[pic] | COMMISSION OF THE EUROPEAN COMMUNITIES |

Brussels, 23.1.2008

COM(2008) 12 final

Proposal for a

COUNCIL REGULATION

amending the scope of the anti-dumping measures imposed by Council Regulation (EC) No 130/2006 on imports of tartaric acid originating in the People's Republic of China

(presented by the Commission)

EXPLANATORY MEMORANDUM

1) 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 tartaric acid originating in the People's Republic of China. |

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 130/2006 imposing a definitive anti-dumping duty on imports of tartaric acid originating in the People's Republic of China. |

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

2) CONSULTATION OF INTERESTED PARTIES AND IMPACT ASSESSMENT |

Consultation of interested parties |

Interested parties concerned by the proceeding have already 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. |

3) LEGAL ELEMENTS OF THE PROPOSAL |

Summary of the proposed action On 17 March 2007, the Commission initiated a partial interim review, limited in scope to the examination of the product scope of the anti-dumping measures applicable to imports of tartaric acid originating in the People's Republic of China. The request was lodged by CU Chemie Uetikon GmbH, an importer from Germany, who provided prima facie evidence indicating that tartaric acid of the 'D-(-)' type ('D' tartaric acid') should not be subject to the above-mentioned measures. The investigation revealed that 'D' tartaric acid and other tartaric acid types have substantially different basic physical and chemical characteristics and totally different end-uses. In particular, 'D' tartaric acid is used by the pharmaceutical industry as an auxiliary substance in chemical synthesis. These applications require the specific properties of 'D' tartaric acid, for which there is no interchangeability with other types of tartaric acid. Furthermore, the price of 'D' tartaric acid is much higher than that of other types of tartaric acid, which in practice restricts its market to the aforementioned pharmaceutical applications. It is therefore proposed to amend the product scope of the anti-dumping measures by excluding 'D' tartaric acid. Member States were consulted and supported this proposal. It is proposed that the Council adopt the attached proposal for a Regulation which should be published in the Official Journal as soon as possible. |

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 reason(s). |

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 for the following reason(s). The above-mentioned basic Regulation does not foresee alternative options. |

4) BUDGETARY IMPLICATION |

The proposal has no impact on expenditure but has a financial impact on revenue, estimated at -€15 543. |

Proposal for a

COUNCIL REGULATION

amending the scope of the anti-dumping measures imposed by Council Regulation (EC) No 130/2006 on imports of tartaric acid 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 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 Article 11(3) thereof,

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

Whereas:

1. MEASURES IN FORCE

(1) By Regulation (EC) No 130/2006[2] ('the original Regulation') the Council imposed a definitive anti-dumping duty on imports of tartaric acid originating in the People's Republic of China ('PRC').

2. PRESENT INVESTIGATION

2.1 Procedure

(2) The Commission received a request from CU Chemie Uetikon GmbH ('the applicant'), an importer from Germany, for a partial interim review pursuant to Article 11(3) of the basic Regulation. The applicant alleged that the so-called D-(-) type is a distinct product from other types of tartaric acid, due to its specific molecular structure, which in turns determines specific chemical characteristics not shared by other types of the product concerned and should not be therefore subject to the above-mentioned measures.

(3) Having determined, after consulting the Advisory Committee, that sufficient evidence existed for the initiation of a partial interim review, the Commission, on 17 March 2007, initiated an investigation[3] according to Article 11(3) of the basic Regulation. The investigation was limited in scope to the definition of the product covered by the measures in force.

(4) The Commission officially advised the applicant importer, the authorities of the exporting country and all parties known to be concerned, of the initiation of this review. Questionnaires were sent to Community producers, importers, users and exporting producers who cooperated in the investigation that led to the existing measures. Interested parties were given the opportunity to make their views known in writing and to request a hearing within the time limit set out in the notice of initiation.

(5) Two questionnaire replies were received and one party was granted a hearing.

(6) The Commission sought and verified all the information it deemed necessary for the purpose of assessing whether the scope of the measures should be amended and carried out investigations at the premises of the following companies:

- CU Chemie Uetikon GmbH, Lahr, Germany

- Longchem Corporation, Hangzhou, China

(7) The investigation period ('IP') covered the period from 1 January 2006 to 31 December 2006.

2.2 Product concerned

(8) The product concerned, as defined in the original Regulation, is tartaric acid originating in the People's Republic of China, currently classifiable within CN code 2918 12 00. The product concerned is used in wine, in beverage and food additives, as a retardant in plaster and in numerous other products. It can be obtained either form the by-products of wine making, as is the case with all Community producers, or via chemical synthesis from petrochemical compounds, as is the case with all PRC exporting producers.

2.3 Findings

(9) Tartaric acid is a 'chiral' molecule, i.e. it exists in different geometric configurations. The 'L-(+)' and 'D-(-)' types (hereinafter 'L' and 'D' tartaric acid respectively), whose molecules are a mirror image of each other, are of particular relevance. Those types of tartaric acid are distinguished in widely accepted industry references such as Chemical Abstract Services ('CAS') or European Inventory of Existing Commercial Chemical Substances ('EINECS'). They can be readily distinguished from one another through a test which measures the rotation of polarised light. The direction of rotation for 'L' tartaric acid is positive while that for 'D' tartaric acid is negative.

(10) The investigation which led to the measures in force focused on naturally-occurring tartaric acid, which is of the type 'L'. It was found that the product manufactured and sold by the Chinese producers had the same basic characteristics as the product of the Community industry, and was in competition with the latter for a majority of the above-mentioned applications.

(11) 'D' tartaric acid, on the other hand, is not naturally-occurring and can only be obtained via chemical synthesis. This type of tartaric acid is not produced by the Community industry and it is not recognised in the Community as a food additive. Its known applications are in the pharmaceutical industry, in the production of certain auxiliary substances which are themselves used to produce the active ingredients of medicines. Either 'L' or 'D' tartaric acid can be used in this type of pharmaceutical applications, depending on the intended characteristics of the end product. However, the 'D' and 'L' types cannot be substituted for one another within any single application. These conclusions were confirmed by the fact that the applicant, a company producing auxiliary substances for the pharmaceutical industry, purchased and used both 'L' and 'D' tartaric acid in the manufacture of its products, rather than just using one (less expensive) type of tartaric acid.

(12) The investigation has also shown that the price of 'D' tartaric acid is 4 to 5 times higher than that of other types of tartaric acid, which is a result of the different production process used in its manufacture. This higher price restricts the market for 'D' tartaric acid to applications such as mentioned above, where other, less expensive types of tartaric acid cannot be used. As a result of those differences in application and costs, the size of the market for 'D' tartaric acid is estimated to be less than 1% of the overall market for tartaric acid.

(13) In summary, the investigation has found that 'D' tartaric acid has substantially different physical and chemical characteristics from those of 'L' tartaric acid produced by the Community industry, meaning that the two types are not interchangeable and not competing in the Community market. Given those differences between 'D' tartaric acid and the product investigated, it is concluded that 'D' tartaric acid should not be covered by the product scope of the measures.

(14) The above conclusions were based on the characteristics of pure 'D' tartaric acid, and therefore do not apply to any mixtures of 'D' tartaric acid with other products.

(15) Interested parties were informed of the above conclusions.

(16) The Community industry, while not questioning the findings of the investigation, expressed its concern that exempting one product type could facilitate the circumvention of the measures.

(17) It is considered, however, that given the differences in prices and quantities involved, circumvention can promptly be detected through statistical data. Furthermore, 'D' tartaric acid can be easily distinguished from other types through an optical test as mentioned above.

(18) The Commission will monitor the import data of 'D' tartaric acid and the other types which are subject to measures. Should the quantities and/or prices of imports of D' tartaric acid into any Member State depart from the normal trend, the Commission will immediately alert the appropriate customs authorities.

3. RETROACTIVE APPLICATION

(19) Given the above, it is considered appropriate to amend the original Regulation to clarify the product definition and to exclude 'D' tartaric acid from the measures.

(20) Since the present review investigation is limited to the clarification of the product scope and since it was not intended this product type be covered by the original measures, in order to prevent any consequent prejudice to importers of the product, it is considered appropriate that the findings be applied from the date of the entry into force of the original Regulation, including any imports subject to provisional duties between 30 July 2005 and 28 January 2006. Moreover, in particular in view of the relatively recent entry into force of the original Regulation and of the expected limited number of requests for refunds, there is no overriding reason not to provide for such retro-active application.

(21) Consequently, for goods not covered by Article 1(1) of Council Regulation (EC) No 130/2006 as amended by this Regulation, the definitive anti-dumping duties paid or entered in the accounts pursuant to Article 1(1) of Regulation (EC) No 130/2006 in its initial version should be repaid or remitted.

(22) Repayment or remission must be requested from national customs authorities in accordance with applicable customs legislation.

(23) This review does not affect the date on which Council Regulation (EC) No 130/2006 will expire pursuant to Article 11(2) of the basic Regulation.

HAS ADOPTED THIS REGULATION:

Article 1

Article 1(1) of Council Regulation (EC) No 130/2006 is hereby replaced by the following:

'1. A definitive anti-dumping duty is hereby imposed on imports of tartaric acid, excluding D-(-)-tartaric acid with a negative optical rotation of at least 12.0 degrees, measured in a water solution according to the method described in the European Pharmacopoeia, falling within CN code ex 2918 12 00 (TARIC code 2918 12 00 90), and originating in the People's Republic of China.'

Article 2

For goods not covered by Article 1(1) of Regulation (EC) No 130/2006 as amended by this Regulation, the definitive anti-dumping duties paid or entered in the accounts pursuant to Article 1(1) of Regulation (EC) No 130/2006 in its initial version shall be repaid or remitted, pursuant to Article 236 of Council Regulation (EEC) No 2913/92 of 12 October 1992 establishing the Community Customs Code[4]. Repayment or remission shall be requested from national customs authorities in accordance with applicable customs legislation.

Article 3

This Regulation shall enter into force on the day following that of its publication in the Official Journal of the European Union . It shall apply from 28 January 2006.

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. Regulation as last amended by Regulation (EC) No 2117/2005 (OJ L 340, 23.12.2005, p. 17).

[2] OJ L 23, 27.01.2006, p. 1.

[3] OJ C 63, 17.03.2007, p. 2.

[4] OJ L 302, 19.10.1992, p. 1. Regulation as last amended by Regulation (EC) No 1791/2006 (OJ L 363, 20.12.2006, p. 1).