2002R0311—EN—22.02.2002—000.001—1
This document is meant purely as a documentation tool and the institutions do not assume any liability for its contents
►B COUNCILREGULATION(EC)No311/2002
of18February2002
imposing a definitive anti-dumping duty on imports of certain magnetic disks (3,5 ″microdisks)
originatinginHongKongandtheRepublicofKorea
(OJL50,21.2.2002,p.13)
Correctedby:
►C1Corrigendum,OJL140,30.5.2002,p.38(311/2002)
▼B
COUNCILREGULATION(EC)No311/2002
of18February2002
imposing a definitive anti-dumping duty on imports of certain
magnetic disks (3,5 ″microdisks) originating in Hong Kong and
theRepublicofKorea
THECOUNCILOFTHEEUROPEANUNION,
HavingregardtotheTreatyestablishingtheEuropeanCommunity,
HavingregardtoCouncilRegulation(EC)No384/96of22December
1995 on protection against dumped imports from countries notmembers of the European Community(
1), and in particular Article
11(2)thereof,
Having regard to the proposal submitted by the Commission after
consultingtheAdvisoryCommittee,
Whereas:
A.GENERALINFORMATION
1.Procedure
Previousinvestigations
(1)In September 1994, by Regulation (EC) No 2199/94(2), the
Council imposed definitive anti-dumping measures on importsof certain magnetic disks (‘3,5 ″microdisks’) originating in
HongKongandtheRepublicofKorea(‘Korea’).
Proceedingsconcerning othercountries
(2)Apart fromm easures on 3,5 ″microdisks originating in Hong
KongandKorea,itisrecalledthatdefinitiveanti-dumpingdutieshave also been imposed on imports of 3,5 ″microdisks origi-
nating in Japan, Taiwan and the People's Republic of China(
3)
and Indonesia(4). The measures on imports of 3,5 ″microdisks
originatinginJapan,TaiwanandthePeople'sRepublicofChinaarecurrentlysubjecttoanexpiryreview(
5).
(3)InDecember1999theproductscopeofthemeasureswasclari-fied. It was found that the microdisks based on opticallycontinuous servo tracking technology or magnetic sector servotrackingtechnologywithastoragecapacity of120MBormore
didnotfallunderthescopeofanyoftheexistinganti-dumping
measureson3,5 ″microdisks(
6).
Currentinvestigation
(4)Following the publication of the notice of impending expiry of
theanti-dumping measures applicable toimportsof3,5 ″micro-
disks originating in Hong Kong and Korea, the Commissionreceived, in June 1999, a request to review these measurespursuant to Article 11(2) of Regulation (EC) No 384/96 (‘thebasic Regulation’). The request was lodged by the Committee
of European Diskette Manufacturers (‘Diskma’) on behalf of
producerswhosecombinedoutputconstitutesamajorproportionof the total Community production of 3,5 ″microdisks (‘the2002R0311—EN—22.02.2002—000.001—2
(1) OJL56,6.3.1996,p.1.RegulationaslastamendedbyRegulation(EC)No
2238/2000(OJL257,11.10.2000,p.2).
(2) OJL236,10.9.1994,p.2.Regulation aslastamended byRegulation (EC)
No2537/1999(OJL307,2.12.1999,p.1).
(3) Regulation (EC) No 2861/93 (OJ L 262, 21.10.1993, p. 4). Regulation as
lastamendedbyRegulation(EC)No2537/1999.
(4) Regulation(EC)No1821/98(OJL236,22.8.1998,p.1).Regulationaslast
amendedbyRegulation(EC)No2537/1999.
(5) OJC322,21.10.1998,p.4.
(6) Regulation(EC)No2537/1999(OJL307,2.12.1999,p.1).
▼B
productconcerned’).Therequestwasbasedonthegroundsthat
theexpiryofthemeasureswouldbelikelytoresultintheconti-nuation or recurrence of dumping and injury to the Community
industry.
(5)Having determined, after consulting the Advisory Committee,
that sufficient evidence existed for the initiation of an expiryreview,theCommissioninitiated aninvestigation(
1)pursuantto
Article11(2)ofthebasicRegulation.
Periodofinvestigation
(6)The investigation of the likelihood of continuation and recur-
renceofdumpingcoveredtheperiodfrom1September1998to31 August 1999 (‘IP’). The examination of trends relevant for
the assessment of the likelihood of continuation and recurrence
of injury covered the period from1995 up to the end of theinvestigationperiod(‘theanalysisperiod’).
2.Parties concernedbytheinvestigation
(7)The Commission officially advised the four Community produ-
cers supporting the request, the exporting producers and theimporters known to be concerned as well as the representativesof the exporting countries of the initiation of the investigation,andgavethepartiesdirectly concernedtheopportunitytomake
theirviewsknowninwritingandtorequestahearing.
