guxiandao’s claim was therefore rejected. |
| --- | --- |

(339)

As set out in recital (334), in order to arrive at an undistorted cost of consumables and overheads, the sampled producers’ share of cost of consumables as well as manufacturing overheads on the costs of manufacturing actually incurred was applied to the undistorted costs of manufacturing. As explained in recital (338), in the absence of a specific data concerning undistorted overhead in the available financial data of the producer(s) in the representative country, the Commission determined the undistorted overhead data for the exporting producer following this method. Furthermore, given that numerous factors of production typically accounting for an insignificant share on the total raw material costs were identified in this case, the Commission deemed it reasonable to include such inputs (using the producers’ actual costs) among consumables and treat them accordingly. Moreover, regarding the transport costs, as outlined in recital (314) and in the absence of data in the file on the undistorted transport costs in the representative country, the Commission considered the ratio between the exporting producer’s raw material and the reported transport costs could be reasonably used as an indication to estimate the undistorted transport costs of raw materials when delivered to the company’s factory. Guxiandao’s claim was therefore rejected.

4.6.   Export price

Export price

| (340) | The sampled exporting producers exported the product concerned directly to independent customers in the Union. The export price for Guxiandao and Unifull for these direct sales was therefore the price actually paid or payable for the product concerned when sold for export to the Union, in accordance with Article 2(8) of the basic Regulation. |
| --- | --- |

(340)

The sampled exporting producers exported the product concerned directly to independent customers in the Union. The export price for Guxiandao and Unifull for these direct sales was therefore the price actually paid or payable for the product concerned when sold for export to the Union, in accordance with Article 2(8) of the basic Regulation.

| (341) | In addition to the direct sales, the Unifull group made also some sales via the other related producer in the group. For these sales, the export price was adjusted in accordance with Article 2(10)(i) of the basic Regulation deducting the respective selling expenses of the selling entity and reasonable profit (established at 6,89 % in the recent investigation on certain polyvinyl alcohols (103) and used in the present investigation given the similarity of industry and the lack of cooperation from unrelated importers). |
| --- | --- |

(341)

In addition to the direct sales, the Unifull group made also some sales via the other related producer in the group. For these sales, the export price was adjusted in accordance with Article 2(10)(i) of the basic Regulation deducting the respective selling expenses of the selling entity and reasonable profit (established at 6,89 % in the recent investigation on certain polyvinyl alcohols (103) and used in the present investigation given the similarity of industry and the lack of cooperation from unrelated importers).

103

4.7.   Comparison

Comparison

| (342) | The Commission compared the normal value and the export price of the sampled exporting producers on an ex-works basis. |
| --- | --- |

(342)

The Commission compared the normal value and the export price of the sampled exporting producers on an ex-works basis.

| (343) | In order to ensure a fair comparison, the Commission adjusted the normal value and/or the export price for differences affecting prices and price comparability, in accordance with Article 2(10) of the basic Regulation. Adjustments to the export price were made for transport, insurance, handling and loading, discounts, commission, credit costs, bank charges and other import charges. |
| --- | --- |

(343)

In order to ensure a fair comparison, the Commission adjusted the normal value and/or the export price for differences affecting prices and price comparability, in accordance with Article 2(10) of the basic Regulation. Adjustments to the export price were made for transport, insurance, handling and loading, discounts, commission, credit costs, bank charges and other import charges.

| (344) | In its response to the final disclosure, Guxiandao requested an adjustment to constructed normal value to ensure fair comparison with the export price under Article 2(10) of the basic Regulation. According to Guxiandao, elements such as freight and insurance that could have been included in the SG&A used in the construction of the normal value should be removed, as the same were deducted from the export price thereby creating asymmetry between the two. |
| --- | --- |

(344)

In its response to the final disclosure, Guxiandao requested an adjustment to constructed normal value to ensure fair comparison with the export price under Article 2(10) of the basic Regulation. According to Guxiandao, elements such as freight and insurance that could have been included in the SG&A used in the construction of the normal value should be removed, as the same were deducted from the export price thereby creating asymmetry between the two.

| (345) | The Commission noted that Guxiandao failed to demonstrate that freight and insurance have been included in the SG&A used for the construction of the normal value. It follows that the requested adjustment was neither substantiated nor quantified and thus the request was rejected. |
| --- | --- |

(345)

The Commission noted that Guxiandao failed to demonstrate that freight and insurance have been included in the SG&A used for the construction of the normal value. It follows that the requested adjustment was neither substantiated nor quantified and thus the request was rejected.

| (346) | In their comments on the final disclosure Unifull argued that an adjustment in accordance with Article 2(10)(i) of the basic Regulation is not warranted for the sales through related producers in the group. Notably Unifull argued that none of the group companies is acting as an agent selling the products of the principal. Unifull also argued that it acts as a whole as a single group and that its decision-making, production arrangements and sales are all made at group level and under a single general manager, rather than by the individual companies of the group. In the sensitive version of the comments Unifull also outlined the reasons why sales were made through each respective party and it claimed that these reasons were unrelated to the functions of trader/agent. |
| --- | --- |

(346)

In their comments on the final disclosure Unifull argued that an adjustment in accordance with Article 2(10)(i) of the basic Regulation is not warranted for the sales through related producers in the group. Notably Unifull argued that none of the group companies is acting as an agent selling the products of the principal. Unifull also argued that it acts as a whole as a single group and that its decision-making, production arrangements and sales are all made at group level and under a single general manager, rather than by the individual companies of the group. In the sensitive version of the comments Unifull also outlined the reasons why sales were made through each respective party and it claimed that these reasons were unrelated to the functions of trader/agent.

| (347) | In this respect, the Commission noted that, pursuant to Article 2(10) of the basic Regulation, a fair comparison must be made between the export price and the normal value. That provision states that, where the normal value and the export price are not on such a comparable basis, due allowance, in the form of adjustments, is to be made, on the merits, for differences in factors which are claimed, and demonstrated, to affect prices and price comparability. Among the factors for which adjustment can be made, Article 2(10)(i) of the basic Regulation provides in particular that an adjustment is to be made for differences in commissions paid in respect of the sales under consideration. That provision states that the term ‘commissions’ is to be understood to include the mark-up received by a trader of the product or the like product if the functions of such a trader are similar to those of an agent working on a commission basis. However, an adjustment under Article 2(10)(i) of the basic Regulation cannot be made where the producer established in a third State and its related distributor responsible for exports to the European Union form a single economic entity (‘SEE’). |
| --- | --- |

(347)

In this respect, the Commission noted that, pursuant to Article 2(10) of the basic Regulation, a fair comparison must be made between the export price and the normal value. That provision states that, where the normal value and the export price are not on such a comparable basis, due allowance, in the form of adjustments, is to be made, on the merits, for differences in factors which are claimed, and demonstrated, to affect prices and price comparability. Among the factors for which adjustment can be made, Article 2(10)(i) of the basic Regulation provides in particular that an adjustment is to be made for differences in commissions paid in respect of the sales under consideration. That provision states that the term ‘commissions’ is to be understood to include the mark-up received by a trader of the product or the like product if the functions of such a trader are similar to those of an agent working on a commission basis. However, an adjustment under Article 2(10)(i) of the basic Regulation cannot be made where the producer established in a third State and its related distributor responsible for exports to the European Union form a single economic entity (‘SEE’).

| (348) | In the analysis of whether there is a single economic entity between a producer and its related distributor, it is crucial to consider the economic reality of the relationship between that producer and that distributor. In view of the requirement of a conclusion reflecting the economic reality of the relationship between that producer and that distributor, the Commission is required to take account of all factors relevant to the determination as to whether or not that distributor carries out the functions of an integrated sales department within that producer or, in turn performs other type of functions. In accordance with the need to have regard to all relevant factors and the general discretion afforded to the Commission to assess complex economic situations, the Commission must carry out its assessment on a case-by-case basis and in a holistic manner. |
| --- | --- |

(348)

In the analysis of whether there is a single economic entity between a producer and its related distributor, it is crucial to consider the economic reality of the relationship between that producer and that distributor. In view of the requirement of a conclusion reflecting the economic reality of the relationship between that producer and that distributor, the Commission is required to take account of all factors relevant to the determination as to whether or not that distributor carries out the functions of an integrated sales department within that producer or, in turn performs other type of functions. In accordance with the need to have regard to all relevant factors and the general discretion afforded to the Commission to assess complex economic situations, the Commission must carry out its assessment on a case-by-case basis and in a holistic manner.

| (349) | In terms of the burden of proof, where the Commission has adduced consistent indicia to establish that a trader affiliated to a producer carries out functions comparable to those of an agent working on a commission basis, it will be for that trader or that producer to adduce evidence that an adjustment under Article 2(10)(i) of the basic Regulation is not justified. |
| --- | --- |

(349)

In terms of the burden of proof, where the Commission has adduced consistent indicia to establish that a trader affiliated to a producer carries out functions comparable to those of an agent working on a commission basis, it will be for that trader or that producer to adduce evidence that an adjustment under Article 2(10)(i) of the basic Regulation is not justified.

| (350) | In the case at hand the Commission notes that both companies belong to the same group under the same management. However, both companies concerned sold the product concerned they produced as well as re-sold the products concerned produced by the other company. The Commission found that each producing, selling and re-selling company should be considered to be acting as an agent working on a commission basis rather than the internal sales department of the other company. It is uncontested that each company had its own fully fledged sales department and incurred the relevant costs. With regards to re-sales, each company performed a function of a trader acting on commission basis that was reflected in the export price component that had to be adjusted in order to eliminate asymmetry vis-a-vis the domestic price constructed on the ex-factory basis. The Commission therefore adduced consistent indicia to establish that each exporting producer of the group carried out functions comparable to those of an agent working on a commission basis with regards to resales of the other producer’s products. Unifull, on the other hand, failed to adduce evidence that an adjustment under Article 2(10)(i) of the basic Regulation is not justified. The claim was therefore rejected. |
| --- | --- |

(350)

In the case at hand the Commission notes that both companies belong to the same group under the same management. However, both companies concerned sold the product concerned they produced as well as re-sold the products concerned produced by the other company. The Commission found that each producing, selling and re-selling company should be considered to be acting as an agent working on a commission basis rather than the internal sales department of the other company. It is uncontested that each company had its own fully fledged sales department and incurred the relevant costs. With regards to re-sales, each company performed a function of a trader acting on commission basis that was reflected in the export price component that had to be adjusted in order to eliminate asymmetry vis-a-vis the domestic price constructed on the ex-factory basis. The Commission therefore adduced consistent indicia to establish that each exporting producer of the group carried out functions comparable to those of an agent working on a commission basis with regards to resales of the other producer’s products. Unifull, on the other hand, failed to adduce evidence that an adjustment under Article 2(10)(i) of the basic Regulation is not justified. The claim was therefore rejected.

| (351) | In view of the above, and considering that a transfer of funds occurs between two related entities, the Commission was justified in examining whether the actual value of the mark-up differs from what an unrelated trader would obtain. Based on the nominal profit identified in this case, the Commission did not consider the mark-up to sufficiently reflect a commission that would have been due in an arm’s length transaction. As mentioned in recital (341), the Commission therefore considered that an adjustment should be based on the SG&A of the trader and a nominal profit identified in this case. |
| --- | --- |

(351)

In view of the above, and considering that a transfer of funds occurs between two related entities, the Commission was justified in examining whether the actual value of the mark-up differs from what an unrelated trader would obtain. Based on the nominal profit identified in this case, the Commission did not consider the mark-up to sufficiently reflect a commission that would have been due in an arm’s length transaction. As mentioned in recital (341), the Commission therefore considered that an adjustment should be based on the SG&A of the trader and a nominal profit identified in this case.

4.8.   Dumping margins

Dumping margins

| (352) | For the sampled exporting producers, the Commission compared the weighted average normal value of each type of the like product with the weighted average export price of the corresponding type of the product concerned to calculate the dumping margin, in accordance with Article 2(11) and (12) of the basic Regulation. |
| --- | --- |

(352)

For the sampled exporting producers, the Commission compared the weighted average normal value of each type of the like product with the weighted average export price of the corresponding type of the product concerned to calculate the dumping margin, in accordance with Article 2(11) and (12) of the basic Regulation.

| (353) | For the cooperating exporting producers outside the sample, the Commission calculated the weighted average dumping margin on the basis of the margins of the sampled exporting producers. |
| --- | --- |

(353)

For the cooperating exporting producers outside the sample, the Commission calculated the weighted average dumping margin on the basis of the margins of the sampled exporting producers.

| (354) | On this basis, the definitive dumping margin of the cooperating exporting producers outside the sample is 17,2 %. |
| --- | --- |

(354)

On this basis, the definitive dumping margin of the cooperating exporting producers outside the sample is 17,2 %.

| (355) | The level of cooperation in this case is high because the exports of the cooperating exporting producers constituted vast majority, if not totality of exports to the Union during the review investigation period. Therefore, the Commission considered it appropriate to set the country-wide dumping margin applicable to all other non-cooperating exporting producers at the level of the highest dumping margin of the sampled exporting producer, namely of Unifull group. The dumping margin thus established was 23,7 %. |
| --- | --- |

(355)

The level of cooperation in this case is high because the exports of the cooperating exporting producers constituted vast majority, if not totality of exports to the Union during the review investigation period. Therefore, the Commission considered it appropriate to set the country-wide dumping margin applicable to all other non-cooperating exporting producers at the level of the highest dumping margin of the sampled exporting producer, namely of Unifull group. The dumping margin thus established was 23,7 %.

| (356) | In conclusion, the definitive dumping margins for the Article 11(3) case, expressed as a percentage of the CIF Union frontier price, duty unpaid, are as follows:






  Company | Definitive dumping margin |
| --- | --- | --- |
| Huzhou Unifull Industrial Fibre Co., Ltd., Zhejiang Unifull Industrial Fibre Co., Ltd. and Zhejiang Unifull Hi-Tech Industry Co., Ltd | 23,7  % |
| Zhejiang Guxiandao Polyester Dope Dyed Yarn Co., Ltd. | 9,7  % |
| Other cooperating companies | 17,2  % |
| All other companies | 23,7  % |

(356)

In conclusion, the definitive dumping margins for the Article 11(3) case, expressed as a percentage of the CIF Union frontier price, duty unpaid, are as follows:

Company

Definitive dumping margin

Huzhou Unifull Industrial Fibre Co., Ltd., Zhejiang Unifull Industrial Fibre Co., Ltd. and Zhejiang Unifull Hi-Tech Industry Co., Ltd

23,7  %

Zhejiang Guxiandao Polyester Dope Dyed Yarn Co., Ltd.

9,7  %

Other cooperating companies

17,2  %

All other companies

23,7  %

4.9.   Lasting nature of changed circumstances in the partial interim review

Lasting nature of changed circumstances in the partial interim review

| (357) | In accordance with Article 11(3) of the basic Regulation, the Commission analysed whether the change in circumstances with regard to dumping could reasonably be said to be of a lasting nature. |
| --- | --- |

(357)

In accordance with Article 11(3) of the basic Regulation, the Commission analysed whether the change in circumstances with regard to dumping could reasonably be said to be of a lasting nature.

| (358) | Between the review investigation period of the original investigation (i.e. 1 July 2008 to 30 June 2009) and 2021, the production capacity of the Chinese HTYP producers subject to the measures more than tripled from [747 000 – 955 000] tonnes in 2009 to [2 508 000 – 3 205 000] tonnes in 2021. Moreover, as evidenced by the governmental strategies as well as the planning documents issued at a provincial and municipal level (see recitals (69) – (75)), since the original investigation the Chinese HTYP industry has been transforming through focus on significant investments into infrastructure and acceleration of research into cutting-edge technologies and development of high performance materials. Such considerable increase in investments and capacity inevitably had an impact on the cost structure and lead to an increase in fixed costs of the Chinese exporting producers. This in turn must have structurally affected the normal value and therefore the dumping margin. |
| --- | --- |

(358)

Between the review investigation period of the original investigation (i.e. 1 July 2008 to 30 June 2009) and 2021, the production capacity of the Chinese HTYP producers subject to the measures more than tripled from [747 000 – 955 000] tonnes in 2009 to [2 508 000 – 3 205 000] tonnes in 2021. Moreover, as evidenced by the governmental strategies as well as the planning documents issued at a provincial and municipal level (see recitals (69) – (75)), since the original investigation the Chinese HTYP industry has been transforming through focus on significant investments into infrastructure and acceleration of research into cutting-edge technologies and development of high performance materials. Such considerable increase in investments and capacity inevitably had an impact on the cost structure and lead to an increase in fixed costs of the Chinese exporting producers. This in turn must have structurally affected the normal value and therefore the dumping margin.

| (359) | Given that the domestic HTYP consumption has been stable in China and thus not capable of absorbing the increased capacities and diluting the increased fixed costs, the exporting producers in China aimed at ramping up production volume by increasing export sales, mainly to the Union (being the leading export destination for the Chinese exporting producers). In fact, the production volumes of Chinese exporting producers subject to measures roughly doubled since the original investigation, which is in line with doubling of the Chinese exports to the Union over that period. To increase the export sales, the producers must have adjusted their export prices to a level appropriate to secure the necessary gains in volume (see recital (147) for decreasing pricing trend of Chinese imports subject to measures). This is demonstrated by the fact that between the RIP of the original investigation and 2021, the Chinese exports (subject to measures) to the Union almost doubled in volume despite being subject to the anti-dumping duties and were dumped, as established in the present investigation (and consistent with the findings in the 2017 expiry review). In conclusion, the Chinese HTYP producers expanded significantly their production capacity and adjusted their export behaviour to gain efficiencies justifying that expansion. These changes structurally affected the normal value, the export price of the Chinese exporting producers and thereby their dumping margin in a way that is considered to be of a lasting nature pursuant to Article 11(3) of the basic Regulation. |
| --- | --- |

(359)

Given that the domestic HTYP consumption has been stable in China and thus not capable of absorbing the increased capacities and diluting the increased fixed costs, the exporting producers in China aimed at ramping up production volume by increasing export sales, mainly to the Union (being the leading export destination for the Chinese exporting producers). In fact, the production volumes of Chinese exporting producers subject to measures roughly doubled since the original investigation, which is in line with doubling of the Chinese exports to the Union over that period. To increase the export sales, the producers must have adjusted their export prices to a level appropriate to secure the necessary gains in volume (see recital (147) for decreasing pricing trend of Chinese imports subject to measures). This is demonstrated by the fact that between the RIP of the original investigation and 2021, the Chinese exports (subject to measures) to the Union almost doubled in volume despite being subject to the anti-dumping duties and were dumped, as established in the present investigation (and consistent with the findings in the 2017 expiry review). In conclusion, the Chinese HTYP producers expanded significantly their production capacity and adjusted their export behaviour to gain efficiencies justifying that expansion. These changes structurally affected the normal value, the export price of the Chinese exporting producers and thereby their dumping margin in a way that is considered to be of a lasting nature pursuant to Article 11(3) of the basic Regulation.

5.   ANTI-DUMPING MEASURES

ANTI-DUMPING MEASURES

| (360) | On the basis of the conclusions reached by the Commission on continuation of dumping, continuation of injury and Union interest, the anti-dumping measures on imports of HTYP originating in China following an expiry review pursuant to Article 11(2) of the basic Regulation should be maintained. |
| --- | --- |

(360)

On the basis of the conclusions reached by the Commission on continuation of dumping, continuation of injury and Union interest, the anti-dumping measures on imports of HTYP originating in China following an expiry review pursuant to Article 11(2) of the basic Regulation should be maintained.

| (361) | Furthermore, as a result of the partial interim review pursuant to Article 11(3) of the basic Regulation and in accordance with Article 9(4) of the basic Regulation, an anti-dumping duty should be imposed on imports of the product concerned originating in China at the level of the lesser of the injury margin on which the measures in force are based and the dumping margins found in the current interim review. |
| --- | --- |

(361)

Furthermore, as a result of the partial interim review pursuant to Article 11(3) of the basic Regulation and in accordance with Article 9(4) of the basic Regulation, an anti-dumping duty should be imposed on imports of the product concerned originating in China at the level of the lesser of the injury margin on which the measures in force are based and the dumping margins found in the current interim review.

| (362) | On the basis of the above, the definitive anti-dumping duty rates, expressed on the CIF Union border price, customs duty unpaid, should be as follows:








  Company | Dumping margin | Injury margin | Definitive anti-dumping duty |
| --- | --- | --- | --- | --- |
| Huzhou Unifull Industrial Fibre Co., Ltd.
  Zhejiang Unifull Industrial Fibre Co., Ltd.
  Zhejiang Unifull Hi-Tech Industry Co., Ltd. | 23,7  % | 57,6  % | 23,7  % |
| Zhejiang Guxiandao Polyester Dope Dyed Yarn Co., Ltd. | 9,7  % | 57,1  % | 9,7  % |
| Other cooperating companies not included in the sample | 17,2  % | 57,3  % | 17,2  % |
| All other companies | 23,7  % | 57,6  % | 23,7  % |

(362)

On the basis of the above, the definitive anti-dumping duty rates, expressed on the CIF Union border price, customs duty unpaid, should be as follows:

Company

Dumping margin

Injury margin

Definitive anti-dumping duty

Huzhou Unifull Industrial Fibre Co., Ltd.

Zhejiang Unifull Industrial Fibre Co., Ltd.

Zhejiang Unifull Hi-Tech Industry Co., Ltd.

23,7  %

57,6  %

23,7  %

Zhejiang Guxiandao Polyester Dope Dyed Yarn Co., Ltd.

9,7  %

57,1  %

9,7  %

Other cooperating companies not included in the sample

17,2  %

57,3  %

17,2  %

All other companies

23,7  %

57,6  %

23,7  %

| (363) | To minimise the risks of circumvention due to the difference in duty rates, special measures are needed to ensure the application of the individual anti-dumping duties. The companies with individual anti-dumping duties must present a valid commercial invoice to the customs authorities of the Member States. The invoice must conform to the requirements set out in Article 1(3) of this Regulation. Imports not accompanied by that invoice should be subject to the anti-dumping duty applicable to ‘all other companies’. |
| --- | --- |

(363)

To minimise the risks of circumvention due to the difference in duty rates, special measures are needed to ensure the application of the individual anti-dumping duties. The companies with individual anti-dumping duties must present a valid commercial invoice to the customs authorities of the Member States. The invoice must conform to the requirements set out in Article 1(3) of this Regulation. Imports not accompanied by that invoice should be subject to the anti-dumping duty applicable to ‘all other companies’.

| (364) | While presentation of this invoice is necessary for the customs authorities of the Member States to apply the individual rates of anti-dumping duty to imports, it is not the only element to be taken into account by the customs authorities. Indeed, even if presented with an invoice meeting all the requirements set out in Article 1(3) of this Regulation, the customs authorities of Member States must carry out their usual checks and may, like in all other cases, require additional documents (shipping documents, etc.) for the purpose of verifying the accuracy of the particulars contained in the declaration and ensure that the subsequent application of the lower rate of duty is justified, in compliance with customs law. |
| --- | --- |

(364)

While presentation of this invoice is necessary for the customs authorities of the Member States to apply the individual rates of anti-dumping duty to imports, it is not the only element to be taken into account by the customs authorities. Indeed, even if presented with an invoice meeting all the requirements set out in Article 1(3) of this Regulation, the customs authorities of Member States must carry out their usual checks and may, like in all other cases, require additional documents (shipping documents, etc.) for the purpose of verifying the accuracy of the particulars contained in the declaration and ensure that the subsequent application of the lower rate of duty is justified, in compliance with customs law.

| (365) | 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 rate(s) and the consequent imposition of a country-wide duty. |
| --- | --- |

(365)

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 rate(s) and the consequent imposition of a country-wide duty.

| (366) | The individual company anti-dumping duty rates specified in this Regulation are exclusively applicable to imports of the product under review originating in China and produced by the named legal entities. Imports of the product under review produced by any other company not specifically mentioned in the operative part of this Regulation, including entities related to those specifically mentioned, should be subject to the duty rate applicable to ‘all other companies’. They should not be subject to any of the individual anti-dumping duty rates. |
| --- | --- |

(366)

The individual company anti-dumping duty rates specified in this Regulation are exclusively applicable to imports of the product under review originating in China and produced by the named legal entities. Imports of the product under review produced by any other company not specifically mentioned in the operative part of this Regulation, including entities related to those specifically mentioned, should be subject to the duty rate applicable to ‘all other companies’. They should not be subject to any of the individual anti-dumping duty rates.

| (367) | A company may request the application of these individual anti-dumping duty rates if it changes subsequently the name of its entity. The request must be addressed to the Commission (104). The request must contain all the relevant information enabling to demonstrate that the change does not affect the right of the company to benefit from the duty rate which applies to it. If the change of name of the company does not affect its right to benefit from the duty rate which applies to it, a regulation about the change of name will be published in the Official Journal of the European Union. |
| --- | --- |

(367)

A company may request the application of these individual anti-dumping duty rates if it changes subsequently the name of its entity. The request must be addressed to the Commission (104). The request must contain all the relevant information enabling to demonstrate that the change does not affect the right of the company to benefit from the duty rate which applies to it. If the change of name of the company does not affect its right to benefit from the duty rate which applies to it, a regulation about the change of name will be published in the Official Journal of the European Union.

104

Official Journal of the European Union

| (368) | An exporter or producer that did not export the product concerned to the Union during the period that was used to set the level of the duty currently applicable to its exports may request the Commission to be made subject to the anti-dumping duty rate for cooperating companies not included in the sample. The Commission should grant such request, provided that three conditions are met. The new exporting producer would have to demonstrate that: (i) it did not export the product concerned to the Union during the period that was used to set the level of the duty applicable to its exports; (ii) it is not related to a company that did so and thus is subject to the anti-dumping duties; and (iii) has exported the product concerned thereafter or has entered into an irrevocable contractual obligation to do so in substantial quantities. |
| --- | --- |

(368)

An exporter or producer that did not export the product concerned to the Union during the period that was used to set the level of the duty currently applicable to its exports may request the Commission to be made subject to the anti-dumping duty rate for cooperating companies not included in the sample. The Commission should grant such request, provided that three conditions are met. The new exporting producer would have to demonstrate that: (i) it did not export the product concerned to the Union during the period that was used to set the level of the duty applicable to its exports; (ii) it is not related to a company that did so and thus is subject to the anti-dumping duties; and (iii) has exported the product concerned thereafter or has entered into an irrevocable contractual obligation to do so in substantial quantities.

| (369) | Imports from Zhejiang Hailide New Material Co. Ltd. are subject to a separate investigation and duties may be imposed in a separate regulation. |
| --- | --- |

(369)

Imports from Zhejiang Hailide New Material Co. Ltd. are subject to a separate investigation and duties may be imposed in a separate regulation.

| (370) | All interested parties were informed of the essential facts and considerations on the basis of which it was intended to recommend that the existing measures be maintained and that definitive anti-dumping duties be imposed on imports of HTYP from China. They were also granted a period to make representations subsequent to the disclosure. The comments submitted by interested parties were duly considered, and, where appropriate, the findings have been modified accordingly. |
| --- | --- |

(370)

All interested parties were informed of the essential facts and considerations on the basis of which it was intended to recommend that the existing measures be maintained and that definitive anti-dumping duties be imposed on imports of HTYP from China. They were also granted a period to make representations subsequent to the disclosure. The comments submitted by interested parties were duly considered, and, where appropriate, the findings have been modified accordingly.

| (371) | In view of Article 109 of Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council (105) when an amount is to be reimbursed following a judgment of the Court of Justice of the European Union, the interest to be paid should be the rate applied by the European Central Bank to its principal refinancing operations, as published in the C series of the Official Journal of the European Union on the first calendar day of each month. |
| --- | --- |

(371)

In view of Article 109 of Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council (105) when an amount is to be reimbursed following a judgment of the Court of Justice of the European Union, the interest to be paid should be the rate applied by the European Central Bank to its principal refinancing operations, as published in the C series of the Official Journal of the European Union on the first calendar day of each month.

105

Official Journal of the European Union

| (372) | The Committee established by Article 15(1) of Regulation (EU) 2016/1036 did not deliver an opinion on the measures provided for in this Regulation, |
| --- | --- |

(372)

The Committee established by Article 15(1) of Regulation (EU) 2016/1036 did not deliver an opinion on the measures provided for in this Regulation,

HAS ADOPTED THIS REGULATION:

Article 1

1.   A definitive anti-dumping duty is imposed on imports of high tenacity yarn of polyesters not put up for retail sale, including monofilament of less than 67 decitex, (excluding sewing thread and ‘Z’-twisted multiple (folded) or cabled yarn, intended for the production of sewing thread, ready for dyeing and for receiving a finishing treatment, loosely wound on a plastic perforated tube), currently falling under CN Code ex 5402 20 00 (TARIC code 5402200010) and originating in the People’s Republic of China.

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

| Company | Definitive anti-dumping duty (%) | TARIC additional code |
| --- | --- | --- |
| Huzhou Unifull Industrial Fibre Co., Ltd.
  Zhejiang Unifull Industrial Fibre Co., Ltd.
  Zhejiang Unifull Hi-Tech Industry Co., Ltd. | 23,7 | 899E |
| Zhejiang Guxiandao Polyester Dope Dyed Yarn Co., Ltd. | 9,7 | 899F |
| Other cooperating companies listed in Annex | 17,2 | A977 |
| All other companies (except Zhejiang Hailide New Material Co. Ltd. – TARIC additional code A976) | 23,7 | A999 |

Company

Definitive anti-dumping duty (%)

TARIC additional code

Huzhou Unifull Industrial Fibre Co., Ltd.

Zhejiang Unifull Industrial Fibre Co., Ltd.

Zhejiang Unifull Hi-Tech Industry Co., Ltd.

23,7

899E

Zhejiang Guxiandao Polyester Dope Dyed Yarn Co., Ltd.

9,7

899F

Other cooperating companies listed in Annex

17,2

A977

All other companies (except Zhejiang Hailide New Material Co. Ltd. – TARIC additional code A976)

23,7

A999

3.   The application of the individual duty rates specified for the companies mentioned in paragraph 2 shall be conditional upon presentation to the Member States’ customs authorities of a valid commercial invoice, on which shall appear a declaration dated and signed by an official of the entity issuing such invoice, identified by his/her name and function, drafted as follows: ‘I, the undersigned, certify that the (volume) of (product under review) sold for export to the European Union covered by this invoice was manufactured by (company name and address) (TARIC additional code) in [country concerned]. I declare that the information provided in this invoice is complete and correct.’ 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.

5.   Where any party from the People’s Republic of China provides sufficient evidence to the Commission that:

| (a) | it did not export the goods described in paragraph 1 originating in the People’s Republic of China during the review investigation period (1 January 2021 – 31 December 2021); |
| --- | --- |

(a)

it did not export the goods described in paragraph 1 originating in the People’s Republic of China during the review investigation period (1 January 2021 – 31 December 2021);

| (b) | it is not related to an exporter or producer subject to the measures imposed by this Regulation; and |
| --- | --- |

(b)

it is not related to an exporter or producer subject to the measures imposed by this Regulation; and

| (c) | it has either actually exported the goods described in paragraph 1 or has entered into an irrevocable contractual obligation to export a significant quantity to the Union after the end of the review investigation period;
  the Commission may amend Annex in order to attribute to that party the duty applicable to cooperating producers not included in the sample, i.e. 17,2 %. |
| --- | --- |

(c)

it has either actually exported the goods described in paragraph 1 or has entered into an irrevocable contractual obligation to export a significant quantity to the Union after the end of the review investigation period;

the Commission may amend Annex in order to attribute to that party the duty applicable to cooperating producers not included in the sample, i.e. 17,2 %.

Article 2

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, 11 May 2023.

For the Commission

The President

Ursula VON DER LEYEN

---

(1)  
  OJ L 176, 30.6.2016, p. 21.

1

(2)  
  OJ L 315, 1.12.2010, p. 1.

2

(3)  
  OJ L 176, 30.6.2016, p. 21.

3

(4)  
  OJ L 49, 25.2.2017, p. 6.

4

(5)  
  OJ L 167, 30.6.2017, p. 31.

5

(6)  WT/DS295/AB/R, 29 November 2005.

6

(7)  
  OJ C 248, 30.6.2022, p. 107.

7

(8)  
  OJ C 205, 31.5.2021, p. 4.

8

(9)  
  OJ C 87, 23.2.2022, p. 2 and C 248, 30.6.2022, p. 142.

9

(10)  Commission Staff Working Document on Significant Distortions in the Economy of the People’s Republic of China for the purposes of Trade Defence Investigations, 20 December 2017, SWD(2017) 483 final/2.

10

(11)  Report – Chapter 2, p. 6-7.

11

(12)  Report – Chapter 2, p. 10.

12

(13)  Available at: Constitution of the People's Republic of China (npc.gov.cn), accessed on 15 November 2022.

13

(14)  Report – Chapter 2, p. 20-21.

14

(15)  Report – Chapter 3, p. 41, 73-74.

15

(16)  Report – Chapter 6, p. 120-121.

16

(17)  Report – Chapter 6. p. 122 -135.

17

(18)  Report – Chapter 7, p. 167-168.

18

(19)  Report – Chapter 8, p. 169-170, 200-201.

19

(20)  Report – Chapter 2, p. 15-16, Report – Chapter 4, p. 50, p. 84, Report – Chapter 5, p. 108-9.

20

(21)  See at: https://aiqicha.baidu.com/company_detail_70517450166132 (accessed on 18 November 2022).

21

(22)  See at: http://www.szse.cn/disclosure/listed/bulletinDetail/index.html?786334a3-123e-4960-bb6a-19fa0d397bd9, p. 99 (accessed on 18 November 2022).

22

(23)  See for example Art. 33 of the CCP Constitution, Article 19 of the Chinese Company Law or the Guidelines on stepping up the United Front work in the private sector for the new era issued by the General Office of the CCP’s Central Committee in 2020.

23

(24)  See at: cfa.com.cn (accessed on 21 November 2022).

24

(25)  Report – Chapter 5, p. 100-1.

25

(26)  Report – Chapter 2, p. 26

26

(27)  See for example: Blanchette, J. – Xi’s Gamble: The Race to Consolidate Power and Stave off Disaster; Foreign Affairs, vol. 100, no. 4, July/August 2021, pp. 10-19.

27

The Race to Consolidate Power and Stave off Disaster

(28)  Report – Chapter 2, p. 31-2.

28

(29)  Available at: https://www.reuters.com/article/us-china-congress-companies-idUSKCN1B40JU (accessed on 15 November 2022).

29

(30)  Available at: www.gov.cn/zhengce/2020-09/15/content_5543685.htm (accessed on 15 November 2022)

30

(31)  Financial Times (2020) – Chinese Communist Party asserts greater control over private enterprise, available at: https://on.ft.com/3mYxP4j (accessed on 15 November 2022).

31

(32)  See at: http://www.szse.cn/disclosure/listed/bulletinDetail/index.html?786334a3-123e-4960-bb6a-19fa0d397bd9, p. 43 (accessed on 18 November 2022).

32

(33)  See at: https://www.guxiandao.com/index.php?g=news&m=index&a=view&id=161 (accessed on 18 November 2022).

33

(34)  Report – Chapters 14.1 to 14.3.

34

(35)  Report – Chapter 4, p. 41-42, 83.

35

(36)  Available at: https://www.miit.gov.cn/zwgk/zcwj/wjfb/yj/art/2022/art_a01b7532a39a41e891d2540da6981d72.html (accessed on 17 November 2022)

36

(37)  Optimize regional layout, strengthen international cooperation, promote digital transformation, eliminate backward production capacity and mergers and reorganizations in accordance with laws and regulations, cultivate leading enterprises, promote the integration and development of large and small enterprises, and consolidate and enhance industrial competitiveness.

37

(38)  Ibid., Art. II.

38

(39)  Available at: https://huanbao.bjx.com.cn/news/20210906/1175114.shtml (accessed on 17 November 2022).

39

(40)  See Chapter V of the Plan.

40

(41)  See Section 2.2.2. of the Plan.

41

(42)  See Section 4.1.1. of the Plan.

42

(43)  See Section 4.1.3. of the Plan.

43

(44)  Available at: www.qg.gov.cn/zwgk/zcfg/sjfgwj/202112/t20211207_2666343.htm (accessed on 18 November 2022).

44

(45)  See Section III.2.5. of the Plan.

45

(46)  See Section III.4.1 of the Plan Available at:

46

https://huanbao.bjx.com.cn/news/20210707/1162695.shtml (accessed on 22 November 2022).

(47)  Available at: https://huanbao.bjx.com.cn/news/20211201/1191133.shtml (accessed on 18 November 2022).

47

(48)  See Section III.2.1 of the Plan.

48

(49)  See the Plan; Available at:

49

https://www.zj.gov.cn/art/2021/6/24/art_1229540815_4671249.html (accessed on 22 November 2022)

(50)  See Section IV.7 of the Plan.

50

(51)  Available at: https://www.cq.gov.cn/zwgk/zfxxgkml/szfwj/qtgw/202108/t20210803_9538603.html (accessed on 22 November 2022)

51

(52)  See Section III.1.4 of the Plan.

52

(53)  Report – Chapter 6, p. 138-149.

53

(54)  Report – Chapter 9, p. 216.

54

(55)  Report – Chapter 9, p. 213-215.

55

(56)  Report – Chapter 9, p. 209-211.

56

(57)  Report – Chapter 13, p. 332-337.

57

(58)  Report – Chapter 13, p. 336.

58

(59)  Report – Chapter 13, p. 337-341.

59

(60)  Report – Chapter 6, p. 114-117.

60

(61)  Report – Chapter 6, p. 119.

61

(62)  Report – Chapter 6, p. 120.

62

(63)  Report – Chapter 6, p. 121-122, 126-128, 133-135.

63

(64)  See official policy document of the China Banking and Insurance Regulatory Commission (CBIRC) of 28 August 2020: Three-year action plan for improving corporate governance of the banking and insurance sectors (2020-2022), available at: http://www.cbirc.gov.cn/cn/view/pages/ItemDetail.html?docId=925393&itemId=928 (accessed on 15 November 2022). The Plan instructs to ‘
  further implement the spirit embodied in General Secretary Xi Jinping’s keynote speech on advancing the reform of corporate governance of the financial sector’
  . Moreover, the Plan’s section II aims at promoting the organic integration of the Party’s leadership into corporate governance: ‘we shall make the integration of the Party’s leadership into corporate governance more systematic, standardised and procedure-based [...] Major operational and management issues must have been discussed by the Party Committee before being decided upon by the Board of Directors or the senior management.’

64

Three-year action plan for improving corporate governance of the banking and insurance sectors (2020-2022

further implement the spirit embodied in General Secretary Xi Jinping’s keynote speech on advancing the reform of corporate governance of the financial sector’

e shall make the integration of the Party’s leadership into corporate governance more systematic, standardised and procedure-based

Major operational and management issues must have been discussed by the Party Committee before being decided upon by the Board of Directors or the senior management.’

(65)  See CBIRC’s Notice on the Commercial banks performance evaluation method, issued on 15 December 2020. http://jrs.mof.gov.cn/gongzuotongzhi/202101/t20210104_3638904.htm (last viewed on 12 April 2021).

65

Notice on the Commercial banks performance evaluation method,

(66)  Available at: https://huanbao.bjx.com.cn/news/20211201/1191133.shtml (accessed on 18 November 2022).

66

(67)  See Paragraph 3 of the Section Safeguard Measures of the Plan.

67

(68)  Available at: https://huanbao.bjx.com.cn/news/20210906/1175114-3.shtml (accessed on 22 November 2022)

68

(69)  See Section 8.7. of the Plan.

69

(70)  See at: http://zj.sina.cn/shaoxing/2022-03-03/detail-imcwipih6326336.d.html (accessed on 18 November 2022).

70

(71)  See IMF Working Paper ‘Resolving China’s Corporate Debt Problem’, by Wojciech Maliszewski, Serkan Arslanalp, John Caparusso, José Garrido, Si Guo, Joong Shik Kang, W. Raphael Lam, T. Daniel Law, Wei Liao, Nadia Rendak, Philippe Wingender, Jiangyan, October 2016, WP/16/203

71

(72)  Report – Chapter 6, p. 121-122, 126-128, 133-135.

72

(73)  See OECD (2019), OECD Economic Surveys: China 2019, OECD Publishing, Paris. p. 29, available at:

73

https://doi.org/10.1787/eco_surveys-chn-2019-en (accessed on 15 November 2022).

(74)  See: http://www.gov.cn/xinwen/2020-04/20/content_5504241.htm (accessed on 22 November 2022).

74

(75)  World Bank Open Data – Upper Middle Income, https://data.worldbank.org/income-level/upper-middle-income.

75

(76)  If there is no production of the product under review in any country with a similar level of development, production of a product in the same general category and/or sector of the product under review may be considered.

