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"B COUNCIL REGULATION (EC) No 368/98
of 16 February 1998
imposing a definitive anti-dumping duty on imports of glyphosate originating in the People’s Republic of
China and collecting definitively the provisional duty imposed
(OJ L 47, 18.2.1998, p. 1)
Amended by:
Official Journal
No page date
"M1 Council Regulation (EC) No 1086/2000 of 22 May 2000 L 124 1 25.5.20001998R0368 — EN — 26.05.2000 — 001.001 — 1
COUNCIL REGULATION (EC) No 368/98
of 16 February 1998
imposing a definitive anti-dumping duty on imports of glyphosate
originating in the People’s Republic of China and collecting definitively
the provisional duty imposed
THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty establishing the European Community,Having regard to Council Regulation (EC) No 384/96 of 22 December 1995
on protection against dumped imports from countries not members of theEuropean Community (
1), and in particular Article 9(4) thereof,
Having regard to the proposal submitted by the Commission after consulting
the Advisory Committee,
Whereas:
A. PROVISIONAL MEASURES
(1) By Commission Regulation (EC) No 1731/97 (2) (hereinafter referred
to as the ‘Provisional Duty Regulation’) provisional anti-dumpingduties were imposed on imports of glyphosate falling within CN codes
ex 2931 00 80 and ex 3808 30 27 originating in the People’ s Republic
of China.
B. SUBSEQUENT PROCEDURE
(2) Following the imposition of the provisional anti-dumping measures, a
number of interested parties submitted comments in writing.
(3) Importers in the Community, Chinese exporters, and both complainant
Community producers requested and were granted a hearing.
(4) The Commission continued to seek and verify all information deemed
necessary for its definitive findings.
(5) Parties were informed of the essential facts and considerations on the
basis of which it was intended to recommend the imposition of
definitive anti-dumping duties and the definitive collection of amounts
secured by way of provisional duties. They were also granted a periodwithin which to make representations subsequent to this disclosure.
(6) The oral and written comments submitted by the interested parties
were considered, and, where deemed appropriate, taken into account in
the Commission’ s definitive findings.
C. PRODUCT UNDER CONSIDERATION AND LIKE
PRODUCT
1.Product under consideration
(7) As stated in recital 10 of the Provisional Duty Regulation, the product
under consideration is glyphosate. This product can be produced in
different grades or forms of concentration of which the main ones arethe following: formulated (generally with 36 % glyphosate content),salt (with 62 %), cake (with 84 %) and acid (95 %).
In order to reduce the costs of transportation, distributors normally
purchase glyphosate in a concentrated form (usually acid, but also salt)
and further process it to obtain the formulated glyphosate, the onlyform that can be used as an end-product, i.e. as a non-selectiveherbicide.
(8) The Chinese exporters and a number of importers in the Community
claimed that the various forms of glyphosate referred to above could
not be considered as one product because they presented substantial
differences in cost terms, customer structure, price and end-use. Oneimporter argued, in particular, that the transformation of acid into
formulated glyphosate required further chemical processing and that
the resulting formulated product was of a different chemical!B
(1) OJ L 56, 6. 3. 1996, p. 1. Regulation as amended by Regulation (EC) No 2331/96
(OJ L 317, 6. 12. 1996, p. 1).
(2) OJ L 243, 5. 9. 1997, p. 7.1998R0368 — EN — 26.05.2000 — 001.001 — 2
composition than the acid form. The importers considered that, as a
consequence, the acid form, which accounted for the majority of allglyphosate imported from the People’s Republic of China during theinvestigation period and the formulated form, which accounted for the
majority of sales of the Community industry in the same period, could
not be considered as a single product.
(9) However, these claims were not considered justified for the following
main reasons:
— it was found in the course of the investigation that there were no
basic differences in the chemical characteristics and properties of
all abovementioned forms of glyphosate. Indeed, although the acid
constitutes an intermediate stage in the production of theformulated form, the acid already contains the essential chemicalproperties of the formulated product,
— furthermore, although the abovementioned forms of glyphosate
have different grades of concentration, thus justifying differencesin cost or price, the transformation costs from one to the other are
not substantial,
— finally, it should be noted that all forms are dedicated to the same
end-use, i.e. as a herbicide, albeit in the case of acid, salt and cake,following further processing into formulated, and cannot be used
for any other purpose.
