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This document is meant purely as a documentation tool and the institutions do not assume any liability for its contents
►B COUNCIL REGULATION (EC)No 1599/1999
of 12 July 1999
imposing a definitive countervailing duty and collecting definitively the provisional duty imposed
on stainless steel wires with a diameter of 1 mm or more originating in India and terminating theproceeding concerning imports of stainless steel wires with a diameter of 1 mm or more originating
in the Republic of Korea
(OJ L 189, 22.7.1999, p. 1)
Corrected by:
►C1 Corrigendum, OJ L 9, 13.1.2000, p. 30 (1599/1999)
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COUNCIL REGULATION (EC)No 1599/1999
of 12 July 1999
imposing a definitive countervailing duty and collecting definitively
the provisional duty imposed on stainless steel wires with a diam-eter of 1 mm or more originating in India and terminating theproceeding concerning imports of stainless steel wires with a diam-
eter of 1 mm or more originating in the Republic of Korea
THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty establishing the European Community,
Having regard to Council Regulation (EC) No 2026/97 of 6 October
1997 on protection against subsidised imports from countries notmembers of the European Community (
1), and in particular Articles 14
and 15 thereof,
Having regard to the proposal submitted by the Commission after
consulting the Advisory Committee,
Whereas:
(A)PROVISIONAL MEASURES
(1) The Commission, by Regulation (EC) No 618/1999 (2) (herein-
after referred to as the ‘provisional Regulation') imposed provi-sional countervailing duties on imports of stainless steel wireswith a diameter of 1 mm or more (hereinafter referred to as ‘largeSSW' or ‘product concerned'), originating in India and in theRepublic of Korea (hereinafter referred to as ‘Korea'), and fallingwithin CN code ex 7223 00 19.
(B)SUBSEQUENT PROCEDURE
(2) Subsequent to the disclosure of the essential facts and considera-
tions on the basis of which it was decided to impose provisionalmeasures on imports of large SSW originating in India and Korea(hereinafter referred to as ‘disclosure'), several interested partiessubmitted comments in writing. The parties who so requestedwere also granted an opportunity to be heard orally.
(3) The Commission continued to seek and verify all information itdeemed necessary for its definitive findings.
(4) All parties were informed of the essential facts and considera-tions on the basis of which it is intended to recommend:
(i) the imposition of definitive countervailing duties on imports
from India and the definitive collection of amounts securedby way of provisional duties on these imports; and
(ii) the termination of the proceeding against imports from Korea
without the imposition of measures.
They were also granted a period within which they could make
representations subsequent to this disclosure.
(5) The oral and written comments submitted by the parties wereconsidered, and, where deemed appropriate, the provisional find-ings have been modified accordingly.
(1) OJ L 288, 21.10.1997, p. 1.
(2) OJ L 79, 24.3.1999, p. 25.
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(C)PRODUCT CONCERNED AND LIKE PRODUCT
(6) The product under consideration is large SSW, containing by
weight 2,5 % or more of nickel, other than containing by weight28 % or more but no more than 31 % of nickel and 20 % or morebut not more than 22 % of chromium.
(7) It was found at the provisional stage of the investigation thatthere were differences in physical characteristics and usesbetween SSW covered by the present investigation, i.e. with adiameter of 1 mm or more (large wire) and SSW with a diameterof less than 1 mm (fine wire). For these reasons, it also appearedthat there was no or only very limited interchangeability betweenlarge and fine wires’ applications. However, it was also stated inthe provisional Regulation that the question whether a cleardividing line could be drawn between these two products wasgoing to be further investigated up to the definitive stage.
(8) On the basis of the further information collected from interestedparties, it is concluded that large wire and fine wire are twodifferent products as they present different physical characteris-tics and are used for different applications. Firstly, as to thephysical characteristics, the tensile strength, granular structureand coating of SSW are different for large and fine wires.Secondly, as regards the various applications of the two products,it has been found that large wire is used for heavier duty engin-eering applications such as fasteners, wall reinforcement prod-ucts, welding wires, etc. By contrast, fine wire is as a rule usedfor precision applications such as screens and filters (woven wirecloth) with small openings for filtering very fine or smallparticles (for example dust filters and chemical filters), medical/surgical applications, etc.
(9) On the basis of the above it is concluded that fine and large wiresare two different products which have different characteristicsand applications and that they are not interchangeable from thepoint of view of SSW users.
(10) Since no arguments were put forward by any of the partiesconcerned with respect to the Commission’s provisional findingson the product under consideration and the considerations madeon the like product, the facts and findings as set out in recitals 7to 12 of the provisional Regulation are hereby confirmed.
(D)SUBSIDIES
I. INDIA
1.Passbook Scheme (PBS)and Duty Entitlement Passbook
Scheme (DEPB)
(11) The Government of India (GOI) and nine exporting producersclaimed that these schemes, which are described in recitals 14 to25 and 26 to 35 of the provisional Regulation, were wronglyassessed by the Commission in terms of the extent of subsidy andthe amount of countervailable benefit. In particular, they claimthat the Commission’s assessment of the benefits under theseschemes was incorrect since only the excess duty drawback couldbe considered a subsidy in accordance with Article 2 of Regula-tion (EC) No 2026/97 (hereinafter referred to as ‘the basic Regu-lation').
(12) The Commission used the following method in order to establishwhether the PBS and the DEPB constitute countervailable subsi-dies and if so, to calculate the amount of benefit. Pursuant toArticle 2(1)(a)(ii), the Commission concluded that these schemesinvolve a financial contribution by the GOI since governmentrevenue (i.e. import duties on imports) otherwise due is notcollected. There is also a benefit to the recipient since theexporting producers did not have to pay normal import duties.
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(13) However, Article 2(1)(a)(ii) provides for an exception to this
general rule for, inter alia , drawback and substitution drawback
schemes which conform to the strict rules laid down in AnnexI(i) and Annex II (definition and rules for drawback) and AnnexIII (definition and rules for substitution drawback).
(14) The analysis of the Commission revealed that neither the PBSnor the DEPB is a drawback or a substitution drawback scheme.These schemes lack a built-in obligation to import only goodsthat are consumed in production of the exported goods (Annex IIto the basic Regulation). Additionally, there is no verificationsystem in place to check whether the imports are actuallyconsumed in the production process. It is also not a substitutiondrawback scheme because the imported goods do not need to beof the same quantity and characteristics as the domesticallysourced inputs that were used for export production (Annex III tothe basic Regulation). Lastly, exporting producers are eligible forthe PBS and DEPB benefits regardless of whether they importany inputs at all. It is enough for an exporter to obtain the benefitby simply exporting goods without the need to show that anyinput material was indeed imported; thus, exporting producerswhich procure all of their inputs locally and do not import goodswhich can be used as inputs are still entitled to the PBS and theDEPB benefits. Hence, the PBS and DEPB do not conform toany of the provisions of Annex I to III. Since this exception tothe subsidy definition of Article 2 does therefore not apply, thecountervailable benefit is the remission of total import dutiesnormally due on all imports.
(15) From the above it clearly follows that the excess remission ofimport duties is the basis for calculating the amount of the benefitonly in the case of bona fide drawback and substitution drawback
schemes. Since it is established that the PBS and the DEPB donot fall in one of these two categories, the benefit is the totalremission of import duties, not any supposed excess remission.
(16) The GOI and nine exporting producers have argued that treat-ment of these schemes is inconsistent with the provisional find-ings in the parallel anti-dumping investigation since the Commis-sion granted in the anti-dumping investigation an allowance forimport duties not paid under the PBS and the DEPB for importedinputs actually consumed in the production of exported products.
