COMMISSION OF THE EUROPEAN COMMUNITIES 
Brussels, 08.03.1996 
COM(96) 103 final 
Proposal for a 
COUNCIL REGULATION (EC) 
imposing a definitive anti-dumping duty on imports of coumarin originating in the 
People's Republic of China 
(presented by the Commission) 

Explanatory memorandum 
1. The Commission Regulation (EC) No. 2352/95 *) imposed a provisional anti­
dumping duty on imports of coumarin originating in the People's Republic of 
China. 
2. This provisional anti-dumping duty has been extended by a further period of two 
months by Council Regulation (EC) No. 212/96 2\ 
3. After examining the arguments put forward by the interested parties, the 
Commission has definitively established the facts. 
4. In accordance with Article 12 of Council Regulation (EC) No. 2423/883), the 
Commission, after consultation of the Advisory Committee, proposes to impose 
a definitive duty of the same amount of the provisional duty and to collect 
definitively the provisional anti-dumping duty. 
]) OJNoL239, 7.10.1995, p. 4. 
2> OJN0L28, 6.2.1996, p. 1. 
3> OJNo. L 209, 2.8.1988, p. 1. 
fa 
Proposal for a 
COUNCIL REGULATION (EC) No /.... 
of. 
imposing a definitive anti-dumping duty on imports of coumarin originating in the 
People's Republic of China 
THE COUNCIL OF THE EUROPEAN UNION, 
Having regard to the Treaty establishing the European Community, 
Having regard to Council Regulation (EC) No 3283/94 of 22 December 1994 on 
protection against dumped imports from countries not members of the European 
Community 1, as last amended by Regulation (EC) No 1251/95 2and in particular 
Article 23 thereof, 
Having regard to Council Regulation (EEC) No 2423/88 of 11 July 1988 on protection 
against dumped or subsidized imports from countries not members of the European 
Economic Community *, as last amended by Regulation (EC) No 522/94 4, and in 
particular Article 12 thereof, 
Having regard to the proposal submitted by the Commission after consulting the 
Advisory Committee, 
Whereas: 
OJ No L 349,31.12.1994, p. 1. 
OJNOL122, 2.6.1995, p. 1. 
OJ No L 209, 2.8.1988, p. 1. 
OJ No L 66,10.3.1994, p. 10. 
A. PROVISIONAL MEASURES 
(1) The Commission, by Regulation (EC) No 2352/95 5f hereinafter referred to as 
"the provisional duty Regulation", imposed a provisional anti-dumping duty on 
imports into the Community of coumarin falling within the CN code ex 2932 21 00 
and originating in the People's Republic of China. 
By Regulation (EC) No 212/96 6, the Council extended the validity of these duties 
for a period of two months expiring on 9 April 1996. 
B. SUBSEQUENT PROCEDURE 
(2) Subsequent to the imposition of the provisional anti-dumping duty the following 
interested parties submitted their comments in writing: 
-CEFIC on behalf of the Community industry 
-Tianjin No 1 Perfumery Factory, an exporter/producer from the People's 
Republic of China, 
-British Essential Oil Association and the importers united therein (BEOA), on 
behalf of the major part of users and importers in the Community. 
-Vereinigung der am Drogen- und Chemikalien- Gross- und Aussenhandel 
beteiligten Firmen (VDC), on behalf of Paul Kaders GmbH, Hamburg, Germany, 
importer. 
(3) The written comments submitted by the interested parties were considered by the 
Commission services and taken account of where appropriate. 
5 OJ No L 239, 7.10.1995, p. 4. 
6 OJNoL28, 6.2.1996, p. 1. 
C. PRODUCT UNDER INVESTIGATION, LIKE PRODUCT AND COMMUNITY 
INDUSTRY 
(4) VDC has reiterated its claim that Chinese coumarin and coumarin produced by 
Rhône Poulenc-cannot be considered as like products. It claimed in particular that 
the Chinese product and the Community product were produced from different 
raw materials, used different production processes, and that the Chinese product 
was of a lower quality and could not be used for as many purposes as the 
Community product. 
