[pic] | COMMISSION OF THE EUROPEAN COMMUNITIES |

Brussels, 19.8.2009

COM(2009) 430 final

Proposal for a

COUNCIL REGULATION

amending Regulation (EC) No 682/2007 imposing a definitive anti-dumping duty on imports of certain prepared or preserved sweetcorn in kernels originating in Thailand

EXPLANATORY MEMORANDUM

CONTEXT OF THE PROPOSAL |

Grounds for and objectives of the proposal This proposal concerns the application of Council Regulation (EC) No 384/96 of 22 December 1995 on protection against dumped imports from countries not members of the European Community, as last amended by Council Regulation (EC) No 2117/2005 of 21 December 2005 (‘the basic Regulation’) in the proceeding concerning imports of certain prepared or preserved sweetcorn in kernels originating in Thailand. |

General context This proposal is made in the context of the implementation of the basic Regulation and is the result of an investigation which was carried out in line with the substantive and procedural requirements laid out in the basic Regulation. |

Existing provisions in the area of the proposal Council Regulation (EC) No 682/2007 imposing definitive anti-dumping duties on imports of certain prepared or preserved sweetcorn in kernels originating in Thailand. Regulation (EC) No 954/2008 amended Regulation (EC) No 682/2007 with regard to the duty imposed on one company and on 'all other companies'. Commission Decision (2007/424/EC) accepting undertakings offered by two Thai producers. |

Consistency with other policies and objectives of the Union Not applicable. |

CONSULTATION OF INTERESTED PARTIES AND IMPACT ASSESSMENT |

Consultation of interested parties |

Interested parties concerned by the proceeding have had the possibility to defend their interests during the investigation, in line with the provisions of the basic Regulation. |

Collection and use of expertise |

There was no need for external expertise. |

Impact assessment This proposal is the result of the implementation of the basic Regulation. The basic Regulation does not foresee a general impact assessment but contains an exhaustive list of conditions that have to be assessed. |

LEGAL ELEMENTS OF THE PROPOSAL |

Summary of the proposed action On 16 September 2008, the Commission initiated a partial interim review of the anti-dumping measures in force in respect of imports of certain prepared or preserved sweetcorn in kernels originating in Thailand. The review was limited in scope to the examination of the form of the measure and in particular to the examination of the acceptability and workability of undertakings offered by certain exporting producers in Thailand. The attached proposal to amend Regulation (EC) No 682/2007 is based on the definitive findings which revealed that price undertakings are not an appropriate form of the measures. It is therefore proposed that the Council adopts the attached proposal for a Regulation which should be published in the Official Journal of the European Union by 15 December 2009 at the latest. |

Legal basis Council Regulation (EC) No 384/96 of 22 December 1995 on protection against dumped imports from countries not members of the European Community, as last amended by Council Regulation (EC) No 2117/2005 of 21 December 2005. |

Subsidiarity principle The proposal falls under the exclusive competence of the Community. The subsidiarity principle therefore does not apply. |

Proportionality principle The proposal complies with the proportionality principle for the following reasons. |

The form of action is described in the above-mentioned basic Regulation and leaves no scope for national decision. |

Indication of how financial and administrative burden falling upon the Community, national governments, regional and local authorities, economic operators and citizens is minimized and proportionate to the objective of the proposal is not applicable. |

Choice of instruments |

Proposed instruments: Regulation. |

Other means would not be adequate because the basic Regulation does not provide for alternative options. |

BUDGETARY IMPLICATION |

The proposal has no implication for the Community budget. |

Proposal for a

COUNCIL REGULATION

amending Regulation (EC) No 682/2007 imposing a definitive anti-dumping duty on imports of certain prepared or preserved sweetcorn in kernels originating in Thailand

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community,

Having regard to Council Regulation (EC) No 384/96 of 22 December 1995 on protection against dumped imports from countries not members of the European Community[1] (‘the basic Regulation’) and in particular Articles 8 and 11(3) thereof,

Having regard to the proposal submitted by the Commission after consulting the Advisory Committee,

Whereas:

