Summary;Judgment — ECLI:EU:C:2024:440
Date: 2024-05-30
Language of the case: English
Court formation: Seventh Chamber
Subject matter: Dumping;External relations;Commercial policy
Procedure: Action for annulment;Appeal - unfounded

JUDGMENT OF THE COURT (Seventh Chamber) 30 May 2024 (*) (Appeal – Dumping – Imports of certain woven and/or stitched glass fibre fabrics originating in the People’s Republic of China and Egypt – Implementing Regulation (EU) 2020/492 – Definitive anti-dumping duty – Calculation of the normal value – Regulation (EU) 2016/1036 – Article 2(5) – Calculation of costs associated with the production and sale of a product under investigation on the basis of records of the party under investigation – Costs not reasonably reflected in records – Adjustment on the basis of the costs of other producers or exporters in the same country or on any other reasonable basis – European Commission’s discretion) In Case C‑261/23 P, APPEAL under Article 56 of the Statute of the Court of Justice of the European Union, brought on 23 April 2023, Hengshi Egypt Fiberglass Fabrics SAE, established in Ain Sokhna (Egypt), Jushi Egypt for Fiberglass Industry SAE, established in Ain Sokhna, represented by V. Crochet and B. Servais, avocats, appellants, the other parties to the proceedings being: European Commission, represented by L. Di Masi, G. Luengo and P. Němečková, acting as Agents, defendant at first instance, Tech-Fab Europe eV, established in Frankfurt am Main (Germany), represented by J. Beck and L. Ruessmann, avocats, intervener at first instance, THE COURT (Seventh Chamber), composed of F. Biltgen, President of the Chamber, J. Passer (Rapporteur) and M. L. Arastey Sahún, Judges, Advocate General: T. Ćapeta, Registrar: A. Calot Escobar, having regard to the written procedure, having decided, after hearing the Advocate General, to proceed to judgment without an Opinion, gives the following Judgment 1 By their appeal, the appellants, Hengshi Egypt Fiberglass Fabrics SAE (‘Hengshi’) and Jushi Egypt for Fiberglass Industry SAE (‘Jushi’), seek to have set aside the judgment of the General Court of the European Union of 1 March 2023, Hengshi Egypt Fiberglass Fabrics and Jushi Egypt for Fiberglass Industry v Commission (T‑301/20, EU:T:2023:93; ‘the judgment under appeal’), by which the General Court dismissed as unfounded their action for the annulment of Commission Implementing Regulation (EU) 2020/492 of 1 April 2020 imposing definitive anti-dumping duties on imports of certain woven and/or stitched glass fibre fabrics originating in the People’s Republic of China and Egypt (OJ 2020 L 108, p. 1; ‘the regulation at issue’), in so far as it concerns the appellants. Legal context WTO law 2 By Council Decision 94/800/EC of 22 December 1994 concerning the conclusion on behalf of the European Community, as regards matters within its competence, of the agreements reached in the Uruguay Round multilateral negotiations (1986-1994) (OJ 1994 L 336, p. 1), the Council of the European Union approved the Agreement establishing the World Trade Organisation (WTO), signed in Marrakesh on 15 April 1994, and also the agreements in Annexes 1 to 3 to that agreement, which include the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (OJ 1994 L 336, p. 103; ‘the Anti-Dumping Agreement’). 3 Article 2 of the Anti-Dumping Agreement, entitled ‘Determination of Dumping’, provides: ‘2.1 For the purpose of this Agreement, a product is to be considered as being dumped, i.e. introduced into the commerce of another country at less than its normal value, if the export price of the product exported from one country to another is less than the comparable price, in the ordinary course of trade, for the like product when destined for consumption in the exporting country. 2.2 When there are no sales of the like product in the ordinary course of trade in the domestic market of the exporting country or when, because of the particular market situation or the low volume of the sales in the domestic market of the exporting country …, such sales do not permit a proper comparison, the margin of dumping shall be determined by comparison with a comparable price of the like product when exported to an appropriate third country, provided that this price is representative, or with the cost of production in the country of origin plus a reasonable amount for administrative, selling and general costs and for profits. 2.2.1 Sales of the like product in the domestic market of the exporting country or sales to a third country at prices below per unit (fixed and variable) costs of production plus administrative, selling and general costs may be treated as not being in the ordinary course of trade by reason of price and may be disregarded in determining normal value only if the authorities … determine that such sales are made within an extended period of time … in substantial quantities … and are at prices which do not provide for the recovery of all costs within a reasonable period of time. If prices which are below per unit costs at the time of sale are above weighted average per unit costs for the period of investigation, such prices shall be considered to provide for recovery of costs within a reasonable period of time. 2.2.1.1 For the purpose of paragraph 2, costs shall normally be calculated on the basis of records kept by the exporter or producer under investigation, provided, that such records are in accordance with the generally accepted accounting principles of the exporting country and reasonably reflect the costs associated with the production and sale of the product under consideration. … …’ European Union law The basic regulation 4 Article 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 (OJ 2016 L 176, p. 21; ‘the basic regulation’), entitled ‘Determination of dumping’, provides: ‘1. 