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"B COUNCIL REGULATION (EC) No 1567/97
of 1 August 1997
imposing a definitive anti-dumping duty on imports of leather handbags originating in the People’s
Republic of China and terminating the proceeding concerning imports of plastic and textile handbags
originating in the People’s Republic of China
(OJ L 208, 2.8.1997, p. 31)
Amended by:
Official Journal
No page date
"M1 Council Regulation (EC) No 2380/98 of 3 November 1998 L 296 1 5.11.1998
"M2 Council Regulation (EC) No 175/2000 of 24 January 2000 L 22 25 27.1.2000
"M3 Council Regulation (EC) No 133/2001 of 22 January 2001 L 23 9 25.1.2001
NB: This consolidated version contains references to the European unit of account and/or the ecu, which from 1 January 1999 should be
understood as references to the euro — Council Regulation (EEC) No 3308/80 (OJ L 345, 20.12.1980, p. 1) and Council Regulation(EC) No 1103/97 (OJ L 162, 19.6.1997, p. 1).1997R1567 — EN — 26.01.2001 — 003.001 — 1
COUNCIL REGULATION (EC) No 1567/97
of 1 August 1997
imposing a definitive anti-dumping duty on imports of leather handbags
originating in the People’s Republic of China and terminating the
proceeding concerning imports of plastic and textile handbags originating
in the People’s Republic of China
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 theEuropean Community (
1), and in particular Articles 9 (2), 9 (4) and 10 (2)
thereof,
Having regard to the proposal presented by the Commission after consulting
the Advisory Committee,
Whereas:
A. PROVISIONAL MEASURES
(1) By Regulation (EC) No 209/97 (2) the Commission imposed a
provisional anti-dumping duty on imports into the Community ofhandbags originating in the People’ s Republic of China and falling
within CN codes 4202 21 00 (leather), 4202 22 10 (plastic) and
4202 22 90 (textiles).
B. SUBSEQUENT PROCEDURE
(2) Subsequent to the imposition of the provisional anti-dumping duty, the
interested parties who so requested were granted an opportunity to beheard by the Commission. A number of these parties also made written
submissions making their views on the findings known.
(3) The Commission’ s services investigated further aspects of the
Community interest and sought and verified all information deemednecessary for the definitive findings. Because of the large number of
parties which made themselves known well after the expiry of the
deadline and the arguments raised by interested parties at a veryadvanced stage of the investigation and immediately after theimposition of provisional measures, the Commission exceptionally
agreed to include these parties in the investigation regarding
Community interest.
(4) Upon request, parties were informed in writing of the essential facts
and considerations on the basis of which it was intended to recommend
both the imposition of definitive duties and the definitive collection of
the amounts secured by way of provisional duty with respect to leatherhandbags, and further to terminate the proceeding with respect toplastic and textile handbags.
(5) The oral and written comments presented by the parties were
considered, and, where appropriate, the Commission’ s findings weremodified to take account of them.
C. SUPPORT FOR THE COMPLAINT
(6) Some interested parties have claimed that the complaint did not receive
support from a major proportion of total Community production
because there was no evidence that individual producers accounting for
a major proportion gave such support. They also pointed out that theopposition of several National Federations affects the representative-ness of the complainant.
(7) After examination prior to the initiation of the proceeding, it was
determined that the National Federations of Belgium, France, Greece,
Italy, Portugal, Spain and the United Kingdom supported thecomplaint. The production of their associated members accounts for!B
(1) OJ No L 56, 6. 3. 1996, p. 1.
(2) OJ No L 33, 4. 2. 1997, p. 11.1997R1567 — EN — 26.01.2001 — 003.001 — 2
a major proportion (around 70 %) of total Community production
under the terms of Article 5 (4) of Regulation (EC) No 384/96(hereinafter referred to as ‘the basic regulation’).
(8) The support of the members of the National Federations (i.e. the
individual companies) was obtained by the European Committee of
National Federations of the Leather, Travel Goods and AlliedIndustries (CEDIM) through the abovementioned National Feder-
ations, which have the legal capacity to represent their members.
(9) No opposition was registered prior to initiation of the investigation as
three other National Federation members of CEDIM (Austria,Germany and the Netherlands) agreed within CEDIM not to oppose
the complaint. Finally no company or National Federation from the
remaining five other Member States (Denmark, Finland, Ireland,Luxembourg and Sweden) expressed opposition to the complaint.
(10) Subsequent to the initiation of the proceeding, the British Federation
decided to withdraw its support. The Austrian, German and DutchFederations, which initially abstained, also decided to oppose theproceeding. This change in position cannot throw into question
retrospectively the validity of the initiation of the proceeding. Given
the low production in these countries (less than 7 % of totalCommunity production) such opposition does not call into questionthe fact that the complainant continues to represent a major proportion
of total Community production.
(11) Finally, almost all companies which expressed opposition to the
proceeding are importers and retailers of handbags, which are not
producing the product concerned. Their opposition is therefore
irrelevant for evaluating the representativeness of the complaint.
(12) It can therefore be concluded that, prior to the initiation of the
proceeding, the Commission sought and obtained, from the complain-
ant, evidence that it fulfilled the requirement of Article 5 (4) of the
basic regulation with regard to representativeness and that the requireddegree of support was maintained throughout the proceeding.
