1999R1599 — EN — 01.02.2002 — 001.001 — 1
This document is meant purely as a documentation tool and the institutions do not assume any liability for its contents
►B COUNCILREGULATION(EC)No1599/1999
of12July1999
imposing a definitive countervailing dutyand collecting definitively the provisional duty imposed
onstainlesssteelwireswithadiameterof1mmormoreoriginatinginIndiaandterminatingtheproceeding concerning imports of stainless steel wires with a diameter of 1 mm or more origi-
natingintheRepublicofKorea
(OJ L 189, 22.7.1999, p. 1)
Amended by:
Official Journal
No page date
►M1Council Regulation (EC) No 164/2002 of 28 January 2002 L 30 9 31.1.2002
Corrected by:
►C1Corrigendum, OJ L 9, 13.1.2000, p. 30 (1599/1999)
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) andCouncil Regulation (EC) No 1103/97 (OJ L 162, 19.6.1997, p. 1).
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COUNCILREGULATION(EC)No1599/1999
of12July1999
imposingadefinitivecountervailingdutyandcollectingdefinitively
the provisional duty imposed on stainless steel wires with adiameter of 1 mm or more originating in India and terminatingthe proceeding concerning imports of stainless steel wires with a
diameter of1mmormoreoriginatingintheRepublicofKorea
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)PROVISIONALMEASURES
(1)The Commission, by Regulation (EC) No 618/1999(2) (herein-
after referred to as the ‘provisional Regulation’) imposedprovisional countervailing duties on imports of stainless steelwires with a diameter of 1 mm or more (hereinafter referred toas ‘large SSW’ or ‘product concerned’), originating in India and
in the Republic of Korea (hereinafter referred to as ‘Korea’), and
falling within CN code ex 7223 00 19.
(B)SUBSEQUENTPROCEDURE
(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
parties submitted comments in writing. The parties who sorequested were 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 secured
by 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.
(C)PRODUCTCONCERNEDANDLIKEPRODUCT
(6)The product under consideration is large SSW, containing by
weight 2,5 % or more of nickel, other than containing by weight
28 % or more but no more than 31 % of nickel and 20 % ormore but not more than 22 % of chromium.1999R1599 — EN — 01.02.2002 — 001.001 — 2
(1) OJ L 288, 21.10.1997, p. 1.
(2) OJ L 79, 24.3.1999, p. 25.
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(7)It was found at the provisional stage of the investigation that
there were differences in physical characteristics and uses
between 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 in
the provisional Regulation that the question whether a clear
dividing line could be drawn between these two products wasgoing to be further investigated upto 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 the
physical characteristics, the tensile strength, granular structureand coating of SSW are different for large and fine wires.Secondly, as regards the various applications of the twoproducts, it has been found that large wire is used for heavier
duty engineering applications such as fasteners, wall reinforce-
ment products, welding wires, etc. By contrast, fine wire is as arule used for precision applications such as screens and filters(woven wire cloth) with small openings for filtering very fineor small particles (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
wires are two different products which have different character-
istics and applications and that they are not interchangeable fromthe point 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 made
on the like product, the facts and findings as set out in recitals 7
to 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 producers
claimed that these schemes, which are described in recitals 14
to 25 and 26 to 35 of the provisional Regulation, were wronglyassessed by the Commission in terms of the extent of subsidyand the amount of countervailable benefit. In particular, theyclaim that the Commission's assessment of the benefits underthese schemes was incorrect since only the excess duty drawback
could be considered a subsidy in accordance with Article 2 of
Regulation (EC) No 2026/97 (hereinafter referred to as ‘the basicRegulation’).
(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 to
Article 2(1)(a)(ii), the Commission concluded that these schemes
involve 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.
(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.1999R1599 — EN — 01.02.2002 — 001.001 — 3
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These schemes lack a built-in obligation to import only goods
that are consumed in production of the exported goods (AnnexII to the basic Regulation). Additionally, there is no verification
system in place to check whether the imports are actually
consumed 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
to the basic Regulation). Lastly, exporting producers are eligible
for the PBS and DEPB benefits regardless of whether theyimport any inputs at all. It is enough for an exporter to obtainthe benefit by simply exporting goods without the need to showthat any input material was indeed imported; thus, exportingproducers which procure all of their inputs locally and do not
import goods which can be used as inputs are still entitled to
the PBS and the DEPB benefits. Hence, the PBS and DEPB donot conform to any of the provisions of Annex I to III. Since thisexception to the subsidy definition of Article 2 does thereforenot apply, the countervailable benefit is the remission of total
import duties normally due on all imports.
