[pic] | COMMISSION OF THE EUROPEAN COMMUNITIES |

Brussels, 3.8.2005

SEC(2005) 1038

COMMISSION STAFF WORKING DOCUMENT

Annex to the 23 rd ANNUAL REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT ON THE COMMUNITY’S ANTI-DUMPING, ANTI-SUBSIDY AND SAFEGUARD ACTIVITIES (2004) COM(2005)360 final}

TABLE OF CONTENTS

Executive summary 5

1. Overview of the legislation 7

1.1. Anti-dumping and anti-subsidy 7

1.1.1. The international framework 7

1.1.2. The Community legislation 7

1.1.3. Changes to the Community legislation in 2004 8

1.2. Safeguards 9

1.2.1. The international framework 9

1.2.2. The Community legislation 10

1.2.2.1. The basic safeguard Regulations 10

1.3. Anti-subsidy and unfair pricing instrument for airline services 10

2. Basic concepts 11

2.1. Anti-dumping and anti-subsidy 11

2.1.1. What is dumping and what are countervailable subsidies - the material conditions for the imposition of duties? 11

2.1.1.1. Dumping and subsidies 11

2.1.1.2. Material injury and causation 12

2.1.1.3. Community interest 12

2.1.2. Procedure 13

2.1.3. Review of measures 15

2.1.4. Judicial reviews 15

2.2. Safeguards 16

2.2.1. What are safeguard measures? 16

2.2.2. Procedure 16

3. Enlargement 17

4. Country-wide market economy status (MES) 19

5. Information and Communication activities / Bilateral contacts 20

5.1. Small and medium sized entreprises (SMEs) 20

5.2. Seminars 20

6. The Trade Defence Instruments’ services 21

7. General overview of anti-dumping and anti-subsidy investigations and measures 21

7.1. New investigations 21

7.2. view investigations 23

8. Overview of activities in 2004 24

8.1. New investigations 24

8.1.1. Initiations 24

8.1.2. Provisional measures 25

8.1.3. Definitive measures 26

8.1.3.1. Overview 26

8.1.3.2. Details on individual cases (in alphabetical order) 27

8.1.4. Investigations terminated without measures 35

8.1.4.1. Overview 35

8.1.4.2. Details on individual cases (in chronological order) 35

8.2. Review investigations 36

8.2.1. Expiry reviews 36

8.2.1.1. Initiations 37

8.2.1.2. Reviews concluded with confirmation of duty(ies) 38

8.2.1.3. Reviews concluded by termination 41

8.2.2. Interim reviews 42

8.2.3. “Other” interim reviews 44

8.2.4. New exporter reviews 44

8.2.5. Absorption investigations 45

8.2.6. Circumvention investigations 45

8.3. Safeguard investigations 45

8.3.1. Safeguard measures on certain prepared or preserved citrus fruits (satsumas) 46

8.3.2. Safeguard measures on salmon 47

9. Enforcement of anti-dumping/countervailing measures 48

9.1. Enforcement-related changes to the Community anti-dumping and anti-subsidy legislation in 2004 48

9.2. Follow-up of measures 49

9.3. Monitoring of undertakings 49

10. Refunds 51

11. Judicial review : decisions given by the Court of Justice / Court of First Instance 52

11.1. Overview of the judicial reviews in 2003 52

11.2. Cases pending 52

11.3. New cases 52

11.4. Judgments rendered by the Court of First Instance 53

11.4.1. Electronic weighing scales originating in the People’s Republic of China 53

12. Activities in the framework of the World Trade Organization (WTO) 55

12.1. Dispute settlement in the field of anti-dumping, anti-subsidy and safeguards 55

12.1.1. Overview of the WTO dispute settlement procedure 55

12.1.2. Dispute settlement procedures initiated by third countries against the Community 55

12.1.2.1. Brazil – anti-dumping duties on malleable cast iron tube or pipe fittings 55

12.1.2.2. Korea – countervailing duties on dynamic access memory chips (DRAMs) 56

12.2. Other WTO activities 56

13. Conclusion 57

LIST OF ANNEXES 58

Executive summary

This report is submitted to the European Parliament following its resolution of 16 December 1981 on the Community’s anti-dumping activities[1], and the report of the European Parliament’s Committee on industry, external trade, research and energy[2].

Since 2003, the report differs from its previous issues as it no longer includes an overview of the activities in relation to anti-dumping, anti-subsidy and safeguard measures adopted by third countries against imports from the Community or its Member States. These activities are now being dealt with in a separate report.

This report, as in previous years, gives an overview of the Community legislation in force with regard to trade defence instruments, including safeguards. This chapter also covers the adoption by the Council in 2004 of a proposal amending the anti-dumping and anti-subsidy basic Regulations. The proposal dealt with a streamlined decision-making process, but also with, inter alia , the introduction of deadlines in reviews and clearer rules on enforcement of the basic Regulations as regards undertakings and circumvention investigations. The proposal was adopted by the Council on 8 March 2004. The report underlines that these changes address to a significant extent the request voiced by the European Parliament in its resolution PE 316.244 (see point 1.1.3).

A major event during 2004 was the enlargement of the European Union (EU). In terms of trade defence, this meant that all measures taken formerly by the acceding countries lapsed and that the Community’s measures were automatically extended to cover the EU-25 as of 1 May 2004.

The report further summarises the developments in general policy. As in previous years, the report no longer contains a commentary on each individual case. It gives an overview of all investigations together with the most essential information, such as for instance the rate of individual duty imposed. In turn, cases which merit some special attention are treated in more detail. Consequently, the report is more factual and condensed and covers the essential facts of the year. The detailed annexes which cover all cases ensure that the factual content of the report remains meaningful and sufficient to provide a full overview of the activity in 2004.

As regards the 2004 activities, a total of 13 new investigations were concluded, of which 11 by the imposition of definitive anti-dumping or countervailing measures and 2 by termination. In a further 6 investigations, provisional measures were imposed.

As regards the expiry review investigations, 6 investigations were initiated and 4 terminated. In 5 cases, the investigations were concluded with confirmation of the duty. As for the interim review investigations, 26 were initiated, 2 terminated and 16 concluded with confirmation or amendment of the duty. It should be noted that of the 26 initiations, 10 were called “enlargement reviews”. Indeed, the Commission, following consultations with interested parties, identified that the enlargement of the EU would create significant changed circumstances for imports of certain products subject to anti-dumping measures. These reviews were therefore specifically aimed at identifying and rectifying the negative impact of certain exports to the acceding States.

As regards safeguard activities, the Commission initiated in 2004 a safeguard investigation on imports of farmed salmon based on the WTO general erga omnes rules. Provisional measures were imposed in August 2004. Furthermore, the investigation initiated in 2003 on imports of citrus fruits was concluded by the imposition of definitive measures.

As in previous years, this issue continues to provide an overview on the Court cases relating to the trade policy instruments. During 2004, two Judgments were rendered by the Court of First Instance

As this report has now been split into two reports, the chapter in this report on activities in the framework of the World Trade Organisation (WTO) only covers dispute settlement procedures initiated against the Community. Furthermore, it deals with other activities, such as the continuation of the first phase of negotiations on the Anti-dumping and Subsidies Agreements, in which the Commission continues to play an active role by submitting negotiating proposals.

The annexes to this report provide easy access to the activities in table form.

This report is also available to the general public. The 2003 version was released in more or less 500 copies.(Internet Website http://europa.eu.int/comm/trade/issues/respectrules/anti_dumping/legis/index_en.htm

1. OVERVIEW OF THE LEGISLATION

1.1. Anti-dumping and anti-subsidy

1.1.1. The international framework

On an international level, unfair trading practices such as dumping and the granting of subsidies, were identified as a threat to open markets as early as 1947, when the first GATT agreement was signed. The agreement contained specific provisions allowing GATT members to take action against these practices if they caused material injury to the domestic industry of a GATT member.

Since that time, considerable efforts have been made to harmonise the rules relating to trade instruments. During the last GATT round (the « Uruguay Round ») which led to the creation of the WTO and the detailed Anti-Dumping and Anti-Subsidy Agreements, much of the attention was focused on the procedural and material conditions to be fulfilled before protective measures can be adopted. The Community played an active role in the negotiation of these relevant criteria which are reflected in its own legislation.

1.1.2. The Community legislation

The Community’s anti-dumping and anti-subsidy legislation was first enacted in 1968 and has since been modified several times. The current basic texts , which form the legal basis of anti-dumping and anti-subsidy investigations in the Community, entered into force in March 1996 and October 1997. These are in line with the Anti-Dumping and Anti-Subsidy Agreements adopted during the GATT/WTO negotiations. The basic texts are :

- Council Regulation (EC) No 384/96 of 22 December 1995 on protection against dumped imports from countries not members of the European Community[3]

- Council Regulation (EC) No 2026/97 of 6 October 1997 on protection against subsidized imports from countries not members of the European Community[4].

