COMMISSION REGULATION (EC) No 773/98 of 7 April 1998 imposing a provisional anti-dumping duty on imports of certain unbleached cotton fabrics originating in the People's Republic of China, Egypt, India, Indonesia, Pakistan and Turkey

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

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 the European Community (1), as amended by Regulation (EC) No 2331/96 (2), and in particular Article 7(1) thereof,

After consulting the Advisory Committee,

Whereas:

A. PROCEDURE

(1) On 11 July 1997, the Commission announced by a notice published in the Official Journal of the European Communities (3), hereinafter referred to as the 'notice of initiation`, the initiation of an anti-dumping proceeding with regard to imports into the Community of certain unbleached cotton fabrics originating in the People's Republic of China, Egypt, India, Indonesia, Pakistan and Turkey and commenced an investigation.

(2) The proceeding was initiated as a result of a complaint lodged by the Cotton and Allied Textile Industries of the EU (Eurocoton) on behalf of Community producers representing a major proportion of Community production of the like product. In this respect, references to 'Community production` relate to production destined for the non-captive market of the product concerned.

(3) The non-captive market of the product concerned is that constituted by open-market sales of unbleached cotton fabrics, that is by Community weavers' sales to independent buyers. In contrast, the captive market is constituted by those transactions that take place within the scope of an integrated group, that is where they weave unbleached cotton and, in a further production step, finish and/or make up the cloth.

It is the practice of the Community institutions, as confirmed by the Court of Justice, to exclude from the analysis of injury sales on the captive market when a clear separation exists between both the captive and the free market. Since the captive production is not sold on the free market, it does not compete directly with imports of the like product.

In those instances, since the analysis of injury relates to the Community industry as defined according to Article 4 of Regulation (EC) No 384/96 (hereinafter referred to as the 'Basic Regulation`), that is to say excluding the sales on the captive market, and since Article 4 refers to Article 5(4) which establishes the rules on standing, it follows that the requirement concerning standing must also be assessed by reference to production sold on the free market.

The complaint contained sufficient evidence of dumping of the product originating in the countries indicated above, and of material injury resulting therefrom; this evidence was considered sufficient to justify initiating a proceeding.

(4) The Commission officially advised the procedures, exporters and importers known to be concerned, the representatives of the exporting countries, and the complainant, and gave the parties concerned the opportunity to make their views known in writing and to request a hearing within the time limits set out in the notice of initiation.

(5) A number of producers/exporters in the countries concerned and a number of importers made their views known. All interested parties who so requested were granted a hearing.

(6) In view of the large number of Community producers manufacturing the product concerned in the Community and supporting the complaint, and in conformity with Article 17(1) of the Basic Regulation, it was considered appropriate to make use of sampling techniques and send questionnaires to and receive information from a representative sample of Community producers.

(7) In view of the large number of producers/exporters in the exporting countries concerned, sampling was also used and the Commission sent out questionnaires to and received detailed information from a representative sample of producers/exporters.

(8) The number of unrelated importers that made themselves known within the deadlines laid down in the notice of initiation and wished to cooperate was too large to be investigated within the time available. Therefore, the Commission decided to resort to a sample of unrelated importers. Interested unrelated importers were invited to provide information on turnover, purchases and employment relating to both total company and the product concerned for the year 1996 on the basis of which the Commission sampled eight unrelated importers located in the following three Member States, which were considered most representative in terms of volume of imports: the United Kingdom, Germany and Italy. Questionnaires were sent to the sampled unrelated importers. Four responses were received within the time limits.

(9) Interested parties were invited to comment on the sampling and the companies selected were disclosed to those parties. No substantive comments were received from interested parties on this approach.

(10) The following unrelated importers were selected:

- United Kingdom:

- Broome & Wellington,

- Joshua Wardle Ltd,

- Premier Textiles Ltd,

- Claremont Fabrics;

- Germany:

- Itochu Deutschland GmbH,

- KLW Textilvertrieb GmbH,

- G. Koppermann & Co. GmbH;

- Italy:

- New Nicoltex SRL.

(11) The Commission sought and verified all the information it considered necessary for the purpose of a provisional determination of dumping and injury and carried out investigations at the premises of the following companies:

(a) Community producers

- Germany:

- Ettlin Gesellschaft für Spinnerei und Weberei AG,

- Velener Textilwerke Grimmelt Wevers & Co. GmbH,

- H. Hecking Söhne,

- F. A. Kümpers GmbH & Co.;

- Italy:

- Tessiture Niggeler & Küpfer SpA,

- Standartela SpA;

- France:

- Éts des Fils de V. Perrin,

- Tenthorey,

- SA HGP GAT,

- Fil. et Tis. de Saulxures;

- Spain:

- Hilados y Tejidos Puigneró, SA;

- Portugal:

- Incotex-Indústria e Comércio de Têxteis, Lda;

- Belgium:

- Le Compte Textielfabrieken NV;

(b) Producers/Exporters

- Egypt:

- Misr Spinning and Weaving Co., Mehalla el-Kubra,

- Misr Fine Spinning and Weaving Co., Kafr el-Dawar,

- Misr El Amria Spinning and Weaving Co., Alexandria;

- India:

- Century Textiles & Industries Ltd, Bombay,

- Mafatlal Industries Limited, Bombay,

- Coats Viyella India Ltd, Bangalore,

- Vardhman Spinning & General Mills Ltd, Ludhiana,

- Virudhunagar Textile Mills Ltd;

- Indonesia:

- PT Argo Pantes, Jakarta,

- PT Daya Manunggal, Jakarta,

- PT Eratex, Jakarta,

- PT Apac Inti Corpora, Jakarta,

- PT Eratex Djaja, Surabaya;

- Pakistan:

- Lucky Textile Mills, Karachi,

- Diamond Fabrics Ltd, Sheikhupura, Lahore,

- Nishat Mills Ltd, Faisalabad,

- Kohinoor Raiwind Mills Ltd, Lahore,

- Kohinoor Weaving Mills Ltd, Lahore;

- Turkey:

- Birlik Mensucat Ticaret ve Sanayi Isletmesi AS Kayseri ('Birlik Mensucat`), Kayseri,

- Söktas Pamuk ve Tarim Ürünlerini Degerlendirme Ticaret ve Sanayi AS ('Söktas`), Söke,

- Tureks,

- Teksmobili,

- Alfa.

(12) The investigation period for the determination of dumping was from 1 January 1996 to 30 June 1997. The examination of injury covers the period from 1 January 1993 to 30 June 1997.

B. PRODUCT

1. Product under consideration

(13) The proceeding covers flat unbleached cotton fabrics containing at least 85 % cotton, that is those fabrics composed of cotton obtained from orthogonal interlacing, on plane looms, of textile yarns, and destined primarily for use in the clothing, linen and furniture industries, currently classifiable under CN codes 5208 11 90 to 5208 19 and 5209 11 to 5209 19.

(14) This product is produced in a great variety of types or constructions, according to a combination of the count (weight) of the yarn used, the number of threads used in both warp and weft and the way yarns are interlaced.

(15) All types of the product under consideration are produced basically on the same machinery and all of them can generally be produced to order.

(16) Several requests have been presented for the exclusion of certain types of unbleached cotton fabrics from the scope of the proceeding. These requests make reference to specific uses and specific constructions, some of which are allegedly not manufactured in the Community. They include fabrics made of ring-spun (conventional) yarn, handloom fabrics, jacquard and stretch fabrics, fabrics for embroidery and fabrics weighing under 100 gr/m2.

(a) Cotton fabrics manufactured with ring-spun yarn

(17) Some parties have claimed that fabrics made of ring-spun yarn should be considered a different product from those fabrics made from open-end yarn, in view of their different resistance. It was also argued that since there existed no Community production of fabrics made of ring-spun yarn, those fabrics should be excluded from the scope of the proceeding.

(18) The Commission found, however, that the essential characteristics and uses both of fabrics made of ring-spun yarn and fabrics made of open-end yarn remain the same, since the difference in resistance cannot be considered significant. In addition, information received from the sampled Community producers shows that there is production of fabrics made of ring-spun yarn in the Community. This has been confirmed by the spinners participating in the Community interest investigation, 50 % of which spin ring-spun yarn. The exclusion of fabrics made of ring-spun yarn from the scope of the proceeding cannot, therefore, at this stage, be accepted.

(b) Handloom cotton fabrics

(19) Handloom fabrics are those woven on looms operated purely by hand or foot. Although the use of different production methods is not in itself relevant to the definition of a product, handloom fabrics have physical characteristics different from those of other unbleached cotton fabrics, notably as a result of a less regular and looser weave, as well as a limited width (generally less than 1 metre). This difference leads to a different consumer perception of handloom fabrics reinforced by the fact that such products are often sold through particular sales channels, different from those of Community producers and exporters for their other fabrics.

(20) Consequently the Commission has provisionally concluded that handloom fabrics should be excluded from the scope of the proceeding and, therefore, those products should be exempted from the payment of the duties if accompanied by a certificate of handloom origin issued by the appropriate authorities of the exporting country.

(c) Jacquard and stretch cotton fabrics

(21) Some parties claimed that jacquard and stretch fabrics should be considered a different product. The two particular constructions ('jacquard` and 'stretch`) were analysed and found to contain at least 85 % cotton. They were therefore considered to be covered by the proceeding.