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. However, where the exporter in the exporting country does not produce or does not sell the like product, the normal value may be established on the basis of prices of other sellers or producers. Prices between parties which appear to be associated or to have a compensatory arrangement with each other may not be considered to be in the ordinary course of trade and may not be used to establish the normal value unless it is determined that they are unaffected by the relationship. In order to determine whether two parties are associated, account may be taken of the definition of related parties set out in Article 127 of [Commission Implementing Regulation (EU) 2015/2447 of 24 November 2015 laying down detailed rules for implementing certain provisions of Regulation (EU) No 952/2013 of the European Parliament and of the Council laying down the Union Customs Code (OJ 2015 L 343, p. 558)]. … 5. Costs shall normally be calculated on the basis of records kept by the party under investigation, provided that such records are in accordance with the generally accepted accounting principles of the country concerned and that it is shown that the records reasonably reflect the costs associated with the production and sale of the product under consideration. If costs associated with the production and sale of the product under investigation are not reasonably reflected in the records of the party concerned, they shall be adjusted or established on the basis of the costs of other producers or exporters in the same country or, where such information is not available or cannot be used, on any other reasonable basis, including information from other representative markets. … 6. The amounts for selling, for general and administrative costs and for profits shall be based on actual data pertaining to production and sales, in the ordinary course of trade, of the like product by the exporter or producer under investigation. When such amounts cannot be determined on that basis, the amounts may be determined on the basis of: (a) the weighted average of the actual amounts determined for other exporters or producers subject to investigation in respect of production and sales of the like product in the domestic market of the country of origin; …’ 5 Article 9 of the basic regulation, entitled ‘Termination without measures; imposition of definitive duties’, provides in paragraph 4 thereof: ‘Where the facts as finally established show that there is dumping, and injury caused thereby, and the [EU] interest calls for intervention in accordance with Article 21, a definitive anti-dumping duty shall be imposed by the [European] Commission acting in accordance with the examination procedure referred to in Article 15(3). Where provisional duties are in force, the Commission shall initiate that procedure no later than one month before the expiry of such duties. The amount of the anti-dumping duty shall not exceed the margin of dumping established but it should be less than the margin if such lesser duty would be adequate to remove the injury to the [EU] industry.’ Regulation (EU) 2016/1037 6 The first subparagraph of Article 29(6) of Regulation (EU) 2016/1037 of the European Parliament and of the Council of 8 June 2016 on protection against subsidised imports from countries not members of the European Union (OJ 2016 L 176, p. 55) provides: ‘Information received pursuant to this Regulation shall be used only for the purpose for which it was requested.’ The regulation at issue 7 Recitals 52, 312 and 331 of the regulation at issue state: ‘(52) The product concerned … is fabrics of woven and/or stitched continuous filament glass fibre rovings and/or yarns with or without other elements, excluding products which are impregnated or pre-impregnated (pre-preg), and excluding open mesh fabrics with cells with a size of more than 1.8 mm in both length and width and weighing more than 35 g/m² (‘GFF’) originating in [the People’s Republic of China] and Egypt, currently falling under CN codes ex 7019 39 00, ex 7019 40 00, ex 7019 59 00 and ex 7019 90 00 (TARIC codes 7019 39 00 80, 7019 40 00 80, 7019 59 00 80 and 7019 90 00 80) (‘the product concerned’). … (312) Contrary to what is argued by the exporting producers, the prices at which [Hengshi] purchased [glass fibre rovings (‘GFR’)] from [Jushi] were found not to be made at arm’s length as they were consistently and substantially below the prices charged by [Jushi] to independent customers on the Egyptian domestic market for the same product. Given the significant difference between these prices, the Commission concluded that the prices paid by [Hengshi] to [Jushi] could not be considered to be at arm’s length. Despite the fact that those prices were profitable, they did not reflect market prices in Egypt and, in the absence of corporate affiliation, [Hengshi] would have paid a much higher price for GFR. Furthermore, the reference to absence of distortive governmental measure[s] in setting the prices of raw materials was found to be irrelevant as, it is the arm’s length analysis that is decisive in this case. … (331) These exporting producers also seem to misunderstand the concept of cost in Article 2(5) of the basic regulation. This refers to the cost to the producer of the product under investigation (and not to the producer of the input). From the perspective of a buyer, the profit of the seller is a cost, embedded in the price paid for an input. The Commission correctly assessed whether Hengshi records reasonably reflected the costs associated with the production of GFF and found that the transfer prices for purchases of GFR were substantially deflated in relation to the market price for the same product types in Egypt, that is, they were not at arm’s length. As a result, it adjusted the GFR cost on the basis of the prices charged by Jushi to unrelated companies in the Egyptian market.’ Regulation (EC) No 1972/2002 8 Recital 4 of Council Regulation (EC) No 1972/2002 of 5 November 2002 amending Regulation (EC) No 384/96 on the protection against dumped imports from countries not members of the European Community (OJ 2002 L 305, p. 1) stated: ‘It is considered appropriate to give some guidance as to what has to be done if, pursuant to Article 2(5) of [Council Regulation (EC) No 384/96 of 22 December 1995 on protection against dumped imports from countries not members of the European Community (OJ 1996 L 56, p. 1)], the records do not reasonably reflect the costs associated with the production and sale of the product under consideration, in particular in situations where because of a particular market situation sales of the like product do not permit a proper comparison. In such circumstances, the relevant data should be obtained from sources which are unaffected by such distortions. Such sources can be the costs of other producers or exporters in the same country or, where such information is not available or cannot be used, any other reasonable basis, including information from other representative markets. The relevant data can be used either for adjusting certain items of the records of the party under consideration or, where this is not possible, for establishing the costs of the party under consideration.’ Background to the dispute 9 In paragraphs 2 to 15 of the judgment under appeal, the background to the dispute is summarised as follows: ‘2 Hengshi and Jushi are two companies formed in accordance with the laws of the Arab Republic of Egypt. They both belong to the China National Building Material group (CNBM). The [appellants’] business consists in the production and export, inter alia, of [GFF] sold, inter alia, within the European Union. 3 During the investigation period (from 1 January 2018 to 31 December 2018), Jushi produced both GFF and [GFR], the main raw material used to produce GFF. Jushi used its self-produced GFR to manufacture GFF, but it also sold GFR to unrelated customers both in Egypt and abroad, as well as to Hengshi. Hengshi manufactured GFF from GFR purchased from Jushi as well as from one other related company and from one unrelated company, which are both established in China. 4 Jushi sold GFF directly to unrelated customers in Egypt and the European Union. It also exported GFF to three related customers in the European Union, namely Jushi Spain SA, Jushi France SAS and Jushi Italia Srl. Jushi also sold GFF in the European Union through a related company established outside the European Union, Jushi Group (HK) Sinosia Composite Materials Co. Ltd. 5 Hengshi did not sell GFF on the Egyptian market. It sold GFF in the European Union directly to unrelated customers and through a related company established outside the European Union, Huajin Capital Ltd. 6 Following a complaint lodged on 8 January 2019 by [the intervener at first instance], Tech-Fab Europe, on behalf of producers representing more than 25% of the total EU production of GFF, pursuant to Article 5 of [the basic regulation], the Commission initiated an anti-dumping investigation with regard to imports into the European Union of GFF originating in China and Egypt. On 21 February 2019, the Commission published a Notice of Initiation in the Official Journal of the European Union (OJ 2019 C 68, p. 29). 7 As is apparent from recital 52 of the [regulation at issue], the products subject to the anti-dumping investigation were fabrics of woven or stitched continuous filament glass fibre rovings or yarns with or without other elements, excluding products which are impregnated or pre-impregnated and excluding open mesh fabrics with cells with a size of more than 1.8 mm both in length and in width and weighing more than 35 g/m2, originating in China and Egypt, falling at the material time under CN codes ex 7019 39 00, ex 7019 40 00, ex 7019 59 00 and ex 7019 90 00 (TARIC codes 7019390080, 7019400080, 7019590080 and 7019900080). 8 The investigation of dumping and injury covered the period from 1 January to 31 December 2018. The examination of trends relevant for the assessment of injury and causation covered the period from 1 January 2015 to the end of the investigation period. 9 On 8 April 2019, the [appellants] submitted their replies to the anti-dumping questionnaire and Annex I to the questionnaire from their related companies. 10 On 16 May 2019, the Commission initiated a separate anti-subsidy investigation with regard to imports into the European Union of GFF originating in China and Egypt (“the parallel anti-subsidy investigation on GFF”). On 7 June 2019, the Commission also initiated an anti-subsidy investigation on GFR (“the parallel anti-subsidy investigation on GFR”). 11 The Commission carried out verification visits at the [appellants’] premises and the premises of their related companies. On 30 May 2019, following those visits, the [appellants] submitted additional comments. 12 On 19 December 2019, the Commission communicated the essential facts and considerations on the basis of which it intended to impose definitive anti-dumping measures on the imports of GFF originating in China and Egypt (“the final disclosure”). On 9 January 2020, the [appellants] submitted their comments on that disclosure. On 16 January 2020, a hearing concerning that disclosure was held at the Commission’s premises. On the same day, the [appellants] submitted further comments in writing. 13 On 10 February 2020, the Commission published an additional final disclosure document (“the additional final disclosure”). That disclosure took account of particular arguments communicated by the [appellants] regarding the final disclosure. The [appellants] submitted their comments on the additional final disclosure on 13 February 2020. On 17 February 2020, a hearing concerning that disclosure was held at the Commission’s premises. 14 At the [appellants’] request, the Hearing Officer held a further hearing on 25 February 2020. 15 On 1 April 2020, the Commission adopted the [regulation at issue]. That regulation imposes a definitive anti-dumping duty of 20% on GFF imports by the [appellants] into the European Union.’ The procedure before the General Court and the judgment under appeal 10 By application lodged at the Registry of the General Court on 19 May 2020, the appellants brought an action for annulment of the regulation at issue. 11 By order of 11 November 2020, the General Court granted Tech-Fab Europe leave to intervene in support of the form of order sought by the Commission. 12 In support of their action for annulment, the appellants relied on two pleas in law, first, alleging, that the Commission’s methodology for establishing Hengshi’s GFF production cost, the selling, general and administrative expenses (‘SG&A expenses’) and the profit to be used for the calculation of its constructed normal value infringed Article 2(3), (5), (6), (11) and (12), and Article 9(4) of the basic regulation and, secondly, the Commission’s methodology to determine the appellants’ undercutting and underselling margins infringed Article 3(1) to (3) and (6), and Article 9(4) of that regulation. 13 By the judgment under appeal, the General Court dismissed those two pleas and, therefore, the action in its entirety. As regards the first plea, the General Court held that, inter alia, without committing an error of law or a manifest error of assessment, that the Commission was able to decide that, since the price of GFR in Hengshi’s records was not at arm’s length, that price could not be regarded as reasonably taking into account the costs associated with the production and sale of the product under consideration, and that, consequently, that price had to be adjusted. As regards the second plea, the General Court held that it was ineffective. Even if the appellants were justified in challenging the method used by the Commission used to establish Jushi’s export price in calculating the undercutting and the underselling margin, the General Court held that such an error would not be capable of leading to the annulment of the regulation at issue, since, even if it were necessary to have regard to new calculations produced by the Commission, taking into consideration the appellants’ criticisms, those calculations would not, in any event, result in a modification of the anti-dumping duties imposed on the appellants, as the appellants themselves had conceded. Forms of order sought 14 By their appeal, the appellants claim that the Court of Justice should: – set aside the judgment under appeal; – accept the first, third and fifth parts of the first plea in law at first instance, and – order the Commission and any intervener to pay the costs of the appeal proceedings and of the proceedings before the General Court. 