However, it had provisionally been established that the two products appeared 
almost entirely interchangeable and that differences in quality had no effect on 
the definition of the "like product". This matter has been explicitly dealt with in 
recitals (11) and (12) of the provisional duty Regulation. Since VDC only 
reiterated the arguments submitted before the imposition of the provisional duty 
and did not provide new evidence, the findings for the provisional determinations 
are confirmed. 
(5) As no new arguments have been presented regarding the product under 
investigation, the like product and the Community industry, the findings set out in 
recitals (9) to (13) of the provisional duty Regulation are confirmed. 
D DUMPING 
1. Normal value 
(6) For the provisional determinations the normal value was established on the basis 
of the average ex-factory price of coumarin sold on the United States market 
which was selected as an analogue country. 
(7) VDC argued that the Commission's efforts to obtain information from India could 
not be considered sufficient and that other potential sources of information 
should have been tapped. The Council would point out that all four Indian 
companies known to be coumarin producers, were contacted by the Commission 
services. However, from the information received it was found that only one of 
them actually produced coumarin during the investigation period. This one, at the 
request of the Commission services, supplied some general information about 
the Indian market, but refused subsequently to fill out the questionnaire. 
Furthermore, on the basis of the information available, the domestic sales prices 
of the Indian producer in question were substantially higher than those of Rhône 
Poulenc Inc., as a result of very high tariff protection of the Indian coumarin 
market. It has been found that this would still be the case even if an adjustment 
for duty draw-back were applied on the raw materials used for the production of 
coumarin. Therefore the choice of India as analogue country would have led, on 
the basis of the information available, to the establishment of a normal value 
higher than that found by using the United States of America as analogue 
country. Hence, the conclusions of recital (14) of the provisional duty Regulation 
are confirmed. 
(8) As regards the choice of the United States of America as analogue country, VDC 
reiterated the claim that the United States was unsuitable as analogue country 
owing to the monopoly position that the US manufacturer allegedly enjoyed in 
that market, allowing him to dictate the prices; as evidence, VDC referred to a 
price increase imposed by the producer in question in November 1991. 
The Council would point out that the US producer cannot be regarded by any 
means as being in a monopolistic situation, since, as explained in recital (15) of 
the provisional Regulation, during the investigation period China held a very 
substantial share of that market. As far as the above mentioned price increase is 
concerned, it should be noted that it was completely nullified by the middle of 
1993 under the pressure exerted on the US market by low priced imports from 
the People's Republic of China. 
(9) In objecting to the choice of USA as analogue country, VDC has reiterated that a 
reference country should be comparable in terms of production conditions, 
methods and standards. The Council observes that the differences in production 
process between Rhône Poulenc Inc. and the Chinese producers have already 
been examined at the stage of the provisional determinations. In this respect no 
adjustment appeared then to be justified, as stated in recital (15) of the 
provisional duty Regulation, 1st and 2nd paragraphs. 
As no new argument has been put forward in this respect, the Council maintains 
that the choice of USA as analogue country has been made in an appropriate 
and reasonable way. Therefore, recital (15) of the provisional duty Regulation is 
confirmed. 
(10) Tianjin No 1 Perfumery Factory argued that, following innovations brought about 
in its production process, its plants have now a higher yield than the other 
companies in China and than Rhône Poulenc and therefore its production costs 
would be comparatively lower. It must be underlined that this statement has not 
been substantiated at all. However, the Council points out that costs and prices in 
China - a non-market economy - do not result from the free action of market 
forces, but are the subject of State intervention. Since Tianjin No 1 Perfumery 
Factory is owned by the State, which, as a consequence, has a determining 
influence on its business, it is not possible to establish reliable costs and prices in 
order to assess the comparative advantage that the producer in question claims 
to enjoy in respect of the other Chinese producers of coumarin, as well as in 
respect of Rhône Poulenc. It follows that the establishment of individual normal 
values and hence individual anti-dumping duties is not possible in the present 
case. 
(11) Consequently, the Council confirms, for the purpose of the definitive findings, the 
single normal value for all Chinese producers established on the basis of 
domestic sales prices found in a market economy country, i.e. the USA, 
according to the rules set out in Article 2.(5) of Council Regulation (EEC) 
2423/88, as indicated in recitals (16) and (17) of the provisional duty Regulation. 