76

(77)  Regulation (EU) 2015/755 of the European Parliament and of the Council of 29 April 2015 on common rules for imports from certain third countries (OJ L 123, 19.5.2015, p. 33). Article 2(7) of the basic Regulation considers that domestic prices in those countries cannot be used for the purpose of determining normal value.

77

(78)  See https://www.kordsa.com/en/images/pdf/Kordsa_Annual_Report_EN_2021.pdf, p. 160.

78

(79)  See https://www.kordsa.com/en/images/pdf/Kordsa_Annual_Report_EN_2021.pdf, p. 117.

79

(80)  The Commission informed the sampled cooperating exporting producers of its intention to use the data provided by these producers for the purposes of the expiry review investigations. No objections were received.

80

(81)  Wood Mackenzie – see https://www.woodmac.com/

81

(82)  Commission Implementing Regulation (EU) 2017/325 of 24 February 2017 imposing a definitive anti-dumping duty on imports of high tenacity yarns of polyesters originating in the People’s Republic of China following an expiry review pursuant to Article 11(2) of Regulation (EU) 2016/1036 of the European Parliament and of the Council (OJ L 49, 25.2.2017, p. 6), as amended by Commission Implementing Regulation (EU) 2017/1159 of 29 June 2017 amending Council Implementing Regulation (EU) No 1105/2010 and Commission Implementing Regulation (EU) 2017/325 as regards the definition of the product scope of the current anti-dumping measures concerning imports of high tenacity yarns of polyesters originating in the People’s Republic of China, and providing for the possibility of repayment or remission of duties in certain cases (OJ L 167, 30.6.2017, p. 31).

82

(83)  Approximately 14 %, if considering exclusively exports subject to the measures.

83

(84)  2022 semi-annual reports of the countries on the WTO website https://www.wto.org/english/tratop_e/adp_e/adp_e.htm

84

(85)  See Fujian Billion diversifies into industrial yarn production (innovationintextiles.com) and http://en.three-v.com.cn/about.html for more details.

85

(86)  Commission Implementing Regulation (EU) 2022/977 of 22 June 2022 accepting two requests for new exporting producer treatment with regard to the definitive antidumping measures imposed on imports of high tenacity yarns of polyesters originating in the People’s Republic of China following an expiry review pursuant to Article 11(2) of Regulation (EU) 2016/1036 of the European Parliament and of the Council and amending Commission Implementing Regulation (EU) 2017/325 (OJ L 167, 24.6.2022, p. 55)..

86

(87)  The 14(6) database contains data on imports of products subject to anti-dumping or anti-subsidy measures or investigations, both from the countries and exporting producers concerned by the proceeding and from other third countries and other exporting producers, at the level of the 10-digit TARIC codes and TARIC additional codes.

87

(88)  The figures of the Chinese exporting producers subject to duties are not confidential as such. However, providing the detailed figures would indirectly reveal the precise import figures of Hailide, the exporter not subject to duties.

88

(89)  Commission Implementing Regulation (EU) 2021/2239 of 15 December 2021 imposing a definitive anti-dumping duty on imports of certain utility scale steel wind towers originating in the People’s Republic of China (OJ L 450, 16.12.2021, p. 59) (‘the steel wind towers case’).

89

(90)  Notice on the consequences of the COVID-19 outbreak on anti-dumping and anti-subsidy investigations (OJ C 86, 16.3.2020, p. 6).

90

(91)  World Bank Open Data – Upper Middle Income, https://data.worldbank.org/income-level/upper-middle-income.

91

(92)  p. 133 of 2021 Annual Report.

92

(93)  p. 61 of 2021 Annual Report available on https://www.kordsa.com/en/images/pdf/Kordsa_Annual_Report_EN_2021.pdf

93

(94)  See Kordsa_Annual_Report_EN_2021.pdf, p. 158, Note 3 -Segment reporting, a) External revenue as well as the Directory on p. 205 of the annual report.

94

(95)  http://www.gtis.com/gta/secure/default.cfm

95

(96)  http://www.macmap.org

96

(97)  https://data.tuik.gov.tr/Bulten/DownloadIstatistikselTablo?p=tg4QGRdNcBVDQo/mmOOyD/8g3GlHdKhwM0SMnhh4V/APyz9UrZvk0kK90vktK5jo

97

(98)  The labour costs are available at https://data.tuik.gov.tr/Bulten/DownloadIstatistikselTablo?p=tg4QGRdNcBVDQo/mmOOyD/8g3GlHdKhwM0SMnhh4V/APyz9UrZvk0kK90vktK5jo

98

(99)  https://data.tuik.gov.tr/Bulten/Index?p=Consumer-Price-Index-December-2021-45789

99

(100)  https://data.tuik.gov.tr/Kategori/GetKategori?p=cevre-ve-enerji-103&dil=2

100

https://data.tuik.gov.tr/Bulten/Index?p=Electricity-and-Natural-Gas-Prices-Period-II:-July-December,-2021-45566

https://data.tuik.gov.tr/Bulten/Index?p=Electricity-and-Natural-Gas-Prices-Period-I:-January-June,-2021-37459

(101)  http://www.gtis.com/gta/secure/default.cfm

101

(102)  Commission Staff Working Document on significant distortions in the economy of the Russian Federation for the purposes of trade defence investigations, 22.10.2020, SWD(2020) 242 final.

102

(103)  Recital (352) of the Commission Implementing Regulation (EU) 2020/1336 of 25 September 2020 imposing definitive anti-dumping duties on imports of certain polyvinyl alcohols originating in the People’s Republic of China (OJ L 315, 29.9.2020, p. 1).

103

(104)  European Commission, Directorate-General for Trade, Directorate G, Rue de la Loi 170, 1040 Brussels, Belgium.

104

(105)  Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council of 18 July 2018 on the financial rules applicable to the general budget of the Union, amending Regulations (EU) No 1296/2013, (EU) No 1301/2013, (EU) No 1303/2013, (EU) No 1304/2013, (EU) No 1309/2013, (EU) No 1316/2013, (EU) No 223/2014, (EU) No 283/2014, and Decision No 541/2014/EU and repealing Regulation (EU, Euratom) No 966/2012 (OJ L 193, 30.7.2018, p. 1).

105

---

ANNEX

Chinese cooperating exporting producers not sampled (TARIC Additional Code A977):

| Company Name | City |
| --- | --- |
| Fujian Billion Polymerization Fiber Technology Industrial Co., Ltd. | Jinjiang |
| Jiangsu Hengli Chemical Fibre Co., Ltd. | Suzhou |
| Jiangsu Solead New Material Group Co., Ltd. | Yixing |
| Oriental Industries (Suzhou) Ltd | Suzhou |
| Zhejiang Kingsway High-tech Fiber Co., Ltd. | Haining |
| Zhejiang Sanwei Material Technology Co., Ltd. | Taizhou |

Company Name

City

Fujian Billion Polymerization Fiber Technology Industrial Co., Ltd.

Jinjiang

Jiangsu Hengli Chemical Fibre Co., Ltd.

Suzhou

Jiangsu Solead New Material Group Co., Ltd.

Yixing

Oriental Industries (Suzhou) Ltd

Suzhou

Zhejiang Kingsway High-tech Fiber Co., Ltd.

Haining

Zhejiang Sanwei Material Technology Co., Ltd.

Taizhou

---

| 12.5.2023 | EN | Official Journal of the European Union | L 127/58 |
| --- | --- | --- | --- |

12.5.2023

EN

Official Journal of the European Union

L 127/58

---

COMMISSION IMPLEMENTING REGULATION (EU) 2023/935

of 11 May 2023

imposing a definitive anti-dumping duty on imports of high tenacity yarns of polyesters originating in the People’s Republic of China and produced by Zhejiang Hailide New Material Co., Ltd.

THE EUROPEAN COMMISSION,

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

Having regard to Regulation (EU) 2016/1036 of the European Parliament and of the Council of 8 June 2016 on protection against dumped imports from countries not members of the European Union (1) (the ‘basic Regulation’) and in particular Article 9(4) thereof,

Whereas:

1.   PROCEDURE

PROCEDURE

1.1.   Original investigation and measures in force

Original investigation and measures in force

| (1) | Anti-dumping measures on imports of high tenacity yarns of polyesters (‘HTYP’) originating in the People’s Republic of China (‘China’ or ‘country concerned’) ranging from 5,1 % to 9,8 % were originally imposed by Council Implementing Regulation (EU) No 1105/2010 (2) (‘the original measures’). |
| --- | --- |

(1)

Anti-dumping measures on imports of high tenacity yarns of polyesters (‘HTYP’) originating in the People’s Republic of China (‘China’ or ‘country concerned’) ranging from 5,1 % to 9,8 % were originally imposed by Council Implementing Regulation (EU) No 1105/2010 (2) (‘the original measures’).

2

| (2) | The original measures applied to all imports of HTYP originating in China, with the exception of imports of HTYP produced by the Chinese exporting producers Zhejiang Hailide New Material Co. Ltd. (‘Hailide’) and Hangzhou Huachun Chemical Fiber Co. Ltd. (‘Huachun’). No duty rate was originally imposed (Regulation (EU) No 1105/2010) on these companies, as no dumping was found. |
| --- | --- |

(2)

The original measures applied to all imports of HTYP originating in China, with the exception of imports of HTYP produced by the Chinese exporting producers Zhejiang Hailide New Material Co. Ltd. (‘Hailide’) and Hangzhou Huachun Chemical Fiber Co. Ltd. (‘Huachun’). No duty rate was originally imposed (Regulation (EU) No 1105/2010) on these companies, as no dumping was found.

| (3) | Following a first expiry review pursuant to Article 11(2) of (the ‘basic Regulation’), the Commission, by Commission Implementing Regulation (EU) 2017/325 (3), as last amended by Commission Implementing Regulation (EU) 2017/1159 (4) maintained the original measures. |
| --- | --- |

(3)

Following a first expiry review pursuant to Article 11(2) of (the ‘basic Regulation’), the Commission, by Commission Implementing Regulation (EU) 2017/325 (3), as last amended by Commission Implementing Regulation (EU) 2017/1159 (4) maintained the original measures.

3

4

| (4) | A second expiry review of the measures in force pursuant to Article 11(2) of the basic Regulation and a partial interim review (5) pursuant to Article 11(3) of the basic Regulation, limited in scope to the examination of dumping (6) were initiated on 23 February 2022 and 30 June 2022 respectively. |
| --- | --- |

(4)

A second expiry review of the measures in force pursuant to Article 11(2) of the basic Regulation and a partial interim review (5) pursuant to Article 11(3) of the basic Regulation, limited in scope to the examination of dumping (6) were initiated on 23 February 2022 and 30 June 2022 respectively.

5

6

| (5) | In line with the WTO Appellate Body report in case Mexico – Definitive Anti-dumping Measures on Beef and Rice (7) (‘the WTO Appellate Body report’), Hailide and Huachun were not examined in the subsequent reviews of the original measures as imposed by Regulation (EU) No 1105/2010 and are not subject to the measures in force. |
| --- | --- |

(5)

In line with the WTO Appellate Body report in case Mexico – Definitive Anti-dumping Measures on Beef and Rice (7) (‘the WTO Appellate Body report’), Hailide and Huachun were not examined in the subsequent reviews of the original measures as imposed by Regulation (EU) No 1105/2010 and are not subject to the measures in force.

7

1.2.   Initiation

Initiation

| (6) | On 30 June 2022, the Commission initiated an anti-dumping investigation under Article 5 of the basic Regulation with regard to imports of HTYP manufactured and exported to the Union by Hailide. A Notice of Initiation was published in the Official Journal of the European Union (8) (‘the Notice of Initiation’). |
| --- | --- |

(6)

On 30 June 2022, the Commission initiated an anti-dumping investigation under Article 5 of the basic Regulation with regard to imports of HTYP manufactured and exported to the Union by Hailide. A Notice of Initiation was published in the Official Journal of the European Union (8) (‘the Notice of Initiation’).

Official Journal of the European Union

8

| (7) | The Commission initiated the investigation following a complaint lodged on 16 May 2022 by The European Man-made Fibres Association (‘CIRFS’ or ‘the complainant’) on behalf of the Union industry of HTYP in the sense of Article 5(4) of the basic Regulation. The complaint contained evidence of dumping and of resulting material injury that was sufficient to justify the initiation of the investigation. |
| --- | --- |

(7)

The Commission initiated the investigation following a complaint lodged on 16 May 2022 by The European Man-made Fibres Association (‘CIRFS’ or ‘the complainant’) on behalf of the Union industry of HTYP in the sense of Article 5(4) of the basic Regulation. The complaint contained evidence of dumping and of resulting material injury that was sufficient to justify the initiation of the investigation.

| (8) | The investigation is limited in scope to the exporting producer concerned (Hailide) and any related company thereto. Another exporting producer, Huachun, which also received no anti-dumping duty rate in the investigation that led to the imposition of the above anti-dumping measures, ceased to exist in 2021. Therefore, Huachun is not considered an exporting producer of the HTYP and a party concerned for the purposes of this investigation. |
| --- | --- |

(8)

The investigation is limited in scope to the exporting producer concerned (Hailide) and any related company thereto. Another exporting producer, Huachun, which also received no anti-dumping duty rate in the investigation that led to the imposition of the above anti-dumping measures, ceased to exist in 2021. Therefore, Huachun is not considered an exporting producer of the HTYP and a party concerned for the purposes of this investigation.

1.3.   Interested parties

Interested parties

| (9) | In the Notice of Initiation, the Commission invited interested parties to contact it in order to participate in the investigation. In addition, it specifically informed the exporting producer concerned and the authorities in China about the initiation of the investigation and invited them to participate. |
| --- | --- |

(9)

In the Notice of Initiation, the Commission invited interested parties to contact it in order to participate in the investigation. In addition, it specifically informed the exporting producer concerned and the authorities in China about the initiation of the investigation and invited them to participate.

| (10) | Interested parties had an opportunity to comment on the initiation of the investigation and to request a hearing with the Commission and/or the Hearing Officer in trade proceedings. |
| --- | --- |

(10)

Interested parties had an opportunity to comment on the initiation of the investigation and to request a hearing with the Commission and/or the Hearing Officer in trade proceedings.

| (11) | A user association together with five users requested a hearing with the Commission services and were granted an opportunity to be heard. |
| --- | --- |

(11)

A user association together with five users requested a hearing with the Commission services and were granted an opportunity to be heard.

1.4.   Sampling of Union producers and of unrelated importers

Sampling of Union producers and of unrelated importers

| (12) | In the Notice of Initiation, the Commission stated that it had provisionally selected a sample of Union producers. The Commission selected the sample based on production and sales volumes, taking into account their geographical location. This sample consisted of 3 Union producers. The sampled Union producers accounted for more than 50 % of the estimated total EU production and EU sales volume of the like product. In accordance with Article 17(2) of the basic Regulation, the Commission invited interested parties to comment on the provisional sample. No interested party submitted comments on the provisional sample, which was confirmed as the definitive sample. The sample is representative of the Union industry. |
| --- | --- |

(12)

In the Notice of Initiation, the Commission stated that it had provisionally selected a sample of Union producers. The Commission selected the sample based on production and sales volumes, taking into account their geographical location. This sample consisted of 3 Union producers. The sampled Union producers accounted for more than 50 % of the estimated total EU production and EU sales volume of the like product. In accordance with Article 17(2) of the basic Regulation, the Commission invited interested parties to comment on the provisional sample. No interested party submitted comments on the provisional sample, which was confirmed as the definitive sample. The sample is representative of the Union industry.

| (13) | In order to enable the Commission to decide whether sampling would be necessary in respect of the unrelated importers in the Union, those parties were requested to make themselves known and to provide the Commission with the information requested in the respective Notice of Initiation. One unrelated importer came forward as an interested party, but did not provide the requested sampling information. Therefore, sampling was not necessary for the unrelated importers. |
| --- | --- |

(13)

In order to enable the Commission to decide whether sampling would be necessary in respect of the unrelated importers in the Union, those parties were requested to make themselves known and to provide the Commission with the information requested in the respective Notice of Initiation. One unrelated importer came forward as an interested party, but did not provide the requested sampling information. Therefore, sampling was not necessary for the unrelated importers.

1.5.   Questionnaire replies and verification visits

Questionnaire replies and verification visits

| (14) | The Commission sent a questionnaire concerning the existence of significant distortions in China within the meaning of Article 2(6a)(b) of the basic Regulation to the Government of China (‘GOC’). |
| --- | --- |

(14)

The Commission sent a questionnaire concerning the existence of significant distortions in China within the meaning of Article 2(6a)(b) of the basic Regulation to the Government of China (‘GOC’).

| (15) | The Commission sent questionnaires to the sampled Union producers, users and to the exporting producer concerned. The same questionnaires had also been made available online on the day of initiation. |
| --- | --- |

(15)

The Commission sent questionnaires to the sampled Union producers, users and to the exporting producer concerned. The same questionnaires had also been made available online on the day of initiation.

| (16) | The Commission received questionnaire replies from Hailide and three sampled Union producers. Questionnaire replies were also received from two users of HTYP. However, these replies could not be taken into consideration in the context of this proceeding, as the users in question did not use the product concerned produced by Hailide. |
| --- | --- |

(16)

The Commission received questionnaire replies from Hailide and three sampled Union producers. Questionnaire replies were also received from two users of HTYP. However, these replies could not be taken into consideration in the context of this proceeding, as the users in question did not use the product concerned produced by Hailide.

| (17) | In view of the outbreak of Covid-19 and the confinement measures put in place by various Member States as well as by various third countries, the Commission could not carry out verification visits pursuant to Article 16 of the basic Regulation at the Hailide’s premises in China. |
| --- | --- |

(17)

In view of the outbreak of Covid-19 and the confinement measures put in place by various Member States as well as by various third countries, the Commission could not carry out verification visits pursuant to Article 16 of the basic Regulation at the Hailide’s premises in China.

| (18) | The Commission instead cross-checked with Hailide remotely all the information deemed necessary for its determinations in line with its Notice on the consequences of the Covid-19 outbreak on anti-dumping and anti-subsidy investigations (9). |
| --- | --- |

(18)

The Commission instead cross-checked with Hailide remotely all the information deemed necessary for its determinations in line with its Notice on the consequences of the Covid-19 outbreak on anti-dumping and anti-subsidy investigations (9).

9

| (19) | Furthermore, verification visits were carried out at the premises of the following companies:






  (a) | Related trader of the exporting producer concerned: Hailide Fibers Europe A/S, Denmark |
| --- | --- | --- |

(19)

Furthermore, verification visits were carried out at the premises of the following companies:

(a)

Related trader of the exporting producer concerned: Hailide Fibers Europe A/S, Denmark

| (b) | Union producers






  — | Glanzstoff Longlaville, Longlaville, France |
| --- | --- | --- |

(b)

Union producers

—

Glanzstoff Longlaville, Longlaville, France

| — | PHP Fibers GmbH, Obernburg, Germany |
| --- | --- |

—

PHP Fibers GmbH, Obernburg, Germany

| — | Brilen Tech S.A., Zaragoza, Spain |
| --- | --- |

—

Brilen Tech S.A., Zaragoza, Spain

1.6.   Subsequent procedure

Subsequent procedure

| (20) | On 30 January 2023, in accordance with Article 19a(2) of the basic Regulation, the Commission informed the interested parties of its intention not to impose provisional measures. The Commission did not impose provisional anti-dumping measures in this investigation in order to align the timing of the definitive findings of this proceeding with the expiry review and the partial interim review referred to in recital (4) above. |
| --- | --- |

(20)

On 30 January 2023, in accordance with Article 19a(2) of the basic Regulation, the Commission informed the interested parties of its intention not to impose provisional measures. The Commission did not impose provisional anti-dumping measures in this investigation in order to align the timing of the definitive findings of this proceeding with the expiry review and the partial interim review referred to in recital (4) above.

| (21) | On 20 February 2023, the Commission disclosed the essential facts and considerations on the basis of which it intended to impose the definitive anti-dumping duties. Furthermore, an additional disclosure was made on 20 March 2023. All parties were granted a period within which they could make comments on the disclosures. |
| --- | --- |

(21)

On 20 February 2023, the Commission disclosed the essential facts and considerations on the basis of which it intended to impose the definitive anti-dumping duties. Furthermore, an additional disclosure was made on 20 March 2023. All parties were granted a period within which they could make comments on the disclosures.

| (22) | The comments made by interested parties were considered by the Commission and taken into account, where appropriate. The parties who so requested were granted a hearing. |
| --- | --- |

(22)

The comments made by interested parties were considered by the Commission and taken into account, where appropriate. The parties who so requested were granted a hearing.

1.7.   Investigation period and period considered

Investigation period and period considered

| (23) | The investigation of dumping and injury covered the period from 1 January 2021 to 31 December 2021 (‘the investigation period’ or ‘IP’). The examination of trends relevant for the assessment of injury covered the period from 1 January 2018 to the end of the investigation period (‘the period considered’). |
| --- | --- |

(23)

The investigation of dumping and injury covered the period from 1 January 2021 to 31 December 2021 (‘the investigation period’ or ‘IP’). The examination of trends relevant for the assessment of injury covered the period from 1 January 2018 to the end of the investigation period (‘the period considered’).

2.   PRODUCT UNDER INVESTIGATION, PRODUCT CONCERNED AND LIKE PRODUCT

PRODUCT UNDER INVESTIGATION, PRODUCT CONCERNED AND LIKE PRODUCT

2.1.   Product under investigation

Product under investigation

| (24) | The product subject to this investigation is high tenacity yarn of polyesters not put up for retail sale, including monofilament of less than 67 decitex, (excluding sewing thread and ‘Z’-twisted multiple (folded) or cabled yarn, intended for the production of sewing thread, ready for dyeing and for receiving a finishing treatment, loosely wound on a plastic perforated tube), currently falling under CN Code ex 5402 20 00 (TARIC code 5402200010) (‘the product under investigation’). The CN and TARIC codes are given for information only without prejudice to a subsequent change in the tariff classification. |
| --- | --- |

(24)

The product subject to this investigation is high tenacity yarn of polyesters not put up for retail sale, including monofilament of less than 67 decitex, (excluding sewing thread and ‘Z’-twisted multiple (folded) or cabled yarn, intended for the production of sewing thread, ready for dyeing and for receiving a finishing treatment, loosely wound on a plastic perforated tube), currently falling under CN Code ex 5402 20 00 (TARIC code 5402200010) (‘the product under investigation’). The CN and TARIC codes are given for information only without prejudice to a subsequent change in the tariff classification.

| (25) | HTYP are used in a number of diverse applications such as tyre reinforcement, broad fabrics, seatbelts, airbags, ropes, nets and a number of industrial applications. |
| --- | --- |

(25)

HTYP are used in a number of diverse applications such as tyre reinforcement, broad fabrics, seatbelts, airbags, ropes, nets and a number of industrial applications.

2.2.   Product concerned

Product concerned

| (26) | Product concerned by this investigation is the product under investigation originating in China and produced by Hailide. |
| --- | --- |

(26)

Product concerned by this investigation is the product under investigation originating in China and produced by Hailide.

2.3.   Like product

Like product

| (27) | The investigation showed that the following products have the same basic physical, chemical and technical characteristics as well as the same basic uses:






  — | the product concerned when exported to the Union; |
| --- | --- | --- |

(27)

The investigation showed that the following products have the same basic physical, chemical and technical characteristics as well as the same basic uses:

—

the product concerned when exported to the Union;

| — | the product under investigation produced and sold on the Chinese domestic market; and |
| --- | --- |

—

the product under investigation produced and sold on the Chinese domestic market; and

| — | the product under investigation produced and sold in the Union by the Union industry. |
| --- | --- |

—

the product under investigation produced and sold in the Union by the Union industry.

| (28) | These products are therefore considered to be like products within the meaning of Article 1(4) of the basic Regulation. |
| --- | --- |

(28)

These products are therefore considered to be like products within the meaning of Article 1(4) of the basic Regulation.

3.   DUMPING

DUMPING

3.1.   Procedure for the determination of the normal value under Article 2(6a) of the basic Regulation

Procedure for the determination of the normal value under Article 2(6a) of the basic Regulation

| (29) | The evidence available at the initiation of the investigation pointed to the existence of significant distortions in China within the meaning of Article 2(6a), point (b) of the basic Regulation. The Commission therefore considered it appropriate to initiate the investigation having regard to Article 2(6a) of the basic Regulation. |
| --- | --- |

(29)

The evidence available at the initiation of the investigation pointed to the existence of significant distortions in China within the meaning of Article 2(6a), point (b) of the basic Regulation. The Commission therefore considered it appropriate to initiate the investigation having regard to Article 2(6a) of the basic Regulation.

| (30) | In order to collect the necessary data for a possible application of Article 2(6a) of the basic Regulation the Commission invited Hailide to provide information regarding the inputs used for producing HTYP. Hailide submitted the relevant information. |
| --- | --- |

(30)

In order to collect the necessary data for a possible application of Article 2(6a) of the basic Regulation the Commission invited Hailide to provide information regarding the inputs used for producing HTYP. Hailide submitted the relevant information.

| (31) | In addition, the Commission invited all interested parties to make their views known, submit information and provide supporting evidence regarding the application of Article 2(6a) of the basic Regulation within 37 days of the date of publication of the Notice of Initiation in the Official Journal of the European Union. |
| --- | --- |

(31)

In addition, the Commission invited all interested parties to make their views known, submit information and provide supporting evidence regarding the application of Article 2(6a) of the basic Regulation within 37 days of the date of publication of the Notice of Initiation in the Official Journal of the European Union.

Official Journal of the European Union

| (32) | In point 6.3.2 of the Notice of Initiation the Commission informed interested parties that based on the information available at that stage possible appropriate representative countries pursuant to Article 2(6a)(a) of the basic Regulation was Türkiye. |
| --- | --- |

(32)

In point 6.3.2 of the Notice of Initiation the Commission informed interested parties that based on the information available at that stage possible appropriate representative countries pursuant to Article 2(6a)(a) of the basic Regulation was Türkiye.

| (33) | The Commission also stated that it would examine other possibly appropriate representative countries in accordance with the criteria set out in 2(6a)(a) first indent of the basic Regulation. |
| --- | --- |

(33)

The Commission also stated that it would examine other possibly appropriate representative countries in accordance with the criteria set out in 2(6a)(a) first indent of the basic Regulation.

| (34) | On 19 July 2022, the Commission issued a First note on the sources for the determination of the normal value (the ‘First Note’) by which it informed interested parties on the relevant sources it intended to use for the determination of the normal value. |
| --- | --- |

(34)

On 19 July 2022, the Commission issued a First note on the sources for the determination of the normal value (the ‘First Note’) by which it informed interested parties on the relevant sources it intended to use for the determination of the normal value.

| (35) | In that note, the Commission provided a preliminary list of all known factors of production (‘FOP’) such as raw materials, labour and energy, used in the production of HTYP. In addition, the Commission identified Türkiye, Brazil and Thailand as possible appropriate representative countries. The Commission gave all interested parties opportunity to comment. The Commission received comments from Hailide as well as from the complainant. |
| --- | --- |

(35)

In that note, the Commission provided a preliminary list of all known factors of production (‘FOP’) such as raw materials, labour and energy, used in the production of HTYP. In addition, the Commission identified Türkiye, Brazil and Thailand as possible appropriate representative countries. The Commission gave all interested parties opportunity to comment. The Commission received comments from Hailide as well as from the complainant.

| (36) | On 30 November 2022, and after having analysed the comments received, the Commission issued the Second note on the sources for the determination of the normal value (the ‘Second Note’) (the First Note and Second Note are collectively referred to as the ‘Notes’). |
| --- | --- |

(36)

On 30 November 2022, and after having analysed the comments received, the Commission issued the Second note on the sources for the determination of the normal value (the ‘Second Note’) (the First Note and Second Note are collectively referred to as the ‘Notes’).

| (37) | In the Second Note, the Commission updated the list of factors of production and informed interested parties of its intention to use Türkiye as the representative country under Article 2(6a)(a), first indent of the basic Regulation. It also informed interested parties that it would establish selling, general and administrative costs and profits based on publicly available financial statements of an HTYP producer in Türkiye. An additional note with revised exchange rates for a number of benchmarks as well as including a more detailed disclosure of benchmark for labour cost calculation was issued and placed on the open file on 16 December 2022. |
| --- | --- |

(37)

In the Second Note, the Commission updated the list of factors of production and informed interested parties of its intention to use Türkiye as the representative country under Article 2(6a)(a), first indent of the basic Regulation. It also informed interested parties that it would establish selling, general and administrative costs and profits based on publicly available financial statements of an HTYP producer in Türkiye. An additional note with revised exchange rates for a number of benchmarks as well as including a more detailed disclosure of benchmark for labour cost calculation was issued and placed on the open file on 16 December 2022.

| (38) | The Commission invited interested parties to comment. Comments were received from Hailide as well as from the complainant and a group of users (IVGT, Delcotex, Gleistein, Guth&Wolf, Heytex and Jakob Eschbach). |
| --- | --- |

(38)

The Commission invited interested parties to comment. Comments were received from Hailide as well as from the complainant and a group of users (IVGT, Delcotex, Gleistein, Guth&Wolf, Heytex and Jakob Eschbach).

| (39) | After having analysed the comments and information received, the Commission concluded that Türkiye was an appropriate representative country from which undistorted prices and costs would be sourced for the determination of the normal value. The underlying reasons for that choice are further described in detail in Section 3.3.2 below. |
| --- | --- |

(39)

After having analysed the comments and information received, the Commission concluded that Türkiye was an appropriate representative country from which undistorted prices and costs would be sourced for the determination of the normal value. The underlying reasons for that choice are further described in detail in Section 3.3.2 below.

3.2.   Application of Article 18 of the basic Regulation

Application of Article 18 of the basic Regulation

| (40) | In order to obtain information it deemed necessary for its investigation with regard to the alleged significant distortions, the Commission sent a questionnaire to the GOC. No questionnaire reply was received from the GOC. Subsequently, the Commission informed the GOC that it would use facts available within the meaning of Article 18 of the basic Regulation for the determination of the existence of the significant distortions in China. |
| --- | --- |

(40)

In order to obtain information it deemed necessary for its investigation with regard to the alleged significant distortions, the Commission sent a questionnaire to the GOC. No questionnaire reply was received from the GOC. Subsequently, the Commission informed the GOC that it would use facts available within the meaning of Article 18 of the basic Regulation for the determination of the existence of the significant distortions in China.

3.3.   Normal value

Normal value

| (41) | According to Article 2(1) of the basic Regulation, “the normal value shall normally be based on the prices paid or payable, in the ordinary course of trade, by independent customers in the exporting country”. |
| --- | --- |

(41)

According to Article 2(1) of the basic Regulation, “the normal value shall normally be based on the prices paid or payable, in the ordinary course of trade, by independent customers in the exporting country”.

the normal value shall normally be based on the prices paid or payable, in the ordinary course of trade, by independent customers in the exporting country

| (42) | However, according to Article 2(6a)(a) of the basic Regulation,
  “in case it is determined [...] that it is not appropriate to use domestic prices and costs in the exporting country due to the existence in that country of significant distortions within the meaning of point (b), the normal value shall be constructed exclusively on the basis of costs of production and sale reflecting undistorted prices or benchmarks”, and
  “shall include an undistorted and reasonable amount of administrative, selling and general costs and for profits”
  (“administrative, selling and general costs” is referred hereinafter as ‘SG&A’). |
| --- | --- |

(42)

However, according to Article 2(6a)(a) of the basic Regulation,
  “in case it is determined [...] that it is not appropriate to use domestic prices and costs in the exporting country due to the existence in that country of significant distortions within the meaning of point (b), the normal value shall be constructed exclusively on the basis of costs of production and sale reflecting undistorted prices or benchmarks”, and
  “shall include an undistorted and reasonable amount of administrative, selling and general costs and for profits”
  (“administrative, selling and general costs” is referred hereinafter as ‘SG&A’).

“in case it is determined

that it is not appropriate to use domestic prices and costs in the exporting country due to the existence in that country of significant distortions within the meaning of point (b), the normal value shall be constructed exclusively on the basis of costs of production and sale reflecting undistorted prices or benchmarks”,

“shall include an undistorted and reasonable amount of administrative, selling and general costs and for profits”

| (43) | As further explained below, the Commission concluded in the present investigation that, based on the evidence available and given the lack of cooperation of the GOC, the application of Article 2(6a) of the basic Regulation was appropriate. |
| --- | --- |

(43)

As further explained below, the Commission concluded in the present investigation that, based on the evidence available and given the lack of cooperation of the GOC, the application of Article 2(6a) of the basic Regulation was appropriate.

3.3.1.   
  Existence of significant distortions

Existence of significant distortions

3.3.1.1.   Introduction

Introduction

| (44) | Article 2(6a)(b) of the basic Regulation stipulates that ‘significant distortions are those distortions which occur when reported prices or costs, including the costs of raw materials and energy, are not the result of free market forces as they are affected by substantial government intervention. In assessing the existence of significant distortions regard shall be had, inter alia, to the potential impact of one or more of the following elements:






  — | the market in question being served to a significant extent by enterprises which operate under the ownership, control or policy supervision or guidance of the authorities of the exporting country; |
| --- | --- | --- |

(44)

Article 2(6a)(b) of the basic Regulation stipulates that ‘significant distortions are those distortions which occur when reported prices or costs, including the costs of raw materials and energy, are not the result of free market forces as they are affected by substantial government intervention. In assessing the existence of significant distortions regard shall be had, inter alia, to the potential impact of one or more of the following elements:

—

the market in question being served to a significant extent by enterprises which operate under the ownership, control or policy supervision or guidance of the authorities of the exporting country;

| — | state presence in firms allowing the state to interfere with respect to prices or costs; |
| --- | --- |

—

state presence in firms allowing the state to interfere with respect to prices or costs;

| — | public policies or measures discriminating in favour of domestic suppliers or otherwise influencing free market forces; |
| --- | --- |

—

public policies or measures discriminating in favour of domestic suppliers or otherwise influencing free market forces;

| — | the lack, discriminatory application or inadequate enforcement of bankruptcy, corporate or property laws; |
| --- | --- |

—

the lack, discriminatory application or inadequate enforcement of bankruptcy, corporate or property laws;

| — | wage costs being distorted; |
| --- | --- |

—

wage costs being distorted;

| — | access to finance granted by institutions which implement public policy objectives or otherwise not acting independently of the state’. |
| --- | --- |

—

access to finance granted by institutions which implement public policy objectives or otherwise not acting independently of the state’.

| (45) | As the list in Article 2(6a)(b) of the basic Regulation is non-cumulative, not all the elements need to be given regard to for a finding of significant distortions. Moreover, the same factual circumstances may be used to demonstrate the existence of one or more of the elements of the list. However, any conclusion on significant distortions within the meaning of Article 2(6a)(a) must be made on the basis of all the evidence at hand. The overall assessment on the existence of distortions may also take into account the general context and situation in the exporting country, in particular where the fundamental elements of the exporting country’s economic and administrative set-up provides the government with substantial powers to intervene in the economy in such a way that prices and costs are not the result of the free development of market forces. |
| --- | --- |

(45)

As the list in Article 2(6a)(b) of the basic Regulation is non-cumulative, not all the elements need to be given regard to for a finding of significant distortions. Moreover, the same factual circumstances may be used to demonstrate the existence of one or more of the elements of the list. However, any conclusion on significant distortions within the meaning of Article 2(6a)(a) must be made on the basis of all the evidence at hand. The overall assessment on the existence of distortions may also take into account the general context and situation in the exporting country, in particular where the fundamental elements of the exporting country’s economic and administrative set-up provides the government with substantial powers to intervene in the economy in such a way that prices and costs are not the result of the free development of market forces.

| (46) | Article 2(6a)(c) of the basic Regulation provides that
  ‘[w]here the Commission has well-founded indications of the possible existence of significant distortions as referred to in point (b) in a certain country or a certain sector in that country, and where appropriate for the effective application of this Regulation, the Commission shall produce, make public and regularly update a report describing the market circumstances referred to in point (b) in that country or sector’. |
| --- | --- |

(46)

Article 2(6a)(c) of the basic Regulation provides that
  ‘[w]here the Commission has well-founded indications of the possible existence of significant distortions as referred to in point (b) in a certain country or a certain sector in that country, and where appropriate for the effective application of this Regulation, the Commission shall produce, make public and regularly update a report describing the market circumstances referred to in point (b) in that country or sector’.

‘[w]here the Commission has well-founded indications of the possible existence of significant distortions as referred to in point (b) in a certain country or a certain sector in that country, and where appropriate for the effective application of this Regulation, the Commission shall produce, make public and regularly update a report describing the market circumstances referred to in point (b) in that country or sector’.

| (47) | Pursuant to this provision, the Commission has issued a country report concerning China (hereinafter ‘the Report’) (10), showing the existence of substantial government intervention at many levels of the economy, including specific distortions in many key factors of production (such as land, energy, capital, raw materials and labour) as well as in specific sectors (such as steel and chemicals). Interested parties were invited to rebut, comment or supplement the evidence contained in the investigation file at the time of initiation. The Report was placed in the investigation file at the initiation stage. The complaint also referred to other documents issued by Chinese authorities at the national (11) or provincial (12) level, complementing the Report. |
| --- | --- |

(47)

Pursuant to this provision, the Commission has issued a country report concerning China (hereinafter ‘the Report’) (10), showing the existence of substantial government intervention at many levels of the economy, including specific distortions in many key factors of production (such as land, energy, capital, raw materials and labour) as well as in specific sectors (such as steel and chemicals). Interested parties were invited to rebut, comment or supplement the evidence contained in the investigation file at the time of initiation. The Report was placed in the investigation file at the initiation stage. The complaint also referred to other documents issued by Chinese authorities at the national (11) or provincial (12) level, complementing the Report.

10

11

12

| (48) | More specifically, the complaint alleged that the factors of production, including the main raw materials and energy to produce HTYP are heavily distorted. The complaint referred to the Report and the distortions identified therein with respect to the chemical sector, including the monoethylene glycol (‘MEG’) and purified terephthalic acid (‘PTA’) industry. Further, the complaint referred to the 14th Five-Year Development Plan (‘FYP’) for Petroleum and Chemical Industry of the Zhejiang Province and its call for the development of petrochemical upstream and midstream industries. Moreover, the complaint pointed – with reference to the Report – to existing distortions with respect to energy costs. The complaint also observed that Chinese authorities support implementing preferential fiscal and financial policies for the chemical industry, not least in line with the mandate of the 14th national and provincial FYPs for the “optimization and structural adjustment of the raw materials industries such as petrochemicals” and for accelerated “transformation and upgrading of enterprises in key industries such as chemicals”. The complaint further noted the State interference with respect to the labour market, the land-use rights, as well as the fact that HTYP producers benefitted from export loans. Against this background, the complaint provided some specific examples, how Hailide may have benefitted from the distortions in terms of sourcing raw materials or receiving financial support by government authorities. |
| --- | --- |

(48)

More specifically, the complaint alleged that the factors of production, including the main raw materials and energy to produce HTYP are heavily distorted. The complaint referred to the Report and the distortions identified therein with respect to the chemical sector, including the monoethylene glycol (‘MEG’) and purified terephthalic acid (‘PTA’) industry. Further, the complaint referred to the 14th Five-Year Development Plan (‘FYP’) for Petroleum and Chemical Industry of the Zhejiang Province and its call for the development of petrochemical upstream and midstream industries. Moreover, the complaint pointed – with reference to the Report – to existing distortions with respect to energy costs. The complaint also observed that Chinese authorities support implementing preferential fiscal and financial policies for the chemical industry, not least in line with the mandate of the 14th national and provincial FYPs for the “optimization and structural adjustment of the raw materials industries such as petrochemicals” and for accelerated “transformation and upgrading of enterprises in key industries such as chemicals”. The complaint further noted the State interference with respect to the labour market, the land-use rights, as well as the fact that HTYP producers benefitted from export loans. Against this background, the complaint provided some specific examples, how Hailide may have benefitted from the distortions in terms of sourcing raw materials or receiving financial support by government authorities.

th

th

optimization and structural adjustment of the raw materials industries such as petrochemicals

transformation and upgrading of enterprises in key industries such as chemicals

| (49) | As indicated in recital (40), the GOC did not comment or provide evidence supporting or contradicting the existing evidence on the case file, including the Report and the additional evidence provided by the complainant, on the existence of significant distortions and/or on the appropriateness of the application of Article 2(6a) of the basic Regulation in the case at hand. |
| --- | --- |

(49)

As indicated in recital (40), the GOC did not comment or provide evidence supporting or contradicting the existing evidence on the case file, including the Report and the additional evidence provided by the complainant, on the existence of significant distortions and/or on the appropriateness of the application of Article 2(6a) of the basic Regulation in the case at hand.

| (50) | Comments were received from Hailide as well as from a group of users. The claims are addressed in section 3.3.1.11 below. |
| --- | --- |

(50)

Comments were received from Hailide as well as from a group of users. The claims are addressed in section 3.3.1.11 below.

| (51) | The Commission examined whether it was appropriate or not to use domestic prices and costs in China, due to the existence of significant distortions within the meaning of point (b) of Article 2(6a) of the basic Regulation. The Commission did so on the basis of the evidence available on the file, including the evidence contained in the Report, which relies on publicly available sources. That analysis covered the examination of the substantial government interventions in China’s economy in general, but also the specific market situation in the relevant sector including the product under investigation. The Commission further supplemented these evidentiary elements with its own research on the various criteria relevant to confirm the existence of significant distortions in China. |
| --- | --- |

(51)

The Commission examined whether it was appropriate or not to use domestic prices and costs in China, due to the existence of significant distortions within the meaning of point (b) of Article 2(6a) of the basic Regulation. The Commission did so on the basis of the evidence available on the file, including the evidence contained in the Report, which relies on publicly available sources. That analysis covered the examination of the substantial government interventions in China’s economy in general, but also the specific market situation in the relevant sector including the product under investigation. The Commission further supplemented these evidentiary elements with its own research on the various criteria relevant to confirm the existence of significant distortions in China.

