**Important legal notice**

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# 52006PC0582

**Proposal for a Council Regulation extending the definitive anti-dumping duty imposed by Regulation (EC) No 769/2002 on imports of coumarin originating in the People's Republic of China to imports of coumarin consigned from Indonesia or Malaysia, whether declared as originating in Indonesia or Malaysia or not  /* COM/2006/0582 final */****

[pic] | COMMISSION OF THE EUROPEAN COMMUNITIES |

Brussels, 9.10.2006

COM(2006) 582 final

Proposal for a

COUNCIL REGULATION

extending the definitive anti-dumping duty imposed by Regulation (EC) No 769/2002 on imports of coumarin originating in the People's Republic of China to imports of coumarin consigned from Indonesia or Malaysia, whether declared as originating in Indonesia or Malaysia or not

(presented by the Commission)

EXPLANATORY MEMORANDUM

CONTEXT OF THE PROPOSAL |

110 | Grounds for and objectives of the proposal This proposal concerns the application of Council Regulation (EC) No 384/96 of 22 December 1995 on protection against dumped imports from countries not members of the European Community, as last amended by Council Regulation (EC) No 2117/2005 of 21 December 2005 ('the basic Regulation') in the proceeding concerning imports of coumarin consigned from Indonesia or Malaysia, whether declared as originating in Indonesia or Malaysia or not. |

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

130 | Existing provisions in the area of the proposal Following an expiry review, by Regulation (EC) No 769/2002 ('the original Regulation'), the Council imposed a definitive anti-dumping duty of EUR 3479 per tonne on imports of coumarin, falling within CN code ex 2932 21 00 originating in the People's Republic of China ('PRC'). In December 2004, after circumvention practices via India and Thailand were found, the measures were extended by Regulation (EC) No 2272/2004 to imports of coumarin consigned from India or Thailand, whether declared as originating in India or Thailand or not. |

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

CONSULTATION OF INTERESTED PARTIES AND IMPACT ASSESSMENT |

Consultation of interested parties |

211 | Consultation methods, main sectors targeted and general profile of respondents Interested parties were given the opportunity to make their views known in writing and to request a hearing within the time limit set in the initiating Regulation. All parties were informed that non-cooperation might lead to the application of Article 18 of the basic Regulation and findings being made on the basis of the facts available. |

212 | Summary of responses and how they have been taken into account There were no responses. |

Collection and use of expertise |

229 | There was no need for external expertise. |

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

LEGAL ELEMENTS OF THE PROPOSAL |

305 | Summary of the proposed action On 13 February 2006, the Commission received a request pursuant to Article 13(3) of the basic Regulation to investigate the alleged circumvention of the anti-dumping measures imposed on imports of coumarin originating in the PRC ('the request'). The request was submitted by the European Chemical Industry Council (CEFIC) ('the applicant') on behalf of the sole producer in the Community. The Commission initiated an investigation by Regulation (EC) No 499/2006 ('the initiating Regulation') into the alleged circumvention of the anti-dumping measures imposed on imports of coumarin originating in the PRC by imports of coumarin consigned from Indonesia or Malaysia, whether declared as originating in Indonesia or Malaysia or not and, pursuant to Articles 13(3) and 14(5) of the basic Regulation, directed the customs authorities to register imports of coumarin consigned from Indonesia or Malaysia, whether declared as originating in Indonesia or Malaysia or not, falling within CN code ex 2932 21 00 (TARIC code 2932 21 00 16). The investigation showed circumvention within the meaning of Article 13(1) of the basic Regulation. Therefore, the existing anti-dumping measures on imports of the product concerned originating in the PRC should be extended to the same product consigned from Indonesia or Malaysia, whether declared as originating in Indonesia or Malaysia or not. The duty extended should be the one established in Article 1(2) of the original Regulation. Pursuant to Articles 13(3) and 14(5) of the basic Regulation, which provide that any extended measures shall be applied against registered imports from the date of registration, the anti-dumping duty should be collected on imports of coumarin consigned from Indonesia or Malaysia, which entered the Community under registration imposed by the initiating Regulation. |

310 | Legal basis Council Regulation (EC) No 384/96 of 22 December 1995 on protection against dumped imports from countries not members of the European Community, as last amended by Council Regulation (EC) No 2117/2005 of 21 December 2005. |