2. Export prices 
(12) No new arguments were presented in relation to the findings set out in 
provisional duty Regulation about the export prices determinations. Recitals (18) 
and (19) are therefore confirmed. 
3. Comparison 
(13) BEOA pointed out that transport costs in the United States of America have not 
been deducted from the normal value for the purpose of the comparison of the 
latter with the export prices, as provided for by the Article 2(10) of the Basic 
Regulation. The Council notes that for the purpose of ensuring a fair comparison, 
the normal value and the Chinese export prices were established at fob level, US 
and Chinese border respectively. As regards the adjustment of US normal value, 
requested by BEOA, transport costs should have been added to the ex-factory 
level and not deducted, in order to establish a fob, US border, normal value level. 
However, it has been found that the transport cost of coumarin between the 
Rhône Poulenc Inc. production plants and the closest shipping harbour is lower 
than 0,5% of normal value. Therefore in conformity with Article 2.(10)(e) of Basic 
Regulation, this adjustment was considered insignificant and hence disregarded. 
In this respect, the determinations laid in recital (21) of the provisional duty 
Regulation are confirmed. 
(14) With relation to the allowance for physical differences in the form of a downward 
adjustment of normal value, CEFIC argued that no real quality difference existed 
between the Chinese coumarin and that of Rhône-Poulenc. In CEFIC's view, any 
difference is simply a matter of perception on the part of certain users only, 
notably those using coumarin for fine fragrance production, who are of the 
opinion that Rhône-Poulenc's coumarin is more suitable for their applications. 
The Commission, in its investigation, has found that tho Chinese product did not 
have a stable quality and needed to be submitted systematically to quality control 
tests by the traders; moreover, in certain cases the shipped batches differed 
sufficiently from the accepted sample to make them unsuitable for the use for 
which they were originally bought. Furthermore, as CEFIC itself admits in its 
submission, most fine fragrance makers have a clear preference for the Rhône 
Poulenc product; consequently the Chinese coumarin is excluded from several 
applications in the specific field of fine fragrances. In view of this the Council 
considers that the supplementary costs for quality control and rejected batches, 
as well as the slightly more limited scope of application of Chinese coumarin, 
justify an allowance for difference in quality. 
(15) CEFIC contested also the methodology used by the Commission for establishing 
the allowance for quality differences as described in recital (22) of the provisional 
duty Regulation. In particular CEFIC alleged that the sales price difference in 
1988 between Rhône-Poulenc SA coumarin and Chinese coumarin was based 
on a sales price of Rhône-Poulenc SA yielding a profit margin on turnover higher 
than the 5% used by the Commission services to calculate the underselling 
during the investigation period. In substance, CEFIC argued that the 
Commission's approach linked the value of the quality difference to the level of 
profit achieved; hence CEFIC suggested to adjust Rhône-Poulenc SA sales price 
in 1988 by applying the profit margin of 5% used for establishing, during the 
investigation period, the injury elimination level through the underselling 
methodology 
The Council points out that there is no link between the calculation method of the 
quality difference as perceived by the consumer and the determination of the 
profit required to reach the injury elimination level. On the one hand, the sales 
price difference in 1988 appears to represent the quality difference as perceived 
by the operators in a coumarin Community market not yet depressed by the 
Chinese low price policy, at a time when Chinese exporters held a significant 
market share of 21.3%, reflecting the existence of a certain degree of competition 
on the market. On the other hand, users and other operators purchase coumarin 
at a price level which corresponds to their perception of the quality of the product, 
independently from the production cost of the said product, which is unknown to 
them. 
(16) As no further arguments were submitted concerning the comparison between 
normal value and export price, the Council confirms the conclusions set out in 
recitals (20) to (22) of the provisional duty Regulation. 