D. INVESTIGATION
(13) Some interested parties have claimed that the sample of Community
producers as described in recital 5 of Commission Regulation (EC) No
209/97 is neither representative nor statistically valid because thesampled companies were selected from a separate list of companies
submitted by the respective National Federations and not from the
membership lists used to assess the representativeness of thecomplaint. These parties claim that the National Federations werethus allowed to pre-select only Community producers who supported
the complaint, those whose financial indicators facilitated findings of
injury or those willing to cooperate.
(14) The sample of Community producers was based on detailed
information previously not available to the National Federations with
that degree of detail or for the period in question. Therefore, it is
considered that a valid sample of Community producers could not havebeen selected on the basis of the list of members submitted by the
National Federations as the basis for the complaint.
(15) The argument that the National Federations could have pre-selected
those Community producers whose indicators facilitated findings ofinjury is also incorrect. Indeed, it should be recalled that general data
concerning production, sales, consumption and employment have been
assessed at total Community industry level where no pre-selection ispossible. As far as data concerning the sampled Community producers
are concerned, this information is of such a detailed and confidential
nature that it is not normally submitted to the National Federations andtherefore leaves no scope for any pre-selection by any NationalFederations. Thus, this argument should also be rejected.
(16) Some parties have also argued that the non-disclosure of the identity of
the sampled Community producers has resulted in a denial of theirright of defence.
(17) The threat of commercial retaliation is considered to be a serious
commercial pressure justifying the non-disclosure of the identity of the
Community producers. Moreover, it is not considered that the lack of!B1997R1567 — EN — 26.01.2001 — 003.001 — 3
knowledge of the identity of the sample Community producers
hampers the rights of defence of interested parties who have access tothe non-confidential versions of the responses to the questionnairessubmitted by other interested parties during the proceeding.
(18) One interested party has claimed that the sample of unrelated
importers is distorted by the fact that only large unrelated importers
have been sampled. Because of their bargaining power these importerstend to import at lower prices, which has resulted in a distortion in thedumping margins found.
(19) This claim is unfounded; unrelated importers were sampled according
to their volume of imports and employment, to reflect large, mediumand small importers.
The names of the sampled unrelated importers in France in recital 10
of Regulation (EC) No 209/97 should be amended as follows: ‘Dané &
Galiay (Paris)’ should read ‘Pollyconcept SA’. This does not affect the
validity of the findings of the Commission, since the data of the latterhas been used consistently.
(20) Subsequent to the impos ition of the provisional anti-dumping
measures, a producer/exporter (Gebr. Picard International Ltd) was
sent, on its request, an exporter’s questionnaire and it submitted a
complete reply. This producer/exporter had not been investigated priorto Regulation (EC) No 209/97 as it had initially focused on its role as
an importer, and not as a related exporter, although it had as such
manifested itself within the time-limits established in paragraph 7 ofthe Notice of Initiation.
(21) A large number of producers/exporters manifested themselves and
offered to cooperate immediately before or following the publication
of Regulation (EC) No 209/97, i.e. well beyond the time-limit
established in paragraph 7 of the Notice of Initiation. Accordingly,these companies have not been considered to be interested parties inthe proceeding and their requests for individual treatment have been
dismissed as being inadmissible on these grounds.
E.PRODUCT UNDER CONSIDERATION — LIKE PRODUCT
1.Product under consideration
(22) For the purpose of the preliminary findings, the Commission
considered leather, plastic and textile handbags to be one product,
given the fact that they were considered to possess the same
characteristics and be intended for the same use.
(23) After the imposition of provisional measures, several interested parties
claimed that a distinction should be made between leather handbags onthe one hand and synthetic handbags (plastic/textile) on the other.
Some parties have also claimed that a distinction should further be
made between leather handbags, patch leather handbags and poly-
urethane (PU) coated split leather handbags in view of the allegeddifferences in style, quality, finish, use, price and consumer perception.
(24) It should be recalled that it is the standard practice of the Commission,
as confirmed by the European Court of Justice, that the product under
consideration be defined according to its basic physical characteristics,
use, interchangeability and consumer perception.
(25) In this respect, the investigation has shown that the different types of
raw materials used in the manufacture of leather and synthetic
handbags confer on the product distinctly different physical char-
acteristics.
While their general use is the same, it has now been found that the
consumer has a clearly different perception of leather handbags andsynthetic handbags respectively, consumer choice being governed
mainly by the type of external raw material of the handbag.
(26) The investigation has also shown that in the handbag market stable
consumer preferences exist. Therefore, the interchangeability of thetwo types of handbags is almost non-existent, except to a very limited
extent in the sector of leather-look plastic handbags. This has allowed a
notable price differential between leather handbags and synthetichandbags, resulting in two different market segments, separated by!B1997R1567 — EN — 26.01.2001 — 003.001 — 4
clear dividing lines between which it is not considered that
interchangeability can take place to a significant degree.
(27) Therefore, and in accordance with the well-established practice of the
institutions concerning the product definition, leather and synthetic
handbags are to be considered different products.
2.Like product
(28) Several parties have argued that the leather handbags manufactured in
the Community and those imported from the People’s Republic ofChina are not like products in the sense of Article 1 (4) of the basic
regulation due to the differences in quality, design and use. It has also
been argued that the differences in quality between the importedhandbags and those manufactured in the Community are such that bothproducts are not in competition.