(10) It was therefore concluded that all forms should be considered as one
product for the purpose of the investigation, irrespective of the
glyphosate concentration.
2.Like product
(11) One importer claimed that the glyphosate production process used in
the Community and in Brazil (the analogue country) is different from
that used in the People’ s Republic of China and that, as a consequence,the products resulting from these different processes are not alike.
(12) The investigation has confirmed that the production process used in
the Community and Brazil, on the one hand, and that used in thePeople’ s Republic of China, on the other, were different. However, theglyphosate produced by both processes was found to be identical in all
respects.
(13) In the absence of other arguments, it was confirmed that the glyphosate
exported to the Community by the People’ s Republic of China and that
produced and sold by the Community industry were alike in all
respects. The same applied to glyphosate produced in Brazil, whencompared to glyphosate exported from the People’ s Republic of Chinaand to that produced in the Community. All these products are
therefore like products within the meaning of Article 1(4) of
Regulation (EC) No 384/96 (hereinafter referred to as the ‘BasicRegulation’).
D. DUMPING
1.Analogue country
(14) Some exporters and importers reiterated their opposition to the choice
of Brazil as analogue country and made a number of counter-pro-
posals. The exporters and importers in particular argued that theCommission did not do enough to verify whether the alternativecountries proposed were more appropriate than Brazil.
(15) In that respect, the Commission made a close examination of the
counter-proposals. It should be noted that in Indonesia all producersrefused to cooperate with the Commission’ s investigation. Whereas in
Brazil there are two producers and significant imports of the product
concerned, in Argentina, Australia, India and Malaysia the markets arelargely denominated by companies related to the main complainingproducer located in the Community, i.e. Monsanto. In those circum-
stances, it was concluded that none of the countries proposed were
more appropriate than Brazil.!B1998R0368 — EN — 26.05.2000 — 001.001 — 3
2.Normal value
(16) Exporters requested the Commission to give justification for the
determination of a constructed normal value for acid while domesticprices were used for the formulated product.
(17) In this respect it should be noted that as clarified to the exporters in the
course of the investigation, normal value for acid was constructedpursuant to Article 2(3) of the Basic Regulation because the domesticsales to unrelated customers, although they were sold in representative
quantities, were not sold in the ordinary course of trade. In the absence
of further arguments concerning the establishment of normal value, theprovisional determintion is hereby confirmed.
3.Export price
(18) In the absence of further arguments concerning the establishment of
export price, the provisional determination is hereby confirmed.
4.Comparison
(19) Exporters claimed that the Commission in determining the dumping
margin had compared export prices of acid with the weighted averagenormal value of both acid and the formulated product. In this respect itis noted that export prices for acid were only compared with the
normal value for acid. The same method was used for formulated. On
that basis a weighted average dumping margin was then calculated.
5.Dumping margins
(20) The methodology used to determine the definitive dumping margin is
the same as that used for the calculation of the provisional dumping
margin. In the absence of any amendments to the establishment of thenormal value and the export price, the provisional determination ishereby confirmed.
(21) The dumping margin established for definitive determinations
expressed as a percentage of the cif price at Community frontier,remains at 38,2 %.
E.INJURY
1.Consumption in the Community market
(22) In determining total apparent consumption on the Community market,
the Commission added the sales of Community producers to the
imports into the Community.
(23) A further examination of the imports volumes originating in both the
People’ s Republic of China and other third countries resulted in minorchanges in the total volume of imports and, consequently, of
consumption figures for the period examined. On this basis,
Community consumption increased by 130 % between 1991 and theinvestigation period.
2.V olume and market share of imports
(24) A number of importers contested the determination of market share
held by imports originating in the People’s Republic of China, asestablished in the provisional duty Regulation. They alleged that this
market share was overestimated because it did not take into account
the relative importance of imports from other third countries, such asthe USA, India, Switzerland and Japan, which, according to theseimporters, were substantial under Eurostat statistics.