(15)From the above it clearly follows that the excess remission of
import duties is the basis for calculating the amount of thebenefit only in the case of bona fide drawback and substitution
drawback schemes. Since it is established that the PBS and theDEPB do not fall in one of these two categories, the benefit is
the total remission 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 provisionalfindings in the parallel anti-dumping investigation since theCommission granted in the anti-dumping investigation an allow-ance for import duties not paid under the PBS and the DEPB for
imported inputs 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 the
product concerned sold on the domestic market and that the
import 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 have
already been found to be countervailable, on the basis of the
provisions of the basic Regulation, for the reasons stated above.As explained above, once such a countervailable subsidy isfound to exist, the benefit to the recipient is the full amount ofimport duty not paid by the exporting producer on all importtransactions. In this regard, it is not for the Commission to
reconstruct the PBS and the DEPB in order to determine which
products are physically incorporated and which are not. Further-more, it should be stressed that the analysis regardingcountervailability of a scheme and an allowance for physicallyincorporated inputs are completely different with regard to
purpose, calculation methodology and legal basis. The purpose
of examining the allowance at issue in anti-dumping investiga-tions is to adjust normal values. The examination of thecountervailability of a scheme in an anti-subsidy investigationaims at establishing benefits received by the exporter thereunder.In addition, the calculation methodology is different in anti-
dumping and anti-subsidy investigations. While in anti-dumping
cases the allowance is granted in relation only to exports of theproducts concerned to the Community, in an anti-subsidy inves-1999R1599 — EN — 01.02.2002 — 001.001 — 4
(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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tigation benefits are examined in relation to total exports of all
products to all destinations in line with Article 7(2) of the basicRegulation and the ‘Guidelines for the calculation of the amount
of subsidy in countervailing duty investigations’ (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 factan excess drawback of import charges on inputs consumed inthe production process.
(19)As already explained in recitals 12 to 15, Annexes II and IIIcontain the rules to establish whether a scheme constitutes aduty drawback or a substitution drawback. The excess remissionof import duties is the basis for calculating the amount of the
benefit only in the case of drawback and substitution drawback
schemes. This argument cannot be accepted as the issue ofexcess remission only arises in the context of assessing properlyconstituted drawback/substitution drawback schemes, and it hasbeen established that the PBS and the DEPB are not drawbackor substitution drawback schemes within the meaning of Annex
I(i) and Annexes 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
procedure in place, to confirm which inputs are consumed in
the manufacturing process of the exported products, and inwhat amounts. The GOI claims that the standard input/outputnorms constitute 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 andthe DEPB are not drawback or substitution drawback schemes
within the meaning of Annexes II and III to the basic Regulation
no further examination needs to be carried out. Even if the PBSand DEPB were to meet the criteria of Annexes II and III, itshould be concluded that no reasonable verification systemexists. The input/output norms are a list of possible items that
can be consumed 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 ofthe inputs that are actually consumed in the production processand do not provide for a verification system whether these inputs
were effectively imported.
(22)The GOI and nine exporting producers allege that the Commis-sion has incorrectly countervailed the value of the credit amount
in 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.
(23)Under the current provisions of the DEPB, a company, whichhas obtained licences, has two options: to import any product(except the items listed on the negative list) using the credits tooffset the applicable import duties or transfer the licence to a
third party. As explained in recital 34 of the provisional Regula-
tion, the Commission considers that ‘the sale of a licence at aprice less than the face value is a pure commercial decisionwhich does not alter the benefit received from the scheme’.Furthermore, Article 7 of the basic Regulation lists the elements
that may be deducted from the subsidy amount. Any application
fees or costs necessarily incurred in order to qualify for or obtainthe subsidy may be deducted from the amount of subsidy. Thetransfer of a lower amount of benefit than that actually grantedand the sales tax cannot be considered as justified deductionswithin the meaning of Article 7 of the Basic Regulation since1999R1599 — EN — 01.02.2002 — 001.001 — 5
(1) OJ C 394, 17.12.1998, p. 6.
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these elements are not a cost necessarily incurred in order to
qualify for or obtain the subsidy.
(24)The GOI and nine exporting producers argue that the Commis-sion countervailed part of the benefits under these schemes
twice due to the overlapbetween this p roceeding and the stain-
less steel bright 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 subsidies
were not linked to the export of the product concerned but all
exports 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 allocated
over 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 investiga-tion should be taken into account. This amount, the companysays, should then be allocated over the corresponding export
turnover of the product concerned to calculate the benefit.
(27)The Commission considers that if it were to accept this argu-
ment, the effect would be to countervail potential as opposed toactual benefits 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.ExportPromotion CapitalGoodsScheme(EPCGS)
(28)Three companies made a claim regarding the Export Promotion
Capital Goods scheme (EPCGS), which is described in recitals36 to 39 of the provisional Regulation. These concern the alloca-tion of 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 provisionalRegulation. The Commission established an average of thedepreciation periods used by all exporting producers of theproduct concerned and arrived at an average depreciation period
of 12 years. This period was used in the provisional finding and
will be confirmed at the definitive stage. The subsidy amountunder the EPCGS was allocated over 12 years in accordancewith 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 shouldhave been used instead of the average of 12 years.