(29) The investigation has further shown that, within each of the two
products under consideration (leather handbags/synthetic handbags),imported handbags cover the full range of types, from higher to lowerquality, and as such are in direct competition with the entire range of
the Community production. These findings are supported by the
information supplied on this issue by several cooperating importing-Community producers on this issue showing that the handbagsmanufactured in the Community and those imported from the People’s
Republic of China do not have quality differences, both items belong
to the same collections and are sold to the same customers. Therefore,across the range there are no quality differences for comparable
models.
(30) Concerning differences in design, it cannot be concluded that these
would be such as to constitute a different like product. In this respect,some importers have even acknowledged that they design their
handbags in the Community, following the fashion of the season, as is
the case with Community manufacturers.
F.DUMPING
1.Normal value
(31) As to the selection of the analogue country, one importer alleged that
neither Regulation (EC) No 209/97 nor the disclosure documentssufficiently explained why India or Taiwan were not selected as
analogue countries. The Council considers however that recitals 24 to
26 of Regulation (EC) No 209/97 are sufficiently precise on this point.
(32) Several interested parties have requested that the names of the two
cooperating Indonesian companies be disclosed alleging that this
would be necessary to exercise their rights of defence effectively. The
Council, however, does not consider it possible to disclose the namesof these companies, as the cooperation of these companies could onlybe secured provided a strict guarantee of confidential treatment of the
identity of the companies were given by the Commission. In addition,
supplying the actual names of the companies involved would not addto the rights of defence of these interested parties. In this regard, the
essential economic facts characterizing the situation of these two
exporters have been set out in recitals 28 and 29 of Regulation (EC) No209/97.
(33) In view of the fact that leather handbags and synthetic handbags have
been considered to be different products, separate normal values were
constructed for leather and synthetic handbags, in accordance withArticle 2 (7) of the basic regulation, on the basis of the cost ofproduction for these two products of the two cooperating Indonesian
producers, to which a reasonable amount for profit and selling, general
and administrative costs (‘SGA’) was added. The findings in the fourthindent of recital 28 of Regulation (EC) No 209/97 on the representa-tiveness of the two Indonesian producers are confirmed in respect of
both like products.
(34) It has been alleged that the cost of production of the cooperating
Indonesian producers should be adjusted to take into account the factthe Chinese exporters predominantly import raw materials under
inward processing relief procedures. In this respect it should be noted
that the raw materials for both like products used by the cooperating!B1997R1567 — EN — 26.01.2001 — 003.001 — 5
Indonesian producers were found to be of non-Indonesian origin and
imported into Indonesia free of customs duties under a procedure ofinward processing relief. It follows that the procurement patterns inIndonesia and in China are the same and that therefore no adjustment
is warranted in this respect.
(35) It was submitted by one exporter that the percentage of SGA used by
the Commission was not representative of the SGA incurred by theChinese exporters. Accordingly, the SGA has been reviewed on the
basis of the actual SGA incurred by the Indonesian exporters of
handbags at the level of trade comparable to that of sales made by theChinese exporters.
2.Export price
(36) In view of the low level of cooperation of Chinese exporters (including
exports of Gebr. Picard International Ltd.) in this proceeding, which
amounts to only 1,58 % of all exports from the People’ s Republic ofChina, the export prices of the cooperating exporters could not beconsidered representative of the prices charged by exporters which did
not cooperate.
(37) For the purpose of the definitive findings, export prices of the
cooperating companies Shilton and Lee & Man in respect of the twolike products were established using the same method as for the
provisional findings. With regard to these companies, the findings set
out in recitals 33 and 34 of Regulation (EC) No 209/97 are confirmed.
(38) The third cooperating exporter (Gebr. Picard International Ltd), not
granted individual treatment by Regulation (EC) No 209/97, was found
to make all of its exports to the Community via a related company
established in the Community; thus its export prices were constructedon the basis of Article 2 (9) of the basic regulation by deducting, from
the prices charged by the related importer to its first independent
customers, its SGA and a profit margin based on the average profit ofunrelated importers.
(39) E xport prices of the non-cooperating Chinese exporters were
established as explained under recital 32 of Regulation (EC) No
209/97. This methodology is herewith confirmed.
3.Comparison
(40) The weighted average normal value fob Indonesia for each of the
leather and synthetic handbags was compared with the weightedaverage export price fob China with respect to each of the two like
products concerned. For the purpose of ensuring a fair comparison
between normal value and the export price, due allowance in the formof adjustments was made in accordance with Article 2 (10) of the basic
regulation, where claims were made and satisfactory evidence was
supplied demonstrating that such differences affected price compara-bility.
(41) It was argued by one exporter that the comparison of normal value and
export price should be made in respect of every single handbag model
or catalogue number (commonly referred to as ‘style number’) ratherthan on the basis of averages of each like product. The Councilconsiders, however, that as a practical matter a comparison at this level
is not possible in view of the extreme variety of model numbers, each
having different physical characteristics and combinations of featuresand accessories. In addition, no objective criteria were found to exist
for distinguishing particular categories or models within the respective
like product; for similar reasons, it was not possible for theCommission to compare normal value and export price on the basisof categories regrouping model or catalogue numbers. It follows that
the only reasonable method for the Commission was to compare
normal value and export price in respect of averages for each of thetwo products concerned (i.e. separately for leather handbags andsynthetic handbags).