3.3.1.2.   Significant distortions affecting the domestic prices and costs in China

Significant distortions affecting the domestic prices and costs in China

| (52) | The Chinese economic system is based on the concept of a ‘socialist market economy’. That concept is enshrined in the Chinese Constitution and determines the economic governance of China. The core principle is the ‘socialist public ownership of the means of production, namely, ownership by the whole people and collective ownership by the working people’. The State-owned economy is the
  ‘leading force of the national economy’
  and the State has the mandate
  ‘to ensure its consolidation and growth’ (13). Consequently, the overall setup of the Chinese economy not only allows for substantial government interventions into the economy, but such interventions are expressly mandated. The notion of supremacy of public ownership over the private one permeates the entire legal system and is emphasized as a general principle in all central pieces of legislation. The Chinese property law is a prime example: it refers to the primary stage of socialism and entrusts the State with upholding the basic economic system under which the public ownership plays a dominant role. Other forms of ownership are tolerated, with the law permitting them to develop side by side with the State ownership (14). |
| --- | --- |

(52)

The Chinese economic system is based on the concept of a ‘socialist market economy’. That concept is enshrined in the Chinese Constitution and determines the economic governance of China. The core principle is the ‘socialist public ownership of the means of production, namely, ownership by the whole people and collective ownership by the working people’. The State-owned economy is the
  ‘leading force of the national economy’
  and the State has the mandate
  ‘to ensure its consolidation and growth’ (13). Consequently, the overall setup of the Chinese economy not only allows for substantial government interventions into the economy, but such interventions are expressly mandated. The notion of supremacy of public ownership over the private one permeates the entire legal system and is emphasized as a general principle in all central pieces of legislation. The Chinese property law is a prime example: it refers to the primary stage of socialism and entrusts the State with upholding the basic economic system under which the public ownership plays a dominant role. Other forms of ownership are tolerated, with the law permitting them to develop side by side with the State ownership (14).

socialist market economy

socialist public ownership of the means of production, namely, ownership by the whole people and collective ownership by the working people

‘leading force of the national economy’

‘to ensure its consolidation and growth

13

14

| (53) | In addition, under Chinese law, the socialist market economy is developed under the leadership of the Chinese Communist Party (‘CCP’). The structures of the Chinese State and of the CCP are intertwined at every level (legal, institutional, personal), forming a superstructure in which the roles of CCP and the State are indistinguishable. Following an amendment of the Chinese Constitution in March 2018, the leading role of the CCP was given an even greater prominence by being reaffirmed in the text of Article 1 of the Constitution. Following the already existing first sentence of the provision: ‘[t]he socialist system is the basic system of the People’s Republic of China’ a new second sentence was inserted which reads: ‘[t]he defining feature of socialism with Chinese characteristics is the leadership of the Communist Party of China.’ (15) This illustrates the unquestioned and ever growing control of the CCP over the economic system of China. This leadership and control is inherent to the Chinese system and goes well beyond the situation customary in other countries where the governments exercise general macroeconomic control within the boundaries of which free market forces are at play. |
| --- | --- |

(53)

In addition, under Chinese law, the socialist market economy is developed under the leadership of the Chinese Communist Party (‘CCP’). The structures of the Chinese State and of the CCP are intertwined at every level (legal, institutional, personal), forming a superstructure in which the roles of CCP and the State are indistinguishable. Following an amendment of the Chinese Constitution in March 2018, the leading role of the CCP was given an even greater prominence by being reaffirmed in the text of Article 1 of the Constitution. Following the already existing first sentence of the provision: ‘[t]he socialist system is the basic system of the People’s Republic of China’ a new second sentence was inserted which reads: ‘[t]he defining feature of socialism with Chinese characteristics is the leadership of the Communist Party of China.’ (15) This illustrates the unquestioned and ever growing control of the CCP over the economic system of China. This leadership and control is inherent to the Chinese system and goes well beyond the situation customary in other countries where the governments exercise general macroeconomic control within the boundaries of which free market forces are at play.

he socialist system is the basic system of the People’s Republic of China

he defining feature of socialism with Chinese characteristics is the leadership of the Communist Party of China

15

| (54) | The Chinese State engages in an interventionist economic policy in pursuance of goals, which coincide with the political agenda set by the CCP rather than reflecting the prevailing economic conditions in a free market (16). The interventionist economic tools deployed by the Chinese authorities are manifold, including the system of industrial planning, the financial system, as well as the level of the regulatory environment. |
| --- | --- |

(54)

The Chinese State engages in an interventionist economic policy in pursuance of goals, which coincide with the political agenda set by the CCP rather than reflecting the prevailing economic conditions in a free market (16). The interventionist economic tools deployed by the Chinese authorities are manifold, including the system of industrial planning, the financial system, as well as the level of the regulatory environment.

16

| (55) | First, on the level of overall administrative control, the direction of the Chinese economy is governed by a complex system of industrial planning which affects all economic activities within the country. The totality of these plans covers a comprehensive and complex matrix of sectors and crosscutting policies and is present on all levels of government. Plans at provincial level are detailed while national plans set broader targets. Plans also specify the means in order to support the relevant industries/sectors as well as the timeframes in which the objectives need to be achieved. Some plans still contain explicit output targets. Under the plans, individual industrial sectors and/or projects are being singled out as (positive or negative) priorities in line with the government priorities and specific development goals are attributed to them (industrial upgrade, international expansion etc.). The economic operators, private and State-owned alike, must effectively adjust their business activities according to the realities imposed by the planning system. This is not only because of the binding nature of the plans but also because the relevant Chinese authorities at all levels of government adhere to the system of plans and use their vested powers accordingly, thereby inducing the economic operators to comply with the priorities set out in the plans (see also section 3.3.1.5 below) (17). |
| --- | --- |

(55)

First, on the level of overall administrative control, the direction of the Chinese economy is governed by a complex system of industrial planning which affects all economic activities within the country. The totality of these plans covers a comprehensive and complex matrix of sectors and crosscutting policies and is present on all levels of government. Plans at provincial level are detailed while national plans set broader targets. Plans also specify the means in order to support the relevant industries/sectors as well as the timeframes in which the objectives need to be achieved. Some plans still contain explicit output targets. Under the plans, individual industrial sectors and/or projects are being singled out as (positive or negative) priorities in line with the government priorities and specific development goals are attributed to them (industrial upgrade, international expansion etc.). The economic operators, private and State-owned alike, must effectively adjust their business activities according to the realities imposed by the planning system. This is not only because of the binding nature of the plans but also because the relevant Chinese authorities at all levels of government adhere to the system of plans and use their vested powers accordingly, thereby inducing the economic operators to comply with the priorities set out in the plans (see also section 3.3.1.5 below) (17).

17

| (56) | Second, on the level of allocation of financial resources, the financial system of China is dominated by the State-owned commercial banks. Those banks, when setting up and implementing their lending policy need to align themselves with the government’s industrial policy objectives rather than primarily assessing the economic merits of a given project (see also section 3.3.1.8 below) (18). The same applies to the other components of the Chinese financial system, such as the stock markets, bond markets, private equity markets etc. Also these parts of the financial sector other than the banking sector are institutionally and operationally set up in a manner not geared towards maximizing the efficient functioning of the financial markets but towards ensuring control and allowing intervention by the State and the CCP (19). |
| --- | --- |

(56)

Second, on the level of allocation of financial resources, the financial system of China is dominated by the State-owned commercial banks. Those banks, when setting up and implementing their lending policy need to align themselves with the government’s industrial policy objectives rather than primarily assessing the economic merits of a given project (see also section 3.3.1.8 below) (18). The same applies to the other components of the Chinese financial system, such as the stock markets, bond markets, private equity markets etc. Also these parts of the financial sector other than the banking sector are institutionally and operationally set up in a manner not geared towards maximizing the efficient functioning of the financial markets but towards ensuring control and allowing intervention by the State and the CCP (19).

18

19

| (57) | Third, on the level of regulatory environment, the interventions by the State into the economy take a number of forms. For instance, the public procurement rules are regularly used in pursuit of policy goals other than economic efficiency, thereby undermining market-based principles in the area. The applicable legislation specifically provides that public procurement shall be conducted in order to facilitate the achievement of goals designed by State policies. However, the nature of these goals remains undefined, thereby leaving broad margin of appreciation to the decision-making bodies (20). Similarly, in the area of investment, the GOC maintains significant control and influence over destination and magnitude of both State and private investment. Investment screening as well as various incentives, restrictions, and prohibitions related to investment are used by authorities as an important tool for supporting industrial policy goals, such as maintaining State control over key sectors or bolstering domestic industry (21). |
| --- | --- |

(57)

Third, on the level of regulatory environment, the interventions by the State into the economy take a number of forms. For instance, the public procurement rules are regularly used in pursuit of policy goals other than economic efficiency, thereby undermining market-based principles in the area. The applicable legislation specifically provides that public procurement shall be conducted in order to facilitate the achievement of goals designed by State policies. However, the nature of these goals remains undefined, thereby leaving broad margin of appreciation to the decision-making bodies (20). Similarly, in the area of investment, the GOC maintains significant control and influence over destination and magnitude of both State and private investment. Investment screening as well as various incentives, restrictions, and prohibitions related to investment are used by authorities as an important tool for supporting industrial policy goals, such as maintaining State control over key sectors or bolstering domestic industry (21).

20

21

| (58) | In sum, the Chinese economic model is based on certain basic axioms, which provide for and encourage manifold government interventions. Such substantial government interventions are at odds with the free play of market forces, resulting in distorting the effective allocation of resources in line with market principles (22). |
| --- | --- |

(58)

In sum, the Chinese economic model is based on certain basic axioms, which provide for and encourage manifold government interventions. Such substantial government interventions are at odds with the free play of market forces, resulting in distorting the effective allocation of resources in line with market principles (22).

22

3.3.1.3.   Significant distortions according to Article 2(6a)(b), first indent of the basic Regulation: the market in question being served to a significant extent by enterprises which operate under the ownership, control or policy supervision or guidance of the authorities of the exporting country

Significant distortions according to Article 2(6a)(b), first indent of the basic Regulation: the market in question being served to a significant extent by enterprises which operate under the ownership, control or policy supervision or guidance of the authorities of the exporting country

| (59) | In China, enterprises operating under the ownership, control and/or policy supervision or guidance by the State represent an essential part of the economy. |
| --- | --- |

(59)

In China, enterprises operating under the ownership, control and/or policy supervision or guidance by the State represent an essential part of the economy.

| (60) | While in the HTYP sector, the degree of state ownership does not appear to be significant, the GOC maintains shareholding exceeding 5 % in Hailide (23). In addition, given that CCP interventions into operational decision making have become the norm also in private companies (24), with CCP claiming leadership over virtually every aspect of the country’s economy, the influence of the State by means of CCP structures within companies effectively results in economic operators being under control and policy supervision of the government, given how far the State and Party structures have grown together in China. |
| --- | --- |

(60)

While in the HTYP sector, the degree of state ownership does not appear to be significant, the GOC maintains shareholding exceeding 5 % in Hailide (23). In addition, given that CCP interventions into operational decision making have become the norm also in private companies (24), with CCP claiming leadership over virtually every aspect of the country’s economy, the influence of the State by means of CCP structures within companies effectively results in economic operators being under control and policy supervision of the government, given how far the State and Party structures have grown together in China.

23

24

| (61) | This is apparent also at the level of the China Chemical Fiber Association (‘CCFA’) (25), the sectoral industry association, of which Hailide is a member. According to Art. 2 of CCFA’s Articles of Association, the organisation’s purpose is, among others, to “implement the country’s industrial policy”. Article 3 confirms CCFA’s subordination to the CCP by stipulating that “[t]he Association adheres to the overall leadership of the Communist Party of China, establishes organizations of the Communist Party of China, develops party activities, and provides the conditions necessary for the activities of the party organizations in accordance with the provisions of the Constitution of the Communist Party of China.” |
| --- | --- |

(61)

This is apparent also at the level of the China Chemical Fiber Association (‘CCFA’) (25), the sectoral industry association, of which Hailide is a member. According to Art. 2 of CCFA’s Articles of Association, the organisation’s purpose is, among others, to “implement the country’s industrial policy”. Article 3 confirms CCFA’s subordination to the CCP by stipulating that “[t]he Association adheres to the overall leadership of the Communist Party of China, establishes organizations of the Communist Party of China, develops party activities, and provides the conditions necessary for the activities of the party organizations in accordance with the provisions of the Constitution of the Communist Party of China.”

25

implement the country’s industrial policy

he Association adheres to the overall leadership of the Communist Party of China, establishes organizations of the Communist Party of China, develops party activities, and provides the conditions necessary for the activities of the party organizations in accordance with the provisions of the Constitution of the Communist Party of China

| (62) | Consequently, even privately owned producers in the HTYP sector are prevented from operating under market conditions. Indeed, both public and privately owned enterprises in the sector are subject to policy supervision and guidance as also set out in section 3.3.1.5 below. |
| --- | --- |

(62)

Consequently, even privately owned producers in the HTYP sector are prevented from operating under market conditions. Indeed, both public and privately owned enterprises in the sector are subject to policy supervision and guidance as also set out in section 3.3.1.5 below.

3.3.1.4.   Significant distortions according to Article 2(6a)(b), second indent of the basic Regulation: State presence in firms allowing the state to interfere with respect to prices or costs

Significant distortions according to Article 2(6a)(b), second indent of the basic Regulation: State presence in firms allowing the state to interfere with respect to prices or costs

| (63) | Apart from exercising control over the economy by means of ownership of State-owned enterprises (‘SOEs’) and other tools, the GOC is in position to interfere with prices and costs through State presence in firms. While the right to appoint and to remove key management personnel in SOEs by the relevant State authorities, as provided for in the Chinese legislation, can be considered to reflect the corresponding ownership rights, (26) CCP cells in enterprises, State-owned and private alike, represent another important channel through which the State can interfere with business decisions. According to China’s company law, a CCP organisation is to be established in every company (with at least three CCP members as specified in the CCP Constitution (27)) and the company shall provide the necessary conditions for the activities of the party organisation. In the past, this requirement appears not to have always been followed or strictly enforced. However, since at least 2016 the CCP has been reinforcing its claims to control business decisions in companies as a matter of political principle (28), including exercising pressure on private companies to put ‘patriotism’ first and to follow party discipline (29). In 2017, it was reported that party cells existed in 70 % of some 1.86 million privately owned companies, with growing pressure for the CCP organisations to have a final say over the business decisions within their respective companies (30). These rules are of general application throughout the Chinese economy, across all sectors, including to the producers of HTYP and the suppliers of their inputs. |
| --- | --- |

(63)

Apart from exercising control over the economy by means of ownership of State-owned enterprises (‘SOEs’) and other tools, the GOC is in position to interfere with prices and costs through State presence in firms. While the right to appoint and to remove key management personnel in SOEs by the relevant State authorities, as provided for in the Chinese legislation, can be considered to reflect the corresponding ownership rights, (26) CCP cells in enterprises, State-owned and private alike, represent another important channel through which the State can interfere with business decisions. According to China’s company law, a CCP organisation is to be established in every company (with at least three CCP members as specified in the CCP Constitution (27)) and the company shall provide the necessary conditions for the activities of the party organisation. In the past, this requirement appears not to have always been followed or strictly enforced. However, since at least 2016 the CCP has been reinforcing its claims to control business decisions in companies as a matter of political principle (28), including exercising pressure on private companies to put ‘patriotism’ first and to follow party discipline (29). In 2017, it was reported that party cells existed in 70 % of some 1.86 million privately owned companies, with growing pressure for the CCP organisations to have a final say over the business decisions within their respective companies (30). These rules are of general application throughout the Chinese economy, across all sectors, including to the producers of HTYP and the suppliers of their inputs.

26

27

28

29

30

| (64) | In addition, on 15 September 2020 a document titled General Office of CCP Central Committee’s Guidelines on stepping up the United Front work in the private sector for the new era (‘the Guidelines’) (31) was released, which further expanded the role of the party committees in private enterprises. Section II.4 of the Guidelines state: “[w]e must raise the Party’s overall capacity to lead private-sector United Front work and effectively step up the work in this area”; and section III.6 states: “[w]e must further step up Party building in private enterprises and enable the Party cells to play their role effectively as a fortress and enable Party members to play their parts as vanguards and pioneers.” The Guidelines thus emphasise and seek to increase the role of the CCP in companies and other private sector entities (32). |
| --- | --- |

(64)

In addition, on 15 September 2020 a document titled General Office of CCP Central Committee’s Guidelines on stepping up the United Front work in the private sector for the new era (‘the Guidelines’) (31) was released, which further expanded the role of the party committees in private enterprises. Section II.4 of the Guidelines state: “[w]e must raise the Party’s overall capacity to lead private-sector United Front work and effectively step up the work in this area”; and section III.6 states: “[w]e must further step up Party building in private enterprises and enable the Party cells to play their role effectively as a fortress and enable Party members to play their parts as vanguards and pioneers.” The Guidelines thus emphasise and seek to increase the role of the CCP in companies and other private sector entities (32).

General Office of CCP Central Committee’s Guidelines on stepping up the United Front work in the private sector for the new era

31

e must raise the Party’s overall capacity to lead private-sector United Front work and effectively step up the work in this area

e must further step up Party building in private enterprises and enable the Party cells to play their role effectively as a fortress and enable Party members to play their parts as vanguards and pioneers

32

| (65) | The State’s presence and intervention in the financial markets (see also section 3.3.1.8 below) as well as in the provision of raw materials and inputs further have an additional distorting effect on the market (33). Thus, the State presence in firms, in the HTYP and other sectors (such as the financial and input sectors) allow the GOC to interfere with respect to prices and costs. |
| --- | --- |

(65)

The State’s presence and intervention in the financial markets (see also section 3.3.1.8 below) as well as in the provision of raw materials and inputs further have an additional distorting effect on the market (33). Thus, the State presence in firms, in the HTYP and other sectors (such as the financial and input sectors) allow the GOC to interfere with respect to prices and costs.

33

3.3.1.5.   Significant distortions according to Article 2(6a)(b), third indent of the basic Regulation: public policies or measures discriminating in favour of domestic suppliers or otherwise influencing free market forces

Significant distortions according to Article 2(6a)(b), third indent of the basic Regulation: public policies or measures discriminating in favour of domestic suppliers or otherwise influencing free market forces

| (66) | The direction of the Chinese economy is, to a significant degree, determined by an elaborate system of planning which sets out priorities and prescribes the goals the central and local governments must focus on. Relevant plans exist on all levels of government and cover virtually all economic sectors. The objectives set by the planning instruments are of binding nature and the authorities at each administrative level monitor the implementation of the plans by the corresponding lower level of government. Overall, the system of planning in China results in resources being driven to sectors designated as strategic or otherwise politically important by the government, rather than being allocated in line with market forces (34). |
| --- | --- |

(66)

The direction of the Chinese economy is, to a significant degree, determined by an elaborate system of planning which sets out priorities and prescribes the goals the central and local governments must focus on. Relevant plans exist on all levels of government and cover virtually all economic sectors. The objectives set by the planning instruments are of binding nature and the authorities at each administrative level monitor the implementation of the plans by the corresponding lower level of government. Overall, the system of planning in China results in resources being driven to sectors designated as strategic or otherwise politically important by the government, rather than being allocated in line with market forces (34).

34

| (67) | The chemical fiber industry is regarded as a key industry by the GOC. This is evident from the 2022 Guiding Opinions on the High-quality Development of Chemical Fiber Industry (‘the Guiding Opinions’) issued by Ministry of Industry and Information Technology National Development and Reform Commission (35), according to which “The chemical fiber industry is an essential pillar of the stable development and continuous innovation of the textile industry chain, an internationally competitive advantage industry, and an important part of the new material industry”. Article I.2. of the Guiding Opinions explicitly articulates the GOC’s intention to determine the geographical and corporate structure of the sector, as well as essential production parameters. (36) The Government intervention may take the form of production sites relocations (“implement the regional development strategy, under the premise of complying with industry, energy, environmental protection and other policies, encourage leading enterprises to build integrated bases for the whole industry chain of chemical fiber textile in Guangxi, Guizhou, Xinjiang and other central and western regions, and form efficient and collaborative supply chain systems with neighbouring countries and regions”), mergers aimed at creating industrial champions (“encourage enterprises to optimize the allocation of production factors through mergers and reorganization, and accelerate business process reengineering and technological upgrading. Support leading enterprises to gather high-quality resources such as technology, brands, channels and talents”), designation of companies as eligible for special support through dedicated Government programs (“promote the integration and development of large, medium and small enterprises, cultivate specialized and specific new "little giant" enterprises and single champion enterprises”) etc. (37) |
| --- | --- |

(67)

The chemical fiber industry is regarded as a key industry by the GOC. This is evident from the 2022 Guiding Opinions on the High-quality Development of Chemical Fiber Industry (‘the Guiding Opinions’) issued by Ministry of Industry and Information Technology National Development and Reform Commission (35), according to which “The chemical fiber industry is an essential pillar of the stable development and continuous innovation of the textile industry chain, an internationally competitive advantage industry, and an important part of the new material industry”. Article I.2. of the Guiding Opinions explicitly articulates the GOC’s intention to determine the geographical and corporate structure of the sector, as well as essential production parameters. (36) The Government intervention may take the form of production sites relocations (“implement the regional development strategy, under the premise of complying with industry, energy, environmental protection and other policies, encourage leading enterprises to build integrated bases for the whole industry chain of chemical fiber textile in Guangxi, Guizhou, Xinjiang and other central and western regions, and form efficient and collaborative supply chain systems with neighbouring countries and regions”), mergers aimed at creating industrial champions (“encourage enterprises to optimize the allocation of production factors through mergers and reorganization, and accelerate business process reengineering and technological upgrading. Support leading enterprises to gather high-quality resources such as technology, brands, channels and talents”), designation of companies as eligible for special support through dedicated Government programs (“promote the integration and development of large, medium and small enterprises, cultivate specialized and specific new "little giant" enterprises and single champion enterprises”) etc. (37)

35

36

37

| (68) | This central Government’s strategy is confirmed in numerous planning documents focused on the chemical fiber industry issued at provincial and municipal level. |
| --- | --- |

(68)

This central Government’s strategy is confirmed in numerous planning documents focused on the chemical fiber industry issued at provincial and municipal level.

| (69) | The Zhejiang, Jiangsu, Fujian and Shandong provinces, as well as the Chongqing municipality provide good examples. |
| --- | --- |

(69)

The Zhejiang, Jiangsu, Fujian and Shandong provinces, as well as the Chongqing municipality provide good examples.

| (70) | The Jiangsu 14th Five year Plan on the high-end development of chemical industry (38) not only contains detailed provisions on development goals for a wide range of subsectors within the chemical sector (39) but it also mirrors the above-mentioned policies of the Guiding Opinions on the industrial structure:

  Through the consolidation of resources, accelerate the construction of a number of large enterprises and enterprise groups with leading roles, increase the level industry concentration, and form a number of world-class enterprises and "single champion" enterprises.
   (40)
  [...]


  The layout of the chemical industry in the province abides by the requirements of the national and provincial industrial planning and layout plans, with chemical parks as important development carriers, they are also essential to lead the development of the chemical industry in each district and city. The industrial development orientation abides by the requirements of the relevant industry policies of the state and of Jiangsu province, establishes the development concept led by encouraged industries, and implements the upgrading of traditional chemical industries as well as the coordinated development of industries in new fields.
   (41)

  as well as the geographic distribution of production:

  The overall layout plan is based on the whole province, according to the characteristics of each city’s industry development, highlighting the advantages of industry development, further improving the development level of characteristic industries, and expanding the industries that meet regional development needs taking into account each city’s relevant industries and local market conditions, ensuring the differentiated development of the chemical industry in each city of the province, and forming a comprehensive industry system with each city having complementary advantages
   (42). |
| --- | --- |

(70)

The Jiangsu 14th Five year Plan on the high-end development of chemical industry (38) not only contains detailed provisions on development goals for a wide range of subsectors within the chemical sector (39) but it also mirrors the above-mentioned policies of the Guiding Opinions on the industrial structure:

14th

38

39

Through the consolidation of resources, accelerate the construction of a number of large enterprises and enterprise groups with leading roles, increase the level industry concentration, and form a number of world-class enterprises and "single champion" enterprises.
   (40)
  [...]

Through the consolidation of resources, accelerate the construction of a number of large enterprises and enterprise groups with leading roles, increase the level industry concentration, and form a number of world-class enterprises and "single champion" enterprises.

40

[...]

The layout of the chemical industry in the province abides by the requirements of the national and provincial industrial planning and layout plans, with chemical parks as important development carriers, they are also essential to lead the development of the chemical industry in each district and city. The industrial development orientation abides by the requirements of the relevant industry policies of the state and of Jiangsu province, establishes the development concept led by encouraged industries, and implements the upgrading of traditional chemical industries as well as the coordinated development of industries in new fields.
   (41)

The layout of the chemical industry in the province abides by the requirements of the national and provincial industrial planning and layout plans, with chemical parks as important development carriers, they are also essential to lead the development of the chemical industry in each district and city. The industrial development orientation abides by the requirements of the relevant industry policies of the state and of Jiangsu province, establishes the development concept led by encouraged industries, and implements the upgrading of traditional chemical industries as well as the coordinated development of industries in new fields.

41

as well as the geographic distribution of production:

The overall layout plan is based on the whole province, according to the characteristics of each city’s industry development, highlighting the advantages of industry development, further improving the development level of characteristic industries, and expanding the industries that meet regional development needs taking into account each city’s relevant industries and local market conditions, ensuring the differentiated development of the chemical industry in each city of the province, and forming a comprehensive industry system with each city having complementary advantages
   (42).

The overall layout plan is based on the whole province, according to the characteristics of each city’s industry development, highlighting the advantages of industry development, further improving the development level of characteristic industries, and expanding the industries that meet regional development needs taking into account each city’s relevant industries and local market conditions, ensuring the differentiated development of the chemical industry in each city of the province, and forming a comprehensive industry system with each city having complementary advantages

42

| (71) | Similarly, the Special plan for the development of strategic emerging industries in the Fujian Province during the 14th FYP (43)contains a mandate for the provincial authorities to support the chemical fibers sector and guide its development:

  Accelerate the development of new textile fabrics, and increase the research and development of functional differentiated fibers, high-performance fiber blends, high-count and high-quality yarns and their fabrics, new heat-bonding composite fibers (ES fibers) for sanitary use, and high-performance metal fibers.
   (44)
  [...]


  Support the construction of Fuzhou’s new functional materials industry clusters (membrane materials, advanced textiles, high-performance metal materials, high-performance composite materials, etc.), Xiamen new functional materials industry clusters [...], Putian’s new functional materials industry cluster (new chemical fibers and functional textile materials, etc.) and Xiamen biomedical industry cluster [...]. |
| --- | --- |

(71)

Similarly, the Special plan for the development of strategic emerging industries in the Fujian Province during the 14th FYP (43)contains a mandate for the provincial authorities to support the chemical fibers sector and guide its development:

Special plan for the development of strategic emerging industries in the Fujian Province during the 14th FYP

43

Accelerate the development of new textile fabrics, and increase the research and development of functional differentiated fibers, high-performance fiber blends, high-count and high-quality yarns and their fabrics, new heat-bonding composite fibers (ES fibers) for sanitary use, and high-performance metal fibers.
   (44)
  [...]

Accelerate the development of new textile fabrics, and increase the research and development of functional differentiated fibers, high-performance fiber blends, high-count and high-quality yarns and their fabrics, new heat-bonding composite fibers (ES fibers) for sanitary use, and high-performance metal fibers.

44

[...]

Support the construction of Fuzhou’s new functional materials industry clusters (membrane materials, advanced textiles, high-performance metal materials, high-performance composite materials, etc.), Xiamen new functional materials industry clusters [...], Putian’s new functional materials industry cluster (new chemical fibers and functional textile materials, etc.) and Xiamen biomedical industry cluster [...].

Support the construction of Fuzhou’s new functional materials industry clusters (membrane materials, advanced textiles, high-performance metal materials, high-performance composite materials, etc.), Xiamen new functional materials industry clusters [...], Putian’s new functional materials industry cluster (new chemical fibers and functional textile materials, etc.) and Xiamen biomedical industry cluster [...].

| (72) | The interference of Fujian’s authorities with the development of the chemical fibers’ sector is further apparent from the provincial 14th FYP on developing a high quality manufacturing industry which gives the following instruction to the stakeholders:

  Promote the construction of Baihong polyester industrial yarn project, and develop special chemical fiber materials used in the automotive sector, marine engineering, military equipment, medical health and other fields. Accelerate the research on cutting-edge fiber technology, focus on breakthroughs in key fiber technologies such as nano-, intelligent, and biomedical fibers, and strive to achieve breakthroughs in high-end fibers such as carbon fiber, aramid fiber, polyphenylene sulfide, and ultra-high molecular weight polyethylene.
   (45) |
| --- | --- |

(72)

The interference of Fujian’s authorities with the development of the chemical fibers’ sector is further apparent from the provincial 14th FYP on developing a high quality manufacturing industry which gives the following instruction to the stakeholders:

14th

Promote the construction of Baihong polyester industrial yarn project, and develop special chemical fiber materials used in the automotive sector, marine engineering, military equipment, medical health and other fields. Accelerate the research on cutting-edge fiber technology, focus on breakthroughs in key fiber technologies such as nano-, intelligent, and biomedical fibers, and strive to achieve breakthroughs in high-end fibers such as carbon fiber, aramid fiber, polyphenylene sulfide, and ultra-high molecular weight polyethylene.
   (45)

Promote the construction of Baihong polyester industrial yarn project, and develop special chemical fiber materials used in the automotive sector, marine engineering, military equipment, medical health and other fields. Accelerate the research on cutting-edge fiber technology, focus on breakthroughs in key fiber technologies such as nano-, intelligent, and biomedical fibers, and strive to achieve breakthroughs in high-end fibers such as carbon fiber, aramid fiber, polyphenylene sulfide, and ultra-high molecular weight polyethylene.

45

| (73) | Also Shandong’s 14th FYP on developing the chemical industry (46) emphasizes the need to “[focus on the development of ethylene-based polyolefins and synthetic resins as end-use products„ propylene-polypropylene, other engineering plastics as well as modified materials, synthetic and rubber materials made of butene and C4, end-products made with high performance polyurethane isocyanate and toluene, new materials, textile and engineering materials made of nylon, benzene and polyamide, PX-PTA-polyester and six other major industry chains” (47), with similar language present also in Zhejiang‘s 14th FYP on developing new materials industry: (48)„In the field of advanced basic materials, implement a number of digital and green transformation projects and production expansion projects for high-end and scarce products; in the fields of key strategic materials such as advanced semiconductor materials, new display materials, biomedical materials, high-performance fibers and composite materials, implement a number of industrialization and application expansion projects” (49) or Chongqing’s 14 FYP on high quality development of manufacturing industry: (50)„Use the raw material bases to encourage relevant enterprises to research, develop and manufacture high-performance PVA (polyvinyl alcohol) functional fibers, differentiated spandex, special polyester fibers, polyamide fibers, PU (polyurethane) microfibers and other products.” (51) |
| --- | --- |

(73)

Also Shandong’s 14th FYP on developing the chemical industry (46) emphasizes the need to “[focus on the development of ethylene-based polyolefins and synthetic resins as end-use products„ propylene-polypropylene, other engineering plastics as well as modified materials, synthetic and rubber materials made of butene and C4, end-products made with high performance polyurethane isocyanate and toluene, new materials, textile and engineering materials made of nylon, benzene and polyamide, PX-PTA-polyester and six other major industry chains” (47), with similar language present also in Zhejiang‘s 14th FYP on developing new materials industry: (48)„In the field of advanced basic materials, implement a number of digital and green transformation projects and production expansion projects for high-end and scarce products; in the fields of key strategic materials such as advanced semiconductor materials, new display materials, biomedical materials, high-performance fibers and composite materials, implement a number of industrialization and application expansion projects” (49) or Chongqing’s 14 FYP on high quality development of manufacturing industry: (50)„Use the raw material bases to encourage relevant enterprises to research, develop and manufacture high-performance PVA (polyvinyl alcohol) functional fibers, differentiated spandex, special polyester fibers, polyamide fibers, PU (polyurethane) microfibers and other products.” (51)

14th

46

ocus on the development of ethylene-based polyolefins and synthetic resins as end-use products„ propylene-polypropylene, other engineering plastics as well as modified materials, synthetic and rubber materials made of butene and C4, end-products made with high performance polyurethane isocyanate and toluene, new materials, textile and engineering materials made of nylon, benzene and polyamide, PX-PTA-polyester and six other major industry chains

47

14th

48

In the field of advanced basic materials, implement a number of digital and green transformation projects and production expansion projects for high-end and scarce products; in the fields of key strategic materials such as advanced semiconductor materials, new display materials, biomedical materials, high-performance fibers and composite materials, implement a number of industrialization and application expansion projects

49

14 FYP on high quality development of manufacturing industry:

50

Use the raw material bases to encourage relevant enterprises to research, develop and manufacture high-performance PVA (polyvinyl alcohol) functional fibers, differentiated spandex, special polyester fibers, polyamide fibers, PU (polyurethane) microfibers and other products

51

| (74) | Through these and other means, the GOC therefore directs and controls virtually every aspect in the development and functioning of the sector. |
| --- | --- |

(74)

Through these and other means, the GOC therefore directs and controls virtually every aspect in the development and functioning of the sector.

| (75) | In sum, the GOC has measures in place to induce operators to comply with the public policy objectives of supporting encouraged industries, including the production the main raw materials used in the manufacturing of HTYP. Such measures impede market forces from operating freely. |
| --- | --- |

(75)

In sum, the GOC has measures in place to induce operators to comply with the public policy objectives of supporting encouraged industries, including the production the main raw materials used in the manufacturing of HTYP. Such measures impede market forces from operating freely.

3.3.1.6.   Significant distortions according to Article 2(6a)(b), fourth indent of the basic Regulation: the lack, discriminatory application or inadequate enforcement of bankruptcy, corporate or property laws

Significant distortions according to Article 2(6a)(b), fourth indent of the basic Regulation: the lack, discriminatory application or inadequate enforcement of bankruptcy, corporate or property laws

| (76) | According to the information on file, the Chinese bankruptcy system delivers inadequately on its own main objectives such as to fairly settle claims and debts and to safeguard the lawful rights and interests of creditors and debtors. This appears to be rooted in the fact that while the Chinese bankruptcy law formally rests on principles that are similar to those applied in corresponding laws in countries other than China, the Chinese system is characterised by systematic under-enforcement. The number of bankruptcies remains notoriously low in relation to the size of the country’s economy, not least because the insolvency proceedings suffer from a number of shortcomings, which effectively function as a disincentive for bankruptcy filings. Moreover, the role of the State in the insolvency proceedings remains strong and active, often having direct influence on the outcome of the proceedings (52). |
| --- | --- |

(76)

According to the information on file, the Chinese bankruptcy system delivers inadequately on its own main objectives such as to fairly settle claims and debts and to safeguard the lawful rights and interests of creditors and debtors. This appears to be rooted in the fact that while the Chinese bankruptcy law formally rests on principles that are similar to those applied in corresponding laws in countries other than China, the Chinese system is characterised by systematic under-enforcement. The number of bankruptcies remains notoriously low in relation to the size of the country’s economy, not least because the insolvency proceedings suffer from a number of shortcomings, which effectively function as a disincentive for bankruptcy filings. Moreover, the role of the State in the insolvency proceedings remains strong and active, often having direct influence on the outcome of the proceedings (52).

52

| (77) | In addition, the shortcomings of the system of property rights are particularly obvious in relation to ownership of land and land-use rights in China. (53) All land is owned by the State (collectively owned rural land and State-owned urban land) and its allocation remains solely dependent on the State. There are legal provisions that aim at allocating land use rights in a transparent manner and at market prices, for instance by introducing bidding procedures. However, these provisions are regularly not respected, with certain buyers obtaining their land for free or below market rates (54). Moreover, authorities often pursue specific political goals including the implementation of the economic plans when allocating land (55). |
| --- | --- |

(77)

In addition, the shortcomings of the system of property rights are particularly obvious in relation to ownership of land and land-use rights in China. (53) All land is owned by the State (collectively owned rural land and State-owned urban land) and its allocation remains solely dependent on the State. There are legal provisions that aim at allocating land use rights in a transparent manner and at market prices, for instance by introducing bidding procedures. However, these provisions are regularly not respected, with certain buyers obtaining their land for free or below market rates (54). Moreover, authorities often pursue specific political goals including the implementation of the economic plans when allocating land (55).

53

54

55

| (78) | Much like other sectors in the Chinese economy, the producers of HTYP are subject to the ordinary rules on Chinese bankruptcy, corporate, and property laws. That has the effect that these companies, too, are subject to the top-down distortions arising from the discriminatory application or inadequate enforcement of bankruptcy and property laws. Those considerations, on the basis of the evidence available, appear to be fully applicable also in the chemical fibers sector. The present investigation revealed nothing that would call those findings into question. |
| --- | --- |

(78)

Much like other sectors in the Chinese economy, the producers of HTYP are subject to the ordinary rules on Chinese bankruptcy, corporate, and property laws. That has the effect that these companies, too, are subject to the top-down distortions arising from the discriminatory application or inadequate enforcement of bankruptcy and property laws. Those considerations, on the basis of the evidence available, appear to be fully applicable also in the chemical fibers sector. The present investigation revealed nothing that would call those findings into question.

| (79) | In light of the above, the Commission concluded that there was discriminatory application or inadequate enforcement of bankruptcy and property laws in the chemical fibers sector, including with respect to the product under investigation. |
| --- | --- |

(79)

In light of the above, the Commission concluded that there was discriminatory application or inadequate enforcement of bankruptcy and property laws in the chemical fibers sector, including with respect to the product under investigation.

3.3.1.7.   Significant distortions according to Article 2(6a)(b), fifth indent of the basic Regulation: wage costs being distorted

Significant distortions according to Article 2(6a)(b), fifth indent of the basic Regulation: wage costs being distorted

| (80) | A system of market-based wages cannot fully develop in China as workers and employers are impeded in their rights to collective organisation. China has not ratified a number of essential conventions of the International Labour Organisation (‘ILO’), in particular those on freedom of association and on collective bargaining (56). Under national law, only one trade union organisation is active. However, this organisation lacks independence from the State authorities and its engagement in collective bargaining and protection of workers’ rights remains rudimentary (57). Moreover, the mobility of the Chinese workforce is restricted by the household registration system, which limits access to the full range of social security and other benefits to local residents of a given administrative area. This typically results in workers who are not in possession of the local residence registration finding themselves in a vulnerable employment position and receiving lower income than the holders of the residence registration. (58) Those findings lead to the distortion of wage costs in China. |
| --- | --- |

(80)

A system of market-based wages cannot fully develop in China as workers and employers are impeded in their rights to collective organisation. China has not ratified a number of essential conventions of the International Labour Organisation (‘ILO’), in particular those on freedom of association and on collective bargaining (56). Under national law, only one trade union organisation is active. However, this organisation lacks independence from the State authorities and its engagement in collective bargaining and protection of workers’ rights remains rudimentary (57). Moreover, the mobility of the Chinese workforce is restricted by the household registration system, which limits access to the full range of social security and other benefits to local residents of a given administrative area. This typically results in workers who are not in possession of the local residence registration finding themselves in a vulnerable employment position and receiving lower income than the holders of the residence registration. (58) Those findings lead to the distortion of wage costs in China.