A. PROCEDURE

1. Measures in force

(1) Following an investigation (the 'original investigation'), the Council, by Regulation (EC) No 682/2007[2] (‘the original Regulation’), imposed definitive anti-dumping duties on imports of certain prepared or preserved sweetcorn in kernels falling within CN codes ex 2001 90 30 and ex 2005 80 00 and originating in Thailand. The measures took the form of an ad valorem duty. Regulation (EC) No 954/2008[3] amended Regulation (EC) No 682/2007 with regard to the rate of duty imposed on one company and on 'all other companies'. The duty rates thus range between 3,1 % and 14,3%. Imports from two Thai exporting producers, namely Malee Sampran Public Co Ltd (Malee) and Sun Sweet Co Ltd (Sun Sweet) from whom undertakings had been accepted by Commission Decision 2007/424/EC[4] and which fulfilled the conditions set out in Article 2 of Regulation (EC) No 682/2007, were exempted from the duty.

2. Grounds for a review

(2) At the time of imposition of definitive measures, the Council exceptionally allowed cooperating exporting producers who were not able to submit a sufficiently substantiated undertaking offer within the deadline set in Article 8(2) of the basic Regulation to complete their offer within 10 calendar days from entry into force of the definitive Regulation (EC) No 682/2007. Ten further undertaking offers were completed within this deadline. The two undertaking offers accepted as well as those ten further offers include fixed minimum import prices.

(3) Upon disclosure of the ten further offers, the Community industry opposed the acceptance of price undertakings by stating that fixed minimum import prices were no longer an effective form of the measure because of increasing prices of the product concerned (as defined in recital (16) below) as well as of its main raw material and inputs.

(4) In order to reassess the appropriateness of undertakings as an effective form of anti-dumping measures, the Commission deemed it necessary to reassess the acceptability and workability of the undertakings offered and of those accepted.

3. Investigation

(5) Having determined, after consulting the Advisory Committee, that sufficient evidence existed for the initiation of a partial interim review, the Commission announced on 16 September 2008, by a notice of initiation published in the Official Journal of the European Union[5] , the initiation of a partial interim review in accordance with Article 11(3) of the basic Regulation.

(6) The review was limited in scope to the examination of the form of the measure applicable to the two Thai exporting producers from whom undertakings had been accepted and the ten Thai exporting producers with pending undertaking offers.

(7) The Commission officially advised the exporting producers, the representatives of the exporting country and the Community producers and their association as well as importers of the initiation of the partial interim review. Interested parties were given the opportunity to make their views known in writing and to request a hearing within the time limit set in the notice of initiation.

(8) In order to obtain the information deemed necessary for the investigation, the Commission sent questionnaires to the twelve exporting producers concerned as well as to the Community producers. The Community producers and seven out of the twelve Thai companies replied to the questionnaire.

(9) Five Thai companies with pending undertaking offers did not reply at all to this review questionnaire and were considered as not cooperating within the meaning of Article 18 of the basic Regulation. The information submitted by one Thai company had to be disregarded due to incompleteness of the confidential questionnaire reply. In addition, this company did not provide a meaningful non-confidential version of the questionnaire reply. The company argued that due to significant structural changes within the company including a name change it was difficult to react efficiently to the questionnaire. Another Thai company also refused to provide a meaningful non-confidential version of the questionnaire reply. The companies concerned were informed about the proposed application of Article 18 of the basic Regulation and were given the opportunity to comment. The latter company claimed that it was impossible for them to furnish a meaningful non-confidential reply of their data submitted due to the sensitivity of the information contained. It is noted that whereas this argument is acceptable for parts of the questionnaire dealing with the companies' costs and prices, this argument cannot be accepted for other parts of the questionnaire such as operating statistics, general information etc. The first company submitted further confidential information. However, even considering that the company might be in a phase of restructuring, basic information has to be given in order to allow for an assessment of the situation of the company. Despite the additional information submitted at a later stage, this minimum requirement was not met, given that no details about certain cost items were given. Moreover, no meaningful non-confidential version of the reply was provided.

(10) It was thus considered that no decisive arguments were submitted to reverse the decision to apply Article 18 of the basic Regulation.

(11) All other producing companies cooperated by replying to the questionnaire.