4.Dumping margins
(42) As indicated above, three cooperating producers/exporters — all
privately-owned companies based in Hong Kong with handbag
factories in China — presented admissible requests for individual!B1997R1567 — EN — 26.01.2001 — 003.001 — 6
treatment i.e. the establishment of separate export prices and thus of
individual dumping and injury margins.
(43) The findings set out in recitals 37 to 40 of Regulation (EC) No 209/97,
with regard to the two companies having been provisionally granted
individual treatment, are confirmed.
(44) In addition, the claim for individual treatment of a third exporter/
producer (Gebr. Picard International Ltd) was investigated. It wasfound that its factual situation was very similar to that of the twocompanies having been provisionally granted individual treatment and
described in recitals 38 and 39 of Regulation (EC) No 209/97.
(45) The Council considers that the three cooperating companies claiming
individual treatment enjoyed a degree of genuine independence fromthe public Chinese authorities comparable to that which would prevail
in a market economy country, and thus that the risk of channelling
exports through these sources with individual anti-dumping duty rateswould seem to be very limited. Accordingly, separate export prices and
individual dumping and injury margins have been established for the
three exporters concerned, as an exception to the principle ofcalculating country-wide dumping margins in respect of non-marketeconomy countries (Article 9 (5) of the basic regulation). It should be
pointed out that individual treatment is granted only in respect of the
like product which was actually produced and exported to theCommunity by the exporter concerned during the investigation period,i.e. leather handbags in respect of Shilton and Gebr. Picard
International Ltd. and synthetic handbags in respect of Lee & Man.
(46) The dumping margins established for the companies granted individual
treatment have been established as follows:
— Shilton, in respect of leather handbags: nil,— Gebr. Picard International Ltd, in respect of leather handbags:
7,7 %,
— Lee & Man, in respect of synthetic handbags: 64,7 %.
(47) The weighted average dumping margin for the exporters not granted
individual treatment has been established at:
— 83,5 % in respect of leather handbags, and
— 151 % in respect of synthetic handbags
of the cif export price Community frontier duty unpaid.
G. LEATHER HANDBAGS
A. INJUR Y
1.Consumption in the Community market
(48) Between 1992 and the investigation period, the consumption of leather
handbags in the Community increased from around 51 million units to
52,3 million units, i.e. an increase of approximately 2,5 %.
2.V olume and market share of imports
(49) Between 1992 and the investigation period, imports of leather
handbags originating in the People’ s Republic of China increasedfrom 8,2 million units to 10,4 million units, i.e. by 27 %. Whenmeasured in value, the increase amounts to 15 %, from ECU 43,6
million in 1992 to ECU 50 million in the investigation period.
(50) The share of the Community market taken up by imports of leather
handbags originating in the People’ s Republic of China increased from16 % in 1992 to 20 % in the investigation period.
3.Prices of dumped imports and undercutting
(51) As mentioned in the provisional regulation, due to the non-cooperation
by the Chinese exporters, official statistical data have been used for the
analysis of the price evolution of imported leather handbags. Thus, theaverage cif import price of leather handbags has decreased by 9 %,!B1997R1567 — EN — 26.01.2001 — 003.001 — 7
from ECU 5,29 per unit in 1992 to ECU 4,79 per unit in the
investigation period.
(52) The calculation of the price undercutting has followed the methodol-
ogy used in Regulation (EC) No 209/97, that is, the cif imports prices
of the sampled unrelated importers, adjusted to customer deliver level,
were compared to the selling prices in the Community of thoseCommunity producers whose production comprised the most basictypes sold, at the same level of trade.
(53) When expressed as a percentage of the Community producers’ selling
prices, the comparison with import prices of unrelated importers, asrecalculated following substantiated arguments submitted by interestedparties after the imposition of provisional measures, show an
undercutting for leather handbags amounting to 31,4 %.
4.Situation of the Community industry
(a) Production
(54) Production of leather handbags by the Community industry increased
from an estimated 26,5 million units in 1992 to 30,3 million units inthe investigation period. When measured in value, production
increased from an estimated ECU 905 million in 1992 to ECU 1 100
million in the investigation period, i.e. by 21 %.
(b) Sales volume
(55) A decline in sales volume in the Community of output manufactured
by the Community industry between 1992 and the investigation period
has been established. Indeed, sales decreased from around 21 millionunits in 1992 to 20 million units in the investigation period, i.e. adecrease of around 5 %. When measured in value, sales decreased by
around 8 %, from around ECU 600 million in 1992 to ECU 550
million in the investigation period.
(c) Market share
(56) The share of the Community market occupied by the Community
industry when measured in units decreased from around 41 % in 1992
to around 39 % during the investigation period.
(d) Profitability and employment
(57) Following Article 3 (8) of the basic regulation, profitability and
employment of Community producers has been calculated for the
narrowest group of products for which information has been provided
by the sampled Community producers, that is, handbags made of bothleather and synthetics.
The revised weighted average profitability concerning sales in the
Community shows a decline from 5,9 % in 1992 to 1,3 % during the
investigation period.
On all sales, the Community industry achieved an overall profit of
around 5 %.
(58) Employment figures in the handbag sector as extrapolated from the
information received by Community producers in the Communityinterest analysis show that employment declined from about 18 600people in 1992 to 14 000 people in the investigation period, a drop of
25 %.