15 The Commission contends that the Court should: – dismiss the appeal, and – order the appellants to pay the costs of the proceedings. 16 Tech-Fab Europe claims that the Court should: – dismiss the appeal as unfounded, and – order the appellants to pay Tech-Fab Europe’s costs of these proceedings and its intervention at first instance. The appeal 17 In support of their appeal, the appellants put forward three grounds of appeal. The first ground of appeal, alleging infringement of the first subparagraph of Article 2(5) of the basic regulation Arguments of the parties 18 By their first ground of appeal, which relates to paragraphs 31 to 34 and 36 to 43 of the judgment under appeal, the appellants claim that the General Court infringed the first subparagraph of Article 2(5) of the basic regulation. In particular, the appellants submit that the General Court erred in holding that since the price of GFR in Hengshi’s records was not at arm’s length, that price could not be regarded as reasonably taking into account the costs associated with the production and sale of the product under consideration, and that, consequently, that price had to be adjusted. 19 In support of that first ground of appeal, the appellants submit, in the first place, that Article 2(5) of the basic regulation, interpreted strictly and in the light of its context, does not allow the Commission to disregard the costs contained in the records of the exporting producer simply because a cost item was not incurred at arm’s length. 20 Accordingly, the General Court, in finding that, on the basis of the wide discretion which it enjoys, the Commission may, for the purpose of making an adjustment, disregard the costs entered in the records of the party under investigation where the price of the raw material used in the manufacture of the product under investigation is not set at arm’s length, erred in law by conferring on the first subparagraph of Article 2(5) of the basic regulation a scope which it does not have. Consequently, the General Court was also wrong to hold, in paragraph 29 of the judgment under appeal, that, because of that wide discretion, its review had to be limited, in that context, to verifying whether the relevant procedural rules have been complied with, whether the facts on which the contested choice is based have been accurately stated, and whether there has been a manifest error of assessment or a misuse of powers by the Commission. 21 Since the second condition set out in the first subparagraph of Article 2(5) of the basic regulation is covered by an exception, that condition is to be interpreted strictly, so that, for the purpose of applying that condition, the Commission must rely on objective factors, without having any discretion in that regard. Thus, in so far as the exception provided for by the second condition of the first subparagraph of Article 2(5) of the basic regulation expressly targets situations in which the records do not reasonably reflect the costs incurred by the producer in question and covers situations in which costs are affected by a particular market situation, that exception cannot be extended to other circumstances, such as the fact that the costs at issue are not incurred at arm’s length as a result of an intra-group relationship, than those which are thus exhaustively provided for by that provision. 22 Furthermore, in paragraph 41 of the judgment under appeal, the General Court wrongly extended the scope of Article 2(5) of that regulation, which concerns the quality of records, relying by analogy on Article 2(1) of that regulation, which concerns the quality and reasonableness of the costs incurred by related parties. 23 In the second place, the appellants claim that the error on the part of the General Court in the interpretation of the first subparagraph of Article 2(5) of the basic regulation is confirmed by the case-law of the WTO Dispute Settlement Body. That provision should be read in the light of Article 2.2.1.1 of the Anti-Dumping Agreement, as interpreted in turn by the WTO Dispute Settlement Body. However, the WTO Dispute Settlement Body has already found, in a report dated 12 September 2019, that the second condition set out in the first sentence of Article 2.2.1.1 relates to whether the records kept by the exporter or producer under investigation suitably and sufficiently correspond to or reproduce those costs incurred by the exporter or producer under investigation that have a genuine relationship with the production and sale of the specific product under consideration. Similarly, in a report adopted on 26 October 2016, the WTO Appellate Body stated, inter alia, that that second condition requires a comparison between the costs indicated in the records of the producer or exporter and the costs incurred by that producer or exporter. 24 Therefore, according to the appellants, the first subparagraph of Article 2(5) of the basic regulation must be interpreted as meaning that the Commission must confine itself to verifying that the documents held by the producer under investigation correspond ‘suitably and sufficiently’ to the costs incurred by that producer in order to produce and sell the product under consideration. The Commission is therefore not permitted to verify whether the records of the producer in question reasonably reflect certain hypothetical costs which could have been incurred if that producer had not purchased the raw material from a related party. In the present case, the General Court should have inferred from the fact, noted in paragraph 37 of the judgment under appeal, that Jushi sold GFR to Hengshi at a profit, that all the costs incurred to produce GFR and GFF had been correctly entered in Hengshi’s records. The General Court was therefore wrong to hold that the Commission was entitled to disregard Hengshi’s records in order to establish its production costs under Article 2(5) of the basic regulation. 