(d) Unbleached cotton fabrics used for embroidery

(22) Furthermore, it was claimed that unbleached cotton fabrics used for the purpose of embroidery should be excluded from the scope of the proceeding, because of their specific characteristics and their particular use. The Commission has provisionally found that most embroiderers use fabrics which weigh less than 100g/m2, fall under a specific CN code and are similar to gauze. Gauze is not covered by the complaint on the basis of which the current proceeding has been initiated. It should be noted that gauze is used for medical purposes only, whereas unbleached cotton fabrics weighing less than 100g/m2 can also be used for purposes other than embroidery. Given this apparent interchangeability of use, it is provisionally considered that the essential physical characteristics of unbleached cotton fabrics used for embroidery cannot be considered so different from cloth used for other purposes as to justify exclusion from the scope of the proceeding. This issue will be further investigated.

(e) Unbleached cotton fabrics weighing under 100 g/m2

(23) It was claimed that fabrics weighing under 100 g/m2 should be excluded from the scope of the proceeding, since they are similar to gauze. The Commission has provisionally concluded that, since the essential physical characteristics and general use remain the same, as compared with unbleached cotton fabrics weighing more than 100 g/m2, it does not seem possible to exclude this product from the scope of the proceeding. This issue will be further investigated.

(f) Other requests for exclusion

(24) Other requests for exclusion from the scope of this proceeding were either insufficiently substantiated or are covered by the definition of the product under consideration, in view of their essential physical characteristics, general use and consumer perception.

2. Like product

(25) The Commission found that the unbleached cotton fabrics produced by the Community industry and sold on the Community market were similar or comparable to the unbleached cotton fabrics produced in the countries concerned and exported to the Community and those sold on their domestic markets (4).

(26) Some parties claimed that the unbleached cotton fabrics manufactured and sold by the Community industry are not comparable to those produced and exported to the Community by the exporting countries concerned. Imports from the countries concerned allegedly consist of basic commodity constructions, of a low quality, whereas those manufactured in the Community are allegedly specialised and sophisticated products.

(27) In this respect, it should be recalled that is the standard practice of the Commission to consider that differences in the quality of a product, where the basic characteristics are similar, are not normally an element that determines the existence or not of a like product.

(28) Moreover, the constructions manufactured and/or offered by the Community industry seem to correspond largely to the ones imported from the countries concerned. For this reason it does not, at the present stage, seem possible to conclude that the Community manufactured products are substantially different from the products imported from the countries concerned. However, the matter will be further investigated.

(29) Accordingly, the Commission has concluded that unbleached cotton fabrics exported from the People's Republic of China, India, Indonesia, Egypt, Pakistan and Turkey are like products to the unbleached cotton fabrics manufactured in the Community by Community producers, within the meaning of Article 1(4) of the Basic Regulation.

C. DUMPING

1. Exporters and producers in the countries of origin

(a) Sampling

(30) In view of the large number of exporters in the countries concerned, the Commission decided to apply sampling techniques in accordance with Article 17 of the Basic Regulation.

(31) In order to enable the Commission to select a sample, exporters and representatives acting on their behalf were requested to make themselves known within three weeks of the initiation and to provide some basic information on their domestic and export turnover for the period of investigation. The authorities of the countries concerned were contacted by the Commission.

(b) Cooperating companies

(32) For each country, the list of the cooperating companies not selected in the sample is given in Annex I.

(33) The companies listed in Annex I were informed that the average dumping margin and anti-dumping duty, if any, of the sample for each country, weighted on the basis of the export turnover to the Community, would be attributed to them, except for China and Egypt, where a single margin was calculated for all exporters.

(c) Selection of the sample

(34) For the People's Republic of China, Egypt, Indonesia, Turkey and Pakistan, the choice of the sample was made in agreement with the representatives of the companies, associations and/or governments concerned.

(35) Indonesian exporters did not want a reserve company (a company which replaces a selected company when the latter subsequently fails to co-operate sufficiently with the Commission) and were informed that this did not constitute a problem as long as the companies in the main sample did cooperate sufficiently.

(36) No agreement could be reached with Indian exporters which refused to agree to the inclusion of their largest exporter in the sample. The Commission, consequently, accepted the selected exporters proposed by Indian exporters but included their largest exporter in the definitive sample.

(37) The companies selected in the sample which fully cooperated with the investigation received their own dumping margin and individual duty rate. When two related companies are part of the sample, a common dumping margin, resulting from a weighted average of their individual dumping margins, is applied. When only one of several related companies is selected, the dumping margin of this company is applied to the cooperating related companies.

(38) The Commission selected reserve companies for Egypt, India and Pakistan. The companies which were included in the sample only as reserves were informed that, although they would have to reply to the Commission's questionnaire, their reply would not be examined unless the non-cooperation of one or more companies selected in the sample would make it no longer representative. They were also informed that they would receive the average dumping margin and average anti-dumping duty rate, if any, of the sample for each country unless they were selected to replace a company in the sample, in which case they would have their own duty rate.

(39) Concerning Indonesia, one company, PT Tyfountex, which had been selected to form the reserve sample, refused to be included in the reserve sample and was subsequently informed that it would be considered as a non-cooperating party.

(40) The Commission sent questionnaires to the following companies finally selected in the sample:

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(d) Individual examination within the context of sampling

(41) The Commission's services received nine requests for individual examination within the deadlines, five of which were accompanied by a reply to the questionnaire, as required by Article 17(3) of the Basic Regulation.

(42) After reviewing the requests and having regard to Article 17(3) of the Basic Regulation, the Commission came to the conclusion that it was not in a position to grant individual examination in the present proceeding. This decision was motivated by the fact that the increased workload resulting from the individual examination requests would not allow the Commission to complete its investigation within the statutory time limit now set by the Basic Regulation. The companies concerned were informed accordingly and were invited to provide their comments.

(43) Companies which filed a complete reply to the questionnaire within 37 days from initiation, or came forward within the three weeks set for the selection of the sample, but whose request for individual examination was rejected, were considered to be cooperating and were attributed the average dumping margin and anti-dumping duty rate established for the sample.

2. Methodology

(a) Companies forming part of the same group

(44) It has been the consistent practice of the Commission to consider related companies, or companies belonging to the same group, as one single entity, and to establish, therefore, one single dumping margin. Calculating individual dumping margins might encourage circumvention of anti-dumping measures (thus rendering them ineffective) by enabling related producers to channel their exports to the Community through the company with the lowest dumping margin. The dumping margin found for a sampled company forming part of a group was therefore applied to the non-sampled companies of the same group involved in the production and sale of the product concerned.

(45) Also in accordance with this principle, two sampled companies located in Indonesia belonging to the same group were regarded as one single entity. Two sampled related companies located in Pakistan were regarded as one single entity as well.

(b) Normal value

(i) Representativeness

(46) The Commission first examined whether the domestic sales of grey cotton fabrics by each company were representative. This was the case when the total volume of such sales was greater than or equal to 5 % of the total volume of export sales to the Community.

(ii) Type comparability

(47) Due to the great number of types of the product in question, grey cotton fabrics produced in the countries concerned were classified by a 'product control number` according to their construction. Each product control number gave information about the count (or weight) of the yarn and the number of threads, for both warp and weft. It also gave information about the construction of the fabric. Finally, it showed whether the type was exported or sold domestically, as well as the intended use of the product (dyeing, pocketing, printing) according to its quality.

(48) Since there were no differences in the basic characteristics of the different types and qualities of grey cotton fabrics, the Commission found that domestic and export types were like products within the meaning of Article 1(4) of the Basic Regulation and could be compared wherever their control number was the same. Following this reasoning, comparisons could be made between types sold on the domestic market in India and types exported by Chinese companies.

(49) The Commission therefore, found that domestic and export types which had the same product control number were comparable products.

(iii) Type specific representativeness

(50) Domestic sales of a particular type were considered sufficiently representative when the volume of grey cotton fabrics of that type sold on the domestic market during the investigation period represented 5 % or more of the volume of grey cotton fabrics of the comparable type sold for export to the Community.

(iv) Ordinary course of trade test

(51) The Commission subsequently examined whether the domestic sales of each type could be regarded as being made in the ordinary course of trade, by looking at the proportion of profitable sales of the type in question:

- in cases where the volume of grey cotton fabrics sold at a net sales price equal to or above the calculated cost of production represented more than 80 % of the total sales volume, the normal value for this type was established as a weighted average price of all domestic sales transactions during the investigation period, whether profitable or not,

- in cases where the volume of grey cotton fabrics sold at a net sales price equal to or above the calculated cost of production represented less than 80 % but more than 10 % of the total sales volume, the normal value for this type was established on the basis of a weighted average price of profitable domestic sales transactions only,

- in cases where the volume of grey cotton fabrics sold at a net sales price equal to or above the calculated cost of production represented less than 10 % of the total sales volume, it was considered that the type was not sold in the ordinary course of trade and that the domestic price did not provide an appropriate basis for establishing normal value.

(v) Normal value based on actual domestic price

(52) When the requirements set out above were met, normal value was based for each type on the basis of the prices paid or payable, in the ordinary course of trade, by independent customers in the domestic market of the exporting country as set out in Article 2(1) of the Basic Regulation.

(vi) Normal value based on constructed value

(53) In cases where domestic prices did not provide an appropriate basis for establishing normal value, the latter was based on constructed value.

(54) Due to the number of different types and the great variety of factors to be considered when assessing one particular type produced by one particular company (for example origin, mix of raw cotton and type of loom used), constructed normal value was consistently chosen in preference to the domestic prices of another producer.

(55) The constructed value was determined by adding to the manufacturing costs of the exported types, duly adjusted when the actual costs differed from those reported, a reasonable percentage for selling, general and administrative (SG & A) expenses and a reasonable margin for profit.