(31)As explained above, the Commission services, in establishing its
provisional findings, determined the normal depreciation period
of 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, the
amount of the countervailable subsidy shall be calculated by
spreading the subsidy across a period which reflects the normaldepreciation of such assets in the industry concerned. In view of1999R1599 — EN — 01.02.2002 — 001.001 — 6
(1) OJ L 273, 9.10.1998, p. 4.
(2) OJ L 202, 18.7.1998, p. 44.
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this provision, it is not appropriate to use the company specific
depreciation period. The claim is therefore rejected.
3.Incometaxexemptionscheme
(32)One company, Bhansali Ferromet Ltd did not submit a copy of
its income tax return within the deadline stipulated by theCommission and was therefore considered non-cooperating for
the purpose of the income tax exemption. After disclosure, this
company 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.Relatedcompanies
(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 as
related companies, it should have applied a different metho-
dology to calculate a single subsidy margin.
(34)It was established during the verification that Isibars and Isinox
are related companies since they have common shareholders and
common 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.Amountofcountervailablesubsidies
(35)Taking account of the definitive findings relating to the various
schemes as set out above, the amount of countervailable subsi-dies for each of the investigated exporting producers is asfollows:
Passbook DEPB EPCGS Income tax Total
Bhansali Bright
Bars4,1 % 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 %
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 compa-
nies other than those cooperating in this investigation,expressed as a percentage of the net, free-at-Community price,is 48,8 %, which is the sum of the highest amount granted toany cooperating exporter under each scheme.1999R1599 — EN — 01.02.2002 — 001.001 — 7
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II. KOREA
1.Loanprogrammes
(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 in
excess of the amount of the subsidy found to exist calculated
on the basis of the benefit conferred. This provision wasobserved since the explicit rules for the calculation of thesubsidy in the case of loans, i.e. Article 5 and Article 6(b) ofthe basic Regulation which incorporate Article 14(b) of theASCM, were followed. These rules clearly establish that the
subsidy should be calculated in terms of the benefit which is
the difference between the amount the firm receiving the loanpays and the amount the firm would have paid for a comparablecommercial loan. Article 19(4) of the ASCM does not create arequirement for calculation of a subsidy on the basis of the cost
to the government. Article 6(1)(a) concerns a presumption of
serious prejudice in certain circumstances, which is not applic-able to countervailing duty proceedings. Point (k) of Annex I tothe ASCM which is reproduced in Annex I to the basic Regula-tion provides for special rules for export credits which areexceptions to the general rules for the calculation of subsidies
in the case of loans. Point (l) in itself does not establish that
the cost-to-the-government approach prevails over the explicitrules in Article 5 and Article 6(b) of the basic Regulation, inparticular since this point was already present in the illustrativelist of export subsidies adopted during the Tokyo Round ofGATT negotiations, at a time when the benefit-to-the-recipient
approach had not yet been incorporated into WTO rules.
(39)Furthermore, the GOK claimed that the comparison of interest
paid on a government loan programme to a commercial loan
would wrongly assume that interest rates on all loans in the
economy would be equal.
(40)The Commission does not assume that all loans are equal but
used as a benchmark loans which were considered comparable
on the basis of repayment period, principal amount and purposeof the 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 sametime as the loan at issue rather than using interest ratesprevailing in the investigation period since during the investiga-tion period, the interest rate was abnormally high due to the
financial crisis.
(42)It was found in the course of the investigation that interest rates
for loans granted on a commercial basis reflect market condi-tions by changing over time. Such loans would have shown the
same interest rates during the investigation period regardless of
whether 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 calcu-lation 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-1999R1599 — EN — 01.02.2002 — 001.001 — 8
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mination of the interest rate on the basis of the loan amount does
not constitute an adequate methodology to determine the bench-mark interest rate. One Korean exporting producer claimed that
because Korean banks do not take into account the loan amount
as 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 interest
rates on trade loans as the benchmark interest rate for EXIM-
SM loans.
(44)In response to these claims, it is considered that Article 6(b) of
the basic Regulation makes it clear that the benchmark for the
calculation 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 resulting
from the financial crisis in Korea as a benchmark for calculating
the subsidy on loans concluded before the crisis.
(46)Article 6(b) of the basic Regulation states that the benefit is
calculated by comparing interest rates on government loans to
interest rates on comparable commercial loans. In order toaccomplish this, average interest rates on government loanswere compared to average interest rates on comparable commer-cial loans during the investigation period. This claim is therefore
rejected.
(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 is
specific 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
the producer which also benefits the product concerned. No
evidence was submitted that the management of financialresources by the exporting producers concerned was conductedin such a way that the overall financing cost of the companywould not be affected by 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 Operation
By-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.1999R1599 — EN — 01.02.2002 — 001.001 — 9
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The purpose of the scheme is not to promote exports but to use
export 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
therefore specific. This is clearly set forth in Article 3(4)(a) of
the basic Regulation which states that subsidies which arecontingent in law or fact, whether solely or as one of severalconditions, upon export performance are deemed to be specific.Since one element to be taken into consideration by the granting
authority is that a minimum share of exports in total turnover is
achieved, this requirement of contingency upon export perfor-mance is fulfilled since companies might not have obtainedbenefits without exceeding a certain level of export sales. TheGOK's claim is therefore rejected.