(17) However, pursuant to Article 2(10)(b) of the basic anti-dumpingRegulation, Regulation (EC) No 384/96 (
1), an allowance was
only granted where it was shown that the materials on whichimport duties were paid were physically incorporated in theproduct concerned sold on the domestic market and that theimport duties were not collected or refunded in respect of theproduct exported to the Community. While such an allowanceultimately will reduce the dumping margins, it is not relevant inthe anti-subsidy investigation, since the PBS and the DEPB havealready been found to be countervailable, on the basis of theprovisions of the basic Regulation, for the reasons stated above.As explained above, once such a countervailable subsidy is foundto exist, the benefit to the recipient is the full amount of importduty not paid by the exporting producer on all import transac-tions. In this regard, it is not for the Commission to reconstruct
(1) OJ L 56, 6.3.1996, p. 1. Regulation as last amended by Regulation (EC)
No 905/98 (OJ L 128, 30.4.1998, p. 18).
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the PBS and the DEPB in order to determine which products are
physically incorporated and which are not. Furthermore, it shouldbe stressed that the analysis regarding countervailability of ascheme and an allowance for physically incorporated inputs arecompletely different with regard to purpose, calculation methodo-logy and legal basis. The purpose of examining the allowance atissue in anti-dumping investigations is to adjust normal values.The examination of the countervailability of a scheme in ananti-subsidy investigation aims at establishing benefits receivedby the exporter thereunder. In addition, the calculation methodo-logy is different in anti-dumping and anti-subsidy investigations.While in anti-dumping cases the allowance is granted in relationonly to exports of the products concerned to the Community, inan anti-subsidy investigation benefits are examined in relation tototal exports of all products to all destinations in line with Article7(2) of the basic Regulation and the ‘Guidelines for the calcula-tion of the amount of subsidy in countervailing duty investiga-tions' (hereinafter referred to as the ‘calculation guidelines')(
1).
(18) The GOI and nine exporting producers further argue that theCommission should have examined whether there was in fact anexcess drawback of import charges on inputs consumed in theproduction process.
(19) As already explained in recitals 12 to 15, Annexes II and IIIcontain the rules to establish whether a scheme constitutes a dutydrawback or a substitution drawback. The excess remission ofimport duties is the basis for calculating the amount of the benefitonly in the case of drawback and substitution drawback schemes.This argument cannot be accepted as the issue of excess remis-sion only arises in the context of assessing properly constituteddrawback/substitution drawback schemes, and it has been estab-lished that the PBS and the DEPB are not drawback or substitu-tion drawback schemes within the meaning of Annex I(i) andAnnexes II and III to the basic Regulation.
(20) The GOI and nine exporting producers claim that the Commis-sion failed to examine whether the GOI has a system or proce-dure in place, to confirm which inputs are consumed in themanufacturing process of the exported products, and in whatamounts. The GOI claims that the standard input/output normsconstitute an adequate verification system.
(21) This argument relates to the issue whether the PBS and theDEPB can be considered as drawback schemes or substitutiondrawback schemes. Since it was established that the PBS and theDEPB are not drawback or substitution drawback schemes withinthe meaning of Annexes II and III to the basic Regulation nofurther examination needs to be carried out. Even if the PBS andDEPB were to meet the criteria of Annexes II and III, it shouldbe concluded that no reasonable verification system exists. Theinput/output norms are a list of possible items that can beconsumed in the production process and in what amounts.However, the input/output norms are not a verification systemwithin the meaning of paragraph 5 of Annex II to the basicRegulation. These norms do not provide for a verification of theinputs that are actually consumed in the production process anddo not provide for a verification system whether these inputswere effectively imported.
(22) The GOI and nine exporting producers allege that the Commis-sion has incorrectly countervailed the value of the credit amountin the DEPB licence instead of the net value upon the sale of thelicence. One company claimed that the sales tax, which was paidupon the sale of the licence, should be deducted from the totalsubsidy amount.
(1) OJ C 394, 17.12.1998, p. 6.
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(23) Under the current provisions of the DEPB, a company, which has
obtained licences, has two options: to import any product (exceptthe items listed on the negative list) using the credits to offset theapplicable import duties or transfer the licence to a third party.As explained in recital 34 of the provisional Regulation, theCommission considers that ‘the sale of a licence at a price lessthan the face value is a pure commercial decision which does notalter the benefit received from the scheme'. Furthermore, Article7 of the basic Regulation lists the elements that may be deductedfrom the subsidy amount. Any application fees or costs neces-sarily incurred in order to qualify for or obtain the subsidy maybe deducted from the amount of subsidy. The transfer of a loweramount of benefit than that actually granted and the sales taxcannot be considered as justified deductions within the meaningof Article 7 of the Basic Regulation since these elements are nota cost necessarily incurred in order to qualify for or obtain thesubsidy.
(24) The GOI and nine exporting producers argue that the Commis-sion countervailed part of the benefits under these schemes twicedue to the overlap between this proceeding and the stainless steelbright bars investigation.
(25) The Commission followed the same methodology as was used inthe cases of antibiotics (
1) and stainless steel bars (2). Pursuant to
Article 7(2) of the basic Regulation, the amount of countervail-able subsidy was determined by allocating the value of the totalsubsidy over the level of total exports. Since the export subsidieswere not linked to the export of the product concerned but allexports of the companies, the Commission considered it appro-priate to use this methodology. In using this methodology, therewas no double counting of benefits that were already counter-vailed in stainless steel bars since the subsidies were allocatedover all exports.
(26) One company, Raajratna Metal Industries Ltd, disputes the meth-odology used by the Commission in calculating the benefit underthe Passbook and DEPB schemes. They contend that only creditsearned on the product concerned during the period of invest-igation should be taken into account. This amount, the companysays, should then be allocated over the corresponding exportturnover of the product concerned to calculate the benefit.
(27) The Commission considers that if it were to accept this argument,the effect would be to countervail potential as opposed to actualbenefits that accrued during the investigation period. As acompany cannot be said to receive a subsidy until the credit ismade use of, the Commission has decided that it is the totaldebits utilised that best reflects the true benefit to a company.The argument is therefore rejected.
2.Export Promotion Capital Goods Scheme (EPCGS)
(28) Three companies made a claim regarding the Export Promotion
Capital Goods scheme (EPCGS), which is described in recitals 36to 39 of the provisional Regulation. These concern the allocationof the benefit over the normal depreciation period of fixed assets.
(29) It was argued that there was a discrepancy between the deprecia-tion period used in the disclosure letter and the provisional Regu-lation. The Commission established an average of the deprecia-tion periods used by all exporting producers of the productconcerned and arrived at an average depreciation period of 12years. This period was used in the provisional finding and will beconfirmed at the definitive stage. The subsidy amount under the
(1) OJ L 273, 9.10.1998, p. 4.
(2) OJ L 202, 18.7.1998, p. 44.
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Passbook DEPB EPCGS Income tax TotalEPCGS was allocated over 12 years in accordance with Article
7(3) of the basic Regulation.
(30) One company argued that its capital goods were being depre-ciated over 21 years and that this depreciation period should havebeen used instead of the average of 12 years.
(31) As explained above, the Commission services, in establishing itsprovisional findings, determined the normal depreciation periodof capital goods in the stainless steel wire industry, i.e. 12 yearson the basis of the average period used by the cooperating Indianexporting producers. This is in accordance with the requirementsof Article 7(3) of the basic Regulation which states that where asubsidy can be linked to the acquisition of fixed assets, theamount of the countervailable subsidy shall be calculated byspreading the subsidy across a period which reflects the normaldepreciation of such assets in the industry concerned. In view ofthis provision, it is not appropriate to use the company specificdepreciation period. The claim is therefore rejected.
3.Income tax exemption scheme
(32) One company, Bhansali Ferromet Ltd did not submit a copy of its
income tax return within the deadline stipulated by the Commis-sion and was therefore considered non-cooperating for thepurpose of the income tax exemption. After disclosure, thiscompany submitted a copy of its income tax return that revealedthat no benefits were granted under this scheme. Therefore, thesubsidy margin for Bhansali Bright Bars Pvt. Ltd is adapted to18,5 %.
4.Related companies
(33) Isibars Ltd and Isinox Ltd argue that the Commission should not
have considered them to be related companies since they areseparate legal entities. If the Commission were to treat them asrelated companies, it should have applied a different methodo-logy to calculate a single subsidy margin.