5.Conclusion on injury
(59) The economic indicators of the Community industry examined in
conjunction with the conclusions drawn in respect of the volume ofimports and their prices show that the Community producers’ situationhas deteriorated between 1992 and the investigation period in respect
of leather handbags. As has been demonstrated, the Community
industry as a whole suffered declining sales volume, loss of market!B1997R1567 — EN — 26.01.2001 — 003.001 — 8
share, declining employment and declining profitability in the
Community market.
(60) As far as production is concerned, further reference is made to the fact
that exports of the Community producers increased significantly.
(61) It is therefore the view of the Council that the situation of the
Community industry is clearly precarious and the trend points to afurther deterioration.
B. CAUSATION
1.Effects on the dumped imports
(62) The penetration of the Community market by imports of leather
handbags from the People’s Republic of China at dumped prices which
significantly undercut the prices of Community producers coincidedwith a loss of market share and a deterioration of the financial situationof the Community industry. Given the increasing volume of low priced,
dumped handbags, it became apparent during the investigation that
many Community producers were unable to compete against thedumped imports.
(63) Moreover, due to the fact that competition takes place across the range
and to the fact that the distribution system is shared by products bothmanufactured in the Community and imported from the People’sRepublic of China, the high price differential in the form of
undercutting is a direct cause of the precarious situation of the
Community industry.
(64) Accordingly, it is considered that dumped imports from the People’s
Republic of China increased at a significant rate and are likely to enter
at prices which will prevent price increases.
2.Effects of other factors
(65) Care was taken to ensure that any impact on the Community industry
caused by other factors was not attributed to the imports concerned.
(66) In this respect, particular reference was made by certain interested
parties to imports into the Community of handbags originating in
India.
Available Eurostat data shows that the volume of imports of leather
handbags from India has remained stable between 1992 and the
investigation period at around 5 million units. As regards the prices ofthese imports, these have increased from around ECU 8 in 1992 toaround ECU 9,2 in the investigation period, an increase of 15 %, well
above the prices of Chinese handbags. The share of volume of the
Community market occupied by imports of handbags from India hasdecreased by 4 % from 1992 to the investigation period.
(67) As to imports of leather handbags from Hong Kong, when measured in
units, these have increased from around 400 000 units in 1992 to
around 750 000 units in the investigation period. With respect to totalimports of handbags into the Community, Hong Kong increased its
share of the volume of Community handbag imports from 1,9 % in
1992 to 3,3 % in the investigation period. However, the share of theCommunity market occupied by imports of handbags originating inHong Kong has remained at relatively low levels, increasing from
0,6 % in 1992 to 1,4 % in volume in the investigation period.
(68) As to imports from other third countries, their share of total imports
has decreased from 32 % in 1992 to 30 % in the investigation period.The share of the Community market occupied by these imports has
decreased from 12 % of volume in 1992 to 11 % in the investigation
period.
It should be noted that the Community market share of imports from
all third countries, excluding the People’s Republic of China, has
remained stable from 1992 to the investigation period, at 23 %, whenmeasured in units.!B1997R1567 — EN — 26.01.2001 — 003.001 — 9
3.Conclusion on causation
(69) Although certain other factors may have contributed to the precarious
situation of the Community industry, taken in isolation, the high
volumes of dumped imports from the People’s Republic of China are
threatening to cause material injury to the Community industry. Thisconclusion is based on the various elements set out above and in
particular the level of price undercutting, the market share gained by
imports of handbags from this country, at the expense of theCommunity industry, and the deterioration of the profitability of theCommunity producers.
C. COMMUNITY INTEREST
1.General considerations
(70) It should be recalled from recitals 76 et seq. of Regulation (EC) No
209/97 that an appreciation of the various interests, including theinterests of the Community industry, importers, distributors and
retailers was made, and that the Commission provisionally concluded
that there were no compelling reasons not to take action against theimports in question. Furthermore, the Commission undertook toconduct an examination of certain issues concerning Community
interest which had not been sufficiently substantiated when the
provisional determination took place.
2.Impact on the Community industry
(a) Current situation of the industry
(71) The information received from the 50 Community producers
responding to the questionnaire on Community interest addressed tointerested parties and representing around 20 % of total handbagCommunity production shows that a major proportion of the
production in the Community is of leather handbags. In terms of
value, 93 % of the total Community production is of leather handbags.
(72) Substantial creative value is added to the product in the Community in
the form of design, innovation and quality. Community producers have
a special know-how in working the leather, which is the result of a longtradition in this sector in the Community.
(73) The share of the Community leather handbag market held by the
Community industry was 39 % in the investigation period, a sign of its
economic importance.
(74) The viability of the Community industry is also evident from its
performance on the export markets, significant and increasing due to
the locomotive effect of the brand names promoting handbags ‘madein Europe’. Exports of leather handbags by the Community industryhave increased from around 6 million units in 1992 to around 10
million units in the investigation period.
(b) Effects of the imposition/non-imposition of measures
(75) In the absence of anti-dumping measures, there is no element that
indicates that the negative situation of the Community industry would
not continue, to the detriment of an industry that is inherently bothviable and competetive.
(76) The situation of importing producers in the Community has been
examined and it is concluded that the majority of the companiesinvestigated by the Commission manufacture leather handbags in theCommunity and import synthetic handbags from the People’ s Republic
of China. In those cases where such importing producers imported
leather handbags, such imports are, in general, ancillary.