(d)Technology Development Business Loan (TDBL)l Science
and Technology Promotion 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 the
meaning 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 Science
and Technology, it cannot exercise any discretion in deciding
on priority projects and that the Commission had failed topresent any evidence to support its conclusion that this discretionhas been exercised.
(52)The claim of non-actionability for both programmes is rejectedfor the same reasons as stated below under recitals 75 to 77.No evidence was provided which would cast doubt on the provi-sional fording that the TDBL was specific to certain industries
investing in certain projects as determined by the Ministry of
Trade and Industry. Also with regard to the STPF, no informa-tion on any criteria used by the Ministry of Science andTechnology was provided. During the investigation it was veri-fied that the Ministry of Science and Technology did in factdecide from time to time on priority projects. This is considered
to be sufficient evidence to establish that the STPF is de facto
specific within the meaning of Article 3(2)(c) of the basic Regu-lation. Hence, the claim that the schemes are not specific isrejected.
(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.
(54)It is considered that this claim is valid. Appropriate adjustmentshave 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 above
those 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 constituting
export subsidies should not be prohibited under this or any other
provision of the ASCM.
(56)It is considered that these arguments only apply to ‘exportcredits’ as defined in point (k) of Annex I to the basic Regula-1999R1599 — EN — 01.02.2002 — 001.001 — 10
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tion. As already explained in the provisional Regulation in reci-
tals 129 and 130, EXIM-EC (pre-shipment), EXIM-SM andEXIM-FIC loans are not considered to be ‘export credits’ and
do not fall under point (k) of Annex I to the basic Regulation.
These claims are 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 investment
is objective and neutral within the meaning of Article 2(1)(b) of
the 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 export perfor-
mance nor upon the use of domestic over imported goods within
the meaning of Article 3(1) of the ASCM.
2.Fixedamountrefundsystem
(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 are
consumed in the production of the exported product, making
normal 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 AnnexIII to the ASCM. In fact, the Korean fixed amount refund system
falls under the general definition of a subsidy according to
Article 2 of the basic Regulation which incorporated Article 1of the ASCM. It constitutes a subsidy as a financial contributionis made by the GOK in the form of grants based on FOB valueof exports 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 basic
Regulation. 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 casesof drawback and substitution drawback schemes in accordance
with Annexes I to III to the basic Regulation. Therefore these
claims are 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 investigating autho-rities deem it necessary, a further examination will be carried outin accordance with paragraph 1 of Annex II(II). The GOKclaimed that since the Commission failed to examine whether
there was in fact an excess drawback of import charges on inputs
consumed in the production of the exported product, there existsno basis to conclude that the Korean fixed amount refund systemconstitutes as specific subsidy pursuant to Article 3(4)(a) of thebasic Regulation.
(62)It is considered that this argument is irrelevant since paragraph 2of Annex II(II) of the ASCM relates to a duty drawback scheme
which, as explained above, the programme under consideration
is not. 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 examina-1999R1599 — EN — 01.02.2002 — 001.001 — 11
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tion. Therefore the Commission did not examine whether there
was 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 the
exported product and in what amount, is not valid because duty
refund 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 the
fixed amount refund system, the amount of the grants received
is not calculated in relation to inputs actually consumed in theproduction process or import duty actually paid but calculatedas a lumpsum based on overall exp orts. Therefore, these claimsare rejected.
(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 the
duty drawback amount is inferior to the amount that they would
have received if the individual system was used. The GOKfurthermore argued that the Korean exporting producer whoused the fixed amount duty drawback system provided theCommission with the evidence that its drawback of import
charges is much less than those levied on imported inputs that
were consumed in the production of the exported product duringthe investigation period.
(66)In response to these arguments it is considered that, for the
reasons explained above, payments under the fixed amount
refund 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 exporting
producer since he chose to receive benefits under a scheme
which is a countervailable subsidy. Hence, these claims arerejected.
3.Taxprogrammes
(a)Non-specificity of the limitation to manufacturing industry
(67)In its provisional determination, the Commission considered that
certain Articles of the Tax Exemption and Reduction Control
Law (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.),
— 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 Article
2(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 ‘manufacturingindustry’ is a very broadly defined one and, in practice, includestens of thousands of sub-category industries.1999R1599 — EN — 01.02.2002 — 001.001 — 12
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(69)The basic principle of specificity is that a subsidy that distorts
the allocation of resources within an economy by favouring
certain enterprises over others should be subject to counter-vailing measures if it causes injury. Where eligibility forsubsidies is limited within an economy on the basis of non-neutral criteria, such a distortion in the allocation of resourcesis presumed to. occur. This principle is the basis for Article
2(1)(a) of the ASCM and Article 3(2)(a) of the basic Regulation
which provide that a subsidy is specific if the granting authority,or the legislation pursuant to which the granting authority oper-ates, explicitly limits access to a subsidy to certain enterprises.In this case, it is considered that, while the concept of ‘manufac-
turing industry’ may be a very broadly defined one, it is a fact
that the provisions of the abovementioned Articles of TERCLare further designed to restrict the benefits thereunder to certainenterprises by making eligibility contingent upon other non-neutral criteria, such as investment in certain types of high tech-nology products or overseas investment.