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

Proportionality principle The proposal complies with the proportionality principle for the following reason(s). |

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

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

Choice of instruments |

341 | Proposed instruments: regulation. |

342 | Other means would not be adequate for the following reason(s). Other means would not be adequate because the basic Regulation does not foresee alternative options. |

BUDGETARY IMPLICATION |

409 | The proposal has no implication for the Community budget. |

1.  Proposal for a

COUNCIL REGULATION

extending the definitive anti-dumping duty imposed by Regulation (EC) No 769/2002 on imports of coumarin originating in the People's Republic of China to imports of coumarin consigned from Indonesia or Malaysia, whether declared as originating in Indonesia or Malaysia or not

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community,

Having regard to Council Regulation (EC) No 384/96 of 22 December 1995 on protection against dumped imports from countries not members of the European Community[1] (‘the basic Regulation’), and in particular Article 13 thereof,

Having regard to the proposal submitted by the Commission after consulting the Advisory Committee,

Whereas:

A. PROCEDURE

1. Existing measures

(1) Following an expiry review, by Regulation (EC) No 769/2002[2] (‘the original Regulation’), the Council imposed a definitive anti-dumping duty of EUR 3479 per tonne on imports of coumarin, falling within CN code ex 2932 21 00 originating in the People’s Republic of China (‘PRC’).

(2) In December 2004, after circumvention practices via India and Thailand were found, the measures were extended by Regulation (EC) No 2272/2004[3] to imports of coumarin consigned from India or Thailand, whether declared as originating in India or Thailand or not.

2. Request

(3) On 13 February 2006, the Commission received a request pursuant to Article 13(3) of the basic Regulation to investigate the alleged circumvention of the anti-dumping measures imposed on imports of coumarin originating in the PRC (‘the request’). The request was submitted by the European Chemical Industry Council (CEFIC) (‘the applicant’) on behalf of the sole producer in the Community.

(4) The request contained sufficient prima facie evidence that there had been a change in the pattern of trade following the imposition of the existing anti-dumping measures and anti-circumvention measures on imports of coumarin originating in the PRC, as shown by a significant increase in imports of the same product from Indonesia and Malaysia.

(5) This change in the pattern of trade was alleged to stem from the transhipment of coumarin originating in the PRC via Indonesia and Malaysia. It was further alleged that there was insufficient due cause or economic justification for these practices other than the existence of the anti-dumping measures on imports of coumarin originating in the PRC.

(6) Finally, the applicant submitted evidence that the remedial effects of the existing anti-dumping measures on coumarin originating in the PRC were being undermined both in terms of quantities and prices. Significant volumes of imports of coumarin from Indonesia and Malaysia appeared to have replaced imports of coumarin from the PRC. In addition, there was sufficient evidence that the increase in imports was made at prices well below the non-injurious price established in the investigation that led to the existing measures, and that dumping was taking place in relation to the normal values previously established for coumarin originating in the PRC.

3. Initiation

(7) The Commission initiated an investigation by Regulation (EC) No 499/2006[4] (‘the initiating Regulation’) into the alleged circumvention of the anti-dumping measures imposed on imports of coumarin originating in the PRC by imports of coumarin consigned from Indonesia or Malaysia, whether declared as originating in Indonesia or Malaysia or not and, pursuant to Articles 13(3) and 14(5) of the basic Regulation, directed the customs authorities to register imports of coumarin consigned from Indonesia or Malaysia, whether declared as originating in Indonesia or Malaysia or not, falling within CN code ex 2932 21 00 (TARIC code 2932 21 00 16).

4. Investigation

(8) The Commission officially advised the authorities of the PRC, Indonesia and Malaysia, the producers/exporters, the importers in the Community known to be concerned and the applicant of the initiation of the investigation. Questionnaires were sent to the producers/exporters in the PRC as well as to the importers in the Community named in the request. There were no known producers in Indonesia and Malaysia. Interested parties were given the opportunity to make their views known in writing and to request a hearing within the time limit set in the initiating Regulation. All parties were informed that non-cooperation might lead to the application of Article 18 of the basic Regulation and findings being made on the basis of the facts available.

(9) No producer or exporter in the PRC, Indonesia or Malaysia submitted a reply to the questionnaire. Indonesian authorities replied that there was no producer of coumarin known in Indonesia.