(25) In this context, it is recalled that, at the provisional stage, the
determination of imports originating in third countries other than thePeople’ s Republic of China, was based on information provided bycooperating importers in the Community. As regards these imports, it
was not considered appropriate to use Eurostat, because no precise
figures for these imports could be established under Eurostat statistics.Indeed, Eurostat is available per CN code only. As the CN codesapplicable to glyphosate are also applied to products other than the
product concerned this course of action was deemed appropriate. In
addition, it has been confirmed that as regards imports originating inthe USA (by far the largest single import quantities declared under
Eurostat), products other than glyphosate were imported under the
same CN code as glyphosate, during the period examined. This wouldalso appear to be the case as regards imports from other origins, since!B1998R0368 — EN — 26.05.2000 — 001.001 — 4
for some of these origins the import volumes reported by Eurostat
largely exceeded the import volumes of glyphosate reported byimporters.
For the reasons stated above, and in the absence of information which
would justify a different approach, the volume of imports originatingin third countries other than the People’s Republic of China wasdefinitively determined on the basis of information supplied by the
importers.
(26) As regards imports originating in the People’s Republic of China, at
provisional stage, these imports were based on Eurostat statistics, since
the Commission was not aware of products other than glyphosate beingimported from the People’s Republic of China under the same CNcodes as glyphosate. However, at the definitive stage it was considered
appropriate to also base the findings concerning the development of
Chinese imports on information supplied by the importers, since thisinformation was considered reliable.
(27) The above analysis resulted in small changes in the assessment of
consumption (recital 23 above) and consequently of the market sharesof both imports and sales of the Community producers.
(28) Following the above, the total volume of dumped imports of
glyphosate originating in the People’ s Republic of China increasedcontinually and substantially, from a very low level in 1991 to 1 487
tonnes in the investigation period. Glyphosate of Chinese origin was
sold in its three main forms (acid, salt and formulated) and was sold inlarger quantities in some Member States than in others.
(29) The market share of these imports followed a similar progressive trend,
from very low levels between 1991 and 1993, to 9 % in 1994 and 11 %in the investigation period, i.e. showing a very rapid rate of increaseafter 1993.
3.Prices of the dumped imports and price undercutting
(30) A number of arguments were put forward by both the Community
industry and importers regarding the price undercutting assessmentmade at the provisional stage.
(31) In this context, it is recalled that prices were compared at the
formulated stage. In order to ensure a fair comparison of prices, andgiven the existence of a variety of types of formulated glyphosate onthe market, the prices of which can vary considerably both according
to the concentration of the product and the type of surfactant used, the
Commission services selected the most common formulation, called‘3A’, which has 360 g of glyphosate content per litre. Consequently,for this comparison, one type of ‘3A’ produced by the Community
industry, containing a special type of surfactant (alkylpolyoalkylam-
moniumquat), designed to increase its efficiency, was excluded fromthe calculation.
(32) One Community producer argued, however, that all types of
formulations having identical concentrations are interchangeable fromthe consumer viewpoint irrespective of the surfactant used. According
to this producer, all such types, including the one with the special
surfactant, should therefore be used for a correct assessment of priceundercutting by Chinese formulations.
However, the information available indicated that the product with
special surfactant was of better quality regarding efficiency andenvironmental impact than other types of identical concentration and,
indeed, was sold at a price significantly higher than that of more
common ‘3A’ formulations of the Community industry. In order toensure the comparability of prices, the approach followed atprovisional stage was therefore maintained.
(33) Importers contested the prices used for the Chinese imports, which
they argued were not representative because Chinese imports offormulated product accounted for a small percentage of all glyphosate
imported from the People’ s Republic of China during the investigation
period.
(34) As mentioned above it should be noted that the price undercutting
assessment was made for formulated product combining both the
prices of direct imports of formulated product provided by one!B1998R0368 — EN — 26.05.2000 — 001.001 — 5
exporter, and the prices of formulated product processed in the
Community from Chinese acid, provided by cooperating importers inthe Community. On this basis, the prices used accounted for arepresentative volume of all imports of glyphosate originating in the
People’ s Republic of China.
(35) On the basis of the abovementioned approach, the price undercutting
margins during the investigation period were found to range from 2 %to 13 % of the Community industry’ s corresponding weighted average
sales unit price.