(34) It was established during the verification that Isibars and Isinoxare related companies since they have common shareholders andcommon management. The Commission has in anti-dumping andanti-subsidy investigations always considered two related compa-nies as a single economic entity in order to avoid circumvention.Therefore, this claim cannot be granted. As regards the calcula-tion of the subsidy margin, the Commission used a weighted-average methodology as the most reasonable basis for estab-lishing the subsidy margin.
5.Amount of countervailable subsidies
(35) Taking account of the definitive findings relating to the various
schemes as set out above, the amount of countervailable subsidiesfor each of the investigated exporting producers is as follows:
Bhansali Bright Bars 4,1 % 14,4 % 0,0 % 0,0 % 18,5 %
Devidayal 0,0 % 18,4 % 0,0 % 0,0 % 18,4 %
Indore Wire 7,7 % 10,7 % 0,9 % 0,0 % 19,3 %
Isibars/Isinox 4,2 % 7,8 % 1,2 % 0,0 % 13,2 %
Kei Industries 0,0 % 0,0 % 0,0 % 0,0 % 0,0 %
Macro Bars 9,6 % 12,6 % 0,0 % 3,2 % 25,4 %
Mukand Ltd 7,5 % 5,7 % 0,0 % 0,0 % 13,2 %
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Passbook DEPB EPCGS Income tax Total
Raajratna 23,3 % 13,7 % 0,0 % 5,9 % 42,9 %
Triveni Shinton 0,0 % 0,0 % 0,0 % 0,0 % 0,0 %
Venus Wire 19,8 % 14,3 % 0,0 % 1,3 % 35,4 %
(36) The subsidy amount definitively established for Indian companies
other than those cooperating in this investigation, expressed as apercentage of the net, free-at-Community price, is 48,8 %, whichis the sum of the highest amount granted to any cooperatingexporter under each scheme.
II. KOREA
1.Loan programmes
(a)Calculation of benchmark interest rate
(37) The Government of Korea (GOK) claimed that with regard to the
calculation of the subsidy amount in the case of loans, thecost-to-the-government approach rather than the benefit-to-the-recipient approach should have been used, citing Article 19(4)and Article 6(1)(a), and Annex points (k) and (l) of the Agree-ment on Subsidies and Countervailing Measures (ASCM).
(38) It is considered that the provisions cited by the GOK are notapplicable to the loan programmes investigated. Article 19(4) ofthe ASCM establishes that no countervailing duty is levied inexcess of the amount of the subsidy found to exist calculated onthe basis of the benefit conferred. This provision was observedsince the explicit rules for the calculation of the subsidy in thecase of loans, i.e. Article 5 and Article 6(b) of the basic Regula-tion which incorporate Article 14(b) of the ASCM, werefollowed. These rules clearly establish that the subsidy should becalculated in terms of the benefit which is the difference betweenthe amount the firm receiving the loan pays and the amount thefirm would have paid for a comparable commercial loan. Article19(4) of the ASCM does not create a requirement for calculationof a subsidy on the basis of the cost to the government. Article6(1)(a) concerns a presumption of serious prejudice in certaincircumstances, which is not applicable to countervailing dutyproceedings. Point (k) of Annex I to the ASCM which is repro-duced in Annex I to the basic Regulation provides for specialrules for export credits which are exceptions to the general rulesfor the calculation of subsidies in the case of loans. Point (l) initself does not establish that the cost-to-the-government approachprevails over the explicit rules in Article 5 and Article 6(b) of thebasic Regulation, in particular since this point was alreadypresent in the illustrative list of export subsidies adopted duringthe Tokyo Round of GATT negotiations, at a time when thebenefit-to-the-recipient approach had not yet been incorporatedinto WTO rules.
(39) Furthermore, the GOK claimed that the comparison of interestpaid on a government loan programme to a commercial loanwould wrongly assume that interest rates on all loans in theeconomy would be equal.
(40) The Commission does not assume that all loans are equal butused as a benchmark loans which were considered comparable onthe basis of repayment period, principal amount and purpose ofthe loan as is required pursuant to Article 6(b) of the basicRegulation.
(41) Finally, the GOK claimed that the relevant benchmark interestrate should be that on a comparable loan granted at the same timeas the loan at issue rather than using interest rates prevailing in
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the investigation period since during the investigation period, the
interest rate was abnormally high due to the financial crisis.
(42) It was found in the course of the investigation that interest ratesfor loans granted on a commercial basis reflect market conditionsby changing over time. Such loans would have shown the sameinterest rates during the investigation period regardless ofwhether they were granted at the same time as the governmentloan or not. Thus, the Commission would not deviate from itsnormal practice set forth by the basic Regulation and the calcula-tion guidelines. Hence, this claim is rejected.
(43) Two Korean exporting producers claimed that the Commission’sclassification of the loans into five categories on the basis of theamount of the principal is arbitrary and inconsistent with theusual practice of Korean banks and that consequently the deter-mination of the interest rate on the basis of the loan amount doesnot constitute an adequate methodology to determine the bench-mark interest rate. One Korean exporting producer claimed thatbecause Korean banks do not take into account the loan amountas a determining factor for the interest rate, the Commissionshould use as the sole benchmark, the producer’s actual averageinterest rate on commercial loans. Two Korean exporting produ-cers also claimed that the Commission should use the interestrates on trade loans as the benchmark interest rate for EXIM-SMloans.
(44) In response to these claims, it is considered that Article 6(b) ofthe basic Regulation makes it clear that the benchmark for thecalculation of the subsidy is a comparable commercial loanwhich the company could actually obtain on the market. There-fore, the Community’s practice in this area, as set forth in thecalculation guidelines, is to compare loans with a similar amount,purpose and a similar repayment period. The trade loans (i.e.short-term loans for operational purposes) obtained by theKorean exporting producers differ in purpose (see recital 126 ofthe provisional Regulation) and loan period from EXIM-SMloans at issue and are therefore not comparable loans. Theseclaims are therefore rejected.
(45) The two Korean exporting producers further argued that theCommission used extraordinarily high interest rates resultingfrom the financial crisis in Korea as a benchmark for calculatingthe subsidy on loans concluded before the crisis.
(46) Article 6(b) of the basic Regulation states that the benefit iscalculated by comparing interest rates on government loans tointerest rates on comparable commercial loans. In order toaccomplish this, average interest rates on government loans werecompared to average interest rates on comparable commercialloans during the investigation period. This claim is thereforerejected.
(b)Fishing Net Production Loan (FNPL)
(47) The GOK claimed that since this loan was specific to the fishing
net industry, it did not confer a benefit on the exporter of stain-less steel wire nor was it specific to the stainless steel industry.Additionally, a company producing both fishing nets and stain-less steel wire would manage financial resources and theiraccounting separately.
(48) In the course of the investigation it was determined that theexporting producers of stainless steel wire received such a loan,which is countervailable since, as admitted by the GOK, it isspecific to the fishing net industry. It is considered to be irrele-vant that the scheme in question is not specific to the industryproducing the product under investigation as long as theprogramme is specific as such and its benefits can be related tothe production of the product concerned. The latter is the casesince the subsidised loan reduced the overall financing cost of theproducer which also benefits the product concerned. No evidence
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was submitted that the management of financial resources by theexporting producers concerned was conducted in such a way thatthe overall financing cost of the company would not be affectedby the grant of the loan. Therefore, this claim is rejected.
(c)SMEs Start-up and Promotion Fund Loans (SME-SPFL)
(49) The GOK claimed that Type C loans granted under the Pusan
Metropolitan City Support Fund Establishment and OperationBy-law were not contingent upon export performance since eightmain and 12 additional criteria determining the eligibility forsuch a loan are objective and neutral. The only export-relatedelement is that additional consideration is taken for SMEs whoseexport sales account for more than 20 % of their total turnover.The purpose of the scheme is not to promote exports but to useexport share as an indirect indicator of technology developmentactivities.