25 The Commission and Tech-Fab Europe contend that the first ground of appeal must be rejected as unfounded. Findings of the Court 26 In the first place, as regards the argument of the appellants that Article 2(5) of the basic regulation contains an exception which must be interpreted restrictively, it must be borne in mind that, according to the wording of the first subparagraph of Article 2(5) of the basic regulation, costs are normally to be calculated on the basis of records kept by the party under investigation, provided that such records are in accordance with the generally accepted accounting principles of the country concerned and that it is shown that the records reasonably reflect the costs associated with the production and sale of the product under consideration. 27 As the General Court stated in paragraph 27 of the judgment under appeal, and as the appellants rightly claim, that arrangement constitutes an exception to a general rule and must therefore be interpreted restrictively. 28 The fact remains that Article 2(5) of the basic regulation does not oblige the Commission to accept unconditionally and without carrying out the necessary checks the information contained in the records of the producer or exporter under investigation. 29 As the General Court rightly pointed out in paragraph 29 of the judgment under appeal, in the sphere of measures to protect trade, the institutions enjoy a wide discretion by reason of the complexity of the economic, political and legal situations which they have to examine. Consequently, review by the EU Courts of measures adopted by the institutions in the exercise of that wide discretion is limited to verifying whether the relevant procedural rules have been complied with, whether the facts on which the contested choice is based have been accurately stated and whether there has been a manifest error of assessment of those facts or a misuse of powers. That limited judicial review covers, in particular, the choice between the different methods of calculating the dumping margin and the assessment of the normal value of a product (see, to that effect, judgment of 27 September 2007, Ikea Wholesale, C‑351/04, EU:C:2007:547, paragraphs 40 and 41 and the case-law cited). 30 In the present case, the General Court noted, in paragraphs 34 and 40 of the judgment under appeal, that the Commission disregarded the costs entered in the records of the party under investigation because the prices of the raw material used in the manufacture of the product under investigation did not appear to be set at arm’s length, because of an intra-group relationship. In addition, as the Commission stated in recital 312 of the regulation at issue, the prices at which Hengshi purchased GFR from Jushi were consistently and substantially below the prices at which Jushi sold the same product to independent customers operating on the Egyptian market. 31 The appellants consider, in essence, that the exception provided for in the first subparagraph of Article 2(5) of the basic regulation must be interpreted as meaning that it is only if the documents kept by the producer under investigation do not correspond ‘suitably and sufficiently’ to the costs incurred by that producer in order to produce and sell the product under consideration that the Commission may calculate the costs associated with the production and sale other than solely on the basis of the records of the producer in question. 32 According to settled case-law, the interpretation of a provision of EU law requires that account be taken not only of its wording and the objectives it pursues, but also of its legislative context and the provisions of EU law as a whole. The origins of a provision of EU law may also provide information relevant to its interpretation (judgments of 10 December 2018, Wightman and Others, C‑621/18, EU:C:2018:999, paragraph 47 and the case-law cited, and of 1 October 2019, Planet49, C‑673/17, EU:C:2019:801, paragraph 48). 33 As regards the objective of the first and second subparagraphs of Article 2(5) of the basic regulation, it should be noted that that provision seeks to ensure that the costs associated with the production and sale of the like product used in calculating the normal value of that product reflect the costs that a producer would have incurred on the domestic market of the exporting country. 34 As regards the context, the provisions of the third and fourth subparagraphs of Article 2(1) of the basic regulation, which make explicit reference to situations in which prices are affected because of an intra-group relationship, serve as a basis for the other provisions of Article 2 in relation to the determination of the normal value, including those provided for in Article 2(5). The failure to repeat those elements in Article 2(5) of that regulation does not imply that the EU legislature intended to exclude that situation. 35 Furthermore, it should be borne in mind that Article 2(5) of Regulation No 384/96, which the basic regulation repealed and replaced, was worded, in essence, in the same terms as Article 2(5) of that regulation. 36 It is apparent from recital 4 of Regulation No 1972/2002, which inserted that provision into Regulation No 384/96, that the EU legislature thus intended to give some guidance as to what has to be done if the producer’s records do not reasonably reflect the costs associated with the production and sale of the product under consideration, in particular in situations where, because of a particular market situation, sales of the like product did not permit a proper comparison. In such a case, that recital states that the relevant data should be obtained from sources which are unaffected by ‘such distortions’. 37 It follows that the Commission must be able to assess the costs associated with the production and sale of a product under investigation on the basis of Article 2(5) of the basic regulation, in particular where sales of the like product do not permit a proper comparison on account of distortion. 38 Consequently, the General Court did not misinterpret the scope of the first subparagraph of Article 2(5) of the basic regulation in holding that that provision does not prevent the Commission from disregarding the costs entered in the records of the party under investigation where the prices of the raw material used in the manufacture of the product under investigation do not appear to be set at arm’s length, because of an intra-group relationship. 