These regulations will overall be referred to as the "basic Regulation(s)".

The Community legislation contains a number of provisions aimed at ensuring a balanced application of the Community’s Anti-Dumping and Anti-Subsidy rules on all interested parties. These provisions include the “Community interest test” and the “lesser duty rule”, which go beyond the WTO obligations.

The Community interest test is a public interest clause and states that measures can only be taken if they are not contrary to the overall interest of the Community. This requires an analysis of all the economic interests involved, including those of the Community industry, users, consumers and traders of the product concerned. The Community interest test does not involve wider aspects such as foreign or development policy considerations.

The lesser duty rule requires the measures imposed by the Community to be lower than the dumping or subsidy margin, if such lower duty rate is sufficient to remove the injury suffered by the Community industry. Such a “no-injury” rate is determined by using the cost of production of the Community industry and a reasonable profit margin; it reduces the anti-dumping measures for individual exporting companies in almost half of the cases and is applied, on a world-wide level, only by the Community on a regular basis.

1.1.3. Changes to the Community legislation in 2004

Experience in 2003, during which two proposals of the Commission for the imposition of definitive anti-dumping measures did not find the necessary majority in the Council, has highlighted a number of shortcomings in the decision-making process in the area of trade defence instruments (TDI).

In these instances, Member States had opted to abstain from voting in the light of a Commission proposal rather than taking clearly a position in favour or against it. On the basis of the applicable decision-making mechanism, these abstentions had the effect of undermining the effectiveness of the TDI instrument.

In order to address this problem, the Council adopted on 8 March 2004 a Regulation[5] amending the above-mentioned basic Regulations. The amendments concerned :

- A clarification of the way decisions were made. In the past, the Council could reject a Commission proposal without clearly taking position, either by abstaining or by expressing a negative vote. Indeed, abstentions had the same practical effects as negative votes. Under the new procedure, a Commission proposal would be adopted unless the Council decided by a simple majority to reject it. This new approach does not upset the balance of responsibilities under the current system; it tackles surgically the problem at hand while respecting the simple majority principle: it ensures that an affirmative position is required by Member States to overturn a Commission proposal.

- The introduction of mandatory deadlines for the completion of review investigations: while maintaining the indicative timetable of 12 months, a mandatory deadline of 15 months was introduced for the completion of interim and expiry review investigations. For newcomer reviews and anti-absorption re-investigations, a mandatory time limit of 9 months was proposed. While this provision will require additional human resources to deal with the resulting additional workload, it will be phased in, starting with deadlines on expiry reviews, and after 2 years, deadlines for other reviews.

- A provision for a streamlined procedure in case of withdrawal of undertakings (reflecting the principle that the Commission is the institution solely responsible for accepting and withdrawing undertakings).

The Regulation further clarified a number of issues in case of an anti-absorption reinvestigation and it rendered the provisions on circumvention more operational by clarifying, inter alia, the identification of practices like, notably, transhipment, slightly modified products and re-channelling of sales via the producers or exporters with the lowest duties.

By introducing mandatory deadlines for the completion of review investigations and by making the trade defence instrument in general more transparent, account has been taken of a number of requests voiced by the European Parliament in its resolution PE 316.244 of 3 October 2002.

1.2. Safeguards

1.2.1. The international framework

The principle of liberalisation of imports was set under the GATT 1947 and strengthened under the 1994 WTO Agreements. As safeguard measures consist of the unilateral withdrawal or suspension of a tariff concession or of other trade liberalisation obligations formerly agreed, they have to be considered as an exception to this principle. Article XIX GATT 1994 and the WTO Agreement on Safeguards do not only impose strict conditions for the application of this "escape clause”, but also put in place a multilateral control mechanism under the WTO Committee on Safeguards.

Under WTO rules, safeguard action has to be viewed as a temporary defence measure that applies to all imports of the product covered by a measure, irrespective of origin. As regards non-WTO members, safeguard measures may be selective and apply to products originating in a specific country. WTO Accession Protocols may also provide for such selective safeguard mechanisms (e.g. the People's Republic of China's Protocol).

WTO safeguards should only be adopted after a comprehensive investigation which provides evidence of the existence of a) unforeseen developments leading to b) increased imports c) the existence of a serious injury for Community producers and d) a causal link between the imports and the injury. WTO Accession Protocols may provide for specific requirements.

1.2.2. The Community legislation

The above-mentioned principles are all reflected in the relevant Community regulations, except for the “unforeseen development requirement” (which is not in the Community law but has been confirmed as a self-standing condition by WTO jurisprudence). Additionally, the adoption of measures in the Community requires an analysis of all interests concerned, i.e. the impact of the measures on producers, users and consumers. In other words, safeguard action can only be taken when it is in the Community’s interest to do so. The current Community safeguard instruments are covered by the following regulations :

1.2.2.1. The basic safeguard Regulations

The basic safeguard regulations consist of :

- Council Regulation (EC) No 3285/94[6] on the common rules of imports and repealing Regulation (EC) No 518/94;

- Council Regulation (EC) No 519/94[7] on common rules for imports from certain third countries and repealing Regulations (EEC) Nos 1765/82, 1766/82 and 3420/83. This Regulation was amended in 2003 when a Transitional Product-Specific Safeguard Mechanism for imports originating in the People’s Republic of China was adopted[8]. This Regulation ensures that Council Regulation (EC) No 519/94 is no longer applicable to the People’s Republic of China;

- Council Regulation (EC) No 517/94[9] on common rules for imports of textile products from certain third countries not covered by bilateral agreements, protocols or other arrangements, or by other specific Community import rules.

These regulations will overall be referred to as the "basic safeguard Regulation(s)".

1.3. Anti-subsidy and unfair pricing instrument for airline services

Regulation n° 868/2004 of the European Parliament and of the Council[10] which deals with the effect of subsidisation and unfair pricing for air services from third countries entered into force on 20 May 2004. The Regulation foresees the adoption of redressive measures if subsidised or unfairly priced airline services cause material injury to Community carriers on certain routes to and from the Community.

This is the first new trade defence instrument in the services sector since a similar instrument was adopted in 1986 concerning maritime services. It was prompted by the crisis in the airline sector at the end of 2001 which led some third-country governments to subsidise their airlines. This crisis showed the negative effect of government support and the lack of an appropriate instrument to deal with such situations at Community level. This was all the more relevant as Community carriers had to compete with third country airlines benefiting from generous subsidies, while they themselves were subject to strict rules on government aid.

The European Parliament actively participated in the drafting of the Regulation and most of its amendments clarifying the text and its implementation on several aspects were taken on board.

While no investigations under this new instrument were initiated in 2004, intensive work within the Commission services continued on developing a detailed methodology for determining the unfair pricing practices, i.e. the second track of this instrument, as foreseen by Article 5(3) of this Regulation. Adoption of this methodology is expected in the course of 2005.

2. BASIC CONCEPTS

2.1. Anti-dumping and anti-subsidy

2.1.1. What is dumping and what are countervailable subsidies - the material conditions for the imposition of duties?

2.1.1.1. Dumping and subsidies

Dumping is traditionally defined as price discrimination between national markets, or as selling below cost of production. The Community’s anti-dumping legislation defines anti-dumping as selling a product in the Community at a price below its “normal value”. This “normal value” is usually the actual sales price on the domestic market of the exporting country. Therefore, a country is selling at dumped prices if the prices in its home market are higher than its export prices (i.e. price discrimination).

Where sales in the domestic market are not representative, for instance because they have only been made in small quantities, the normal value may then be established on another basis, such as the sales prices of other producers on the domestic market or the cost of production. In the latter case, a company is selling at dumped prices if its export prices are below the cost of production.

A certain segregation of the market exists in the majority of the cases where dumping occurs on a more than incidental basis. That segregation may be caused, amongst other reasons, by government regulation. As a result, exporters are shielded, at least to a certain degree, from international competition on their domestic market.

Subsidies can have similar effects to sales at dumped prices in that they allow exporters to operate from a distorted home base. Subsidies involve a direct support from a government or a government-directed private body which has the effect of conferring a benefit to producers or exporters (e.g. grants, tax and duty exemptions, preferential loans at below commercial rates, export promotion schemes, etc.), all aimed at allowing the exporters to sell at low prices in the Community. Only subsidies which are “specific”, i.e. targeted at individual companies or certain sectors of the economy, can be subject to trade defence measures.

2.1.1.2. Material injury and causation

For measures to be taken against these unfair trading practices, it is not sufficient that companies are exporting their products to the Community at dumped or subsidised prices. Measures can only be taken if these exports cause material injury to Community producers, who cannot compete on an equal footing with exporters.

Typical injury indicators are that the dumped and/or subsidised import volumes increase over a certain period and import prices undercut the sales prices of the Community industry. As a consequence, the latter is forced to decrease production volumes and sales prices thus losing market shares, making losses or having to make employees redundant. In extreme cases, exporters may try to eliminate viable Community producers by using a predatory pricing strategy. In any event, the injury analysis requires that all relevant factors be taken into account before deciding whether the Community industry is in fact suffering “material injury”.