(50) It is considered that, even though a condition related to exportperformance is only one among several criteria, it neverthelessmakes the scheme contingent upon export performance and there-fore specific. This is clearly set forth in Article 3(4)(a) of thebasic Regulation which states that subsidies which are contingentin law or fact, whether solely or as one of several conditions,upon export performance are deemed to be specific. Since oneelement to be taken into consideration by the granting authority isthat a minimum share of exports in total turnover is achieved, thisrequirement of contingency upon export performance is fulfilledsince companies might not have obtained benefits withoutexceeding a certain level of export sales. The GOK’s claim istherefore rejected.
(d)TechnologyDevelopment Business Loan (TDBL)l Science
and TechnologyPromotion Fund (STPF)
(51) The GOK claimed that these programmes provide assistance forresearch activities in accordance with Article 8(2)(a) of theASCM and are therefore non-actionable and non-countervailable.Additionally, technology development, and science and tech-nology promotion are objective and neutral criteria within themeaning of Article 2(1)(b) ASCM and the programmes aregenerally available to all industries which invest in technologydevelopment projects and are therefore not specific. With regardto the STPF, the GOK furthermore claimed that since transparentand objective criteria are employed by the Ministry of Scienceand Technology, it cannot exercise any discretion in deciding onpriority projects and that the Commission had failed to presentany evidence to support its conclusion that this discretion hasbeen exercised.
(52) The claim of non-actionability for both programmes is rejectedfor the same reasons as stated below under recitals 75 to 77. Noevidence was provided which would cast doubt on the provi-sional fording that the TDBL was specific to certain industriesinvesting in certain projects as determined by the Ministry ofTrade and Industry. Also with regard to the STPF, no informationon any criteria used by the Ministry of Science and Technologywas provided. During the investigation it was verified that theMinistry of Science and Technology did in fact decide from timeto time on priority projects. This is considered to be sufficientevidence to establish that the STPF is de facto specific within the
meaning of Article 3(2)(c) of the basic Regulation. Hence, theclaim that the schemes are not specific is rejected.
(e)Export financing loans
(53) One Korean exporting producer claimed that the Commission
disregarded certain verified information and made a calculationerror in determining the benefit from the EXIM-SM loans.
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(54) It is considered that this claim is valid. Appropriate adjustments
have accordingly been made to the amount of subsidy for therelevant company.
(55) The GOK claimed that since the EXIM-EC (pre-shipment),EXIM-SM and EXIM-FIC loans were granted at rates abovethose which EXIM actually paid for the funds, EXIM-EC,EXIM-SM and EXIM-FIC loans are not countervailable. Further-more it is argued that footnote 5 to Article 3(1)(a) of the ASCMstates that measures referred to in Annex I as not constitutingexport subsidies should not be prohibited under this or any otherprovision of the ASCM.
(56) It is considered that these arguments only apply to ‘export credits'as defined in point (k) of Annex I to the basic Regulation. Asalready explained in the provisional Regulation in recitals 129and 130, EXIM-EC (pre-shipment), EXIM-SM and EXIM-FICloans are not considered to be ‘export credits' and do not fallunder point (k) of Annex I to the basic Regulation. These claimsare therefore rejected.
(57) The GOK argued that EXIM-FIC is contingent neither uponexport performance nor upon the use of domestic over importedgoods within the meaning of Article 3(1) of the ASCM. TheGOK also states that, because EXIM-FIC is available to a widevariety of industries and since the criterion of foreign investmentis objective and neutral within the meaning of Article 2(1)(b) ofthe ASCM, EXIM-FIC is not specific.
(58) In response to these arguments the Commission concluded onEXIM-FIC loans that they are available only to companies whichinvest abroad and are therefore specific within the meaning ofArticle 3(2)(b) of the basic Regulation since they are not basedon neutral criteria as explained below in recitals 80 to 84. It wasconsidered that EXIM-FIC is not contingent upon exportperformance nor upon the use of domestic over imported goodswithin the meaning of Article 3(1) of the ASCM.
2.Fixed amount refund system
(59) The GOK argued that this scheme is a drawback system within
the meaning of Annex I, point (i), Annex II and Annex III to theASCM and claimed further that the drawback of import chargesis not made in excess of those levied on imported inputs that areconsumed in the production of the exported product, makingnormal allowance for waste.
(60) In response to these arguments it is considered that since there isno obligation to import any inputs for the production of theexported product, the fixed amount refund scheme is neither aduty drawback scheme nor a substitution drawback schemewithin the meaning of Annex I, point (i), Annex II and Annex IIIto the ASCM. In fact, the Korean fixed amount refund systemfalls under the general definition of a subsidy according toArticle 2 of the basic Regulation which incorporated Article 1 ofthe ASCM. It constitutes a subsidy as a financial contribution ismade by the GOK in the form of grants based on FOB value ofexports and confers a direct benefit upon the recipient. It is asubsidy contingent in law upon export performance and is there-fore deemed to be specific under Article 3(4)(a) of the basicRegulation. Consequently, the issue of excess remission ofimport duties, as mentioned in Article 2(1)(a)(ii) of the basicRegulation, does not arise since this is only relevant for cases ofdrawback and substitution drawback schemes in accordance withAnnexes I to III to the basic Regulation. Therefore these claimsare rejected.
(61) The GOK stated that, pursuant to paragraph 2 of Annex II(II) tothe ASCM, if there is no system or procedure to determinewhether an excess payment occurred and the investigatingauthorities deem it necessary, a further examination will becarried out in accordance with paragraph 1 of Annex II(II). The
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GOK claimed that since the Commission failed to examinewhether there was in fact an excess drawback of import chargeson inputs consumed in the production of the exported product,there exists no basis to conclude that the Korean fixed amountrefund system constitutes as specific subsidy pursuant to Article3(4)(a) of the basic Regulation.
(62) It is considered that this argument is irrelevant since paragraph 2of Annex II(II) of the ASCM relates to a duty drawback schemewhich, as explained above, the programme under consideration isnot. But in any event, even if it were a duty drawback scheme,Annex II(II)(5) and Annex III(II)(3) to the basic Regulationprovide that the burden would be on the government of theexporting country to carry out such an examination based onactual transactions. The GOK did not carry out such an exam-ination. Therefore the Commission did not examine whether therewas in fact an excess drawback of import charges on inputsconsumed in the production of the exported product.
(63) One Korean exporting producer stated that the argument of theCommission that there is no system or procedure in place toconfirm which inputs are consumed in the production of theexported product and in what amount, is not valid because dutyrefund is only allowed for the inputs actually used in the produc-tion of exported goods and for import duty actually paid.
(64) In response to these arguments it is considered that under thefixed amount refund system, the amount of the grants received isnot calculated in relation to inputs actually consumed in theproduction process or import duty actually paid but calculated asa lump sum based on overall exports. Therefore, these claims arerejected.
(65) One Korean exporting producer further argued that he did notreceive any benefit from the use of this system claiming that hepaid import duty on the raw materials used in the production ofthe product concerned, exported the product concerned and theduty drawback amount is inferior to the amount that they wouldhave received if the individual system was used. The GOKfurthermore argued that the Korean exporting producer who usedthe fixed amount duty drawback system provided the Commis-sion with the evidence that its drawback of import charges ismuch less than those levied on imported inputs that wereconsumed in the production of the exported product during theinvestigation period.
(66) In response to these arguments it is considered that, for thereasons explained above, payments under the fixed amountrefund system constitute grants which are based on exportperformance and are therefore specific and countervailablepursuant to Article 3(4)(a) of the basic Regulation. Furthermore,it is irrelevant whether the use of a legitimate duty drawbackscheme would have been more advantageous for the exportingproducer since he chose to receive benefits under a scheme whichis a countervailable subsidy. Hence, these claims are rejected.
3.Tax programmes
(a)Non-specificityof the limitation to manufacturing industry
(67) In its provisional determination, the Commission considered that
certain Articles of the Tax Exemption and Reduction ControlLaw (TERCL) were countervailable as they were specificpursuant to Article 3(2)(a) of the basic Regulation by virtue ofbeing limited to certain enterprises including those in the manu-facturing industry. These Articles were:
— Article 7 (Special reduction and exemption of tax amount for
small and medium manufacturing industry, etc.),
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— Article 8 (Reserve for technology development),
— Article 9 (Tax credit for technology and manpower develop-
ment expenses),
— Article 25 (Tax credit for investment in facilities for
increasing productivity),
— Article 27 (Temporary investment tax credit).