(70)It has been argued by GOK that such criteria are neutral, since
all companies have an equal opportunity to avail themselves of
the subsidies. For example, it is argued that a subsidy for firmswhich invest overseas is non-specific because all firms are ableto invest overseas. However, according to this argument, asubsidy limited to firms in the textile sector is non-specific,because all firms ‘are able’ to diversify into textiles. If specifi-
city under the ASCM is to make any sense, it must cover
situations where governments make subsidies subject to condi-tions which they know in advance will severely restrict thenumber of firms eligible to apply; such subsidies are designedto favour certain enterprises over others. For this reason, the
type of criteria used by GOK to designate recipients are not
‘neutral’, and as explained below, they are not horizontal inapplication, as required by Article 3(2)(b) of the basic Regula-tion. It has therefore been found that the subsidies under theseArticles of TERCL are specific; more detailed reasons are givenbelow with regard to the individual schemes.
(b)Undue process
(71)The GOK has claimed that, as the complainant in this
proceeding did not make any allegations concerning the taxprovisions of certain Articles of TERCL, they should not beincluded in any determination to be made in this proceeding.The Articles concerned are:
— Article 5 (Special tax credit for SMEs),
— Article 7 (Special reduction and exemption of tax amount for
small and medium manufacturing industry, etc.),
— 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 interestedparties in a countervailing duty investigation shall be givennotice of 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 practice
prior to the (verification) visit to advise the firms concernedof the general nature of the information to be verified andof any 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 determi-nation and that, furthermore, both the GOK and some1999R1599 — EN — 01.02.2002 — 001.001 — 13
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cooperating exporting producers did not have the opportunity to
defend themselves appropriately.
(74)In response to the GOK's claims, it is considered that, when
lodging a complaint, complainants cannot be expected to have
knowledge of every last detail of alleged subsidy programmesin a 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 been
specifically mentioned in the complaint, but which have a very
similar 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 is
concluded that the Commission is entitled to investigate them
and recommend countervailing action if appropriate.
(c)Article 8 of TERCL (Reserve for Technology Development)
(75)In addition to the GOK's claim regarding the non-specificity of
the provisions of this Article, the GOK claimed that this Article
is a non-actionable research and development (R&D) subsidy
within 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 the
provisions of Article 8(3) of that Agreement, an investigation
cannot even be opened against such subsidies. In regard toArticle 8 of TERCL, it has been noted that Korea has not noti-fied this provision to the WTO under Article 8(3) of the ASCM.Accordingly, the Commission was entitled to initiate an investi-gation of this provision of TERCL. Regarding the GOK's claim
that this provision is non-actionable, and accordingly is protected
from 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 accruing
under this Article.
(77)As regards the GOK's non-specificity allegations, the scheme isnot neutral since it differentiates between normal and tech-nology-intensive firms. The latter receive higher rates ofbenefit. Such a distinction shows that the criteria are not neutral
and exclude a large number of firms for whom such technolo-
gical development is not necessary. For these reasons and thosestated in recitals 67 to 70, it is considered that Article 8 ofTERCL is specific and therefore countervailable.
(d)Article 9 of TERCL (Tax credit for technology and
manpower development expenses)
(78)In addition to the GOK's general claim regarding the non-speci-ficity 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)of the ASCM. It is considered that this criterion is not neutral
within the sense of that Article of the ASCM nor within the
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 applica-tion. The provisions of this Article of TERCL are considered
not to be horizontal in nature as clearly companies in certain
industrial sectors will be more technologically-oriented thanthose in other sectors and will therefore be more likely to takeadvantage of this provision. The GOK, by enacting this provi-sion of TERCL, has conferred a disproportionate benefit tofirms in certain industrial sectors.1999R1599 — EN — 01.02.2002 — 001.001 — 14
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(79)It is considered that this scheme is specific as it is limited to
certain 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
an objective and neutral criterion within the meaning of Article
2(1)(b) of the ASCM.
(81)The nature of this provision is that of a tax deferral which willbe added back to a company's tax base after a two-year grace
period in equal amounts over three years. Accordingly, for tax
deferred during the last year of eligibility (tax year 1997), bene-fits continued to accrue during the investigation period (1 April1997 to 31 March 1998) and will continue to accrue for anumber of years thereafter to companies which availed of thistax provision.
(82)Concerning the GOK's claim that the provisions of this Articleare available to a wide variety of industries, it is noted that, inits provisional findings, the Commission found that the provi-sions of this Article were limited to those Korean companieswhich invest abroad. No new information has been provided
that this is not the case. Similar to the GOK's claim above
regarding the non-specificity of the limitation to manufacturingindustry (see recitals 67 to 70), it is a fact that the provisions ofArticle 23 of TERCL restrict the benefits thereunder to certainenterprises. This provision is therefore specific pursuant to
Article 3(2)(a) of the Basic Regulation and therefore countervail-
able.