A further condition for the imposition of measures is the need for “causality”: the injury must be caused by the dumping or the subsidy. This condition is fulfilled when the injury to the Community industry coincides with the increase in dumped and subsidised imports. It is important to note that the dumped or subsidised imports do not have to be the only cause of the injury.

2.1.1.3. Community interest

Finally, it has to be established that the application of measures would not be contrary to the overall interest of the Community. In this respect, the interests of all relevant economic operators which might be affected by the outcome of the investigation must be taken into account. These interests typically include those of the Community industry, users, consumers and traders of the product concerned and the analysis assesses the positive impact measures will have on some operators as opposed to the negative impact on others. Only if it can be clearly concluded that the negative impact would be disproportional, measures should not be imposed.

2.1.2. Procedure

Investigations are carried out in accordance with the procedural rules laid down in the basic Regulations. These rules guarantee a transparent, fair and objective proceeding by granting significant procedural rights to interested parties. In addition, the results of an investigation are published in the Official Journal, and the Community is obliged to justify its decisions in this publication. Finally, it is ensured that each case is decided on its merits and the Commission does not hesitate to terminate a case if the conditions to impose measures are not met.

Whereas each investigation is different depending on the products and countries involved, all cases follow the same procedural rules. However certain preferential rules apply to the candidate countries. The rules relating to a new case are summarised below.

Initiation

A case normally starts with a sufficiently substantiated complaint from the Community industry manufacturing the same or a similar product to the one referred to in the complaint. After receipt of this complaint, the Commission assesses whether the complaint contains sufficient evidence to allow for the initiation of the case. A case is opened by a notice of initiation published in the Official Journal. In this notice, all interested parties, including users, in anti-subsidy investigations in particular exporting country authorities and, where appropriate, consumer organisations, are invited to participate and co-operate in the proceedings. Detailed questionnaires are sent to producers in the exporting countries, in anti-subsidy investigations also to the exporting country authorities, and in the Community, traders (in particular importers) and other interested parties, such as users. These questionnaires cover all different conditions to be fulfilled, i.e. dumping/subsidy, injury, causation and Community interest. The parties are also informed that they can request a hearing and ask for access to the non-confidential files which will help them defend their case.

The investigation up to the provisional measures

Following receipt of the replies to the questionnaire, investigations are carried out by Commission officials at the premises of the co-operating parties.

The main purpose of these visits is to verify whether the information given in the questionnaires is reliable. The verified information is subsequently used to calculate or determine the dumping margin and the injury factors, in particular the price undercutting margin and injury elimination level, as well as the Community interest analysis. The respective calculations and analysis often involve the processing of thousands of transactions, the complex examination of production costs and the assessment of the economic situation of numerous economic operators.

The results of the calculations and other findings are summarised in a working document, on the basis of which it is decided - after consultation of the Member States in the Advisory Committee - whether to impose provisional measures, whether to continue the investigation without proposing duties or whether to terminate the proceedings. In either eventuality, at this stage the decision is the Commission's responsibility.

The investigation up to the definitive stage

Following the publication in the Official Journal of a Commission regulation imposing provisional duties, interested parties which so request receive a full disclosure which allows them to verify the Commission’s calculations and to submit comments. Comments can also be made at a hearing. These provisional submissions and comments are taken into account when a second, definitive, working document is prepared by the Commission.

After final disclosure, assessment of comments of interested parties and consultation of the Member States on the basis of the second working document, the Commission makes a proposal to the Council whether or not to impose definitive measures. Another possibility is that the Commission accepts undertakings offered by exporters, which undertake to respect minimum prices. In the latter case, no duties are generally imposed on the companies from which undertakings are accepted.

As set out above, throughout the process and at various specific steps, the procedure - consisting e.g. of requests for information, hearings, access to the file and disclosure – ensures that the rights of defence of interested parties are fully respected in this quasi-judicial process.

The Council decides on the adoption of the Commission proposal by simple majority vote. The regulation imposing definitive duties, and deciding on the collection of the provisional duties, is published in the Official Journal.

In view of the findings made, it may also be decided to terminate a case without the imposition of measures. The same procedure (disclosure, comments, hearing, working document) as described above applies. The termination of the case would generally be made by a Commission Decision after consultation of the Member States.

Timing

The procedure described above is subject to strict statutory time limits. Thus, a decision to impose provisional duties must be taken within nine months of the initiation and the total duration of an investigation is limited to fifteen months in anti-dumping cases and to 13 months in anti-subsidy cases. This leads to significant time constraints, taking into account, inter alia , internal consultations and the necessity to publish regulations and decisions in all Community languages at the same time.

Anti-dumping or countervailing measures will normally remain in force for five years, and may consist of duties or undertakings concluded with exporters. Measures are taken on a countrywide basis, but individual treatment, i.e. the application of a company-specific duty, can be granted to exporters which have co-operated throughout the investigation. During the five-year period, interested parties may, under certain conditions, request a review of measures or the refund of anti-dumping duties paid. Measures may also be suspended for a certain period, subject to given criteria.

2.1.3. Review of measures

The basic Regulations provide for administrative reviews and distinguish between interim reviews, newcomer reviews and expiry reviews.

The expiry review is initiated at the end of the five year life-time of the measures. Initiation is based on a request by the Community industry evidencing that the expiry of the measures would lead to continuation or recurrence of dumping and injury. Since the amendment to the basic Regulations, expiry reviews initiated after 20 March 2004 are subject to strict deadlines, i.e. they shall normally be concluded within 12 months of the date of initiation of the review, but in all cases be concluded within 15 months.

During the five year life-time of measures, the Commission may perform an interim review . Under the latter procedure, the Commission will consider whether the circumstances with regard to subsidy/dumping and injury have changed significantly or whether existing measures are achieving the intended results in removing the injury. Under the new provisions of the basic Regulations, the deadline for concluding an interim review is set at 12 months, but no later than 15 months for reviews initiated after 20 March 2006.

Finally, the basic Regulations provide that a review shall be carried out to determine individual margins for new exporters in the exporting country concerned. As of 20 March 2006, the deadline for conclusion of newcomer reviews shall be 9 months.

During these reviews, the main procedural rules outlined in chapter 2.1.2 are also applicable.

2.1.4. Judicial reviews

The procedural rights of the parties, including hearings and access to non-confidential files, are respected in the course of the proceeding, and a system of judicial review is in place to ensure their correct implementation. The competence to review anti-dumping and anti-subsidy cases lies with the Court of First Instance and the Court of Justice in Luxembourg. Furthermore, the possibility of recourse to the WTO dispute settlement mechanism exists for WTO members.

2.2. Safeguards

2.2.1. What are safeguard measures?

Safeguard measures allow temporary protection against the adverse effects of import surges. Under the Community legislation[11] implementing the WTO Safeguards Agreement, they can be applied under the following conditions: safeguard measures may be imposed if, as a result of unforeseen developments, a product is being imported into the Community in such increased quantities and/or on such terms and conditions as to cause, or threaten to cause, serious injury to Community producers of like or directly competitive products. Safeguard measures may only be imposed to the extent and for such time as may be necessary to prevent or remedy the injury.

2.2.2. Procedure

Investigations are carried out in accordance with the procedural rules laid down in the basic safeguard Regulations. These rules guarantee a transparent, fair and objective proceeding. In addition, the results of safeguard investigations are published in the Official Journal, and the Community is obliged to justify its decisions in this publication.

Initiation

The Commission is informed by one or more Member States should trends in imports of a certain product appear to call for safeguard measures. This information must contain evidence available, of the following criteria : a) the volume of imports, b) the price of imports, c) trends in certain economic factors such as production, capacity utilisation, stocks, sales, market share, prices, profits, employment, etc. and d) facts other than trends. Where there is a threat of serious injury, the Commission must also examine whether it is clearly foreseeable that a particular situation is likely to develop into actual injury.

This information is immediately passed on by the Commission to all other Member States, at which stage consultations are held within the Advisory Safeguard Committee. If there is sufficient evidence to justify an investigation, the Commission publishes a notice of initiation in the Official Journal within one month of receipt of the information and commences the investigation, acting in co-operation with the Member States.

Provisional measures

Provisional measures may be imposed at any stage of the investigation. They shall be applied in critical circumstances where delay would cause damage which would be difficult to repair, making immediate action necessary, and where a preliminary determination provides clear evidence that increased imports have caused, or are threatening to cause, serious injury.

The duration of the provisional measures can, however, not exceed 200 days (i.e. 6 months).