(68) The GOK claimed that since the provisions of these Articles are,
in practice, available to a significantly wide variety of industries/businesses, they are not specific within the meaning of Article2(1)(a), (b) and (c) of the ASCM and are accordingly not coun-tervailable (these paragraphs of the ASCM are reproduced inArticle 3(2)(a), (b) and (c) of the basic Regulation). In particular,the GOK emphasised that the concept of ‘manufacturing industry'is a very broadly defined one and, in practice, includes tens ofthousands of sub-category industries.
(69) The basic principle of specificity is that a subsidy that distorts theallocation of resources within an economy by favouring certainenterprises over others should be subject to countervailing meas-ures if it causes injury. Where eligibility for subsidies is limitedwithin an economy on the basis of non-neutral criteria, such adistortion in the allocation of resources is presumed to. occur.This principle is the basis for Article 2(1)(a) of the ASCM andArticle 3(2)(a) of the basic Regulation which provide that asubsidy is specific if the granting authority, or the legislationpursuant to which the granting authority operates, explicitlylimits access to a subsidy to certain enterprises. In this case, it isconsidered that, while the concept of ‘manufacturing industry'may be a very broadly defined one, it is a fact that the provisionsof the abovementioned Articles of TERCL are further designed torestrict the benefits thereunder to certain enterprises by makingeligibility contingent upon other non-neutral criteria, such asinvestment in certain types of high technology products or over-seas investment.
(70) It has been argued by GOK that such criteria are neutral, since allcompanies have an equal opportunity to avail themselves of thesubsidies. For example, it is argued that a subsidy for firmswhich invest overseas is non-specific because all firms are able toinvest overseas. However, according to this argument, a subsidylimited to firms in the textile sector is non-specific, because allfirms ‘are able' to diversify into textiles. If specificity under theASCM is to make any sense, it must cover situations wheregovernments make subsidies subject to conditions which theyknow in advance will severely restrict the number of firmseligible to apply; such subsidies are designed to favour certainenterprises over others. For this reason, the type of criteria usedby GOK to designate recipients are not ‘neutral',and as explainedbelow, they are not horizontal in application, as required byArticle 3(2)(b) of the basic Regulation. It has therefore beenfound that the subsidies under these Articles of TERCL arespecific; more detailed reasons are given below with regard to theindividual schemes.
(b)Undue process
(71) The GOK has claimed that, as the complainant in this proceeding
did not make any allegations concerning the tax provisions ofcertain Articles of TERCL, they should not be included in anydetermination to be made in this proceeding. The Articlesconcerned are:
— Article 5 (Special tax credit for SMEs),— Article 7 (Special reduction and exemption of tax amount for
small and medium manufacturing industry, etc.),
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— Article 27 (Temporary investment tax credit).
(72) In particular, the GOK states that:
(i) Article 11 of the ASCM (Article 10 of the basic Regulation)
lists the information to be contained in a complaint,including evidence of the existence of subsidies and theamount and nature of the subsidy in question;
(ii) Article 12(1) of the ASCM (Article 11 of the basic Regula-
tion) states that interested Members and all interested partiesin a countervailing duty investigation shall be given noticeof the information which the authorities require;
(iii) paragraph 7 of Annex VI to the ASCM (Article 26(3) of the
basic Regulation) states that it should be standard practiceprior to the (verification) visit to advise the firms concernedof the general nature of the information to be verified and ofany further information which needs to be provided.
(73) The GOK claims that these provisions of the ASCM have beenignored by including the non-alleged programmes in the deter-mination and that, furthermore, both the GOK and some cooper-ating exporting producers did not have the opportunity to defendthemselves appropriately.
(74) In response to the GOK’s claims, it is considered that, whenlodging a complaint, complainants cannot be expected to haveknowledge of every last detail of alleged subsidy programmes ina third country. In this case, the complainant made a largenumber of allegations of tax subsidies granted under the TERCL.The investigation then unearthed other tax subsidies grantedunder certain provisions of the TERCL which had not beenspecifically mentioned in the complaint, but which have a verysimilar effect to the alleged schemes. In view of the nature ofthese subsidies, and in particular the fact that they are grantedunder the general umbrella of the TERCL (against which thecomplainant has made a number of subsidy allegations) it isconcluded that the Commission is entitled to investigate them andrecommend countervailing action if appropriate.
(c)Article 8 of TERCL (Reserve for TechnologyDevelopment)
(75) In addition to the GOK’s claim regarding the non-specificity of
the provisions of this Article, the GOK claimed that this Articleis a non-actionable research and development (R&D) subsidywithin the meaning of Article 8(2)(a) of the ASCM (this para-graph of the ASCM is reproduced in Article 4(2) of the basicRegulation).
(76) It is noted that, if R&D subsidies fulfilling the requirements ofArticle 8(2)(a) of the ASCM are notified to the WTO under theprovisions of Article 8(3) of that Agreement, an investigationcannot even be opened against such subsidies. In regard toArticle 8 of TERCL, it has been noted that Korea has not notifiedthis provision to the WTO under Article 8(3) of the ASCM.Accordingly, the Commission was entitled to initiate an invest-igation of this provision of TERCL. Regarding the GOK’s claimthat this provision is non-actionable, and accordingly is protectedfrom countervailing measures, the GOK is required to demon-strate such non-actionability. It was given an opportunity by theCommission to make such a demonstration at the beginning ofthe investigation, but has not done so. In these circumstances,countervailing measures can be imposed on benefits accruingunder this Article.
(77) As regards the GOK’s non-specificity allegations, the scheme isnot neutral since it differentiates between normal and technology-intensive firms. The latter receive higher rates of benefit. Such adistinction shows that the criteria are not neutral and exclude alarge number of firms for whom such technological developmentis not necessary. For these reasons and those stated in recitals 67
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to 70, it is considered that Article 8 of TERCL is specific andtherefore countervailable.
(d)Article 9 of TERCL (Tax credit for technologyand manpower
development expenses)
(78) In addition to the GOK’s general claim regarding the non-specif-icity of the provisions of this Article, the GOK claimed that thecriterion of technology and manpower development is an objec-tive and neutral criterion within the meaning of Article 2(1)(b) ofthe ASCM. It is considered that this criterion is not neutral withinthe sense of that Article of the ASCM nor within the sense ofArticle 3(2)(b) of the basic Regulation. This latter Articlerequires that objective criteria or conditions must be neutral andalso economic in nature and horizontal in application. The provi-sions of this Article of TERCL are considered not to be hori-zontal in nature as clearly companies in certain industrial sectorswill be more technologically-oriented than those in other sectorsand will therefore be more likely to take advantage of this provi-sion. The GOK, by enacting this provision of TERCL, hasconferred a disproportionate benefit to firms in certain industrialsectors.
(79) It is considered that this scheme is specific as it is limited tocertain enterprises (see recitals 67 to 70) and therefore counter-vailable. The scheme is also specific pursuant to Article 3(2)(b)of the basic Regulation and therefore countervailable.
(e)Article 23 of TERCL (Reserve for overseas investment loss)
(80) The GOK noted that the provisions of this Article are no longer
effective since 1 January 1998. The GOK claimed also that theprovisions of this Article are available to a wide variety ofindustries and also that the criterion of overseas investment is anobjective and neutral criterion within the meaning of Article2(1)(b) of the ASCM.
(81) The nature of this provision is that of a tax deferral which will beadded back to a company’s tax base after a two-year grace periodin equal amounts over three years. Accordingly, for tax deferredduring the last year of eligibility (tax year 1997), benefitscontinued to accrue during the investigation period (1 April 1997to 31 March 1998) and will continue to accrue for a number ofyears thereafter to companies which availed of this tax provision.