56

57

58

| (81) | No evidence was submitted to the effect that the chemical fibers sector, including the producers of HTYP, would not be subject to the Chinese labour law system described. The chemical fibers sector is thus affected by the distortions of wage costs both directly (when making the product under investigation or the main raw material for its production) as well as indirectly (when having access to capital or inputs from companies subject to the same labour system in China). |
| --- | --- |

(81)

No evidence was submitted to the effect that the chemical fibers sector, including the producers of HTYP, would not be subject to the Chinese labour law system described. The chemical fibers sector is thus affected by the distortions of wage costs both directly (when making the product under investigation or the main raw material for its production) as well as indirectly (when having access to capital or inputs from companies subject to the same labour system in China).

3.3.1.8.   Significant distortions according to Article 2(6a)(b), sixth indent of the basic Regulation: access to finance granted by institutions which implement public policy objectives or otherwise not acting independently of the State

Significant distortions according to Article 2(6a)(b), sixth indent of the basic Regulation: access to finance granted by institutions which implement public policy objectives or otherwise not acting independently of the State

| (82) | Access to capital for corporate actors in China is subject to various distortions. |
| --- | --- |

(82)

Access to capital for corporate actors in China is subject to various distortions.

| (83) | Firstly, the Chinese financial system is characterised by the strong position of State-owned banks (59), which, when granting access to finance, take into consideration criteria other than the economic viability of a project. Similarly to non-financial SOEs, the banks remain connected to the State not only through ownership but also via personal relations (the top executives of large State-owned financial institutions are ultimately appointed by the CCP) (60) and, again just like non-financial SOEs, the banks regularly implement public policies designed by the GOC. In doing so, the banks comply with an explicit legal obligation to conduct their business in accordance with the needs of the national economic and social development and under the guidance of the industrial policies of the State (61). This is compounded by additional existing rules, which direct finances into sectors designated by the government as encouraged or otherwise important (62). |
| --- | --- |

(83)

Firstly, the Chinese financial system is characterised by the strong position of State-owned banks (59), which, when granting access to finance, take into consideration criteria other than the economic viability of a project. Similarly to non-financial SOEs, the banks remain connected to the State not only through ownership but also via personal relations (the top executives of large State-owned financial institutions are ultimately appointed by the CCP) (60) and, again just like non-financial SOEs, the banks regularly implement public policies designed by the GOC. In doing so, the banks comply with an explicit legal obligation to conduct their business in accordance with the needs of the national economic and social development and under the guidance of the industrial policies of the State (61). This is compounded by additional existing rules, which direct finances into sectors designated by the government as encouraged or otherwise important (62).

59

60

61

62

| (84) | While it is acknowledged that various legal provisions refer to the need to respect normal banking behaviour and prudential rules such as the need to examine the creditworthiness of the borrower, the overwhelming evidence, including findings made in trade defence investigations, suggests that these provisions play only a secondary role in the application of the various legal instruments. |
| --- | --- |

(84)

While it is acknowledged that various legal provisions refer to the need to respect normal banking behaviour and prudential rules such as the need to examine the creditworthiness of the borrower, the overwhelming evidence, including findings made in trade defence investigations, suggests that these provisions play only a secondary role in the application of the various legal instruments.

| (85) | For example, the GOC has clarified that even private commercial banking decisions must be overseen by the CCP and remain in line with national policies. One of the State’s three overarching goals in relation to banking governance is now to strengthen the Party’s leadership in the banking and insurance sector, including in relation to operational and management issues (63). Also, the performance evaluation criteria of commercial banks have now to, notably, take into account how entities ‘serve the national development objectives and the real economy’, and in particular how they ‘serve strategic and emerging industries’. (64) |
| --- | --- |

(85)

For example, the GOC has clarified that even private commercial banking decisions must be overseen by the CCP and remain in line with national policies. One of the State’s three overarching goals in relation to banking governance is now to strengthen the Party’s leadership in the banking and insurance sector, including in relation to operational and management issues (63). Also, the performance evaluation criteria of commercial banks have now to, notably, take into account how entities ‘serve the national development objectives and the real economy’, and in particular how they ‘serve strategic and emerging industries’. (64)

63

serve the national development objectives and the real economy

serve strategic and emerging industries

64

| (86) | Specifically in the chemical fibers sector, the prioritisation of sectors on criteria related to industrial policies rather than creditworthiness of a given project is apparent from a number of policy documents, such as the Shandong Province’s 14th FYP on developing the chemical industry which provides for the following with respective to chemical industry: (65)


  Increase financial support. Strengthen fiscal policy incentives, ensure the overall involvement of special funds, support chemical enterprises to accelerate technological transformation, intelligent transformation, industry transfer, relocation into parks, elimination of obsolete capacities, etc., and implement policies such as tax exemption for imported major technical equipment, value-added tax credits and refunds, additional deductions of research and development expenses, and insurance compensation for the first (set) of technical equipment. Actively guide all kinds of financial institutions and social capital to invest in the chemical industry, give play to the advantages of policy-based finance, development finance and commercial finance, and increase financial support to the key areas of chemical industry and technology.
   (66) |
| --- | --- |

(86)

Specifically in the chemical fibers sector, the prioritisation of sectors on criteria related to industrial policies rather than creditworthiness of a given project is apparent from a number of policy documents, such as the Shandong Province’s 14th FYP on developing the chemical industry which provides for the following with respective to chemical industry: (65)

14th

65

Increase financial support. Strengthen fiscal policy incentives, ensure the overall involvement of special funds, support chemical enterprises to accelerate technological transformation, intelligent transformation, industry transfer, relocation into parks, elimination of obsolete capacities, etc., and implement policies such as tax exemption for imported major technical equipment, value-added tax credits and refunds, additional deductions of research and development expenses, and insurance compensation for the first (set) of technical equipment. Actively guide all kinds of financial institutions and social capital to invest in the chemical industry, give play to the advantages of policy-based finance, development finance and commercial finance, and increase financial support to the key areas of chemical industry and technology.
   (66)

Increase financial support. Strengthen fiscal policy incentives, ensure the overall involvement of special funds, support chemical enterprises to accelerate technological transformation, intelligent transformation, industry transfer, relocation into parks, elimination of obsolete capacities, etc., and implement policies such as tax exemption for imported major technical equipment, value-added tax credits and refunds, additional deductions of research and development expenses, and insurance compensation for the first (set) of technical equipment. Actively guide all kinds of financial institutions and social capital to invest in the chemical industry, give play to the advantages of policy-based finance, development finance and commercial finance, and increase financial support to the key areas of chemical industry and technology.

66

| (87) | Similarly, under the 14th FYP on the high-end development of the chemical industry (67) of the Jiangsu province, the local authorities are obliged to “[g]ive full play to the guiding role of government investment funds, flexibly expand funding channels and guide social capital investments.» (68) |
| --- | --- |

(87)

Similarly, under the 14th FYP on the high-end development of the chemical industry (67) of the Jiangsu province, the local authorities are obliged to “[g]ive full play to the guiding role of government investment funds, flexibly expand funding channels and guide social capital investments.» (68)

14th

67

ive full play to the guiding role of government investment funds, flexibly expand funding channels and guide social capital investments.

68

| (88) | Furthermore, bond and credit ratings are often distorted for a variety of reasons including the fact that the risk assessment is influenced by the firm’s strategic importance to the GOC and the strength of any implicit guarantee by the government. Estimates strongly suggest that Chinese credit ratings systematically correspond to lower international ratings. (69) |
| --- | --- |

(88)

Furthermore, bond and credit ratings are often distorted for a variety of reasons including the fact that the risk assessment is influenced by the firm’s strategic importance to the GOC and the strength of any implicit guarantee by the government. Estimates strongly suggest that Chinese credit ratings systematically correspond to lower international ratings. (69)

69

| (89) | This is compounded by additional existing rules, which direct finances into sectors designated by the government as encouraged or otherwise important (70). This results in a bias in favour of lending to SOEs, large well-connected private firms and firms in key industrial sectors, which implies that the availability and cost of capital is not equal for all players on the market. |
| --- | --- |

(89)

This is compounded by additional existing rules, which direct finances into sectors designated by the government as encouraged or otherwise important (70). This results in a bias in favour of lending to SOEs, large well-connected private firms and firms in key industrial sectors, which implies that the availability and cost of capital is not equal for all players on the market.

70

| (90) | Secondly, borrowing costs have been kept artificially low to stimulate investment growth. This has led to the excessive use of capital investment with ever lower returns on investment. This is illustrated by the growth in corporate leverage in the State sector despite a sharp fall in profitability, which suggests that the mechanisms at work in the banking system do not follow normal commercial responses. |
| --- | --- |

(90)

Secondly, borrowing costs have been kept artificially low to stimulate investment growth. This has led to the excessive use of capital investment with ever lower returns on investment. This is illustrated by the growth in corporate leverage in the State sector despite a sharp fall in profitability, which suggests that the mechanisms at work in the banking system do not follow normal commercial responses.

| (91) | Thirdly, although nominal interest rate liberalization was achieved in October 2015, price signals are still not the result of free market forces, but are influenced by government-induced distortions. The share of lending at or below the benchmark rate still represented at least one-third of all lending as of the end of 2018 (71). Official media in China have recently reported that the CCP called for ‘guiding the loan market interest rate downwards.’ (72) Artificially low interest rates result in under-pricing, and consequently, the excessive utilization of capital. |
| --- | --- |

(91)

Thirdly, although nominal interest rate liberalization was achieved in October 2015, price signals are still not the result of free market forces, but are influenced by government-induced distortions. The share of lending at or below the benchmark rate still represented at least one-third of all lending as of the end of 2018 (71). Official media in China have recently reported that the CCP called for ‘guiding the loan market interest rate downwards.’ (72) Artificially low interest rates result in under-pricing, and consequently, the excessive utilization of capital.

71

guiding the loan market interest rate downwards

72

| (92) | Overall credit growth in China indicates a worsening efficiency of capital allocation without any signs of credit tightening that would be expected in an undistorted market environment. As a result, non-performing loans have increased rapidly, with the GOC a number of times opting to either avoid defaults, thus creating so called ‘zombie’ companies, or to transfer the ownership of the debt (e.g. via mergers or debt-to-equity swaps), without necessarily removing the overall debt problem or addressing its root causes. |
| --- | --- |

(92)

Overall credit growth in China indicates a worsening efficiency of capital allocation without any signs of credit tightening that would be expected in an undistorted market environment. As a result, non-performing loans have increased rapidly, with the GOC a number of times opting to either avoid defaults, thus creating so called ‘zombie’ companies, or to transfer the ownership of the debt (e.g. via mergers or debt-to-equity swaps), without necessarily removing the overall debt problem or addressing its root causes.

| (93) | In essence, despite the steps that have been taken to liberalize the market, the corporate credit system in China is affected by significant distortions resulting from the continuing pervasive role of the State in the capital markets. Therefore, the substantial government intervention in the financial system leads to the market conditions being severely affected at all levels. |
| --- | --- |

(93)

In essence, despite the steps that have been taken to liberalize the market, the corporate credit system in China is affected by significant distortions resulting from the continuing pervasive role of the State in the capital markets. Therefore, the substantial government intervention in the financial system leads to the market conditions being severely affected at all levels.

3.3.1.9.   Systemic nature of the distortions described

Systemic nature of the distortions described

| (94) | The Commission noted that the distortions described in the Report are characteristic for the Chinese economy. The evidence available shows that the facts and features of the Chinese system as described above in Sections 3.3.1.1 – 3.3.1.5 as well as in Part I of the Report apply throughout the country and across the sectors of the economy. The same holds true for the description of the factors of production as set out above in Sections 3.3.1.6-3.3.1.8 and in Part II of the Report. |
| --- | --- |

(94)

The Commission noted that the distortions described in the Report are characteristic for the Chinese economy. The evidence available shows that the facts and features of the Chinese system as described above in Sections 3.3.1.1 – 3.3.1.5 as well as in Part I of the Report apply throughout the country and across the sectors of the economy. The same holds true for the description of the factors of production as set out above in Sections 3.3.1.6-3.3.1.8 and in Part II of the Report.

| (95) | The Commission recalls that in order to produce HTYP, a range of inputs is needed. When the producers of HTYP purchase/contract these inputs, the prices they pay (and which are recorded as their costs) are clearly exposed to the same systemic distortions mentioned before. For instance, suppliers of inputs employ labour that is subject to the distortions. They may borrow money that is subject to the distortions on the financial sector/capital allocation. In addition, they are subject to the planning system that applies across all levels of government and sectors. |
| --- | --- |

(95)

The Commission recalls that in order to produce HTYP, a range of inputs is needed. When the producers of HTYP purchase/contract these inputs, the prices they pay (and which are recorded as their costs) are clearly exposed to the same systemic distortions mentioned before. For instance, suppliers of inputs employ labour that is subject to the distortions. They may borrow money that is subject to the distortions on the financial sector/capital allocation. In addition, they are subject to the planning system that applies across all levels of government and sectors.

| (96) | As a consequence, not only the domestic sales prices of HTYP are not appropriate for use within the meaning of Article 2(6a)(a) of the basic Regulation, but all the input costs (including raw materials, energy, land, financing, labour, etc.) are also affected because their price formation is affected by substantial government intervention, as described in Parts I and II of the Report. Indeed, the government interventions described in relation to the allocation of capital, land, labour, energy and raw materials are present throughout China. This means, for instance, that an input that in itself was produced in China by combining a range of factors of production is exposed to significant distortions. The same applies for the input to the input and so forth. No evidence or argument to the contrary has been adduced by the GOC or the exporting producers in the present investigation. |
| --- | --- |

(96)

As a consequence, not only the domestic sales prices of HTYP are not appropriate for use within the meaning of Article 2(6a)(a) of the basic Regulation, but all the input costs (including raw materials, energy, land, financing, labour, etc.) are also affected because their price formation is affected by substantial government intervention, as described in Parts I and II of the Report. Indeed, the government interventions described in relation to the allocation of capital, land, labour, energy and raw materials are present throughout China. This means, for instance, that an input that in itself was produced in China by combining a range of factors of production is exposed to significant distortions. The same applies for the input to the input and so forth. No evidence or argument to the contrary has been adduced by the GOC or the exporting producers in the present investigation.

3.3.1.10.   Conclusion

Conclusion

| (97) | The analysis set out in sections 3.3.1.2. to 3.3.1.9, which includes an examination of all the available evidence relating to China’s intervention in its economy in general as well as in the chemical fibers sector (including the product under investigation) showed that prices or costs of the product under investigation, including the costs of raw materials, energy and labour, are not the result of free market forces because they are affected by substantial government intervention within the meaning of Article 2(6a)(b) of the basic Regulation as shown by the actual or potential impact of one or more of the relevant elements listed therein. On that basis, and in the absence of any cooperation from the GOC, the Commission concluded that it is not appropriate to use domestic prices and costs to establish normal value in this case. |
| --- | --- |

(97)

The analysis set out in sections 3.3.1.2. to 3.3.1.9, which includes an examination of all the available evidence relating to China’s intervention in its economy in general as well as in the chemical fibers sector (including the product under investigation) showed that prices or costs of the product under investigation, including the costs of raw materials, energy and labour, are not the result of free market forces because they are affected by substantial government intervention within the meaning of Article 2(6a)(b) of the basic Regulation as shown by the actual or potential impact of one or more of the relevant elements listed therein. On that basis, and in the absence of any cooperation from the GOC, the Commission concluded that it is not appropriate to use domestic prices and costs to establish normal value in this case.

| (98) | Consequently, the Commission proceeded to construct the normal value exclusively on the basis of costs of production and sale reflecting undistorted prices or benchmarks, that is, in this case, on the basis of corresponding costs of production and sale in an appropriate representative country, in accordance with Article 2(6a)(a) of the basic Regulation, as discussed in the following section. |
| --- | --- |

(98)

Consequently, the Commission proceeded to construct the normal value exclusively on the basis of costs of production and sale reflecting undistorted prices or benchmarks, that is, in this case, on the basis of corresponding costs of production and sale in an appropriate representative country, in accordance with Article 2(6a)(a) of the basic Regulation, as discussed in the following section.

3.3.1.11.   Comments by interested parties

Comments by interested parties

| (99) | In the course of the investigation, comments were received from Hailide as well as from a group of users. |
| --- | --- |

(99)

In the course of the investigation, comments were received from Hailide as well as from a group of users.

| (100) | In their comments on the First Note on factors of production, Hailide, apart from stating that the application of Article 2(6a) of the basic Regulation would be WTO incompatible, alleged that the analysis in the complaint pertaining to the existence of significant distortions – in China in general as well as concerning Hailide specifically – was flawed for the following reasons: (i) the complaint’s allegations are general in nature – for example when referring to energy or labour costs – and they concern China or its chemical sector, rather than the HTYP market; the allegations also rely exclusively on the Report, rather than being based on positive evidence; (ii) the complainant, in assessing whether significant distortions exist, relies on supporting evidence that is either irrelevant – typically outdated – or factually wrong – quoting past distortive obligations which no longer exist under Chinese law; (iii) the raw materials (purified terephthalic acid (‘PTA’)and monoethylene glycol (‘MEG’))are two commodity goods traded globally and priced in a transparent manner and in line with international prices, for which reason the complaint’s claims about their prices being distorted in China is flawed; (iv) the complainants failed to provide any positive and concrete evidence as regard the factors listed in Article 2(6a)(b) of the basic Regulation and therefore no valid conclusion can be drawn concerning the existence of significant distortions. A group of users made a similar claim in support of Hailide. |
| --- | --- |

(100)

In their comments on the First Note on factors of production, Hailide, apart from stating that the application of Article 2(6a) of the basic Regulation would be WTO incompatible, alleged that the analysis in the complaint pertaining to the existence of significant distortions – in China in general as well as concerning Hailide specifically – was flawed for the following reasons: (i) the complaint’s allegations are general in nature – for example when referring to energy or labour costs – and they concern China or its chemical sector, rather than the HTYP market; the allegations also rely exclusively on the Report, rather than being based on positive evidence; (ii) the complainant, in assessing whether significant distortions exist, relies on supporting evidence that is either irrelevant – typically outdated – or factually wrong – quoting past distortive obligations which no longer exist under Chinese law; (iii) the raw materials (purified terephthalic acid (‘PTA’)and monoethylene glycol (‘MEG’))are two commodity goods traded globally and priced in a transparent manner and in line with international prices, for which reason the complaint’s claims about their prices being distorted in China is flawed; (iv) the complainants failed to provide any positive and concrete evidence as regard the factors listed in Article 2(6a)(b) of the basic Regulation and therefore no valid conclusion can be drawn concerning the existence of significant distortions. A group of users made a similar claim in support of Hailide.

| (101) | The arguments raised by Hailide could not be accepted. At the outset, the Commission emphasized its position that the provisions of Article 2(6a) of the basic Regulation are fully consistent with the European Union’s WTO obligations.. As to the arguments concerning the allegedly flawed significant distortions analysis in the complaint, the Commission recalled, first of all, that Article 2(6a)(e) of the basic Regulation lays down an obligation to collect the data necessary for the application of this methodology when the investigation has been initiated on this basis. Consequently, far from drawing conclusions concerning the existence of significant distortions, the Commission merely deemed the evidence submitted by the complainant on the significant distortions sufficient to initiate the investigation. Moreover, the Commission pointed out that certain types of distortions present in China – such as distortion related to energy or labour – are cross-cutting, affecting the entire Chinese economy and therefore also prices and/or the raw materials and costs of production of the product under investigation. |
| --- | --- |

(101)

The arguments raised by Hailide could not be accepted. At the outset, the Commission emphasized its position that the provisions of Article 2(6a) of the basic Regulation are fully consistent with the European Union’s WTO obligations.. As to the arguments concerning the allegedly flawed significant distortions analysis in the complaint, the Commission recalled, first of all, that Article 2(6a)(e) of the basic Regulation lays down an obligation to collect the data necessary for the application of this methodology when the investigation has been initiated on this basis. Consequently, far from drawing conclusions concerning the existence of significant distortions, the Commission merely deemed the evidence submitted by the complainant on the significant distortions sufficient to initiate the investigation. Moreover, the Commission pointed out that certain types of distortions present in China – such as distortion related to energy or labour – are cross-cutting, affecting the entire Chinese economy and therefore also prices and/or the raw materials and costs of production of the product under investigation.

| (102) | Further, concerning the claim that allegations in the complaint rely exclusively on the Report and are at any rate based on outdated or inaccurate information, the Commission pointed out that while the complaint may be striving to demonstrate the unchanged nature of the significant distortions by referring to policy documents of the 12th or 13th planning cycle, the complaint also identified relevant documents for the 2021-2025 planning period, such as 14th Five-Year Plan for National Economic and Social Development of the People’s Republic of China or the 14th Five-Year Development Plan for Petroleum and Chemical Industry of the Zhejiang Province. In addition, the Commission recalled that Article 2(6a)(d) of the basic Regulation explicitly provides the Union industry with the possibility to rely on the information contained in the Report when bringing a complaint or a review request. The Commission therefore considered that the evidence identified in the complaint and referred to in the Notice of Initiation was sufficient to warrant initiation of an investigation on the basis of Article 2(6a) of the basic Regulation. As to the claim that raw materials PTA and MEG are traded internationally and their prices in China are therefore not being distorted, this argument has to be dismissed for the reasons set out above, in particular in recitals (95)-(97). |
| --- | --- |

(102)

Further, concerning the claim that allegations in the complaint rely exclusively on the Report and are at any rate based on outdated or inaccurate information, the Commission pointed out that while the complaint may be striving to demonstrate the unchanged nature of the significant distortions by referring to policy documents of the 12th or 13th planning cycle, the complaint also identified relevant documents for the 2021-2025 planning period, such as 14th Five-Year Plan for National Economic and Social Development of the People’s Republic of China or the 14th Five-Year Development Plan for Petroleum and Chemical Industry of the Zhejiang Province. In addition, the Commission recalled that Article 2(6a)(d) of the basic Regulation explicitly provides the Union industry with the possibility to rely on the information contained in the Report when bringing a complaint or a review request. The Commission therefore considered that the evidence identified in the complaint and referred to in the Notice of Initiation was sufficient to warrant initiation of an investigation on the basis of Article 2(6a) of the basic Regulation. As to the claim that raw materials PTA and MEG are traded internationally and their prices in China are therefore not being distorted, this argument has to be dismissed for the reasons set out above, in particular in recitals (95)-(97).

th

th

th

th

3.3.2.   
  Representative country

Representative country

3.3.2.1.   General remarks

General remarks

| (103) | The choice of the representative country was based on the following criteria pursuant to Article 2(6a) of the basic Regulation:






  — | A level of economic development similar to China. For this purpose, the Commission used countries with a gross national income per capita similar to China on the basis of the database of the World Bank (73); |
| --- | --- | --- |

(103)

The choice of the representative country was based on the following criteria pursuant to Article 2(6a) of the basic Regulation:

—

A level of economic development similar to China. For this purpose, the Commission used countries with a gross national income per capita similar to China on the basis of the database of the World Bank (73);

73

| — | Production of the product under investigation in that country (74); |
| --- | --- |

—

Production of the product under investigation in that country (74);

74

| — | Availability of relevant public data in the representative country. |
| --- | --- |

—

Availability of relevant public data in the representative country.

| — | Where there is more than one possible representative country, preference should be given, where appropriate, to the country with an adequate level of social and environmental protection. |
| --- | --- |

—

Where there is more than one possible representative country, preference should be given, where appropriate, to the country with an adequate level of social and environmental protection.

| (104) | As explained in recitals (34)-(37), the Commission issued and placed on the file two Notes on the sources for the determination of the normal value. The Notes described the facts and evidence underlying the relevant criteria and addressed the comments received by the parties on these elements and on the relevant sources. In the Second Note, the Commission informed interested parties of its intention to consider Türkiye as an appropriate representative country in the present case if the existence of significant distortions pursuant to Article 2(6a) of the basic Regulation would be confirmed. The Commission’s assessment can be summarised as follows. |
| --- | --- |

(104)

As explained in recitals (34)-(37), the Commission issued and placed on the file two Notes on the sources for the determination of the normal value. The Notes described the facts and evidence underlying the relevant criteria and addressed the comments received by the parties on these elements and on the relevant sources. In the Second Note, the Commission informed interested parties of its intention to consider Türkiye as an appropriate representative country in the present case if the existence of significant distortions pursuant to Article 2(6a) of the basic Regulation would be confirmed. The Commission’s assessment can be summarised as follows.

3.3.2.2.   A level of economic development similar to China and production of the product under investigation

A level of economic development similar to China and production of the product under investigation

| (105) | In the investigation period, the World Bank classified countries with a similar level of economic development as China as ‘upper-middle income’ countries on a gross national income basis. In the First Note, a sizeable production of the product under investigation was found to exist only in five of these countries, namely in Belarus, Brazil, Mexico, Thailand and Türkiye. |
| --- | --- |

(105)

In the investigation period, the World Bank classified countries with a similar level of economic development as China as ‘upper-middle income’ countries on a gross national income basis. In the First Note, a sizeable production of the product under investigation was found to exist only in five of these countries, namely in Belarus, Brazil, Mexico, Thailand and Türkiye.

| (106) | However, in view of the fact that Belarus is not a WTO-member and not a market economy, the said country was not examined further as a potential representative country. |
| --- | --- |

(106)

However, in view of the fact that Belarus is not a WTO-member and not a market economy, the said country was not examined further as a potential representative country.

| (107) | The Commission therefore further analysed Brazil, Mexico, Thailand and Türkiye as potential representative countries. |
| --- | --- |

(107)

The Commission therefore further analysed Brazil, Mexico, Thailand and Türkiye as potential representative countries.

3.3.2.3.   Availability of relevant public data in the representative country

Availability of relevant public data in the representative country

| (108) | For the countries considered and mentioned above, the Commission further verified the availability of the public data, including the data on imports of factors of production as well as of financial data from the producers of the product under investigation in the potential representative countries. |
| --- | --- |

(108)

For the countries considered and mentioned above, the Commission further verified the availability of the public data, including the data on imports of factors of production as well as of financial data from the producers of the product under investigation in the potential representative countries.

| (109) | The analysis of imports of the main factors of production showed that Türkiye imported overall more significant and representative undistorted volumes of the key inputs for production of the HTYP (namely PTA, MEG and Polyethylene terephthalate (‘PET’) chips) compared to Brazil, Mexico or Thailand. |
| --- | --- |

(109)

The analysis of imports of the main factors of production showed that Türkiye imported overall more significant and representative undistorted volumes of the key inputs for production of the HTYP (namely PTA, MEG and Polyethylene terephthalate (‘PET’) chips) compared to Brazil, Mexico or Thailand.

| (110) | The analysis further showed that Turkish imports were not materially affected by imports from China or any of the countries listed in Annex I to Regulation (EU) 2015/755 of the European Parliament and of the Council (75). Furthermore the HTYP production and production capacity is significant in Türkiye and no particular trade distortions on the factors of production nor on HTYP exist in the country. Moreover, detailed and sufficiently representative data on import prices of the material inputs are readily available in the Global Trade Atlas (‘GTA’) for Türkiye. |
| --- | --- |

(110)

The analysis further showed that Turkish imports were not materially affected by imports from China or any of the countries listed in Annex I to Regulation (EU) 2015/755 of the European Parliament and of the Council (75). Furthermore the HTYP production and production capacity is significant in Türkiye and no particular trade distortions on the factors of production nor on HTYP exist in the country. Moreover, detailed and sufficiently representative data on import prices of the material inputs are readily available in the Global Trade Atlas (‘GTA’) for Türkiye.

75

| (111) | Regarding the producers in representative countries and availability of their data, the Commission identified a HTYP producer KORDSA TEKNIK TEKSTIL A.S. (‘Kordsa Türkiye’) for which consolidated 2021 financial results are available. On the other hand, the financial data for Brazilian (KORDSA BRASIL S.A.), Mexican (Monosuisse, Performance Fibers Mexico Operations and Akra Polyester SA DE CV) and Thai companies (THAI TORAY SYNTHETICS CO LTD and TEIJIN POLYESTER (THAILAND) CO LTD.) producing HTYP are not readily available for the full investigation period and are not fully compliant with the International Financial Reporting Standards (for the Thai producers). |
| --- | --- |

(111)

Regarding the producers in representative countries and availability of their data, the Commission identified a HTYP producer KORDSA TEKNIK TEKSTIL A.S. (‘Kordsa Türkiye’) for which consolidated 2021 financial results are available. On the other hand, the financial data for Brazilian (KORDSA BRASIL S.A.), Mexican (Monosuisse, Performance Fibers Mexico Operations and Akra Polyester SA DE CV) and Thai companies (THAI TORAY SYNTHETICS CO LTD and TEIJIN POLYESTER (THAILAND) CO LTD.) producing HTYP are not readily available for the full investigation period and are not fully compliant with the International Financial Reporting Standards (for the Thai producers).

| (112) | It is observed that Kordsa Türkiye does not produce solely HTYP, but approximately 86 % of its 2021 revenues were in the segment covering HTYP (76). The Commission noted in this respect that in the event that no financial information is readily available specifically and only in relation to the product under investigation (which is nearly always the case), the Commission seeks the closest readily available proxy, including consolidated information of producer(s) active among others in the business covering the product under investigation. In these circumstances, the consolidated SG&A and profit identified for Kordsa Türkiye are therefore deemed sufficiently representative to be applied for the purposes of the present investigation. |
| --- | --- |

(112)

It is observed that Kordsa Türkiye does not produce solely HTYP, but approximately 86 % of its 2021 revenues were in the segment covering HTYP (76). The Commission noted in this respect that in the event that no financial information is readily available specifically and only in relation to the product under investigation (which is nearly always the case), the Commission seeks the closest readily available proxy, including consolidated information of producer(s) active among others in the business covering the product under investigation. In these circumstances, the consolidated SG&A and profit identified for Kordsa Türkiye are therefore deemed sufficiently representative to be applied for the purposes of the present investigation.

76

| (113) | Given the public availability of Kordsa Türkiye’s full and comprehensive annual report for 2021 (77), the Commission therefore resorted to the use of the information included therein. |
| --- | --- |

(113)

Given the public availability of Kordsa Türkiye’s full and comprehensive annual report for 2021 (77), the Commission therefore resorted to the use of the information included therein.

77

3.3.2.4.   Level of social and environmental protection

Level of social and environmental protection

| (114) | Having established that Türkiye was an appropriate representative country based on all of the above elements, there was no need to carry out an assessment of the level of social and environmental protection in accordance with the last sentence of Article 2(6a)(a) first indent of the basic Regulation. |
| --- | --- |

(114)

Having established that Türkiye was an appropriate representative country based on all of the above elements, there was no need to carry out an assessment of the level of social and environmental protection in accordance with the last sentence of Article 2(6a)(a) first indent of the basic Regulation.

3.3.2.5.   Conclusion

Conclusion

| (115) | In view of the above analysis, Türkiye met the criteria laid down in Article 2(6a)(a), first indent of the basic Regulation in order to be considered as an appropriate representative country. |
| --- | --- |

(115)

In view of the above analysis, Türkiye met the criteria laid down in Article 2(6a)(a), first indent of the basic Regulation in order to be considered as an appropriate representative country.

3.3.3.   
  Comments of the parties

Comments of the parties

| (116) | With respect to the choice of the representative country, a group of users suggested in response to the Second Note that Republic of Korea is the most appropriate representative country, given the level of economic development similar to China, production of the product under investigation, availability of relevant public data, and its adequate level of social and environmental protection. |
| --- | --- |

(116)

With respect to the choice of the representative country, a group of users suggested in response to the Second Note that Republic of Korea is the most appropriate representative country, given the level of economic development similar to China, production of the product under investigation, availability of relevant public data, and its adequate level of social and environmental protection.

| (117) | It is recalled that for the purpose of identifying countries with a level of economic development similar to China, the Commission considers on the basis of the database of the World Bank (78) only ‘upper-middle income’ countries on a gross national income basis. However, Republic of Korea has been classified, in and prior to IP, as a ‘high income’ country by the World Bank and hence cannot be considered as a potential representative country. |
| --- | --- |

(117)

It is recalled that for the purpose of identifying countries with a level of economic development similar to China, the Commission considers on the basis of the database of the World Bank (78) only ‘upper-middle income’ countries on a gross national income basis. However, Republic of Korea has been classified, in and prior to IP, as a ‘high income’ country by the World Bank and hence cannot be considered as a potential representative country.

78

| (118) | Hailide claimed in its response to the Notes that the GTA data concerning the main raw materials for HTYP production is inaccurate, when compared to the statistics from the official data portal of the Turkish Statistical Institute. The Commission noted that the data reported in GTA system for Türkiye is based on the general trade view while the data that was gathered from the official Turkish statistics is based on a special trade view (which excludes goods that enter or exit a free trade zone or bonded warehouse). Hence the differences in figures are duly justified and cannot render the GTA data unreliable. Therefore, Hailide cannot validly claim that the GTA data are inaccurate and its argument has to be dismissed. |
| --- | --- |

(118)

Hailide claimed in its response to the Notes that the GTA data concerning the main raw materials for HTYP production is inaccurate, when compared to the statistics from the official data portal of the Turkish Statistical Institute. The Commission noted that the data reported in GTA system for Türkiye is based on the general trade view while the data that was gathered from the official Turkish statistics is based on a special trade view (which excludes goods that enter or exit a free trade zone or bonded warehouse). Hence the differences in figures are duly justified and cannot render the GTA data unreliable. Therefore, Hailide cannot validly claim that the GTA data are inaccurate and its argument has to be dismissed.

| (119) | Hailide further submitted in response to the Second Note that the prices for raw materials in Türkiye, disclosed in Annex I (List of factors of production and their prices in Türkiye) are inconsistent with the prices disclosed for Türkiye in Annex II (Comparison of import statistics for potential representative countries). The Commission noted that the statistics in Annex II are only raw data for the purposes of comparison between different countries aggregated at the common HS6 level without including the applicable customs duties for individual importing countries. The data in Annex I on the other hand outlines values at the level of Turkish national tariff codes and includes the customs duties as well. Therefore, the price levels in Annex I and Annex II are not intended to be identical and the argument of the party has to be dismissed as unfounded. Further to the final disclosure, Hailide claimed that no calculation worksheet was provided in relation to the adjustment for import duties in Annex I, which led to an inadequate disclosure by the Commission. It was observed by the Commission that the data including prices of factors of production in Türkiye has been generated automatically from GTA at the level of Turkish national tariff codes (including all conventional and preferential customs duties based on the Market Access Map database – MacMap), it was duly disclosed and was used in this case by the Commission without further modification. It was noted that no additional calculation worksheet or the like was produced by the Commission for this purpose. Hence, Hailide’s claim has to be dismissed. |
| --- | --- |

(119)

Hailide further submitted in response to the Second Note that the prices for raw materials in Türkiye, disclosed in Annex I (List of factors of production and their prices in Türkiye) are inconsistent with the prices disclosed for Türkiye in Annex II (Comparison of import statistics for potential representative countries). The Commission noted that the statistics in Annex II are only raw data for the purposes of comparison between different countries aggregated at the common HS6 level without including the applicable customs duties for individual importing countries. The data in Annex I on the other hand outlines values at the level of Turkish national tariff codes and includes the customs duties as well. Therefore, the price levels in Annex I and Annex II are not intended to be identical and the argument of the party has to be dismissed as unfounded. Further to the final disclosure, Hailide claimed that no calculation worksheet was provided in relation to the adjustment for import duties in Annex I, which led to an inadequate disclosure by the Commission. It was observed by the Commission that the data including prices of factors of production in Türkiye has been generated automatically from GTA at the level of Turkish national tariff codes (including all conventional and preferential customs duties based on the Market Access Map database – MacMap), it was duly disclosed and was used in this case by the Commission without further modification. It was noted that no additional calculation worksheet or the like was produced by the Commission for this purpose. Hence, Hailide’s claim has to be dismissed.

| (120) | Hailide claimed that Türkiye is not appropriate to be selected as a representative country. The company submits that, first, the currency depreciation and high inflation led to abnormal market conditions in Türkiye which inevitably impacted the local costs and which in turn made Türkiye manifestly unsuitable as a representative country. Hailide reiterated its claim in response to the final disclosure, adding that local prices and/or import prices affected by significant local currency depreciation into Türkiye cannot reflect undistorted prices or benchmarks. Second, according to Hailide, Kordsa Türkiye cannot be considered a producer of HTYP destined to the open market, as its limited polyester yarn production capacity is mainly, if not exclusively, used for captive use in its own downstream tire cord fabric production. In the same vein, a group of users claimed that Kordsa Türkiye uses HTYP mostly for its own production for materials used in tires. Hailide claimed that HTYP is only marginal and subordinate business in support of cord fabric and that the biggest majority, if not all, of the external revenues in the segment “Industrial yarn and cord fabric” relate to revenue from sales of industrial fabrics and nylon yarn, and not of HTYP. Hailide reiterated this argument in its response to the final disclosure. The parties concluded that the financial result of the company is thus not representative of a HTYP producer and hence there is no financial information readily available for HTYP operation in Türkiye. Third, Hailide maintained that Kordsa Türkiye produces only one specific type of HTYP (high value-added HMLS for automotive use), which makes it unsuitable for representative country purpose, as the operational result from one single product type is not representative of that concerning Chinese HTYP producers which produce a wide range of product types. In conclusion, Hailide submitted that the Commission should disregard the profit margin of Kordsa Türkiye and use a more reasonable profit margin representative of Chinese HTYP producers. Hailide maintained in its response to the final disclosure that the profit level of 15,3 % established by the Commission is excessively high for an HTYP producer and that a maximum of 6 % (equal to the target profit margin for sampled Union producers in the present case, established by applying Article 7(2c) of the basic Regulation) is thus a reasonable proxy for the undistorted and reasonable profit that an HTYP producer can normally achieve. |
| --- | --- |

(120)

Hailide claimed that Türkiye is not appropriate to be selected as a representative country. The company submits that, first, the currency depreciation and high inflation led to abnormal market conditions in Türkiye which inevitably impacted the local costs and which in turn made Türkiye manifestly unsuitable as a representative country. Hailide reiterated its claim in response to the final disclosure, adding that local prices and/or import prices affected by significant local currency depreciation into Türkiye cannot reflect undistorted prices or benchmarks. Second, according to Hailide, Kordsa Türkiye cannot be considered a producer of HTYP destined to the open market, as its limited polyester yarn production capacity is mainly, if not exclusively, used for captive use in its own downstream tire cord fabric production. In the same vein, a group of users claimed that Kordsa Türkiye uses HTYP mostly for its own production for materials used in tires. Hailide claimed that HTYP is only marginal and subordinate business in support of cord fabric and that the biggest majority, if not all, of the external revenues in the segment “Industrial yarn and cord fabric” relate to revenue from sales of industrial fabrics and nylon yarn, and not of HTYP. Hailide reiterated this argument in its response to the final disclosure. The parties concluded that the financial result of the company is thus not representative of a HTYP producer and hence there is no financial information readily available for HTYP operation in Türkiye. Third, Hailide maintained that Kordsa Türkiye produces only one specific type of HTYP (high value-added HMLS for automotive use), which makes it unsuitable for representative country purpose, as the operational result from one single product type is not representative of that concerning Chinese HTYP producers which produce a wide range of product types. In conclusion, Hailide submitted that the Commission should disregard the profit margin of Kordsa Türkiye and use a more reasonable profit margin representative of Chinese HTYP producers. Hailide maintained in its response to the final disclosure that the profit level of 15,3 % established by the Commission is excessively high for an HTYP producer and that a maximum of 6 % (equal to the target profit margin for sampled Union producers in the present case, established by applying Article 7(2c) of the basic Regulation) is thus a reasonable proxy for the undistorted and reasonable profit that an HTYP producer can normally achieve.

| (121) | The Commission observed that the choice of the representative country was based on the three criteria: level of economic development, production of the product concerned and availability of relevant public data. A potential impact of a devaluing currency or inflation level is not among those criteria. In any event, the submitting party has not demonstrated how the depreciation of the Turkish Lira and high inflation would actually have affected the prices of inputs sourced in Türkiye, and if so what the real impact on the normal value that is calculated in CNY would be. Moreover, the parties did not provide any information indicating that (and to what extent) Turkish lira would be used in import transactions for raw materials forming a basis for establishing the undistorted cost benchmarks in this case. In addition, when establishing benchmarks on the basis of import prices for the calculation of normal value under Article 2(6a)(a) of the basic Regulation, the import values into the representative countries are ultimately converted into the currency of the exporting country, i.e. in this case CNY. Therefore, the Commission found that this claim was unsubstantiated and rejected it. |
| --- | --- |

(121)

The Commission observed that the choice of the representative country was based on the three criteria: level of economic development, production of the product concerned and availability of relevant public data. A potential impact of a devaluing currency or inflation level is not among those criteria. In any event, the submitting party has not demonstrated how the depreciation of the Turkish Lira and high inflation would actually have affected the prices of inputs sourced in Türkiye, and if so what the real impact on the normal value that is calculated in CNY would be. Moreover, the parties did not provide any information indicating that (and to what extent) Turkish lira would be used in import transactions for raw materials forming a basis for establishing the undistorted cost benchmarks in this case. In addition, when establishing benchmarks on the basis of import prices for the calculation of normal value under Article 2(6a)(a) of the basic Regulation, the import values into the representative countries are ultimately converted into the currency of the exporting country, i.e. in this case CNY. Therefore, the Commission found that this claim was unsubstantiated and rejected it.

| (122) | Regarding Kordsa Türkiye’s product portfolio and source of revenues, the Commission noted that in the event when no financial information is readily available specifically and solely in relation to product concerned by investigation (in this case HTYP), which is rarely the case, the Commission seeks to identify the closest readily available proxy, including consolidated information of producer(s) active, among others in the business of the product concerned. In this case, as outlined in recital (112), approximately 86 % of Kordsa Türkiye’s external revenues in 2021 were generated in the segment covering HTYP. Furthermore, contrary to what the parties submit, Kordsa Türkiye does indeed generate external revenue by producing and selling also polyester yarn (79). In fact, Kordsa is “[o]
  ne of the leaders of the [...] HMLS polyester yarn market
  ”, with “a portfolio of yarns that are suitable for use in such applications as cord fabrics, heavy-duty textiles, industrial fabrics, chafer fabrics, single-end cords and ropes” (80), hence for use also in industries other than the automotive industry. This makes the parties’ argument on captive use of HTYP unfounded. Moreover, tire reinforcement is one of the main applications for HTYP and the Chinese HTYP producers, including Hailide also produce HMLS yarn and serve customers in the automotive industry. Hence it would be misleading to state that Kordsa Türkiye’s HTYP business is unrepresentative of the business activities of the Chinese HTYP producers. Lastly, the parties did not propose as an alternative to Kordsa Türkiye any other suitable HTYP producer with readily available financial data specifically and solely for HTYP, let alone a HTYP producer with wider HTYP portfolio than that of Kordsa Türkiye. |
| --- | --- |

(122)

Regarding Kordsa Türkiye’s product portfolio and source of revenues, the Commission noted that in the event when no financial information is readily available specifically and solely in relation to product concerned by investigation (in this case HTYP), which is rarely the case, the Commission seeks to identify the closest readily available proxy, including consolidated information of producer(s) active, among others in the business of the product concerned. In this case, as outlined in recital (112), approximately 86 % of Kordsa Türkiye’s external revenues in 2021 were generated in the segment covering HTYP. Furthermore, contrary to what the parties submit, Kordsa Türkiye does indeed generate external revenue by producing and selling also polyester yarn (79). In fact, Kordsa is “[o]
  ne of the leaders of the [...] HMLS polyester yarn market
  ”, with “a portfolio of yarns that are suitable for use in such applications as cord fabrics, heavy-duty textiles, industrial fabrics, chafer fabrics, single-end cords and ropes” (80), hence for use also in industries other than the automotive industry. This makes the parties’ argument on captive use of HTYP unfounded. Moreover, tire reinforcement is one of the main applications for HTYP and the Chinese HTYP producers, including Hailide also produce HMLS yarn and serve customers in the automotive industry. Hence it would be misleading to state that Kordsa Türkiye’s HTYP business is unrepresentative of the business activities of the Chinese HTYP producers. Lastly, the parties did not propose as an alternative to Kordsa Türkiye any other suitable HTYP producer with readily available financial data specifically and solely for HTYP, let alone a HTYP producer with wider HTYP portfolio than that of Kordsa Türkiye.