Definitive measures

If, at the end of the investigation, the Commission considers that definitive safeguard measures are necessary, it will take the necessary decisions no later than nine months from the initiation of the investigation, at which stage the results of the investigation are being published in the Official Journal. In exceptional circumstances, this time limit may be extended by a further maximum period of two months, provided a notice is published in the Official Journal specifying the duration of the extension and a summary of its reasons.

Safeguard measures shall be applied only to the extent to prevent or remedy serious injury, thereby maintaining as far as possible traditional trade flows. As to the form of the measures, the Community will choose the measures most suitable in order to achieve these objectives. These measures could consist of quantitative quotas, tariff quotas, duties, etc.

Duration and review of the measures

The duration of safeguard measures must be limited to the period of time necessary to prevent or remedy serious injury and to facilitate adjustments on the part of the Community producers, but should not exceed four years, including the duration of the provisional measures, if any. Under certain circumstances, extensions may be necessary but the total period of application of safeguard measures should not exceed eight years.

If the duration of the measures exceeds one year, the measures must be progressively liberalised at regular intervals during the period of application. If the duration exceeds three years, the Commission should seek consultations with the Advisory Safeguard Committee in order to examine the effects of the measures, to determine the appropriateness of further liberalisation and to ascertain that the application of the measures is still necessary. Depending on the consultations, the measures may be revoked or amended.

3. ENLARGEMENT

As for the Union in general, also in the area of TDI, enlargement triggered numerous activities. These activities concentrated on accompanying the administrations concerned in order to allow their smooth integration into the working of the EU, and on ensuring that economic operators could fully take up their new role.

This was the more so important, because, as from 1 May 2004, all trade defence investigations and measures taken by the acceding countries before their accession to the EU lapsed and the Community’s measures were automatically applied to the EU-25.

In response to the important information needs on the part of numerous economic operators and administrations, including our trade partners in third countries, the TDI services continued with the implementation of an action plan aimed at ensuring smooth operation of the trade defence instruments after enlargement.

In particular, the TDI services assisted the acceding countries’ administrations and economic operators to develop the necessary capacity to take full advantage of their rights and to meet their obligations under the Community law in the area of trade defence as of the first day of their accession. The assistance was provided through a programme of seminars, followed up with bilateral meetings, operation of a help desk and publication of information on a special website.

As for all Commission Committees, prior to enlargement, the representatives of the acceding countries were involved as active observers in the work of the Anti-dumping and Anti-subsidy Advisory Committees. During the first months after enlargement, the Commission continued to assist the new Member States through e.g. the organization of a specific training seminar.

To explain the consequences of enlargement for the Community trade defence activities and to address concerns expressed by third countries regarding the application of the EU-15 trade defence measures to the new EU Member States as of 1 May 2004, meetings with several exporting third countries continued in 2004.

Furthermore, in March 2004, at the initiative of the Commission, partial interim reviews were launched in order to examine whether the extension of trade defence measures on EU10 users and consumers would result in economic hardship/shock. As a result of the investigation carried out by the TDI “ Enlargement Task Force”, special transitional measures were introduced in May 2004 for 4 products subject to anti-dumping measures: potassium chloride (Belarus and Russia), ammonium nitrate (Russia and Ukraine), GOES (Russia) and silicon carbide (Ukraine). The transitional measures took the form of price and/or quantitative undertakings limited to the traditional export flows to the new Member States for a limited period (for details see chapter 8.1 – monitoring of undertakings).

Finally, in April 2004, the Commission also published a Notice in the Official Journal regarding the application of anti-dumping and anti-subsidy measures in force in the Community following enlargement. The Notice, inter alia, reiterated the readiness of the TDI services to review anti-dumping and anti-subsidy measures in force, if interested parties submitted a request for a review backed by evidence that measures would have been significantly different if they were based on information including the new Member States.

The overall experience gained with and the feedback received on the action plan was very positive. The new Member States’ administrations have fully taken up their role and the economic operators concerned are actively participating in the investigations carried out.

On the basis of this positive experience, the TDI services will start an action plan aimed at working towards a further enlargement of the Community in 2007.

4. COUNTRY-WIDE MARKET ECONOMY STATUS (MES)

The work on the country-wide market economy requests has continued in 2004 and is now encompassing ever more countries.

Conceptually, the country-wide criteria for determining whether a country can be considered a full market economy for the purpose of anti-dumping investigations are inspired from those applicable to individual companies located in economies in transition to a market economy, which are set out in Article 2(7) of the basic Regulation. These criteria are :

- Degree of government influence

- Absence of State-induced distortions in the operation of enterprises

- Existence and implementation of a transparent and non-discriminatory company law

- Existence and implementation of a coherent, effective and transparent set of laws

- Existence of a genuine financial sector

These criteria are used to analyse whether countries classified as non-market economies or as economies in transition should be graduated to full market economy countries. As a consequence of such graduation, the behaviour of economic operators would be analysed on the basis of their specific cost and prices, rather than using data from analogue country producers. It should be noted that the MES analysis is not a judgment on a country’s overall economic development. Rather, the issue is whether costs and prices can automatically be used for the purpose of TDI investigations.

Significant work has been done in this respect during 2004. In particular, the request received in March 2002 from Ukraine was assessed and the Commission sent its definitive findings to the Ukrainian authorities in May. The conclusion reached was not to grant MES to this country at that stage as certain criteria were not met. In particular, a number of issues related to government influence in the Ukrainian economy, as well as the existing bankruptcy procedures were still a cause of concern. In order to address these concerns, Ukraine was asked to 1) eliminate distorting state interference in the pricing of goods, especially in the metalworking sector, and 2) provide information on the number, size and activities of companies exempted from normal bankruptcy procedures.

The People’s Republic of China’s request was received in September 2003. An extensive analysis was carried out by the Commission, leading to a preliminary and substantive assessment delivered to the Chinese authorities in June 2004. In this assessment, certain shortcomings were identified in four areas, namely state influence, corporate governance, property and bankruptcy law and the financial sector. The Commission concluded that, in order to obtain MES, China should 1) ensure equal treatment of all companies by reducing state interference, 2) increase the level of compliance with the existing Accounting Law, 3) ensure equal treatment of all companies in bankruptcy procedures, and 4) bring the banking sector under market rules in order to ensure a rational allocation of capital. In order to reflect the importance of the matter and in order to push forward the necessary developments, a bilateral working group was set up and met for the first time in November 2004.

For both Ukraine and China, country-wide MES will be granted as soon as the outstanding issues are satisfactorily addressed. The issue of MES will be discussed further with both countries in more detail in the months to come.

During 2004 and early 2005, further requests were received from Kazakhstan, Vietnam, Mongolia and Armenia. In all three cases, the Commission requested further information from the applicant countries in order to be able to assess their requests. This information was still pending at the end of 2004.

5. INFORMATION AND COMMUNICATION ACTIVITIES / BILATERAL CONTACTS

5.1. Small and medium sized entreprises (SMEs)

A Trade Defence Helpdesk for SMEs was set up in December 2004 to address specific SME questions/problems regarding TDIs, whether general or case-specific. This helpdesk is accessible through a direct link from a TDI SME website, which has been launched at the same time. This indicates that the Commission is working towards ensuring proper access to the TDI instruments, especially for companies and sectors which could otherwise meet technical difficulties using these instruments because of their small size, their fragmentation and/or their high number.

5.2. Seminars

The TDI services continued to organise and participate in information and training seminars for third country government representatives and for economic operators, both within and outside the EU. All in all, 11 seminars have been held for the following beneficiaries: Argentina, China, Korea, Romania, Russia, Slovakia, Turkey, Ukraine and Vietnam. Furthermore, a number of ad hoc meetings on TDI matters were organised with specific third country TDI services.

6. THE TRADE DEFENCE INSTRUMENTS’ SERVICES

Within DG Trade, Directorate B is responsible for trade defence instruments. The directorate consists of 5 Units. Unit 1 is in charge of policy aspects related to anti-dumping and anti-subsidy (including WTO and complaints office). Units 2 to 5 deal with investigations covering dumping/subsidization, injury and Community interest aspects. On top, Unit 2 monitors the activity of third countries on anti-dumping, anti-subsidy and safeguards, as well as policy aspects related to safeguards. Unit 4 is also responsible for following up and controlling the efficiency of measures and for policy matters concerning circumvention/absorption.

7. GENERAL OVERVIEW OF ANTI-DUMPING AND ANTI-SUBSIDY INVESTIGATIONS AND MEASURES

7.1. New investigations

At the end of 2004, the Community had 137 anti-dumping measures[12] and 19 countervailing measures in force. The anti-dumping measures covered 56 products and 32 countries (see Annex O); the countervailing measures covered 13 products and 9 countries (see Annex P). Of the measures, the large majority was in the form of duties; however, in a number of cases, undertakings were accepted.

