COMMISSION OF THE EUROPEAN COMMUNITIES 
COM(94) 683 final 
Brussels, 22.12.1994 
Proposal for a 
COUNCIL REGULATION (EC) 
imposing a definitive anti-dumping duty on imports offiirfuraldchyde originating in the 
People's Republic of China 
(presented by the Commission) 

explanatory memorandum 
"> I he Commission Regulation (IX) No 1783/94" t) imposed a provisional anti-dumping duty 
on imports of furfuraldehydc originating in the People's Republic of China. 
This provisional anti-dumping duty has been extended by a further period of two months by 
Council Regulation (IX") No 28l8/94«2). 
3. Alter examining the arguments put forward by the interested parties, the Commission has 
dellnitively established the facts. 
4. In accordance with Article 12 of Council Regulation (BC) No 2423/88(((3), the Commission, 
after consultation of the Advisory Committee, proposes to impose a definitive duty of the 
same amount ol the provisional duly and to collect definitively the provisional anti-dumping 
duty. 
'I) O.J. No. I, 186, 21.07.1994, p. II 
,,2)O.J. No. 1,298, I9.II.IW4, p. 31 
,,(3)()..!. No. 1,209, 02.08.1988, p. I 
COUNCIL REGULATION (EC) Nc 
of 
imposing a definitive anti-dumping duty on imports of furfuraldehyde originating in the 
People's Republic of China 
iin;COUNCIL01 mi; EUROPBAN UNION, 
Having regard to the Treaty establishing the European Community, 
Having regard to Council Regulation (EEC) N° 2423/88 of I I July 1988 on protection against 
dumped or subsidised imports from countries not members of the European Economic 
Community (ll(i) as last amended by Regulation (EC) N° 522/94 """2), and in particular Article 12 
thereof. 
Having regard to the proposal submitted by the Commission after consultations within the 
Advisory Committee, 
Whereas: 
A. PROVISIONAL MEASURES 
(I) By Regulation (EC) N° 1783/94 (,,lll3), hereinafter referred to as "the provisional 
Regulation", the Commission imposed a provisional anti-dumping duty on imports of 
furfuraldehyde falling within the CN code 2932 12 00 and originating in the People's 
Republic of China. 
liy Regulation (EC) N° 2818/94 """'4), the Council extended the validity of these duties for 
a period not exceeding two months. 
""I) O.J. No. 1,209,02.08.1988 p. I 
(,<,,2)()..l. No. I, 66, 10.03.1994 p. 10 
3) O.J. No. L 186, 21.07.1994, p. I I 
' 4) O.J. No. L298, 19.1 1.1994, p.3 I 
B. SUBSEQUENT PROCEDURE 
(2) Subséquent to the imposition of the provisional anti-dumping duty, Sinochem, the main 
Chinese exporter submitted comments in writing and requested and was granted a hearing. 
One importer made its views known to the Commission in writing. 
In addition, an importer and processor of furfuraldehyde, which had not been taken into 
consideration for the imposition of the provisional duty because it started operating only at 
the beginning of 1994, submitted its written comments. Furthermore it requested and was 
granted the opportunity to be heard orally. 
(3) The oral and written comments submitted by the interested parties were considered by the 
Commission services and taken into account where appropriate. 
C. PRODUCT UNDER CONSIDERATION. LIKE PRODUCT AND COMMUNITY 
INDUSTRY 
(4) As no further arguments have been presented regarding the product under consideration, 
the like product and the Community industry, the findings set out in recitals (9) to (12) of 
the provisional Regulation are confirmed. 
I). DUMPING 
1. Normal value 
(5) As the People's Republic of China is a non-market economy country, the Commission 
based the determination of normal value on domestic sales prices of two furfuraldehyde 
producers in a market economy country, in this case Argentina, pursuant to Article 2 (5) 
(a) (i) of the basic Regulation. 
(6) One importer argued that Argentina is inappropriate as an analogue country because the 
volume of the Argentinian production of furfuraldehyde would be too small compared 
with the estimated world production and with Chinese production. 