(56) For this purpose, the Commission services examined whether the SG & A expenses incurred and the profit realised by each of the producers concerned on the domestic market could be used within the terms of the Basic Regulation:

- actual domestic SG & A expenses incurred by the domestic sales of the like product were used when the domestic sales volume of the company concerned could be regarded as representative. Where this criterion was not met, the weighted average of SG & A expenses was used,

- the actual domestic profit margin realised on domestic sales of the like product was used when the volume of grey cotton fabrics sold at a net sales price above the calculated cost of production represented more than 10 % of the total domestic sales volume of the company concerned. Whereas this criterion was not met, use was made of the profit margins weighted average of the other companies which fulfilled that criterion.

(c) Export price

(57) In all cases where exports of grey cotton fabrics were made to independent customers in the Community, the export price was established in accordance with Article 2(8) of the Basic Regulation, that is on the basis of export prices actually paid or payable.

(58) However, in cases where there was no actual export price or when it was considered to be unreliable because the sale was made to a related party, an export price was constructed pursuant to Article 2(9) of the Basic Regulation, that is on the basis of the price at which the imported products were first resold to an independent buyer.

(59) In such cases, adjustments were made for all costs incurred between importation and resale and for profits accruing, in order to establish a reliable export price at the Community frontier level.

(d) Comparison

(60) For the purpose of ensuring a fair comparison between the normal value and the export price, due allowance in the form of adjustments was made for differences affecting price comparability in accordance with Article 2(10) of the Basic Regulation.

(61) Accordingly, allowances for differences in transport, insurance, handling charges, packing costs, credit, discounts and warranty have been granted where applicable and justified.

(e) Dumping margin

(i) Dumping margin for companies investigated

(62) According to Article 2(11) of the Basic Regulation, the weighted average normal value by type, determined as set out in section 2(b), was compared with the weighted average export price, determined as set out in section 2(c). Whenever it was established that there was a pattern of export prices which differed significantly among different purchasers, regions or time periods and that the abovementioned method did not reflect the full degree of dumping, the weighted average normal value was compared with the prices of all individual transactions to the Community.

(ii) Dumping margin for cooperating companies not in the sample

(63) Cooperating companies which were not included in the sample received the average dumping margin of the companies in the sample, weighted on the basis of export turnover to the Community.

(iii) Dumping margin for non-cooperating companies

(64) The level of cooperation ranged from 87 % to 100 % for all the countries concerned, except for Turkey. For those countries with a very high level of cooperation, it was decided to give to non-cooperating companies the margin of the company with the highest dumping margin in the sample. In cases of a single duty for all companies in the sample (China and Egypt), this duty was applied to the non-cooperating companies.

(65) For non-cooperating companies in Turkey, where the level of cooperation did not reach 50 %, a residual dumping margin was determined on the basis of the facts available. Of the company with the highest dumping margin, the type with the highest dumping margin which had representative export sales was identified. The residual dumping margin was determined on the basis of the weighted average margin of this type, expressed as a percentage of the cif import price at the Community border.

3. Indonesia

(a) Level of cooperation

(66) Four companies were selected as the sample. Two of the four companies were related and formed part of the same group.

(67) As a result of the on-the-spot verifications it was found that three of the four companies were either providing misleading information or showed partial non-cooperation which necessitated the application of Article 18 of the Basic Regulation.

(68) The application of Article 18 resulted in the use of the facts available to the Commission for domestic prices, manufacturing costs, export prices and differences in physical characteristics (different grades) which affected prices and price comparability.

(69) The remaining company submitted two substantial modifications to its questionnaire response before the on-the-spot verification. However, during the on-the-spot verification it was found that the final rely to the questionnaire was substantially incorrect which made it impossible to perform a dumping calculation. Since this company was part of a group of companies, the dumping margin was established on the basis of another sampled company belonging to the same group of companies (see section 2(a)).

(b) Impact of Article 18 of the Basic Regulation on the sample

(70) It should be noted that in accordance with Article 17 of the Basic Regulation, sampling was used because of the large number of companies involved in this investigation. The choice of the sample was made in agreement with the representatives of the companies and the association concerned and included the four companies mentioned above.

(71) One company, PT Tyfountex, had been selected as the reserve sample. However, the company refused to be included in the reserve sample and was subsequently informed that it would be considered as a non-cooperating party. Faced with the fact that the Indonesian representatives did not want a reserve sample, the Commission proceeded with the selected sample without having a reserve company. At the same time it was made clear that if full cooperation was not forthcoming from the companies in the sample, at any stage of the proceeding, there would be no possibility to replace the non-cooperating companies in that sample by a reserve company and this could have far reaching implications for all Indonesian companies.

(72) Article 17(4) of the Basic Regulation states that where there is a degree of non-cooperation by all of the parties selected which is likely materially to affect the outcome of the investigation, a new sample may be selected. However, if there is insufficient time to select a new sample, the relevant provisions of Article 18 shall apply.

(73) In view of the fact that it was not possible to select a new sample and conclude the investigation within the time limits and the refusal of any Indonesian company to serve as a reserve sample, the dumping margins for the companies selected in the sample were established on the basis of the facts available. However, in order not to penalise unduly the other producers to which the result of the sampling should apply, it was provisionally decided to use the duty rate mentioned in the complaint (13,5 %, which is the dumping margin found by the Commission in the previous proceeding) as information available for the cooperating companies not included in the sample. In view of the particular situation of the sample selected for provisional measures, the selection of a new sample for definitive measures, if any, is being examined by the Commission.

(c) Normal value

(74) The procedures and methodologies followed by the Commission to assess the normal value of products originating in Indonesia were the same as those set out in section 2(b), except where, in accordance with Article 18, information available was used for certain elements of the normal value.

(i) Normal value based on actual domestic price

(75) On the basis of the method referred to in section 2(b), it was not possible to establish normal value on the basis of the domestic price of comparable types in accordance with Article 2(2) of the Basic Regulation.

(ii) Normal value based on constructed value

(76) For all types of the product concerned sold for export to the Community by the three companies for which a dumping calculation was made, normal value was calculated, in accordance with Article 2(3) of the Basic Regulation, on the basis of constructed value.

(77) This was done by adding the companies' own domestic SG & A expenses and domestic profit margin to the manufacturing cost of the exported types, in accordance with Article 2(6) of the Basic Regulation.

(d) Export price

(78) The procedures and methodologies followed by the Commission in assessing the export of products originating in Indonesia were the same as those set out in section 2(c).

(79) Exports by all the companies in the sample were made to independent importers in the Community. The export prices were established, in accordance with Article 2(8) of the Basic Regulation, by reference to the prices paid or payable for the product concerned sold for export to the Community.

(e) Comparison

(80) For the purpose of ensuring a fair comparison between normal value and export price, due allowance in the form of adjustments was made for differences affecting price comparability in accordance with Article 2(10) of the Basic Regulation.

(81) Accordingly, allowances for differences in transport, handling charges, credit costs, packing and commissions have been granted where applicable and justified.

(i) Allowance for credit costs

(82) An adjustment to normal value was claimed by the three Indonesian exporters/producers in respect of credit costs. However, the investigation revealed that the amounts of credit costs were inflated by applying an artificially high interest rate. An adjustment was therefore only granted on the basis of an interest rate for short-term loans found in the audited accounts of the companies concerned.

(f) Dumping margin

(83) The procedures and methodologies followed by the Commission in assessing the dumping margin of products originating in Indonesia were the same as those set out in section 2(e), except for the cooperating companies not part of the sample.

(i) Dumping margin for companies investigated

(84) The comparison shows the existence of dumping in respect of all the companies in the sample. The dumping margins expressed as a percentage of the free-at-Community-frontier price CIF level are the following:

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(ii) Dumping margin for cooperating companies not in the sample

(85) For cooperating companies not in the sample (see section 2(b)), it was provisionally decided, in accordance with Article 17(4) and Article 18 of the Basic Regulation, to use the information available, which in this case is the dumping margin mentioned in the complaint. Expressed as a percentage of the free-at-Community-frontier price CIF level, the margin is 13,5 %.

(iii) Dumping margin for non-cooperating companies

(86) For non-cooperating companies, the dumping margin was assessed on the basis of the margin of the company with the highest dumping margin in the sample. Expressed as a percentage of the free-at-Community-frontier price CIF level, the margin is 31,8 %.

4. Turkey

(a) Level of cooperation

(87) Five companies provided a reply to the questionnaire for producers/exporters and were investigated.

(88) The investigation revealed that one of those five companies was not a producer but a trader which was buying the product from an independent producer included in the sample in order to export it to the Community. It is the consistent policy of the Commission to calculate anti-dumping margins only for producers. The purchases of this trader were therefore used to establish the anti-dumping margin of the producer concerned.

(89) One of the selected companies did not fully cooperate in the proceeding. It was found that neither the reported costs of manufacturing nor the reported exported quantities were reliable.

(90) Since that company supplied misleading and unreliable information, it was decided to regard the company as a non-cooperating party.

(91) In view of the poor level of representativeness of the selected cooperating companies, the selection of a new sample for definitive measures, if any, is being examined by the Commission.

(b) Normal value

(92) The procedures and methodologies followed by the Commission in assessing the normal value of products originating in Turkey were the same as those set out in section 2(b). Due to high inflation, however, a monthly normal value for each type was calculated for Turkey.