39 In the second place, the appellants complain that the General Court failed to take adequate account of the case-law of the WTO Dispute Settlement Body relating to Article 2.2.1.1 of the Anti-Dumping Agreement. 40 In that regard, it should be recalled that, first, the primacy of international agreements concluded by the European Union over secondary EU legislation requires that the latter be interpreted, as far as possible, in a manner consistent with those agreements, and, secondly, that the Court has already referred to WTO Panel and Appellate Body reports in support of its interpretation of certain provisions of agreements annexed to the agreement establishing the WTO (see, to that effect, judgment of 28 April 2022, Yieh United Steel v Commission, C‑79/20 P, EU:C:2022:305, paragraphs 101 and 102 and the case-law cited). 41 Therefore, the General Court was fully entitled to refer, in paragraph 32 of the judgment under appeal, to a report of the WTO Appellate Body in the case ‘European Union – Anti-dumping measures on biodiesel from Argentina’ (WT/DS 473/AB/R), adopted on 26 October 2016, in which, inter alia, the scope of Article 2.2.1.1 of the Anti-Dumping Agreement is clarified, for the purpose of interpreting the substantially identical provision of Article 2(5) of the basic regulation in order to confirm that the latter provision does not preclude the Commission from disregarding the costs entered in the records of the party under investigation where the price of the raw material used for the manufacture of the product under consideration is not at arm’s length. 42 Contrary to what the appellants submit, it is apparent from paragraph 6.33 of that report that it may be found that records do not take reasonable account of the costs associated with the production and sale of the product under consideration where the transactions concerning certain inputs associated with the production and sale of that product are not at arm’s length. 43 It follows from all the foregoing that the General Court did not infringe the first subparagraph of Article 2(5) of the basic regulation in holding that that provision does not prevent the Commission from disregarding the costs entered in the records of the party under investigation where the prices of the raw material used in the manufacture of the product under investigation do not appear to be set at arm’s length, because of an intra-group relationship. 44 In the light of the foregoing considerations, the first ground of appeal must be dismissed as unfounded. The second ground of appeal, alleging infringement of the second subparagraph of Article 2(5) of the basic regulation 45 The second ground of appeal, which relates to paragraphs 72 to 76, 80 and 82 to 88 of the judgment under appeal, is divided into two parts. The first part – Arguments of the parties 46 By the first part of the second ground of their appeal, the appellants complain that the General Court, in paragraph 84 of the judgment under appeal, misinterpreted and misapplied the second subparagraph of Article 2(5) of the basic regulation in finding that the Commission was justified in making an adjustment to Hengshi’s cost of GFR on ‘any other reasonable basis’. More specifically, the General Court failed to have regard to the scope of the conditions for the application of the second subparagraph of Article 2(5) of the basic regulation, according to which the Commission must, in principle, adjust the costs which are not reasonably reflected in that producer’s records. Since that provision states that it is only ‘where such information is not available or cannot be used’ that the Commission can rely on ‘any other reasonable basis’, that rule is in the nature of an exception and is, on that basis, to be interpreted restrictively. 47 In that regard, the appellants claim that it was on the basis of a misinterpretation of that provision that the General Court held, in paragraph 86 of the judgment under appeal, that, although, in accordance with the second subparagraph of Article 2(5) of the basic regulation, where the costs associated with the production and sale of the product under investigation are not reasonably reflected in the records of the party concerned, they must be adjusted or established ‘on the basis of the costs of other producers or exporters in the same country’, the Commission was entitled, in the present case, to make that calculation on ‘any other reasonable basis’, on the ground that the costs of the other producers were not ‘comparable’ to each other, given the relationship between Jushi and Hengshi and Jushi’s cost structure, as a vertically integrated company. According to the appellants, the ‘comparability’ of the costs of other producers is not among the derogations from the rule, established in the second subparagraph of Article 2(5) of the basic regulation, for adjusting the costs which are not reasonably reflected in the records. 48 The appellants argue that the error of law committed by the General Court in finding that the Commission was justified in applying the exception in the second subparagraph of Article 2(5) of the basic regulation is confirmed in paragraph 87 of the judgment under appeal. The General Court wrongly considered irrelevant the fact that the Commission relied on Jushi’s SG&A expenses and profit on its domestic sales of GFF in order to construct the normal value of Hengshi’s GFF pursuant to Article 2(6)(a) of the basic regulation, on the ground that Article 2(5) of that regulation deals with a different issue. Those provisions deal with the same question, namely the determination of the cost elements which must be used to construct the normal value. Consequently, it should also be permissible to use Jushi’s cost of production under the second subparagraph of Article 2(5) of the basic regulation to determine Hengshi’s cost of production. 49 Furthermore, according to the appellants, the General Court should have concluded that Jushi’s GFR production cost could validly be used to determine Hengshi’s cost of production pursuant to the second subparagraph of Article 2(5) of the basic regulation. It is incorrect to claim, as the General Court did in paragraph 83 of the judgment under appeal, that the Commission did not ‘accept’ Jushi’s GFR production cost, even though that institution used Jushi’s own production cost for manufacturing GFF, which by definition encompassed Jushi’s GFR production cost, in order to calculate its dumping margin. The fact that Jushi and Hengshi are related had no impact on the costs of production of GFR manufactured by Jushi, since that producer did not purchase raw materials or inputs from Hengshi. 