4. Dumping margin 
(17) The dumping margin, which was higher than 50%, as indicated in recital (23) of 
provisional Regulation, is therefore confirmed. 
to 
E. INJURY 
(18) It was provisionally determined that the prices of coumarin originating in the 
People's Republic of China have consistently undercut the prices of the 
Community product since 1990. During the investigation period the undercutting 
practised by the Chinese exporters has been found to be as high as 28 7% on 
the price of Community industry coumarin. VDC argued that falling prices of 
imports of coumarin from China between 1990 and the investigation period 
cannot be considered as undercutting the Community producer prices within the 
meaning of Article 4(2)(b) of the basic Regulation, in so far as they simply passed 
on to the consumer the effects of the declining prices of the raw materials, in 
particular orthocresol which is used only by Chinese producers for producing 
coumarin. 
It has been observed that Chinese prices, which in 1988 and 1989 were 
practically at the same level of the Community product, have been undercutting 
Rhône Poulenc SA. prices throughout the period 1990/1994, regardless of the 
evolution of the prices of the raw materials, in particular orthocresol, whose 
prices, in fact, during the period under examination (1990/1994), though 
declining, were substantially higher than in the years prior to 1990, when no 
undercutting was recorded. Therefore, it is maintained that significant price 
undercutting has been observed between 1990 and the investigation period 
within the meaning of Article 4(2)(b) of the basic Regulation. The findings of 
recital (29) of the provisional duty Regulation are therefore confirmed. 
H 
(19) No other argument concerning the injury suffered by the Community industry has 
been submitted. The injury findings and the conclusion that the Community 
producer has suffered material injury within the meaning of Article 4 (1) of the 
basic Regulation, as stated in recitals (24) to (38) of the provisional duty 
Regulation, are therefore confirmed in view, in particular, of the dramatic erosion 
of market shares and of the heavy financial losses suffered by the Community 
industry during the period under examination. 
F. CAUSATION OF INJURY 
(20) With regard to the effect of dumped imports, VDC maintained that no clear link 
existed between the imports from China and any injury to the Community 
producer. To support this statement, VDC pointed out that imports from China 
decreased by 33 tonnes between 1991 and 1992, while those from the USA 
increased by the same volume during the same period. 
This argument, however, is unconvincing. Indeed VDC omitted to consider that 
the two quoted developments are simply episodic and limited fluctuations which 
contrast with the overall growing trend of imports from China in the five year 
reference period and the mainly stable imports from the USA. In absolute terms, 
the increase of 132 tonnes in imports from China between 1990 and the 
investigation period (1 April 1993 - 31 March 1994) at low undercutting prices has 
clearly had a negative impact on the Community industry. The development of 
imports from China has to be seen in the context of the Community market which 
amounts to a few hundred tons a year and in which the Community industry saw 
its sales decreasing by 58.5%. Consequently, the findings of recital (39) of the 
provisional duty Regulation are confirmed. 
t2 
(21) With regard to the effect of other factors, VDC claimed that imports from third 
countries were a major factor in the Community industry's loss of market share. In 
this respect, VDC pointed out that imports from third countries climbed from 38 
tonnes in 1990 to 71 tonnes in the investigation period. 
It is observed that only imports from Russia and Japan, which were also made at 
low prices comparable to those of the imports from China, could have contributed 
to the injury suffered by the Community industry. However, given their low 
volume, representing less than 7% of the Chinese imports, it must be concluded 
that the sharp decline in sales and market share of the Community industry is 
principally attributable to the massive dumped imports from China which 
increased their market share by 32 percentage points between 1990 and the 
period of investigation, compared to an increase of 1,8 percentage points from 
Russia and 3,7 percentage points from Japan over the same period. 
Consequently, the Council maintains that a possible contribution to the injury by 
low priced imports from other third countries can only be considered as marginal, 
given their much smaller volume compared to that of the Chinese. The 
conclusions of recital (43) of the provisional duty Regulation are therefore 
confirmed. 
(22) As no further aspects concerning other possible injury factors have been found 
and no further argumente have been submitted, it is maintained that the low 
priced imports of coumarin from the PRC, taken in isolation, caused material 
injury to the Community industry through their continuous erosion of the 
Community industry's market share and the depressing effect on its prices. The 
provisional findings on the causation of injury as expressed in recitals (40) to (42) 
and (44) to (46) of the provisional duty Regulation are therefore confirmed. 