(12) Several other interested parties submitted comments. One importer stated that the imposition of measures was not justified due to the absence of dumping during the original IP (as defined below in recital (17)) and should therefore be withdrawn. In this regard it should be recalled that the original investigation established that injurious dumping was taking place. Moreover, this review focuses on the appropriateness of undertakings as an effective form of anti-dumping measures, and any claims regarding the findings of the original investigation other than the form of the measures cannot be taken into account. The comment therefore had to be rejected. Another importer submitted a formal request for suspension of the measures. This request is being assessed outside the current review investigation.

(13) Verification visits were carried out at the premises of the following companies:

(14) (a) Exporting producers in Thailand

- Lampang Food Products Co., Ltd., Bangkok,

- Malee Sampran Public Co., Ltd., Bangkok,

- River Kwai International Food Industry Co., Ltd., Bangkok, and

- Sun Sweet Co., Ltd., Chingmai;

(b) Community Producers

- Bonduelle Conserve International, Lille-Villeneuve d'Ascq, France

- Conserve Italia SCA, San Lazzaro di Savena, Italy.

(15) The investigation covered the period from 01 July 2007 to 30 June 2008 (‘review investigation period’ or ‘RIP’).

4. Product concerned

(16) The product concerned is sweetcorn ( Zea mays var. saccharata ) in kernels, prepared or preserved by vinegar or acetic acid, not frozen, currently falling within CN code ex 2001 90 30, and sweetcorn ( Zea mays var. saccharata ) in kernels, prepared or preserved otherwise than by vinegar or acetic acid, not frozen, other than products of heading 2006, currently falling within CN code ex 2005 80 00, originating in Thailand.

C. FINDINGS

1. Evolution of sales prices of the product concerned

(17) As a first step, the price developments of the product concerned were examined for the period beginning with the original investigation period, i.e. from 01 January 2005 to 31 December 2005 ('original IP') and ending with the RIP. Data for the remainder of 2008 was looked at to cross-check conclusions.

(18) The analysis showed a clear upward trend of import prices of the product concerned from Thailand since the original IP, in particular since the end of 2006. Despite a price decrease during the RIP, prices remain significantly above the price level of the original IP. Data available for 2008 point to yet another increase.

Table 1: Import prices for imports from Thailand into the EU by quarter

Index, Q1/2005 = 100 | Q1 | Q2 | Q3 | Q4 |

Original IP Index | 656 100 | 669 102 | 723 110 | 699 107 |

2006 Index | 719 110 | 705 107 | 715 109 | 747 114 |

2007 Index | 830 127 | 798 122 | 814 124 | 773 118 |

RIP Index | 814 124 | 773 118 | 763 116 | 740 113 |

2008 Index | 763 116 | 740 113 | 768 117 | 811 124 |

Source: Eurostat

(19) The overall evolution of the average import prices of the product concerned reported by Eurostat was corroborated by the analysis of the verified sales prices to the EU of a representative can size (12 oz) by the Thai companies. Indeed, as shown in the table below, the same trend as in Eurostat could be observed for this can size.

(20) Furthermore, an analysis of the Thai prices for the representative can size, demonstrated an even higher price fluctuation since the original IP. Sales prices varied by more than 30% in the period between the first quarter of 2005 and the last quarter of the RIP. Data available for the second half of 2008 confirm this evolution.

Table 2: Thai sales prices to the EU (Euro/t - can size12 oz – indexed)

Index, Q1/2005 = 100 | Q1 | Q2 | Q3 | Q4 |

Original IP | 100 | 105 | 106 | 115 |

2006 | 118 | 119 | 118 | 123 |

2007 | 129 | 133 | 123 | 116 |

RIP | 123 | 116 | 109 | 112 |

2008 | 109 | 112 | 121 | 122 |

Source: Investigation

(21) In view of the significant price variation of the product concerned since the original IP it has to be concluded that price undertakings with fixed minimum import prices are no longer suitable.

2. Possible indexation of the minimum import prices

(22) Although the pending undertaking offers and the accepted undertaking offers exclusively contain fixed minimum prices, it was also examined whether the two undertakings in force and the ten pending undertaking offers could exceptionally be maintained, or respectively accepted, through an indexation of the minimum import prices.