79

ne of the leaders of the

HMLS polyester yarn market

a portfolio of yarns that are suitable for use in such applications as cord fabrics, heavy-duty textiles, industrial fabrics, chafer fabrics, single-end cords and ropes

80

| (123) | In these circumstances, the consolidated SG&A and profit identified for Kordsa Türkiye are therefore deemed sufficiently representative and suitable to be applied for the purposes of the present investigation and the arguments of the parties have to be dismissed. It was further observed that, the target profit of 6 % proposed to be used by Hailide and the profit in the representative country refer to different concepts governed by different rules prescribed in different legal provisions. In particular, the target profit is the profit achieved by the Union industry for domestic sales in the Union under normal conditions of competition and it is used to calculate the injury margin under Article 9(4) of the basic Regulation. The profit in the representative country is used in the calculation of normal value by reference to the appropriate representative country pursuant to Article 2(6a)(a) of the basic Regulation. This profit must reflect the profit achieved by a company producing the product under investigation or a similar product, in a representative country. Since the concept of the target profit and of profit in a representative country are not comparable, the claim of Hailide was dismissed as irrelevant. Moreover, Hailide provided no evidence suggesting that the amount for profit included in the constructed normal value was not undistorted and reasonable within the meaning of Article 2(6a)(a). |
| --- | --- |

(123)

In these circumstances, the consolidated SG&A and profit identified for Kordsa Türkiye are therefore deemed sufficiently representative and suitable to be applied for the purposes of the present investigation and the arguments of the parties have to be dismissed. It was further observed that, the target profit of 6 % proposed to be used by Hailide and the profit in the representative country refer to different concepts governed by different rules prescribed in different legal provisions. In particular, the target profit is the profit achieved by the Union industry for domestic sales in the Union under normal conditions of competition and it is used to calculate the injury margin under Article 9(4) of the basic Regulation. The profit in the representative country is used in the calculation of normal value by reference to the appropriate representative country pursuant to Article 2(6a)(a) of the basic Regulation. This profit must reflect the profit achieved by a company producing the product under investigation or a similar product, in a representative country. Since the concept of the target profit and of profit in a representative country are not comparable, the claim of Hailide was dismissed as irrelevant. Moreover, Hailide provided no evidence suggesting that the amount for profit included in the constructed normal value was not undistorted and reasonable within the meaning of Article 2(6a)(a).

| (124) | Hailide took the view that the Commission should select Brazil as the suitable representative country instead of Türkiye, given that financial data are readily available for Kordsa group company in Brazil and because Brazil had hardly any imports from China concerning the key inputs for production of the HTYP (PTA, MEG, PET chips) compared to Türkiye in 2021 and therefore is less likely affected by the alleged distortions. Hailide reiterated this argument in its response to the final disclosure, adding that if Kordsa Türkiye’s annual report for 2021 at company group consolidated level is acceptable as source for establishing the undistorted SG&A and profit in Türkiye, the same equally applies to Kordsa Brazil since the consolidated accounts also include the operational result of Kordsa Brazil. |
| --- | --- |

(124)

Hailide took the view that the Commission should select Brazil as the suitable representative country instead of Türkiye, given that financial data are readily available for Kordsa group company in Brazil and because Brazil had hardly any imports from China concerning the key inputs for production of the HTYP (PTA, MEG, PET chips) compared to Türkiye in 2021 and therefore is less likely affected by the alleged distortions. Hailide reiterated this argument in its response to the final disclosure, adding that if Kordsa Türkiye’s annual report for 2021 at company group consolidated level is acceptable as source for establishing the undistorted SG&A and profit in Türkiye, the same equally applies to Kordsa Brazil since the consolidated accounts also include the operational result of Kordsa Brazil.

| (125) | First, financial data for Kordsa Brazil is only available for 2019, while the period under investigation in the present case, which is of primary relevance, covers the year 2021. In addition, as outlined above, readily available and profitable data exist in relation to Kordsa Türkiye for 2021. While the financial statement of Kordsa Türkiye for 2021 used for the purposes of this case consolidates also the data of its subsidiaries, including Kordsa Brazil, it is evident that the profit and SG&A figures in the consolidated statement are more representative of Kordsa Türkiye’s operations rather than operations of Kordsa Brazil. This is because the revenue generated by the Europe-Middle East-Africa geographical segment (covering solely operations in Turkey) is almost three times higher than the revenues generated by Kordsa Brazil (representing the South American segment) (81). In any event, Article 2(6a)(a) of the basic Regulation requires that the amount for administrative, selling and general costs and for profits included in the constructed normal value is undistorted and reasonable. Hailide adduced no evidence demonstrating that this is not the case. Second, while the proportion of undistorted import quantities on the total imports for PET chips, PTA and MEG into Türkiye was lower than that of the undistorted imports into Brazil, the total quantity of undistorted imports for each of these inputs into Türkiye was significantly higher than the total quantity of undistorted imports into Brazil. In fact, while Brazil may have sufficiently representative data on PET chips and MEG imports available, this does not apply to the PTA imports, which were insignificant compared to Türkiye and accounted only for around 7 % of the PTA imports into Türkiye. The argument submitted by Hailide therefore has to be rejected. |
| --- | --- |

(125)

First, financial data for Kordsa Brazil is only available for 2019, while the period under investigation in the present case, which is of primary relevance, covers the year 2021. In addition, as outlined above, readily available and profitable data exist in relation to Kordsa Türkiye for 2021. While the financial statement of Kordsa Türkiye for 2021 used for the purposes of this case consolidates also the data of its subsidiaries, including Kordsa Brazil, it is evident that the profit and SG&A figures in the consolidated statement are more representative of Kordsa Türkiye’s operations rather than operations of Kordsa Brazil. This is because the revenue generated by the Europe-Middle East-Africa geographical segment (covering solely operations in Turkey) is almost three times higher than the revenues generated by Kordsa Brazil (representing the South American segment) (81). In any event, Article 2(6a)(a) of the basic Regulation requires that the amount for administrative, selling and general costs and for profits included in the constructed normal value is undistorted and reasonable. Hailide adduced no evidence demonstrating that this is not the case. Second, while the proportion of undistorted import quantities on the total imports for PET chips, PTA and MEG into Türkiye was lower than that of the undistorted imports into Brazil, the total quantity of undistorted imports for each of these inputs into Türkiye was significantly higher than the total quantity of undistorted imports into Brazil. In fact, while Brazil may have sufficiently representative data on PET chips and MEG imports available, this does not apply to the PTA imports, which were insignificant compared to Türkiye and accounted only for around 7 % of the PTA imports into Türkiye. The argument submitted by Hailide therefore has to be rejected.

81

| (126) | Regarding the SG&A of Kordsa Türkiye, which is to be applied in the present case to construct the normal value, Hailide submitted that to ensure fair comparison between the constructed normal value and the export price, the packaging expenses, which according to Hailide form part of the SG&A (based on the Note 21 to the Kordsa Türkiye financial statements) should be excluded. |
| --- | --- |

(126)

Regarding the SG&A of Kordsa Türkiye, which is to be applied in the present case to construct the normal value, Hailide submitted that to ensure fair comparison between the constructed normal value and the export price, the packaging expenses, which according to Hailide form part of the SG&A (based on the Note 21 to the Kordsa Türkiye financial statements) should be excluded.

| (127) | First, the Commission took the profit and loss statement and operating items listed therein as a basis for calculating the SG&A costs for Kordsa Türkiye. Note 21 to the financial statements, referred to by Hailide lists ‘Expenses by nature’, which evidently cover not only the operating expenses, but also the material costs, including packaging costs included in the cost of goods sold. Simple comparison of the total of operating expenses in the profit and loss statement and of the total of the expenses in Note 21 also shows that the latter amount is significantly higher. It would therefore be manifestly wrong to extrapolate from the mere reference to Note 21 in the profit and loss statement part listing operating items that all expenses outlined in Note 21 correspond to the operating expenses. In view of the above, the argument made by Hailide has to be rejected. |
| --- | --- |

(127)

First, the Commission took the profit and loss statement and operating items listed therein as a basis for calculating the SG&A costs for Kordsa Türkiye. Note 21 to the financial statements, referred to by Hailide lists ‘Expenses by nature’, which evidently cover not only the operating expenses, but also the material costs, including packaging costs included in the cost of goods sold. Simple comparison of the total of operating expenses in the profit and loss statement and of the total of the expenses in Note 21 also shows that the latter amount is significantly higher. It would therefore be manifestly wrong to extrapolate from the mere reference to Note 21 in the profit and loss statement part listing operating items that all expenses outlined in Note 21 correspond to the operating expenses. In view of the above, the argument made by Hailide has to be rejected.

Expenses by nature

| (128) | Furthermore, a group of users urged the Commission to use Chinese exporting producers’ own SG&A and profit to calculate the normal value. |
| --- | --- |

(128)

Furthermore, a group of users urged the Commission to use Chinese exporting producers’ own SG&A and profit to calculate the normal value.

| (129) | The Commission noted that once the existence of significant distortions for the exporting country is established in accordance with Article 2(6a)(b) of the basic Regulation, the normal value is constructed by reference to undistorted prices or benchmarks in an appropriate representative country (in this instance Türkiye) for each exporting producer according to Article 2(6a)(a). The Commission underlines that this provision also specifically requires that the constructed normal value includes a reasonable amount for undistorted SG&A costs and profit in the appropriate representative country. Once the Commission establishes the existence of the significant distortions affecting the product under investigation in the exporting country, it is prevented from using the actual SG&A costs and profit of individual exporting producers as, as a result, they were found to be distorted. Hailide did not provide any evidence that its actual SG&A costs and profit were undistorted. Therefore, this claim is rejected. |
| --- | --- |

(129)

The Commission noted that once the existence of significant distortions for the exporting country is established in accordance with Article 2(6a)(b) of the basic Regulation, the normal value is constructed by reference to undistorted prices or benchmarks in an appropriate representative country (in this instance Türkiye) for each exporting producer according to Article 2(6a)(a). The Commission underlines that this provision also specifically requires that the constructed normal value includes a reasonable amount for undistorted SG&A costs and profit in the appropriate representative country. Once the Commission establishes the existence of the significant distortions affecting the product under investigation in the exporting country, it is prevented from using the actual SG&A costs and profit of individual exporting producers as, as a result, they were found to be distorted. Hailide did not provide any evidence that its actual SG&A costs and profit were undistorted. Therefore, this claim is rejected.

3.3.4.   
  Sources used to establish undistorted costs

Sources used to establish undistorted costs

| (130) | On the basis of the information submitted by interested parties and other relevant information available on the file, the Commission established, in the First Note, an initial list of factors of production such as materials, energy and labour, used for the production of the product under investigation. |
| --- | --- |

(130)

On the basis of the information submitted by interested parties and other relevant information available on the file, the Commission established, in the First Note, an initial list of factors of production such as materials, energy and labour, used for the production of the product under investigation.

| (131) | In accordance with Article 2(6a)(a) of the basic Regulation, the Commission also identified sources to be used for establishing undistorted prices and benchmarks. The main source that the Commission proposed to use included the Global Trade Atlas (‘GTA’). Finally, the Commission identified the Harmonised System (‘HS’) codes of the FOPs which in the First Note were initially considered to be used for the GTA analysis on the basis of information provided by the interested parties. |
| --- | --- |

(131)

In accordance with Article 2(6a)(a) of the basic Regulation, the Commission also identified sources to be used for establishing undistorted prices and benchmarks. The main source that the Commission proposed to use included the Global Trade Atlas (‘GTA’). Finally, the Commission identified the Harmonised System (‘HS’) codes of the FOPs which in the First Note were initially considered to be used for the GTA analysis on the basis of information provided by the interested parties.

| (132) | The Commission invited the interested parties to comment and propose publicly available information on undistorted values for each of the factors of production (‘FOP’) mentioned in the First Note. Subsequently, in the Second Note, the Commission updated tariff classification information on and expanded the list by a number of FOPs based on the comments received from the interested parties. |
| --- | --- |

(132)

The Commission invited the interested parties to comment and propose publicly available information on undistorted values for each of the factors of production (‘FOP’) mentioned in the First Note. Subsequently, in the Second Note, the Commission updated tariff classification information on and expanded the list by a number of FOPs based on the comments received from the interested parties.

| (133) | In view of the above, the following FOPs and their sources were identified with regard to Türkiye, in order to determine the normal value in accordance with Article 2(6a)(a) of the basic Regulation:

  Table 1


  Factors of production of HTYP










  Factor of Production | Tariff line | Source of data the Commission intends to use
  Raw materials | Prices (CNY) |
| --- | --- | --- | --- | --- |
| |
| Purified terephthalic acid (PTA) | 291736 00 0011 | Global Trade Atlas (GTA) (82)

  Market Access Map, International Trade Centre (MacMap) (83) | 4,91 CNY/Kg |
| Mono-ethylene glycol (MEG) | 290531 | Global Trade Atlas (GTA)
  Market Access Map, International Trade Centre (MacMap) | 4,73 CNY/Kg |
| Poly(ethylene terephthalate) (PET) chips | 390769 | Global Trade Atlas (GTA)
  Market Access Map, International Trade Centre (MacMap) | 7,14 CNY/Kg |
| Spinning Finish Oil | 340311
  340391 | Global Trade Atlas (GTA)
  Market Access Map, International Trade Centre (MacMap) | 17,41 CNY/Kg |
| Labour |
| Labour | [N/A] | Turkish Statistical Institute (84) | 37,83 CNY/Manhour |
| Energy |
| Electricity | [N/A] | Turkish Statistical Institute | Consumption band (MWh) |
| T > 150 000 | 0,47 CNY/kWh |
| Gas | [N/A] | Turkish Statistical Institute | Consumption band (m3 )
  2 610 000 ≤ T < 26 100 000 1,63 CNY/m3 |
| | | | |
| By-product/Waste |
| Waste yarn | 550510 30 0011
  550510 30 0019 | Global Trade Atlas (GTA)
  Market Access Map, International Trade Centre (MacMap) | 3,15 CNY/Kg |

(133)

In view of the above, the following FOPs and their sources were identified with regard to Türkiye, in order to determine the normal value in accordance with Article 2(6a)(a) of the basic Regulation:

Table 1

Table 1

Factors of production of HTYP

Factors of production of HTYP

Factor of Production

Tariff line

Source of data the Commission intends to use

Raw materials

Prices (CNY)

Purified terephthalic acid (PTA)

291736 00 0011

Global Trade Atlas (GTA) (82)

82

Market Access Map, International Trade Centre (MacMap) (83)

83

4,91 CNY/Kg

Mono-ethylene glycol (MEG)

290531

Global Trade Atlas (GTA)

Market Access Map, International Trade Centre (MacMap)

4,73 CNY/Kg

Poly(ethylene terephthalate) (PET) chips

390769

Global Trade Atlas (GTA)

Market Access Map, International Trade Centre (MacMap)

7,14 CNY/Kg

Spinning Finish Oil

340311

340391

Global Trade Atlas (GTA)

Market Access Map, International Trade Centre (MacMap)

17,41 CNY/Kg

Labour

Labour

[N/A]

Turkish Statistical Institute (84)

84

37,83 CNY/Manhour

Energy

Electricity

[N/A]

Turkish Statistical Institute

Consumption band (MWh)

T > 150 000

0,47 CNY/kWh

Gas

[N/A]

Turkish Statistical Institute

Consumption band (m3 )

2 610 000 ≤ T < 26 100 000 1,63 CNY/m3

3

By-product/Waste

Waste yarn

550510 30 0011

550510 30 0019

Global Trade Atlas (GTA)

Market Access Map, International Trade Centre (MacMap)

3,15 CNY/Kg

3.3.5.   
  Raw materials used in the production process

Raw materials used in the production process

| (134) | In order to establish the undistorted price of raw materials, the Commission used as a basis the weighted average import price (CIF) to the representative country, as reported in the GTA, from all third countries excluding China and countries that are not members of the WTO and listed in Annex I of Regulation (EU) 2015/755 (85). The Commission decided to exclude imports from China as it concluded that it is not appropriate to use domestic prices and costs in China due to the existence of significant distortions in accordance with Article 2(6a)(b) of the basic Regulation (see recital (97) above). In the absence of any evidence showing that the same distortions do not equally affect products intended for export, the Commission considered that the same distortions affected exports. The weighted average import price was adjusted for import duties, where applicable. After excluding imports from the PRC and countries which are not members of the WTO into the representative country, the volume of imports from other third countries remained representative. |
| --- | --- |

(134)

In order to establish the undistorted price of raw materials, the Commission used as a basis the weighted average import price (CIF) to the representative country, as reported in the GTA, from all third countries excluding China and countries that are not members of the WTO and listed in Annex I of Regulation (EU) 2015/755 (85). The Commission decided to exclude imports from China as it concluded that it is not appropriate to use domestic prices and costs in China due to the existence of significant distortions in accordance with Article 2(6a)(b) of the basic Regulation (see recital (97) above). In the absence of any evidence showing that the same distortions do not equally affect products intended for export, the Commission considered that the same distortions affected exports. The weighted average import price was adjusted for import duties, where applicable. After excluding imports from the PRC and countries which are not members of the WTO into the representative country, the volume of imports from other third countries remained representative.

85

| (135) | The Commission expressed the transport cost incurred by the cooperating exporting producer for the supply of raw materials as a percentage of the actual cost of such raw materials and then applied the same percentage to the undistorted cost of the same raw materials in order to obtain the undistorted transport costs. The Commission considered that, in the context of this investigation, the ratio between the exporting producer’s raw material and the reported transport costs could be reasonably used as an indication to estimate the undistorted transport costs of raw materials when delivered to the company’s factory. |
| --- | --- |

(135)

The Commission expressed the transport cost incurred by the cooperating exporting producer for the supply of raw materials as a percentage of the actual cost of such raw materials and then applied the same percentage to the undistorted cost of the same raw materials in order to obtain the undistorted transport costs. The Commission considered that, in the context of this investigation, the ratio between the exporting producer’s raw material and the reported transport costs could be reasonably used as an indication to estimate the undistorted transport costs of raw materials when delivered to the company’s factory.

| (136) | For a small number of FOPs, due to their insignificant share in the total raw material costs in the IP, regardless of the source used, the Commission treated those FOPs as consumables, as explained in recital (146). |
| --- | --- |

(136)

For a small number of FOPs, due to their insignificant share in the total raw material costs in the IP, regardless of the source used, the Commission treated those FOPs as consumables, as explained in recital (146).

3.3.5.1.   Labour

Labour

| (137) | To establish the benchmark for labour costs the Commission used the most recent statistics published by the Turkish Statistical Institute (86). This institute publishes detailed information on labour costs in different economic sectors in Türkiye. The Commission established the benchmark based on hourly labour costs for 2020 for the economic activity Manufacture of chemicals’ NACE code 20 according to NACE Rev.2 classification. The values were further adjusted for inflation using the domestic consumer price index (87) to reflect the costs for the investigation period. Compared to the Second Note and following a claim raised by Hailide, the benchmark value for labour was modified to take account of the annual average inflation rate. |
| --- | --- |

(137)

To establish the benchmark for labour costs the Commission used the most recent statistics published by the Turkish Statistical Institute (86). This institute publishes detailed information on labour costs in different economic sectors in Türkiye. The Commission established the benchmark based on hourly labour costs for 2020 for the economic activity Manufacture of chemicals’ NACE code 20 according to NACE Rev.2 classification. The values were further adjusted for inflation using the domestic consumer price index (87) to reflect the costs for the investigation period. Compared to the Second Note and following a claim raised by Hailide, the benchmark value for labour was modified to take account of the annual average inflation rate.

86

87

3.3.5.2.   Energy

Energy

| (138) | To establish the benchmark price for electricity and gas, the Commission used prices for companies (industrial users) in Türkiye published by the Turkish Statistical Institute (88). The benchmark was established based on the price for electricity and gas, published on 31 March 2022. The price referred to is the average for 2021. The Commission used the data on the industrial electricity and gas prices in the corresponding consumption bands, net of VAT. |
| --- | --- |

(138)

To establish the benchmark price for electricity and gas, the Commission used prices for companies (industrial users) in Türkiye published by the Turkish Statistical Institute (88). The benchmark was established based on the price for electricity and gas, published on 31 March 2022. The price referred to is the average for 2021. The Commission used the data on the industrial electricity and gas prices in the corresponding consumption bands, net of VAT.

88

| (139) | Hailide argued that in addition to the VAT applied on electricity and gas prices identified for Türkiye, the electricity prices include additional taxes and fees (consumption tax, TRT and Energy Fund fees), which should be deducted by the Commission for the purposes of establishing benchmark cost of electricity. First, it was noted that there is no evidence on the file showing that (and to what extent, if any) companies in Türkiye would have recovered any of the said taxes and fees, hence meriting any deduction from the benchmark costs. Moreover, Hailide failed to substantiate its claim specifically with respect to the dataset published by the Turkish Statistical Institute and used for the purposes of this case. |
| --- | --- |

(139)

Hailide argued that in addition to the VAT applied on electricity and gas prices identified for Türkiye, the electricity prices include additional taxes and fees (consumption tax, TRT and Energy Fund fees), which should be deducted by the Commission for the purposes of establishing benchmark cost of electricity. First, it was noted that there is no evidence on the file showing that (and to what extent, if any) companies in Türkiye would have recovered any of the said taxes and fees, hence meriting any deduction from the benchmark costs. Moreover, Hailide failed to substantiate its claim specifically with respect to the dataset published by the Turkish Statistical Institute and used for the purposes of this case.

| (140) | CIRFS submitted in response to the final disclosure that the Commission should explain, why the 2021 price of gas in Türkiye selected for the purpose of the normal value calculation has significantly decreased, while according to the Turkish Statistical Institute, the average unit price of natural gas in Türkiye sharply increased in 2021 compared with 2020. As already outlined in the disclosed Second Note, the Commission sourced the data on gas prices directly from the database of the Turkish Statistical Institute, using average prices for 2021 for the respective consumption bands, while converting the figures from Turkish Lira to the RMB using the applicable official exchange rate in order to construct the normal value for the exporting producers. |
| --- | --- |

(140)

CIRFS submitted in response to the final disclosure that the Commission should explain, why the 2021 price of gas in Türkiye selected for the purpose of the normal value calculation has significantly decreased, while according to the Turkish Statistical Institute, the average unit price of natural gas in Türkiye sharply increased in 2021 compared with 2020. As already outlined in the disclosed Second Note, the Commission sourced the data on gas prices directly from the database of the Turkish Statistical Institute, using average prices for 2021 for the respective consumption bands, while converting the figures from Turkish Lira to the RMB using the applicable official exchange rate in order to construct the normal value for the exporting producers.

| (141) | Furthermore, CIRFS stated in response to the final disclosure that the Commission should explain with respect to gas the methodology used to select the most appropriate consumption band for each Chinese producer. It was noted in this respect that, as outlined in recital (138), the Commission attributed to Hailide the gas cost in the consumption band corresponding to its actual total gas consumption over the IP. |
| --- | --- |

(141)

Furthermore, CIRFS stated in response to the final disclosure that the Commission should explain with respect to gas the methodology used to select the most appropriate consumption band for each Chinese producer. It was noted in this respect that, as outlined in recital (138), the Commission attributed to Hailide the gas cost in the consumption band corresponding to its actual total gas consumption over the IP.

3.3.6.   
  SG&A and profits

SG&A and profits

| (142) | According to Article 2(6a)(a) of the basic Regulation, “the constructed normal value shall include an undistorted and reasonable amount for administrative, selling and general costs and for profits”. In addition, a value for manufacturing overhead costs needs to be established to cover costs not included in the factors of production referred to above. |
| --- | --- |

(142)

According to Article 2(6a)(a) of the basic Regulation, “the constructed normal value shall include an undistorted and reasonable amount for administrative, selling and general costs and for profits”. In addition, a value for manufacturing overhead costs needs to be established to cover costs not included in the factors of production referred to above.

the constructed normal value shall include an undistorted and reasonable amount for administrative, selling and general costs and for profits

| (143) | For establishing an undistorted and reasonable amount for SG&A and profits, the Commission used the SG&A (6,6 %) and profit (15,3 %) of the HTYP producer in Türkiye, Kordsa Türkiye, for which figures relating to 2021 financial data (i.e. for the period fully overlapping with the IP) were readily available. |
| --- | --- |

(143)

For establishing an undistorted and reasonable amount for SG&A and profits, the Commission used the SG&A (6,6 %) and profit (15,3 %) of the HTYP producer in Türkiye, Kordsa Türkiye, for which figures relating to 2021 financial data (i.e. for the period fully overlapping with the IP) were readily available.

3.3.7.   
  Calculation of the normal value

Calculation of the normal value

| (144) | Based on the undistorted prices and benchmarks described above, the Commission constructed the normal value per product type on an ex-works basis in accordance with Article 2(6a)(a) of the basic Regulation. |
| --- | --- |

(144)

Based on the undistorted prices and benchmarks described above, the Commission constructed the normal value per product type on an ex-works basis in accordance with Article 2(6a)(a) of the basic Regulation.

| (145) | First, the Commission established the undistorted costs of manufacturing for Hailide based on the factors of production purchased by the company and identified in Table 1. The Commission then applied the undistorted unit costs to the actual consumption of the individual factors of production of Hailide. The Commission reduced the costs of manufacturing by the undistorted revenues generated for by-product (in this case waste yarn) resold. |
| --- | --- |

(145)

First, the Commission established the undistorted costs of manufacturing for Hailide based on the factors of production purchased by the company and identified in Table 1. The Commission then applied the undistorted unit costs to the actual consumption of the individual factors of production of Hailide. The Commission reduced the costs of manufacturing by the undistorted revenues generated for by-product (in this case waste yarn) resold.

| (146) | Second, to arrive at a total undistorted cost of manufacturing, the Commission added manufacturing overheads. Manufacturing overheads incurred by Hailide were increased by the costs of consumables referred to in recital (136) and subsequently expressed as a share of the costs of manufacturing actually incurred by Hailide. This percentage was applied to the undistorted costs of manufacturing. |
| --- | --- |

(146)

Second, to arrive at a total undistorted cost of manufacturing, the Commission added manufacturing overheads. Manufacturing overheads incurred by Hailide were increased by the costs of consumables referred to in recital (136) and subsequently expressed as a share of the costs of manufacturing actually incurred by Hailide. This percentage was applied to the undistorted costs of manufacturing.

| (147) | Finally, the Commission added SG&A and profit, determined on the basis of the Turkish HTYP producer (see recital (143)). SG&A and profit, both expressed as a percentage of the cost of goods sold and applied to the undistorted total cost of manufacturing, amounted to 6,6 % and 15,3 % respectively. |
| --- | --- |

(147)

Finally, the Commission added SG&A and profit, determined on the basis of the Turkish HTYP producer (see recital (143)). SG&A and profit, both expressed as a percentage of the cost of goods sold and applied to the undistorted total cost of manufacturing, amounted to 6,6 % and 15,3 % respectively.

| (148) | On that basis, the Commission determined the normal value per product type on an ex-works basis in accordance with Article 2(6a)(a) of the basic Regulation. |
| --- | --- |

(148)

On that basis, the Commission determined the normal value per product type on an ex-works basis in accordance with Article 2(6a)(a) of the basic Regulation.

| (149) | Hailide claimed in response to the final disclosure that the Commission groundlessly linked the value of consumables and manufacturing overheads to that of other inputs. According to Hailide, the Commission shall identify the benchmark for the consumables and manufacturing overheads separately from other inputs or, otherwise accept the company’s actual cost for consumables and manufacturing overheads. Similar claim was raised by Hailide with respect to the construction of the transport cost for the supply of raw materials. |
| --- | --- |

(149)

Hailide claimed in response to the final disclosure that the Commission groundlessly linked the value of consumables and manufacturing overheads to that of other inputs. According to Hailide, the Commission shall identify the benchmark for the consumables and manufacturing overheads separately from other inputs or, otherwise accept the company’s actual cost for consumables and manufacturing overheads. Similar claim was raised by Hailide with respect to the construction of the transport cost for the supply of raw materials.

| (150) | As explained in recital (97) the investigation found that prices or costs of the product under investigation, including the costs of raw materials, energy and labour, are not the result of free market forces because they are affected by substantial government intervention within the meaning of Article 2(6a)(b) of the basic Regulation. Hailide failed to demonstrate that the prices of its consumables, its manufacturing overheads or its transport cost are not distorted. It could not be positively established that these costs are not distorted and therefore, in view of third indent of the second paragraph of Article 2(6a)(a) they cannot be used in the construction of the normal value. The Commission was unable to find any reasonable benchmark for these costs, nor any reasonable benchmark for these costs were suggested by Hailide or any other interested party. When appropriate benchmarks cannot be found for a cost, the Commission may in principle establish them as a ratio to the cost group they relate to (be it cost of all raw materials or the manufacturing costs). Once the undistorted costs of raw materials or manufacturing costs are established, the Commission will apply the benchmark to estimate the undistorted cost in question, thereby preserving the exporting producer’s cost structure. This means that if, for instance, consumables represent 1 % of all raw materials costs in the accounts of an exporting producer, following construction of the normal value they will still represent 1 % of the raw material costs. |
| --- | --- |

(150)

As explained in recital (97) the investigation found that prices or costs of the product under investigation, including the costs of raw materials, energy and labour, are not the result of free market forces because they are affected by substantial government intervention within the meaning of Article 2(6a)(b) of the basic Regulation. Hailide failed to demonstrate that the prices of its consumables, its manufacturing overheads or its transport cost are not distorted. It could not be positively established that these costs are not distorted and therefore, in view of third indent of the second paragraph of Article 2(6a)(a) they cannot be used in the construction of the normal value. The Commission was unable to find any reasonable benchmark for these costs, nor any reasonable benchmark for these costs were suggested by Hailide or any other interested party. When appropriate benchmarks cannot be found for a cost, the Commission may in principle establish them as a ratio to the cost group they relate to (be it cost of all raw materials or the manufacturing costs). Once the undistorted costs of raw materials or manufacturing costs are established, the Commission will apply the benchmark to estimate the undistorted cost in question, thereby preserving the exporting producer’s cost structure. This means that if, for instance, consumables represent 1 % of all raw materials costs in the accounts of an exporting producer, following construction of the normal value they will still represent 1 % of the raw material costs.

| (151) | As set out in recital (146), in order to arrive at undistorted cost of consumables and overheads, Hailide’s share of cost of consumables as well as manufacturing overheads on the costs of manufacturing actually incurred was applied to the undistorted costs of manufacturing. As explained in recital (150), in the absence of a specific data concerning undistorted overhead in the available financial data of the producer(s) in the representative country, the Commission determined the undistorted overhead data for the exporting producer following this method. Furthermore, given that numerous factors of production typically accounting for an insignificant share on the total raw material costs were identified in this case, the Commission deemed it reasonable to include such inputs (again using Hailide’s actual costs) among consumables and treat them accordingly. Moreover, regarding the transport costs, as outlined in recital (135) and in the absence of data in the file on the undistorted transport costs in the representative country, the Commission considered the ratio between the exporting producer’s raw material and the reported transport costs could be reasonably used as an indication to estimate the undistorted transport costs of raw materials when delivered to the company’s factory. Hailide’s claim was therefore rejected. |
| --- | --- |

(151)

As set out in recital (146), in order to arrive at undistorted cost of consumables and overheads, Hailide’s share of cost of consumables as well as manufacturing overheads on the costs of manufacturing actually incurred was applied to the undistorted costs of manufacturing. As explained in recital (150), in the absence of a specific data concerning undistorted overhead in the available financial data of the producer(s) in the representative country, the Commission determined the undistorted overhead data for the exporting producer following this method. Furthermore, given that numerous factors of production typically accounting for an insignificant share on the total raw material costs were identified in this case, the Commission deemed it reasonable to include such inputs (again using Hailide’s actual costs) among consumables and treat them accordingly. Moreover, regarding the transport costs, as outlined in recital (135) and in the absence of data in the file on the undistorted transport costs in the representative country, the Commission considered the ratio between the exporting producer’s raw material and the reported transport costs could be reasonably used as an indication to estimate the undistorted transport costs of raw materials when delivered to the company’s factory. Hailide’s claim was therefore rejected.

3.4.   Export price

Export price

| (152) | Hailide exported the product concerned directly to independent customers in the Union as well as through a related company located in Hong Kong. The export price for Hailide was the price actually paid or payable for the product concerned when sold for export to the Union, in accordance with Article 2(8) of the basic Regulation. Regarding the sales via the related company in Hong Kong, please see recitals (162)-(163) below for further details. |
| --- | --- |

(152)

Hailide exported the product concerned directly to independent customers in the Union as well as through a related company located in Hong Kong. The export price for Hailide was the price actually paid or payable for the product concerned when sold for export to the Union, in accordance with Article 2(8) of the basic Regulation. Regarding the sales via the related company in Hong Kong, please see recitals (162)-(163) below for further details.

| (153) | Furthermore, Hailide also sold the product concerned to the Union through an additional related company in the Union acting as an importer. For these sales, the export price was constructed on the basis of the price at which the imported product was first resold to independent customers in the Union in accordance with Article 2(9) of the basic Regulation. The adjustments made related to all costs incurred between importation and resale, including the SG&A expenses of the related importer located in the Union, and a reasonable profit (established at 6,89 % in the recent polyvinyl alcohols (‘PVA’) investigation (89) for another chemical product and used in the present investigation given the similarity of the industry and the lack of cooperation from unrelated importers), in order to establish a reliable export price at the Union frontier level. |
| --- | --- |

(153)

Furthermore, Hailide also sold the product concerned to the Union through an additional related company in the Union acting as an importer. For these sales, the export price was constructed on the basis of the price at which the imported product was first resold to independent customers in the Union in accordance with Article 2(9) of the basic Regulation. The adjustments made related to all costs incurred between importation and resale, including the SG&A expenses of the related importer located in the Union, and a reasonable profit (established at 6,89 % in the recent polyvinyl alcohols (‘PVA’) investigation (89) for another chemical product and used in the present investigation given the similarity of the industry and the lack of cooperation from unrelated importers), in order to establish a reliable export price at the Union frontier level.

89

| (154) | Hailide stated in response to the final disclosure that the application of the notional profit level of 6,89 % from recent investigation concerning PVA is groundless and overstated. Hailide submitted that PVA and HTYP do not share similar chemical or physical characteristics, they have different end use and end users and the markets for the two products are distinct. Therefore, according to Hailide, the profit in PVA sector is in no way representative of what a company can achieve in trading HTYP. Furthermore, Hailide argued that if the profit level that Union HTYP producers can obtain in the normal market conditions without dumped imports is less than 6 %, it would be odd that traders of this product can achieve higher profit in the same market. |
| --- | --- |

(154)

Hailide stated in response to the final disclosure that the application of the notional profit level of 6,89 % from recent investigation concerning PVA is groundless and overstated. Hailide submitted that PVA and HTYP do not share similar chemical or physical characteristics, they have different end use and end users and the markets for the two products are distinct. Therefore, according to Hailide, the profit in PVA sector is in no way representative of what a company can achieve in trading HTYP. Furthermore, Hailide argued that if the profit level that Union HTYP producers can obtain in the normal market conditions without dumped imports is less than 6 %, it would be odd that traders of this product can achieve higher profit in the same market.

| (155) | Furthermore, CIRFS also considered that the notional profit used is not an appropriate benchmark for the HTYP case, arguing contrary to Hailide’s position that such profit margin largely underestimates profit of importers in the HTYP sector. Instead, CIRFS suggested that there is a more recent case involving man-made fibres, which would better represent the profit margin of unrelated importers, namely the optical fibre cables (‘OFC’) case (90) which was between 15-25 %. Moreover, CIRFS submitted that the Commission should not encourage the non-cooperation from unrelated importers by underestimating the profit margin. Instead, the Commission should according to CIRFS adopt a proactive approach by accessing the financial reports of the known importers and relying on these reports as the best facts available. |
| --- | --- |

(155)

Furthermore, CIRFS also considered that the notional profit used is not an appropriate benchmark for the HTYP case, arguing contrary to Hailide’s position that such profit margin largely underestimates profit of importers in the HTYP sector. Instead, CIRFS suggested that there is a more recent case involving man-made fibres, which would better represent the profit margin of unrelated importers, namely the optical fibre cables (‘OFC’) case (90) which was between 15-25 %. Moreover, CIRFS submitted that the Commission should not encourage the non-cooperation from unrelated importers by underestimating the profit margin. Instead, the Commission should according to CIRFS adopt a proactive approach by accessing the financial reports of the known importers and relying on these reports as the best facts available.