(i) Normal value based on actual domestic price

(93) After assessing the representatives of domestic sales, type comparability and type-specific representativeness, and after performing the ordinary-course-of-trade test, as set out in section 2(b), the Commission calculated monthly normal values on the basis of actual domestic prices (on average for the cooperating companies: one type for the first company, two types for the second company and none for the third company) in accordance with Article 2(2) of the Basic Regulation.

(ii) Normal value based on constructed value

(94) In all other cases, normal value had to be calculated, in accordance with Article 2(3) of the Basic Regulation, on the basis of a constructed value for the products exported to the Community. The constructed normal value was established, as set out in section 2(b), for each month of the period of investigation. Monthly SG & A expenses and a monthly domestic profit margin of two of the three companies were added to the manufacturing costs of the exported types concerned. For the third company, which had no representative domestic sales, in accordance with Article 2(6), normal value was constructed by adding to the manufacturing costs of its exported types the weighted average of the domestic SG & A costs and the domestic profit margin determined for the two companies with representative and profitable domestic sales.

(c) Export price

(95) The procedures and methodologies followed by the Commission in assessing the export price of products originating in Turkey were the same as those set out in section 2(c).

(96) All sales of grey cotton fabrics made by Turkish companies on the Community market were made to independent customers in the Community. Consequently the export price for the companies was established by reference to the prices actually paid or payable.

(d) Comparison

(97) For the purpose of ensuring a fair comparison between the normal value and the export price, due allowance in the form of adjustments was made for differences affecting price comparability in accordance with Article 2(10) of the Basic Regulation.

(98) Accordingly, allowances for differences in transport, packing costs, charges, credit costs and commissions have been granted where applicable and justified.

(i) Allowance for credit costs

(99) An adjustment to normal value was claimed by one Turkish exporter/producer in respect of credit costs linked to payment terms. However, it was found that, although payment terms are indeed stated on the invoice, domestic sales are made on the basis of an open account system. Since no evidence was provided that the payment terms were linked to prices, it was decided not to grant any allowance for credit costs.

(ii) Allowance for currency conversion

(100) One of the companies requested that an allowance be made to account for currency conversion (Article 2(10)(j) of the Basic Regulation) in view of the high inflation rate in Turkey and the corresponding steady currency depreciation.

(101) However, it is considered that the depreciation has already been accounted for by making adjustments by calculating normal value on a monthly basis and using monthly average exchange rates. The claim was therefore rejected.

(e) Dumping margin

(102) The procedures and methodologies followed by the Commission in assessing the dumping margin of products originating in Turkey were the same as those set out in section 2(e).

(i) Dumping margin for companies investigated which cooperated

(103) The comparison shows the existence of dumping in respect of two of the companies in the sample. The dumping margins expressed as a percentage of the free-at-Community-frontier price CIF level are the following:

>TABLE>

(ii) Dumping margin for cooperating companies not in the sample

(104) Cooperating companies (see sections 1(b) and 1(d)) receive the average dumping margin of the sample. Since the dumping margin found for Teksmobili was below 2 %, its dumping margin was not taken into consideration for establishing the average dumping margin of the sample. Expressed as a percentage of the free-at-Communty-frontier price CIF level, the margin is 11 %.

(iii) Dumping margin for non-cooperating companies

(105) In view of the low level of cooperation of Turkey, the dumping margin of all the other non-cooperating companies was assessed on the basis of the best information available (see section 2(e)).

(106) Expressed as a percentage of the free-at-Community-frontier price CIF level, the margin is 14,29 %.

5. Egypt

(107) Three companies were investigated in Egypt. Due to the fact that the three investigated companies were directly or indirectly State-owned and managed by the Government, it was decided to treat those companies as a group. Therefore, no individual dumping margins and duty rates were attributed. A distinction was only made between cooperating and non-cooperating exporters.

(a) Normal value

(108) The procedures and methodologies followed by the Commission in assessing normal value were the same as those set out in section 2(b).

(i) Normal value based on actual domestic price

(109) After assessing representativeness of domestic sales, type comparability and type specific representativeness, and after performing the ordinary-course-of-trade test, as set out in section 2(b), the Commission concluded that, in the case of one company, normal value for seven types could be based on actual domestic price, in accordance with Article 2(2) of the Basic Regulation.

(ii) Normal value based on constructed value

(110) For all other types sold for export to the Community by the one company mentioned in section 5(a), and all types sold for export to the Community by the other two companies, the normal value had to be calculated, in accordance with Article 2(3) of the Basic Regulation, on the basis of a constructed value for the products exported to the Community. The constructed normal value per type was established as set out in section 2(b).

(111) Since only one company had sufficient profitable sales of the product concerned during the investigation period, it was decided to use the profit margin of that company and to apply it to the other two companies in order to construct normal value. Therefore, for the first company the constructed normal value was based on manufacturing costs plus its own SG & A costs and profit margin. For the other two companies, their own manufacturing and SG & A costs and the profit margin of the company with sufficient profitable domestic sales were used to construct normal value.

(b) Export price

(112) The procedure and methodologies followed by the Commission in assessing the export price of products originating in Egypt were the same as those set out in section 2(c).

(113) All exports of grey cotton fabrics to the Community by the three companies were made directly to independent customers. Consequently, the export price of those companies was established by reference to the prices actually paid or payable to them for the grey cotton fabrics sold, in accordance with Article 2(8) of the Basic Regulation.

(c) Comparison

(114) For the purpose of ensuring a fair comparison between the normal value and the export price, due allowance in the form of adjustments was made for differences affecting price comparability in accordance with Article 2(10) of the Basic Regulation.

(115) Where applicable and justified, adjustments were made for differences in transport and insurance, packing costs, credit costs and commissions.

(i) Allowance for credit cost

(116) All three companies claimed an adjustment for credit costs in respect of normal value. For two companies this claim had to be rejected because it appeared that the payment terms on the domestic market were in fact based on the open account system, that is to say no evidence was provided that the payment terms were linked to prices.

(d) Dumping margin

(i) Method

(117) For the reasons set out in section 2, it was decided to calculate only one dumping margin for all cooperating companies. The procedures for assessing the dumping margin were the same as those set out in section 2(e).

(118) Individual dumping margins were calculated for the three companies investigated and the average, weighted on the basis of export turnover to the Community, applied to all cooperating companies.

(ii) Dumping margin for all cooperating companies whether or not in the sample

(119) The dumping margin for cooperating exporters expressed as a percentage of the free-at-Community-frontier price CIF level is 20,6 %

(iii) Dumping margin for the non-cooperating companies

(120) In view of the high level of cooperation of Egypt, the dumping margin for non-cooperating companies was set at the level of the margin of the company with the highest dumping margin in the sample (see section 2(c)). Expressed as a percentage of the free-at-Community-frontier price CIF level, the margin is the following: 20,6 %.

6. Pakistan

(a) Level of cooperation

(121) Five companies were selected in the sample for Pakistan, as set out in section 1(c) and were investigated. Individual dumping margins were calculated for two non-related companies whereas a weighted average dumping margin was established for two other related companies. The remaining company was regarded as a non-cooperating company and the same margin was applied to it as to the cooperating company with the highest margin (see below).

(122) The three non-related companies and the two related companies selected were part of different groups of companies. In each of these groups there were companies involved, in a varying degree, in the production and sale of the product concerned. For the purpose of provisional determinations, the above-mentioned margins will apply also to the other companies which form part of the same group (see section 2(a)).

(123) Article 18 of the Basic Regulation was applied to one company which had provided misleading information. The dumping margin of that company was consequently not taken into account in determining the average dumping margin for the cooperating companies (see section 2(e)). However, it was found that this had no excessive effect on the representativeness of the sample since the company taken out accounted for less than one third of the exports of the initial sampled companies.

(b) Normal value

(124) The procedures and methodologies followed by the Commission in assessing the normal value of products originating in Pakistan were the same as those set out in section 2(b).

(i) Normal value based on actual domestic price

(125) After assessing the overall representativeness of domestic sales, type comparability and type-specific representativeness, and after performing the ordinary-course-of-trade test, as explained in point 2(b), the Commission found that three companies in the sample had representative domestic sales of the product concerned during the investigation period.

(126) The representative domestic sales of the three companies were found to be in the ordinary course of trade. However, for one company, there was only one type sold domestically which was comparable to the exported types whereas for another company, two types sold domestically were comparable to the exported types. The third company had no comparable type. In those circumstances, the Commission concluded that normal value for Pakistan should be constructed in all cases except for one type for one company and two types for another company, which are based on the prices paid in the ordinary course of trade by independent customers in the exporting country.

(ii) Normal value based on constructed value

(127) For all but three types of the product concerned sold for export to the Community by the four cooperating companies selected, normal value was calculated, in accordance with Article 2(3) of the Basic Regulation, on the basis of constructed value.

(128) In the case of the three companies with domestic sales, this was done by adding the companies' own domestic SG & A expenses and domestic profit margin to the manufacturing cost of the exported types, in accordance with Article 2(6) of the Basic Regulation.

(129) The other cooperating company in the sample did not have domestic sales. In accordance with Article 2(6), normal value for these companies was constructed by adding to the manufacturing costs of their exported types the weighted average of the domestic SG & A costs and the domestic profit margin determined for the three companies with representative and profitable domestic sales.

(c) Export price

(130) The procedures and methodologies followed by the Commission's services to assess the export price of products originating in Pakistan were the same as those set out in section 2(c).

(131) Exports by all the cooperating companies in the sample were made directly to independent importers in the Community. The export prices were established, in accordance with Article 2(8) of the Basic Regulation, by reference to the prices paid or payable for the product concerned sold for export to the Community.