(83)The GOK also claimed that the criterion of overseas investmentis an objective and neutral criterion within the meaning ofArticle 2(1)(b) of the ASCM. It is considered that this criterion
is not neutral within the sense of that Article of the ASCM nor
within the sense of Article 3(2)(b) of the basic Regulation. Thislatter Article requires that objective criteria or conditions mustbe neutral and also economic in nature and horizontal in applica-tion. The provisions of this Article of TERCL are considered notto be objective, since it is known in advance that companies
which do not invest abroad will be ineligible for the benefit.
This criterion is therefore neither neutral nor horizontal in appli-cation. The GOK, by enacting this provision of TERCL, hasconferred a benefit upon a limited number of enterprises withoverseas interests.
(84)It is considered, therefore, that this provision of TERCL isspecific 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 the
provision of preferential treatment for domestic over imported
facilities 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 theprovision in the Article for different rates in force for imported
(3 % credit) and indigenously sourced (10 % credit) facilities
was deleted 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 duringthe investigation period.1999R1599 — EN — 01.02.2002 — 001.001 — 15
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(86)As regards the different rates in force for imported and indigen-
ously sourced facilities prior to the end of 1996, it has already
been found that the scheme is specific pursuant to Article3(4)(b) of the basic Regulation. Concerning the general claimof non-specificity, it is considered that this scheme is specificas it is limited to certain enterprises (see recitals 67 to 70) andtherefore countervailable. It is known in advance that certain
enterprises are more likely than others to be in a position to
benefit from tax advantages for productivity improvement, justbecause of the type of business they are in. Therefore, benefitsfrom this scheme will inevitably be more relevant to somesectors than to others.
(g)Article 27 of TERCL (Temporary investment 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 the
provision 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 underthis Article should be countervailed as companies may opt to
benefit from the different rtes in force for imported (3 % credit)
and indigenously sourced (10 % credit) machinery prior to theend of 1996 for investment projects commenced before then.Accordingly, benefits continued to accrue during the investiga-tion period.
(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
of 1996, the scheme is specific pursuant to Article 3(4)(b) of thebasic Regulation. Concerning the general claim for non-specifi-city, as in the case of Article 25, this scheme is available onlyto those firms which invest in productivity-improving equipment.Given the nature of this condition, it is inevitable that certain
enterprises will be more likely to benefit than others.
4.Amountofcountervailablesubsidies
(89)Taking account of the definitive findings relating to the various
schemes as set out above, the amount of countervailable subsi-dies for each of the investigated exporting producers is asfollows:
Loans
(export)Loans
(other)Tax
(export)Tax
(other)Duty draw-
backTotal
subsidy
Korea Welding 0,47 0,06 0,34 0,08 0 0,95
Shine Metal
Products1,63 0 0 0 1,09 2,72
Dae Sung Rope
Mfg Co., Ltd0,09 0,15 0,06 0,55 0 0,85
Korea Sangsa
Co. Ltd/Myung
Jin Co., Ltd0,17 0 0,15 0,25 0 0,57
Kowel Special
Steel Wire Co.0,88 0 0 0,03 0 0,91
SeAH Metal
Products Co.,
Ltd2,31 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 de1999R1599 — EN — 01.02.2002 — 001.001 — 16
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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 thede minimis threshold, imports of large SSW originating in Korea
are no longer considered as subsidised imports. Therefore,
contrary to the findings set out in the provisional Regulation,
only imports originating in India will be taken into account forthe purposes of the injury assessment set out below.
2.Communityindustry
(92)In the absence of new evidence or any further substantiated
argument put forward by any of the parties concerned, the facts
and findings set out in recitals 207 and 208 of the provisionalRegulation are confirmed, i.e the complainant Communityproducers representing more than 65 % of the total Communityproduction of large SSW constitute the Community industry, in
accordance with Article 9(1) of the basic Regulation.
3.Competitionaspects
(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 current
proceeding would be artificially inflated as a result of the
uniform 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
any interested party and there has been a definitive decision
rejecting the complaint in case IV/E-1/36.930 concerning stain-less steel bright bars, which belong to the same category ofproducts as SSW, the findings set out in recitals 209 to 216 ofthe provisional Regulation are hereby confirmed.
4.Communityconsumption
(94)Following the disclosure, some interested parties have argued
that the methodology followed for the purpose of determiningthe Community consumption, in particular with regard to thesales of non-cooperating Community producers and third coun-tries imports, was inappropriate.
(95)In this respect, it should be recalled that detailed and verifieddata are only available for the Community industry and thecooperating exporting producers in the country concerned.
Therefore, in line with the consistent practice of the Community
institutions recourse was made to information available to theCommission, and in particular to independent statistical sources.No interested party has provided information that would showthat the approach followed by the Community institutions wasunreasonable and not justified in the circumstances of the
present case.