90

| (156) | First, as stated in recital (153), in the absence of cooperation from unrelated importers in the present case, the Commission resorted to the use of a notional profit from a recent investigation in the chemical industry, establishing that such profit was considered reasonable. Second, Hailide’s comparison of a trader’s profit with a profit that Union producers could obtain is unfounded given the fundamental differences in the activities of a manufacturing company as opposed to a trading company. |
| --- | --- |

(156)

First, as stated in recital (153), in the absence of cooperation from unrelated importers in the present case, the Commission resorted to the use of a notional profit from a recent investigation in the chemical industry, establishing that such profit was considered reasonable. Second, Hailide’s comparison of a trader’s profit with a profit that Union producers could obtain is unfounded given the fundamental differences in the activities of a manufacturing company as opposed to a trading company.

| (157) | Further to the similarity of PVA and HTYP, while it is not disputed that PVA and HTYP have different chemical and physical characteristics, uses, users and markets it is an established fact that both products are part of a chemical industry. Moreover, Hailide failed to substantiate why the nominal profit used would not be representative of a profit achieved by a trader of HTYP. Therefore, the Commission concluded that the profit in PVA sector is representative of what a company can achieve in trading HTYP. On the other hand, the optical fibre cables as well as the main raw material used in their production (optical fibre) are used in telecommunication industries without even a remote link to chemical industry. Therefore, it would be inappropriate to apply in the present HTYP investigation profit margins for unrelated importers used in the OFC case. |
| --- | --- |

(157)

Further to the similarity of PVA and HTYP, while it is not disputed that PVA and HTYP have different chemical and physical characteristics, uses, users and markets it is an established fact that both products are part of a chemical industry. Moreover, Hailide failed to substantiate why the nominal profit used would not be representative of a profit achieved by a trader of HTYP. Therefore, the Commission concluded that the profit in PVA sector is representative of what a company can achieve in trading HTYP. On the other hand, the optical fibre cables as well as the main raw material used in their production (optical fibre) are used in telecommunication industries without even a remote link to chemical industry. Therefore, it would be inappropriate to apply in the present HTYP investigation profit margins for unrelated importers used in the OFC case.

| (158) | Moreover, contrary to what CIRFS suggested, the Commission only resorted to use of a notional profit from PVA case after it encouraged unrelated importers to come forward and cooperate with the investigation (whether by specifically inviting the known importers to take part in a sampling exercise or by publishing on the website dedicated questionnaire intended for the unrelated importers willing to cooperate) and following the absence of any such cooperation. Hence, the Commission could not possibly encourage non-cooperation from unrelated importers by underestimating the profit margin ultimately used. |
| --- | --- |

(158)

Moreover, contrary to what CIRFS suggested, the Commission only resorted to use of a notional profit from PVA case after it encouraged unrelated importers to come forward and cooperate with the investigation (whether by specifically inviting the known importers to take part in a sampling exercise or by publishing on the website dedicated questionnaire intended for the unrelated importers willing to cooperate) and following the absence of any such cooperation. Hence, the Commission could not possibly encourage non-cooperation from unrelated importers by underestimating the profit margin ultimately used.

| (159) | With respect to the identification and use of importers’ publicly available financial data, as an established practice, the Commission uses for determining a reasonable profit (for instance under Article 2(9)) duly verified Union profitability data compiled and collected specifically for the purposes of its investigations. Such data, if available, is usually considered to be more reasonable. Therefore, the arguments raised by Hailide and CIRFS have to be dismissed. |
| --- | --- |

(159)

With respect to the identification and use of importers’ publicly available financial data, as an established practice, the Commission uses for determining a reasonable profit (for instance under Article 2(9)) duly verified Union profitability data compiled and collected specifically for the purposes of its investigations. Such data, if available, is usually considered to be more reasonable. Therefore, the arguments raised by Hailide and CIRFS have to be dismissed.

3.5.   Comparison

Comparison

| (160) | The Commission compared the normal value and the export price of Hailide on an ex-works basis. |
| --- | --- |

(160)

The Commission compared the normal value and the export price of Hailide on an ex-works basis.

| (161) | In order to ensure a fair comparison, the Commission adjusted the normal value and/or the export price for differences affecting prices and price comparability, in accordance with Article 2(10) of the basic Regulation. Adjustments to the export price were made for transport, insurance, handling and loading, discounts, commission, credit costs, bank charges and other import charges. |
| --- | --- |

(161)

In order to ensure a fair comparison, the Commission adjusted the normal value and/or the export price for differences affecting prices and price comparability, in accordance with Article 2(10) of the basic Regulation. Adjustments to the export price were made for transport, insurance, handling and loading, discounts, commission, credit costs, bank charges and other import charges.

| (162) | Furthermore, Hailide exported part of its HTYP to the Union through a related trader located outside the Union, in Hong Kong, namely through HALEAD (H.K.) CO., LIMITED (‘Halead’). |
| --- | --- |

(162)

Furthermore, Hailide exported part of its HTYP to the Union through a related trader located outside the Union, in Hong Kong, namely through HALEAD (H.K.) CO., LIMITED (‘Halead’).

| (163) | Consequently, in order to ensure a fair comparison in accordance with the chapeau of Article 2(10) of the basic Regulation, an adjustment under Article 2(10)(i) in particular was made for sales through this related trading company of Hailide group. The adjustment consists of the deduction of SG&A of the trading company and of a notional 6,89 % profit identified for this case (see recital (153) above). |
| --- | --- |

(163)

Consequently, in order to ensure a fair comparison in accordance with the chapeau of Article 2(10) of the basic Regulation, an adjustment under Article 2(10)(i) in particular was made for sales through this related trading company of Hailide group. The adjustment consists of the deduction of SG&A of the trading company and of a notional 6,89 % profit identified for this case (see recital (153) above).

chapeau

| (164) | Hailide argued in its response to the final disclosure that the export price of Halead shall not be adjusted by deducting the SG&A of the trading company and a notional profit of 6,89 %. Hailide claimed that the related trader shall be treated as part of Hailide and that the role played by it has nothing similar to the functions of an agent working on a commission basis, outlining number of reasons in the sensitive version of its response to the final disclosure in support of the claim. |
| --- | --- |

(164)

Hailide argued in its response to the final disclosure that the export price of Halead shall not be adjusted by deducting the SG&A of the trading company and a notional profit of 6,89 %. Hailide claimed that the related trader shall be treated as part of Hailide and that the role played by it has nothing similar to the functions of an agent working on a commission basis, outlining number of reasons in the sensitive version of its response to the final disclosure in support of the claim.

| (165) | In this respect, the Commission noted that, pursuant to Article 2(10) of the basic Regulation, a fair comparison must be made between the export price and the normal value. That provision states that, where the normal value and the export price are not on such a comparable basis, due allowance, in the form of adjustments, is to be made, on the merits, for differences in factors which are claimed, and demonstrated, to affect prices and price comparability. Among the factors for which adjustment can be made, Article 2(10)(i) of the basic Regulation provides in particular that an adjustment is to be made for differences in commissions paid in respect of the sales under consideration. That provision states that the term ‘commissions’ is to be understood to include the mark-up received by a trader of the product or the like product if the functions of such a trader are similar to those of an agent working on a commission basis. However, an adjustment under Article 2(10)(i) of the basic Regulation cannot be made where the producer established in a third State and its related distributor responsible for exports to the European Union form a single economic entity (‘SEE’). |
| --- | --- |

(165)

In this respect, the Commission noted that, pursuant to Article 2(10) of the basic Regulation, a fair comparison must be made between the export price and the normal value. That provision states that, where the normal value and the export price are not on such a comparable basis, due allowance, in the form of adjustments, is to be made, on the merits, for differences in factors which are claimed, and demonstrated, to affect prices and price comparability. Among the factors for which adjustment can be made, Article 2(10)(i) of the basic Regulation provides in particular that an adjustment is to be made for differences in commissions paid in respect of the sales under consideration. That provision states that the term ‘commissions’ is to be understood to include the mark-up received by a trader of the product or the like product if the functions of such a trader are similar to those of an agent working on a commission basis. However, an adjustment under Article 2(10)(i) of the basic Regulation cannot be made where the producer established in a third State and its related distributor responsible for exports to the European Union form a single economic entity (‘SEE’).

| (166) | In the analysis of whether there is a single economic entity between a producer and its related distributor, it is crucial to consider the economic reality of the relationship between that producer and that distributor. In view of the requirement of a conclusion reflecting the economic reality of the relationship between that producer and that distributor, the Commission is required to take account of all factors relevant to the determination as to whether or not that distributor carries out the functions of an integrated sales department within that producer or, in turn performs other type of functions. In accordance with the need to have regard to all relevant factors and the general discretion afforded to the Commission to assess complex economic situations, the Commission must carry out its assessment on a case-by-case basis and in a holistic manner. |
| --- | --- |

(166)

In the analysis of whether there is a single economic entity between a producer and its related distributor, it is crucial to consider the economic reality of the relationship between that producer and that distributor. In view of the requirement of a conclusion reflecting the economic reality of the relationship between that producer and that distributor, the Commission is required to take account of all factors relevant to the determination as to whether or not that distributor carries out the functions of an integrated sales department within that producer or, in turn performs other type of functions. In accordance with the need to have regard to all relevant factors and the general discretion afforded to the Commission to assess complex economic situations, the Commission must carry out its assessment on a case-by-case basis and in a holistic manner.

| (167) | In terms of the burden of proof, where the Commission has adduced consistent indicia to establish that a trader affiliated to a producer carries out functions comparable to those of an agent working on a commission basis, it will be for that trader or that producer to adduce evidence that an adjustment under Article 2(10)(i) of the basic Regulation is not justified. |
| --- | --- |

(167)

In terms of the burden of proof, where the Commission has adduced consistent indicia to establish that a trader affiliated to a producer carries out functions comparable to those of an agent working on a commission basis, it will be for that trader or that producer to adduce evidence that an adjustment under Article 2(10)(i) of the basic Regulation is not justified.

| (168) | The Commission found that Halead should be considered to be acting as an agent working on a commission basis rather than the internal sales department of Hailide. In its assessment the Commission took into consideration the relationship between the two companies in view of the ownership structure of the group as well as provisions of the contracts regulating the relationship of the two companies. The Commission analysed sales activities of both Hailide and Halead with particular attention to the existence of an internal sales department in Hailide. The Commission adduced consistent indicia to establish that Halead carried out functions comparable to those of an agent working on a commission basis. Hailide, on the other hand, failed to adduce evidence that an adjustment under Article 2(10)(i) of the basic Regulation is not justified. The claim was therefore rejected. Detailed analysis, due to its confidential nature, was provided to Hailide upon publication of this Regulation. |
| --- | --- |

(168)

The Commission found that Halead should be considered to be acting as an agent working on a commission basis rather than the internal sales department of Hailide. In its assessment the Commission took into consideration the relationship between the two companies in view of the ownership structure of the group as well as provisions of the contracts regulating the relationship of the two companies. The Commission analysed sales activities of both Hailide and Halead with particular attention to the existence of an internal sales department in Hailide. The Commission adduced consistent indicia to establish that Halead carried out functions comparable to those of an agent working on a commission basis. Hailide, on the other hand, failed to adduce evidence that an adjustment under Article 2(10)(i) of the basic Regulation is not justified. The claim was therefore rejected. Detailed analysis, due to its confidential nature, was provided to Hailide upon publication of this Regulation.

| (169) | In view of the above, and considering that a transfer of funds occurs between two related entities, the Commission was justified in examining whether the actual value of the mark-up differs from what an unrelated trader would obtain. Based on the nominal profit identified in this case, as explained in recital (153), the Commission did not consider the mark-up to sufficiently reflect a commission that would have been due in an arm’s length transaction. As mentioned in recital (163), the Commission therefore considered that an adjustment should be based on the SG&A of the trader and a nominal profit identified in this case. |
| --- | --- |

(169)

In view of the above, and considering that a transfer of funds occurs between two related entities, the Commission was justified in examining whether the actual value of the mark-up differs from what an unrelated trader would obtain. Based on the nominal profit identified in this case, as explained in recital (153), the Commission did not consider the mark-up to sufficiently reflect a commission that would have been due in an arm’s length transaction. As mentioned in recital (163), the Commission therefore considered that an adjustment should be based on the SG&A of the trader and a nominal profit identified in this case.

| (170) | In its response to the final disclosure, Hailide requested an adjustment to constructed normal value to ensure fair comparison with the export price under Article 2(10) of the basic Regulation. According to Hailide, elements such as freight and insurance that could have been included in the SG&A used in the construction of the normal value should be removed from, as the same were deducted from the export price thereby creating asymmetry between the two. |
| --- | --- |

(170)

In its response to the final disclosure, Hailide requested an adjustment to constructed normal value to ensure fair comparison with the export price under Article 2(10) of the basic Regulation. According to Hailide, elements such as freight and insurance that could have been included in the SG&A used in the construction of the normal value should be removed from, as the same were deducted from the export price thereby creating asymmetry between the two.

| (171) | The Commission noted that Hailide failed to demonstrate that freight and insurance have been included in the SG&A used for the construction of the normal value. It follows that the requested adjustment was neither substantiated nor quantified and thus the request was rejected. |
| --- | --- |

(171)

The Commission noted that Hailide failed to demonstrate that freight and insurance have been included in the SG&A used for the construction of the normal value. It follows that the requested adjustment was neither substantiated nor quantified and thus the request was rejected.

3.6.   Dumping margin

Dumping margin

| (172) | The Commission compared the weighted average normal value of each type of the like product with the weighted average export price of the corresponding type of the product concerned to calculate the dumping margin, in accordance with Article 2(11) and (12) of the basic Regulation. |
| --- | --- |

(172)

The Commission compared the weighted average normal value of each type of the like product with the weighted average export price of the corresponding type of the product concerned to calculate the dumping margin, in accordance with Article 2(11) and (12) of the basic Regulation.

| (173) | In response to the final disclosure, Hailide raised a number of specific claims regarding the export sales via Hailide’s related importer in the Union. These claims related to adjustments for allowances attributable to the related importer, a clerical error in exchange rate used for conversion of CIF amounts, as well as deductible SG&A percentage and were accepted as valid. Moreover, the Commission noted and corrected a clerical error in the exchange rate used for conversion of allowances amount with respect to the sales of the related importer. As a result, Hailide’s dumping margin was recalculated and the revised calculations were subject to an additional disclosure. |
| --- | --- |

(173)

In response to the final disclosure, Hailide raised a number of specific claims regarding the export sales via Hailide’s related importer in the Union. These claims related to adjustments for allowances attributable to the related importer, a clerical error in exchange rate used for conversion of CIF amounts, as well as deductible SG&A percentage and were accepted as valid. Moreover, the Commission noted and corrected a clerical error in the exchange rate used for conversion of allowances amount with respect to the sales of the related importer. As a result, Hailide’s dumping margin was recalculated and the revised calculations were subject to an additional disclosure.

| (174) | The definitive dumping margin thus established, expressed as a percentage of the CIF Union frontier price, duty unpaid, is 6,9 % for Hailide. |
| --- | --- |

(174)

The definitive dumping margin thus established, expressed as a percentage of the CIF Union frontier price, duty unpaid, is 6,9 % for Hailide.

| (175) | The Commission considered that the provisions of Article 7(2) were applicable to set the level of the definitive duty. |
| --- | --- |

(175)

The Commission considered that the provisions of Article 7(2) were applicable to set the level of the definitive duty.

4.   INJURY

INJURY

4.1.   Definition of the Union industry and Union production

Definition of the Union industry and Union production

| (176) | The like product was manufactured by six producers in the Union during the period considered. They constitute the ‘Union industry’ within the meaning of Article 4(1) of the basic Regulation. |
| --- | --- |

(176)

The like product was manufactured by six producers in the Union during the period considered. They constitute the ‘Union industry’ within the meaning of Article 4(1) of the basic Regulation.

| (177) | The total Union production during the investigation period was established at around 117 000 tonnes. A part of the production, 22 322 tonnes, is subject to captive consumption. The Commission established the figure on the basis of all the available information concerning the Union industry, such as figures provided by the Union producers. As indicated in recital (12), three Union producers were selected in the sample representing more than 50 % of the total Union production of the like product. |
| --- | --- |

(177)

The total Union production during the investigation period was established at around 117 000 tonnes. A part of the production, 22 322 tonnes, is subject to captive consumption. The Commission established the figure on the basis of all the available information concerning the Union industry, such as figures provided by the Union producers. As indicated in recital (12), three Union producers were selected in the sample representing more than 50 % of the total Union production of the like product.

4.2.   Union consumption

Union consumption

| (178) | The Commission established the Union consumption on the basis of the sales volume of the Union industry on the Union market, plus the volume of imports of HTYP from all third countries. Since imports of HTYP from China were subject to measures during the period considered, the Commission used the statistics collected pursuant to Article 14(6) (91) of the basic Regulation (‘Article 14(6) database’) to establish the volume and average prices of imports from this country during the period considered, as it contained sufficiently detailed information at the level of the 10-digit TARIC codes and TARIC additional codes per company. |
| --- | --- |

(178)

The Commission established the Union consumption on the basis of the sales volume of the Union industry on the Union market, plus the volume of imports of HTYP from all third countries. Since imports of HTYP from China were subject to measures during the period considered, the Commission used the statistics collected pursuant to Article 14(6) (91) of the basic Regulation (‘Article 14(6) database’) to establish the volume and average prices of imports from this country during the period considered, as it contained sufficiently detailed information at the level of the 10-digit TARIC codes and TARIC additional codes per company.

91

| (179) | Union consumption developed as follows:

  Table 2


  Union consumption (tonnes) | 2018 | 2019 | 2020 | Investigation Period |
| --- | --- | --- | --- | --- | --- |
| Total Union consumption | 244 112 | 228 168 | 208 516 | 253 039 |
| Index | 100 | 93 | 85 | 104 |
| Captive market | 16 046 | 13 911 | 16 563 | 22 322 |
| Index | 100 | 87 | 103 | 139 |
| Free market | 228 065 | 214 256 | 191 953 | 230 717 |
| Index | 100 | 94 | 84 | 101 |
| Source: | Verified data provided by the Union industry and verified questionnaire replies of the sampled Union producers, Eurostat and Article 14(6) database |

(179)

Union consumption developed as follows:

Table 2

Table 2

Union consumption (tonnes)

Union consumption (tonnes)

2018

2019

2020

Investigation Period

Total Union consumption

244 112

228 168

208 516

253 039

Index

Index

100

100

93

93

85

85

104

104

Captive market

16 046

13 911

16 563

22 322

Index

Index

100

100

87

87

103

103

139

139

Free market

228 065

214 256

191 953

230 717

Index

Index

100

100

94

94

84

84

101

101

Source:

Source:

Verified data provided by the Union industry and verified questionnaire replies of the sampled Union producers, Eurostat and Article 14(6) database

| (180) | The Union free market consumption within the period considered first decreased by 6 percentage points from 2018 until 2019, followed by a steep decrease of 10 percentage points due to Covid-19 in 2020. However, consumption then recovered and in the IP was 1 percentage point higher than in 2018. |
| --- | --- |

(180)

The Union free market consumption within the period considered first decreased by 6 percentage points from 2018 until 2019, followed by a steep decrease of 10 percentage points due to Covid-19 in 2020. However, consumption then recovered and in the IP was 1 percentage point higher than in 2018.

4.3.   Imports from Hailide China

Imports from Hailide China

| (181) | The Commission established the volume of imports as well as the market share of the imports on the basis of the Article 14(6) database which provides data per 10-digit TARIC Code and per exporting producer (TARIC additional code). |
| --- | --- |

(181)

The Commission established the volume of imports as well as the market share of the imports on the basis of the Article 14(6) database which provides data per 10-digit TARIC Code and per exporting producer (TARIC additional code).

| (182) | Imports into the Union from the country concerned developed as follows for Hailide:

  Table 3


  Import volume (tonnes) and market share | 2018 | 2019 | 2020 | Investigation Period |
| --- | --- | --- | --- | --- | --- |
| Volume of imports into the Union from Hailide China (tonnes) | [50 000 – 55 000 ] | [51 000 – 56 000 ] | [43 000 – 48 000 ] | [43 000 – 48 000 ] |
| Index | 100 | 102 | 86 | 86 |
| Market share | [20  % – 25  %] | [23  % – 28  %] | [21  % – 26  %] | [18  % – 23  %] |
| Index | 100 | 109 | 102 | 85 |
| Source: | Article 14(6) database. |

(182)

Imports into the Union from the country concerned developed as follows for Hailide:

Table 3

Table 3

Import volume (tonnes) and market share

Import volume (tonnes) and market share

2018

2019

2020

Investigation Period

Volume of imports into the Union from Hailide China (tonnes)

[50 000 – 55 000 ]

[51 000 – 56 000 ]

[43 000 – 48 000 ]

[43 000 – 48 000 ]

Index

Index

100

100

102

102

86

86

86

86

Market share

[20  % – 25  %]

[23  % – 28  %]

[21  % – 26  %]

[18  % – 23  %]

Index

Index

100

100

109

109

102

102

85

85

Source:

Source:

Article 14(6) database.

| (183) | Hailide’s exports from China to the Union decreased by 14 % over the period considered. Also, Hailide’s market share decreased over the period considered. Nevertheless, in the IP Hailide still maintained a high market share of [18 % – 23 %] of the Union market. |
| --- | --- |

(183)

Hailide’s exports from China to the Union decreased by 14 % over the period considered. Also, Hailide’s market share decreased over the period considered. Nevertheless, in the IP Hailide still maintained a high market share of [18 % – 23 %] of the Union market.

4.4.   Prices of the imports from Hailide

Prices of the imports from Hailide

| (184) | The Commission established the prices of imports on the basis of the import statistics of the Article 14(6) database. Price undercutting of the imports was established on the basis of the comparison of the figures in the Article 14(6) database with the verified prices of the sampled Union producers. |
| --- | --- |

(184)

The Commission established the prices of imports on the basis of the import statistics of the Article 14(6) database. Price undercutting of the imports was established on the basis of the comparison of the figures in the Article 14(6) database with the verified prices of the sampled Union producers.

| (185) | The weighted average price of imports into the Union from Hailide developed as follows:

  Table 4


  Import prices (EUR/tonne) | 2018 | 2019 | 2020 | Investigation Period |
| --- | --- | --- | --- | --- | --- |
| Hailide | [1 700 – 1 800 ] | [1 600 – 1 700 ] | [1 300 – 1 400 ] | [1 500 – 1 600 ] |
| Index | 100 | 96 | 77 | 91 |
| Source: | Article 14(6) database. |

(185)

The weighted average price of imports into the Union from Hailide developed as follows:

Table 4

Table 4

Import prices (EUR/tonne)

Import prices (EUR/tonne)

2018

2019

2020

Investigation Period

Hailide

[1 700 – 1 800 ]

[1 600 – 1 700 ]

[1 300 – 1 400 ]

[1 500 – 1 600 ]

Index

Index

100

100

96

96

77

77

91

91

Source:

Source:

Article 14(6) database.

| (186) | The import price of Hailide was volatile, decreasing by 23 % to a price of [1 300 – 1 400] EUR/ton in 2020 and then increasing by 14 percentage points in the IP. Despite the price recovery in the IP to [1 500 – 1 600] EUR/ton, this still shows an overall decrease of 9 % throughout the period considered. The increase in the IP was caused by increased transport costs and the post-Covid-19 recovery resulting in a high demand in the IP. |
| --- | --- |

(186)

The import price of Hailide was volatile, decreasing by 23 % to a price of [1 300 – 1 400] EUR/ton in 2020 and then increasing by 14 percentage points in the IP. Despite the price recovery in the IP to [1 500 – 1 600] EUR/ton, this still shows an overall decrease of 9 % throughout the period considered. The increase in the IP was caused by increased transport costs and the post-Covid-19 recovery resulting in a high demand in the IP.

| (187) | The Commission determined the price undercutting during the IP by comparing:






  (a) | the weighted average sales prices per product type of the three sampled Union producers charged to unrelated customers on the Union market, adjusted to an ex-works level; and |
| --- | --- | --- |

(187)

The Commission determined the price undercutting during the IP by comparing:

(a)

the weighted average sales prices per product type of the three sampled Union producers charged to unrelated customers on the Union market, adjusted to an ex-works level; and

| (b) | the corresponding weighted average prices per product type of the imports from Hailide to the first independent customer on the Union market, established on a Cost, Insurance, Freight (CIF) basis, with appropriate adjustments for customs duties and post-importation costs. |
| --- | --- |

(b)

the corresponding weighted average prices per product type of the imports from Hailide to the first independent customer on the Union market, established on a Cost, Insurance, Freight (CIF) basis, with appropriate adjustments for customs duties and post-importation costs.

| (c) | The price comparison was made on a type-by-type basis for transactions at the same level of trade, duly adjusted where necessary, and after deduction of rebates and discounts. The result of the comparison was expressed as a percentage of the sampled Union producers’ turnover during the investigation period. |
| --- | --- |

(c)

The price comparison was made on a type-by-type basis for transactions at the same level of trade, duly adjusted where necessary, and after deduction of rebates and discounts. The result of the comparison was expressed as a percentage of the sampled Union producers’ turnover during the investigation period.

| (d) | It showed a weighted average undercutting margin of [17 % – 20 %] done by Hailide on the Union market. In addition, as further described in recital (203), the Union industry was unable to raise its prices above the level of its Cost of Production because of the price pressure from Hailide, whose prices remained below the Union industry’s cost of production during the entire period concerned. |
| --- | --- |

(d)

It showed a weighted average undercutting margin of [17 % – 20 %] done by Hailide on the Union market. In addition, as further described in recital (203), the Union industry was unable to raise its prices above the level of its Cost of Production because of the price pressure from Hailide, whose prices remained below the Union industry’s cost of production during the entire period concerned.

4.5.   Economic situation of the Union industry

Economic situation of the Union industry

4.5.1.   
  General remarks

General remarks

| (188) | In accordance with Article 3(5) of the basic Regulation, the assessment of the economic situation of the Union industry included an evaluation of all economic indicators having a bearing on the state of the Union industry during the period considered. |
| --- | --- |

(188)

In accordance with Article 3(5) of the basic Regulation, the assessment of the economic situation of the Union industry included an evaluation of all economic indicators having a bearing on the state of the Union industry during the period considered.

| (189) | As mentioned in recital (12), sampling was used for the assessment of the economic situation of the Union industry. |
| --- | --- |

(189)

As mentioned in recital (12), sampling was used for the assessment of the economic situation of the Union industry.

| (190) | For the injury determination, the Commission distinguished between macroeconomic and microeconomic injury indicators. The Commission evaluated the macroeconomic indicators on the basis of the verified data provided by the Union industry and verified questionnaire replies of the sampled Union producers. The data related to all Union producers. The Commission evaluated the microeconomic indicators on the basis of data contained in the questionnaire replies from the sampled Union producers. The data related to the sampled Union producers. Both sets of data were found to be representative of the economic situation of the Union industry. |
| --- | --- |

(190)

For the injury determination, the Commission distinguished between macroeconomic and microeconomic injury indicators. The Commission evaluated the macroeconomic indicators on the basis of the verified data provided by the Union industry and verified questionnaire replies of the sampled Union producers. The data related to all Union producers. The Commission evaluated the microeconomic indicators on the basis of data contained in the questionnaire replies from the sampled Union producers. The data related to the sampled Union producers. Both sets of data were found to be representative of the economic situation of the Union industry.

| (191) | The macroeconomic indicators are: production, production capacity, capacity utilisation, sales volume, market share, growth, employment, productivity, magnitude of the dumping margin, and recovery from past dumping. |
| --- | --- |

(191)

The macroeconomic indicators are: production, production capacity, capacity utilisation, sales volume, market share, growth, employment, productivity, magnitude of the dumping margin, and recovery from past dumping.

| (192) | The microeconomic indicators are: average unit prices, unit cost, labour costs, inventories, profitability, cash flow, investments, return on investments, and ability to raise capital. |
| --- | --- |

(192)

The microeconomic indicators are: average unit prices, unit cost, labour costs, inventories, profitability, cash flow, investments, return on investments, and ability to raise capital.

4.5.2.   
  Macroeconomic indicators

Macroeconomic indicators

4.5.2.1.   Production, production capacity and capacity utilisation

Production, production capacity and capacity utilisation

| (193) | The total Union production, production capacity and capacity utilisation developed over the period considered as follows:

  Table 5


  Production, production capacity and capacity utilisation | 2018 | 2019 | 2020 | Investigation Period |
| --- | --- | --- | --- | --- | --- |
| Production volume (tonnes) | 104 834 | 100 373 | 90 470 | 116 803 |
| Index | 100 | 96 | 86 | 111 |
| Production capacity (tonnes) | 128 826 | 133 544 | 134 426 | 133 517 |
| Index | 100 | 104 | 104 | 104 |
| Capacity utilisation | 81  % | 75  % | 67  % | 87  % |
| Index | 100 | 92 | 83 | 108 |
| Production volume on the free market (tonnes) | 88 788 | 86 462 | 73 907 | 94 481 |
| Index | 100 | 97 | 83 | 106 |
| Source: | Verified data provided by the Union industry and verified questionnaire replies of the sampled Union producers. |

(193)

The total Union production, production capacity and capacity utilisation developed over the period considered as follows:

Table 5

Table 5

Production, production capacity and capacity utilisation

Production, production capacity and capacity utilisation

2018

2019

2020

Investigation Period

Production volume (tonnes)

104 834

100 373

90 470

116 803

Index

Index

100

100

96

96

86

86

111

111

Production capacity (tonnes)

128 826

133 544

134 426

133 517

Index

Index

100

100

104

104

104

104

104

104

Capacity utilisation

81  %

75  %

67  %

87  %

Index

Index

100

100

92

92

83

83

108

108

Production volume on the free market (tonnes)

88 788

86 462

73 907

94 481

Index

Index

100

100

97

97

83

83

106

106

Source:

Source:

Verified data provided by the Union industry and verified questionnaire replies of the sampled Union producers.

| (194) | The production volume first decreased by 14 % from 2018 to 2020 and then increased by 25 percentage points in the IP showing an overall increase of 11 % over the period considered. The production volume on the free market first decreased by 17 % from 2018 to 2020 and then increased by 23 percentage points in the IP, showing an overall increase of 6 % over the period considered. The capacity utilisation decreased from 2018 to 2020 by 17 %, but increased overall 8 % over the period considered. |
| --- | --- |

(194)

The production volume first decreased by 14 % from 2018 to 2020 and then increased by 25 percentage points in the IP showing an overall increase of 11 % over the period considered. The production volume on the free market first decreased by 17 % from 2018 to 2020 and then increased by 23 percentage points in the IP, showing an overall increase of 6 % over the period considered. The capacity utilisation decreased from 2018 to 2020 by 17 %, but increased overall 8 % over the period considered.

4.5.2.2.   Sales volume and market share

Sales volume and market share

| (195) | The Union industry’s sales volume and market share developed over the period considered as follows:

  Table 6


  Sales volume and market share (tonnes) | 2018 | 2019 | 2020 | Investigation Period |
| --- | --- | --- | --- | --- | --- |
| Sales volume on the Union market (tonnes) | 70 753 | 64 150 | 59 880 | 67 335 |
| Index | 100 | 91 | 85 | 95 |
| Market share | 31  % | 30  % | 31  % | 29  % |
| Source: | Verified data provided by the Union industry and verified questionnaire replies of the sampled Union producers. |

(195)

The Union industry’s sales volume and market share developed over the period considered as follows:

Table 6

Table 6

Sales volume and market share (tonnes)

Sales volume and market share (tonnes)

2018

2019

2020

Investigation Period

Sales volume on the Union market (tonnes)

70 753

64 150

59 880

67 335

Index

Index

100

100

91

91

85

85

95

95

Market share

31  %

30  %

31  %

29  %

Source:

Source:

Verified data provided by the Union industry and verified questionnaire replies of the sampled Union producers.

| (196) | Total sales volume of the Union industry on the Union market decreased by 5 % during the period considered. The Union industry’s market share decreased by 2 percentage points during the period considered. The market share shows a declining trend over the period considered, interrupted by an intervening upward trend in 2020, which can be explained by the Covid-19 pandemic and the container shortage in 2020, which made shippings from East Asian countries more difficult. |
| --- | --- |

(196)

Total sales volume of the Union industry on the Union market decreased by 5 % during the period considered. The Union industry’s market share decreased by 2 percentage points during the period considered. The market share shows a declining trend over the period considered, interrupted by an intervening upward trend in 2020, which can be explained by the Covid-19 pandemic and the container shortage in 2020, which made shippings from East Asian countries more difficult.

4.5.2.3.   Growth

Growth

| (197) | During the period considered, the free market consumption increased by 1 %, the sales volume of the Union industry decreased by 5 %, which translated into a loss in market share of 2 percentage points over the period considered. |
| --- | --- |

(197)

During the period considered, the free market consumption increased by 1 %, the sales volume of the Union industry decreased by 5 %, which translated into a loss in market share of 2 percentage points over the period considered.

4.5.2.4.   Employment and productivity

Employment and productivity

| (198) | Employment and productivity developed over the period considered as follows:

  Table 7


  Employment and productivity | 2018 | 2019 | 2020 | Investigation Period |
| --- | --- | --- | --- | --- | --- |
| Number of employees | 1 024 | 1 014 | 993 | 1 034 |
| Index | 100 | 99 | 97 | 101 |
| Productivity (tonnes/employee) | 102 | 99 | 91 | 113 |
| Index | 100 | 97 | 89 | 110 |
| Source: | Verified data provided by the Union industry and verified questionnaire replies of the sampled Union producers. |

(198)

Employment and productivity developed over the period considered as follows:

Table 7

Table 7

Employment and productivity

Employment and productivity

2018

2019

2020

Investigation Period

Number of employees

1 024

1 014

993

1 034

Index

Index

100

100

99

99

97

97

101

101

Productivity (tonnes/employee)

102

99

91

113

Index

Index

100

100

97

97

89

89

110

110

Source:

Source:

Verified data provided by the Union industry and verified questionnaire replies of the sampled Union producers.

| (199) | Due to the recovery of the demand in the IP, the employment of the Union industry increased by 1 % during the period considered, despite showing a negative trend from 2018 to 2020. Similarly, the productivity also decreased from 2018 to 2020 and turned positive for the period considered only due to the IP. |
| --- | --- |

(199)

Due to the recovery of the demand in the IP, the employment of the Union industry increased by 1 % during the period considered, despite showing a negative trend from 2018 to 2020. Similarly, the productivity also decreased from 2018 to 2020 and turned positive for the period considered only due to the IP.

4.5.2.5.   Magnitude of the dumping margin

Magnitude of the dumping margin

| (200) | Hailide’s dumping margin was above the de minimis level. The impact of the magnitude of the actual margin of dumping on the Union industry was substantial, given the volume and prices of Hailide’s imports from China. As mentioned above, Hailide’s prices undercut the Union industry prices by [17 % – 20 %]. Furthermore, Hailide’s import price as displayed in Table 4 was at least 23 % lower than the average import price from South Korea, at least 12 % lower than the import price from Taiwan and at least 42 % lower than the average import price from other third countries. |
| --- | --- |

(200)

Hailide’s dumping margin was above the de minimis level. The impact of the magnitude of the actual margin of dumping on the Union industry was substantial, given the volume and prices of Hailide’s imports from China. As mentioned above, Hailide’s prices undercut the Union industry prices by [17 % – 20 %]. Furthermore, Hailide’s import price as displayed in Table 4 was at least 23 % lower than the average import price from South Korea, at least 12 % lower than the import price from Taiwan and at least 42 % lower than the average import price from other third countries.

4.5.3.   
  Microeconomic indicators

Microeconomic indicators

4.5.3.1.   Prices and factors affecting prices

Prices and factors affecting prices

| (201) | The weighted average unit sales prices of the sampled Union producers to unrelated customers in the Union developed over the period considered as follows:

  Table 8


  Sales prices and cost of production in the Union (EUR/tonne) | 2018 | 2019 | 2020 | Investigation Period |
| --- | --- | --- | --- | --- | --- |
| Average unit sales price in the Union (EUR/tonne) | 2 042 | 1 974 | 1 713 | 1 957 |
| Index | 100 | 97 | 84 | 96 |
| Unit cost of production (EUR/tonne) | 2 371 | 2 357 | 2 039 | 2 246 |
| Index | 100 | 99 | 86 | 95 |
| Source: | Verified questionnaire replies of the sampled Union producers. |

(201)

The weighted average unit sales prices of the sampled Union producers to unrelated customers in the Union developed over the period considered as follows:

Table 8

Table 8

Sales prices and cost of production in the Union (EUR/tonne)

Sales prices and cost of production in the Union (EUR/tonne)

2018

2019

2020

Investigation Period

Average unit sales price in the Union (EUR/tonne)

2 042

1 974

1 713

1 957

Index

Index

100

100

97

97

84

84

96

96

Unit cost of production (EUR/tonne)

2 371

2 357

2 039

2 246

Index

Index

100

100

99

99

86

86

95

95

Source:

Source:

Verified questionnaire replies of the sampled Union producers.

| (202) | The Union industry’s average unit sales price to unrelated customers in the Union decreased from 2018 to 2020 by 16 % and only partially recovered 12 percentage points in the IP reaching 1 957 EUR/tonne. The decline of the sales price is mostly linked to the pricing pressure from Chinese imports. In addition, in 2019 and 2020, the global economic slowdown has been affecting the prices of raw materials and, as a consequence, of industrial polyester yarn. |
| --- | --- |

(202)

The Union industry’s average unit sales price to unrelated customers in the Union decreased from 2018 to 2020 by 16 % and only partially recovered 12 percentage points in the IP reaching 1 957 EUR/tonne. The decline of the sales price is mostly linked to the pricing pressure from Chinese imports. In addition, in 2019 and 2020, the global economic slowdown has been affecting the prices of raw materials and, as a consequence, of industrial polyester yarn.

| (203) | The cost of production developed in a similar trend, partially due to decreasing raw material prices during the global economic slowdown in 2019 and 2020 and partially due to rationalisations like reducing staff during these years. In 2019 and 2020 the Unit cost decreased by 1 percentage point and 13 percentage points respectively. However, the prices decreased at a higher rate of 16 percentage points over these two years. This shows that the Union industry could not benefit from these cost decreases. In the IP, unit costs increased by 9 percentage points whereas the sales price increased by 12 percentage points. However, compared to the beginning of the period considered the prices decreased almost at the same percentage as the unit costs, showing that the prices were suppressed. The Union industry was not able to benefit from the cost decrease, it could not raise prices, and could not even maintain prices at their original level. |
| --- | --- |

(203)

The cost of production developed in a similar trend, partially due to decreasing raw material prices during the global economic slowdown in 2019 and 2020 and partially due to rationalisations like reducing staff during these years. In 2019 and 2020 the Unit cost decreased by 1 percentage point and 13 percentage points respectively. However, the prices decreased at a higher rate of 16 percentage points over these two years. This shows that the Union industry could not benefit from these cost decreases. In the IP, unit costs increased by 9 percentage points whereas the sales price increased by 12 percentage points. However, compared to the beginning of the period considered the prices decreased almost at the same percentage as the unit costs, showing that the prices were suppressed. The Union industry was not able to benefit from the cost decrease, it could not raise prices, and could not even maintain prices at their original level.

4.5.3.2.   Labour costs

Labour costs

| (204) | The average labour costs of the sampled Union producers developed over the period considered as follows:

  Table 9


  Average labour costs per employee | 2018 | 2019 | 2020 | Investigation Period |
| --- | --- | --- | --- | --- | --- |
| Average labour costs per employee (EUR) | 48 153 | 49 499 | 46 821 | 51 680 |
| Index | 100 | 103 | 97 | 107 |
| Source: | Verified questionnaire replies of the sampled Union producers. |

(204)

The average labour costs of the sampled Union producers developed over the period considered as follows:

Table 9

Table 9

Average labour costs per employee

Average labour costs per employee

2018

2019

2020

Investigation Period

Average labour costs per employee (EUR)

48 153

49 499

46 821

51 680

Index

Index

100

100

103

103

97

97

107

107

Source:

Source:

Verified questionnaire replies of the sampled Union producers.

| (205) | The average labour costs per employee increased by 7 % over the period considered. This trend was only interrupted in 2020, partially due to rationalisations and partially due to Covid-19 pandemic specific measures like short-time work. |
| --- | --- |

(205)

The average labour costs per employee increased by 7 % over the period considered. This trend was only interrupted in 2020, partially due to rationalisations and partially due to Covid-19 pandemic specific measures like short-time work.