(d) Comparison

(132) For the purpose of ensuring a fair comparison between normal value and export price, due allowance in the form of adjustments was made for differences affecting price comparability in accordance with Article 2(10) of the Basic Regulation.

(133) Accordingly, allowances for differences in transport, handling charges, credit cost and commissions have been granted where applicable and justified.

(i) Allowance for import charges

(134) An adjustment to normal value was claimed by all Pakistani exporters/producers in respect of import charges and duties borne by materials, physically incorporated in the like product when intended for consumption, and refunded on export of the product under consideration pursuant to Pakistani legislation. However, the investigation revealed that the amounts of import charges and duties refunded exceeded the amounts actually included in the cost of raw materials utilised. Therefore, in accordance with Article 2(10)(b) of the Basic Regulation, the adjustment was restricted to the amounts actually included in the cost of the raw materials.

(e) Dumping margin

(135) The procedures and methodologies followed by the Commission in assessing the dumping margin of products originating in Pakistan were the same as those set out in section 2(e).

(i) Dumping margin for cooperating companies investigated

(136) The comparison shows the existence of dumping in respect of all the companies in the sample. The dumping margins expressed as a percentage of the free-at-Community-frontier price CIF level are the following:

>TABLE>

(ii) Dumping margin for cooperating companies not in the sample

(137) Cooperating companies (see sections 1(b) and 1(d)) receive the average dumping margin of the sample. Expressed as a percentage of the free-at-Community-frontier price CIF level, the margin is 19,2 %.

(iii) Dumping margin for non-cooperating companies

(138) In view of the high level of cooperation of Pakistan, the dumping margin for non-cooperating companies was set at the level of the margin of the company with the highest dumping margin in the sample (see section 2(c)). Expressed as a percentage of the free-at-Community frontier price CIF level, the margin is 32,5 %.

7. India

(139) All five companies selected in the sample for India replied to the questionnaire for producers/exporters. The information provided by those companies was verified. Individual dumping margins were calculated for the five companies selected in the sample.

(a) Normal value

(140) The procedures and methodologies followed by the Commission's services to assess the normal value of products originating in India were the same as those set out in section 2(b).

(i) Normal value based on actual domestic price

(141) After assessing representativeness of domestic sales, type comparability and type specific representativeness and after performing the ordinary course of trade test, as set out in section 2(b), the Commission's services concluded that normal value for 23 types of unbleached cotton fabrics sold for export to the Community by the five companies could be based on the actual domestic price of comparable types, in accordance with Article 2(2) of the Basic Regulation.

(ii) Normal value based on constructed value

(142) For all other types sold for export to the Community by the companies, the normal value had to be calculated on the basis of a constructed value for the products exported to the Community, in accordance with Article 2(3) of the Basic Regulation. The constructed value was determined according to the method described in section 2(b).

For three companies having sufficient profitable sales, the constructed normal value was based on their own manufacturing costs plus their own SG & A and their profit margin. For the remaining two companies having insufficient profitable domestic sales, their own manufacturing costs and SG & A expenses plus the weighted average profit margin of the companies with sufficient profitable domestic sales were used to construct normal value. Where necessary, the SG & A expenses as reported were corrected.

(b) Export price

(143) The procedures and methodologies followed by the Commission's services in assessing the export price of products originating in India were the same as those set out in section 2(c).

(144) All five companies in the sample had export sales made directly to independent importers in the Community or had sales to independent parties in India destined for export to the Community. Consequently, the export price of those transactions was established by reference to the prices actually paid or payable by independent importers to the Indian producers for the grey cotton fabrics sold.

(145) One Indian company also sold part of its production to the Community through three related trading companies. The export prices for the products sold via the related companies were reconstructed by reference to the prices actually paid or payable to them by the first independent customer, less a reasonable profit margin and SG & A costs attributed to those companies, in accordance with Article 2(9) of the Basic Regulation. The profit margin was provisionally estimated at 5 % in the absence of any information being made available by independent importers in the Community.

(c) Comparison

(146) For the purpose of ensuring a fair comparison between normal value and export price, due allowance in the form of adjustments was made for differences which were claimed and demonstrated to affect price comparability in accordance with Article 2(10) of the Basic Regulation.

(147) Accordingly, allowances for import charges and indirect taxes, for discounts and rebates, for transport, insurance, handling and ancillary costs, for packing, for credit, for commissions and for the purchase cost of export licences were made.

(i) Allowance for level of trade

(148) All companies claimed an adjustment for an alleged difference in the level of trade of their exports and domestic sales. The claims were made on the ground that they sold mainly to distributors on the Community market, and mainly to end-users on their domestic market, and that the volume of the average transaction on the domestic market was smaller than to the Community. One company claimed also that all deductions made for SG & A expenses incurred by its related importers deducted from the export price to the first unrelated buyer when constructing the export price should be automatically granted as an allowance for level of trade on normal value. However, none of the companies was able to demonstrate a consistent difference in price levels according to the alleged different levels of trade. In view of the above, no adjustment was granted for level of trade.

(ii) Allowance for import charges

(149) All Indian companies claimed an adjustment for indirect taxes borne by the like product and by materials physically incorporated therein, when intended for consumption in India and refunded in respect of the products exported to the Community. As those claims were based on the amounts refunded on the export sales rather than on the amounts borne by the product when intended for consumption in India, the adjustments claimed were reduced accordingly.

(iii) Allowance for currency conversion

(150) All Indian companies claimed that the Commission should depart from its normal practice and use the exchange rates of forward foreign currency sales rather than the exchange rates on the date of invoice. As no direct link between the sales of foreign currencies and the export sales involved existed, the Commission used the exchange rates on the date of invoice.

(iv) Allowance for other factors affecting price comparability

(151) On the basis of Article 2(10)(k), three Indian companies claimed an adjustment for advertisement and publicity and two companies claimed an adjustment for salesmen's salaries. Since none of the companies was able to show that those factors affect price comparability, those claims were rejected.

(d) Dumping margin

(i) Method

(152) The procedures and methodologies followed by the Commission's services in assessing the dumping margin of products originating in India were the same as those set out in section 2(e).

(153) For two Indian companies, the calculations were based on a comparison of weighted average normal values with weighted average export prices. For the other companies, the weighted average normal value was compared with the prices of each individual transaction to the Community.

(ii) Dumping margin for companies investigated

(154) The comparison shows the existence of dumping in respect of all the companies in the sample. The dumping margins expressed as a percentage of the import free-at Community frontier price CIF level are the following:

>TABLE>

(iii) Dumping margin for cooperating companies not in the sample

(155) Cooperating companies (see sections 1(b) and 1(d)) receive the weighted average dumping margin of the sample. Expressed as a percentage of free-at-Community-frontier price CIF level, the margin is 13,2 %.

(iv) Dumping margin for non-cooperating companies

(156) In view of the high level of cooperation of India, the dumping margin for non-cooperating companies was set at the level of the margin of the company with the highest dumping margin in the sample (see section 2(e)). Expressed as a percentage of the free-at-Community-frontier price CIF level, the margin is 16,9 %.

8. People's Republic of China

(157) Since China is not a market-economy country, it was necessary to compare the export prices of the Chinese exporters with the domestic prices or costs of production of a third market-economy country. India was proposed by the complainant. Since it is the largest exporter with the highest number of producers, and since no substantiated evidence in favour of another analogue country was put forward by the interested parties, India was chosen by the Commission as an appropriate market-economy third country for the purpose of establishing normal value, in accordance with Article 2(7) of the Basic Regulation.

(158) Three exporters were selected in the sample for China and were sent a questionnaire. They were State-owned organisations.

(a) Individual treatment

(159) All three sampled exporters requested that individual dumping margins be established in their regard, claiming that they enjoyed full autonomy and were responsible for their profits and losses.

(160) Following established practice with respect to exports from a State trading country, individual treatment can be applied solely in cases where the exporter concerned has provided evidence that it operates outside the influence of the national authorities and according to market economy conditions. In the present proceeding no evidence to this effect was submitted. In those circumstances, it was decided that individual dumping margins were not appropriate and that a single dumping margin had to be established on the basis of the weighted average (according to export turnover to the Community) of the dumping margins of the sample.

(b) Normal value

(161) Normal value for the Chinese exporters was calculated on the basis of the normal values established for the co-operating Indian companies (see section 7(a)). In this context, the Indian types used were those sold on the domestic market which were found to have the same construction number (see also section 2(b)) as the Chinese types exported to the Community. In view of the difficulties in finding a representative quantity of comparable types, the Commission used normal values of all Indian exporters, that is those selected in the main sample.

(c) Export price

(162) The procedures and methodologies followed by the Commission in assessing the export price of products originating in China were the same as those set out in section 2(c).

(163) One of the companies had a related importer based in Germany, which dealt with part of their exports to the Community. For the transactions made through the related importer the export prices were constructed on the basis of the price paid or payable by the first independent customer for the product concerned, less the SG & A costs and a reasonable amount for profit, in accordance with Article 2(9) of the Basic Regulation. The profit margin was provisionally estimated at 5 % on turnover.

(d) Comparison

(164) For the purpose of ensuring a fair comparison between the normal value and the export price, due allowance in the form of adjustments was made for differences affecting price comparability in accordance with Article 2(10) of the Basic Regulation.

(165) Where applicable, adjustments were made on the export price to take account of credit costs, transport, packing and commission.

(166) On the normal value side, all allowances granted to the Indian exporters (see section 7(c)) were also deducted in the case of China.

(e) Dumping margin

(167) Weighted average normal value by type, as determined for India under section 7(a), was compared with the export price, as determined under section 8(c), both adjusted in accordance with section 8(d). The methodology applied was that described in section 2(e).