50 The Commission and Tech-Fab Europe contend that the first part of the appellants’ second ground of appeal must be rejected as unfounded. – Findings of the Court 51 In accordance with the second subparagraph of Article 2(5) of the basic regulation, if costs associated with the production and sale of the product under investigation are not reasonably reflected in the records of the party concerned, they are to be adjusted or established on the basis of the costs of other producers or exporters in the same country or, where such information is not available or cannot be used, on any other reasonable basis, including on the basis of information from other representative markets. 52 In the present case, the Commission had recourse to that exception to adjust Hengshi’s GFR cost by adjusting those costs on ‘any other reasonable basis’, instead of making an adjustment ‘on the basis of the costs of other producers or exporters in the same country’, namely on the basis of the costs incurred by Jushi, which is the only other producer of GFR in Egypt, for the production of those GFR. 53 First of all, it must be held that the General Court was right to find, in paragraph 79 of the judgment under appeal, that since the choice of using ‘any other reasonable basis’ constitutes an exception to the general rule laid down in the second subparagraph of Article 2(5) of the basic regulation, it must be interpreted restrictively, as the appellants submit in support of the first part of their second ground of appeal. Thus, in order to depart from the rule that, where the costs associated with the production and sale of the product under investigation are not reasonably reflected in the records of the party concerned, they must be adjusted or established on the basis of the costs of other producers or exporters in the same country, the Commission must rely on direct evidence, or at least on circumstantial evidence, pointing to the existence of the factor for which the adjustment was made. 54 In the present case, the General Court held, in paragraph 80 of the judgment under appeal, that, in order to substantiate its decision not to use Jushi’s GFR production cost to adjust the cost of Hengshi’s GFR and, consequently, to use another reasonable basis, the Commission had relied on the fact that Jushi was a company related to Hengshi, and that Jushi was a vertically integrated company, that is to say that it produces and uses its own GFR to manufacture GFF, which was not the case with Hengshi, which sources GFR from Jushi and other related Chinese suppliers to manufacture GFF. 55 On the basis of such findings of fact, which the appellants do not dispute, the General Court could legitimately infer that Jushi’s GFR production cost could not be used by the Commission for the purposes of the adjustment in question. As the General Court stated in paragraph 86 of the judgment under appeal, in such circumstances, that institution could not take those costs into consideration, since Jushi, unlike Hengshi, was a vertically integrated company. Accordingly, the General Court was fully entitled to hold that the Commission was justified, in the light of those facts, in disregarding Jushi’s GFR production costs and making an adjustment on ‘any other reasonable basis’. 56 Next, the appellants submit that if Jushi’s SG&A expenses and profit could have been used to establish the normal value of Hengshi’s GFF pursuant to Article 2(6)(a) of the basic regulation, Jushi’s cost of production could also have been used under the second subparagraph of Article 2(5) of the basic regulation to determine Hengshi’s cost of production. 57 Contrary to what the appellants claim, the General Court did not err, in paragraph 87 of the judgment under appeal, in rejecting that argument on the ground that the provisions in question deal with different issues. The General Court was correct to point out that Article 2(5) of the basic regulation concerns the calculation of the costs associated with the production and sale of the product under consideration, whereas the subject matter of Article 2(6) of that regulation is the calculation of SG&A expenses and profit based on the domestic sales of the like product in the ordinary course of trade. They are separate elements in the construction of the normal value. 58 Finally, as regards paragraph 83 of the judgment under appeal, the appellants call into question the General Court’s assessment of the facts that the Commission did not ‘accept’ Jushi’s GFR production cost. They claim that that error of assessment is clear from the procedural documents submitted to the General Court, in which the Commission states that ‘Jushi Egypt’s own cost of manufacturing was used’ to construct the normal value of product types not sold in representative quantities. 59 In that regard, it should be borne in mind that according to settled case-law, in an appeal, the Court of Justice has no jurisdiction to establish the facts or, in principle, to examine the evidence which the General Court accepted in support of those facts. Provided that the evidence has been properly obtained and the general principles of law and the Rules of Procedure in relation to the burden of proof and the taking of evidence have been observed, it is for the General Court alone to assess the value which should be attached to the evidence produced before it, save where that evidence has been distorted (judgment of 11 January 2024, Foz v Council, C‑524/22 P, EU:C:2024:23, paragraph 37 and the case-law cited). 60 There is such distortion where, without recourse to new evidence, the assessment of the existing evidence is clearly incorrect. However, such distortion must be obvious from the documents on the Court’s file, without there being any need to carry out a new assessment of the facts and the evidence. Furthermore, where an appellant claims that the evidence has been distorted, it must indicate precisely the evidence alleged to have been distorted by the General Court and show the errors of appraisal which, in its view, led to that distortion (judgment of 11 January 2024, Foz v Council, C‑524/22 P, EU:C:2024:23, paragraph 38 and the case-law cited). 