(82) Concerning the GOK’s claim that the provisions of this Articleare available to a wide variety of industries, it is noted that, in itsprovisional findings, the Commission found that the provisions ofthis Article were limited to those Korean companies which investabroad. No new information has been provided that this is not thecase. Similar to the GOK’s claim above regarding the non-specif-icity of the limitation to manufacturing industry (see recitals 67to 70), it is a fact that the provisions of Article 23 of TERCLrestrict the benefits thereunder to certain enterprises. This provi-sion is therefore specific pursuant to Article 3(2)(a) of the BasicRegulation and therefore countervailable.
(83) The GOK also claimed that the criterion of overseas investmentis an objective and neutral criterion within the meaning of Article2(1)(b) of the ASCM. It is considered that this criterion is notneutral within the sense of that Article of the ASCM nor withinthe sense of Article 3(2)(b) of the basic Regulation. This latterArticle requires that objective criteria or conditions must beneutral and also economic in nature and horizontal in application.The provisions of this Article of TERCL are considered not to beobjective, since it is known in advance that companies which donot invest abroad will be ineligible for the benefit. This criterionis therefore neither neutral nor horizontal in application. TheGOK, by enacting this provision of TERCL, has conferred abenefit upon a limited number of enterprises with overseas inter-ests.
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Loans
(export)Loans
(other)Tax
(export)Tax
(other)Duty
drawbackTotal
subsidy(84) It is considered, therefore, that this provision of TERCL is
specific pursuant to Article 3(2)(b) of the basic Regulation andtherefore countervailable.
(f)Article 25 of TERCL (Tax credit for investment in facilities
for increasing productivity)
(85) In addition to the GOK’s claim regarding the non-specificity ofthe provisions of this Article, the GOK pointed out that theprovision of preferential treatment for domestic over importedfacilities which was contained in this Article was deleted at theend of 1996 which is before the investigation period. In itsprovisional findings, the Commission indeed noted that the provi-sion in the Article for different rates in force for imported (3 %credit) and indigenously sourced (10 % credit) facilities wasdeleted at the end of 1996. However, as companies whichcommenced investment projects before the end of 1996, butwhich continued after that date, may opt to benefit from the ratesin force prior to that date, benefits continued to accrue during theinvestigation period.
(86) As regards the different rates in force for imported and indige-nously sourced facilities prior to the end of 1996, it has alreadybeen found that the scheme is specific pursuant to Article 3(4)(b)of the basic Regulation. Concerning the general claim of non-specificity, it is considered that this scheme is specific as it islimited to certain enterprises (see recitals 67 to 70) and thereforecountervailable. It is known in advance that certain enterprisesare more likely than others to be in a position to benefit from taxadvantages for productivity improvement, just because of thetype of business they are in. Therefore, benefits from this schemewill inevitably be more relevant to some sectors than to others.
(g)Article 27 of TERCL (Temporaryinvestment tax credit)
(87) In addition to the GOK’s claim regarding the non-specificity of
the provisions of this Article, the GOK pointed out that theprovision of preferential treatment for domestic over importedfacilities was deleted at the end of 1996. In its provisional find-ings, the Commission considered that benefits accruing under thisArticle should be countervailed as companies may opt to benefitfrom the different rtes in force for imported (3 % credit) andindigenously sourced (10 % credit) machinery prior to the end of1996 for investment projects commenced before then. Accord-ingly, benefits continued to accrue during the investigationperiod.
(88) It is considered that this scheme is specific as it is limited tocertain enterprises (see recitals 67 to 70) and therefore counter-vailable. As regards the different rates in force prior to the end of1996, the scheme is specific pursuant to Article 3(4)(b) of thebasic Regulation. Concerning the general claim for non-specif-icity, as in the case of Article 25, this scheme is available only tothose firms which invest in productivity-improving equipment.Given the nature of this condition, it is inevitable that certainenterprises will be more likely to benefit than others.
4.Amount of countervailable subsidies
(89) Taking account of the definitive findings relating to the various
schemes as set out above, the amount of countervailable subsidiesfor each of the investigated exporting producers is as follows:
Korea Welding 0,47 0,06 0,34 0,08 0 0,95
Shine Metal
Products1,63 0 0 0 1,09 2,72
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Loans
(export)Loans
(other)Tax
(export)Tax
(other)Duty
drawbackTotal
subsidy
Dae Sung Rope
Mfg Co., Ltd0,09 0,15 0,06 0,55 0 0,85
Korea SangsaCo. Ltd/MyungJin Co., Ltd
0,17 0 0,15 0,25 0 0,57
Kowel SpecialSteel Wire Co.0,88 0 0 0,03 0 0,91
SeAH MetalProducts Co.,Ltd
2,31 0,18 0,02 0 0 2,51
(90) The weighted average country-wide subsidy margin for all the
exporting producers investigated which represent the totality ofexports to the Community originating in Korea expressed as apercentage of the cif price at Community frontier level is de
minimis , i.e. under 1 %. Under these circumstances, the subsidy
margin for Korea has to be considered negligible in accordancewith Article 14(3) of the basic Regulation.
(E)INJURY
1.Preliminary remark
(91) On the basis of the above findings regarding Korea, i.e. the
country-wide subsidy margin for this country being below the de
minimis threshold, imports of large SSW originating in Korea are
no longer considered as subsidised imports. Therefore, contraryto the findings set out in the provisional Regulation, only importsoriginating in India will be taken into account for the purposes ofthe injury assessment set out below.
2.Community industry
(92) In the absence of new evidence or any further substantiated
argument put forward by any of the parties concerned, the factsand findings set out in recitals 207 and 208 of the provisionalRegulation are confirmed, i.e the complainant Community produ-cers representing more than 65 % of the total Community produc-tion of large SSW constitute the Community industry, in accord-ance with Article 9(1) of the basic Regulation.
3.Competition aspects
(93) In their comments following the disclosure, the Indian exporting
producers reiterated their claim that all data submitted by theCommunity industry within the framework of the currentproceeding would be artificially inflated as a result of theuniform application of the ‘alloy surcharge' system, and that itwould, therefore, not be possible to conduct any accurate injuryanalysis within the framework of the anti-subsidy proceeding.Since, however, no new arguments have been put forward by anyinterested party and there has been a definitive decision rejectingthe complaint in case IV/E-1/36.930 concerning stainless steelbright bars, which belong to the same category of products asSSW, the findings set out in recitals 209 to 216 of the provisionalRegulation are hereby confirmed.
4.Community consumption
(94) Following the disclosure, some interested parties have argued that
the methodology followed for the purpose of determining theCommunity consumption, in particular with regard to the sales ofnon-cooperating Community producers and third countriesimports, was inappropriate.
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(95) In this respect, it should be recalled that detailed and verified data
are only available for the Community industry and the cooper-ating exporting producers in the country concerned. Therefore, inline with the consistent practice of the Community institutionsrecourse was made to information available to the Commission,and in particular to independent statistical sources. No interestedparty has provided information that would show that theapproach followed by the Community institutions was unreason-able and not justified in the circumstances of the present case.
(96) Consequently, the findings as set out in recitals 217 and 218 ofthe provisional Regulation are confirmed.
5.Import volume and market shares of the subsidised
imports
(97) The imports originating in India developed as follows: 952 t in1994, 4 513 t in 1995, 6 951 t in 1996, 8 719 t in 1997 and9 166 t during the investigation period. They have thereforeincreased steadily and considerably over the period under consid-eration, i.e. by around 850 %.
(98) The market shares of the subsidised imports originating in Indiaincreased constantly from 1,4 % in 1994 to 5,6 % in 1995, 9,9 %in 1996 to 11,1 % in 1997, remaining stable at 11,1 % during theinvestigation period.
6.Prices of the subsidised imports
(a)Price evolution
(99) Average sales prices per kilo (in ecus) of the imports originating
in India increased between 1994 and 1995 (from 1,88 to 2,44),but steadily decreased from that year onwards (2,32 in 1996, 2,10in 1997 and 2,05 during the investigation period).
(b)Price undercutting
(100) As to the methodology followed for the purpose of calculation of
price undercutting margins, some interested parties contested themethodology used by the Commission at the provisional stage.They claimed that these margins were inflated because any nega-tive amount by which the exporting producer prices undercutthose of the Community industry were not offset with any posi-tive amounts.