3.Impact on importers-traders
(77) Further investigation has shown that the full amount of the provisional
anti-dumping duty (39,2 %) is being shared, generally in an equal
proportion, by the different steps in the distribution chain: in particular
the importer, the retailer and, finally, the consumer. This seems to be!B1997R1567 — EN — 26.01.2001 — 003.001 — 10
possible due to the average mark up of importers and retailers
respectively of around 70 % on cif including a profit of 14 % onturnover.
(78) The impact of any definitive measures on importers and traders has to
be seen in the light of the findings of the product concerned. Indeed, a
reduction in the scope of application of the measures to leatherhandbags only (see recitals 118 et seq.) will minimize the impact of
measures on these interested parties.
(79) Some importers have claimed that they had to cease their activity or
are experiencing financial difficulties. Since importers are generallypurchasing in US dollars, they are currently suffering from the strength
of the US dollar against European currencies. It is concluded,
therefore, that the weak financial situation of certain importers/tradersis also attributable to currency fluctuations.
(80) As to the argument that the imposition of anti-dumping duties will not
have the effect of increasing sales of the Community producers butwould make importers purchase from other third countries, it should bementioned that it is not the purpose of any anti-dumping measure to
limit imports from third countries at non-dumped prices. Moreover, the
investigation has confirmed that it is not likely that a major proportionof importers will source leather handbags from other third countries,due to the skilled labour and know-how necessary to manufacture
leather handbags currently available in the People’s Republic of China.
(81) Given the above, measures on imports of leather handbags are not
likely to endanger the business performance of the distribution chain.
4.Impact on consumers
(82) As has been mentioned above, the full amount of the duty is currently
being shared by the different steps in the distribution chain. Therefore,the effect of the duty on the consumer in the form of a price increase isnot likely to exceed 9 %.
(83) Furthermore, leather handbags being a fashion product not purchased
on regular basis, a moderate increase in the prices for the consumershould be seen in the light of the lack of a clear perception of the
appropriate price for a handbag for a consumer, which is not likely to
affect demand substantially in the long term.
(84) In view of this, it is not expected that definitive measures on imports of
leather handbags will have a significant impact on the consumer.
5.Conclusion on Community interest
(85) In the light of the above, it is considered that the conclusions drawn by
the Commission in Regulation (EC) No 209/97 concerning Commu-nity interest should be confirmed with respect to leather handbags.There are no compelling reasons which would lead to the conclusion
that adopting definitive measures would not be in the interest of the
Community.
H. SYNTHETIC HANDBAGS
A. INJUR Y
1.Consumption in the Community market
(86) Between 1992 and the investigation period, the consumption of
synthetic handbags in the Community increased from 73 million units
to 96 million units, i.e. an increase of approximately 31 %.
2.V olume and market share of imports
(87) Between 1992 and the investigation period, imports of synthetic
handbags originating in the People’ s Republic of China increased from
53 million units to 78 million units, i.e. by 47 %. When measured in
value, the increase amounts to 31 %, from ECU 152 million in 1992 toECU 199 million in the investigation period.
(88) The share of the Community market taken by imports of handbags
originating in the People’s Republic of China increased from 73 % in
1992 to 81 % in the investigation period.!B1997R1567 — EN — 26.01.2001 — 003.001 — 11
3.Prices of dumped imports and undercutting
(89) The average cif import price of synthetic handbags as reported by
Eurostat has decreased by 10 %, from ECU 2,8 per unit in 1992 to
ECU 2,5 per unit in the investigation period.
(90) The undercutting margin amounts to 27,8 % for synthetic handbags.
4.Situation of the Community industry
(a) Production
(91) The estimated production of synthetic handbags by the Community
industry has remained stable at around 14 million units between 1992
and the investigation period.
(b) Sales volume
(92) A decline in sales volume in the Community of handbags manu-
factured by the Community industry of around 70 % between 1992 andthe investigation period has been established. Indeed, sales decreasedfrom around 6 million units in 1992 to around 2 million units in the
investigation period.
(c) Market share
(93) The share of the Community market occupied by the Community
industry when measured in units decreased from around 9 % in 1992 toaround 3 % during the investigation period.
(d) Profitability and employment
(94) The overall profitability of Community producers declined progress-
ively from 5,9 % in 1992 to 1,3 % during the investigation period.
(95) Employment figures in the handbag sector declined from about 18 600
people in 1992 to 14 000 people in the investigation period, a drop of25 %.
5.Conclusion on injury
(96) It is considered that the Community industry of synthetic handbags
suffered material injury within the meaning of Article 3 of the basicregulation.
(97) This stems from the deterioration of the economic factors of the
Community industry during the period 1992 to the investigationperiod, namely declining sales volume, loss of market share, declining
employment and declining profitability, as seen in the light of the
increase in the volume of imports of synthetic handbags from thePeople’ s Republic of China and its prices.
B. CAUSATION
1.Effects of the dumped imports
(98) Given the above findings, it is considered that the imports of synthetic
handbags from the People’ s Republic of China had, taken in isolation, amaterial impact on the situation of the Community industry.
(99) Indeed, given that synthetic handbags manufactured in the Community
and those imported from the People’s Republic of China competeacross the range, where the distribution system is common to both
products, the undercutting found indicates that, taken in isolation,
imports of synthetic handbags from the People’s Republic of Chinacaused material injury to the Community industry.!B1997R1567 — EN — 26.01.2001 — 003.001 — 12
2.Effects of other factors: imports from third countries
(100) The Commission has examined the impact on the Community industry
of factors other than imports of synthetic handbags from the People’s
Republic of China, namely, imports from other third countries.