(i) Dumping margin for China

(168) The comparison, as described in section 8(d), shows the existence of dumping in respect of the three Chinese producers. In the absence of individual treatment for any of the companies concerned, a single dumping margin was calculated for China, which is the average of the margins found for the three companies, weighted on export turnover. The dumping margin expressed as a percentage of the CIF import price at the Community border is 15,7 %.

9. Dumping margins

>TABLE>

D. COMMUNITY INDUSTRY

(169) In view of the large number of producers supporting the complaint (hereinafter called the 'Community industry`) and wishing to cooperate with the Commission, the Commission decided to investigate injury on the basis of a sample of Community producers which could reasonably be investigated within the time available. In the notice of initiation it was announced that the sample used in the previous proceeding would be the basis for the selection. In order to select the sample, the Commission requested the complainant to present company-specific production and sales data of the product concerned for the year 1996.

(170) On the basis of that information the Commission selected 14 companies, representing 7 Member States, to which questionnaires were addressed. In the selection, the following criteria were considered: number of companies per country, according to the relative importance of the country; main producing Member States; various company sizes and production structures. The companies included in the sample represented around 52 % of total Community production of the product concerned during the investigation period.

(171) Parties concerned which, following the notice of initiation, had expressed their wish to be consulted by the Commission on the final selection of the sample were thus given disclosure of the sampled companies and of the methodology used for their selection.

The following producers were selected for the sample:

Germany:

- Ettlin Gesellschaft für Spinnerei und Weberei AG,

- Velener Textilwerke Grimmelt Wevers & Co. GmbH,

- Hecking Söhne,

- A. Kümpers GmbH & Co;

Italy:

- Tessiture Niggeler & Küpfer SpA,

- Standartela SpA;

France:

- Éts. des Fils de V. Perrin,

- Tenthorey,

- SA HGP GAT,

- Fil. et Tis. de Saulxures;

Spain:

- Hilados y Tejidos Puigneró, S.A.;

Portugal:

- Incotex - Indústria e Comércio de Têxteis, Lda;

Belgium:

- Le Compte Textielfabrieken NV;

Austria:

- Linz Textil GmbH.

(172) Linz Textil was excluded from the sample due to its inability to provide the requested data, although expressly supporting the proceeding.

E. INJURY

1. Preliminary remark

(173) For the purpose of the analysis of the injury aspects of the case, the Commission analysed data relating to the period from 1 January 1993 to 30 June 1997.

(174) In order to enable yearly comparisons to be made, the respective calendar years 1993 to 1996 have been compared to a period covering July 1996 to June 1997, which for the purpose of the establishment of trends in injury, causation and Community interest analyses is hereinafter referred to as the Injury Investigation Period (IIP).

(175) The geographical scope of the investigation over the period from January 1993 to June 1997 was the current Community of 15 Member States. Injury has been analysed by reference to the non-captive market, since it has been found that a clear separation exists between the captive and non-captive markets for unbleached cotton fabrics in the Community.

2. Community consumption

(176) Between 1993 and 1996 the apparent Community consumption, as calculated by adding the production of Community producers (5) to imports (6) and deducting exports (7), increased by 12,7 %, from around 273 000 tonnes to around 308 000 tonnes. In 1994 consumption amounted to around 312 790 tonnes and in 1995 it amounted to around 282 200 tonnes. In the IIP consumption amounted to around 297 600 tonnes.

3. Cumulative assessment of the effects of the imports concerned

(177) The Commission examined whether imports from all countries concerned should be assessed cumulatively pursuant to Article 3(4) of the Basic Regulation.

(178) In this respect Turkish exporters have argued that exports of unbleached cotton fabrics from Turkey should not be cumulated with the rest of the countries concerned, in view of the decline of exports from Turkey, their decreasing share of the Community market and differences in export prices as compared to the other countries concerned.

(179) Similarly, Egyptian exporters have argued that exports from Egypt should not be cumulated with the rest of the countries concerned, in view of the decrease in their absolute and relative level of exports and their different market behaviour.

(180) The Commission has examined these arguments, taking account of the conditions of Article 3(4) of the Basic Regulation, according to which the effects of imports 'shall be cumulatively assessed only if it is determined that (a) the margin of dumping established in relation to the imports from each country is more than de minimis as defined in Article 9(3) and that the volume of imports from each country is not negligible; and (b) a cumulative assessment of the effects of the imports is appropriate in the light of the conditions of competition between imported products and the conditions between the imported products and the like Community product.` On this basis, the following provisional conclusions have been made:

(a) Turkey

(181) With respect to the dumping margin and the volume of imports, they cannot at this stage be considered de minimis or completely negligible. With respect to the appropriateness of a cumulative assessment in the light of the conditions of competition, the following provisional findings have been made:

Volumes and market shares: between 1993 and the IIP, exports from Turkey have decreased by 40 %, from around 9 300 tonnes in 1993 to around 5 600 tonnes in the IIP. Their share of the Community market has decreased by 44 points between 1993 and the IIP, that is from 3,4 % in 1993 to 1,9 % in the IIP. This trend is confirmed by the export figures of the nine first months of 1997 (3 205 tonnes). This points, on an annual basis, to a further decline of 21 % for 1997 compared to the IIP, representing around 1,5 % share of the Community market. The decrease should be seen in the light of the non-existence of quota restrictions between Turkey and the Community.

Prices: As regards the prices of the product concerned as reported by Eurostat, there was an increase of 9 % between 1993 and 1996. In 1996 Turkish prices were the highest of the countries concerned; between 1996 and the IIP prices increased by a further 1 %. With respect to price undercutting, provisional figures point to an average of 5,6 %. However, the representativeness of the sample on which this figure is based still needs to be further verified (see below). On average, this provisional figure is the lowest of all countries under investigation.

(182) In conclusion, it has been found that there has been a decrease in the volume of imports, a decrease in the share of the Community market as well as a price increase in Turkish imports in the period under investigation. However, the undercutting provisionally established is not insubstantial, even though it is based on a sample the representativeness of which is doubtful. For these reasons, it is provisionally considered appropriate to reject the Turkish request for non-cumulation and to cumulate imports from Turkey with the rest of the countries concerned. Nevertheless, the issue will be further investigated.

(b) Egypt

(183) Imports from Egypt have remained fairly stable at around 13 000 tonnes between 1993 and 1996. Between 1996 and the IIP there was an increase in imports from 12 800 to 14 600 tonnes, that is 14 %. Furthermore, their share of the Community market has remained stable at around 5 %.

(184) It has also been found that imports of unbleached cotton fabrics from Egypt followed a similar pricing pattern to that of Indian, Chinese, Pakistani and Indonesian imports. When considered in isolation, the volumes exported from the countries concerned are not negligible. Imports from the third countries concerned compete with each other and with the like product manufactured by the Community industry, given their similar import and pricing trends.

(185) In view of these circumstances, it is provisionally considered appropriate to cumulate imports from Egypt with the rest of the countries concerned.

4. Volume and market share of the dumped imports

(186) The volume of imports from the countries concerned increased by 13 % between 1993 and 1996, from 117 224 tonnes in 1993 to around 131 693 tonnes in 1996. Between 1996 and the IIP (a period during part of which provisional measures were in force) imports from the countries concerned decreased by 24 % from around 131 693 tonnes in 1996 to around 100 385 tonnes in the IIP.

(187) The import trends should be considered in the light of the following factors: firstly, quotas applicable to most of the countries concerned, which limit the volumes of their imports to a fixed level, the flexibility of the quotas being limited; secondly, a certain stocking effect that appears to have taken place in 1996, partly owing to the new anti-dumping complaint lodged that year and the reaction of the market, which anticipated the possible imposition of duties; thirdly, the opposite effect of sales out of stocks, and therefore reduced imports during 1997, a period during part of which provisional anti-dumping duties were in force.

(188) The share of the Community market held by imports from the countries concerned decreased between 1993 and 1994 from 42,8 % to 40,5 %, further decreased in 1995 to around 39 % and increased in 1996 to 42,7 %. In the IIP the share of the Community market held by imports from the countries concerned decreased to 33,7 %.

5. Prices of the dumped imports

(189) Examination of trends of weighted average export prices from the countries concerned, as provided by Eurostat, shows that export prices from the countries concerned increased from ECU 3/kg in 1993 to ECU 3,2/kg in 1994. Prices further increased to ECU 3,6/kg in 1995 and they decreased to ECU 3,4/kg in 1996. In the IIP prices increased to ECU 3,5/kg.

(190) The Commission has examined whether the producers/exporters in the countries concerned are undercutting the prices of the Community producers. The analysis covered the investigation period (1 January 1996 to 30 June 1997).

For the analysis of the price undercutting, the exported unbleached cotton fabrics as well as those manufactured in the Community by the Community industry have been grouped in categories according to four criteria considered to have the highest impact on the cost of production, namely count of yarn in warp and weft, number of thread in warp and weft.

Exporters' prices have been duly adjusted to CIF value and duty paid. Where appropriate, a level of trade adjustment has been granted based on information gathered from the responses to the unrelated importers' questionnaires. Community producers' prices have been adjusted to ex-works level.

Within each category, the weighted average ex-works prices of the Community producers have been compared to the weighted average export prices of each producer/exporter concerned.