(101) It should be noted that in the methodology described in recitals226 and 227 of the provisional Regulation for the calculation ofthe price undercutting margins the weighted average net salesprices of the subsidised imports were compared, on a model-by-model basis, with the average net sales price by model of theCommunity industry in the Community market. Therefore, thismethodology allowed the amount by which the exporting produ-cers price of one particular model exceeded that of theCommunity industry price to be taken into account on a transac-tion-by-transaction basis.
(102) Therefore, the conclusions reached with respect to the generalmethodology applied set out in recitals 226 to 227 of the provi-sional Regulation are confirmed.
(103) In the absence of any other comments, the actual price undercut-ting margins for imports originating in India set out in recital 228of the provisional Regulation are hereby confirmed.
7.Situation of the Community industry
(104) Since no arguments were put forward by any interested party as
to the provisional findings concerning the economic indicatorsrelating to the situation of the Community industry, the findings
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as set out in recitals 229 to 238 of the provisional Regulation are
hereby confirmed.
(105) Some interested parties have argued that the economic indicatorsof the Community industry did not lead to the conclusion thatthis industry was materially injured. Indeed, they argued that thesituation of the Community industry remained relatively stableduring the period under consideration, and even showed signs ofimprovement in terms of production, sales volume and invest-ments. As to profitability, its decreasing trend would beexplained by the decision of the Community industry to concen-trate on products generating higher costs of production.
(106) As set out in recitals 237 and 238 of the provisional Regulation,it is recalled that the conclusion of material injury of theCommunity industry was based on the fact that the Communityindustry, faced with subsidised imports, could not follow thegrowing trend of the market, never did recover its position on themarket and was only able to keep its sales volume stable at theexpense of its profitability situation which, in a context ofdepressed sales prices, strongly deteriorated. Indeed, the salesvolume of the Community industry only increased by 5 %between 1994 and the investigation period, whilst the Communitymarket went up by 20 % during the same period. Furthermore,the slight increase of production and investment are only due tothe fact that the Community industry tried to keep its marketshare. Thus, the decreasing trend of its profitability is not exclu-sively due to the fact that the Community industry also started toproduce some models for which less competition from the subsi-dised imports was faced.
(107) On the basis of the above, it is concluded that the Communityindustry is suffering material injury as set out in recitals 237 and238 of the provisional Regulation.
(F)CAUSATION
(108) Pursuant to Article 8(6) and (7) of the basic Regulation, the
Commission services have examined whether imports originatingin India have caused material injury. Known factors other thanthe subsidised imports, which could at the same time be injuringthe Community industry, were also examined in order to ensurethat possible injury caused by these factors is not attributed tosubsidised imports.
(a)Effect of the subsidised imports
(109) The significant increase of the sales volume (around 850 %) and
of the market shares of the subsidised imports (from 1,4 to11,1 %) between 1994 and the investigation period as well as thesubstantial price undercutting found coincided with the deteriora-tion of the situation of the Community industry in terms of lossof market shares, price depression as well as deteriorating profit-ability.
(110) In the context of the general fall of the market in 1996, whichfollowed the strong growth of the year 1995, the Communityindustry was negatively affected by the continuous rise of thesubsidised imports. Indeed, the imports originating in India werethose which grew strikingly during that year.
(111) As from 1997, the growing trend of the market mainly benefitedthe subsidised imports. Sales volumes of the Community industrydid not follow the upward trend of the market, and sales pricesdid not recover their previous levels. On the contrary, theCommunity industry suffered price suppression and strong pricedepression, as shown by the price undercutting found. This situa-tion is reflected in a deteriorated profitability situation anddecreasing employment.
(112) When faced with low-priced imports originating in India, theCommunity industry had the possibility of either maintaining itsprices with a risk of losing sales volume, or following the low
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(In % of volume)
1994 1995 1996 1997 IPprices of subsidised imports regardless of consequences on profit-
ability. Both strategies resulted in a negative impact on profit-ability either directly (lower prices) or indirectly (high prices ledto lower sales volume resulting in higher production costs pertonne). As from 1996, all Community producers substantiallylowered their sales prices, which again had a negative impact ontheir profitability, even though they tried to concentrate oncertain market niches to avoid being affected even more stronglyby the effects of the subsidised imports. This clearly shows theprice sensitivity of the market and the important impact of theprice undercutting practised by the Indian exporting producers.
(b)Effect of other factors
(113) In accordance with Article 8(7) of the basic Regulation, the
Commission services have examined whether factors other thanthe subsidised imports from India might have had an effect on thesituation of the Community industry, with particular regard to therole of other Community producers not cooperating in the invest-igation and of imports from other third countries.
(i) Other Community producers
(114) Following the adoption of the provisional Regulation, some inter-
ested parties questioned whether the injury suffered by theCommunity industry was caused by the subsidised imports. Inparticular, it was alleged that the injury was caused by otherfactors, namely by other Community producers. It was argued inthis respect that in view of the limited cooperation obtained fromthe Community producers, the assessment of the impact of salesby the non-cooperating Community producers was not fully reli-able.
(115) It should be recalled that detailed and verified data are onlyavailable for the Community industry. Taking into account thehigh level of cooperation obtained from the Community industryensuring representative findings as well as the transparency andthe price sensitivity of the SSW market in the Community, it isnot unreasonable to conclude that other Community producersare likely to have followed a trend similar to that found for theCommunity industry, in particular as regards prices. Furthermore,no interested party has submitted any information that wouldsuggest that the non-complaining producers operated in a morepositive context.
(ii) Imports from third countries
(116) The market shares of the imports from third countries are as
follows:
Korea 0,4 0,6 1,0 1,1 1,5
Switzerland 6,6 6,3 5,5 6,7 6,9
Other countries 1,4 2,8 2,5 1,7 2,2
Total other
imports8,4 9,7 9,0 9,6 10,6
(117) The market share of large SSW imports originating in third
countries only increased by 2,2 percentage points between 1994and the investigation period, whilst subsidised imports originatingin India went up by 9,7 percentage points during the same periodof time. As to prices, no indication of any price undercutting ofthe sales prices of the Community industry was found in thecourse of the investigation.
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Korea
(118) Imports originating in Korea were examined in the context of thisinvestigation and it was concluded that the weighted averagecountry-wide subsidy margin is below the de minimis threshold.
On the basis of the development of these imports set out above, itis concluded that their increasing trend is less pronounced thanfor imports originating in India, but it is nevertheless not negli-gible.
(119) On the basis of the above findings, it is concluded that importsfrom third countries may have contributed to the injury sufferedby the Community industry but this alone was not found to besufficient to break the causal link established between the subsi-dised imports from India and the material injury suffered by theCommunity industry, particularly in view of the development ofthe market share of these third countries over the period consid-ered.
(iii) Other
(120) No new arguments were put forward by any interested party
regarding whether other factors which might have contributed tothe injury suffered by the Community industry, in particular, acontraction in demand or the changes in the patterns of consump-tion, developments in technology and the export performance andproductivity of the Community industry. Therefore, the findingsset out in recitals 247 to 250 of the provisional Regulation arehereby confirmed.
(c)Conclusion on causation
(121) Thus, other factors than the subsidised imports originating in
India, even though they might have contributed to the injurysuffered by the Community industry, were not such as to breakthe causal link between the subsidised imports originating inIndia and the material injury suffered by the Community industrytherefrom.
(122) In the light of the above, it is concluded that the subsidisedimports originating in India taken in isolation have causedmaterial injury to the Community industry.
(G)COMMUNITY INTEREST
(123) Following the adoption of the provisional Regulation, comments
have been submitted by users with respect to the potential effectof the duties.
(124) As to the Community industry and other Community producers,in the absence of any further submissions regarding the impact ofthe duties on their situation, the conclusion is hereby confirmedthat the imposition of measures will enable the Communityindustry to regain a satisfactory profitability margin, and to main-tain and further develop its activities in the Community securingboth employment and investment.