(101) Concerning India, available Eurostat data shows that even if the
volume of imports from India has increased from 1,6 million units in1992 to 3,4 million units in the investigation period, their share of totalimports of synthetic handbags into the Community has increased only
from 2,6 % in 1992 to 3,6 % in the investigation period. The share of
the Community synthetic handbag market occupied by these importshas remained at a low level, being 3,5 % in the investigation period.
(102) Imports of synthetic handbags from Hong Kong, when measured in
units, have increased from 1,5 million units in 1992 to 6,5 million units
in the investigation period. However, their share of the Communitysynthetic handbag market has remained at a relatively low level,
increasing from 2 % in 1992 to 7 % in the investigation period.
(103) As to imports from other third countries, their share of the total import
of synthetic handbags into the Community has decreased from 11 % in1992 to 5,5 % in the investigation period. The share of the Communitysynthetic handbags market occupied by these imports has decreased
from 9,7 % in 1992 to 5 % in the investigation period.
3.Conclusion on causation
(104) The above analysis shows that, even if certain other factors might have
contributed to the injury suffered by the Community industry, it isconsidered that, taken in isolation, the high volume of synthetichandbags imported from the People’ s Republic of China at dumped
prices have caused material injury to the Community industry.
C. COMMUNITY INTEREST
1.Community industry
(105) The indicators of the Community synthetic handbag industry show that
it is not likely that the Community industry would benefit from any
anti-dumping measure imposed. The imposition of measures would nothave the effect of increasing the sales of the Community synthetic
handbags manufacturers, given that it is likely that synthetic handbags
will be sourced from other third countries in the medium term. Indeed,it has been ascertained that the production process in the syntheticsector is of such a nature that it can be transferred to another third
country within a relatively short period of time. In this respect,
evidence has been provided by some interested parties showing thatthis has already taken place in some instances. There are, therefore,strong reasons to expect that most of the volume and price benefits
which anti-dumping measures may have will not go to the Community
industry but to imports from other third countries.
(106) In addition, the consequences of the non-imposition of measures on the
employment levels of the Community synthetic handbag producers is
relatively limited, given the low sales volume in the Community of
Community produced synthetic handbags and the estimated employ-ment figures for synthetic handbags of around 500 employees. Whilethese jobs may be exposed to competition from dumped imports of
handbags from the People’ s Republic of China, this figure has to be
compared to a total employment figure for the entire Communityhandbags sector of around 14 000 employees. In this respect, it is
expected that an increase in the sales volume of the Community
manufacturers of leather handbags may have the effect of offsettingthis negative impact, if any.
2.Impact on importers/traders
(107) In view of the high share of the Community synthetic handbag market
held by imports from the People’ s Republic of China, if definitive
anti-dumping measures of the provisional amount were to be imposed,
a substantial impact on Community importers and traders would beexpected.!B1997R1567 — EN — 26.01.2001 — 003.001 — 13
(108) Indeed, a comparison of the market shares held respectively by the
Community industry (around 2 % in the investigation period) and theimports from the People’s Republic of China (around 80 % in theinvestigation period) indicate that the resulting negative impact on
importers and traders of the product would be clearly disproportionate
to any possible benefit in the short term to the Community industrywhich would be gained through the imposition of anti-dumpingmeasures.
(109) The estimated employment for the distribution chain of synthetic
handbags has been estimated at around 4 100 employees. It is
considered that the imposition of anti-dumping measures on imports ofsynthetic handbags will have, at least in the medium term, a negative
impact on this employment. Indeed, since the expected switch in the
source of supply to other third countries will take place in the mediumterm, it is expected that in the meantime a certain number of jobs in thedistribution sector will be at risk. On the other hand, the employment
levels of the Community synthetic handbags manufacturers are not
expected to decrease to a significant extent, in view of the fact that theCommunity industry is concentrating on the export markets.
3.Impact on consumers
(110) In this respect, it has to be recalled that, should a definitive duty be
imposed, a shortage in supply will occur, at least in the short term, thusrestricting consumer choice.
The effect on the consumer in the form of a certain price increase
should also be seen in the light of the likely absence of any benefit for
the Community producer and the negative impact on the distribution
chain.
4.Conclusion on Community interest
(111) In view of the abovementioned facts and trends which differ
significantly from those established in respect of leather handbags, itis considered that there are compelling reasons why the imposition ofdefinitive measures on imports of synthetic handbags is not in the
interest of the Community. The negative impact of definitive
anti-dumping measures on imports of synthetic handbags from thePeople’ s Republic of China would be disproportionate to any actualbenefit to the Community industry.
I.DUTY
1.Leather handbags
(112) Some interested parties have argued that the duty should take the form
of a variable duty. However, given the wide variety of leather handbagsand the fact that it is considered that competition is taking place acrossthe whole range of leather handbags and not among those in the lower
price range, it is considered that measures should take the form of an
ad valorem duty.
The provisional conclusions with respect to the type of duty to be
applied are therefore confirmed.