13 
G. COMMUNITY INTEREST 
1. Interest of the Community industry 
(23) According to a submission by VDC, the extent to which an anti-dumping measure 
is in the Community interest has to be judged in the light of the overall economic 
situation of the Community industry, whose consolidated profit has increased 
considerably in the first half of 1995 compared to the same period of 1994. 
While it may be correct that the overall situation of Rhône Poulenc SA has 
improved after the investigation period, no indication has been given that the 
profitability of the coumarin business by Rhône Poulenc SA has improved. 
Moreover, it should be recalled that, following a longstanding practice of the 
Community institutions, all aspects of a given case are only examined in relation 
to the product in question, i.e. in this case coumarin. For these reasons, the 
argument of VDC cannot be accepted. 
(24) VDC further argued that the imposition of an anti-dumping duty would have 
repercussions on the Community's exports of orthocresol to China, as 80% of this 
raw material for Chinese coumarin originates in the Community. This statement 
has not been substantiated; however, it should be noted that any increase in 
Community orthocresol exports to China by Community producers of that product 
may be attributed to an increase of Chinese exports of coumarin to the 
Community as a result of unfair Chinese trading practices. In addition it has to be 
observed that any decrease of Community exports of orthocresol to China due to 
lower coumarin imports from China would be compensated by a higher 
production volume of phenol in the Community to feed the anticipated increase in 
production of coumarin by the Community industry. 
f4 
2. Interest of users 
(25) Moreover, VDC and some users raised the argument that the decline in imports 
of coumarin from China following the imposition of an anti-dumping duty would 
cause difficulties to users of Chinese coumarin which will have to bear 
considerable costs in changing their formulas as a result of switching from 
Chinese coumarin to that made by the Community industry; in addition, importers 
would allegedly encounter problems in satisfying customer demand for Chinese 
quality coumarin. 
The Council notes that neither VDC nor the users have given any information 
about the incidence of these costs for changing formulas on the production costs 
of perfume compounds; in any case it must be stressed that Chinese coumarin 
would still be available on the Community market if an anti-dumping duty was 
imposed, but at a non-injunously dumped price. Therefore 'switching' costs would 
not necessarily have to be incurred. 
(26) VDC expressed the concern that, in the long run the imposition of a definitive 
anti-dumping duty would place in a monopolistic position the sole producer of 
coumarin in the Community, a producer whose subsidiary in the USA allegedly 
controls the US market. 
It is recalled that the aim of the anti-dumping duty is not to eliminate from the 
Community market the imports originating in a given third country, but to remove 
trade-distorting effects of injurious dumping and to restore effective competition. 
In this respect it should be observed that the duty has been fixed at a level which 
should not prevent the Chinese coumarin from remaining competitive on the 
Community market (see recital (55) of the provisional duty Regulation). 
15 
Moreover, it should be stressed that during the investigation period the Chinese 
producers held a very substantial share of the Community market which was 
consistently higher than that of the Community producer. Hence, the concrete 
risk exists that the Chinese producers themselves could acquire a monopolistic 
position should no measures be taken. The risk of the creation of such a 
monopoly would also not be in the Community interest. Furthermore, the world 
coumarin industry appears currently to be concentrated in two poles, one 
Community producer with its US subsidiary and the production in the People's 
Republic of China; however, there are indications that other coumarin production 
regions are emerging, e.g. in India. Consequently, it is very unlikely that the 
Community producer would find itself in a monopolistic situation as a 
consequence of the imposition of an anti-dumping duty. Finally, as far as the 
alleged dominant position of Rhône Poulenc Inc. in the US market is concerned, 
it is pointed out that during the investigation period the exporters from the 
People's Republic of China held a very substantial share of the US market. In this 
regard, it also has to be mentioned that Chinese exports of coumarin to the USA 
are now subject to anti-dumping measures, which could lead to a diversion of 
Chinese exports to the Community market. 