Of the measures in force at the end of 2004 (both anti-dumping and anti-subsidy), 34 concerned China, 20 India, 10 Taiwan, 11 Russia, 10 the Republic of Korea, 9 Thailand, 7 Indonesia, 6 Japan and 16 measures (excluding China) applied to countries with economies in transition or to non-market-economy countries, including Ukraine with 8 measures and Belarus with 5 measures. Sixteen measures lapsed on 1 May 2004 following accession of 10 new countries. Six measures were still applicable against imports originating in the candidate countries Bulgaria, Romania and Turkey.

For a more realistic view of the impact of anti-dumping measures, however, one has to look at the trade volume of the products concerned, which varies considerably depending on the product sector. The biggest trade volumes are often generated by high technology, such as electronics, which are high-value products. It should be noted that in 2004, only XX%[13] of total imports into the Community was affected by anti-dumping or anti-subsidy measures.

Table 1 below provides statistical information on the new investigations for the years 2000 – 2004.

TABLE 1

Anti-dumping and anti-subsidy new investigations

during the period 1 January 2000 - 31 December 2004[14]

2000 | 2001 | 2002 | 2003 | 2004 |

Investigations in progress at the beginning of the period | 87 | 34 | 43 | 33 | 15 |

Investigations initiated during the period | 31 | 33 | 23 | 8 | 29 |

Investigations in progress during the period | 118 | 67 | 66 | 41 | 44 |

Investigations concluded : - imposition of definitive duty or acceptance of undertakings - terminations[15] | 52 32 | 12 12 | 28 5 | 5 21 | 11 2 |

Total investigations concluded during the period | 84 | 24 | 33 | 26 | 13 |

Investigations in progress at the end of period | 34 | 43 | 33 | 15 | 31 |

Provisional measures imposed during the period | 48 | 18 | 17 | 10 | 6 |

7.2. Review investigations

Anti-dumping measures, including price undertakings, may be subject, under the basic Regulation, to five different types of reviews: expiry reviews (Article 11(2)), interim reviews (Article 11(3)), newcomer investigations (Article 11(4)), absorption investigations (Article 12) and circumvention investigations (Article 13).

Also anti-subsidy measures may be subject, under the basic Regulation, to five different types of reviews: expiry reviews (Article 18), interim reviews (Article 19), absorption investigations (Article 19(3)), accelerated reviews (Article 20) and circumvention investigations (Article 23).

These reviews continue to represent a major part of the work of the Commission's TDI services. In the period from 2000 to 2004, a total of 189 review investigations were initiated. These review investigations represented more than 60% of all investigations initiated.

In 2004, 42 reviews were initiated. Of these, 6 were expiry reviews, 26 interim reviews, 2 newcomer reviews, and 8 circumvention investigations.

An overview of the review investigations in 2004 can be found in Annexes F to K. Table 2 provides statistical information for the years 2000 - 2004.

TABLE 2

Reviews of anti-dumping and anti-subsidy investigations

during the period 1 January 2000 - 31 December 2004[16]

2000 | 2001 | 2002 | 2003 | 2004 |

Reviews in progress at the beginning of the period | 61 | 53 | 58 | 67 | 53 |

Reviews initiated during the period | 37 | 29 | 55 | 26 | 42 |

Reviews in progress during the period | 97 | 82 | 113 | 93 | 95 |

Total reviews concluded during the period[17] | 44 | 24 | 46 | 40 | 54[18] |

Reviews in progress at the end of the period | 53 | 58 | 67 | 53 | 41 |

Details on the conclusions can be found under heading XX.

8. OVERVIEW OF ACTIVITIES IN 2004

8.1. New investigations

8.1.1. Initiations

In 2004, 29 investigations were initiated. They involved 14 different products from 12 different countries. Details of these investigations are given in Annex A. Most affected countries are China with 9 investigations, Korea, Russia, Taiwan and Vietnam with 3 investigations each and USA with 2 investigations, followed by Thailand, Philippines, Norway, Malaysia, Indonesia and Belarus with 1 investigation each. As to the products, the most affected is the iron and steel sector and the chemical and allied sector.

In the five-year period from 2000 to 2004, 124 investigations were initiated on imports from 33 countries. The main sectors concerned by the investigations were iron and steel with 41 investigations, chemical and allied with 38 investigations and textiles and allied with 13 investigations. A breakdown of the product sectors is given in Annex B(A).

The main countries concerned during the period from 2000 to 2004 were the People's Republic of China with 23 investigations, India with 16 investigations, Russia with 10 investigations, Korea with 7 investigations and Indonesia and Turkey with 6 investigations each. The investigations initiated over the last five years are broken down by country of export in Annex B(B).

The alphabetical list of cases initiated in 2004 can be found below, together with the name of the complainant. More information can be obtained from the Official Journal to which reference is given in Annex A.

Product/type of investigation[19] | Originating from | Complainant |

Barium carbonate (AD) | P.R. China | Solvay Barium Strontium GmbH |

Bicycles (AD) | Vietnam | European Bicycles Manufacturers’ Association (EBMA) |

Castings (AD) | P.R. China | Eurofonte |

Grain-oriented electrical sheets (small + big) (AD) | Russia USA | European Confederation of Iron and Steel Industries (Eurofer) |

Granular polytetrafluoroethylene (PTFE) resin (AD) | P.R. China Russia | European Chemical Industry Council (Cefic) |

Hand pallet trucks and their essential parts (AD) | P.R. China | Four Community producers |

Magnesia bricks (AD) | P.R. China | European Refractories Producers Federation |

Polyester filament apparel fabrics (AD) | P.R. China | AIUFFASS |

Polyester high tenacity filament yarn (AD) | Belarus Korea (Rep. of) Taiwan | Comité International de la Rayonne et des Fibres Synthétiques |

Salmon (AD) | Norway | EU Salmon Producers Group |

Stainless steel fasteners and parts thereof (AD) | P.R. China Indonesia Malaysia Philippines Taiwan Thailand Vietnam | European Industrial Fastener Institute (EiFi) |

Steel ropes and cables (AD) | Korea (Rep. of) | Liaison Committee of European Wire Rope Industries (EWRIS) |

Styrene-butadiene-styrene thermoplastic rubber (AD) | Korea (Rep. of) Russia | European Chemical Industry Council (Cefic) |

Tartaric acid (AD) | P.R. China | Five Community producers |

Trichloroisocyanuric acid (TCCA) (AD) | P.R. China | European Chemical Industry Council (Cefic) |

Trichloroisocyanuric acid (TCCA) (AD) | USA | European Chemical Industry Council (Cefic) |

Tube or pipe fittings (AD) | Taiwan Vietnam | Defence Committee of the Steel Butt-Weldings Fittings Industry of the EU |

8.1.2. Provisional measures

In 2004, provisional duties were imposed in 6 proceedings, one of which concerned an anti-subsidy proceeding. They involved imports from 4 different countries. As shown in Table 1 (see point XX), this figure compares to 10 in 2003 and 17 in 2002.

The alphabetical list of cases where provisional measures were imposed during 2004 can be found below, together with the measure(s) imposed. More information can be obtained from the Official Journal to which reference is given in Annex C.

Product | Originating from | Type[20] and level of measure |

Graphite electrode systems | India | AD : 0-5,7% |

Graphite electrode systems | India | AS : 12,8-14,6% |

Okoumé plywood | P.R. China | AD : 8,5-48,5% |

Polyethylene teraphthalate (PET) | Australia P.R. China Pakistan | AD : 72-141 EUR/t AD : 106-230 EUR/t AD : 128 EUR/t |

8.1.3. Definitive measures

8.1.3.1. Overview

During 2004, definitive duties were imposed in 11 cases, two of which concerned anti-subsidy proceedings. They involved imports from 7 different countries and covered 6 products. The People’s Republic of China and India featured with 3 investigations each, Pakistan, Indonesia, Norway, Faeroe Islands and Australia with 1 investigation each.

The alphabetical list of cases where definitive measures were imposed during 2004 can be found below, together with the measure(s) imposed. More information can be obtained from the Official Journal to which reference is given in Annex D. Annex D also gives some additional information on import and consumption volumes.

Product | Originating from | Type[21] and level of measure |

Cotton-type bed linen | Pakistan | AD : 13,1% |

Cotton-type bed linen | India | CVD : 4,4-10,4% |

Graphite electrode systems | India | AD : 0% CVD : 7-15,7% |

Okoumé plywood | P.R. China | AD : 6,5-66,7% |

Polyethylene terephthalate (PET) | Australia P.R. China | AD : 66-128 EUR/t AD : 0-184 EUR/t |

Sodium cyclamate | P.R. China Indonesia | AD : 0-0,26 EUR per kilo AD : 0,24-0,27 EUR per kilo |

Trout | Norway Faeroe Islands | AD : 19,9 % AD : 30-54,4% |

8.1.3.2. Details on individual cases (in alphabetical order)

1. Cotton-type bed linen originating in Pakistan

The product covered by this investigation was bed linen of cotton fibres, pure or mixed with man-made fibres or flax (flax not being the dominant fibre), bleached, dyed or printed originating in Pakistan. Bed linen includes bed sheets (fitted or flat), duvet covers and pillow covers, packaged for sale either separately or in sets.