4.5.3.3.   Inventories

Inventories

| (206) | Stock levels of the sampled Union producers developed over the period considered as follows:

  Table 10


  Inventories | 2018 | 2019 | 2020 | Investigation Period |
| --- | --- | --- | --- | --- | --- |
| Closing stocks (tonnes) | 7 721 | 8 052 | 6 510 | 6 991 |
| Index | 100 | 104 | 84 | 91 |
| Closing stocks as a percentage of production | 14 | 16 | 13 | 12 |
| Source: | Verified questionnaire replies of the sampled Union producers. |

(206)

Stock levels of the sampled Union producers developed over the period considered as follows:

Table 10

Table 10

Inventories

Inventories

2018

2019

2020

Investigation Period

Closing stocks (tonnes)

7 721

8 052

6 510

6 991

Index

Index

100

100

104

104

84

84

91

91

Closing stocks as a percentage of production

14

16

13

12

Source:

Source:

Verified questionnaire replies of the sampled Union producers.

| (207) | The level of closing stocks of the sampled Union producers decreased by 9 % over the period considered. In the IP, the level of stocks represented around 12 % of their production. |
| --- | --- |

(207)

The level of closing stocks of the sampled Union producers decreased by 9 % over the period considered. In the IP, the level of stocks represented around 12 % of their production.

4.5.3.4.   Profitability, cash flow, investments, return on investments and ability to raise capital

Profitability, cash flow, investments, return on investments and ability to raise capital

| (208) | Profitability, cash flow, investments and return on investments of the sampled Union producers developed over the period considered as follows:

  Table 11


  Profitability, cash flow, investments and return on investments | 2018 | 2019 | 2020 | Investigation Period |
| --- | --- | --- | --- | --- | --- |
| Profitability of sales in the Union to unrelated customers (% of sales turnover) | -10 | -15 | -17 | -8 |
| Index | - 100 | - 153 | - 174 | -86 |
| Cash flow (EUR) | -8 902 195 | -4 318 803 | -2 067 021 | -5 374 726 |
| Index | - 100 | -49 | -23 | -60 |
| Investments (EUR) | 12 926 148 | 7 405 795 | 2 087 298 | 4 495 812 |
| Index | 100 | 57 | 16 | 35 |
| Return on investments | -4  % | -6  % | -6  % | -4  % |
| Index | - 100 | - 158 | - 154 | - 101 |
| Source: | Verified questionnaire replies of the sampled Union producers. |

(208)

Profitability, cash flow, investments and return on investments of the sampled Union producers developed over the period considered as follows:

Table 11

Table 11

Profitability, cash flow, investments and return on investments

Profitability, cash flow, investments and return on investments

2018

2019

2020

Investigation Period

Profitability of sales in the Union to unrelated customers (% of sales turnover)

-10

-15

-17

-8

Index

Index

- 100

- 100

- 153

- 153

- 174

- 174

-86

-86

Cash flow (EUR)

-8 902 195

-4 318 803

-2 067 021

-5 374 726

Index

Index

- 100

- 100

-49

-49

-23

-23

-60

-60

Investments (EUR)

12 926 148

7 405 795

2 087 298

4 495 812

Index

Index

100

100

57

57

16

16

35

35

Return on investments

-4  %

-6  %

-6  %

-4  %

Index

Index

- 100

- 100

- 158

- 158

- 154

- 154

- 101

- 101

Source:

Source:

Verified questionnaire replies of the sampled Union producers.

| (209) | The Commission established the profitability of the sampled Union producers by expressing the pre-tax net profit of the sales of the like product to unrelated customers in the Union as a percentage of the turnover of those sales. The profitability of the Union industry was negative throughout the period considered. It started at -10 % in 2018 and extended the loss until 2020 at -17 %. In the IP, it could slightly improve to -8 % due to high demand. |
| --- | --- |

(209)

The Commission established the profitability of the sampled Union producers by expressing the pre-tax net profit of the sales of the like product to unrelated customers in the Union as a percentage of the turnover of those sales. The profitability of the Union industry was negative throughout the period considered. It started at -10 % in 2018 and extended the loss until 2020 at -17 %. In the IP, it could slightly improve to -8 % due to high demand.

| (210) | The net cash flow is the ability of the Union producers to self-finance their activities. The trend in net cash flow was negative throughout the period considered. While it gradually improved from 2018 to 2020, it dropped again in the IP. While it showed a 40 % improvement over the period considered it continued to be negative. Consequently, the improvement in cash flow does not indicate a stabilizing of the financial situation of the Union industry as it still remains negative. |
| --- | --- |

(210)

The net cash flow is the ability of the Union producers to self-finance their activities. The trend in net cash flow was negative throughout the period considered. While it gradually improved from 2018 to 2020, it dropped again in the IP. While it showed a 40 % improvement over the period considered it continued to be negative. Consequently, the improvement in cash flow does not indicate a stabilizing of the financial situation of the Union industry as it still remains negative.

| (211) | Investments decreased by 65 % over the period considered. Investments related to compliance improvements in relation to health, safety and environmental requirements, increase in the capacity and effectiveness of the production plants. While in 2018, investments in a capacity increase were possible, in the following years this was no longer possible. |
| --- | --- |

(211)

Investments decreased by 65 % over the period considered. Investments related to compliance improvements in relation to health, safety and environmental requirements, increase in the capacity and effectiveness of the production plants. While in 2018, investments in a capacity increase were possible, in the following years this was no longer possible.

| (212) | The return on investments is the profit in percentage of the net book value of investments. The return on investment from the production and sale of the like product followed similar trend as the profitability. It dropped from 2018 to 2020 and then in the IP returned to a level closer to 2018. It stayed negative throughout the entire period considered. Consequently, the return on investment indicates a negative financial situation of the Union industry over the entire period considered. |
| --- | --- |

(212)

The return on investments is the profit in percentage of the net book value of investments. The return on investment from the production and sale of the like product followed similar trend as the profitability. It dropped from 2018 to 2020 and then in the IP returned to a level closer to 2018. It stayed negative throughout the entire period considered. Consequently, the return on investment indicates a negative financial situation of the Union industry over the entire period considered.

4.5.4.   
  Conclusion on injury

Conclusion on injury

| (213) | The investigation showed that the overall situation of the Union industry on a macro level did not improve over the period considered as would be expected in a situation of increasing demand in the IP. Despite being protected as regards other exporters, exports of Hailide at low prices still were made under conditions which did not allow the Union industry to recover from injurious dumping. The volume of imports from Hailide were substantial throughout the period considered ([43 000 – 56 000]) resulting in an equally substantial market share ([18 %-28 %]), making Hailide the single biggest exporting producer on the Union market. Prices of Hailide were consistently below costs of production of the Union industry throughout the period considered and were found to undercut the Union industry’s prices by [17 % – 20 %] in the IP. Faced with such volume and price pressure, the Union industry’s prices were consistently below its cost of production making losses throughout the entire period considered. Even the fact of an increased demand in the IP did not lead to higher sales on the EU market than in the beginning of the period considered. Despite investments into a capacity increase, the Union was not able to even maintain its market share. |
| --- | --- |

(213)

The investigation showed that the overall situation of the Union industry on a macro level did not improve over the period considered as would be expected in a situation of increasing demand in the IP. Despite being protected as regards other exporters, exports of Hailide at low prices still were made under conditions which did not allow the Union industry to recover from injurious dumping. The volume of imports from Hailide were substantial throughout the period considered ([43 000 – 56 000]) resulting in an equally substantial market share ([18 %-28 %]), making Hailide the single biggest exporting producer on the Union market. Prices of Hailide were consistently below costs of production of the Union industry throughout the period considered and were found to undercut the Union industry’s prices by [17 % – 20 %] in the IP. Faced with such volume and price pressure, the Union industry’s prices were consistently below its cost of production making losses throughout the entire period considered. Even the fact of an increased demand in the IP did not lead to higher sales on the EU market than in the beginning of the period considered. Despite investments into a capacity increase, the Union was not able to even maintain its market share.

| (214) | The investigation has also shown that the situation of the industry on a micro level was not reaching a sustainable level and the industry incurred losses in the IP despite the fact that in the IP the demand had recovered from the economic downfall of the previous two years. The economic situation of the Union industry was thus injurious. |
| --- | --- |

(214)

The investigation has also shown that the situation of the industry on a micro level was not reaching a sustainable level and the industry incurred losses in the IP despite the fact that in the IP the demand had recovered from the economic downfall of the previous two years. The economic situation of the Union industry was thus injurious.

| (215) | On the basis of the above, the Commission concluded that the Union industry was suffering material injury within the meaning of Article 3(5) of the basic Regulation during the investigation period. |
| --- | --- |

(215)

On the basis of the above, the Commission concluded that the Union industry was suffering material injury within the meaning of Article 3(5) of the basic Regulation during the investigation period.

5.   CAUSATION

CAUSATION

| (216) | In accordance with Article 3(6) of the basic Regulation, the Commission examined whether the dumped imports from Hailide caused material injury to the Union industry. In accordance with Article 3(7) of the basic Regulation, the Commission also examined whether other known factors could at the same time have injured the Union industry. The Commission ensured that any possible injury caused by factors other than the dumped imports from Hailide was not attributed to the dumped imports. |
| --- | --- |

(216)

In accordance with Article 3(6) of the basic Regulation, the Commission examined whether the dumped imports from Hailide caused material injury to the Union industry. In accordance with Article 3(7) of the basic Regulation, the Commission also examined whether other known factors could at the same time have injured the Union industry. The Commission ensured that any possible injury caused by factors other than the dumped imports from Hailide was not attributed to the dumped imports.

5.1.   Effects of the dumped imports

Effects of the dumped imports

| (217) | During the entire period considered, Hailide’s exports represented a substantial share of the imports to the EU. Even though, Hailide’s market share decreased during the period considered by 3 percentage points, Hailide’s exports during the IP still represented [18 % – 23 %] of the Union market share. The price level of Hailide’s exports decreased by 9 % over the period considered: during the IP at [1 500 – 1 600] EUR/tonne it undercut the Union industries’ price by at least 17 %. As displayed in Table 8, the Union producers were able to decrease the unit cost of production by 5 % over the period considered. However, due to the pressure from Hailide’s low prices they were not able to increase their pricing level or even to maintain it to improve their profitability. Hailide thereby depressed the price level for the Union industry, contributing to a situation of continued losses over the period considered for the Union industry. There was a clear coincidence in time between the price pressure of Hailide’s imports representing an important market share of [18 % -23 %] and the injury of the Union industry. Therefore, due to the significant volume and price pressure exercised by Hailide’s exports there was a genuine and substantial relationship of cause and effect between the imports of HTYP from Hailide and the injury suffered by the Union industry. |
| --- | --- |

(217)

During the entire period considered, Hailide’s exports represented a substantial share of the imports to the EU. Even though, Hailide’s market share decreased during the period considered by 3 percentage points, Hailide’s exports during the IP still represented [18 % – 23 %] of the Union market share. The price level of Hailide’s exports decreased by 9 % over the period considered: during the IP at [1 500 – 1 600] EUR/tonne it undercut the Union industries’ price by at least 17 %. As displayed in Table 8, the Union producers were able to decrease the unit cost of production by 5 % over the period considered. However, due to the pressure from Hailide’s low prices they were not able to increase their pricing level or even to maintain it to improve their profitability. Hailide thereby depressed the price level for the Union industry, contributing to a situation of continued losses over the period considered for the Union industry. There was a clear coincidence in time between the price pressure of Hailide’s imports representing an important market share of [18 % -23 %] and the injury of the Union industry. Therefore, due to the significant volume and price pressure exercised by Hailide’s exports there was a genuine and substantial relationship of cause and effect between the imports of HTYP from Hailide and the injury suffered by the Union industry.

5.2.   Effects of other factors

Effects of other factors

5.2.1.   
  Imports from Hangzhou Huachun Chemical Fiber

Imports from Hangzhou Huachun Chemical Fiber

| (218) | Hangzhou Huachun Chemical Fiber ceased to exist in 2021. Its exports have decreased by 99 % during the period considered and were below 1 % of the Union market share in the IP. Furthermore, the export price was significantly above of the Union industry price. Therefore, these exports did not contribute to the injury. |
| --- | --- |

(218)

Hangzhou Huachun Chemical Fiber ceased to exist in 2021. Its exports have decreased by 99 % during the period considered and were below 1 % of the Union market share in the IP. Furthermore, the export price was significantly above of the Union industry price. Therefore, these exports did not contribute to the injury.

5.2.2.   
  Imports from the other exporting producers subject to duties

Imports from the other exporting producers subject to duties

| (219) | The imports from the other exporting producers subject to duties developed as follows:

  Table 12


  Import volume (tonnes) and market share | 2018 | 2019 | 2020 | Investigation Period |
| --- | --- | --- | --- | --- | --- |
| Volume of imports from exporters currently subject to duties (tonnes) | [58 000 - 63 000 ] | [59 000 – 64 000 ] | [58 000 – 63 000 ] | [69 000 – 74 000 ] |
| Index | 100 | 101 | 99 | 117 |
| Market share | [25  % - 30  %] | [27  % – 32  %] | [30  % – 35  %] | [29  % – 34  %] |
| Index | 100 | 107 | 118 | 115 |
| Source: | Article 14(6) database. |

(219)

The imports from the other exporting producers subject to duties developed as follows:

Table 12

Table 12

Import volume (tonnes) and market share

Import volume (tonnes) and market share

2018

2019

2020

Investigation Period

Volume of imports from exporters currently subject to duties (tonnes)

[58 000 - 63 000 ]

[59 000 – 64 000 ]

[58 000 – 63 000 ]

[69 000 – 74 000 ]

Index

Index

100

100

101

101

99

99

117

117

Market share

[25  % - 30  %]

[27  % – 32  %]

[30  % – 35  %]

[29  % – 34  %]

Index

Index

100

100

107

107

118

118

115

115

Source:

Source:

Article 14(6) database.

| (220) | Their import prices developed as follows:

  Table 13


  Import prices without duties (EUR/tonne) | 2018 | 2019 | 2020 | Investigation Period |
| --- | --- | --- | --- | --- | --- |
| China (exporters currently subject to duties) | 1 655 | 1 531 | 1 195 | 1 440 |
| Index | 100 | 92 | 72 | 87 |

(220)

Their import prices developed as follows:

Table 13

Table 13

Import prices without duties (EUR/tonne)

Import prices without duties (EUR/tonne)

2018

2019

2020

Investigation Period

China (exporters currently subject to duties)

1 655

1 531

1 195

1 440

Index

Index

100

100

92

92

72

72

87

87

| (221) | By increasing their export volume to the European Union during the period considered by 17 % at prices below the Union industry’s prices, the producers subject to current duties have contributed to the injury of the Union Industry. The exporters currently subject to duties sold at 1 440 EUR/tonne in the investigation period, and showed an overall price decrease of 13 % throughout the period considered. These exporters were able to further extend their market share over the period concerned by 4 percentage points. The Commission therefore concluded that these exporters contributed to the injurious situation of the Union industry. |
| --- | --- |

(221)

By increasing their export volume to the European Union during the period considered by 17 % at prices below the Union industry’s prices, the producers subject to current duties have contributed to the injury of the Union Industry. The exporters currently subject to duties sold at 1 440 EUR/tonne in the investigation period, and showed an overall price decrease of 13 % throughout the period considered. These exporters were able to further extend their market share over the period concerned by 4 percentage points. The Commission therefore concluded that these exporters contributed to the injurious situation of the Union industry.

| (222) | However, these imports did not attenuate the link found between the dumped imports from Hailide and the material injury suffered by the Union industry such that this link can no longer be characterized as a genuine and substantial relationship of cause and effect. Hailide’s exports represented a market share of [18 % – 23 %] on the Union market during the IP, and its prices followed closely the prices of the other Chinese exporting producers, with anti-dumping duties added. This high market share, (which represents more than two thirds of the market share of the Union industry and as much as the market share of the total of all third countries excluding China) coupled with low prices has such an important weight on the market, that it exercised a significant independent price pressure on the Union industry. |
| --- | --- |

(222)

However, these imports did not attenuate the link found between the dumped imports from Hailide and the material injury suffered by the Union industry such that this link can no longer be characterized as a genuine and substantial relationship of cause and effect. Hailide’s exports represented a market share of [18 % – 23 %] on the Union market during the IP, and its prices followed closely the prices of the other Chinese exporting producers, with anti-dumping duties added. This high market share, (which represents more than two thirds of the market share of the Union industry and as much as the market share of the total of all third countries excluding China) coupled with low prices has such an important weight on the market, that it exercised a significant independent price pressure on the Union industry.

| (223) | Accordingly, the effects of exports from other producers than Hailide, even if they contributed to the injury, did not materially diminish the relative importance of the Hailide’s dumped imports in bringing about the injury. |
| --- | --- |

(223)

Accordingly, the effects of exports from other producers than Hailide, even if they contributed to the injury, did not materially diminish the relative importance of the Hailide’s dumped imports in bringing about the injury.

5.2.3.   
  Imports from third countries

Imports from third countries

| (224) | The imports into the Union of HTYP from third countries other than China were mainly from South Korea, Vietnam and Taiwan. |
| --- | --- |

(224)

The imports into the Union of HTYP from third countries other than China were mainly from South Korea, Vietnam and Taiwan.

| (225) | The (aggregated) volume of imports into the Union as well as the market share and price trends for imports of HTYP from other third countries developed as follows:

  Table 14


  Imports from third countries











  Country | | 2018 | 2019 | 2020 | Investigation Period |
| --- | --- | --- | --- | --- | --- | --- |
| South Korea | Volume (tonnes) | 15 150 | 13 025 | 9 259 | 15 167 |
| | Index | 100 | 86 | 61 | 100 |
| | Market share | 7  % | 6  % | 5  % | 7  % |
| | Average price (EUR/tonne) | 2 024 | 2 051 | 1 803 | 2 077 |
| | Index | 100 | 101 | 89 | 103 |
| Vietnam | Volume (tonnes) | 500 | 129 | 776 | 12 231 |
| | Index | 100 | 26 | 155 | 2 444 |
| | Market share | 0  % | 0  % | 0  % | 5  % |
| | Average price (EUR/tonne) | 2 340 | 4 136 | 2 276 | 1 537 |
| | Index | 100 | 177 | 97 | 66 |
| Taiwan | Volume (tonnes) | 6 776 | 4 485 | 3 795 | 7 375 |
| | Index | 100 | 66 | 56 | 109 |
| | Market share | 3  % | 2  % | 2  % | 3  % |
| | Average price (EUR/tonne) | 1 874 | 1 858 | 1 636 | 1 816 |
| | Index | 100 | 99 | 87 | 97 |
| Other third countries | Volume (tonnes) | 19 759 | 15 261 | 11 917 | 11 364 |
| | Index | 100 | 77 | 60 | 58 |
| | Market share | 9  % | 7  % | 6  % | 5  % |
| | Average price (EUR/tonne) | 2 586 | 2 780 | 2 683 | 2 740 |
| | Index | 100 | 108 | 104 | 106 |
| Total of all third countries except the country concerned | Volume (tonnes) | 42 185 | 32 900 | 25 747 | 46 137 |
| | Index | 100 | 78 | 61 | 109 |
| | Market share | 18  % | 15  % | 13  % | 20  % |
| | Average price (EUR/tonne) | 2 267 | 2 371 | 2 200 | 2 055 |
| | Index | 100 | 105 | 97 | 91 |
| Source: | Eurostat. |

(225)

The (aggregated) volume of imports into the Union as well as the market share and price trends for imports of HTYP from other third countries developed as follows:

Table 14

Table 14

Imports from third countries

Imports from third countries

Country

2018

2019

2020

Investigation Period

South Korea

Volume (tonnes)

15 150

13 025

9 259

15 167

Index

Index

100

100

86

86

61

61

100

100

Market share

7  %

6  %

5  %

7  %

Average price (EUR/tonne)

2 024

2 051

1 803

2 077

Index

Index

100

100

101

101

89

89

103

103

Vietnam

Volume (tonnes)

500

129

776

12 231

Index

Index

100

100

26

26

155

155

2 444

2 444

Market share

0  %

0  %

0  %

5  %

Average price (EUR/tonne)

2 340

4 136

2 276

1 537

Index

Index

100

100

177

177

97

97

66

66

Taiwan

Volume (tonnes)

6 776

4 485

3 795

7 375

Index

Index

100

100

66

66

56

56

109

109

Market share

3  %

2  %

2  %

3  %

Average price (EUR/tonne)

1 874

1 858

1 636

1 816

Index

Index

100

100

99

99

87

87

97

97

Other third countries

Volume (tonnes)

19 759

15 261

11 917

11 364

Index

Index

100

100

77

77

60

60

58

58

Market share

9  %

7  %

6  %

5  %

Average price (EUR/tonne)

2 586

2 780

2 683

2 740

Index

100

108

104

106

Total of all third countries except the country concerned

Volume (tonnes)

42 185

32 900

25 747

46 137

Index

Index

100

100

78

78

61

61

109

109

Market share

18  %

15  %

13  %

20  %

Average price (EUR/tonne)

2 267

2 371

2 200

2 055

Index

Index

100

100

105

105

97

97

91

91

Source:

Source:

Eurostat.

| (226) | In the IP, 46 137 tonnes of HTYP were imported from third countries excluding China – this volume represents 20 % of the Union market. In total, their market share decreased from 2018 to 2020 from 18 % to 13 % and then increased to 20 % in the IP. This follows the trend of EU consumption, but in a more pronounced way. The average import price from third countries excluding China increased in 2019 by 5 %, then decreased 8 percentage points in 2020 and further decreased 6 percentage points in the IP. These imports mainly stem from South Korea (7 % of the Union Market), Vietnam (5 % of the Union market) and Taiwan (3 % of the Union market). Due to the fact that all these countries are located in East Asia, they were affected by the shipping container shortage and the resulting high shipping costs, which explains that in 2020 the market share of these third countries decreased. |
| --- | --- |

(226)

In the IP, 46 137 tonnes of HTYP were imported from third countries excluding China – this volume represents 20 % of the Union market. In total, their market share decreased from 2018 to 2020 from 18 % to 13 % and then increased to 20 % in the IP. This follows the trend of EU consumption, but in a more pronounced way. The average import price from third countries excluding China increased in 2019 by 5 %, then decreased 8 percentage points in 2020 and further decreased 6 percentage points in the IP. These imports mainly stem from South Korea (7 % of the Union Market), Vietnam (5 % of the Union market) and Taiwan (3 % of the Union market). Due to the fact that all these countries are located in East Asia, they were affected by the shipping container shortage and the resulting high shipping costs, which explains that in 2020 the market share of these third countries decreased.

| (227) | Imports from all third countries together have increased their market share on the Union Market by 2 percentage points. However, the average price of all third country imports in the IP, but also in all previous years of the period considered was substantially above the average EU sales price. Therefore, all third countries together have not contributed to the injury of the Union Industry. The Commission therefore analysed if imports from a specific third country have contributed to the injury of the Union industry. |
| --- | --- |

(227)

Imports from all third countries together have increased their market share on the Union Market by 2 percentage points. However, the average price of all third country imports in the IP, but also in all previous years of the period considered was substantially above the average EU sales price. Therefore, all third countries together have not contributed to the injury of the Union Industry. The Commission therefore analysed if imports from a specific third country have contributed to the injury of the Union industry.

| (228) | Imports form South Korea followed the trend of the EU consumption in a more accentuated way, decreasing from 2018 to 2020 and in the IP recovering closely above the level of 2018. The market share gradually decreased from 2018 to 2020 from 7 % to 5 % and then recovered to 7 % in the IP. The price level of South Korean imports gradually increased over the period concerned, with the exception of 2020, which shows a price decrease that can be linked to the low demand in that year. |
| --- | --- |

(228)

Imports form South Korea followed the trend of the EU consumption in a more accentuated way, decreasing from 2018 to 2020 and in the IP recovering closely above the level of 2018. The market share gradually decreased from 2018 to 2020 from 7 % to 5 % and then recovered to 7 % in the IP. The price level of South Korean imports gradually increased over the period concerned, with the exception of 2020, which shows a price decrease that can be linked to the low demand in that year.

| (229) | The price level of imports from South Korea during the IP as well as in the two preceding years was higher than the Union industry’s sales price. Due to the higher price level, the Commission concluded that imports from South Korea have not contributed to the injury. |
| --- | --- |

(229)

The price level of imports from South Korea during the IP as well as in the two preceding years was higher than the Union industry’s sales price. Due to the higher price level, the Commission concluded that imports from South Korea have not contributed to the injury.

| (230) | Imports from Vietnam where at a very low level from 2018 until 2020 representing a market share clearly below 1 % in that period, they increased in the IP to a quantity representing 5 % of the Union market share. This coincided with a price decrease from levels above the Union Industry’s average sales price to a price of 1 537 EUR/tonne in the IP, which is not only substantially lower than the Union Industry’s sales price, but also close to the price of Hailide’s exports from China of [1 500 – 1 600] EUR/tonne. |
| --- | --- |

(230)

Imports from Vietnam where at a very low level from 2018 until 2020 representing a market share clearly below 1 % in that period, they increased in the IP to a quantity representing 5 % of the Union market share. This coincided with a price decrease from levels above the Union Industry’s average sales price to a price of 1 537 EUR/tonne in the IP, which is not only substantially lower than the Union Industry’s sales price, but also close to the price of Hailide’s exports from China of [1 500 – 1 600] EUR/tonne.

| (231) | However, Hailide’s exports to the EU in the IP were substantially higher. They amounted to [43 000 – 48 000] tonnes, whereas imports from Vietnam only amounted to 12 231 tonnes, thereby only representing a fraction of Hailide’s exports to the EU. |
| --- | --- |

(231)

However, Hailide’s exports to the EU in the IP were substantially higher. They amounted to [43 000 – 48 000] tonnes, whereas imports from Vietnam only amounted to 12 231 tonnes, thereby only representing a fraction of Hailide’s exports to the EU.

| (232) | Therefore, the Commission concluded that while imports from Vietnam may have contributed to the injury of the Union industry, they do not attenuate the causal link as the volume of imports from Vietnam represent only a small fraction of Hailide’s exports to the Union and do not have a comparable weight to put pressure on Union industry. |
| --- | --- |

(232)

Therefore, the Commission concluded that while imports from Vietnam may have contributed to the injury of the Union industry, they do not attenuate the causal link as the volume of imports from Vietnam represent only a small fraction of Hailide’s exports to the Union and do not have a comparable weight to put pressure on Union industry.

| (233) | Imports from Taiwan represented a market share of 3 % in the beginning of the period considered as well as in the IP. While the import price of 1 816 EUR/tonne in the IP was slightly lower than the Union Industry’s sales price, it was substantially higher than the price of Hailide’s exports from China of [1 400-1 600] EUR/tonne. |
| --- | --- |

(233)

Imports from Taiwan represented a market share of 3 % in the beginning of the period considered as well as in the IP. While the import price of 1 816 EUR/tonne in the IP was slightly lower than the Union Industry’s sales price, it was substantially higher than the price of Hailide’s exports from China of [1 400-1 600] EUR/tonne.

| (234) | Therefore, the Commission concluded that while imports from Taiwan may have contributed to the injury of the Union Industry, they do not attenuate the causal link as the volume of imports from Taiwan represent only a fraction of Hailide’s imports from China, their price was substantially above Hailide’s sales price for imports from China and do not have a comparable weight to put pressure on Union industry. |
| --- | --- |

(234)

Therefore, the Commission concluded that while imports from Taiwan may have contributed to the injury of the Union Industry, they do not attenuate the causal link as the volume of imports from Taiwan represent only a fraction of Hailide’s imports from China, their price was substantially above Hailide’s sales price for imports from China and do not have a comparable weight to put pressure on Union industry.

| (235) | Imports from Taiwan and Vietnam, when considered together with the imports from the Chinese exporters currently subject to duties, did not attenuate the link found between the dumped imports from Hailide and the injury suffered by the Union industry such that this link cannot be characterized as a genuine and substantial relationship of cause and effect. Hailide’s exports represented a market share of [18 % – 23 %] on the Union market during the IP and were sold, on average, substantially below the costs of production of the Union industry. Considering this magnitude and the resulting price pressure imports from Taiwan, Vietnam and other Chinese exporting producers did not materially diminish the relative importance of the dumped imports from Hailide in bringing about the injury. |
| --- | --- |

(235)

Imports from Taiwan and Vietnam, when considered together with the imports from the Chinese exporters currently subject to duties, did not attenuate the link found between the dumped imports from Hailide and the injury suffered by the Union industry such that this link cannot be characterized as a genuine and substantial relationship of cause and effect. Hailide’s exports represented a market share of [18 % – 23 %] on the Union market during the IP and were sold, on average, substantially below the costs of production of the Union industry. Considering this magnitude and the resulting price pressure imports from Taiwan, Vietnam and other Chinese exporting producers did not materially diminish the relative importance of the dumped imports from Hailide in bringing about the injury.

5.2.4.   
  Export performance of the Union industry

Export performance of the Union industry

| (236) | The volume of exports of the sampled Union producers developed over the period considered as follows:

  Table 15


  Export performance of the sampled Union producers | 2018 | 2019 | 2020 | Review Investigation Period |
| --- | --- | --- | --- | --- | --- |
| Export volume (tonnes) | 21 674 | 19 603 | 18 729 | 21 299 |
| Index | 100 | 90 | 86 | 98 |
| Average price (EUR/tonnes) | 2 208 | 2 161 | 1 767 | 2 272 |
| Index | 100 | 98 | 80 | 103 |
| Source: | Verified data provided by the Union industry and verified questionnaire replies of the sampled Union producers. |

(236)

The volume of exports of the sampled Union producers developed over the period considered as follows:

Table 15

Table 15

Export performance of the sampled Union producers

Export performance of the sampled Union producers

2018

2019

2020

Review Investigation Period

Export volume (tonnes)

21 674

19 603

18 729

21 299

Index

Index

100

100

90

90

86

86

98

98

Average price (EUR/tonnes)

2 208

2 161

1 767

2 272

Index

Index

100

100

98

98

80

80

103

103

Source:

Source:

Verified data provided by the Union industry and verified questionnaire replies of the sampled Union producers.

| (237) | While export volumes over the period considered followed a similar trend than the sales on the Union market, in the IP, the volumes were only 2 % below the 2018 figures and recovered stronger than sales on the Union market, which were still 5 % below the 2018 volumes. |
| --- | --- |

(237)

While export volumes over the period considered followed a similar trend than the sales on the Union market, in the IP, the volumes were only 2 % below the 2018 figures and recovered stronger than sales on the Union market, which were still 5 % below the 2018 volumes.

| (238) | The average price for exports in every year was clearly above the sales price on the EU market, in the IP it was more than 10 % higher. The average price for exports followed a trend similar to the prices on the EU market. However, while in 2020 the export price fell stronger, in the IP it recovered quicker than the prices on the EU market, reaching a level 3 % higher than the 2018 average price, whereas the sales price on the EU market in the IP was still 4 % below the 2018 price. |
| --- | --- |

(238)

The average price for exports in every year was clearly above the sales price on the EU market, in the IP it was more than 10 % higher. The average price for exports followed a trend similar to the prices on the EU market. However, while in 2020 the export price fell stronger, in the IP it recovered quicker than the prices on the EU market, reaching a level 3 % higher than the 2018 average price, whereas the sales price on the EU market in the IP was still 4 % below the 2018 price.

| (239) | The comparison shows that the Union producers are strongly committed to the Union market, while being able to reach higher prices for export sales. |
| --- | --- |

(239)

The comparison shows that the Union producers are strongly committed to the Union market, while being able to reach higher prices for export sales.

| (240) | Therefore, the Commission concluded that the export performance of the Union industry has not contributed to the injury, but to the contrary contributed to limiting the loss. |
| --- | --- |

(240)

Therefore, the Commission concluded that the export performance of the Union industry has not contributed to the injury, but to the contrary contributed to limiting the loss.

5.2.5.   
  Captive consumption

Captive consumption

| (241) | The captive consumption of the Union industry has substantially increased in the IP. Over the period considered it increased by 39 %. However, the decision to increase the captive consumption in order to sell downstream products at a higher manufacturing level, is not a cause of the injury of the Union industry, but rather a direct consequence of the dumped imports, since the Union producers were not able to reach a fair market price on the free market for HTYP due to the pricing pressure from the dumped imports. Therefore, the Commission concluded that this is not a factor contributing to the injury. |
| --- | --- |

(241)

The captive consumption of the Union industry has substantially increased in the IP. Over the period considered it increased by 39 %. However, the decision to increase the captive consumption in order to sell downstream products at a higher manufacturing level, is not a cause of the injury of the Union industry, but rather a direct consequence of the dumped imports, since the Union producers were not able to reach a fair market price on the free market for HTYP due to the pricing pressure from the dumped imports. Therefore, the Commission concluded that this is not a factor contributing to the injury.

5.2.6.   
  High energy prices and inflation

High energy prices and inflation

| (242) | As a reaction to a submission of the applicant on post-IP developments, several users together with a user association claimed that rising energy costs and inflation crisis breaks the causal link between imports of Chinese HTYP and the injury experienced by the Union industry. The rising energy costs and inflation, as submitted by the applicant, have however occurred post-IP. The users have not detailed that any such development occurred during the IP. Therefore, the Commission rejected this argument. |
| --- | --- |

(242)

As a reaction to a submission of the applicant on post-IP developments, several users together with a user association claimed that rising energy costs and inflation crisis breaks the causal link between imports of Chinese HTYP and the injury experienced by the Union industry. The rising energy costs and inflation, as submitted by the applicant, have however occurred post-IP. The users have not detailed that any such development occurred during the IP. Therefore, the Commission rejected this argument.

5.3.   Conclusion on causation

Conclusion on causation

| (243) | There was a clear coincidence in time between the substantial imports from Hailide from China and the deterioration of the situation of the Union industry. |
| --- | --- |

(243)

There was a clear coincidence in time between the substantial imports from Hailide from China and the deterioration of the situation of the Union industry.

| (244) | The Commission has also investigated other factors of injury and has not found any other factor which would attenuate the causal link between Hailide’s exports from China and the material injury suffered by the Union industry to the extent that there was no longer any genuine and substantial relationship between imports from Hailide and the injury found. |
| --- | --- |

(244)

The Commission has also investigated other factors of injury and has not found any other factor which would attenuate the causal link between Hailide’s exports from China and the material injury suffered by the Union industry to the extent that there was no longer any genuine and substantial relationship between imports from Hailide and the injury found.

| (245) | On the basis of the above, the Commission concluded that Hailide’s dumped exports from China materially contributed to the injury of the Union industry and that no other factors, considered individually or collectively, attenuated the causal link between the dumped exports of Hailide and the injury suffered by the Union industry. |
| --- | --- |

(245)

On the basis of the above, the Commission concluded that Hailide’s dumped exports from China materially contributed to the injury of the Union industry and that no other factors, considered individually or collectively, attenuated the causal link between the dumped exports of Hailide and the injury suffered by the Union industry.

6.   LEVEL OF MEASURES

LEVEL OF MEASURES

| (246) | Based on the conclusions reached by the Commission on dumping, injury, causation and Union interest (examined under point 7 below), definitive measures should be imposed to prevent further injury being caused to the Union industry by the dumped imports. |
| --- | --- |

(246)

Based on the conclusions reached by the Commission on dumping, injury, causation and Union interest (examined under point 7 below), definitive measures should be imposed to prevent further injury being caused to the Union industry by the dumped imports.

| (247) | To determine the level of the measures, the Commission examined whether a duty lower than the margin of dumping would be sufficient to remove the injury caused by dumped imports to the Union industry. |
| --- | --- |

(247)

To determine the level of the measures, the Commission examined whether a duty lower than the margin of dumping would be sufficient to remove the injury caused by dumped imports to the Union industry.

6.1.   Injury margin

Injury margin

| (248) | The Commission first established the amount of duty necessary to eliminate the injury suffered by the Union industry. In this case, the injury would be eliminated if the Union industry was able to cover its costs of production, including those costs resulting from multilateral environmental agreements, and protocols thereunder, to which the Union is a party, and of ILO Conventions listed in Annex Ia of the basic Regulation, and was able to obtain a reasonable profit (‘target profit’) by selling at a target price in the sense of Articles 7(2c) and 7(2d) of the basic regulation. |
| --- | --- |

(248)

The Commission first established the amount of duty necessary to eliminate the injury suffered by the Union industry. In this case, the injury would be eliminated if the Union industry was able to cover its costs of production, including those costs resulting from multilateral environmental agreements, and protocols thereunder, to which the Union is a party, and of ILO Conventions listed in Annex Ia of the basic Regulation, and was able to obtain a reasonable profit (‘target profit’) by selling at a target price in the sense of Articles 7(2c) and 7(2d) of the basic regulation.

| (249) | In accordance with Article 7(2c) of the basic Regulation, for establishing the target profit, the Commission took into account the level of profitability before the increase of imports from the country concerned and the level of profitability to be expected under normal conditions of competition. The Commission analysed the profits achieved by the sampled Union producers before the increase of imports from China. However, this was lower than the minimum 6 % required by Article 7(2c) of the basic Regulation. Thus, this profit margin was replaced by 6 % as required under Article 7(2c) of the basic Regulation. |
| --- | --- |

(249)

In accordance with Article 7(2c) of the basic Regulation, for establishing the target profit, the Commission took into account the level of profitability before the increase of imports from the country concerned and the level of profitability to be expected under normal conditions of competition. The Commission analysed the profits achieved by the sampled Union producers before the increase of imports from China. However, this was lower than the minimum 6 % required by Article 7(2c) of the basic Regulation. Thus, this profit margin was replaced by 6 % as required under Article 7(2c) of the basic Regulation.

| (250) | No claims were made that the Union industry’s level of investments, research and development (R & D) and innovation during the period considered would have been higher under normal conditions of competition. |
| --- | --- |

(250)

No claims were made that the Union industry’s level of investments, research and development (R & D) and innovation during the period considered would have been higher under normal conditions of competition.

| (251) | One sampled EU producer (Glanzstoff) could demonstrate the existence of future compliance costs within the meaning of Article 7(2d) of the basic Regulation. Amounts of 6,6€/tonne were added to the target price of the respective producer to reflect additional environmental costs during the period of application of the measures. This represents less than 1 % of the average production cost per tonne of Glanzstoff. |
| --- | --- |

(251)

One sampled EU producer (Glanzstoff) could demonstrate the existence of future compliance costs within the meaning of Article 7(2d) of the basic Regulation. Amounts of 6,6€/tonne were added to the target price of the respective producer to reflect additional environmental costs during the period of application of the measures. This represents less than 1 % of the average production cost per tonne of Glanzstoff.

| (252) | On this basis, the Commission calculated a non-injurious price of the like product for the Union industry by applying the target profit margin of 6 % to the cost of production of the sampled Union producers during the investigation period. |
| --- | --- |

(252)

On this basis, the Commission calculated a non-injurious price of the like product for the Union industry by applying the target profit margin of 6 % to the cost of production of the sampled Union producers during the investigation period.

| (253) | The Commission then determined the injury elimination level on the basis of a comparison of the weighted average export price of Hailide on a type-by-type basis, as established for the price undercutting calculations, with the weighted average non-injurious price of the like product sold by the sampled Union producers on the free Union market during the investigation period. Any difference resulting from this comparison was expressed as a percentage of the weighted average import CIF value. The resulting average underselling margin at final disclosure was 39 %. |
| --- | --- |

(253)

The Commission then determined the injury elimination level on the basis of a comparison of the weighted average export price of Hailide on a type-by-type basis, as established for the price undercutting calculations, with the weighted average non-injurious price of the like product sold by the sampled Union producers on the free Union market during the investigation period. Any difference resulting from this comparison was expressed as a percentage of the weighted average import CIF value. The resulting average underselling margin at final disclosure was 39 %.

| (254) | In response to the final disclosure, Hailide raised number of specific claims regarding the export sales via Hailide’s related importer in the Union, as highlighted in detail in section 2.6 above. Moreover, the Commission noted and corrected a clerical error in the rounding of the figures for the injury margin. As a result, Hailide’s injury margin as well as the undercutting were recalculated. The Commission found that the recalculation did not have any material impact on the undercutting. The revised calculations were subject to an additional disclosure. |
| --- | --- |

(254)

In response to the final disclosure, Hailide raised number of specific claims regarding the export sales via Hailide’s related importer in the Union, as highlighted in detail in section 2.6 above. Moreover, the Commission noted and corrected a clerical error in the rounding of the figures for the injury margin. As a result, Hailide’s injury margin as well as the undercutting were recalculated. The Commission found that the recalculation did not have any material impact on the undercutting. The revised calculations were subject to an additional disclosure.

| (255) | Therefore, the final injury elimination level is as follows:







  Country | Company | Definitive injury margin (%) |
| --- | --- | --- | --- |
| China | Zhejiang Hailide New Material Co., Ltd. | 38,7 |

(255)

Therefore, the final injury elimination level is as follows:

Country

Company

Definitive injury margin (%)

China

Zhejiang Hailide New Material Co., Ltd.