(191) The undercutting margins found per country, expressed as a percentage of the Community producers' prices, are as follows:

- People's Republic of China: between 20 % and 24 %, on average 21,7 %;

- Egypt: between 24 % and 35 %, on average 27,8 %;

- India: between 3 % and 35 %, on average 26,9 %;

- Indonesia: between 18 % and 36 %, on average 29,2 %;

- Pakistan: between 9 % and 19 %, on average 13,3 %;

- Turkey: between 0,1 % and 21,2 %, on average 5,6 %.

(192) For Turkey, the calculation showed the following particularities. Doubts about the representativity of the four sampled companies chosen from Turkish exporters result from the following factors. Firstly, one company did not cooperate. Secondly, one company was found to be exporting mainly one type of fabric for which the price comparison was particularly difficult; the undercutting margin found for this company amounts provisionally to 0,1 % (the company has a de minimis dumping margin). The third company for which an undercutting margin of 21,2 % was established only accounts for around 5 % of total exports by the sampled companies. The fourth company, whose exports account for around 50 % of the sample, has an undercutting margin of 5,5 %. These results deviate substantially from the results found in the previous investigation. In view of the limitations in the sample, while it was considered sufficient at the provisional stage to use the information currently available, the question of price undercutting will be further investigated. In particular, an attempt will be made to select a new sample.

6. Situation of the Community industry

(a) Preliminary remark

(193) For the injury analysis, two sets of data have been assessed: data at the level of all complainants, that is the Community industry and data at the level of the sampled companies.

(b) Data relating to the Community industry as a whole

(194) Between 1993 and 1996, production of unbleached cotton fabrics by the Community industry decreased from around 85 600 tonnes to around 83 200 tonnes, that is by around 3 %. In the IIP, production increased by 5 %, to around 87 500 tonnes.

(195) While Community consumption rose by 12,6 % between 1993 and 1996, total sales by the Community industry decreased by around 1,4 %, from 74 000 tonnes to around 73 000 tonnes. The corresponding share of the Community market decreased from 27 % to 24 %, a decline of 11 % in relative terms over the period.

(196) Between 1996 and the IIP, sales of the Community industry increased to 77 000 tonnes, that is an increase of 5 %, while the share of the Community market increased to 26 %, the period of application of anti-dumping measures largely coincided with that in which these increases occurred.

(197) Between 1993 and 1995, 88 company closures took place in the Community, with a loss of total employment of around 8 600 employees. Between January 1996 and July 1997, 24 companies were closed with a loss of total employment of around 2 500 employees. This loss in employment would amount to around 4,5 % of the total captive and non-captive employment in weaving of cotton fabrics. These data relate to Community producers with captive and non-captive production of > 50 % cotton, it not being possible to make specific allocations between captive and non-captive production.

(c) Data relating to the sampled Community producers

(i) Production

(198) Production of the sampled Community producers decreased by 6,3 % between 1993 and 1996, from around 52 000 tonnes in 1993 to around 48 700 tonnes in 1996. In the IIP, production increased to 52 000 tonnes.

The trends of the average monthly production show a decrease of 8 % between 1993 and 1996, with an increase of 20 % between 1996 and June 1997, coinciding with the period of imposition of provisional anti-dumping measures.

(ii) Capacity

(199) Maximum production capacity, as measured in machine hours per year of the sampled producers, decreased from 18,1 million hours per year in 1993 to 16,9 million hours per year in 1996, a decrease of 7 %. Between 1996 and the IIP, production capacity increased from 16,9 million hours per year to 17,3 million hours per year.

With respect to capacity utilisation, the actual machine hours worked decreased from 15,4 million hours in 1993 to 15,3 million hours in 1996. Between 1996 and the IIP, actual machine hours increased to around 16 million hours.

During this period the sampled Community producers have rationalised production in the form of a reduction of capacities and modernisation of the machinery.

(iii) Stocks

(200) Stocks of the sampled producers increased between 1993 and 1996 by around 54 %, from around 3 800 tonnes to around 5 900 tonnes. During the IIP, stocks decreased to 2 800 tonnes.

(iv) Sales volumes

(201) Sales of the product concerned by the sampled Community producers decreased by 5,8 % between 1993 and 1996, from around 52 000 tonnes to around 49 000 tonnes. During the IIP, sales rose to 53 000 tonnes.

The average monthly evolution of sales shows a decrease of 5 % between 1993 and 1996, from an average of 4 336 tonnes/month in 1993 to 4 110 tonnes/month in 1996. Between 1996 and the IIP, the average monthly sales of the sampled Community producers increased by 8 %, to an average of 4 422 tonnes/month, partly coinciding with the period of application of the anti-dumping measures. While in 1996 the average monthly sales amount to 4 110 tonnes/month, during the first six months of 1997 the average monthly sales amount to 5 250 tonnes/month.

(v) Prices

(202) The analysis of the development of prices of the sampled Community producers shows an increase of 8 % between 1993 and 1994, a further increase of 13 % between 1994 and 1995. Between 1995 and 1996, prices increased by 4 %. Between 1996 and the IIP, prices decreased by 2 %.

(203) The trends of the Community producers' prices have to be seen in the light of two main factors that have influenced the costs of Community producers: (a) prices of raw cotton, and (b) costs arising as a result of making frequent changes in constructions and weaving shorter series, due to the pressure of imports from the countries concerned on certain constructions.

(204) With respect to raw cotton - main input in the manufacture of fabrics and accounting for around one-third of the total manufacturing costs - price trends have been examined. Between 1993 and 1994, the price of raw cotton in the world market increased by 48 %; between 1994 and 1995, raw cotton prices increased by a further 15 %. Between 1995 and 1996, prices of raw cotton decreased by 15 %. Between 1996 and the IIP, raw cotton prices increased by 10 %.

(205) A comparison of the two trends would imply that the rise in prices of fabrics failed to match even the rise in the cost of the raw cotton. Account should be taken of the fact that the increase in the cost of the raw material only has an impact on the price of the unbleached fabric between six months and one year later, due to advance purchases.

(206) It should also be noted that the costs of the Community producers also increased during the period from 1993 to 1996 for the same reasons as those given in recitals 203, 204 and 205, thus preventing Community producers from benefiting from economies of scale and thus reaching a profitable situation.

(207) It is provisionally concluded, therefore, that despite an increase in the prices of the Community industry, Community producers failed to match the increase in the manufacturing costs. This situation can be regarded as one of price suppression.

(vi) Investments

(208) Between 1993 and the IIP, the sampled Community producers increased their rate of investments from around ECU 7 million to around ECU 13 million, that is by 76 %, representing around 4 % and 5,5 % on turnover, respectively. The rate of investments has been maintained even at a time when profitability was negative, in order to maintain competitiveness.

(vii) Profitability

(209) Between 1993 and 1996, the profitability of the sampled Community producers deteriorated. Indeed, the weighted average profit decreased from around 0 % in 1993 to around -2 % in 1996. During the IIP, which partly coincided with the period of imposition of provisional anti-dumping measures, the losses decreased to 1 %.

(viii) Employment

(210) The total number of employees in the sampled Community producers decreased from 5 352 in 1993 to 4 932 in 1996, a decrease of 8 %. In the IIP, the number of employees amounted to 4 965.

7. Conclusion regarding injury

(211) The examination of the above-mentioned injury factors shows that between 1993 and 1996 the situation of the Community industry deteriorated. Indeed, during this period, the Community industry suffered decreases in production, in sales in the Community, in profitability and in employment. During the same period, stocks increased.

(212) Although between 1996 and the IIP, the Community industry's production and sales increased and stocks decreased, it appears that the recovery is principally attributable to the provisional anti-dumping measures in place between November 1996 and May 1997. Furthermore, the limited duration of the measures did not allow the Community industry to regain profitability, the financial situation of the Community industry still being negative.

F. CAUSATION

1. Introduction

(213) Pursuant to Article 3(6) and (7) of the Basic Regulation, the Commission has examined whether imports of unbleached cotton fabrics originating from the countries concerned have caused injury to the Community industry to a degree that enables it to be classified as material. Known factors other than the dumped imports, which could at the same time be injuring the Community industry, were also examined to ensure that possible injury caused by those other factors is not attributed to the dumped imports.

2. Effect of the dumped imports from the countries concerned

(214) In examining the effects of the dumped imports, it was found that, between 1993 and 1996, the increase in the imports of unbleached cotton fabrics from the countries concerned, of 12 %, and their high share of the Community market, of around 43 %, coincided with a deterioration of the financial situation of the Community industry, whose share of the Community market decreased from 28 % to 26 %.

(215) The market for unbleached cotton fabrics is highly price-sensitive due to the type of product which, in general, can be characterised as a commodity, the great product interchangeability and the transparency of the market.

(216) Examination of trends of the Community producer's prices shows considerable price suppression between 1993 and 1996. Price suppression caused by the imports concerned was most apparent between 1995 and 1996, when Community producers were only able to increase their prices by 4 % (despite prices already having been suppressed over the previous two years); during the same period, prices of the imports from the countries concerned decreased by 6 %.

(217) Furthermore, it should be borne in mind that, during the period of imposition of provisional measures on imports from the countries concerned, there were clear signs of recovery of the Community industry, as shown below.

(218) It is therefore considered that in such a price-sensitive market, the pressure exerted by the imports concerned in the form of price undercutting caused price suppression for the Community producers leading to financial losses. For this reason, it is considered that one of the causes of the material injury suffered by the Community producers is the price undercutting.

3. Effects of other factors

(a) Quotas and voluntary export restraints

(219) Some parties have argued that imports from the countries concerned cannot be the cause of any injury suffered by the Community industry, since they are subject to quotas imposed in the context of the Multifibre Arrangement (MFA).