The investigation was initiated on 18 December 2002. Due to the high number of parties, the Commission had to resort to sampling techniques for its examination, resulting in the selection of six Pakistani exporters and five Community producers.

During the verification of one of the Pakistani exporters selected in the sample, the Commission received an anonymous letter containing life threats addressed personally to the officials carrying out the verifications. The verification visits had therefore to be interrupted. Another Pakistani company – who had been fully verified before this incident - was found to have supplied false information and, in the impossibility to verify the remaining sampled companies, a determination had to be made on the basis of the facts available, in accordance with Article 18 of the basic Regulation. In this respect, resort was made to all verified information submitted by all interested parties.

Given the need to further examine certain aspects of dumping, injury, causality and Community interest, no provisional anti-dumping measures were imposed. The investigation, however, continued and revealed the existence of injurious dumping at definitive stage.

On 4 March 2004 the Council imposed definitive anti-dumping duties at the level of 13,1%, based on the dumping margin found, since the injury elimination level was higher (lesser duty rule).

One Pakistani exporting producer has filed a complaint with the Court of First Instance on the grounds that the initiation of the investigation, the normal value calculation, the determination of material injury and the existence of a causal link between dumped imports and the injury found, were inconsistent with the basic Regulation and in breach of the WTO AD Agreement.

2. Cotton-type bed linen originating in India (anti-subsidy investigation)

The Commission initiated an anti-subsidy investigation on imports into the Community of cotton-type bed linen originating in India on 18 December 2002. The complaint was lodged by Eurocoton on behalf of the Community industry (actually 45% of the total Community production of cotton-type bed linen).

The anti-subsidy proceeding was preceded by anti-dumping investigations on the same product and already had a complex history involving two WTO panels. These circumstances necessitated a very thorough investigation.

Given the need to further examine certain aspects of subsidisation and injury resulting therefrom, no provisional measures were imposed. The investigation eventually revealed the existence of injurious subsidisation and definitive measures were imposed on 17 January 2004. These ranged from 4,4 to 10,4%, i.e. at the levels of the subsidy margins.

Large number of co-operating parties

As more than eighty companies, representing more than 90% of total exports of bed linen from India to the Community, were willing to co-operate, a sample of representative Indian companies had to be chosen. In consultation with the companies, the industry association (Texprocil) and the Government of India eight exporting producers were selected. This sample represented 55% of Indian exports of the product concerned to the Community

Subsidies

On the basis of the information contained in the complaint and the replies to the Commission’s questionnaire, six schemes allegedly involving the granting of export subsidies were investigated. These were: the Duty Entitlement Passbook (DEPB) Scheme, the Duty Free Replenishment Certificate (DFRC), the Export Promotion Capital Goods (EPCG) Scheme, the Advance Licence Scheme (ALS), the Export Processing Zones/Export Processing Units (EPZ/EOU), and the Income Tax Exemption.

The investigation confirmed the existence of countervailable subsidies for five of the above schemes and for all the companies included in the sample.

Injury and causation of injury

Injury to the Community industry was caused by the following factors: the market share of the Community industry declined from 20,8% to 18,9% between 1999 and the investigation period, i.e. by almost 10%; the profitability and return on investment of the sampled Community producers decreased considerably; investments dropped by 60% and cash flow decreased by one third over the period considered. Prices of the subsidized imports undercut those of the Community producers by 26% to 77%. With a market share of 7,2% in the investigation period the subsidised imports originating in India contributed materially to the injury suffered by the Community industry.

Community interest

The main issue with regard to Community interest was the claim that cheap imports of bed linen were necessary for the individual consumer as well as for institutional users such as hotels and hospitals as products at the cheaper end of the range were no longer produced by the Community producers. However, the investigation showed that the Community producers still produce these products and that there was no technical reason why the production of these products in the Community could not be increased. It was therefore considered to be in the Community interest to impose measures.

3. Graphite electrode systems originating in India (anti-dumping and anti-subsidy investigation)

On 21 August 2003, following complaints lodged by the European Carbon and Graphite Association (ECGA), the Commission initiated an anti-dumping and an anti-subsidy investigation on imports of certain graphite electrode systems originating in India. Graphite electrodes are used mainly by steel producers in electric arc furnaces to carry electric current, in order to melt recycled scrap and produce steel. Total Community consumption amounted to 130.000 tonnes during the investigation period (1 April 2002 – 31 March 2003), valued at around € 295 million. Indian imports represented around 8% of the Community market.

There were two producing exporters of the product concerned in India, Graphite India Ltd (GIL) and Hindustan Electro Graphite Ltd (HEG). Both companies co-operated in the investigations. Provisional anti-dumping duties and provisional countervailing duties were imposed on graphite electrodes on 19 May 2004. On 13 September 2004, the Council imposed definitive measures. Definitive countervailing duties were set at 7% (HEG) and 15,7% (GIL and residual) and definitive anti-dumping duties at 0%.

With regard to the 0% anti-dumping duty which was imposed, it should be noted that no product shall be subject to both anti-dumping and countervailing duties for the purpose of dealing with one and the same situation arising from dumping or export subsidisation. In these investigations, it was established that the subsidy amounts and the dumping margins had partly arisen from the same export subsidies. Therefore, the anti-dumping duty calculated was the lesser of the dumping margin and the injury margin found in the anti-dumping proceeding minus the countervailing duty, thus offsetting the effect of the export subsidies. As a result, the anti-dumping duty imposed was 0%.

Dumping

For both exporting producers dumping margins were established on the basis of a comparison between their weighted average normal values and weighted average export prices. The dumping margins so obtained were 22,4% (HEG) and 33,1% (GIL).

Subsidies

Both companies were found to have received export subsidies from the Government of India. The majority of these subsidies were provided via the Duty Entitlement Pass Book Scheme, which rewards companies by way of an ad valorem grant on the basis of the value of export sales. Countervailable benefits were also found in respect of duty remissions on imported capital goods and raw materials, both schemes being contingent upon export performance.

The ad valorem subsidy margins were definitively assessed at 16,7% for GIL, and 14,9% for HEG.

Injury and causation of injury

A clear deterioration of the situation of the Community industry had been found between 1999 and the investigation period. Virtually all injury indicators developed negatively: production, production capacity and sales volumes of the Community industry declined, the latter resulting in a loss of 6,4 percentage points of market share. Community industry’s profitability, employment and investment also declined substantially.

Conversely, the two Indian producers gained 3,5 percentage points of market share between 1999 and the IP, whilst the average prices of dumped imports from India were consistently lower than those of the Community industry during the period considered. These findings hinted at a strong causal link between dumped/subsidised imports from India and the injury suffered by the Community industry.

Indian exporters claimed that any objective assessment of the situation of the Community industry was impossible because the picture would be blurred by the fact that the two Community producers had practised a cartel between May 1992 and March 1998, and had been fined for this. The investigation found that the period relevant for the analysis of injury was free from any effect of the cartel on prices.

Community interest

The principal user industry, accounting for around 80% of the total Community consumption of graphite electrodes, was the electric steel industry. The investigation showed that consumption of graphite electrodes represented on average 1% of total costs of production of co-operating users. Given the low duties proposed, the simulation has shown that users’ costs of production would be increased at most by 0,1%.

Users also objected to the imposition of countervailing measures on the ground that this would raise an obstacle to a competitive market, and de facto help re-instate the cartel found in 2001 by the Commission. It was considered that the fact that the Community industry practised a cartel in the years 1992-98 for which it had been fined should not deprive it from the right to obtain relief under the anti-dumping and anti-subsidy regulations against unfair trade practises, as long as the consequences of the cartel had been properly addressed and isolated.

Form of the measure

Both exporting producers in India, offered price undertakings in the framework of the anti-subsidy investigation. However, the price of graphite electrodes is very volatile due, in turn, to the volatility of raw material prices. Therefore, any undertaking would have required the indexation of the minimum prices to the prices of the raw materials. However, this was impossible, since there was no publicly available and independent source for prices of raw materials. In addition, one of the exporting producers, subsequent to its undertaking offer, acquired a graphite electrode production company situated in the Community which raised the risk of circumvention of its undertaking offer. In view of two elements, it was not possible to accept undertakings.

Court challenge

Both the definitive anti-subsidy Regulation and the definitive anti-dumping Regulation are currently challenged before the Court of First Instance by the two Indian exporting producers.

4. Polyethylene terephthalate originating in Australia, the People’s Republic of China (PRC) and Pakistan

Polyethylene terephthalate ('PET') is a chemical normally used in the plastic industry for the production of PET-bottles for mineral water, soft drinks, and plastic sheets. Given that the cost of the PET bottle represents a significant proportion of the overall sale price (80% in the case of bottled water), it is understandable that this case has elicited widespread interest from users.

