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COUNCIL REGULATION (EEC) No 2112/90
of 23 July 1990
imposing a definitive anti-dumping duty on imports of certain types of electronic microcircuits known as DRAMs (dynamic random access memories) originating in Japan and collecting definitively the provisional duty
THE COUNCIL OF THE EUROPEAN COMMUNITIES,
Having regard to the Treaty establishing the European Economic Community,
Having regard to Council Regulation (EEC) No 2423/88 of 11 July 1988 on protection against dumped or subsidized imports from countries not members of the European Economic Community (1), and in particular Articles 9 and 12 thereof,
Having regard to the proposal submitted by the Commission after consultations within the Advisory Committee as provided for by the above Regulation,
Whereas,
A. Provisional measures
(1) The Commission, by Regulation (EEC) No 165/90 (2), imposed a provisional anti-dumping duty on imports of certain types of electronic microcircuits known as DRAMs (dynamic random access memories) originating in Japan, accepted undertakings offered by certain exporters in connection with the anti-dumping proceeding concerning imports of these products and terminated the investigation in this respect. The Commission subsequently published two corrigenda to this Regulation (3). Furthermore, the validity of the provisional duty was extended for a period not exceeding two months by Council Regulation (EEC) No 1361/90 (4).
B. Subsequent procedure
(2) Following the imposition of the provisional anti-dumping duty, one independent importer which had not previously made itself known, requested, and was granted, an opportunity to be heard orally by the Commission and made its views known in writing. One Japanese producer/exporter also made its views known in writing.
(3) Several Japanese producers/exporters have requested that further related companies be added to the list contained in Annex I to Regulation (EEC) No 165/90.
(4) The oral and written submissions and comments of the parties were considered and, where appropriate, the Commission's findings were modified to take account of them.
(5) Due to the complexity of the DRAM industry, in particular the internationalization of manufacturing processes, the huge volume of data to be processed and verified and the numerous arguments put forward, this investigation could not be concluded within the time provided for in Article 7 (9) (a) of Regulation (EEC) No 2423/88.
C. Products under investigation, like products and Community industry
(a) Products under investigation
(6) The products under investigation are certain types of electronic microcircuits known as dynamic random access memories (DRAMs) (5) whether assembled, in processed wafer or dice form, manufactured using variations of metal oxide semiconductor (MOS) process technology including
complementary MOS types (CMOS) and N-channel types (NMOS) of all densities irrespective of access speed, configuration package or frame.
Finished DRAMs fall within CN codes 8542 11 41, 8542 11 43 and 8542 11 45; wafers fall within CN code ex 8542 11 10; dice fall within CN code ex 8542 11 30 (chips); memory boards (modules) fall within the CN codes for finished DRAMs or within CN code ex 8473 30 00 or ex 8548 00 00.
(b) Like products determination
(7) The Commission determined for its preliminary findings that:
- processed wafers and dice are like finished DRAMs because, once a wafer is processed or diffused, the dice contained therein have all the essential electric properties which distinguish DRAMs from other products and processed dice are exclusively dedicated to a single use as the memory storage unit in a finished DRAM,
- different densities and processes of DRAMs constitute different sub-types of the same like product because the similarities of DRAMs of different densities and process technology outweigh their differences in memory capacity, design and process technology,
- on the basis of the information available with respect to current density and future density DRAMs, in particular with regard to technical specifications and applications, all densities of DRAMs including future densities are one like product,
- further processed DRAMs such as 'stack' DRAMs, 'piggy-back' DRAMs or 'modules' which incorporate two or more DRAM units are like finished DRAMs because most of these sub-assemblies are very little more than a grouping of standard DRAMs into the package, the function of which is to provide large quantities of memory capacity,
- DRAMs for military applications and DRAMs for commercial applications also fall into the like product, and
- video RAMs (VRAMs), which are not based on DRAM technology but on other technologies such as static RAM (SRAM) technology, are not to be regarded as like products, but products which are used in video applications which are based on DRAM technology are like products.
Given that no new arguments were raised in this respect, the Council confirms these determinations.
(c) Community industry
(8) The Commission interpreted for the purposes of its preliminary findings the term 'Community industry' as referring to the complainant companies represented by EECA i.e., Motorola, SGS-Thomson and Siemens; which accounted for almost all known Community production of the like product.