By applying Article 2 (5) (a) of the basic Regulation and, in particular, by evaluating the 
representativeness of the sales on which normal value is to be based, it is the practice of 
the Commission to compare the volumes exported to the Community by the country under 
investigation with the volume of sales on which normal value is based. In applying this 
principle, it has been found that Argentinian domestic sales represented more than 10% of 
the Chinese exports to the Community, which can be regarded as sufficiently 
representative. The ratio between the production in the analogue country and the world 
production or the production in the country under investigation is not relevant in regard to 
the choice of the analogue country. 
(7) The same importer argued that the production costs of furfuraldehyde in Argentina are 
higher than in other countries. This could be proved by the fact that Argentinian 
furfuraldehyde could only be exported to other South American countries, whose markets 
are protected by high duties, but which grant preferential treatment to ALADI (Latin 
American Integration Association) countries. It was found that this statement by the 
importer in question is incorrect, as during the investigation period about one third of 
Argentinian production offiirfuraldchyde was exported to the Community. 
(8) Sinochem also reiterated its arguments with regard to the choice of Argentina as an 
analogue country. The Commission has already given adequate reasons for this choice in 
recitals (13) and ( 14) of the provisional Regulation. 
(9) Therefore, the Council maintains that the choice of Argentina as an analogue country has 
been made in an appropriate and not unreasonable manner. Recitals (13) and (14) of the 
provisional Regulation are confirmed. 
(10) Consequently, for the purpose ol definitive findings, the Council confirms the normal 
value established on the basis of Argentinian domestic prices, as indicated in recital (15) 
of the provisional Regulation. 
2. Export prices 
(11) No new arguments were presented regarding the establishment of export prices. The 
findings set out in recitals ( 16) to ( 19) are therefore confirmed. 
3. Comparison 
( 12) No new arguments were presented concerning the method followed by the Commission in 
the comparison between normal value and export price. The method set out in recital (20) 
of the provisional Regulation is, therefore, confirmed. 
4. Dumping margin 
(13) No further arguments were submitted on the dumping margin determination by the 
Commission in the provisional Regulation, which consisted of a single dumping margin 
corresponding to the weighted average dumping margins of both cooperating and non 
cooperating exporters. The dumping margin of 62.6% as indicated in recital (21) of the 
provisional Regulation is, therefore, confirmed. 
I. Preliminary Remarks 
(14) In its provisional Regulation, the (Commission based its calculation on injury on the price 
effect of the dumped imports from China. In this regard, the Commission only considered 
the part of the market in which Community produced furfuraldehyde competed with the 
furfuraldehyde imported from China. The Commission excluded imports originating from 
a third country whose name cannot be disclosed for reasons of confidentiality. These 
imports are based on a long term exclusive supply contract between the producer in the 
third country and a company linked to the major Community importer, which covers more 
than 80% of the furfuraldehyde purchased by this Community importer. The existence of 
this contract leaves the Community producer with only a very low potential volume of 
business with this importer. Hie imports from the third country in question were therefore 
considered to occur in a captive market. 
(15) Sinochem argued that there is no captive market as the complainant sells its entire 
production on the open market and the importer in question is by far the largest potential 
purchaser of furfuraldehyde from the Community industry since it accounts for the bulk of 
furfuraldehyde consumption within the Community. Therefore, by excluding imports 
from the third country the evaluation of consumption and of the respective market shares 
would have differed. 
(16) The Commission carried out a further inquiry in particular with regard to the specific 
contractual relationship between the producer in the third country and a company linked to 
the Community importer. This contractual relationship referred to in recital (14) has 
existed since the 1960s and constituted in the investigation period the basis of over 80% of 
the furfuraldehyde purchased by the importer in question. The elements available at the 
provisional determination stage led the Commission to conclude that a captive market 
existed. Having now more information on this issue and after further analysis, there are 
doubts whether the situation described above could be qualified with certainty as a captive 
market. Under these circumstances, the Commission has decided to take into 
consideration the imports from this third country in its assessment of the injury caused to 
the Community producer. 
2. Market share of the Community production 
(17) Necessarily, compared with the provisional findings, when the imports from the third 
country are included, Community consumption increases and the market share of the 
dumped imports and of the Community producer's sales while showing an unchanged 
trend in their developments over the last years, decreases. In particular, the market share 
of the Community producer amounts to 6.3% in the investigation period. This apparently 
low level is explained by the fact that the importer mentioned above (recitals 14 and 15) 
accounts for approximately 75% of the Community consumption of furfuraldehyde and as 
also explained above most of the furfuraldehyde from the third country is imported under 
special conditions, so that these imports constitute a market segment separate from that 
served by Ihe Community producer. 