(27) BEOA maintained its allegation about the threat of abuse of a dominant position 
by Rhône-Poulenc S.A in relation to its marketing policy, consisting allegedly of 
guaranteeing the delivery of a predetermined volume of coumarin only to users 
which agree to enter into a five-year purchase contract. This allegation, which 
was already rejected at the stage of the provisional determinations, has not been 
further substantiated. Moreover, no formal complaint has been lodged with the 
appropriate authorities and, according to the information gathered in the course 
of the investigation, it has been found that'the marketing policy in question has 
not been implemented at all. The conclusions expressed in recital (51) of the 
provisional duty Regulation are therefore confirmed. 
16 
3. Conclusions 
(28) No other arguments were made with respect to Community interest. After 
carefully examining all the arguments made, the Council is of the opinion that 
there are no compelling reasons not to take anti-dumping action in this case. It 
can therefore be considered that it is in the Community interest to impose an anti­
dumping duty as set out in recitals (47) to (54) of the provisional duty Regulation. 
H. DUTY 
(29) BEOA argued that the Commission made a methodological error in calculating 
the underselling margin for the transactions occurring directly between the 
Chinese exporter and the user in the Community, since they did not add a 
distributor mark-up to the CIF import price. BEOA claimed that, in doing this the 
trade level difference would not be removed for sales of this kind, because the 
injury elimination level established for Rhône Poulenc SA included SG&A and 
profits of its distributors, while no mark-up was taken into account for the users 
purchasing directly from the Chinese exporters. In this respect, it should be 
observed that the Commission established the injury elimination level by 
including all the costs and profits of Rhône Poulenc SA distributors which 
themselves sell directly to users. Therefore no mark-up needs to be added to the 
CIF import price of users because the transactions were taking place at the 
same level of trade . Furthermore, it has been found that the average CIF import 
prices for all distributor-importers fall within a narrow scope, and on average, at a 
significantly lower level than that found for the users. In particular, this price 
difference is of a magnitude corresponding tp the mark-up applied by distributor 
importers for their resales to thé users. 
17 
This fact is clear evidence that the PRC producer/exporters differentiate their 
sales prices according to the level of trade at which their customer is situated 
Consequently, the Council considers that the comparison has been made at the 
same level of trade and adding a mark-up to the CIF import price of users would 
constitute double counting. The claim for adjustment for trade level difference is 
therefore rejected. The underselling determination as described in recitals (54) 
and (55)of the provisional duty Regulation is confirmed. 
(30) Provisional measures consisted of an anti-dumping duty in the form of a specific 
amount per tonne. The duty was imposed at the injury elimination level since this 
was lower than the dumping margin and was established as set out in recitals 
(56) and (57) of the provisional duty Regulation. No further arguments were put 
forward to contradict this approach. The relevant findings as expressed in recitals 
(23) and (55) are therefore confirmed. Accordingly the rate of the definitive duty 
should be at the same level as the provisional duty. 
I. COLLECTION OF THE PROVISIONAL DUTY 
(31) In view of the dumping margin established, and the seriousness of the injury 
caused to the Community industry, it is considered necessary that amounts 
secured by way of the provisional anti-dumping duty should be definitively 
collected, 
18 
HAS ADOPTED THIS REGULATION: 
Article 1 
1. A definitive anti-dumping duty is hereby imposed on imports of coumarin falling 
within CN code ex 2932 21 00 (Taric code 2932 21 00* 10) and originating in the 
People's Republic of China. 
2. The rate of the duty applicable is ECU 3 479 per tonne. 
3. Unless otherwise specified, the provisions in force concerning customs duties 
shall apply. 
Article 2 
The amounts secured by way of the provisional anti-dumping duty pursuant to 
Regulation (EC) No. 2352/95 shall be definitively collected in full. 
Article 3 
This Regulation shall enter into force on the day following its publication in the 
Official Journal of the European Communities. 
This Regulation shall be binding in its entirety and directly applicable in all 
Member States. 
Done at Brussels, 
19 
ISSN 0254-1475 
COM(96) 103 final 
DOCUMENTS 
EN 02 ii 
Catalogue number : CB-C0-96-111-EN-C 
ISBN 92-78-01424-9 
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