(9) While diffusion is, from a technological and capital investment point of view, more significant than the assembly and testing operations, assembly and testing operations can account for a significant part of cost of manufacture. The Commission has not determined whether companies performing only assembly or testing operations belong to the Community DRAM industry because, even if companies performing only assembly or testing operations were part of the Community DRAM industry, pursuant to the first indent of Article 4 (5) of Regulation (EEC) No 2423/88 those companies were related to Japanese exporters, which themselves import the products under investigations and should therefore be excluded from the definition of Community industry.
This is confirmed by the Council.
D. Normal value
(10) Normal value for the DRAM products subject to the provisional duty was, for the purpose of definitive findings, established on the basis for the methods used for the provisional determination of dumping.
(11) As regards the Commission's provisional findings concerning reasonable profit (recitals 59 and 60), the only exporter who further commented after the publication of the provisional duty Regulation referred to the profit margin of 9,5 % of total costs which is applied under the terms of the undertakings in order to establish the reference prices and suggested that this margin should have been applied for the normal value calculation rather than the method applied by the Commission. This argument is inconclusive because the profit which has to be added to cost of production pursuant to Article 2 (3) (b) (ii) of Regulation (EEC) No 2423/88, in order to establish a normal value, has been based on the actual profits earned on the domestic market and bears no relation to the profit margin which has been included in an undertaking with a view to calculating a preference price to the first independent purchaser in the Community. Furthermore, the profit margin contained in the undertaking is, as expressly stated in the undertaking text, a 'minimum margin for a short period in an oversupply market situation and that an average long term profit margin should be higher'.
Thus, the Council also confirms the Commission's provisional findings as regards the establishment of reasonable profit.
E. Export price
(12) With regard to exports by Japanese producers directly to independent importers in the Community and to independent purchasers in Japan (Japanese purchase offices), export prices were provisionally determined by the Commission on the basis for the prices actually paid or payable for the product sold for export to the Community.
(13) In accordance with Article 2 (8) (b) of Regulation (EEC) No 2423/88, in all other cases, i.e. where exports were made to subsidiary companies which imported the product into the Community, the Commission considered it appropriate, in view of the relationship between exporter and importer, to construct export prices on the basis of prices at which the finished products were first resold to independent purchasers in the Community.
Constructred cif Community-border export prices for finished products were reached by deducting from resale prices to independent purchasers all costs incurred by the sales subsidiary between import and resale, including duties and taxes, and a reasonable profit margin. In the absence of cooperation from independent importers, the profit margin was, on the basis of Commission experience, assessed at 5 % on sales turnover.
Constructed cif Community-border export prices for unfinished products were reached by deducting from resale prices to independent purchasers, as a first step, the costs and the profit margin determined for the sales subsidiary and, as a second step, all costs incurred by the manufacturing subsidiary for the assembly or further processing operations. No additional profit margin was attributed to the manufacturing subsidiary.
(14) As no new argument or evidence was submitted, the Council confirms the provisional findings reached by the Commission.
F. Comparison
(15) For the purposes of a fair comparison between normal value and export prices, the Commission took account, where appropriate, of differences affecting price comparability such as differences in physical characteristics, import charges and indirect taxes and differences in directly-related selling costs where claims for these differences in the sales under consideration were made. All comparisons were made at ex-works level.
This is confirmed by the Council.
G. Margins
(16) The Commission's preliminary examination of the facts showed the existence of dumping in respect of imports of DRAMs originating in Japan from all the Japanese producers/exporters investigated, namely Fujitsu Limited, Hitachi Ltd, Mitsubishi Electric Corporation, NEC Corporation, NMB Semiconductor Ltd/Minebea Co. Ltd, Miyazaki Oki Electric Co. Ltd/Oki Electric Industry Co. Ltd, Texas Instruments (Japan) Ltd, and Toshiba Corporation. The weighted average margins of the exporters named above when expressed as a percentage of the cif Community-border price vary between 8,5 and 206,2 %.
(17) For those exporters which neither replied to the Commission's questionnaire nor otherwise made themselves known, dumping was determined on the basis of the facts available in accordance with Article 7 (7) (b) of Regulation (EEC) No 2423/88 and it was considered appropriate to use the highest dumping margin for this group of exporters.
(18) The same considerations were applied by the Commission to three exporters which had exported small quantities during the period under investigation and made themselves known as interested parties at a later stage of the proceeding. The Commission therefore considered that the highest dumping margin should also be applied to these companies.