(113) As for the calculation of the injury threshold, i.e. price underselling,
the Council confirms the methodology followed by Regulation (EC)
No 209/97 (recitals 103 to 105). Thus, the weighted average profit
shortfall of the sampled Community producers during the investigationperiod was added to the percentage of the undercutting found. On thisbasis, the weighted average injury margin for leather handbags,
expressed as a percentage of the free-at-Community-frontier price,
amounts to 38 %.
(114) For the companies which requested and were granted individual
treatment, their injury margin, when expressed as a percentage of the
free-at-Community-frontier price amounts to the following:
— for Shilton, given that the dumping margin found is nil, in
accordance with Article 7 (2) of the basic regulation, it was notconsidered necessary to calculate an individual injury margin,
— for Picard, the injury margin amounts to 32,7 %.!B1997R1567 — EN — 26.01.2001 — 003.001 — 14
(115) In accordance with Article 7 (2) of the basic regulation, as the injury
elimination level is below the dumping margin found, the anti-dump-ing duty calculated on the basis of the free-at-frontier price shouldamount to 38 %.
(116) For the companies which requested and were granted individual
treatment, the anti-dumping duty should amount to the following:
— for Shilton: nil,
— for Picard: 7,7 %, which is the dumping margin established for
this company.
2.Synthetic handbags
(117) In view of the fact that it is considered that there are compelling
reasons not to adopt anti-dumping measures concerning synthetic
handbags, the proceeding with respect to imports of plastic handbags(CN code 4202 22 10) and textile handbags (CN code 4202 22 90)should be terminated.
J.COLLECTION OF PROVISIONAL DUTIES
(118) Concerning leather handbags, since the Community industry is
suffering a threat of material injury, the Council considers itappropriate to decide that, pursuant to Article 10 (2) of the basic
regulation, the amounts secured by way of provisional anti-dumping
duty under Regulation (EC) No 209/97 for leather handbags bereleased.
(119) The provisional duties secured with respect to plastic and textile
handbags should also be released,
HAS ADOPTED THIS REGULATION:
Article 1
1. A definitive anti-dumping duty is hereby imposed on imports of
handbags with outer surface of leather, of composition leather or patent
leather falling within CN code 4202 21 00 originating in the People’s
Republic of China.
2. For the purpose of this Regulation, leather handbags shall be understood
to mean bags, whether or not with shoulder strap, including those without
handle, with outer surface of leather, of composition leather or patent leather,
designed primarily to contain small objects for personal use, such as keys,purses, make-up and cigarettes, regardless of their size and form.
3. The rate of the duty shall be 38 % of the net, free-at-frontier price, before
duty (Taric 8900), with the exception of imports of leather handbags whichare manufactured by the following companies, which shall be subject to thefollowing rates of the duty:
—
"M1Zengcheng Jane Shilton Leather Goods Company Ltd 3: 0,0 %
(Taric additional code 8961),
— Gebr. Picard International Ltd: 7,7 % (Taric additional code 8087),
— C-Duck Leather Goods Company Ltd: 0,0 % (Taric additional code:
8961),
— Wideland Trading Company: 0,0 % (Taric additional code: 8961),
—"M2Lucci Creations Ltd including its related company Wiemer
Leathergoods Manufacturing Co. Ltd. 3: 0,0 % (Taric additional code:
8961),
— Kunshan C & S Leather Products Co. Ltd: 0,0 % (Taric additional code:
8961),
— Y amani Continental Inc.: 0,0 % (Taric additional code: 8961),— IP Handbag Industrial Ltd: 0,0 % (Taric additional code: 8961),
— W . K. Maxy Industries Ltd and W . K. Maxy Leather Goods Industries
Zhongshan Co. Ltd: 0,0 % (Taric additional code: 8961),!B
!M11997R1567 — EN — 26.01.2001 — 003.001 — 15
— Lai Wah Industries Ltd: 3,1 % (Taric additional code: 8310),
— Shenzhen Colleen Handbag Co. Ltd: 4,2 % (Taric additional code: 8311),
— The Well Leatherware Manufactory Ltd: 6,5 % (Taric additional code:
8451),
— Shenzhen Crownwick Leatherwares Co. Ltd: 12,4 % (Taric additional
code: 8452),
— Shundi South Sea Leather Handbag Factory Ltd and Nam Chow Leather
Products Co. Ltd: 39,0 % (Taric additional code: 8453),
—"M2Ever Trust Leather Products Shenzen Co. Ltd. including its related
company Superior Leather Ltd. 3: 45,2 % (Taric additional code: 8454),
— Dongguan Sitoy Leather Products Factory Ltd: 58,3 % (Taric additional
code: 8455).
Article 2
1. The anti-dumping proceeding concerning imports of handbags with outer
surface of plastic sheeting or with outer surface of textile materials falling
within CN codes 4202 22 10 and 4202 22 90 is hereby terminated.
2. The amounts secured by way of provisional anti-dumping duties under
Commission Regulation (EC) No 209/97 shall be released.
Article 3
This Regulation shall enter into force on the day following that of its
publication in the Official Journal of the European Communities .
As far as leather handbags produced by Lucci Creation Ltd and imported by
Medici Grimm KG (Germany) (TARIC additional code A211) are concerned,
the rate of duty of 0,0 % shall be applicable as from 3 August 1997.
This Regulation shall be binding in its entirety and directly applicable in all
Member States.!M1
!B
!M3
!B1997R1567 — EN — 26.01.2001 — 003.001 — 16