(8)The Commission sent questionnaires to all parties known to be
concerned and received full replies from three Communityproducers (‘the cooperating Community producers’) and oneunrelated importer of 3,5 ″microdisks originating in Hong
Kong. No complete replies were received from any exporting
producersineitherHongKongorKorea.
(9)The Commission sought and verified all information theydeemednecessaryforthepurposesofdeterminingwhethertherewasalikelihoodofacontinuationorrecurrenceofdumpingandinjury and whether maintaining the measures would not be
againsttheCommunityinterest.
Verification visits were carried out at the premises of the
followingcompanies:
CooperatingCommunityproducers
— SentinelN.V.,Bodem,Belgium;
— ComputerSupportItalcardsrl,Milan,Italy;
— Datarexsrl,Assemini,Italy.
Importers— Datamaticsrl,Milan,Italy.
3.Productconcernedandlikeproduct
Productconcerned
(10)The product concerned is the same as in the original investiga-
tion and as clarified subsequently, i.e. 3,5 ″microdisks used to
record and store encoded digital computer information fallingwithin CN code ex 85232090, with the exception of 3,5 ″
microdisks based on optically continuous servo tracking tech-
nology or magnetic sector servo tracking technology with a
storagecapacityof120MBormore.
(11)The 3,5 ″microdisks concerned are available in various types,
depending on various factors, including, amongst others, theirstorage capacity, formatting, degree of certification (this is ameasure used to test the performance of the microdisk which2002R0311—EN—22.02.2002—000.001—3
(1) OJC256,9.9.1999,p.3.
▼B
influences its market value) and on the way in which they are
marketed, i.e. whether sold as branded products or in bulk.Despite the existence of various types of 3,5 ″microdisks, there
arenosignificant differences intheirbasicphysical characteris-
tics and technology, and they all show a high degree ofinterchangeability.
(12)On this basis, the 3,5 ″microdisks as defined above are to be
consideredasoneproduct.
Likeproduct
(13)The various types of 3,5 ″microdisks, as defined above, which
are manufactured and sold in the Community, and those manu-
factured and sold in the countries concerned or exported to the
Community are alike in their essential physical characteristicsand technology and show a high degree of interchangeability.Therefore, they are considered to be like products within themeaningofArticle1(4)ofthebasicRegulation.
B.LIKELIHOOD OF CONTINUATION OR RECURRENCE OF
DUMPING
1.General
(14)Themarketsharerepresentedbyimportsof3,5 ″microdisksfrom
HongKongwassignificantatthetimeoftheoriginalinvestiga-tion, when it represented more than 10 % of the total
Communityconsumption.Intheperiodfollowingtheimposition
of the anti-dumping measures, this market share decreased to5,5 % in 1997 and during the IP of this investigation, it repre-sented7,3%ofthetotalCommunityconsumption.
(15)ThemarketsharerepresentedbyimportsfromKorearepresentedat the time of the original investigation more than 2 % of thetotal Community consumption. After the imposition of the anti-
dumping measures, the market share of Korean imports
decreased substantially, and during the IP it represented lessthan 0,2 % of the total Community consumption of the productconcerned.
(16)AsfarasHongKongisconcerned,fouroutofthe10companiescontacted came forward and stated that they were no longerproducing or selling the product concerned to the Community.
The remaining companies did not reply at all to the question-
naire.
(17)InthecaseofKorea,neitherofthetwocompaniesnamedintherequest for a review replied to the questionnaire. During theinvestigation no indication of the existence of other Koreanexporting producers was found. It should be recalled that onlyone company cooperated in the investigation which led to theadoptionoftheanti-dumpingmeasures.
(18)Underthesecircumstances,findingsconcerningHongKongand
Korea were established on the basis of the facts available, in
accordancewithArticle18ofthebasicRegulation.
2.Continuationofdumping
(a) HongKongNormalvalue
(19)Inviewofthenon-cooperation,normalvaluewasestablishedon
the basis of the information provided in the request for review,
which was the only reliable information available. The use ofthe normal value established in the original investigation wouldbeinappropriate,becausepricesandcostsforthemanufacturingof the product concerned have decreased significantly over theperiodonallknowninternationalmarkets.2002R0311—EN—22.02.2002—000.001—4
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(20)In the request, normal value was constructed separately for
bulkedandbranded/packedmicrodisks,byaddingtothecostof
productionoftheproductconcernedintheEuropeanCommunityareasonablemarginofprofit(10%,asintheoriginalinvestiga-tion).Giventhenatureofdataavailablefortheexportprice,i.e.Eurostat, which does not distinguish between different types, asingle weighted average normal value was established. The
weighing was done on the basis of the export shares of bulked
andbranded/packedmicrodiskstotheCommunity,asevidencedbythefewimportinvoicesavailable. Onthebasisofthisinfor-mation,itwasestablishedthat3,5 ″microdisksmarketedinbulk
represented almost 80 % of the imports of microdisks in the
Community, while the remaining 20 % were branded/packed
microdisks.