5. Investigation period

(10) The investigation period covered the period from 1 March 2005 to 28 February 2006 (‘IP’). Data from 2002 up to the end of the investigation period were collected to investigate the alleged change in the pattern of trade.

B. RESULTS OF THE INVESTIGATION

1. General considerations/degree of cooperation

(a) Indonesia and Malaysia

(11) No producers or exporters of coumarin in Indonesia and Malaysia made themselves known or co-operated in the investigation. Accordingly, findings in respect of the exports of coumarin consigned from Indonesia and Malaysia to the Community had to be made on the basis of the facts available in accordance with Article 18 of the basic Regulation. At the outset of the investigation, the authorities of Indonesia and Malaysia had been informed of the consequences of non-cooperation, as set out in Article 18(6) of the basic Regulation.

(b) PRC

(12) No Chinese producers or exporters co-operated in the investigation.

(13) It was made clear to the known companies that non-cooperation may lead to the application of Article 18 of the basic Regulation.

2. Product concerned and like product

(14) The product concerned by the alleged circumvention is, as defined in the original Regulation, coumarin currently classifiable within CN code ex 2932 21 00. Coumarin is a whitish crystalline powder with the characteristic odour of newly mown hay. Its main uses are as an aroma chemical and as a fixative in the preparation of fragrance compounds, such compounds being used in the production of detergents, cosmetics and fine fragrances.

(15) Coumarin can be manufactured following two different production processes: the Phenol route which involves Perkin reaction and the o-Cresol route which involves Rasching reaction. However, coumarin produced through these two processes has the same basic physical and chemical characteristics and has the same uses.

(16) In the absence of co-operation by parties in Indonesia or Malaysia, it must be inferred, on the basis of the information available and in the absence of any contrary evidence, that coumarin exported to the Community from the PRC and coumarin consigned from Indonesia and Malaysia have the same basic physical and chemical characteristics and have the same uses. They are therefore to be considered as like products within the meaning of Article 1(4) of the basic Regulation.

3. Change in the pattern of trade

(17) As stated above, the change in the pattern of the trade was alleged to stem from transhipment via Indonesia and Malaysia.

Indonesia

(18) As no Indonesian company cooperated in the investigation, exports from Indonesia to the Community had to be established on the basis of the facts available pursuant to Article 18 of the basic Regulation. Eurostat data, which were the most appropriate information available, were therefore used to establish the export prices and quantities of imports from Indonesia.

(19) Significant imports from Indonesia into the Community started immediately after the initiation of the previous anti-circumvention investigation against India and Thailand, at the level of 12,5 tonnes in 2004, 15 tonnes in 2005 and 10 tonnes in the investigation period (representing 1,7% of the EU consumption). In parallel, Chinese exports into Indonesia have developed from 57 tonnes in 2003 to 83,8 tonnes in the investigation period.

(20) In the absence of cooperation and of any contrary evidence, it is concluded that there was a change in the pattern of trade between the PRC, Indonesia and the Community from 2004 to the end of the investigation period, which stemmed from transhipment of coumarin originating in the PRC via Indonesia.

Malaysia

(21) As no Malaysian company cooperated in the investigation, exports from Malaysia to the Community had to be established on the basis of the facts available pursuant to Article 18 of the basic Regulation. Eurostat data, which were the most appropriate information available, were therefore used to establish the export prices and quantities of imports from Malaysia.

(22) Imports from Malaysia into the Community started in 2005, reaching a level of 13 tonnes in 2005 and 23 tonnes in the investigation period (representing 3,9% of the EU consumption). At the same time, the Chinese exports into Malaysia have grown from 23,6 tonnes in 2004 to 43,76 tonnes in the investigation period.

(23) In the absence of cooperation and of any contrary evidence, it is concluded that there was a change in the pattern of trade between the PRC, Malaysia and the Community from 2005 to the end of the investigation period, which stemmed from transhipment of coumarin originating in the PRC via Malaysia.