4.Situation of the Community industry
4.1. Market share
(36) The market share of the Community industry decreased continuously
from 98 % in 1991, to 95 % in 1992, to 93 % in 1993, to 86 % in 1994and to 85 % in the investigation period.
4.2. Profitability
(37) The profitability of the Community industry was re-assessed to take
account of factors such as financing costs which, in the case of one
producer, had been incorrectly determined at the provisional stage. Itwas confirmed that one producer was incurring heavy financial losses
in the investigation period. The profitability of the other producer
decreased substantially reaching very low levels in the investigationperiod.
In addition, a calculation of the profitability of this producer for the
product types more exposed to competition from the People’s Republic
of China and used in the undercutting assessment revealed significant
financial losses in sales of such product types.
4.3. Employment
(38) One importer argued that the employment figure for the Community
industry provisionally determined seemed overestimated because
glyphosate production does not normally require as many people.
The Commission confirms that, on the basis of verified information, inthe investigation period the Community industry employed some 814people in connection with the glyphosate activity.
(39) In the absence of other arguments, the other findings concerning the
situation of the Community industry, as stated in recitals 46 to 53 ofthe Provisional Duty Regulation, are confirmed.
4.4. Conclusion on injury
(40) Importers argued that in the light of the increase in capacity,
production, sales volume and employment of the Community industry,
it could not be considered that this industry had suffered material
injury in the period examined.
However, it is recalled that, in accordance with Article 3(5) of the
Basic Regulation, any one or more of the injury factors set out in this
provision cannot necessarily give decisive guidance as to the impact of
the dumped imports on the situation of the Community industry.
In this context, it is noted that, in spite of the positive development of
the above factors, which took place in the context of a significant
expansion of the market, during the period examined, the Community
industry’ s market share decreased significantly, as did its prices andprofits. Furthermore, it is recalled that, in the investigation period, andas underlined by the analysis of imports prices made in recitals 41 to
44 of the Provisional Duty Regulation, the Chinese dumped prices of
acid were found to be below the manufacturing costs of acid of theCommunity industry. This shows the magnitude of the impact of suchimports on the situation of this industry.
The conclusion whereby the Community industry suffered material
injury during the period examined, as set out in recitals 54 and 55 ofthe Provisional Duty Regulation, is therefore confirmed.!B1998R0368 — EN — 26.05.2000 — 001.001 — 6
F.CAUSATION
1.Patent expiry
(41) Importers claimed that the situation of the Community industry and, in
particular, the decrease in prices and profits of this industry, was
mainly a consequence of the expiry of the patent held by oneCommunity producer up to 1991. The importers argued, in particular,that the decrease in glyphosate prices on the Community market was in
line with other cases of patent expiry and that, as a consequence, the
decrease in profitability of the former patent holder was to beexpected.
As regards any losses suffered by the other producer, these were
claimed by the importers to be due to lack of anticipation of the priceevolution that the market would follow after the expiry of the patent.The importers further claimed that the prices of glyphosate on the
Community market during the investigation period were comparable to
prices of the product on other world markets, e.g. Argentina, whichshowed that following the expiry of the patent the prices in the
Community market had reached a normal level.
(42) It should be noted, in the first instance, that no new evidence was
submitted on this subject following provisional findings, which wouldjustify a change in the conclusions regarding causality. In particular, it
is noted that as regards the comparison of prices of glyphosate in the
Community and Argentina, insufficient evidence was provided on theprices in the latter market or, indeed, on whether the conditions of
competition in Argentina would be comparable to those in the
Community following the expiry of the patent. It should further benoted that given the different situations for different markets as regardspatents, no world price could be established for this product.
(43) Concerning the profitability of the Community industry, it is recalled
that in spite of considerable reductions in costs of this industry, itsprices decreased further than costs. In addition, the investigation
revealed that this decrease in prices was considerably accelerated
between 1993 and the investigation period, when the Chinese importsappeared on the Community market in significant volumes. Thisshows that, irrespective of the patent expiry, the Chinese imports had a
negative impact on the level of Community market prices.