(23) It therefore had to be established whether there is a correlation between the price evolution of the sales prices of the product concerned and the purchase prices of the main raw material/inputs used in the production process and, should that be the case, whether they represent a significant part of the total cost of production and whether there is publicly available price information for those components.

(24) The two main components are sweetcorn and cans, representing each between 30 and 40% of the cost of production of the product concerned.

a) Indexation on the evolution of purchase prices of sweetcorn

(25) As can be seen from the table below, average purchase prices of sweetcorn in Thailand and in the EU increased significantly compared to the original IP. Prices at the end of the RIP were significantly higher than during the original IP. Data available for the second half of 2008 confirm the price increase.

(26) It is also evident that, other than in the EU, purchase prices in Thailand show an increasing volatility within a given year, in particular since the end of 2006. The difference between the lowest and the highest price in Thailand varied by almost 40% in the period between the original IP and the RIP. Data available for end of 2008 point to an even higher volatility.

Table 3: Purchase prices of sweetcorn by quarter in EURO (indexed)

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Source: Investigation

(27) Even though it was found that both, sales prices of the product concerned as well as purchase prices of sweetcorn showed an increasing volatility since the original IP, no consistent and stable correlation between both prices could be established. Although between the beginning of 2005 and the end of 2006, it could be argued that the price evolution of sweetcorn is somewhat reflected in the price evolution of the product concerned, this is no longer the case since 2007. Indeed, purchase prices of sweetcorn decrease while sales prices of the product concerned increase and vice versa.

Table 4: Correlation between sales prices of the product concerned and purchase prices of sweetcorn

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(28) Moreover, the analysis showed that there is no homogeneity in evolution of sweetcorn prices world-wide. As can be seen in table 3 above, prices in Thailand and in the Community evolve differently.

(29) Due to the absence of a correlation between sales prices of the product concerned and purchase prices of sweetcorn as well as in light of the divergent evolution of sweetcorn prices in Thailand and in the Community, it is evident that an indexation of the minimum import price on the price of sweetcorn is not feasible.

(30) Moreover, and of equal importance is that that there is no publicly available information on prices of sweetcorn. The above data could only be obtained in the framework of a review. An indexation of the minimum price would therefore be impossible, even if a correlation had been established.

b) Indexation on the evolution of purchase prices of cans

(31) The cost of cans, the other main input, represents a part of the total cost of production that is not significant enough to permit an indexation on can prices alone. In any case, the investigation has shown that can prices remained stable between the original IP and the review IP, i.e. no correlation whatsoever with the prices of the product concerned could be established. It is therefore noted that main pre-conditions for indexation, as outlined in recital 23, are not met. The possibility to index the minimum import prices to the evolution of the prices for cans was therefore not considered further.

(32) In view of all the elements listed above, the investigation therefore confirmed that there is no possibility to index the minimum import prices in order to address the fluctuating prices of the product concerned.

3. Individual reasons not to accept pending undertaking offers

(33) Five out of the ten companies with pending undertaking offers did not reply to the questionnaire and have therefore been considered as non-cooperating in accordance with Article 18 of the basic Regulation. For reasons of general policy, non-cooperation should not be rewarded and thus the pending undertaking offers of those companies cannot be accepted.

(34) It was also found that another company absorbed the anti-dumping duties, at least with regard to certain transactions. Such practice negatively affects the relationship of trust which forms the basis for acceptance of price undertakings. The undertaking offer of this company is therefore not acceptable.

(35) Another company established a related company outside Thailand which produces the product concerned. The company offered to include this subsidiary in the undertaking offer. However, the existence of such a subsidiary constitutes a high risk of cross-compensation. The undertaking offer of this company therefore also has to be rejected.

(36) Another company ceased production of the product concerned and leased the production facilities to a newly established related company. The undertaking offer of this company therefore also has to be rejected.

4. Individual reasons for withdrawal of an undertaking

(37) The verification at the premises of one of the companies with an existing undertaking revealed a number of breaches as detailed in Commission Decision [INSERT].