4. Insufficient due cause or economic justification

Indonesia

(24) In the absence of cooperation and of any contrary evidence, it is concluded that, given that significant imports started immediately after the initiation of the previous anti-circumvention investigation against India and Thailand, in parallel with an increase of Chinese exports of coumarin to Indonesia, the change in the pattern of trade stemmed from the existence of the anti-dumping measures rather than from any other sufficient due cause or economic justification within the meaning of Article 13(1) of the basic Regulation. In this respect, it is also noted that there is no evidence of genuine production of coumarin in Indonesia.

Malaysia

(25) In the absence of cooperation and of any contrary evidence, it is concluded that, given that the imports started in 2005, after the extension of the measures on imports of coumarin consigned from India or Thailand and that, in parallel, the Chinese exports into Malaysia have grown from 23,6 tonnes in 2004 to 43,76 tonnes in 2005, the change in the pattern of trade stemmed from the existence of the anti-dumping measures rather than from any other sufficient due cause or economic justification within the meaning of Article 13(1) of the basic Regulation. In this respect, it is also noted that there is no evidence of genuine production of coumarin in Malaysia.

5. Undermining of the remedial effects of the duty in terms of the prices and/or the quantities of the like products

Indonesia

(26) Based on the trade flow analysis made above, it was found that a change in the pattern of the Community imports is linked to the fact that there were anti-dumping and anti-circumvention measures in place. While imports declared as originating in Indonesia were absent on the Community market until 2003, they amounted to 4 tonnes in 2003, to 12,5 tonnes in 2004, to 15 tonnes in 2005 and to 10 tonnes in the investigation period, representing 1,7% of Community consumption.

(27) The investigation revealed that the imports from Indonesia have taken place at price levels below the export price in the original investigation and well below the original normal value.

(28) On the basis of the above, it is concluded that the change in trade flows, together with the abnormally low prices of exports from Indonesia have undermined the remedial effects of the anti-dumping measures both in terms of quantities and prices of the like products.

Malaysia

(29) Based on the trade flow analysis made above, it was found that a change in the pattern of trade is linked to the fact that there were anti-dumping and anti-circumvention measures in place. While there were no imports of coumarin into the Community before 2005, they amounted to 13 tonnes in 2005 and to 23 tonnes in the investigation period.

(30) The investigation revealed that the imports from Malaysia have taken place at price levels below the export price in the original investigation and well below the original normal value.

(31) On the basis of the above, it is concluded that the change in trade flows, together with the abnormally low prices of exports from Malaysia have undermined the remedial effects of the anti-dumping measures both in terms of quantities and prices of the like products.

6. Evidence of dumping in relation to the normal values previously established for like or similar products

Indonesia

(32) In order to determine whether evidence of dumping could be found with respect to the exports of coumarin from Indonesia to the Community during the IP, Eurostat data were used pursuant to Article 18 of the basic Regulation.

(33) Article 13(1) of the basic Regulation requires evidence of dumping in relation to the normal value previously established for the like or similar products.

(34) For the purpose of a fair comparison between the normal value and the export price, due allowance, in the form of adjustments, was made for differences which affect prices and price comparability. These adjustments were made in accordance with Article 2(10) of the basic Regulation in respect of transport and insurance, on the basis of the facts available, i.e. as given in the request, in accordance with Article 18 of the basic Regulation.

(35) In accordance with Articles 2(11) and 2(12) of the basic Regulation, the comparison of the weighted average normal value as established in the previous investigation and the weighted average of export prices during this investigation’s IP, expressed as a percentage of the CIF price at the Community frontier, duty unpaid, showed dumping for the imports of coumarin to the Community from Indonesia. The dumping margin found, expressed as a percentage of the CIF price at the Community frontier, duty unpaid, was above 100%.

Malaysia

(36) In order to determine whether evidence of dumping could be found with respect to the exports of coumarin from Malaysia to the Community during the IP, Eurostat data were used pursuant to Article 18 of the basic Regulation.

(37) For the purpose of a fair comparison between the normal value and the export price, due allowance, in the form of adjustments, was made for differences which affect prices and price comparability. These adjustments were made in accordance with Article 2(10) of the basic Regulation in respect of transport and insurance, on the basis of the facts available, i.e. as given in the request, in accordance with Article 18 of the basic Regulation.