(44) It is further noted with regard to the other Community producer which
entered the market after the expiry of the patent, that it had made
detailed forecasts of the decrease in prices that would follow the expiry
of the patent. However, it is clear that prices dropped to much lowerlevels than anticipated.
(45) Finally, it is stressed that in the investigation period, the Chinese
imports of acid were found to be below the manufacturing costs of theCommunity industry, i.e. at a level excluding any general, sales oradministrative expenses, thus exerting a continuous downward press-
ure on the prices of the formulated product.
(46) In view of all the above elements, the conclusion in the Provisional
Duty Regulation is maintained that the dumped prices largely
influenced the level of prices and profits of the Community industry
in the period examined. Furthermore, it is recalled that the impact ofthe dumped Chinese imports resulted in an increase of market share ofthese imports, to the detriment of the market share of the Community
industry.
2.Other imports
(47) As regards the effects of imports other than those originating in the
People’ s Republic of China, one importer claimed that the Commission
had underestimated the volume of these imports, in particular of thoseoriginating in Hungary.
For the reasons explained in recital 25, it is recalled that the volume of
imports was based on information provided by importers. In thiscontext, it is noted that other imports were found to have taken placefrom Hungary, Korea, Taiwan, Slovenia, India and Malaysia. The total
market share of these imports was, in the investigation period, 3,2 %,
with individual market shares of less than 1 % in all cases with the!B1998R0368 — EN — 26.05.2000 — 001.001 — 7
exception of Hungary. As regards Hungary, its market share was 2 % in
the investigation period. However, there was no evidence that theHungarian prices were dumped.
(48) In the light of the above, it is unlikely that other imports had any
significant impact on the situation of the Community industry.
3.Conclusion on causation
(49) Although it is not contested that the patent expiry had an impact on the
Community industry’ s situation, it was concluded that the imports
concerned have, in isolation, caused material injury to the Communityindustry. The findings set out in recitals 56 to 60 of the ProvisionalDuty Regulation, concerning causation, are confirmed.
G. COMMUNITY INTEREST
1.Impact on importers/formulators
(50) Importers in the Community claimed that the imposition of
anti-dumping duties would force them to cut down an important part
of their activities. However, since this claim was not substantiated and
for the reasons set out in recitals 66 and 67 of the Provisional DutyRegulation, it could not be considered justified.
2.Competition in the Community
(51) One importer alleged that the imposition of duties would strengthen
the position of the former patent holder in the Community market, thuspreventing competition from developing in this market.
(52) In this respect, it is considered that, on the contrary, measures would
ensure the viability of new producers in the Community, as well as ofthose already producing, thus enlarging the number of competitors on
the market.
(53) As explained in recitals 70 and 71 of the Provisional Duty Regulation,
it is noted that, following the expiry of the patent, two new producers
have entered the Community market. However, the investments made
by these new producers are being jeopardised by the continuedpresence of the dumped imports, the prices of which have apparentlycontinued to decrease after the investigation period.
It is therefore considered essential that fair conditions of competition
are established on the Community market in order to ensure the
viability of these producers, while encouraging the emergence of new
ones.
(54) Furthermore, given the difficulties encountered by the new producers
due to the Chinese dumped prices there is a likelihood that, without theimposition of measures, competition in the Community would belimited to the former patent holder and the Chinese, to the extent that
the former patent holder would economically be in a position to
compete with the very low dumped prices of the Chinese exporters. Itis considered that new entrants would ensure a more effectivecompetition on the Community market as there would be a greater
number of players involved on that market. In doing so, a greater
variety of reliable sources of supply for Community consumers wouldbe maintained than would be the case if Chinese imports were the only
alternative to the former patent holder products.
3.Conclusion on Community interest
(55) In the absence of any other arguments, the conclusions on Community
interest as stated in recitals 61 to 74 to the Provisional Duty Regulationare maintained.
H. DEFINITIVE DUTY
(56) The product type used as a reference to determine the duty rate was the
acid form of the product concerned, because the acid form represented67 % of the volume of glyphosate imported from the People’s Republicof China during the investigation period. Moreover, acid is the
common base of all forms of glyphosate exported from the People’s
Republic of China and produced in the Community.