(21)The Hong Kong Economic and Trade Office (‘HKETO’)objected tothepossible useofthecostofproduction submittedintherequestforreviewtoestablishthenormalvalueforHongKong exports. However, the only alternatives suggested by theHKETOweretheuseofeitherthedomesticsalesorthecostofproduction in Hong Kong. As none of these methods could be
applied because of the non-cooperation, the evidence provided
bythecomplainantremainedthemostreliableinformationavail-able to the Commission. After disclosure, the HKETO claimedthatnormalvalueshouldinsteadhavebeenbasedontheexportsfromHong Kong to other countries, as resulting fromHong
Kong'stradestatistics.Thisclaimwasrejected,notablyasthese
tradestatistics(atthe6digitleveloftheinternationalnomencla-ture: Harmonised System) also include products other than theproductunderconsideration.
Exportprice
(22)Inviewofthenon-cooperation,theexportpricewasestablished
on the basis of Eurostat data. However, Eurostat figures (on aper month and individual Member State basis) sometimes
showed high unit values that were entirely irreconcilable with
sales prices of 3,5 ″microdisks in the Community. This seems
to be due to the fact that other products such as CD-Rs havebeen recorded under the CN code covering 3,5 ″microdisks.
The Eurostat figures concerning the IP were therefore adjusted
in order to exclude monthly data having an average unit value
higher than 0,17 EUR/unit. This was a very conservativeapproachbecause:
— theexportpricesforHongKongsetoutinthereviewrequest
were significantly below this threshold. The import pricesresultingfromtheinvoicesmadeavailable bythesolecoop-eratingunrelatedimporterintheCommunity,whichhoweverrepresented only a small share in the total import volume
fromHongKongwerealsosignificantlybelowthislevel;
— the threshold of 0,17 EUR/unit corresponds to the weighted
average unrelated importers/Community producers' resale/selling price of 3,5 ″microdisks in the Community market
during the IP.The weighing wascarried outonthe basisofsales quantities of the Community industry and the total
import volumes of 3,5 ″microdisks from all origins. It was
in fact reckoned that imports from Hong Kong shouldreasonably nottake place atcif Community frontier averagepriceshigherthantheaverageresale/sellingpricesprevailingintheCommunitymarket.
TheHKETOclaimedthattheabovementionedmethodologywas
arbitrary and incorrect, and that values and quantities reportedunderthe total CNcodeshouldhave beenusedtocalculate theexport price. This claimis rejected for the reasons outlinedabove.2002R0311—EN—22.02.2002—000.001—5
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Comparison
(23)Normal value and export price were compared on an ex-works
basis, in accordance with Article 2(10) of the basic Regulation.Dueallowance in the form of adjustments wasmade fordiffer-ences in transport, insurance, handling, loading and ancillary
costs on the basis of the information contained in the request
forareview.
Dumpingmargin
(24)In accordance with Article 2(11) of the basic Regulation, the
weightedaveragenormalvaluewascomparedwiththeweighted
averageexportpricetotheCommunity.
(25)This comparison showed the existence of a margin of dumping
ofbetween10%and15%,thedumpingmarginbeingequalto
the amount by which the normal value exceeded the exportprice, expressed as a percentage of the cif import price at theCommunity border, duty unpaid. This compares with a residualmargin of dumping of 27,4 % established in the course of theoriginalinvestigation (whenindividual dumpingmarginsranged
from6,7%to13,3%).
(26)Shouldthecomparisonbemadebetweenthenormalvaluecalcu-
lated as described in recitals 17 to 19 and the export prices
obtainedfromtheinvoicesmadeavailable fromthecooperating
unrelated importer, the dumping margin would be even bigger.However,as mentioned above, thisimporter only accounted forafairlysmallshareoftotalimportsfromHongKong.
Conclusion
(27)The above findings show the existence of a continuation of
dumping for imports of 3,5 ″microdisks originating in Hong
Kongestablishedonthebasisofsignificantexportvolumes.
(b) KoreaMethodology
(28)Normal value and export price concerning Korea were estab-
lished by following the same methodology described above forHong Kong, though in the case of Korea no import invoiceswere available fromthe cooperating unrelated im porter. The
comparison between normal value and export price was also
carried out by applying the same methodology used for HongKong.Itshouldhoweverbenotedthattheresultsoftheexami-nationofcontinuationofdumpingwerenotdecisiveinthiscaseinviewofthelowvolumeofimportsfromKoreaasdescribedatrecital49.
Dumpingmargin
(29)In accordance with Article 2(11) of the basic Regulation, the
weightedaveragenormalvaluewascomparedwiththeweightedaverageexportpricetotheCommunity.
(30)This comparison showed the existence of a margin of dumpingofbetween20%and25%,thedumpingmarginbeingequaltothe amount by which the normal value exceeded the export
price, expressed as a percentage of the cif import price at the
Community border, duty unpaid. This compares with a marginof dumping margin of 8,1 % established in the course of theoriginalinvestigation.
Conclusion
(31)The above findings show the existence of a continuation of
dumping for imports of 3,5 ″microdisks originating in Korea,
although the import volumes onthe basisof which thisconclu-sionhadbeenreachedwereverysmall.2002R0311—EN—22.02.2002—000.001—6
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3.Likelihoodofrecurrence ofdumping
(a) HongKong
(32)The market share represented by imports of 3,5 ″microdisks
fromHong Kong was significant at the tim e of the originalinvestigation, when it represented more than 10 % of the total
Communityconsumption.Intheperiodfollowingtheimposition
of the anti-dumping measures, this market share decreased to5,5 % in 1997, and, during the IP, it represented 7,3 % of thetotal Community consumption.Itshouldalsobementioned thatimportsfromHongKonghaveshown,aftertheIP,asignificantdecrease.
(33)The HKETO claimed, at the initiation of the investigation, thatthere was only one Hong Kong exporting producer of 3,5 ″
microdisks still active in the market and that the production
capacity of this company, if exported, was too limited to causeinjury to the Community industry even if the anti-dumpingduties were allowed to lapse. In addition, after disclosure, theHKETO claimed that after the IP production of microdisks inHong Kong had ceased altogether and that therefore there was
nolikelihoodofrecurrenceofdumpinganymore.
(34)Inthisrespect,itshouldbepointedoutthatHongKonghashelda substantial market share throughout the period analysed
(mostly around 7 %). It should also be noted that imports of3,5″microdisks from Hong Kong significantly decreased after
the IP while there was a commensurate increase of imports ofthis product fromMacao which is not subject to anti-dum pingmeasures.Followingdisclosure,theHKETOhasprovidedinfor-
mation claiming that production and exports to the Community
ofmicrodisksoriginatinginHongKonghasceasedaftertheIP.However,thiscannotcompensateforthefactthatmanufacturingactivities for the product concerned have been found to bemobile and, if measures were repealed it is likely that certainexporting producers would relocate their production back to
Hong Kong, or resume their export should they only have
suspended themtem porarily. It should also be noted that,becauseofthelackofcooperationshownbyexportingproducersduring the IP, it was not possible to ascertain whether thesource(s) of dumped exports had indeed ceased its(their) activ-
itiesaftertheIP.
(b) Korea
(35)ThemarketsharerepresentedbyimportsfromKorearepresented
at the time of the original investigation more than 2 % of the
total Community consumption. After the imposition of the anti-dumping measures, the market share of Korean importsdecreased substantially, and during the IP it represented lessthan 0,2 % of the total Community consumption of the productconcerned. It was therefore considered whether there was a
likely risk of a recurrence of dumping of Korean imports at
abovedeminimislevels.
(36)Two companies had been named in the request for a review as
producers of the product concerned, however neither of themcooperated. For one of these two producers, exports to theCommunityrepresentedaverysubstantialproportionofitstotalsales during the original investigation. Moreover, this companyhad a production capacity which used to satisfy an important
part of Community consumption (close to 5 %). In the absence
ofcooperationbythiscompany,itcanthereforebeassumedthatsubstantial unused production capacity still exists in Koreawhich could be exploited, should the measures be repealed.Information available indicates that this producer is still manu-
facturingtheproductconcerned.
(37)Moreover, given the abovementioned ease of relocation of
productionfortheproductconcerned,itcannotbeexcludedthat2002R0311—EN—22.02.2002—000.001—7
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certainexportingproducerswouldrelocatetheirproductionback
to Korea, should they have shifted production to locationsoutsideKorea.
(38)As imports from Korea were made at significantly dumpedprices,albeitinlimitedquantities,andasspareproductioncapa-
city is reckoned to exist in the country and in view of the
possibility of a relocation of production, it is concluded that,should the measures be repealed, there is a likelihood of recur-renceofdumpingatsignificantexportvolumes.
C.DEFINITIONOFTHECOMMUNITYINDUSTRY
(39)In the Community, during the IP, 3,5 ″microdisks were manu-
facturedby:
— threeCommunityproducers,whichfullycooperatedwiththe
Commissionduringtheinvestigation;
— anotherproducerwhichsupportedtherequestforreviewbut
didnotsupplydata;
— othereconomicoperatorsrelatedtoJapanese,Taiwaneseand
Chineseexportingproducers.
(40)As in the previous proceedings, the Commission found that the
assessment of the situation of the Community industry would
be distorted if Community producers related to those producers
fromcountries involved in prior proceedings found to bedumping the product concerned, and causing material injury tothe applicant, were not excluded fromthe definition of the‘Community production’. Consequently, the production of the
economic operators which are related to producers in the coun-
tries concerned have been excluded fromthe definition of the‘Communityproduction’.
(41)The production of the three cooperating Community producersand of the other producer supporting the complaint constitutetherefore the Community production within the meaning ofArticle4(1)ofthebasicRegulation.
(42)The HKETO argued that companies related with Japanese,Taiwanese or other non-Community-owned producers shouldnot be excluded from the definition of the Community produc-
tionandstatedthisexclusioninflatedtheapplicants'standing.
(43)As explained above, these producers were excluded fromthe
definition of the Community production, because they were
foundtoberelatedtopartiesdumpingontheCommunitymarket
andnoreasonshavebeengivenastowhythisapproachshouldbechangedinthereviewinvestigation.Furthermore,evenwhentakingtheseproducersintoaccount,thecooperatingCommunityproducers would still represent more than 25 % of production
taking place in the Community. The HKETO claim was, there-
fore,rejected.
(44)Onthisbasisandgiventhatthecooperating Community produ-
cers represent a major proportion, in this case more than 75%,
of the Community production, they are therefore considered toconstitutetheCommunityindustrywithinthemeaningofArticle4(1) and Article 5(4) of the basic Regulation. They are herein-afterreferredtoasthe‘Communityindustry’.
D.THECOMMUNITYMICRODISKS'MARKET
1.General
(45)Themarketfor3,5 ″microdisksismature,andiscurrentlychar-
acterised by a situation of falling demand. Other products such
as Zip™ discs, other high capacity microdisks such as HiFDsand optical-magnetic data storage media, such as recordablecompact disks (CD-Rs) are progressively replacing the marketheldby3,5 ″microdisks.However,giventhesignificantbaseof
PCswith3,5 ″microdiskdiskdrivesincorporated(currentlyesti-2002R0311—EN—22.02.2002—000.001—8
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mated at 30 million units in the Community), it is clear that
there will be a continuing need for these microdisks in theCommunity. Furthermore, according to recent market studies,
most PC manufacturers continue to incorporate 3,5 ″microdisk
drives in the basic configuration of their machines. It is esti-mated that bythe year 2002 there will be 38million microdiskdrivesintheCommunity.TheCommunitymicrodiskmarketwillthereforeremainimportant.
2.Consumption of 3,5 ″microdisks on the Community
market
(46)Figures for consumption in the Community are based on infor-mation contained in the request for review crossed checked byverifiedproductionandsalesfiguresprovidedbytheCommunityindustryandtotalimportvolumesobtainedfromEurostat.
(47)InEurostatdatahowever,3,5 ″microdisksareonlyapartofthe
CN heading concerned. During the analysis period they weredeemed to be by far the largest part of this heading since the
marketforothernon-rigidmagneticdiscswasverysmall.Ithas
becomeevidenttotheCommissionthatin1998and1999somerecordableCDs(CD-Rs)weremisdeclaredtothecustomsautho-rities under this CN heading. Volume import figures werecorrected using detailed confidential statistical information toreflectthismisdeclaration.
(48)Consumptionfellby50%duringtheanalysisperiod.
Totalconsumptionof3,5 ″
microdisksintheCommu-
nity1995 1996 1997 1998 IP
Millionsofunits 1300 1100 1000 800 650
Index1995=100 100 85 77 62 50
3.Importsfromthecountriesconcerned
Preliminaryremark
(49)Duetothelackofcooperation,Eurostatandcustominformation
(TARIC) was used to estimate imported volumes. For Hong
Kong,theCommissionhasusedcustominformation concerningthe product concerned for 1995 to 1998. For the IP, it wasconsidered that 20 % of the trade registered by Eurostat undertherelevantheadingcouldbelinkedtoamisdeclarationofCD-Rs and volumes were corrected accordingly, while prices were
estimatedasexplainedatrecital20.ForKorea,thecustominfor-
mation was used across the analysis period for volume andprices.
Volumeandmarketshare
(50)Based on the above methodology, the development of the
volume of imports of 3,5 ″microdisks into the Community was
asfollows:
ImportsintotheCommu-
nity(millionsofunits)and
marketshare(%)1995 1996 1997 1998 IP
ImportsfromHong
Kong89,1 72 54,7 62,1 47,2
MarketshareHong
Kong6,9% 6,5% 5,5% 7,8% 7,3%
ImportsfromKorea 5,7 1,7 0,1 0,5 1,22002R0311—EN—22.02.2002—000.001—9
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ImportsintotheCommu-
nity(millionsofunits)and
marketshare(%)1995 1996 1997 1998 IP
MarketshareKorea 0,5% 0,2% 0% 0,2% 0,2%
TotalimportsfromHong
KongandKorea94,7 73,7 54,8 62,6 48,4
Totalmarketshareof
HongKongandKorea7,3% 6,7% 5,5% 7,8% 7,4%
(51)The volume of imports from Hong Kong fell throughout the
analysisperiodfrom89millionunitsin1995to47millionunitsduring the IP.The market share of imports originating in HongKongfellinitially from6,9%in1995to5,5%in1997beforerisingagainin1998,toreach7,3%intheIP.
(52)ThevolumeofimportsfromKoreawasatlowlevelsthroughout
the period analysed, falling from6 m illion units in 1995 to
almostzeroin1997andrisingtojustover1millionunitsduringthe IP. Korean market share remained at negligible levelsthroughouttheanalysisperiod.
Pricebehaviourofexporting producers
(53)The Commission compared average cif prices of imports origi-
nating in Hong Kong and in Korea with sales prices of theCommunityindustryintheCommunity.
(54)The comparison showed, on a weighted average basis, that thepricesoftheimportsoriginatinginHongKongwere5%lower
thanthoseofthesalesoftheCommunityindustryduringtheIP,
andthatthepricesoftheimportsoriginatinginKoreawere14%lowerthanthoseofthesalesoftheCommunity industryduringtheIP.
4.Importsfromotherthirdcountries
(55)During the IP, imports from other countries develop as follow.
They were originating mainly in India and Singapore (5,7 %and8,7%ofmarketsharerespectively).
Importsfromother
countries(inmillionof
units)637,5 237,6 198,4 167,5 190,5
Marketshareimports
fromothercountries49,0% 21,6% 19,8% 20,9% 27,9%
5.SituationoftheCommunityindustry
Production, capacity andcapacity utilisation
(56)TheproductionvolumeoftheCommunityindustrydecreasedby
30%overtheanalysisperiod.Overthesameperiod,therateof
capacity utilisation bythe Community industrydecreased by29
percentagepoints.
1995 1996 1997 1998 UP
Productioninmillionof
units225 208 190 178 157
Index1995=100 100 92 84 79 702002R0311—EN—22.02.2002—000.001—10
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1995 1996 1997 1998 UP
Capacityinmillionof
units234 273 235 240 235
Capacityutilisation 96% 76% 81% 74% 67%
Sales,marketshareandgrowth
(57)SalesmadebytheCommunityindustrydecreasedby31%over
theanalysisperiod.WhilstthetotalCommunityconsumptionfor3,5″microdiskshasdecreasedovertheanalysisperiodby50%,
the Community industry's market share has increased by 6percentagepoints.Thisgainreflectsaconsolidationoftheposi-
tion of the Community industry that was permitted by anti-
dumpingmeasuresinforce.
Salesof3,5 ″microdisksin
theCommunitybythe
Communityindustry1995 1996 1997 1998 IP
Millionsofunits 218 205 187 168 149
Index1995=100 100 94 86 77 69
Percentagemarketshare 17% 19% 19% 21% 23%
Pricedevelopment
(58)Thedevelopment ofprices oftheCommunity industryforsales
to unrelated customers during the analysis period is as follows.
Pricesfellby44%duringtheanalysisperiod.
Developmentofpricesof
3,5″microdisksofthe
Communityindustry1995 1996 1997 1998 IP
Averagepriceperunit
(euro)0,2599 0,2065 0,1796 0,1531 0,1453
Index1995=100 100 79 69 59 56
Inventories
(59)Inventoriesarerelatively stable overtime andtherefore theydo
not add any relevant information as to the situation of theCommunityindustry.
Profitability, returnoninvestments andcashflow
(60)Itwasfoundthatthroughouttheanalysisperiod,theCommunity
industry had recorded financial results (i.e. losses) which were
well below the profit rate deemed appropriate for the Commu-nityindustryin the original investigation. Profitlevels for1995arenotavailableduetoindustryrestructuring.Overallduringtheanalysisperiod,lossesfellfrom-5,57%in1996to-1,75%in
theIP.
(61)Return on investments has been negative during the analysis
period and, in general terms, in line with the trend of profit-ability. Cash flow has slightly improved in line withprofitability.2002R0311—EN—22.02.2002—000.001—11
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Employment,productivity, wages
(62)Between 1995 and the IP, the Community industry reduced its
labourforceby35%from252to163employees.Accordingly,its productivity rose by 9 % during the same period, and total
wages decreased by 23 % (wages per employee increased by
19%).
Investmentsandability toraisecapital
(63)Productionof3,5 ″microdisksiscapitalintensiveandproduction
facilities typically operate 24 hours daily all year round. Aftersome insignificant investments made in 1995 and 1996, therehasbeennonewnetinvestmentinthisindustry.
(64)Thelossesexperiencedduringtheanalysisperiodweresuchthat
nofinancingfornewinvestmentbytheCommunityindustrywas
possibleduringthelastthreeyears.
ExportsbytheCommunityindustry
(65)Theexportsremainedstablebetween2and3%oftotalturnover
overtheanalysisperiod.