(38) In accordance with Articles 2(11) and 2(12) of the basic Regulation, the comparison of the weighted average normal value as established in the previous investigation and the weighted average of export prices during this investigation’s IP, expressed as a percentage of the CIF price at the Community frontier, duty unpaid, showed dumping for the imports of coumarin to the Community from Malaysia. The dumping margin found, expressed as a percentage of the CIF price at the Community frontier, duty unpaid, was above 100%.

C. MEASURES

(39) In view of the above findings of circumvention within the meaning of Article 13(1) of the basic Regulation, the existing anti-dumping measures on imports of the product concerned originating in the PRC should be extended to the same product consigned from Indonesia or Malaysia, whether declared as originating in Indonesia or Malaysia or not.

(40) The duty extended should be the one established in Article 1(2) of the original Regulation.

(41) Pursuant to Articles 13(3) and 14(5) of the basic Regulation, which provide that any extended measures shall be applied against registered imports from the date of registration, the anti-dumping duty should be collected on imports of coumarin consigned from Indonesia or Malaysia, which entered the Community under registration imposed by the initiating Regulation.

D. REQUESTS FOR EXEMPTION

(42) Although during this investigation no genuine producer of coumarin was found to exist in Indonesia or Malaysia or made itself known to the Commission, new producers which would consider lodging a request for an exemption from the extended anti-dumping measure pursuant to Article 13(4) of the basic Regulation are informed that they will be required to complete a questionnaire in order to enable the Commission to determine whether an exemption may be warranted. Such exemption may be granted after the assessment of, for instance, the market situation of the product concerned, production capacity and capacity utilisation, procurement and sales and the likelihood of continuation of practices for which there is insufficient due cause or economic justification and the evidence of dumping. The Commission would normally also carry out an on-spot verification visit. The request would have to be addressed to the Commission forthwith, with all relevant information, in particular any modification in the company's activities linked to production and sales.

(43) Importers could still benefit from exemption from the measures to the extent that their imports are from exporting producers, which are granted such an exemption, and in accordance with Article 13(4) of the basic Regulation.

(44) Where an exemption is warranted, the Council will amend this Regulation accordingly. Subsequently, any exemption granted will be monitored by the Commission to ensure compliance with the conditions set therein.

E. PROCEDURE

(45) Interested parties were informed of the essential facts and considerations on the basis of which the Council intended to extend the definitive anti-dumping measures in force and were given the opportunity to comment and to be heard. No comments which were of a nature to change the above mentioned conclusions were received.

HAS ADOPTED THIS REGULATION:

Article 1

1. The definitive anti-dumping duty imposed by Council Regulation (EC) No 769/2002 on imports of coumarin, falling within CN code ex 2932 21 00 originating in the People’s Republic of China is hereby extended to imports of coumarin, falling within CN code ex 2932 21 00 consigned from Indonesia or Malaysia, whether declared as originating in Indonesia or Malaysia or not (TARIC code 2932 21 00 16).

2. The duty extended by paragraph 1 shall be collected on imports registered in accordance with Article 2 of Commission Regulation (EC) No 499/2006 and Articles 13(3) and 14(5) of Council Regulation (EC) No 384/96.

3. The provisions in force concerning customs duties shall apply.

Article 2

1. Requests for exemption from the duty extended by Article 1 shall be made in writing in one of the official languages of the European Union and must be signed by a person authorised to represent the applicant. The request must be sent to the following address:European CommissionDirectorate-General for TradeDirectorate BOffice: J-79 05/17B - 1049 BrusselsFax (32 2) 295 65 05

2. In accordance with Article 13(4) of Regulation (EC) No 384/96, the Council may decide to exempt imports which do not circumvent the anti-dumping measures imposed by Regulation (EC) No 769/2002 from the duty extended by Article 1.

Article 3

Customs authorities are hereby directed to discontinue the registration of imports, established in accordance with Article 2 of Commission Regulation (EC) No 499/2006.

Article 4

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,

For the Council

The President

 [1] OJ L 56, 6.3.1996, p. 1. Regulation as last amended by Regulation (EC) No 2117/2005 (OJ L 340, 23.12.2005, p. 17)

[2] OJ L 123, 9.5.2002, p. 1. Regulation as last amended by Regulation (EC) No 1854/2003 (OJ L 272, 23.10.2003, p. 1).

[3] OJ L 396, 31.12.2004, p. 18.

[4] OJ L 91, 29.3.2006, p. 3.