61 In the present case, it is apparent from the file submitted to the Court that it was when calculating Hengshi’s cost of GFR that the Commission decided not to use Jushi’s GFR production cost and that it therefore used another reasonable basis. However, the procedural document relied on by the appellants, in which the Commission states that ‘Jushi Egypt’s own cost of manufacturing was used’, refers to the cost of GFR produced not by Hengshi, but by Jushi. In that regard, as the General Court found in paragraph 80 of the judgment under appeal, to which paragraph 83 of that judgment expressly refers, the Commission did not accept Jushi’s GFR production cost on account of the links between those two companies, namely that Jushi, whilst being the only other producer of GFF in Egypt, was, first, a company related to Hengshi and, secondly, a vertically integrated company, which was not the case with Hengshi. 62 In that regard, the appellants merely submit that the General Court’s finding, in paragraph 83 of the judgment under appeal, is materially inaccurate, without establishing further the evidence alleged to have been distorted by the General Court or showing the errors of appraisal which, in its view, led to that distortion. Accordingly, it must be held that, by not providing any evidence to justify their allegation of distortion of the facts at issue by the General Court, the appellants have not discharged their burden in that regard. 63 That complaint must therefore be rejected. 64 In the light of the foregoing considerations, the first part of the second ground of appeal must be dismissed as unfounded. The second part – Arguments of the parties 65 In support of the second part of their second ground of appeal, the appellants complain that the General Court, first, erred in law in deciding that the Commission had not infringed its obligation to state reasons and, secondly, wrongly upheld reasons relied on for the first time before it by that institution. According to the appellants, recital 331 of the regulation at issue does not explain why the Commission had to resort to the exception referred to in the second subparagraph of Article 2(5) of the basic regulation in order to determine Hengshi’s cost of production. In addition, the Commission does not explain, in the body of the regulation at issue, why, first, that provision gives rise to a requirement of ‘comparability’ and, secondly, Jushi was not comparable to Hengshi, thus justifying the use of that exception. It was for the first time in its statement in defence before the General Court that the Commission set out why it decided to use the exception provided for in the second subparagraph of Article 2(5) of the basic regulation. 66 The Commission contends that that part of the second ground of appeal is, principally, unfounded and, in the alternative, ineffective. 67 Tech-Fab Europe submits that the second part of the second ground of appeal must be rejected as unfounded. – Findings of the Court 68 As regards the failure to state reasons claimed by the appellants, it should be noted that it is apparent from recital 331 of the regulation at issue that the Commission stated therein that, after assessing whether Hengshi’s records reasonably reflected the costs associated with the production of GFF, it had found that the transfer prices for Hengshi’s purchases of GFR from Jushi were significantly deflated in relation to the market price for the same product types in Egypt, that is, they were not at arm’s length. 69 Since the Commission thus set out the reasons why it had recourse to the second subparagraph of Article 2(5) of the basic regulation, the General Court was right to decide, in paragraph 76 of the judgment under appeal, that the complaint alleging infringement of the obligation to state reasons had to be rejected. 70 Lastly, the argument concerning comparability that the Commission set out for the first time in the defence is ineffective, given that recital 331 of the regulation at issue already provided a statement of reasons for the Commission’s use of ‘[another] reasonable basis’ within the meaning of the second subparagraph of Article 2(5). 71 In the light of the foregoing considerations, the second part of the second ground of appeal of the appellants must be rejected as, in part, unfounded and, in part, ineffective. Accordingly, the second ground of appeal must be rejected in its entirety. The third ground of appeal Arguments of the parties 72 By their third ground of appeal, which relates to paragraphs 97 and 98 of the judgment under appeal, the appellants submit that the General Court erred in finding that the Commission did not infringe Article 9(4) of the basic regulation by imposing on the appellants a definitive anti-dumping duty of 20% which exceeds the dumping margin. In support of that ground of appeal, the appellants submit that it follows from the complaints that they put forward in their first and second grounds of appeal that the General Court wrongly held that the appellants had not demonstrated that the Commission had committed errors of law or manifest errors of assessment. The General Court therefore also erred in law in holding that the Commission did not impose anti-dumping duties which exceed the dumping margin and that, consequently, it did not infringe Article 9(4) of the basic regulation. 73 According to the Commission and Tech-Fab Europe, the third ground of appeal is ineffective. Findings of the Court 74 As the appellants submit, the third ground of appeal presupposes that the first and second grounds of appeal have been declared well founded. Since those grounds of appeal have been rejected, that third ground of appeal, even if it is well founded, cannot, on its own, lead to the judgment under appeal being set aside, with the result that it must be declared ineffective. 75 Since none of the grounds of appeal put forward by the appellants in support of their appeal has been upheld, the appeal must be dismissed in its entirety. Costs 76 Under Article 184(2) of the Rules of Procedure of the Court of Justice, where the appeal is unfounded, the Court is to make a decision as to costs. Under Article 138(1) of those Rules of Procedure, which applies to appeal proceedings by virtue of Article 184(1) thereof, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. 77 Since the Commission and Tech-Fab Europe have applied for costs and Hengshi and Jushi have been unsuccessful, Hengshi and Jushi must be ordered, in addition to bearing their own costs, to pay those incurred by the Commission and Tech-Fab Europe. On those grounds, the Court (Seventh Chamber) hereby: 1. Dismisses the appeal; 2. Orders Hengshi Egypt Fiberglass Fabrics SAE and Jushi Egypt for Fiberglass Industry SAE, in addition to bearing their own costs, to pay those incurred by the European Commission and by Tech-Fab Europe eV. Biltgen Passer Arastey Sahún Delivered in open court in Luxembourg on 30 May 2024. A. Calot Escobar F. Biltgen Registrar President of the Chamber * Language of the case: English.