38,7

7.   UNION INTEREST

UNION INTEREST

| (256) | In accordance with Article 21 of the basic Regulation, the Commission examined whether it could clearly conclude that it was not in the Union interest to adopt measures in this case, despite the determination of injurious dumping. The determination of the Union interest was based on an appreciation of all the various interests involved, including those of the Union industry, importers and users. |
| --- | --- |

(256)

In accordance with Article 21 of the basic Regulation, the Commission examined whether it could clearly conclude that it was not in the Union interest to adopt measures in this case, despite the determination of injurious dumping. The determination of the Union interest was based on an appreciation of all the various interests involved, including those of the Union industry, importers and users.

7.1.   Interest of the Union industry

Interest of the Union industry

| (257) | The investigation has shown that the Union industry is suffering material injury because of the effects of dumped imports from Hailide from China that undercut Union industry’s prices, which are also adding to the price pressure exercised by the Chinese exporters already subject to duties. The Union industry was indeed not able to fully benefit from the imposition of anti-dumping duties against China. |
| --- | --- |

(257)

The investigation has shown that the Union industry is suffering material injury because of the effects of dumped imports from Hailide from China that undercut Union industry’s prices, which are also adding to the price pressure exercised by the Chinese exporters already subject to duties. The Union industry was indeed not able to fully benefit from the imposition of anti-dumping duties against China.

| (258) | The Union industry will benefit from the extension of the existing measures to Hailide, which would likely prevent a further surge of imports from China at very low prices. Without measures, Hailide will continue to dump HTYP on the Union market preventing the Union industry from selling HTYP at an adequate price and thus causing further material injury to the Union industry. |
| --- | --- |

(258)

The Union industry will benefit from the extension of the existing measures to Hailide, which would likely prevent a further surge of imports from China at very low prices. Without measures, Hailide will continue to dump HTYP on the Union market preventing the Union industry from selling HTYP at an adequate price and thus causing further material injury to the Union industry.

7.2.   Interest of unrelated importers

Interest of unrelated importers

| (259) | No unrelated importers cooperated in the current investigation. |
| --- | --- |

(259)

No unrelated importers cooperated in the current investigation.

| (260) | The Commission concluded that there were no compelling reasons from the position of unrelated importers against the imposition of measures against Hailide. |
| --- | --- |

(260)

The Commission concluded that there were no compelling reasons from the position of unrelated importers against the imposition of measures against Hailide.

7.3.   Interest of users

Interest of users

| (261) | There are several main groups of different HTYP users: tire producers who account for around 50 % of the HTYP demand in the Union and technical fabrics, tapes, webbings, straps, ropes and belt producers, who account for around 50 % of the HTYP demand in the Union. Technical fabrics, webbings, straps, ropes and belts are used in automotive, lifting, transport securing and all kinds of machine applications. |
| --- | --- |

(261)

There are several main groups of different HTYP users: tire producers who account for around 50 % of the HTYP demand in the Union and technical fabrics, tapes, webbings, straps, ropes and belt producers, who account for around 50 % of the HTYP demand in the Union. Technical fabrics, webbings, straps, ropes and belts are used in automotive, lifting, transport securing and all kinds of machine applications.

| (262) | Upon initiation, 64 known users and user associations in the Union were contacted and invited to cooperate. Following the initiation of the investigation, five users came forward together with a user’s association. The users that came forward belong to the segment of technical fabrics, tapes, webbings, straps, ropes and belt producers. The participating users represent 10 % of the Union consumption of HTYP. No user of the tire producer segment came forward. |
| --- | --- |

(262)

Upon initiation, 64 known users and user associations in the Union were contacted and invited to cooperate. Following the initiation of the investigation, five users came forward together with a user’s association. The users that came forward belong to the segment of technical fabrics, tapes, webbings, straps, ropes and belt producers. The participating users represent 10 % of the Union consumption of HTYP. No user of the tire producer segment came forward.

| (263) | No user of HTYP produced by Hailide replied to the questionnaire. However, a user’s association together with five users of HTYP produced by Hailide provided submissions on the financial impact of the extension of the duties to Hailide, and the need for supply stability. |
| --- | --- |

(263)

No user of HTYP produced by Hailide replied to the questionnaire. However, a user’s association together with five users of HTYP produced by Hailide provided submissions on the financial impact of the extension of the duties to Hailide, and the need for supply stability.

| (264) | Following the final disclosure, ten users, a user’s association as well as one integrated producer, which also produces woven products, commented on the final disclosure and opposed the Commission’s intention to impose anti-dumping duties on HTYP from Hailide. |
| --- | --- |

(264)

Following the final disclosure, ten users, a user’s association as well as one integrated producer, which also produces woven products, commented on the final disclosure and opposed the Commission’s intention to impose anti-dumping duties on HTYP from Hailide.

| (265) | Several users together with the user’s association claimed that the analysis of the Commission is based on incomplete facts, since the Commission ignored the submissions from the user companies, who are SMEs, despite their offer for their data to be verified on the spot or via a remote verification. |
| --- | --- |

(265)

Several users together with the user’s association claimed that the analysis of the Commission is based on incomplete facts, since the Commission ignored the submissions from the user companies, who are SMEs, despite their offer for their data to be verified on the spot or via a remote verification.

| (266) | The Commission disagreed with this claim. In fact, as can be seen in the following sections, the Commission took into account the submissions of all users when analysing the Union interest, even though some specific data were submitted within a hearing presentation 64 days following the deadline, supplemented with more data 7 months following the deadline and too late to be the object of a verification. The Commission had already informed the parties of the passing of the deadline when they requested permission for a late submission of questionnaires two months following the deadline. |
| --- | --- |

(266)

The Commission disagreed with this claim. In fact, as can be seen in the following sections, the Commission took into account the submissions of all users when analysing the Union interest, even though some specific data were submitted within a hearing presentation 64 days following the deadline, supplemented with more data 7 months following the deadline and too late to be the object of a verification. The Commission had already informed the parties of the passing of the deadline when they requested permission for a late submission of questionnaires two months following the deadline.

7.3.1.   
  Financial impact

Financial impact

| (267) | The user’s association together with five users of HTYP produced by Hailide submitted the position that the level of existing duties against other Chinese exporters, from 5,1 % to 9,8 %, struck the right balance between the interests of EU producers of HTYP and user industries. Therefore, a continuation of the measures at the original levels could be absorbed by the user industry. While Hailide in the past was not subject to duties, a duty of 6,9 % on imports of Hailide is within the range of duties previously imposed against the other Chinese exporters. The Commission therefore concluded that there is no compelling reason from a financial aspect against the imposition of a duty against Hailide of 6,9 %. |
| --- | --- |

(267)

The user’s association together with five users of HTYP produced by Hailide submitted the position that the level of existing duties against other Chinese exporters, from 5,1 % to 9,8 %, struck the right balance between the interests of EU producers of HTYP and user industries. Therefore, a continuation of the measures at the original levels could be absorbed by the user industry. While Hailide in the past was not subject to duties, a duty of 6,9 % on imports of Hailide is within the range of duties previously imposed against the other Chinese exporters. The Commission therefore concluded that there is no compelling reason from a financial aspect against the imposition of a duty against Hailide of 6,9 %.

| (268) | Following the final disclosure, ten users, the user’s association as well as the integrated producer argued that an additional cost increase coming from the duties on their main raw material will further erode their competitive position as EU based manufacturers. They provided multiple examples of offers from Chinese manufacturers of downstream products made with HTYP to European clients, whose prices were very close or even below the price of HTYP after addition of the proposed duties. They argued that the biggest problem of anti-dumping duties on HTYP from Hailide is that they do not extend to downstream products like fabrics, belts, lashing straps, round slings and webbing slings. |
| --- | --- |

(268)

Following the final disclosure, ten users, the user’s association as well as the integrated producer argued that an additional cost increase coming from the duties on their main raw material will further erode their competitive position as EU based manufacturers. They provided multiple examples of offers from Chinese manufacturers of downstream products made with HTYP to European clients, whose prices were very close or even below the price of HTYP after addition of the proposed duties. They argued that the biggest problem of anti-dumping duties on HTYP from Hailide is that they do not extend to downstream products like fabrics, belts, lashing straps, round slings and webbing slings.

| (269) | Following the final disclosure, the applicants also argued that the main concern of the users are related to the unfair competition they are facing from China in downstream markets. This concern would be further exacerbated if anti-dumping duties on HTYP imports from Hailide are imposed. On the other hand, users repeatedly indicated that they did not oppose a prolongation of the original anti-dumping measures, whose range was from 5,1 % to 9,8 %. |
| --- | --- |

(269)

Following the final disclosure, the applicants also argued that the main concern of the users are related to the unfair competition they are facing from China in downstream markets. This concern would be further exacerbated if anti-dumping duties on HTYP imports from Hailide are imposed. On the other hand, users repeatedly indicated that they did not oppose a prolongation of the original anti-dumping measures, whose range was from 5,1 % to 9,8 %.

| (270) | In order to address the issue of unfair competition on downstream products, five users together with a user’s association requested the Commission to extend the duties to HTYP contained in imported webbings ropes and fire hoses. They referred to the Commission’s Regulation on steel wind towers from China (92), in which the anti-dumping duty applied not only to wind towers, but also to wind turbines, which incorporate steel wind towers. |
| --- | --- |

(270)

In order to address the issue of unfair competition on downstream products, five users together with a user’s association requested the Commission to extend the duties to HTYP contained in imported webbings ropes and fire hoses. They referred to the Commission’s Regulation on steel wind towers from China (92), in which the anti-dumping duty applied not only to wind towers, but also to wind turbines, which incorporate steel wind towers.

92

| (271) | First, the Commission acknowledges that the competition from Chinese exporters of downstream products limits the users’ possibility to increase prices and pass on the additional costs of increased duties. However, a potential unfair competition on the level of the users cannot by itself constitute a compelling reason for not addressing the injurious dumping found on the upstream market. While the users have demonstrated that the increased duties on HTYP cause a competitive disadvantage against Chinese manufacturers of the same downstream product, they have also indicated that a protection against these imports of downstream products could be reached by anti-dumping duties on these products. They have not demonstrated that it is not feasible for the user industry to file a complaint to initiate an investigation against potentially dumped imports of HTYP based fabrics or other secondary products. |
| --- | --- |

(271)

First, the Commission acknowledges that the competition from Chinese exporters of downstream products limits the users’ possibility to increase prices and pass on the additional costs of increased duties. However, a potential unfair competition on the level of the users cannot by itself constitute a compelling reason for not addressing the injurious dumping found on the upstream market. While the users have demonstrated that the increased duties on HTYP cause a competitive disadvantage against Chinese manufacturers of the same downstream product, they have also indicated that a protection against these imports of downstream products could be reached by anti-dumping duties on these products. They have not demonstrated that it is not feasible for the user industry to file a complaint to initiate an investigation against potentially dumped imports of HTYP based fabrics or other secondary products.

| (272) | In addition, the anti-dumping duties imposed on HTYP from Hailide at 6,9 % are at the lower end of the duties that were already imposed on the other Chinese exporting producers. The users have argued several times that the original level of the duties struck a balance between the different interests. In addition, the users have the option to source supply from other third countries like South Korea, Taiwan and Vietnam, which are increasing their production capacity. |
| --- | --- |

(272)

In addition, the anti-dumping duties imposed on HTYP from Hailide at 6,9 % are at the lower end of the duties that were already imposed on the other Chinese exporting producers. The users have argued several times that the original level of the duties struck a balance between the different interests. In addition, the users have the option to source supply from other third countries like South Korea, Taiwan and Vietnam, which are increasing their production capacity.

| (273) | Concerning the proposal to extend the measures to the HTYP incorporated in the downstream products, the Commission noted that, contrary to the steel wind towers case, the products to which the duties would be extended were not included in the product scope of the investigation. Indeed, the definition of the product concerned in the steel wind towers case already included the towers imported as part of a wind turbine: “The product concerned is certain utility scale wind towers of steel, [...], currently falling under CN codes ex 7308 20 00 (TARIC code 7308200011), and ex 7308 90 98 (TARIC code 7308909811)

  and, when imported as part of a wind turbine

  , currently falling under CN codes ex 8502 31 00, ...” The Commission cannot in principle impose duties on a product that was not within the scope of the investigation. In this case particularly, the Commission considered that the multitude of possible transformations covered within the suggested CN codes would expand the application of the duties beyond the scope of the investigation. |
| --- | --- |

(273)

Concerning the proposal to extend the measures to the HTYP incorporated in the downstream products, the Commission noted that, contrary to the steel wind towers case, the products to which the duties would be extended were not included in the product scope of the investigation. Indeed, the definition of the product concerned in the steel wind towers case already included the towers imported as part of a wind turbine: “The product concerned is certain utility scale wind towers of steel, [...], currently falling under CN codes ex 7308 20 00 (TARIC code 7308200011), and ex 7308 90 98 (TARIC code 7308909811)

  and, when imported as part of a wind turbine

  , currently falling under CN codes ex 8502 31 00, ...” The Commission cannot in principle impose duties on a product that was not within the scope of the investigation. In this case particularly, the Commission considered that the multitude of possible transformations covered within the suggested CN codes would expand the application of the duties beyond the scope of the investigation.

The product concerned is certain utility scale wind towers of steel, [...], currently falling under CN codes ex 7308 20 00 (TARIC code 7308200011), and ex 7308 90 98 (TARIC code 7308909811)

and, when imported as part of a wind turbine

, currently falling under CN codes ex 8502 31 00, ...

| (274) | Therefore, the Commission found that the request of the users would have expanded the scope of the investigation beyond the application. The request was thus rejected. |
| --- | --- |

(274)

Therefore, the Commission found that the request of the users would have expanded the scope of the investigation beyond the application. The request was thus rejected.

| (275) | Consequently, the Commission confirmed its initial position. |
| --- | --- |

(275)

Consequently, the Commission confirmed its initial position.

7.3.2.   
  Supply stability

Supply stability

| (276) | The users have also pointed out a lack of capacity of the Union producers. The EU consumption of HTYP was 230 000 tonnes in the IP, 73 % higher than the production capacity of the Union industry, which amounts only to 134 000 tonnes. This demonstrates the overall need for imports. |
| --- | --- |

(276)

The users have also pointed out a lack of capacity of the Union producers. The EU consumption of HTYP was 230 000 tonnes in the IP, 73 % higher than the production capacity of the Union industry, which amounts only to 134 000 tonnes. This demonstrates the overall need for imports.

| (277) | Furthermore, following the IP, in 2022 several Union producers have temporarily reduced or fully stopped their production as a reaction to the difficult situation caused by the dumped imports and also the temporary increase in energy prices in Europe. However, this situation occurred post-IP, and it was only a temporary measure. There is no indication at this stage that the temporary capacity reduction will be prolonged in the long-term, all the more so that the energy costs have in the meantime already significantly decreased. |
| --- | --- |

(277)

Furthermore, following the IP, in 2022 several Union producers have temporarily reduced or fully stopped their production as a reaction to the difficult situation caused by the dumped imports and also the temporary increase in energy prices in Europe. However, this situation occurred post-IP, and it was only a temporary measure. There is no indication at this stage that the temporary capacity reduction will be prolonged in the long-term, all the more so that the energy costs have in the meantime already significantly decreased.

| (278) | All cooperating users have argued that for their segment, only one Union producer provides the quality of HTYP used within their products, whereas other Union producers are to a large extent focused on supplying the tire industry or are integrated competitors. The users have further argued that other third countries either produce expensive specialised grades, like South Korea, or do not offer sufficient capacity or quality, with the exception of Vietnam. |
| --- | --- |

(278)

All cooperating users have argued that for their segment, only one Union producer provides the quality of HTYP used within their products, whereas other Union producers are to a large extent focused on supplying the tire industry or are integrated competitors. The users have further argued that other third countries either produce expensive specialised grades, like South Korea, or do not offer sufficient capacity or quality, with the exception of Vietnam.

| (279) | Exports from Vietnam during the IP had a 5 % Union market share. However, Vietnamese imports only amounted to 12 000 tonnes and cover only a fraction of the needed imports to satisfy the demand on the Union market. The Commission therefore noted that imports from China are generally needed to ensure the supply stability on the Union Market. |
| --- | --- |

(279)

Exports from Vietnam during the IP had a 5 % Union market share. However, Vietnamese imports only amounted to 12 000 tonnes and cover only a fraction of the needed imports to satisfy the demand on the Union market. The Commission therefore noted that imports from China are generally needed to ensure the supply stability on the Union Market.

| (280) | The Commission concluded in the previous section that the duty against Hailide of 6,9 % is within the level of duties that could be absorbed by the users. Consequently, this level of duty will not have a prohibitive effect to continue to source from China, especially in view of the fact that the users still have the choice of an exporting producer at the lower end of the duties. Consequently, the supply stability will not be endangered by the imposition of duties on Hailide. |
| --- | --- |

(280)

The Commission concluded in the previous section that the duty against Hailide of 6,9 % is within the level of duties that could be absorbed by the users. Consequently, this level of duty will not have a prohibitive effect to continue to source from China, especially in view of the fact that the users still have the choice of an exporting producer at the lower end of the duties. Consequently, the supply stability will not be endangered by the imposition of duties on Hailide.

| (281) | Therefore, the Commission concluded that the interest of the users for supply stability does not lead to a compelling reason against the imposition of measures. |
| --- | --- |

(281)

Therefore, the Commission concluded that the interest of the users for supply stability does not lead to a compelling reason against the imposition of measures.

7.3.3.   
  Risk of transferring production capacities outside the EU

Risk of transferring production capacities outside the EU

| (282) | Several users and the integrated producer emphasized the importance of the HTYP weaving and coating industry for the job market and the fact that the increased duties on HTYP may lead to a transfer of production capacities outside of the EU. The integrated producer argued that the workforce in the EU involved in the production of downstream products made out of HTYP consists of around 100 000 skilled workers. |
| --- | --- |

(282)

Several users and the integrated producer emphasized the importance of the HTYP weaving and coating industry for the job market and the fact that the increased duties on HTYP may lead to a transfer of production capacities outside of the EU. The integrated producer argued that the workforce in the EU involved in the production of downstream products made out of HTYP consists of around 100 000 skilled workers.

| (283) | The Commission recognized that the HTYP weaving and coating industry is an important employer for the EU job market. However, as stated in recitals (272) and (274), the duty of 6,9 % imposed on imports of Hailide is within the level of duties that could be absorbed by the users. The Commission therefore concluded that the argument of a potential transfer of production capacities does not constitute a compelling reason against the duties on HTYP from Hailide. In addition, no concrete evidence was submitted to support these claims. |
| --- | --- |

(283)

The Commission recognized that the HTYP weaving and coating industry is an important employer for the EU job market. However, as stated in recitals (272) and (274), the duty of 6,9 % imposed on imports of Hailide is within the level of duties that could be absorbed by the users. The Commission therefore concluded that the argument of a potential transfer of production capacities does not constitute a compelling reason against the duties on HTYP from Hailide. In addition, no concrete evidence was submitted to support these claims.

7.4.   Conclusion on Union interest

Conclusion on Union interest

| (284) | On the basis of the above, the Commission concluded that there were no compelling reasons of the Union interest against the imposition of duties on Chinese exports of HTYP from Hailide. |
| --- | --- |

(284)

On the basis of the above, the Commission concluded that there were no compelling reasons of the Union interest against the imposition of duties on Chinese exports of HTYP from Hailide.

| (285) | Following the above comments of users, the user’s association and one integrated producer, the Commission confirmed its assessment. |
| --- | --- |

(285)

Following the above comments of users, the user’s association and one integrated producer, the Commission confirmed its assessment.

8.   DEFINITIVE ANTI-DUMPING MEASURES

DEFINITIVE ANTI-DUMPING MEASURES

| (286) | Definitive anti-dumping measures should be imposed on imports into the Union of HTYP originating in China in accordance with the lesser duty rule in Article 9(4) of the basic Regulation. The amount of the duty should be set at the level of the lower of the dumping and the injury margins. |
| --- | --- |

(286)

Definitive anti-dumping measures should be imposed on imports into the Union of HTYP originating in China in accordance with the lesser duty rule in Article 9(4) of the basic Regulation. The amount of the duty should be set at the level of the lower of the dumping and the injury margins.

| (287) | On the basis of the above, the definitive anti-dumping duty rates, expressed on the CIF Union border price, customs duty unpaid, should be as follows:








  Company | Dumping margin | Injury margin | Definitive anti-dumping duty |
| --- | --- | --- | --- | --- |
| Zhejiang Hailide New Material Co., Ltd. | 6,9  % | 38,7  % | 6,9  % |

(287)

On the basis of the above, the definitive anti-dumping duty rates, expressed on the CIF Union border price, customs duty unpaid, should be as follows:

Company

Dumping margin

Injury margin

Definitive anti-dumping duty

Zhejiang Hailide New Material Co., Ltd.

6,9  %

38,7  %

6,9  %

| (288) | The individual company anti-dumping duty rate specified in this Regulation was established on the basis of the findings of this investigation. Therefore, it reflected the situation found during this investigation with respect to this company. This duty rate is exclusively applicable to imports of the product concerned originating in the country concerned and produced by the named legal entity. Imports of product concerned produced by any other company not specifically mentioned in the operative part of this Regulation, including entities related to that specifically mentioned, shall be subject to the duty rates listed under Article 1 of Commission Implementing Regulation (EU) 2023/934 of 11 May 2023 imposing a definitive anti-dumping duty on imports of high tenacity yarns of polyesters originating in the People’s Republic of China following an expiry review pursuant to Article 11(2) and a partial interim review pursuant to Article 11(3) of Regulation (EU) 2016/1036 of the European Parliament and of the Council (93). |
| --- | --- |

(288)

The individual company anti-dumping duty rate specified in this Regulation was established on the basis of the findings of this investigation. Therefore, it reflected the situation found during this investigation with respect to this company. This duty rate is exclusively applicable to imports of the product concerned originating in the country concerned and produced by the named legal entity. Imports of product concerned produced by any other company not specifically mentioned in the operative part of this Regulation, including entities related to that specifically mentioned, shall be subject to the duty rates listed under Article 1 of Commission Implementing Regulation (EU) 2023/934 of 11 May 2023 imposing a definitive anti-dumping duty on imports of high tenacity yarns of polyesters originating in the People’s Republic of China following an expiry review pursuant to Article 11(2) and a partial interim review pursuant to Article 11(3) of Regulation (EU) 2016/1036 of the European Parliament and of the Council (93).

93

| (289) | To minimise the risks of circumvention, the company with individual anti-dumping duty must present a valid commercial invoice to the customs authorities of the Member States. The invoice must conform to the requirements set out in Article 1(4) of this Regulation. Imports not accompanied by that invoice should be subject to the anti-dumping duty applicable to ‘all other companies’ under Article 1 of Implementing Regulation (EU) 2023/934. |
| --- | --- |

(289)

To minimise the risks of circumvention, the company with individual anti-dumping duty must present a valid commercial invoice to the customs authorities of the Member States. The invoice must conform to the requirements set out in Article 1(4) of this Regulation. Imports not accompanied by that invoice should be subject to the anti-dumping duty applicable to ‘all other companies’ under Article 1 of Implementing Regulation (EU) 2023/934.

| (290) | While presentation of this invoice is necessary for the customs authorities of the Member States to apply the individual rate of anti-dumping duty to imports, it is not the only element to be taken into account by the customs authorities. Indeed, even if presented with an invoice meeting all the requirements set out in Article 1(4) of this Regulation, the customs authorities of Member States must carry out their usual checks and may, like in all other cases, require additional documents (shipping documents, etc.) for the purpose of verifying the accuracy of the declaration and ensure that the application of the individual duty rate is justified and in compliance with customs law. |
| --- | --- |

(290)

While presentation of this invoice is necessary for the customs authorities of the Member States to apply the individual rate of anti-dumping duty to imports, it is not the only element to be taken into account by the customs authorities. Indeed, even if presented with an invoice meeting all the requirements set out in Article 1(4) of this Regulation, the customs authorities of Member States must carry out their usual checks and may, like in all other cases, require additional documents (shipping documents, etc.) for the purpose of verifying the accuracy of the declaration and ensure that the application of the individual duty rate is justified and in compliance with customs law.

| (291) | The company may request the application of the individual anti-dumping duty rate if it changes subsequently the name of its entity. The request must be addressed to the Commission (94). The request must contain all the relevant information enabling to demonstrate that the change does not affect the right of the company to benefit from the duty rate which applies to it. If the change of name of the company does not affect its right to benefit from the duty rate which applies to it, a regulation about the change of name will be published in the Official Journal of the European Union. |
| --- | --- |

(291)

The company may request the application of the individual anti-dumping duty rate if it changes subsequently the name of its entity. The request must be addressed to the Commission (94). The request must contain all the relevant information enabling to demonstrate that the change does not affect the right of the company to benefit from the duty rate which applies to it. If the change of name of the company does not affect its right to benefit from the duty rate which applies to it, a regulation about the change of name will be published in the Official Journal of the European Union.

94

Official Journal of the European Union

9.   FINAL PROVISION

FINAL PROVISION

| (292) | In view of Article 109 of Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council (95), when an amount is to be reimbursed following a judgment of the Court of Justice of the European Union, the interest to be paid should be the rate applied by the European Central Bank to its principal refinancing operations, as published in the C series of the Official Journal of the European Union on the first calendar day of each month. |
| --- | --- |

(292)

In view of Article 109 of Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council (95), when an amount is to be reimbursed following a judgment of the Court of Justice of the European Union, the interest to be paid should be the rate applied by the European Central Bank to its principal refinancing operations, as published in the C series of the Official Journal of the European Union on the first calendar day of each month.

95

Official Journal of the European Union

| (293) | All interested parties were informed of the essential facts and considerations on the basis of which it was intended to impose the definitive anti-dumping duty on imports of HTYP originating in China and produced by Zhejiang Hailide New Material Co., Ltd. They were also granted a period to make representations subsequent to the disclosures. The comments submitted by interested parties were duly considered, and, where appropriate, the findings have been modified accordingly. |
| --- | --- |

(293)

All interested parties were informed of the essential facts and considerations on the basis of which it was intended to impose the definitive anti-dumping duty on imports of HTYP originating in China and produced by Zhejiang Hailide New Material Co., Ltd. They were also granted a period to make representations subsequent to the disclosures. The comments submitted by interested parties were duly considered, and, where appropriate, the findings have been modified accordingly.

| (294) | The Committee established by Article 15(1) of Regulation (EU) 2016/1036 did not deliver an opinion on the measures provided for in this Regulation, |
| --- | --- |

(294)

The Committee established by Article 15(1) of Regulation (EU) 2016/1036 did not deliver an opinion on the measures provided for in this Regulation,

HAS ADOPTED THIS REGULATION:

Article 1

1.   A definitive anti-dumping duty is imposed on imports of high tenacity yarn of polyesters not put up for retail sale, including monofilament of less than 67 decitex, (excluding sewing thread and ‘Z’-twisted multiple (folded) or cabled yarn, intended for the production of sewing thread, ready for dyeing and for receiving a finishing treatment, loosely wound on a plastic perforated tube) originating in the People’s Republic of China and produced by Zhejiang Hailide New Material Co., Ltd., currently falling under CN Code ex 5402 20 00 (TARIC code 5402200010).

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 produced by the company listed below, shall be as follows:

| Company | Definitive anti-dumping duty (%) | TARIC additional code |
| --- | --- | --- |
| Zhejiang Hailide New Material Co., Ltd. | 6,9 | A976 |

Company

Definitive anti-dumping duty (%)

TARIC additional code

Zhejiang Hailide New Material Co., Ltd.

6,9

A976

3.   TARIC additional code A989 (‘Hangzhou Huachun Chemical Fiber Co., Ltd’) is hereby closed.

4.   The application of the individual duty rate specified for the company mentioned in paragraph 2 shall be conditional upon presentation to the Member States’ customs authorities of a valid commercial invoice, on which shall appear a declaration dated and signed by an official of the entity issuing such invoice, identified by his/her name and function, drafted as follows: ‘I, the undersigned, certify that the (volume) of (product under investigation) sold for export to the European Union covered by this invoice was manufactured by (company name and address) (TARIC additional code) in [country concerned]. I declare that the information provided in this invoice is complete and correct.’ If no such invoice is presented, the duty applicable to all other companies under Article 1 of Implementing Regulation (EU) 2023/934 shall apply.

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

Article 2

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, 11 May 2023.

For the Commission

The President

Ursula VON DER LEYEN

---

(1)  
  OJ L 176, 30.6.2016, p. 21.

1

(2)  
  OJ L 315, 1.12.2010, p. 1.

2

(3)  
  OJ L 49, 25.2.2017, p. 6.

3

(4)  
  OJ L 167, 30.6.2017, p. 31.

4

(5)  
  OJ C 87, 23.2.2022, p. 2.

5

(6)  
  OJ C 248, 30.6.2022, p. 142.

6

(7)  WT/DS295/AB/R, 29 November 2005.

7

(8)  
  OJ C 248, 30.6.2022, p. 107.

8

(9)  Notice on the consequences of the COVID-19 outbreak on anti-dumping and anti-subsidy investigations (OJ C 86, 16.3.2020, p. 6).

9

(10)  Commission Staff Working Document on Significant Distortions in the Economy of the People’s Republic of China for the purposes of Trade Defence Investigations, 20 December 2017, SWD(2017) 483 final/2.

10

(11)  E.g. Chemical Fiber Industry 13th Directive Opinion or Five-year plans for National Economic and Social Development.

11

th

(12)  14th Five-year plan for the Development of Petroleum and Chemical Industry in Zhejiang Province.

12

th

(13)  Report – Chapter 2, p. 6-7.

13

(14)  Report – Chapter 2, p. 10.

14

(15)  Available at: Constitution of the People's Republic of China (npc.gov.cn), accessed on 15 November 2022.

15

(16)  Report – Chapter 2, p. 20-21.

16

(17)  Report – Chapter 3, p. 41, 73-74.

17

(18)  Report – Chapter 6, p. 120-121.

18

(19)  Report – Chapter 6. p. 122 -135.

19

(20)  Report – Chapter 7, p. 167-168.

20

(21)  Report – Chapter 8, p. 169-170, 200-201.

21

(22)  Report – Chapter 2, p. 15-16, Report – Chapter 4, p. 50, p. 84, Report – Chapter 5, p. 108-9.

22

(23)  See at: https://aiqicha.baidu.com/company_detail_51522707507210 (accessed on 18 November 2022).

23

(24)  See for example Art. 33 of the CCP Constitution, Article 19 of the Chinese Company Law or the Guidelines on stepping up the United Front work in the private sector for the new era issued by the General Office of the CCP’s Central Committee in 2020.

24

(25)  See at: cfa.com.cn (accessed on 21 November 2022).

25

(26)  Report – Chapter 5, p. 100-1.

26

(27)  Report – Chapter 2, p. 26

27

(28)  See for example: Blanchette, J. – Xi’s Gamble: The Race to Consolidate Power and Stave off Disaster; Foreign Affairs, vol. 100, no. 4, July/August 2021, pp. 10-19.

28

The Race to Consolidate Power and Stave off Disaster

(29)  Report – Chapter 2, p. 31-2.

29

(30)  Available at: https://www.reuters.com/article/us-china-congress-companies-idUSKCN1B40JU (accessed on 15 November 2022).

30

(31)  Available at: www.gov.cn/zhengce/2020-09/15/content_5543685.htm (accessed on 15 November 2022)

31

(32)  Financial Times (2020) – Chinese Communist Party asserts greater control over private enterprise, available at: https://on.ft.com/3mYxP4j (accessed on 15 November 2022).

32

(33)  Report – Chapters 14.1 to 14.3.

33

(34)  Report – Chapter 4, p. 41-42, 83.

34

(35)  Available at: https://www.miit.gov.cn/zwgk/zcwj/wjfb/yj/art/2022/art_a01b7532a39a41e891d2540da6981d72.html (accessed on 17 November 2022)

35

(36)  Optimize regional layout, strengthen international cooperation, promote digital transformation, eliminate backward production capacity and mergers and reorganizations in accordance with laws and regulations, cultivate leading enterprises, promote the integration and development of large and small enterprises, and consolidate and enhance industrial competitiveness.

36

(37)  Ibid., Art. II.

37

(38)  Available at: https://huanbao.bjx.com.cn/news/20210906/1175114.shtml (accessed on 17 November 2022).

38

(39)  See Chapter V of the Plan.

39

(40)  See Section 2.2.2. of the Plan.

40

(41)  See Section 4.1.1. of the Plan.

41

(42)  See Section 4.1.3. of the Plan.

42

(43)  Available at: www.qg.gov.cn/zwgk/zcfg/sjfgwj/202112/t20211207_2666343.htm (accessed on 18 November 2022).

43

(44)  See Section III.2.5. of the Plan.

44

(45)  See Section III.4.1 of the Plan Available at:

45

https://huanbao.bjx.com.cn/news/20210707/1162695.shtml (accessed on 22 November 2022).

(46)  Available at: https://huanbao.bjx.com.cn/news/20211201/1191133.shtml (accessed on 18 November 2022).

46

(47)  See Section III.2.1 of the Plan.

47

(48)  See the Plan, available at:

48

https://www.zj.gov.cn/art/2021/6/24/art_1229540815_4671249.html (accessed on 22 November 2022)

(49)  See Section IV.7 of the Plan.

49

(50)  Available at: https://www.cq.gov.cn/zwgk/zfxxgkml/szfwj/qtgw/202108/t20210803_9538603.html (accessed on 22 November 2022)

50

(51)  See Section III.1.4 of the Plan.

51

(52)  Report – Chapter 6, p. 138-149.

52

(53)  Report – Chapter 9, p. 216.

53

(54)  Report – Chapter 9, p. 213-215.

54

(55)  Report – Chapter 9, p. 209-211.

55

(56)  Report – Chapter 13, p. 332-337.

56

(57)  Report – Chapter 13, p. 336.

57

(58)  Report – Chapter 13, p. 337-341.

58

(59)  Report – Chapter 6, p. 114-117.

59

(60)  Report – Chapter 6, p. 119.

60

(61)  Report – Chapter 6, p. 120.

61

(62)  Report – Chapter 6, p. 121-122, 126-128, 133-135.

62

(63)  See official policy document of the China Banking and Insurance Regulatory Commission (CBIRC) of 28 August 2020: Three-year action plan for improving corporate governance of the banking and insurance sectors (2020-2022), available at: http://www.cbirc.gov.cn/cn/view/pages/ItemDetail.html?docId=925393&itemId=928 (accessed on 15 November 2022). The Plan instructs to ‘
  further implement the spirit embodied in General Secretary Xi Jinping’s keynote speech on advancing the reform of corporate governance of the financial sector’
  . Moreover, the Plan’s section II aims at promoting the organic integration of the Party’s leadership into corporate governance: ‘we shall make the integration of the Party’s leadership into corporate governance more systematic, standardised and procedure-based [...] Major operational and management issues must have been discussed by the Party Committee before being decided upon by the Board of Directors or the senior management.’

63

Three-year action plan for improving corporate governance of the banking and insurance sectors (2020-2022

further implement the spirit embodied in General Secretary Xi Jinping’s keynote speech on advancing the reform of corporate governance of the financial sector’

e shall make the integration of the Party’s leadership into corporate governance more systematic, standardised and procedure-based

Major operational and management issues must have been discussed by the Party Committee before being decided upon by the Board of Directors or the senior management.’

(64)  See CBIRC’s Notice on the Commercial banks performance evaluation method, issued on 15 December 2020. http://jrs.mof.gov.cn/gongzuotongzhi/202101/t20210104_3638904.htm (last viewed on 12 April 2021).

64

Notice on the Commercial banks performance evaluation method,

(65)  Available at: https://huanbao.bjx.com.cn/news/20211201/1191133.shtml (accessed on 18 November 2022).

65

(66)  See Paragraph 3 of the Section Safeguard Measures of the Plan.

66

(67)  Available at: https://huanbao.bjx.com.cn/news/20210906/1175114-3.shtml (accessed on 22 November 2022)

67

(68)  See Section 8.7. of the Plan.

68

(69)  See IMF Working Paper ‘Resolving China’s Corporate Debt Problem’, by Wojciech Maliszewski, Serkan Arslanalp, John Caparusso, José Garrido, Si Guo, Joong Shik Kang, W. Raphael Lam, T. Daniel Law, Wei Liao, Nadia Rendak, Philippe Wingender, Jiangyan, October 2016, WP/16/203

69

(70)  Report – Chapter 6, p. 121-122, 126-128, 133-135.

70

(71)  See OECD (2019), OECD Economic Surveys: China 2019, OECD Publishing, Paris. p. 29, available at:

71

https://doi.org/10.1787/eco_surveys-chn-2019-en (accessed on 15 November 2022).

(72)  See: http://www.gov.cn/xinwen/2020-04/20/content_5504241.htm (accessed on 22 November 2022).

72

(73)  World Bank Open Data – Upper Middle Income, https://data.worldbank.org/income-level/upper-middle-income.

73

(74)  If there is no production of the product under investigation in any country with a similar level of development, production of a product in the same general category and/or sector of the product under investigation may be considered.

74

(75)  Regulation (EU) 2015/755 of the European Parliament and of the Council of 29 April 2015 on common rules for imports from certain third countries, OJ L 123, 19.5.2015, p. 33.

75

(76)  See https://www.kordsa.com/en/images/pdf/Kordsa_Annual_Report_EN_2021.pdf, p. 160.

76

(77)  See https://www.kordsa.com/en/images/pdf/Kordsa_Annual_Report_EN_2021.pdf, p. 117.

77

(78)  World Bank Open Data – Upper Middle Income, https://data.worldbank.org/income-level/upper-middle-income.

78

(79)  p. 133 of 2021 Annual Report.

79

(80)  p. 61 of 2021 Annual Report available on https://www.kordsa.com/en/images/pdf/Kordsa_Annual_Report_EN_2021.pdf

80

(81)  See Kordsa_Annual_Report_EN_2021.pdf, p. 158, Note 3 -Segment reporting, a) External revenue as well as the Directory on p. 205 of the annual report.

81

(82)  http://www.gtis.com/gta/secure/default.cfm

82

(83)  http://www.macmap.org

83

(84)  https://data.tuik.gov.tr/Bulten/DownloadIstatistikselTablo?p=tg4QGRdNcBVDQo/mmOOyD/8g3GlHdKhwM0SMnhh4V/APyz9UrZvk0kK90vktK5jo

84

(85)  Article 2(7) of the basic Regulation considers that domestic prices in those countries cannot be used for the purpose of determining normal value.

85

(86)  The labour costs are available at https://data.tuik.gov.tr/Bulten/DownloadIstatistikselTablo?p=tg4QGRdNcBVDQo/mmOOyD/8g3GlHdKhwM0SMnhh4V/APyz9UrZvk0kK90vktK5jo

86

(87)  https://data.tuik.gov.tr/Bulten/Index?p=Consumer-Price-Index-December-2021-45789

87

(88)  https://data.tuik.gov.tr/Kategori/GetKategori?p=cevre-ve-enerji-103&dil=2

88

https://data.tuik.gov.tr/Bulten/Index?p=Electricity-and-Natural-Gas-Prices-Period-II:-July-December,-2021-45566

https://data.tuik.gov.tr/Bulten/Index?p=Electricity-and-Natural-Gas-Prices-Period-I:-January-June,-2021-37459

(89)  Recital (352) of Commission Implementing Regulation (EU) 2020/1336, of 25 September 2020 imposing definitive anti-dumping duties on imports of certain polyvinyl alcohols originating in the People’s Republic of China (OJ L 315, 29.9.2020, p. 1).

89

(90)  Commission Implementing Regulation (EU) 2021/2011 of 17 November 2021 imposing a definitive anti-dumping duty on imports of optical fibre cables originating in the People’s Republic of China, OJ L 410, 18 November 2021, p. 51, recital 367.

90

(91)  The 14(6) database contains data on imports of products subject to anti-dumping or anti-subsidy measures or investigations, both from the countries and exporting producers concerned by the proceeding and from other third countries and other exporting producers, at the level of the 10-digit TARIC codes and TARIC additional codes.

91

(92)  Commission Implementing Regulation (EU) 2021/2239 of 15 December 2021 imposing a definitive anti-dumping duty on imports of certain utility scale steel wind towers originating in the People’s Republic of China. OJ L 450, 16.12.2021, p. 59 (‘the steel wind towers case’).

92

(93)  See page 1 of this Official Journal.

93

(94)  European Commission, Directorate-General for Trade, Directorate G, Rue de la Loi 170, 1040 Brussels, Belgium.

94

(95)  Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council of 18 July 2018 on the financial rules applicable to the general budget of the Union, amending Regulations (EU) No 1296/2013, (EU) No 1301/2013, (EU) No 1303/2013, (EU) No 1304/2013, (EU) No 1309/2013, (EU) No 1316/2013, (EU) No 223/2014, (EU) No 283/2014, and Decision No 541/2014/EU and repealing Regulation (EU, Euratom) No 966/2012 (OJ L 193, 30.7.2018, p. 1).

95

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