The Council confirms these findings.
H. Injury
(19) The volume of the dumpd imports, their market penetration, the prices at which the dumped DRAMs have been offered in the Community market and the condition of the Community industry has led the Commission to determine for the purpose of its preliminary findings that the effects of dumped imports of DRAMs originating in Japan, taken in isolation, have to be considered as causing injury to the Community industry.
(20) Furthermore, the Commission has reached the conclusion that the facts of this case support a finding of either material injury or injury in the form of material retardation. In the first instance, the huge financial losses resulting from the non-utilization of plant and manpower have to be considered as material, whether related to an established industry or an industry that exists but which is an infant or nascent state. In the second instance, the dumped imports have clearly materially retarded the development of a Community industry, established or otherwise, by causing delays in the adoption of decisions that would have occurred in a fair market environment. The Commission, therefore, left the question open of whether the Community industry was established at the time.
(21) In the absence of any new evidence or arguments, the Council confirms the Commission's provisional findings.
I. Community interest
(22) The Commission, taking into consideration the changes in supply and demand factors on the Community market, the benefits derived from mass DRAM production and the particular situation of the Community DRAM industry and user industries, has found that:
- Japanese suppliers now have, to a large extent through dumping practices, a huge market share not only in the Community but also worldwide. This has contributed, on the one hand, to the DRAM shortages, and, on the other, to a dependence of the electronics user industries on these Japanese suppliers,
- the semiconductor industry, of which DRAM production is a part, is a strategic industry in that semiconductors are a key component for the data processing, telecommunications and automotive industries,
- a viable Community DRAM industry will provide an alternative source of supply to the Community electronics industry, thereby reducing dependence on the dominant Japanese producers of DRAMs,
- the benefits derived from mass DRAM production in the Community will contribute to a strong Community electronics industry overall because DRAMs serve as a technology driver for other more complex semiconductor devices,
- the use of the most advanced technology in DRAM production not only improves the competitiveness of this industry but also that of the downstream electronics industry.
(23) On the basis of its provisional findings, the Commission considered that Community interest calls for protection of the Community DRAM industry to ensure that it can develop in a fair market environment. However, given the particular characteristics of the DRAM industry, it was considered that in the interest of the Community, the necessary protection should be given by means of measures suitably tailored to follow the dynamics of the DRAM industry without causing unnecessary hindrance to the user industry.
This is confirmed by the Council.
J. Measures
(a) Price undertakings
(24) The Commission has, by Regulation (EEC) No 165/90, accepted undertakings offered by 11 Japanese DRAM producers/exporters. These undertakings are intended to ensure that sales prices in the Community do not fall below a certain reference price level considered adequate to eliminate to a satisfactory extent the injury caused to the complainant companies. Due consideration is given to the exporters' actual and projected costs of production. The refernce price level is determined quarterly.
(b) Duty
(25) Even though in its provisional findings the Commission believed that all Japanese producers/exporters, whose undertakings were accepted, currently represent all Japanese DRAM producers which export DRAMs to the Community, it considered it necessary, in order to safeguard the effectiveness of the undertakings by covering, inter alia, 'grey market' sales to the Community, known to exist for this product, to impose a residual anti-dumping duty.
(26) One independent importer argued that the imposition of a residual duty is particularly unfair because the duty applies even if it sells in the Community well above the reference prices level established under the terms of the undertakings. First of all, it has to be noted that the imposition of a residual duty in connection with the acceptance of undertakings is a standard Community practice in order to avoid that companies which did not produce/export the goods during the investigation period or companies which did not make themselves known are put at a competitive advantage vis-à-vis such exporters from which undertakings have been accepted. The complexities of the products under consideration, in particular the great number of producers/exporters and device types, exclude the possibility of a minimum price residual duty. Secondly, it has to be remembered that independent importers can indirectly benefit from the terms of the undertakings pursuant to the third indent of Article 1 (4) of Regulation (EEC) No 165/90. For these reasons, the Council cannot accept the importer's argument and considers it necessary to impose a residual duty. (c) Collection of provisional duties
(27) In view of the dumping margins established, and the seriousness of the injury caused to the Community industry, the Council considers it necessary that amounts collected by way of provisional anti-dumping duties should be definitively collected.