This case presented a particular challenge in terms of the application of the Community interest test, partly because of the high degree of cooperation of users and partly because of the positions taken by users (manufacturers of PET bottles etc., which will be explained in more detail below). The Community interest test demands that the interests of all operators on the EU market be taken into account before a conclusion is reached on the imposition of anti-dumping measures, even where it is clear that dumped imports are injuring Community industry.

The Commission initiated proceedings on 22 May 2003, following a complaint lodged by the Association of Plastic Manufacturers in Europe (APME). The Commission imposed provisional measures in February 2004, and definitive measures were imposed in August 2004 by the Council. The duties imposed range from 0 % up to 22,9 %, and consist of a fixed amount per tonne.

Dumping

The People’s Republic of China (PRC)

Eight exporters, representing close to 100% of imports from the PRC, co-operated with this proceeding. The PRC is considered to be an economy in transition for the purpose of anti-dumping investigations and it is therefore recognised that the costs of companies operating therein are not necessarily reliable, inter alia because of remaining state influence on the market (see explanations to terminology used). Nevertheless under the special rules applicable to such economies, companies may obtain their own dumping margins (if any) if they can prove that their costs and prices are market-driven. All of the cooperating exporters in this case requested market economy treatment (MET) or individual treatment (IT). However only four were successful – (two were granted MET and two others IT). The rejection of MET for the remaining companies was mainly due to the apparent state influence in business decisions. For example the majority of the Board of Directors was appointed by the state, the majority of the shares were held by the state or there were no restrictions in voting power for the state. Moreover, questions were raised concerning the reliability of the accounts. Where MET was refused, the dumping margins were calculated on the basis of verified cost data in a third country, the so-called analogue country (here the United States of America). The United States of America was chosen as the analogue country because it is comparable in size to China and has an open and competitive market.

For the two companies granted MET, the dumping margins found were 0% and 2,6% respectively, and for the remaining companies between 18,4% and 22,9 %

Australia

For the two Australian cooperating exporters, representing almost 100% of Australian exports to the Community, the definitive dumping margins are 7,8% and 15,9%. The dumping margins were calculated on the basis of the actual prices charged by the Australian companies on their home market.

Moreover, the main Australian exporter accepted a price-undertaking. This means that as long as a certain export price is respected, no anti-dumping duty will apply.

Pakistan

The proceeding against Pakistan was terminated. The conclusions are set out in more detail under the section “Investigations terminated without measures”.

Injury and Causation

Eleven out of the 12 Community producers, representing close to 100% of total Community production, actively cooperated with the proceedings.

A clear increase in the volume of imports from the PRC and Australia was registered during 2002 and during the first quarter of 2003. The prices of these imports were considerably below those of the Community industry, with a level of price undercutting ranging from 10% to 17%. The price comparison, as is usual practice for the Community institutions, was carried out at the same level of trade and during the same time period. The situation of the Community industry (i.e. the 11 producers combined) deteriorated from 2002 onwards, particularly with regards to its profitability. This trend coincided with the increase in imports and this, together with the fact that in principle PET is an interchangeable commodity product, clearly indicates that imports had taken over part of the former sales of the Community industry, overriding all other possible causes that could have had an impact on the situation of the Community industry.

Community interest

One of the more interesting aspects of this case was the question of whether it would be in the Community interest to impose these anti-dumping measures. In order to assess this interest, a significant number of suppliers, importers and users were contacted. Cooperation was also received from users representing an unusually high percentage of Community consumption.

The two main points were :

- Should measures be introduced, and given the expected growth in demand for PET (especially for PET used for mineral waters), is the Community industry’s production capacity sufficient to meet this expected demand?

- If measures were introduced and if the effect of their introduction would be higher prices of PET, what would be the effect of these price increases on the downstream industry (bottlers, mineral water producers, soft drink producers, retailers etc.) and at the level of the end-consumer?

It is worth noting that in this particular case, the majority of the users (expressed in volumes of PET purchased) supported the introduction of measures. They were concerned about a possible interruption to their supply of high-quality PET, and underlined the necessity of having access to a continuous supply. As this demand could not be met by imports it was therefore essential that the Community industry commit to investing in new capacity within the Community. However, given that several of the Community producers were already planning such investments, no shortage of PET was actually envisaged.

An assumed 10% increase of the price of PET would at the maximum entail an increase of 0,3 cents (0,6%) per bottle of mineral water at the level of the end-consumer. Thus, it was not unreasonable to assume that the downstream industry could either absorb such an increase or pass it on to the end-consumer.

In conclusion there were no compelling reasons against the imposition of anti-dumping measures on dumped imports originating in Australia and the PRC.

5. Okoumé plywood originating in the People’s Republic of China

Okoumé plywood is made with okoumé, a tropical wood of excellent quality, grown in West Africa.

The Commission initiated the proceeding on 19 August 2003 following a complaint lodged by the European Federation of the Plywood Industry (FEIC) on behalf of producers representing more than 50% of the Community production of okoumé plywood. Provisional measures were imposed in May 2004.

In November 2004 the Council adopted the Regulation imposing definitive measures. This included special provisions to ensure the proper application of the anti-dumping duty so as to minimise the risk of circumvention.

Dumping

The eight co-operating Chinese producers requested market economy treatment and individual treatment. Only four of them fulfilled the conditions for the granting of market economy status.

Turkey was chosen as analogue country for the purpose of establishing a normal value applicable to all non-cooperating exporters and for those which were not granted market economy treatment.

In all cases the dumping margin was established on the basis of a comparison of the weighted average normal value with the weighted average export price during the investigation period (July 2002 – June 2003). The dumping margins thus obtained ranged from 6,5% to 66,7%.

Injury and causation

The injury caused to the Community producers during the period January 1999 – June 2003 was characterized by a decrease of about 10% in the turnover of the Community industry within the context of a 14% increase in consumption of okoumé plywood on the Community market and a sharp decline in the Community industry’s market share from 72,9% in 2001 to 57,1% during the same period.

Profitability and return on investment decreased considerably and investments fell sharply.

With a substantial market share of almost 25%, the dumped imports originating in China were made at low prices which undercut those of the Community industry by more than 20% on average. It was therefore concluded that these imports had caused the material injury suffered by the Community industry

Community interest

Two importers claimed that imposing measures would be against the Community interest but did not provide any evidence to substantiate their claim. There was therefore no reason on the grounds of Community interest not to impose anti-dumping duties.

Measures adopted

The definitive measures imposed, in the form of ad valorem duties ranging from 6,5% to 66,7%, were based on the dumping margins, all of which were lower than the injury margins.

8.1.4. Investigations terminated without measures

8.1.4.1. Overview

In accordance with the provisions of the respective basic Regulations, investigations may be terminated without the imposition of measures if a complaint is withdrawn or if measures are unnecessary (i.e. no dumping/no subsidies, no injury resulting therefrom, measures not in the interest of the Community).

In 2004, 2 new anti-dumping proceedings (0 anti-subsidy proceedings) were concluded without measures, compared to 21 in 2003 and 5 in 2002.

The alphabetical list of cases which were terminated without the imposition of measures during 2004 can be found below. More information can be obtained from the Official Journal to which reference is given in Annex E.

Product (type of investigation[22]) | Originating from | Main reason for termination |

Polyethylene terephthalate (PET) (AD) | Pakistan | Dumping below the de minimis threshold of 2% |

Stainless steel cold-rolled flat products (AD) | USA | Withdrawal of the complaint |

8.1.4.2. Details on individual cases (in chronological order)

1. Polyethylene terephthalate (PET) originating in, inter alia , Pakistan

The background of the case has already been described above under the section “Definitive measures”.

In February 2004, the Commission imposed provisional measures on imports originating in, inter alia, Pakistan. However, following submissions by interested parties, the methodology applied for the dumping calculations was revised, leading to a dumping margin below 2% (i.e. below the so called “ de minimis ” threshold). Therefore, the proceedings had to be terminated.

At the provisional stage, it was considered that despite certain financial links, the two cooperating Pakistani producers could be considered as two separate entities. However the subsequent comments necessitated a reassessment of this relationship. This reassessment found that very specific connections existed between the producers at issue, notwithstanding the fact that they each had different cost structures and were set up in the form of two different legal entities. For example, there was a substantial level of integration in key sectors of their organisation such as management, marketing and production.

As a result of these findings the producers were treated as one single company in the definitive stage of the proceedings. This has had a considerable influence on the dumping margin which was eventually found to be “ de minimis”, meaning below 2%. In accordance with WTO and Community law, the proceedings were therefore terminated.

2. Stainless steel cold-rolled flat products originating in the USA

The product covered was certain stainless steel cold-rolled flat products, i.e. chromium-ferritic stainless steel, mainly used in the automotive exhaust systems. Other typical applications include petrochemical, heat exchangers, furnaces, appliances and food equipment.