(220) Imports of unbleached cotton fabrics from the countries concerned, except Turkey, are currently governed by a number of trade agreements. Exports from India, Indonesia, the People's Republic of China and Pakistan are subject to import quotas. Volumes imported from Egypt are the subject of voluntary export restraints.

(221) The product concerned by the current proceeding falls under product Category 2 of the old MFA system as taken over by the WTO Agreement on Textile and Clothing. That category covers unbleached and bleached plain-weave fabric containing more than 50 % of cotton. Therefore, the proportion of exports of unbleached fabrics from the countries concerned covered by Category 2 quota may vary from year to year. Furthermore, the quota system allows for some flexibility in switching quota allocations between different categories, making advance use of them, as well as carrying over certain quantities between years.

(222) However, quotas restricting import volumes do not necessarily preclude the causation of injury to the Community industry, in the form of price suppression or price depression, their aim being only to restrict the quantities imported. Despite the existence of quotas, average prices of India, Indonesia, Pakistan and the People's Republic of China decreased between 1995 and 1996 by 5 %.

(223) In this respect, it should be noted that, despite the existence of quotas and import restrictions, imports of unbleached fabrics from the countries concerned which are subject to trade arrangements have substantially increased from around 107 000 tonnes in 1993 to around 121 000 tonnes in the IIP. It appears that the countries concerned have increased the proportion of unbleached fabrics within the total exports of the products covered by Category 2.

(224) Furthermore, the high and increasing import volumes from the countries concerned were sold at prices which significantly undercut Community producers' prices.

(225) Given those factors, it can provisionally be considered that the existence of quotas and voluntary export restraints does not preclude the imports concerned from being a cause of injury to the Community industry.

(b) Imports from third countries

(226) Certain interested parties have further alleged that any injury suffered by the Community industry has been caused by imports from third countries not covered by the proceeding.

(227) Imports of unbleached cotton fabrics from third countries rose from around 76 245 tonnes in 1993 to around 97 300 tonnes in 1996, having peaked at around 104 600 tonnes in 1994. In the IIP, imports of the product concerned from third countries increased to around 113 000 tonnes. The share of the Community market held by those imports increased from 28 % in 1993 to 32 % in 1996. In the IIP, it further increased to 38 %.

(228) As to the prices of imports from third countries, available Eurostat information shows that on average, prices charged by third countries are higher than the prices of the countries concerned. In 1993, the weighted average prices of imports from third countries - as reported by Eurostat - were 15 % higher than the weighted average prices from the countries concerned. In 1996 the difference amounted to around 6 %.

(229) If Russia and United Arab Emirates (UAE) are excluded, the prices of unbleached fabrics from other third countries in 1993 were 22 % higher than those of the countries concerned. In 1996 the difference amounted to around 13 %.

(230) Furthermore, in 1996 only four countries had a share of the Community market greater than 2 %, namely Estonia (2,6 %), Russia (3 %), UAE (3 %) and Thailand (4 %).

(231) Between 1993 and 1996, imports of the product concerned originating in Estonia have steadily increased from around 2 000 tonnes in 1993 to around 6 900 tonnes in 1996, while their share of the Community market has increased from around 1 % to around 2,6 %. Their prices have increased from ECU 2/kg to around ECU 3,1/kg.

(232) Between 1993 and 1996 imports of the product concerned originating in Russia remained stable at around 8 000 tonnes, while their share of the Community market remained stable at 3 %. Available Eurostat data show that their prices remained relatively stable at around ECU 2,5/kg.

(233) Imports from UAE substantially increased, reaching a share of the Community market of around 3 %. The issue of possible fraud in the declaration of the origin of those unbleached cotton fabrics is currently being investigated. The prices of those exports have remained stable at around ECU 3/kg between 1993 and 1996.

(234) As regards Thailand, exports remained stable at around 12 000 tonnes between 1993 and 1996 and their share of the Community market remained at 4 %. It is worth noting that prices of those imports as reported by Eurostat fluctuated between ECU 4/kg and ECU 4,5/kg, well above the prices charged by the exporters from the countries concerned.

(235) As regards third countries other than Estonia, Russia, United Arab Emirates and Thailand, each country individually has a small share of the Community market and their average prices between 1993 and 1996 remained at levels which are higher than those from the countries concerned. In 1996 prices of those other third countries were 10 % higher than those of the countries concerned.

(236) In the light of the foregoing, it is provisionally concluded that, although imports from Estonia, Russia and United Arab Emirates might also be causing injury to the Community industry, they have not broken the causal link between the imports from the countries concerned and the material injury suffered by the Community industry.

4. Conclusion on causation

(237) The negative situation of the Community industry coincided with an increase in the imports from the countries concerned (until the provisional anti-dumping measures were imposed in November 1996) and substantial price undercutting by those imports.

(238) The possibility cannot be ruled out that other factors, notably imports from Russia and United Arab Emirates (due to their increasing market share and low prices) and other low-cost third countries considered together (due to their important and increasing market share) have exerted pressure on the prices of the Community industry and have consequently contributed to the negative situation of the Community industry.

(239) However, even if certain other third countries might have contributed to the negative situation of the Community industry, taken in isolation, imports from the countries concerned have caused material injury to the Community industry.

G. COMMUNITY INTEREST

1. The Community interest investigation: information gathering

(240) Pursuant to Article 21 of the Basic Regulation, in order to assess properly the Community interest, the Commission has carried out an investigation into the likely effects of the imposition/non-imposition of anti-dumping measures on the economic operators concerned.

(241) The subsequent analysis is based on the information submitted by all interested parties, where duly substantiated by evidence.

(242) The Commission sent out specific requests for information in the form of questionnaires. They were addressed to 52 interested parties which were deemed representative of the different sectors of the textile industry directly concerned by the product under investigation, namely: spinners, weavers, importers-traders, finishers, converters and makers-up.

(243) Some interested parties have claimed that such an approach constitutes a breach of the Basic Regulation, since the latter does not provide for sampling in the context of the examination of the Community interest.

(244) However, the approach used cannot be characterised as sampling. Contrary to the procedure followed under Article 17 of the Basic Regulation, all arguments submitted by the interested parties, where substantiated by evidence, have been taken into account. It was in order to be able to obtain information in a systematic way allowing the Commission to respond to the different issues at stake and to complete and verify the information obtained that the Commission made specific requests for information to a limited number of parties.

(245) The Commission requested all interested parties that had made themselves known to provide information concerning production, sales, employment and imports for the year 1996.

(246) Within each type of activity, companies were selected from different Member States, according to the relative importance of that activity in the respective country. Within each country, and where available, companies were selected according to their turnover of the product concerned in the Community, within the categories of large, small and medium. In this respect the size of a company was considered to be indicative of its ability to negotiate prices.

(247) Within each type of activity, the number of companies selected therefrom varies according to the weight of the category with respect to the total volume of turnover reported for that country. With respect to the selection of the companies, the following criteria carried weight: activity being carried out on commission basis or not, degree of integration of the company and geographical location.

(248) The identity of the selected companies was disclosed to interested parties who had the opportunity to comment on it. Substantiated comments were duly taken into account.

2. Economic operators concerned

(249) The categories of economic operators concerned by the current proceeding are identified below. It should be emphasised that a large proportion of the industry is vertically integrated, covering one or more of the activities listed below.

(a) Upstream industry: spinners

(250) They transform the raw cotton into yarn through a highly automated process. The yarn is then used for weaving the fabric.

(b) The Community industry: weavers

(251) They weave yarn into fabrics.

(c) Users

(252) Finishers: woven fabric is bleached, printed, dyed or otherwise transformed. These activities are generally, but not always, performed by the same company.

(253) Makers-up: the finished cloth is cut and sewn to make garments, household goods, or industrial goods by makers-up. This is a labour-intensive stage, where the production processes are not normally automated.

(d) Importers-traders/converters

(254) They supply the Community's finishers and makers-up with cloth, either imported or purchased in the Community; converters also recruit the services of finishers to have the fabrics processed to the requirements of makers-up.

3. The Community industry

(a) Nature and structure of the Community industry

(255) Total captive and non-captive production of the product concerned amounted to around 317 000 tonnes in 1996. Total non-captive production of the product concerned in the Community amounted to around 92 000 tonnes in 1996. The complaining Community industry accounts for around 90 % of this figure.

(256) The Community industry is mainly composed of small and medium-sized companies. The production process is highly automated and capital-intensive. Substantial economies of scales are achieved when weaving large volumes of the same construction.

(257) Unbleached cotton fabrics are an intermediate product with a high degree of standardisation and price sensitivity, especially in the most common constructions, but subject to fashion changes and, in niche areas of the market which require unusual constructions, demand may be for limited quantities only.

(258) Employment corresponding to the product concerned, of both the integrated and non-integrated Community weavers, amounted to 40 000 in 1996. The employment attributable to the non-integrated producers of the product concerned in the Community would amount to around 12 000.

(b) Viability of the Community industry

(259) The Community industry is viable and competitive. This provisional assessment is based on an appreciation of the following elements:

(i) Degree of investments and machinery replacement

(260) The average rate of replacement of the machinery is around seven years. The companies invest in the latest and fastest technology in order to benefit from economies of scale and to be able to offer a product that is price competitive.

(ii) The commitment of the Community industry to the development of new technology

(261) This is apparent from the participation of some of the sampled Community producers in new R& D projects developing new spinning methods (8), which will have consequential benefits for weaving.

(iii) Development of new constructions for new uses

(262) Community producers are constantly developing new constructions. This is necessary in order to remain in the business by offering new products where competition from third countries is initially v