(28) Given that under the terms of the undertakings, the exporters concerned benefit from a phase-in provision, it appears appropriate to allow independent importers who comply with the conditions to benefit from this phase-in provision as well. Thus, provisional duty levied on imports of products by independent importers where the latter can prove to the satisfaction of the competent customs authorities that the phase-in conditions are met, i.e.:
- the date of order confirmation to the first independent purchaser for the products in question is prior to 26 January 1990,
- effective delivery of these goods to the first independent purchaser occurred not later than 30 June 1990, and
- the products in question were produced by one of the companies listed in the first indent of Article 1 (4) of this Regulation
shall not be definitively collected; provisional anti-dumping duties collected or securities received shall therefore be released.
(29) Given the specific circumstances of this case, in particular the fact that undertakings offered by all known Japanese DRAM producers exporting to the Community have been accepted and as a consequence of the methodology applied in the undertakings for the reference price calculation, the Council considers that a duty lower than the highest dumping margin found in the investigation is sufficient to achieve the objective of imposing a residual duty in this case. Furthermore, in view of the numerous different DRAM devices exported and the volatility of costs and prices in this industry, the duty should be in the form of an ad valorem duty. In the light of these considerations, the rate should be 60 % of the net free-at-Community-frontier price before duty.
(30) In view of the fact that the undertakings offered by 11 exporters have beeen accepted by the Commission (Article 2 of Regulation (EEC) No 165/90), these exporters can be excluded from the scope of application of the duty on imports of DRAMs originating in Japan,
HAS ADOPTED THIS REGULATION:
Article 1
1. A definitive anti-dumping duty is hereby imposed on imports of certain types of electronic microcircuits known as DRAMs (dynamic random access memories) falling within CN code ex 8473 30 00, ex 8542 11 10, ex 8542 11 30, 8542 11 41, 8542 11 43, 8542 11 45 or ex 8548 00 00 (for Taric and additional codes see Annex II), originating in Japan.
2. For the purpose of this Regulation, DRAMs comprise all types and densities including unfinished forms such as wafers and dice (mounted or unmounted), VRAMs if based on DRAM technology and multi-combinational forms, such as 'stack' DRAMS, 'piggy-back' DRAMs and 'modules'.
3. The rate of the duty shall be 60 % of the net free-at-Community-frontier price before duty.
4. Products referred to in paragraph 1 shall be exempt from the duty, provided that:
- they are produced and exported to the Community by the following companies, which have offered undertakings which have been accepted pursuant to Article 2 of Regulation (EEC) No 165/90:
- Fujitsu Limited,
- Hitachi Ltd,
- Matsushita Electronics Corporation,
- Mitsubishi Electric Corporation,
- NEC Corporation,
- NMB Semiconductor Co. Ltd,
- Oki Electric Industry Co. Ltd,
- Sanyo Electric Co. Ltd,
- Sharp Corporation,
- Texas Instruments (Japan) Ltd, and
- Toshiba Corporation, or that
- they are produced by one of the companies listed in the first indent and exported to the Community by one of its affiliated companies listed in Annex I, or that
- they are produced, and sold for export to the Community, by one of the companies listed in the first indent: in this case, exemption from the duty shall be conditional upon presentation to the customs authorities of documentation from the producers confirming that it sold the products for which the exemption is sought for export to the Community; the documentation, the format of which is contained in Annex III, must contain a clear description of the device type(s) sold, the total quantity per device type, the unit price per device type or a statement that the price was not lower than the applicable reference price, the invoice number and the confirmation that these products were produced and sold for export to the Community by the said company under the undertakings referred to in Article 2 of Regulation (EEC) No 165/90.
5. The provisions in force concerning customs duties shall apply.
Article 2
The amounts secured by way of a provisional anti-dumping duty pursuant to Regulation (EEC) No 165/90 shall be definitively collected. However, where the importer requests so and the following conditions are fulfilled:
- the date of order confirmation to the first independent purchaser for the products in question is prior to 26 January 1990,
- effective delivery of these goods to the first independent purchaser occurred not later than 30 June 1990, and
- the products in question were produced by one of the companies listed in the first indent of Article 1 (4) of this Regulation,
provisional duties collected or securities lodged shall be released.
Article 3
This Regulation shall enter into force on the day following its publication in the Official Journal of the European Communities.
This Regulation shall be binding in its entirety and directly applicable in all Member States.
Done at Brussels, 23 July 1990.