(125) In the absence of any further reaction from unrelated importersand from the suppliers, the findings set out in recitals 257 to 261of the provisional Regulation are confirmed.
(126) Concerning the users, some companies have alleged that theimposition of measures would have a direct impact on theireconomic situation since it would lead to an increase of the priceof their raw material. However, they have also stated that theycould source their supplies from countries other than the countryconcerned. Furthermore, in view of the overall low level of theduties, the impact of any price increase would be limited.
(127) Other users have insisted on the quality and reliability of theCommunity industry’s products, considering therefore that theimposition of the measures would not affect their own situation.
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CompanyProposed countervailing
duty %(128) Therefore, the findings set out in recitals 252 to 268 of the
provisional Regulation are confirmed in the sense that there areno compelling reasons against the imposition of countervailingduties.
(H)DEFINITIVE COURSE OF ACTION
1.Korea
(129) In the light of the above findings that the country-wide weighted
average subsidy margin for imports originating in Korea is de
minimis , this proceeding should be terminated in accordance with
Article 14(3) of the basic Regulation.
2.India
(130) Based on the above conclusions on subsidisation, injury, causal
link and Community interest, it was considered what form andlevel the definitive countervailing measures would have to take inorder to remove the trade-distorting effects of injurious subsidiesand to restore effective competitive conditions on the Communitylarge SSW market.
(131) Accordingly, as explained in recital 271 of the provisional Regu-lation a non-injurious level of prices was calculated at a levelwhich covers the Community industry’s cost of production andobtains a reasonable return on sales.
(132) The comparison of the non-injurious price levels with the exportprice of the producers led to injury margins which were, exceptfor one exporting producer, in all cases equal to or above thesubsidy amounts found for the cooperating exporting producers.
(133) In accordance with Article 15(1) of the basic Regulation, the dutyrate should correspond to the subsidy amount, unless the injurymargin is lower. This led to the following rates of duty for thecooperating Indian exporting producers:
Bhansali Bright Bars Pvt Ltd 18,5
Devidayal Ltd, Mumba 18,4
Indore Wire Ltd, Indore 19,3
Isibars/Isinox Ltd, Mumbai 13,2
Kei Industries Ltd, Delhi 0
Macro Bars and Wires Pvt Ltd, Mumbai 25,4
Mukand Ltd, Mumbai 13,2
Raajratna Metal Industries Ltd, Mumbai 28,6
Triveni Shinton, Mumbai 0
Venus Wire, Indore 35,4
(134) In order to avoid granting a bonus for non-cooperation, it was considered appropriate
to establish the duty rate for the non-cooperating companies at the highest levelestablished per individual subsidy programme for the cooperating companies, i.e. fornon-cooperating companies located in India at 48,8 %.
(135) The individual duty rates specified in this Regulation were established on the basis ofthe findings of the present anti-subsidy investigation. Therefore, they reflect thesituation found during that investigation. These duty rates are thus exclusivelyapplicable to imports of products originating in the country concerned and producedby the specific legal entities mentioned. Products produced by any other company notspecifically mentioned in the operative part of this Regulation, including relatedentities, cannot benefit from these rates and shall be subject to the residual duty rate.
1999R1599 — EN — 23.07.1999 — 000.001 — 23
▼B
ProducerRate of duty
(%)Taric additional
code(136) Any claim requesting the application of these individual duty rates (e.g. following a
change in the name of the entity) should be addressed to the Commission forthwithwith all relevant information, in particular any modification in the company’s activi-ties linked to production, domestic and export sales associated with that namechange.
(J)COLLECTION OF THE PROVISIONAL DUTIES
(137) In view of the amount of the countervailable subsidies found for the exporting
producers located in India and in the light of the seriousness of the injury caused tothe Community industry, it is considered necessary that the amounts secured by wayof provisional countervailing duties on imports originating in India pursuant toRegulation (EC) No 618/1999 be definitively collected to the extent of the amount ofdefinitive duties imposed, unless the provisional duty rates are lower in which casethe latter should prevail.
(138) As regards the amounts secured by way of provisional countervailing duties onimports originating in Korea, they should be released,
HAS ADOPTED THIS REGULATION:
Article 1
1. A definitive countervailing duty is hereby imposed on imports of stainless steel wire
with a diameter of l mm or more, containing by weight 2,5 % or more of nickel, excludingwire containing by weight 28 % or more but no more than 31 % of nickel and 20 % or morebut no more than 22 % of chromium, falling within CN code ex 7223 00 19 (TARIC code7223 00 19 90) and originating in India.
2. The rate of the definitive countervailing duty applicable to the net, free-at-
Community-frontier price, before duty, shall be as follows:
— Bhansali Bright Bars Pvt Ltd, C-8/3, T.T.C. Industrial
Area, Village — Pawne Opposite P.I.L., Thane - BelapurRoad, Navi Mumbai 400 705, India18,5 A009
— Devidayal Industries Ltd, Gupta Mills Estate,►
C1Reay Road, ◄Mumbai 400 010, India18,4 A010
— Indore Wire Company Ltd, Near Fort , Indore 452 006
(M.P.), India19,3 A004
— Isinox Steels Ltd Indiasteel Complex, Railway Gate No4, Antop Hill, Wadala, Mumbai 400 037, India 13,2 A002
— Isibars Ltd Indiasteel Complex, Railway Gate No 4,Antop Hill, Wadala, Mumbai 400 037, India 13,2 A011
— Mukand Ltd, L.B.S. Marg, Kurla, Mumbai 400 070,India 13,2 A003
— Raajratna Metal Industries Ltd, 909, Sakar - III, NrIncome Tax, Ahmedabad 380 014, Gujarat, India 28,6 A005
— Venus Wire Industries Ltd, Block No 19, RaghuvanshiMill Compound, Senapati Bapat Marg, Lower Parel,Mumbai 400 013, India 35,4 A006
— Macro Bars and Wires Pvt. Ltd, 702 Bombay MarketBuilding ►
C1Tardeo Road, ◄Mumbai 400 032, India25,4 A008
— Kei Industries Ltd, D-90, Okhla Industrial Area Phase-1,
New Delhi, India0 A020
— Triveni Shinton International Ltd., Kanti Mansion, 6Murai Mohalla Indore, ►
C1452 001, ◄(M.P.), India0 A012
1999R1599 — EN — 23.07.1999 — 000.001 — 24
▼B
ProducerRate of duty
(%)Taric additional
code
— All other companies 48,8 A999
3. Unless otherwise specified, the provisions in force concerning
customs duties shall apply.
4. The individual duty rates (as opposed to the country-wide duty
applicable to ‘others') specified in this Regulation are exclusivelyapplicable to imports of products produced by the specific legalentity/ies mentioned and originating in the country concerned. Productsproduced by any company not specified by its precise name in theoperative part of the Regulation cannot benefit from these rates.
Any claim requesting the application of these individual duty rates (e.g.
following a change in the name of the entity) should be addressed to theCommission forthwith with all relevant information, in particular anymodification in the company’s activities linked to production, domesticand export sales associated with that name change. The Commissionwill, after consultation of the Advisory Committee, amend the Regula-tion accordingly by updating the list of companies benefiting fromindividual duty rates.
Article 2
1. The amounts secured by way of the provisional countervailing
duties on imports originating in India pursuant to Regulation (EC) No618/1999 shall be definitively collected at the rate of the duties defin-itively imposed. Amounts secured in excess of the definitive rate ofcountervailing duties shall be released.
2. The provisions referred to in Article 1(4) shall also apply to the
definitive collection of the amounts secured by way of the provisionalcountervailing duties.
Article 3
The proceeding concerning imports of stainless steel wire with a diam-
eter of 1 mm or more originating in Korea shall be terminated. Theamounts provisionally secured by way of the provisional countervailingduties on imports originating in Korea pursuant to Regulation (EC) No618/1999 shall be released.
Article 4
This Regulation shall enter into force on the day following its publica-
tion in the Official Journal of the European Communities .
This Regulation shall be binding in its entirety and directly applicable in
all Member States.