Magnitudeofdumpingmarginandrecovery frompastdumping
(66)The situation of the Community industry improved to a certain
extentaftertheimpositionofmeasures,butithasnotcompletely
recoveredfrompastdumpingasevidencedmainlyfromitsweak
financialsituation.
(67)As concerns the impact on the situation of the Communityindustry of the magnitude of the actual margin of dumpingduring the IP, this is not considered a relevant factor in thepresentreviewexamination astheimpositionofdutiesismeanttoremedythedumpingfound.
SubmissionbytheHongKongEconomic andTradeOffice
(68)TheHKETOclaimedthattheCommunityindustryhashadgood
economic resultsduringthe analysisperiod, taking intoaccountthe decrease in demand and that it was not showing any weak-ness. They also claimed that, because of the declining trend inthe volume and value of imports from Hong Kong, it was
doubtfulthattheseimportshadcausedaninjurytotheCommu-
nityindustryandwoulddosointhefuture.
(69)These claims could not be accepted. Indeed, the above analysisdescribes the situation of the Community industry as improvedin a difficult context of declining demand although it is clearlyconcluded that this industry has not completely recovered frompastdumpingfromHongKongandfromothercountriessubject
toanti-dumping measures.Moreover,it mustbeunderlined that
importsfromHongKongcontinuedtobedumpedasconcludedatrecital25andthatHongKongwasthelargestsuppliertotheCommunityduringtheIP,withamarketshareofmorethan7%.Finally, it must be stressed that, in the context of an expiryreview, it isnecessary to establish whether there isa likelihood
ofrecurrenceofinjuryshouldmeasuresexpire.
Conclusions
(70)TheoverallpicturethatemergesofthesituationoftheCommu-
nity industry fromthe foregoing is that of an industry still in aweak situation, despite an improved market share and asuccessful effort at significantly reducing costs of production
(reduced by 40 % over the period examined). Production
methods have been modernised and facilities are now almostentirely automated in order to improve efficiency, maintainmarket share and maximise profits. However, the Communityindustry has not yet been able to reach a satisfactory financialsituation.2002R0311—EN—22.02.2002—000.001—12
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E.LIKELIHOOD OF CONTINUATION AND/OR RECURRENCE
OFINJURY
(71)It is recalled that it was concluded at recitals 33 and 37 that a
likelihood of a recurrence of dumping in significant volumes
existedforbothHongKongandKorea.
(72)It was concluded above that the Community industry was in avulnerablesituationduringtheIP.
(73)Should measures expire, dumped imports from Hong Kong andKorea are likely to push down the prices of the Communityindustrywhicharealreadydepressed.
(74)In such conditions, the Community industry, already loss-making,wouldnotbeabletocompetewithhighquantitiessoldat such low prices because firstly, a difference in prices in this
market (microdisks are a commodity-like product) leads to
immediatesubstitutioninsuppliesandsecondly,theCommunityindustryhasalreadymadeallthenecessaryeffortstorestructureitself and is already operating at very low costs. It is thereforelikely that the Community industry would see a further dete-
rioration of its financial situation bringing its very survival into
question.
(75)Inthelightoftheabovefindingsitisconcludedthattheexpiryofthemeasureswouldbelikelytoleadtoacontinuationand/orrecurrenceofinjuryfortheCommunityindustry.
F.COMMUNITYINTEREST
1.General considerations
(76)TheCommissionexaminedwhetherthemaintenanceoftheanti-
dumping measures on 3,5 ″microdisks would be in the interest
of the Community. It has been found that there is a likelihoodof continuation and/or recurrence of injurious dumping. Theinvestigation alsoconsidered whetherornotthereareanyover-riding interests against maintaining the measures and also took
account of the past effects of duties on all the various interests
involved.
(77)Itshouldberecalledthat,inthepreviousinvestigation,theadop-tionofmeasureswasconsiderednottobeagainsttheinterestofthe Community. It should also be noted that, since this is anexpiry review investigation, this investigation should also showtheimpactoftheexistingmeasuresinparticularonusers,consu-
mersandtraders.
2.InterestsoftheCommunityindustry
(78)In view of the conclusions on the situation of the Community
industry set out at recital 68,especially in terms ofits negativeprofitability, the Commission considers that, in the absence ofmeasures against injurious dumping, the Community industry is
likelytoexperienceaworseningofitsfinancialsituation.
(79)TheCommunity industryisviable andcapable ofsupplyingthe
marketforaproductwhich,althoughatamaturestageofitslifecycle,constitutesthebasicstoragedeviceforalargenumberofcomputer users. Indeed, the Community industry has shown awillingness to maintain a competitive presence on the Commu-nitymarket.Examplesofsuchstepstakenare:
(a) keepingpricesataminimumtomaintainitsmarketshare;
(b) progressiontowardsgreaterconsolidation;
(c) closureofmanufacturingunits;
(d) widespread use of modern production techniques (e.g.
increasedmechanisationandcomputerisation);
(e) improvementsinproductivity;2002R0311—EN—22.02.2002—000.001—13
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(f) investing in production of other digital storage media
products.
(80)Itisalsotobenotedthattheproductionofdatastoragemediaisan area of technological importance for the Community as awhole.TheproductiontechnologyandexperiencegainedbytheCommunityindustryin3,5 ″microdiskproductionhasprovided,
andwillcontinuetoprovide,abasisforfurtherinnovationinthe
manufacture of other related data storage media products. For
the Community industry, remaining viable in the microdisksector is the economic basis for participating in the growingmarketofotherstoragemedia.
3.Interestsofunrelatedimporters/traders
(81)Onlyoneunrelatedimportercooperatedwiththeinvestigation.It
stated that imports were restricted by the existence of anti-
dumpingduties.However,itwasobviousthatimportswerestill
possible for this importer. Should measures be maintained, thiscompanywouldstillbeabletosource3,5 ″microdisksfromthe
countries concerned and fromother third countries, includingcountriesnotsubjecttoanti-dumpingmeasures.
(82)Furthermore, the limited cooperation of importer in this caseleads to the conclusion that the measures in force on importsoriginating in Hong Kong and Korea did not have any signifi-cant impact on the situation of unrelated importers and tradersof3,5″microdisksintheCommunity.
(83)Therefore, it is concluded that the continuation of the measures
is not likely to affect the situation of unrelated importers andtradersof3,5 ″microdisksintheCommunity.
4.Interestsofcomponentsuppliers
(84)Any further shrinking and/or deterioration of the Community
industrywouldnotonlyhavenegative implications foremploy-
mentandinvestmentintheindustryitselfbutmayhaveaknock-
on effect among the industry's suppliers of inter alia, shells,
cookies,shutters,hubs,linersandsprings.
(85)The Community producers source the large majority of their
materialsandcomponentsfromsupplierslocatedintheCommu-
nity. Therefore, the continuation of the anti-dumping measureswould clearly be in the interest of the Community componentsupplierindustry.
5.Interestsofusersandconsumers
(86)Major users of 3,5 ″microdisks include duplicators and final
consumers. Neither sector has made representations in this
review investigation. The Commission, therefore, considers that
the findingsof the original investigation in thiscontext are stillapplicable, i.e. the increase in costs applicable to this sectorwhencompared tooverall costscanbeconsidered asnegligibleandwouldhaveverylittleornoimpactonpricestoretailconsu-
mers.
(87)On the contrary the expiry of the measures would seriously
threaten the viability oftheCommunity industry,the disappear-ance of which would reduce supply and competition, to thedetrimentofduplicatorsandconsumers.
6.Conclusion
(88)After weighing the interests of the various parties involved, the
Commission concludes that there are no compelling reasons ofCommunityinterestagainstthecontinuationofmeasures.
(89)Due to the long duration of the investigation, it is consideredappropriatethatthemeasuresbelimitedtofouryears.2002R0311—EN—22.02.2002—000.001—14
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G.PROPOSEDDUTIES
(90)Theanti-dumping dutiesimposed byRegulation (EC)No2199/
94shouldbemaintainedatexistinglevels,i.e.:
Country Company Duty
HongKong JackinMagneticCo.Ltd 7,2%
Plantron(HK)Ltd 6,7%
TechnosourceIndustrial
Ltd13,3%
Allothercompanies 27,4%
RepublicofKorea Allcompanies 8,1%
HASADOPTEDTHISREGULATION:
Article 1
1. A definitive anti-dumping duty is hereby imposed on imports of
3,5″microdisks used to record and store encoded digital computer
information falling within CN code ex 85232090 (TARIC code85232090*40) and originating in Hong Kong and the Republic of
Korea,withtheexceptionof3,5 ″microdisksbasedonopticallycontin-
uous servo tracking technology or magnetic sector servo trackingtechnologywithastoragecapacityof120MBormore.
2. The rate of definitive anti-dumping duty applicable to the net,
free-at-Community-frontier price before duty, shall be as follows fortheproductsmanufacturedby:
Country Company RateofADdutyTARICadditional
code
HongKong JackinMagneticCoLtd. 7,2% 8775
Plantron(HK)Ltd. 6,7% 8776TechnosourceIndustrialLtd 13,3% 8778
Allotherexportingproducers 27,4% 8999
RepublicofKorea Allexportingproducers 8,1% —
Article 2
Unlessotherwisespecified,theprovisionsinforceconcerningcustoms
dutiesshallapply.
Article 3
The anti-dumping duties shall be imposed for a period of four years
fromthedateofentryintoforceofthisRegulation.
Article 4
This Regulation shall enter into force on the day following that of its
publicationinthe Official JournaloftheEuropeanCommunities .
ThisRegulation shallbebindinginitsentirety anddirectly applicable
inallMemberStates.2002R0311—EN—22.02.2002—000.001—15
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