3. Market shares on the dumped imports 
(18) When furfuraldehyde imports from the third country are included, the dumped imports 
from China show, in volume terms between 1989 and the investigation period, a stronger 
decrease (31.7%) than that of the total Community consumption (23.7%). This situation 
reflects the fact that between 1989 and 1992 the market share of imports from the third 
country referred to in recital (14) increased; between 1992 and the investigation period 
this trend however, was reversed and the market share of the Chinese imports increased 
from 13.7% to 15.2%. Furthermore, it should be noted that the imports from China 
represent more than double of Ihe sales volume of the Community producer and are by far 
Ihe largest in volume after those from the third country in question. 
4. Price of dumped imports 
(19) As explained in recital 28 of the provisional Regulation import prices of furfuraldehyde 
originating in China were found to undercut the prices of the Community producer by 
24.4% and to have dropped by more than 30% during the investigation period. This 
calculation was based on the CI F prices paid to Chinese exporters by the importers which 
co-operated. Sinochem, without contesting this calculation argued that the Commission 
has wrongly included in its injury calculation the resales of furfuraldehyde, allegedly 
made by the importer purchasing primarily in the third country. This argument is 
incorrect. 
(20) As no other argument was brought forward concerning the prices of dumped imports, the 
findings in recital (28) of the provisional Regulation are confirmed. 
5. Situation of the Community Industry 
(21) No further argument concerning injury, in particular on the situation of the Community 
industry, has been received. In particular the financial losses incurred by the Community 
producer have not been contested by the Chinese exporters. The findings of recitals (29), 
(30) and (32) to (35) are, therefore, confirmed. 
6. Conclusions on injury 
(22) In conclusion, the injury findings in recital 36 of the provisional Regulation are confirmed, 
in view, in particular, of the heavy financial losses suffered by the Community producer as 
a consequence of the strong decrease of furfuraldehyde prices on the Community market. 
F. CAUSATION 
I. Effect of the dumped imports 
(23) As no argument has been submitted, the provisional findings in recital (37), with regard to 
the effect of Ihe dumped imports, are confirmed. 
2. Other factors 
;24) With regard to causation of injury, Sinochem argued that the Commission, by excluding 
imports originating in the third country in question, from the assessment of injury had 
ignored an important "other factor" causing injury. It alleges that these imports, which 
would amount to more than four times the volume ol imports from the People's Republic 
of China, were made available to the importer mentioned above (recitals 14 and 15) at a 
very low price. 
(25) As regards the imports from the third country, they have, over the last 30 years provided 
Ihe major proportion of the furfuraldehyde consumed in the Community. These imports, 
however, benefited a single, albeit major importer, which, for the reason explained above 
(recitals 14 and 15) did almost no business with the Community producer. Despite that 
situation Ihe Community producer was able to maintain its prices, its market share and 
remained largely profitable until 1991. Il was only starting from 1992 when the price for 
furfuraldehyde imported from China dropped abruptly, that the Community producer was 
compelled to cut its domestic sales prices and follow this downward trend in order to 
preserve ils market share. Under these conditions, it can be excluded that the imports 
from the third country in question are the cause of its precarious situation. Regarding 
resales of furfuraldehyde imported by that importer and the possible effect of such 
transactions on the price level in ihe Community, the Commission established that this 
importer, in addition to furfuraldehyde from the third country referred to in recital (9), also 
bought Chinese furfuraldehyde and that a certain quantity of the imported material was 
resold in the Community. The prices of these resales, however, were significantly and 
consistently higher than those of Ihe Chinese exports and did not undercut those charged 
by the Community producer. The Council concludes therefore that these resales cannot be 
considered a factor which eliminates the injurious effect of the Chinese exports. 
10 
(26) As no other argument has been submitted on this issue and since the changes in the market 
share figures do not alter the trends in market developments, the conclusions in recitals 
(38) to (11 ) of the provisional Regulation are confirmed and it is therefore maintained that 
Ihe low priced imports from the People's Republic of China which brought about a serious 
price depression starting in 1992, have, taken in isolation, caused the material injury 
suffered by the Community industry. 