D. CONCLUSIONS

(38) On the basis of the above facts and considerations it is considered that price undertakings with fixed minimum import prices are no longer appropriate to counteract the injurious effect of dumping and that there is no possibility of indexing the minimum import prices in order to address the problem. In these circumstances the undertaking offers should be rejected and the accepted undertakings should be withdrawn.

(39) Moreover, eight out of the ten pending undertaking offers should be rejected due to the individual reasons outlined above.

(40) In addition, one of the two existing price undertakings should also be withdrawn due to non-compliance with the undertaking.

(41) It was therefore concluded that the review investigation limited to the form of the measure should be terminated, that the undertaking offers in question should not be accepted and that the existing undertakings should be withdrawn.

(42) All parties were informed of the essential facts and considerations on the basis of which the decision to reject the pending undertaking offers and withdraw the existing undertakings was made and were given the opportunity to comment.

(43) Some parties argued that an undertaking cannot be withdrawn if all clauses of the undertaking have been respected. Instead, the company should be given the opportunity to revise its minimum import prices in accordance with the market evolution.

(44) In response to this argument it has to be underlined that the existing undertakings have first and foremost to be withdrawn, just like the pending undertaking offers have to be rejected, for general reasons of practicability. As outlined above, the review has shown that sweetcorn is no longer suitable for a price undertaking, regardless of whether or not individual companies complied with the provisions of the undertaking or whether they are willing to revise the minimum import prices. In any case, in view of the price volatility established during the review, a revision of the minimum import prices would only be feasible by introducing an indexation formula. But, the review has shown that there is no basis for it.

(45) One company contested that their purchase prices of sweet corn and their sales prices of the product concerned showed an increasing volatility and upward trend between the original IP and the RIP and claimed that the increase in their sales prices of the product concerned was only caused by the minimum import price. It was therefore argued that there are no reasons to withdraw the acceptance of their price undertaking.

(46) However, data provided by the company do not corroborate the claim. The purchase prices of sweetcorn did show an increasing trend although slightly less than the average. On the other hand, their sales prices of the product concerned during the RIP were significantly above the relevant minimum import price and showed a further increasing trend in the second half of 2008.

(47) Some parties argued further that the rejection of the pending price undertaking offers and the withdrawal of the existing price undertakings is not in line with Article 15 of the WTO Anti-Dumping Agreement which obliges WTO members to give regard to the special situation of developing countries. In response to this submission it has to be stressed that the Commission actively considered, with an open mind, all possible options, including indexation of the fixed minimum import prices, in order to overcome the practicability problems of the undertakings. Thus, possibilities of constructive remedies have been explored in this case. However, the findings of the investigation as set out in recitals (22)-(32) did not give any leeway in this regard.

(48) Other parties requested formal suspension of the measures as a result of the review findings. As already outlined in recital (12), such a request is being assessed outside the current review investigation,

HAS ADOPTED THIS REGULATION:

Article 1

1. Article 1(3) of Regulation (EC) No 682/2007, as last amended by Regulation (EC) No 954/2008, shall be deleted.

2. Article 1(4) of Regulation (EC) No 682/2007, as last amended by Regulation (EC) No 954/2008, shall be renumbered as Article 1(3).

3. Article 2 of Regulation (EC) No 682/2007, as last amended by Regulation (EC) No 954/2008, shall be deleted.

4. Articles 3 and 4 of Regulation (EC) No 682/2007, as last amended by Regulation (EC) No 954/2008, shall be renumbered as Articles 2 and 3 respectively.

5. Annex II of Regulation (EC) No 682/2007, as last amended by Regulation (EC) No 954/2008, shall be deleted.

Article 2

The partial interim review of Regulation (EC) No 682/2007 as last amended by Regulation (EC) No 954/2008 is hereby terminated with the non-acceptance of the undertaking offers.

Article 3

This Regulation shall enter into force on the day following that of its publication in the Official Journal of the European Union .

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels,

For the Council

The President

[…]

[1] OJ L 56, 6.3.1996, p. 1.

[2] OJ L 159, 20.6.2007, p. 14.

[3] OJ L 260, 30.9.2008, p.1

[4] OJ L 159, 20.6.2007, p. 42.

[5] OJ C 237, 16.9.2008, p. 18.