(96)Consequently, the findings as set out in recitals 217 and 218 of
the 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 therefore1999R1599 — EN — 01.02.2002 — 001.001 — 17
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increased steadily and considerably over the period under
consideration, 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 the
investigation period.
6.Prices ofthesubsidisedimports
(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,
2,10 in 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 recitals
226 and 227 of the provisional Regulation for the calculation of
the price undercutting margins the weighted average net sales
prices 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 the
Community 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 recital228 of the provisional Regulation are hereby confirmed.
7.SituationoftheCommunityindustry
(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 findingsas set out in recitals 229 to 238 of the provisional Regulation arehereby 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
the situation of the Community industry remained relatively
stable during the period under consideration, and even showedsigns of improvement in terms of production, sales volume andinvestments. 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 the
Community industry was based on the fact that the Community
industry, faced with subsidised imports, could not follow thegrowing trend of the market, never did recover its position onthe market and was only able to keepits sales volume stable atthe expense of its profitability situation which, in a context ofdepressed sales prices, strongly deteriorated. Indeed, the sales1999R1599 — EN — 01.02.2002 — 001.001 — 18
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volume of the Community industry only increased by 5 %
between 1994 and the investigation period, whilst the Commu-nity market went upby 20 % during the same p eriod.
Furthermore, the slight increase of production and investment
are only due to the fact that the Community industry tried tokeepits market share. Thus, the decreasing trend of its p rofit-ability is not exclusively due to the fact that the Communityindustry also started to produce some models for which less
competition from the subsidised imports was faced.
(107)On the basis of the above, it is concluded that the Community
industry is suffering material injury as set out in recitals 237and 238 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 to
subsidised 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 asthe substantial price undercutting found coincided with the dete-
rioration of the situation of the Community industry in terms of
loss of market shares, price depression as well as deterioratingprofitability.
(110)In the context of the general fall of the market in 1996, which
followed the strong growth of the year 1995, the Community
industry was negatively affected by the continuous rise of thesubsidised imports. Indeed, the imports originating in Indiawere those which grew strikingly during that year.
(111)As from 1997, the growing trend of the market mainly benefitedthe subsidised imports. Sales volumes of the Communityindustry did not follow the upward trend of the market, and salesprices did 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 and
decreasing employment.
(112)When faced with low-priced imports originating in India, theCommunity industry had the possibility of either maintaining its
prices with a risk of losing sales volume, or following the low
prices of subsidised imports regardless of consequences on prof-itability. Both strategies resulted in a negative impact onprofitability either directly (lower prices) or indirectly (highprices led to lower sales volume resulting in higher productioncosts per tonne). As from 1996, all Community producers
substantially lowered their sales prices, which again had a nega-
tive impact on their profitability, even though they tried toconcentrate on certain market niches to avoid being affectedeven more strongly by the effects of the subsidised imports.This clearly shows the price sensitivity of the market and the
important impact of the price 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 onthe situation of the Community industry, with particular regard1999R1599 — EN — 01.02.2002 — 001.001 — 19
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to the role of other Community producers not cooperating in the
investigation and of imports from other third countries.
(i)Other Community producers
(114)Following the adoption of the provisional Regulation, some
interested parties questioned whether the injury suffered by theCommunity industry was caused by the subsidised imports. In
particular, it was alleged that the injury was caused by other
factors, namely by other Community producers. It was arguedin this respect that in view of the limited cooperation obtainedfrom the Community producers, the assessment of the impact ofsales by the non-cooperating Community producers was not fullyreliable.
(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 producers
are likely to have followed a trend similar to that found for the
Community industry, in particular as regards prices. Further-more, no interested party has submitted any information thatwould suggest that the non-complaining producers operated in amore positive context.
(ii)Imports from third countries
(116)The market shares of the imports from third countries are as
follows:
(In % of volume)
1994 1995 1996 1997 IP
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 2,2Total other imports 8,4 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 1994
and the investigation period, whilst subsidised imports origi-
nating in India went up by 9,7 percentage points during thesame period of time. As to prices, no indication of any priceundercutting of the sales prices of the Community industry wasfound in the course of the investigation.
Korea
(118)Imports originating in Korea were examined in the context of
this investigation 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,
it is concluded that their increasing trend is less pronounced than
for 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 suffered
by the Community industry but this alone was not found to be
sufficient 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.1999R1599 — EN — 01.02.2002 — 001.001 — 20
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(iii)Other
(120)No new arguments were put forward by any interested party
regarding whether other factors which might have contributed
to the injury suffered by the Community industry, in particular,a contraction in demand or the changes in the patterns ofconsumption, developments in technology and the export perfor-mance and productivity of the Community industry. Therefore,the findings set out in recitals 247 to 250 of the provisional
Regulation are hereby confirmed.
(c)Conclusion on causation
(121)Thus, other factors than the subsidised imports originating in
India, even though they might have contributed to the injury
suffered 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 Communityindustry therefrom.