<;. COMMUNITY INTEREST 
(27) Some interested parlies argue that the Community producer does not have the capacity to 
supply Ihe Community market. Furthermore, an importer of furfuraldehyde which was set 
up at the beginning of 1994 with Ihe aim of producing furfuril alcohol, argued that the 
anti-dumping duty on furfuraldehyde imports from China would make the production of 
furfuril alcohol unprofitable for itself as il cannot rely on an agreement of an exclusive and 
cheap supply of furfuraldehyde from the third country in question, as the other importer 
processor is able to do. 
(28) The Council is aware I hat the Community is not self-sufficient in furfuraldehyde, but 
taking into account Ihe number of suppliers from third countries, it can be expected that no 
supply shortage will occur and price competition will continue to be considerable. 
Furthermore, the Council points out Ihal al Ihe lime when the new processing company 
was sel up in January 1994 the present antidumping proceeding had already been initiated 
following Ihe note published on 31 July, 1993. This fact should have been known by the 
company in question, which should have taken into account the possibility that an 
antidumping duty might be levied on its principal raw material as a proceeding had already 
been initiated. In addition, the disadvantage for the importer/processor in question has to 
be viewed against (he background of the threat ol the disappearance of the sole producer 
of furfuraldehyde still operating in the Community. This Community producer is mainly 
oriented to Ihe oil refining industry market for which a sale and timely supply of 
furfuraldehyde can be considered of strategic importance. Finally should this company be 
shut down, at leasl 80 employees will become redundant in an area with one of the highest 
unemployment rates in the Community. 
No other arguments were made with respect to Community interest. It can therefore be 
considered as sel oui in recitals (12) lo (49) of the provisional Regulation Ihal it is in Ihe 
( 'oinmunily inleicsl lo impose definitive anti-dumping measures lo eliminate Ihe injurious 
effects of dumped imports. 
II. UNDERIAKLNC; 
(29) Sinochem has proposed a price underlakiiig coupled with a commitment not lo exceed a 
maximum quantity of export of furfuraldehyde. Accepting such an undertaking would 
imply granting individual treatment lo Sinochem. However, Sinochem, as a state-owned 
company, does not meet Ihe requirements to be granted individual treatment for a 
company in a non-market economy. Furthermore, a number of violations of undertakings 
by Chinese exporters have taken place in recent years. In particular, Sinochem itself has 
previously breached an underlakiiig. The offer of an undertaking is therefore rejected. 
I. DUTY 
( W) Provisional measures consisted of an anti-dumping duty in the form ol a specific amount 
per tonne. This was imposed al the injury elimination level determined, since this was 
lower than the dumping margin established, as set out in recital (51) of the provisional 
Regulation. 
No new arguments were put forward lo contradict this approach. The relevant findings as 
expressed in recitals (21 ) and (50) of the provisional Regulation are therefore confirmed. 
Accordingly Ihe amount of Ihe definitive anti-dumping duty should be the same as the 
amount ol the provisional duty. 
12 
.1. ( Ol ,LEC 1l( )N ( )E 11 IE Pl« ) VISION AI, DUTY 
(31 ) In view of Ihe dumping margin established and of the seriousness ol the injury caused to 
Ihe ( 'ommunily industry, it is considered necessary that the amounts secured by way of the 
provisional anti-dumping duty should be definitively collected, 
HAS ADOPIII) THIS RIXiULATION: 
Article 1 
1. A definitive anti-dumping duly is hereby imposed on imports ol furfuraldehyde falling 
within CN code 2932 12 00 and originating in the People's Republic of China. 
2. The rate of the duly applicable is \X'\\ 352 per tonne. 
3. I Inless otherwise specified, the provisions in force concerning customs duties shall apply. 
Article 2 
The amounts secured by way of Ihe provisional anti-dumping duty pursuant to Regulation 
(F,C) N" 1783/94 shall be definitively collected in full. 
Article 3 
This Regulation shall enter into force on Ihe day following its publication in the Official 
Journal of the Furopean Communities. 
This Regulation shall be binding in its entirety and directly applicable in all Member 
Slates. 
Done al Brussels, 
ISSN 0254-1475 
COM (94) 683 final 
DOCUMENTS 
EN 11 02 
Catalogue number : CB-CO-94-709-EN-C 
ISBN 92-77-84559-7 
Office for Official Publicanons of the European Communities 
L-2985 Luxembourg 
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