(57) For the purpose of calculating the injury elimination level, the
Commission considered that the prices of the dumped imports shouldbe compared with the production costs of acid of the Community!B1998R0368 — EN — 26.05.2000 — 001.001 — 8
industry plus a reasonable level of profit. In this context, the
Community industry contested both the determination of its cost ofproduction at provisional stage, insofar as it did not include certain R &D costs claimed by this industry, and the profit level used by the
Commission, which the industry considered to be underestimated for a
product in the agrochemical sector.
(58) Specifically, the Community industry argued that the Commission, at
provisional stage, had improperly classified glyphosate acid as a
commodity product and that this had resulted in an underestimation ofboth the R & D costs and the profit margin attributed to this product.The Community industry claimed that glyphosate acid is a highly
technical product that requires continued research and development for
compliance with environmental requirements.
(59) In this context, the producer concerned provided sufficient additional
evidence showing the link of certain R & D costs with the product type
concerned.
(60) Therefore, the cost of production of the Community industry, for the
purpose of establishing the non-injurious price level, was adjusted,
where appropriate, to take account of these R & D costs.
(61) No further evidence was provided on R & D costs relating to
glyphosate which should be taken into account at definitive stage.Furthermore, as far as the former patent holder is concerned, and given
the effective duration of the patent protection for this company, it can
be considered that any other significant research costs in relations tothis product were already recovered.
(62) As regards profit, the Community industry argued that profit level
higher than that used at provisional stage would be adequate for theglyphosate business. In this respect, it should be noted that duringmuch of the period examined, the prices on the Community market
were influenced by the former existence of a patent, and latterly, by the
presence of dumped Chinese prices. Therefore, it was not possible toobtain reliable information on the profit level this industry would beable to obtain in normal conditions of competition.
(63) In any event, it should be borne in mind that, irrespective of whether
acid should be qualified as a commodity, glyphosate has benefitedduring an extended time period from patent protection. Therefore, the
level of profit of 5 % on turnover was considered reasonable. It should
be noted that the same level of profit was considered appropriate forproducers in the analogue country (see recital 26 of the ProvisionalDuty Regulation).
(64) Further, a small downward correction was found to be required in the
amount of post-importation adjustment added to the Chinese cif exportprice of acid, in order that the comparison be made at the same level of
trade.
(65) On the basis of the revised figures, the weighted average export price
of acid, for the investigation period, on a cif Community frontier level,adjusted to take account of customs duty and post-importation costs,
was compared with the weighted average cost of production of the
Community industry, increased by a profit margin of 5 %.
(66) This comparison resulted in an injury margin of 24,0 %, on the basis of
the net, free-at-Community frontier average price before duty.
(67) Since the injury margin is lower than the dumping margin found, the
definitive anti-dumping duties should be based on this lower level, inaccordance with the provisions of Article 9(4) of the Basic Regulation.
I.COLLECTION OF THE PROVISIONAL DUTY
(68) Considering the conclusions on dumping and injury definitively
established, and that the rate of definitive duty is higher than that
provisionally determined, the amounts secured by way of the
provisional anti-dumping duty should be definitively collected at therate established in the Provisional Duty Regulation,!B1998R0368 — EN — 26.05.2000 — 001.001 — 9
HAS ADOPTED THIS REGULATION:
Article 1
1. A definitive anti-dumping duty is hereby imposed on imports of
glyphosate falling within CN codes ex 2931 00 95 (TARIC code2931 00 95 80) and ex 3808 30 27 (TARIC code 3808 30 27 10) originatingin the People’s Republic of China.
2. The rate of duty applicable to the net, free-at-Community-frontier price
before duty shall be 48 %.
3. Unless otherwise specified, the provisions in force concerning customs
duties shall apply.
Article 2
The amount secured by way of provisional anti-dumping duty pursuant to
Regulation (EC) No 1731/97 shall be definitively collected at the duty rate
provisionally imposed.
Article 3
This Regulation shall enter into force on the day following its publication in
theOfficial Journal of the European Communities .
This Regulation shall be binding in its entirety and directly applicable in all
Member States.!B
!M1
!B1998R0368 — EN — 26.05.2000 — 001.001 — 10