(122)In the light of the above, it is concluded that the subsidised
imports originating in India taken in isolation have caused mate-
rial injury to the Community industry.
(G)COMMUNITYINTEREST
(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
of the duties on their situation, the conclusion is hereby
confirmed that the imposition of measures will enable theCommunity industry to regain a satisfactory profitability margin,and to maintain and further developits activities in the Commu-nity securing both employment and investment.
(125)In the absence of any further reaction from unrelated importers
and from the suppliers, the findings set out in recitals 257 to
261 of 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 price
of their raw material. However, they have also stated that they
could 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 the
Community industry's products, considering therefore that the
imposition of the measures would not affect their own situation.
(128)Therefore, the findings set out in recitals 252 to 268 of theprovisional Regulation are confirmed in the sense that there areno compelling reasons against the imposition of countervailingduties.
(H)DEFINITIVECOURSEOFACTION
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 take1999R1599 — EN — 01.02.2002 — 001.001 — 21
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in order to remove the trade-distorting effects of injurious subsi-
dies and to restore effective competitive conditions on theCommunity large 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
duty rate should correspond to the subsidy amount, unless the
injury margin is lower. This led to the following rates of dutyfor the cooperating Indian exporting producers:
CompanyProposed countervailing
duty %
Bhansali Bright Bars Pvt Ltd 18,5
Devidayal Ltd, Mumba 18,4Indore 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 level established per indi-vidual 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 estab-lished on the basis of the findings of the present anti-subsidyinvestigation. Therefore, they reflect the situation found duringthat investigation. These duty rates are thus exclusively applic-able to imports of products originating in the country concerned
and produced by the specific legal entities mentioned. Products
produced by any other company not specifically mentioned inthe operative part of this Regulation, including related entities,cannot benefit from these rates and shall be subject to the resi-dual duty rate.
(136)Any claim requesting the application of these individual dutyrates (e.g. following a change in the name of the entity) shouldbe addressed to the Commission forthwith with all relevantinformation, in particular any modification in the company'sactivities linked to production, domestic and export sales asso-
ciated with that name change.
(J)COLLECTIONOFTHEPROVISIONALDUTIES
(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 to the Community industry, itis considered necessary that the amounts secured by way ofprovisional countervailing duties on imports originating in Indiapursuant to Regulation (EC) No 618/1999 be definitivelycollected to the extent of the amount of definitive duties1999R1599 — EN — 01.02.2002 — 001.001 — 22
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imposed, unless the provisional duty rates are lower in which
case the latter should prevail.
(138)As regards the amounts secured by way of provisional counter-vailing duties on imports originating in Korea, they should bereleased,
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, excluding wire containing by weight28 % or more but no more than 31 % of nickel and 20 % or more butno more than 22 % of chromium, falling within CN codeex 7223 00 19 (TARIC code 7223 0019 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:
ProducerRate of duty
(%)Taric addi-
tional code
— Bhansali Bright Bars Pvt Ltd, C-8/3, T.T.C.
Industrial Area, Village — Pawne Opposite
P.I.L., Thane - Belapur Road, 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 No 4, AntopHill, Wadala,
Mumbai 400 037, India13,2 A002
— Isibars Ltd Indiasteel Complex, Railway Gate
No 4, AntopHill, Wadala, Mumbai 400 037,
India13,2 A011
— Mukand Ltd, L.B.S. Marg, Kurla, Mumbai
400 070, India13,2 A003
— Raajratna Metal Industries Ltd, 909, Sakar -
III, Nr Income Tax, Ahmedabad 380 014,
Gujarat, India28,6 A005
— Venus Wire Industries Ltd, Block No 19,
Raghuvanshi Mill Compound, Senapati Bapat
Marg, Lower Parel, Mumbai 400 013, India35,4 A006
— Macro Bars and Wires Pvt. Ltd, 702 Bombay
Market Building ►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, 6 Murai Mohalla Indore, ►C1452
001,◄(M.P.), India0 A012
— Sindia Steels Limited, 53/9 AB. Samitha
complex, Off Andheri Kurla Road, Safeed Pool,
Andheri (East),Mumbai 400 072, India15,8 A2851999R1599 — EN — 01.02.2002 — 001.001 — 23
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ProducerRate of duty
(%)Taric addi-
tional 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. Products
produced by any company not specified by its precise name in the
operative 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 tothe Commission forthwith with all relevant information, in particularany modification in the company's activities linked to production,domestic and export sales associated with that name change. The
Commission will, after consultation of the Advisory Committee, amend
the Regulation accordingly by updating the list of companies benefitingfrom individual 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 defini-tively imposed. Amounts secured in excess of the definitive rate of
countervailing 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
diameter of 1 mm or more originating in Korea shall be terminated.The amounts provisionally secured by way of the provisional counter-vailing duties on imports originating in Korea pursuant to Regulation
(EC) No 618/1999 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.1999R1599 — EN — 01.02.2002 — 001.001 — 24
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