The investigation was initiated on 17 December 2002. On 16 September 2003, the Commission imposed a provisional anti dumping duty amounting to 20,6% for the sole co-operating exporting producer and to 25,0% for the non co-operating companies in the US. The calculation of the injury margin was based on a method taking into consideration “meeting points”, i.e. it was considered that the unfair competition took place in particular where the Community industry and the exporting producer in question had common customers. The determination of the injury margin was therefore based on limited transactions.

After disclosure of provisional findings, the Community industry (EUROFER) withdrew its complaint. An anti-dumping proceeding may be terminated where the complaint is withdrawn unless such termination would not be in the Community interest. It was considered that a termination of the investigation would indeed not be against the Community interest and none of the interested parties objected to this conclusion.

The Commission therefore terminated the anti-dumping investigation in March 2004 without imposition of definitive duties. The amount secured by way of the provisional anti-dumping duty was released.

8.2. Review investigations

8.2.1. Expiry reviews

Article 11(2) and Article 18 of the basic Regulations provide for the expiry of measures after five years, unless an expiry review demonstrates that they should be maintained in their original form.

In 2004, 14 measures were allowed to expire automatically. Furthermore, 16 measures which were in force against imports originating in one or more of the 10 acceding countries lapsed automatically on the day of the enlargement. The references for these measures are set out in Annex N.

Since the expiry (or "sunset") provision of the basic Regulations came into force in 1985, a total of 378 measures have been allowed to expire automatically.

8.2.1.1. Initiations

During 2004, 6 expiry review investigations were initiated. It should be noted that investigations initiated after 20 March 2004 are now under deadline, i.e. conclusions should be reached within 12 months but not later than 15 months from the date of initiation.

The alphabetical list of these cases can be found below, together with the name of the complainant. It should be noted that some expiry reviews may be carried out in parallel with interim reviews, which allow the amendment of the duty rates. In such case, these reviews are marked with an asterisk. More information can be obtained from the Official Journal to which reference is given in Annex F.

Product (type of investigation[23]) | Originating from | Complainant |

Magnesium oxide (AD) | P.R. China | Eurométaux |

Polyethylene terephthalate (PET) film (AS) | India | Four Community producers |

Steel ropes and cables | P.R. China India South Africa Ukraine | Liaison Committee of European Union Wire Rope Industries (EWRIS) |

8.2.1.2. Reviews concluded with confirmation of duty(ies)

During 2004, 5 expiry reviews were concluded with confirmation of duty.

The alphabetical list of the cases which were concluded with confirmation of duty during 2004, together with the result of the investigation, can be found below. More information can be obtained from the Official Journal to which reference is given in Annex F.

Product | Originating from | Result of the investigation/ Type[24] and level of measure |

Glyphosate (combined with an interim review) | P.R. China Malaysia Taiwan | Confirmation and lowering of AD duty : 29,9% Confirmation of extension of Chinese AD duty : 29,9% Confirmation of extension of Chinese AD duty : 29,9% |

Ring binder mechanisms | P.R. China | Confirmation of AD duty : depending on mechanism - difference between the minimum import price of EUR 325 per 1000 pieces and the net free-at-Community frontier price - between 51,2 and 78,8% |

Silicon | P.R. China | Confirmation of AD duty : 49% |

Synthetic fibre ropes | India | Confirmation of AD duty : 53-82% |

Tungsten carbide and fused tungsten carbide | P.R. China | Confirmation of AD duty : 33% |

Details on some individual cases (in chronological order)

1. Synthetic fibre ropes originating in India

The original measures concerning imports of synthetic fibre ropes (‘SFR’) originating in India were imposed in June 1998.

During the investigation period Community consumption of SFR amounted to 36.093 tonnes. The volume of imports from India during the same period was negligible.

The expiry review was initiated in June 2003 at the request of the Liaison Committee of EU Twine, Cordage and Netting industries (EUROCORD).

Contrary to the original investigation in 1997-1998, there was no cooperation from Indian exporting producers in the expiry review. In the absence of significant exports from India to the Community market, it was examined how imports of SFR from India would develop should the measures be allowed to expire.

The investigation revealed that that the Community market remains strategically interesting for Indian producers and that their total production capacity represented almost three times the level of Community consumption. Consequently, it was concluded that the existence of large excess capacity indicates a likelihood of a resumption of exports to the Community should measures lapse.

In addition, as quantities of SFR exports from India to the Community market were negligible, the export behaviour of India to other third markets was analysed. The investigation revealed that exports from India to third countries were still made at dumped prices, with dumping margins at higher levels than those found in the original investigation. In other words, dumping behaviour of Indian exporters had not ceased after 1997 but it had been accentuated on third country markets. It was therefore concluded that the expiry of measures was likely to lead to a recurrence of dumped exports.

The analysis of the Community industry showed that it was structurally viable, however, still in a difficult situation, in particular as regards its profitability. It was therefore concluded that if measures were not maintained the Community industry would be put at further risk, creating a decline in its market shares, depressing its prices and lowering its profitability.

In view of the above findings, it was therefore concluded that the measures should be maintained.

2. Tungsten carbide and fused tungsten carbide originating in the People’s Republic of China (PRC)

Tungsten carbide is a carbonised metal powder made from tungsten ore. It is used by the hard metal industry to make drill heads and wear components for machinery. This case is of interest in that it prolongs an anti-dumping duty already in place for 14 years on imports from the Peoples Republic of China (PRC). The continued refusal of the PRC to grant access to Community producers to their supplies of the raw materials for tungsten carbide is at the root of this duty and justifies its length.

The PRC holds approximately 40 % of the raw materials for tungsten carbide, the exports of which are still controlled by the Chinese government. This supply control allows the PRC to influence prices further down the production chain. Community producers on the other hand are largely dependent on access to these raw materials.

Dumping

When the present duties were imposed in 1990, the PRC was considered to be a non-market economy. The level of State influence meant that company costs were not reliable and a country-wide margin was calculated instead of individual dumping margins.

The PRC is currently considered to be an “economy in transition”. Under the special rules applicable to such economies, companies may request so-called “market economy treatment”, provided they can prove that their costs and prices are market-driven (see explanations to terminology used). However no such application was made by any Chinese exporter in the current review proceeding. Therefore the original methodology (no individual dumping margins) was maintained, in accordance with the legal provisions in force.

In order to determine the so-called “normal value”, i.e. what would be a “normal” price to be charged under market economy conditions, cost data were verified with a cooperating producer in the so-called analogue country, in this case the United States of America. The United States of America was chosen as it is comparable in size to China and has an open and competitive market. It was on this basis that continued dumping was found.

Likelihood of continuation of dumping

The comparatively high prices in the Community market make it an attractive destination for Chinese producers of tungsten carbide. Moreover these producers were found to have considerable unused capacity. In such circumstances there is a strong likelihood of continued dumping.

Injury

Three producers, representing 90% of the total Community production, fully co-operated in the investigation. Notwithstanding the existing measures, it was apparent that the ability of the Community industry (i.e. the 3 producers combined) to operate profitably remained under pressure from Chinese imports. This is often the case with commodity products, where even small volumes at low prices can have a large impact on the overall market terms. In fact since 2002, the Community industry’s rate of use of the production lines and its profitability had declined.

Likelihood of continuation of injury

As mentioned above, there is substantial unused production capacity available in China. In addition, Chinese prices had constantly been much lower that those of the Community industry. Although the quantities currently imported from the PRC were relatively small, a price-depressive effect was observed nonetheless, with resulting negative consequences for the Community industry. As this industry remained vulnerable, an increase in the volume of imports would have inevitably impacted negatively on its situation.

If the existing measures had been repealed, the Community industry would (once again) face increasing unfair competition from Chinese exporters of the product concerned. This would have led to continued and aggravated injury. In light of this likelihood the extension of the anti-dumping duty was considered necessary.

Community interest

A number of importers/traders and users were contacted when evaluating whether there were any compelling reasons against extending the measures. No replies were received from any importers or traders and only one user co-operated. The latter, who represented a very small market share in the Community, expressed some fear that prolonging the measures would strengthen the position of the Community industry at his expense. However, given the risk to the Community industry and the very low level of cooperation from the users and other related industries, the extension of the existing anti-dumping measures was considered justified.

8.2.1.3. Reviews concluded by termination

During 2004, 4 expiry reviews were concluded by termination. It should be noted that some expiry reviews may be carried out in parallel with interim reviews. These reviews are marked with an asterisk.

The alphabetical list of the cases which were concluded by termination during 2004, together with the result of the investigation, can be found below. More information can be obtained from the Official Journal to which reference is given in Annex F.

Product (type of investigation[25]) | Originating from | Main reason for termination |

Sacks and bags of polyethylene or polypropylene | P.R. China India Indonesia Thailand | Withdrawal of the request |

Details on the individual case (in chronological order)

1. Sacks and bags of polyethylene or polypropylene originating in the People’s Republic of China, India, