COMMISSION OF THE EUROPEAN COMMUNITIES 
C0M(94) 374 final 
Brussels, 12.08.1994 
Proposal for a 
COUNCIL REGULATION (EC) 
o imposing a definitive anti-dumping duty 
n imports of certain magnetic disks (3.5» microdisks) 
1 
I originating in Hong Kong and the Republic of Korea 
and collecting definitively the provisional dut y imposed 
(presented by the Commission) 
EXPLANATORY MEMORANDUM 
1. The Commission, by Regulation (EEC) No 534/94 of 9 March 1994 (^ 
imposed a provisional duty on imports of certain magnetic disks 
(3.5" microdisks) originating in Hong Kong and the Republic of 
Korea. The Council, by Regulation (EC) No 1340/94 (2) of 8 June 
1994 extended this duty for a period not exceeding two months. 
2. Following the adoption of the provisional measures, the interested 
parties, who so requested, were heard by the Commission and made 
written submissions. Upon request, parties were informed of the 
essential facts and considerations on the basis of which it was 
intended to recommend the imposition of definitive duties and the 
definitive collection of amounts secured by way of a provisional 
duty. They were also granted a period within which to make 
representations subsequent to the disclosure. 
3. The oral and written comments submitted by the parties were 
considered and, where appropriate, the Commission's findings were 
modified to take account of them. 
4. The facts, as finally established, show dumping for all the 
exporters concerned as well as injury to the Community industry 
caused thereby, especially demonstrated by sales suppression, price 
depression and a resulting lack of profitability. 
5. In these circumstances, the Commission considers that it is in the 
Community interest to adopt definitive measures intended to 
eliminate the injurious effect of the dumped imports concerned. 
Consequently, in accordance with Article 12 of Council Regulation 
(EEC) No 2423/88^) t the Commission, after consultation within the 
Advisory Committee, proposes the imposition of definitive anti­
dumping duties on imports of certain magnetic disks (3.5" 
microdisks) originating in Hong Kong and the Republic of Korea. 
6. In view of the dumping margins established, and the seriousness of 
the injury caused to the Community industry, it is also proposed 
that the amounts secured by way of provisional anti-dumping duty be 
definitively collected to the extent of the amount of the duty 
definitively imposed. 
(1) OJ No L 68, 11.3 .94, p. 5 
(2) OJ No L 14 6, 11.6.94, p. 1 
(3) OJ No L 209, 2.8.1988, p. 1 
COUNCIL REGULATION (EC) No 
of 1994 
imposing a definitive anti-dumping duty 
on imports of certain magnetic disks (3.5" microdisks) 
originating in Hong Kong and the Republic of Korea, 
and collecting definitively the provisional duty imposed 
THE COUNCIL OF THE EUROPEAN UNION, 
Having regard to the Treaty establishing the European Community, 
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 Community(-^ , and in particular Article 12 
thereof, 
Having regard to the proposal submitted by the Commission after 
consultation within the Advisory Committee as provided for under the 
above Regulation, 
Whereas : 
A. PROVISIONAL MEASURES 
(1) The Commission, by Regulation (EC) N° 543/94<2^ , hereinafter 
referred to as the "provisional Regulation", imposed a provisional 
anti-dumping duty on imports into the Community of certain magnetic 
disks (hereinafter referred to as 3.5" microdisks) originating in 
Hong Kong and the Republic of Korea, and falling within CN Code ex 
8523 20 90. The duty was extended for a maximum period of two 
months by Council Regulation (EC) N° 1340/94<3) 
(1) OJ No I 209, 2.8.1988, p.1 
(2) OJ No I 68, 11.3.94, p.5 
(3) OJ No L 146, 11.6.94, p. 1 
>l<x_ 
B. SUBSEQUENT PROCEDURE 
(2) Subsequent to the imposition of the provisional anti-dumping duty, 
the Government of Hong Kong and other interested parties who so 
requested were granted an opportunity to be heard by the Commission. 
Certain of these parties also presented written submissions making 
known their views on the findings. In particular, the Hong Kong 
authorities reiterated certain views expressed at various stages of 
the proceeding. 
(3) One importer, which had not cooperated in the proceeding, made 
written representations to the Commission following the introduction 
of the provisional anti-dumping duty. 
(4) Upon request, parties were informed of the essential facts and 
considerations on the basis of which it was intended to recommend 
the imposition of definitive duties and the definitive collection of 
amounts secured by way of provisional duty. They were also granted 
a reasonable period within which to make representations subsequent 
to the disclosure. 
(5) It should be noted that the complainant Community producer RPS, 
Rhone Poulenc Systems, mentioned at recital 4(a) of the provisional 
Regulation should now be referred to as RPS Boeder International. 
(6) Because of the volume and complexity of the data examined, the 
investigation could not be concluded within the time limit provided 
for in Article 7 (9)(a) of Regulation (EEC) N° 2423/88 (hereinafter 
referred to as the basic Regulation). 
(7) Following an anti-dumping proceeding on imports of certain magnetic 
disks (3.5" microdisks) originating in Japan, Taiwan and the 
People's Republic of China, hereinafter referred to as the "prior 
proceeding", definitive anti-dumping duties were imposed in October 
1993 by Council Regulation (EEC) No 2861/93 (4). 
(4) OJ No L 262, 21.10.1993, p.4 
C. PRODUCT UNDER CONSIDERATION/LIKE PRODUCT 
(8) As no further arguments have been presented regarding the product 
under consideration and the like product, the findings set out in 
recitals (8) to (12) of the provisional Regulation are confirmed. 
D. DUMPING 
1. Normal value 
(9) For the purpose of the definitive findings, normal value was, in 
general, established on the basis of the same methods as those used 
in the provisional determination of dumping, after taking into 
consideration new facts and arguments presented by the parties. 
(10) Following publication of the provisional Regulation, two producers 
in Hong Kong and the Hong Kong authorities contended that, even 
although their domestic sales of the like product had been 
insufficient to permit a proper comparison, the amount for selling, 
general and administrative expenses used in constructing normal 
value should have been based on the selling, general and 
administrative expenses of the companies concerned, even those 
relating to export sales, rather than those of another producer in 
Hong Kong. The Hong Kong authorities also questioned the 
reasonableness of the level of profit used in constructing normal 
value. 
It was not possible to follow the approach suggested for selling, 
general and administrative expenses, since Article 2(3)(ii) of the 
basic Regulation requires that these relate to domestic sales and 
not export sales. 
The investigation showed that the selling, general and 
administrative expenses for the domestic producer referred to in the 
provisional duty regulation related to sales in the same business 
sector. These were, therefore, used for the construction of normal 
value for the other Hong Kong producers. 
As to the level of profit of 10% used, it should be noted that this 
was the level alleged by the complainant, and was found to be less 
than that realised by the sole producer with sales of the product 
concerned on the Hong Kong market, albeit in unrepresentative 
quantities. 
(11) The Korean producer argued that an adjustment should have been made 
to normal value for promotional items given to certain of its 
customers, on the grounds that the value of these goods represented 
a rebate, and should thus be deducted from the domestic price of the 
product concerned. 
As the items in question were not 3.5" microdisks, and there was no 
evidence that the price of the product concerned would have been 
different in the absence of the promotional goods, the costs 
incurred should be regarded as promotional expenses and not as 
rebates. 
The adjustment claimed, therefore, is not allowable under the 
provisions of Article 2(3)(a) of the basic Regulation. 
(12) In the light of the foregoing, the findings set out in recitals 13 
and 14 of the provisional Regulation are confirmed. 
2. Export price 
(13) One Hong Kong producer made its sales to the Community through its 
parent company in Japan. At the provisional stage, in the absence 
of sufficient information on the price at which the parent company 
sold for export to the Community, the Commission considered that 
export price should be established on the basis of the price charged 
by the producer to its parent company. 
Subsequent to the introduction of the provisional duty, the producer 
in question has provided evidence on the price at which its parent 
company sold for export to the Community. 
The export price has been adjusted accordingly. 
(14) No other new arguments were presented regarding the establishment of 
export price. The findings set out in recitals (15) and (16) of the 
provisional Regulation are, therefore, confirmed. 
3. Comparison 
(15) One Hong Kong producer argued that, as its export sales were mainly 
to OEM customers, these sales could not be compared to domestic 
sales made under a producer's brand name, because OEM sales would be 
at lower prices as a result of lower selling, general and 
administrative expenses and profit. 
After examination of the domestic sales of the cooperating Hong Kong 
producers, the Commission has come to the conclusion that prices 
were not a function of the channel of sale. No pattern of prices 
specific to OEM sales could be identified and, therefore, the 
adjustment claimed could not be made. 
4. Dumping margins 
(16) On the basis of the modifications made to the calculations of normal 
value and export price, the definitive dumping margins calculated by 
the Commission, expressed as a percentage of the GIF value, 
established in accordance with the provisions of Regulation (EEC) No 
1224/80 of 28 May 1980 on the valuation of goods for customs 
purposes^, for each of the companies concerned, are as follows : 
Hong Kong 
- Jackin Magnetic Company Limited : 7.2 
- Plantron (HK) Ltd. : 6.7 
- Technosource Industrial Ltd. : 13.3 
It should be noted that Swire Magnetic Holdings Limited ceased 
production and trading of 3.5" microdisks in the first quarter of 
1994. It was therefore not found necessary to establish an 
individual dumping margin for this producer. 
(5) OJ No L 134, 31.5.1980, p.1 
Republic of Korea : 
- SKC : 8.1 
(17) As far as non-cooperating producers are concerned, the Hong Kong 
authorities contended that the dumping margin to be applied for Hong 
Kong should be based on the highest margin established for producers 
in Hong Kong which cooperated in the investigation. 
The Commission has examined this contention and reaffirms its 
findings at recital (23) of the provisional Regulation that the low 
level of cooperation on the part of Hong Kong producers makes the 
adoption of such a solution unreasonable, as the dumping margin for 
such cooperating exporters is not a reliable basis for assessing the 
level of dumping on the very large volume of imports from non-
cooperating exporters. 
The Commission has, however, adjusted the dumping margin to be 
applied to non-cooperating producers in Hong Kong to the weighted 
average margin for the different product types sold for export to 
the Community, as alleged by the complainant. 
The findings in this respect, and those set out in recital (22) of 
the provisional Regulation regarding non-cooperating producers in 
the Republic of Korea, are confirmed. The dumping margin for non-
cooperating producers in the countries subject to this proceeding 
are thus set as follows : 
- Hong Kong : 27.4% 
- Republic of Korea : 8.1% 
E. COMMUNITY INDUSTRY 
(18) No new arguments were presented in relation to the definition of the 
Community industry. The findings set out in recitals (24) and (29) 
of the provisional Regulation are, therefore, confirmed. 
INJURY 
1. Cumulation of the effects of the dumped imports 
(19) No new arguments having been received in connection with the 
findings at recitals (30) to (34) of the provisional Regulation, 
these findings are confirmed. 
2. Community consumption, volume and market share of the dumped 
imports 
(20) As no comments were received, the findings stated in recitals (35) 
and (36) of the provisional Regulation are confirmed. 
3. Prices of dumped imports 
(21) In the absence of comment, the findings in recital (37) of the 
provisional Regulation are confirmed. 
4. Situation of the Community industry 
(22) The Korean producer and the Hong Kong authorities questioned the 
view expressed by the Commission in recital (39) of the provisional 
Regulation, on the grounds that a 2.5% increase in the market share 
of the Community industry between 1989 and the investigation period 
would lead to the conclusion that the Community industry had 
actually performed better than the market average. 
It is correct that the sales volume of the Community industry 
increased in absolute terms and that its limited market share grew 
from 9.8% in 1989 to 12.3% in the investigation period. This, 
however, does not detract from the fact that the relative 
performance of the Community industry can only be properly assessed 
in the light of prevailing market circumstances. Ideally this would 
be a market free from the distortions, which was clearly not the 
case in the period examined. Dumped imports from the countries 
concerned in this and the prior proceeding prevented a relatively 
young industry from achieving a market share of a size it could 
reasonably have attained at a time of rapid growth in consumption. 
The findings in recitals (38, (39) and (42) of the provisional 
Regulation are, therefore, confirmed. 
G. CAUSATION 
(23) No new arguments were presented as to causation of injury. The 
findings at recitals (44) to (50) of the provisional Regulation are 
therefore, confirmed. 
H. COMMUNITY INTEREST 
24) No new arguments have been received in respect of Community 
interest. 
However, as regards the interests of users and despite the fact that 
no representations have been made at any time during the proceeding 
by final consumers of 3.5" microdisks, the Commission has sought to 
determine with some degree of precision from the information 
available to it whether the imposition of anti-dumping duties would 
have an impact on users that would go beyond the restoration of 
fair, undistorted trading. 
In view of the total lack of input from user interests in this 
proceeding, the following remarks draw on general sources of 
information on developments in the Community and world markets for 
3.5" microdisks. 
On a global level, overall demand continues to increase, although, 
in line with the growing length of time between the release of new 
packages (one major release now takes place approximately every 3 
years), slower growth in the software duplication sector is exerting 
a negative influence on the rate of increase. Demand could also be 
expected to decline as alternative data storage systems develop. 
On the supply side, excess production capacity continues to exist on 
a world level. This has resulted in continuing price declines in 
1993 and in the early months of 1994. 
The Community market is, of course, not immune to the imbalance 
between global demand and supply. Prices in the Community have 
continued to decline, and given the competition that exists on both 
the world and Community markets, there are no grounds for believing 
that user interests will be adversely affected by the imposition of 
definitive anti-dumping duties in the present proceeding. 
A further factor which would relieve any unjustified upward pressure 
on prices to users that resulted from definitive duties is that the 
Community will continue to rely on imports as, despite recent 
increases in production capacity by the Community industry, total 
existing capacity in the Community is able to meet only about 70% of 
Community demand. 
The conclusion to be drawn, therefore, is that users of 3.5" 
microdisks in the Community are unlikely to experience any 
significant negative consequences as a result of the introduction of 
definitive anti-dumping duties, in particular no unjustified price 
increases. 
In the light of the foregoing, the findings set out in recitals (51) 
to (56) of the provisional Regulation are confirmed. 
DOTY 
(25) No comments were received on the methodology adopted by the 
Commission for the establishment of the duty rates to be applied, as 
set out in recitals (57) to (60) of the provisional Regulation. 
These are therefore confirmed, and as the injury thresholds 
established exceed the dumping margins definitely determined, 
measures should be imposed at the levels of these dumping margins. 
J. COLLECTION OF THE PROVISIONAL DUTIES 
(26) In view of the dumping margins established, the injury caused to the 
Community industry, and of the latter's precarious financial 
situation, it is considered necessary that amounts secured by way of 
provisional anti-dumping duty for all companies should be collected 
definitively. Where the provisional duty exceeds the duty rate 
definitively imposed, the amount collected should not exceed that of 
the definitive anti-dumping duty. 
HAS ADOPTED THIS REGULATION : 
Article 1 
A definitive anti-dumping duty is hereby imposed on imports of 3.5" 
microdisks used to record and store encoded digital computer 
information, falling within CN Code ex 8523 20 90 (Taric Code 8523 
20 90*10), and originating in Hong Kong and the Republic of Korea. 
10 
2. The rate of duty applicable to the net free-at-Community-frentier 
price, not cleared through customs, shall be as follows : 
(a) 27.4% in respect of the products specified in paragraph 1 
originating in Hong Kong (Taric additional code : 8772), with the 
exception of imports which are manufactured by the following 
companies, which shall be subject to the rates of duty mentioned 
hereunder : 
- Jackin Magnetic Co. Ltd. : 7.2% (Taric additional code : 8775) 
- Plantron HK Ltd. : 6.7% (Taric additional code : 8776) 
- Technosource Industrial 
Ltd. : 13.3% (Taric additional code : 8778) 
4b) 8.1% in respect of the products specified in paragraph 1 originating 
in the Republic of Korea. 
3.' The provisions in force concerning customs duty shall apply to the 
said duty. 
Article 2 
1. The amounts secured by way of the provisional anti-dumping duty 
under Regulation (EC) N° 534/94 in respect of 3.5" microdisks shall 
be definitively collected. Where the provisional duty exceeds the 
duty definitively imposed, the amount collected should not exceed 
that of the definitive duty. 
2. Amounts secured in excess of the definitive rate of duty shall be 
released. 
ll 
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, For the Council 
12 
ISSN 0254-1475 
COM(94) 374 final 
DOCUMENTS 
EN li 02 
Catalogue number : CB-CO-94-392-EN-C 
ISBN 92-77-80167-0 
Office for Offidal Publicarions of the European Communities 
L-2985 Luxembourg 
A :s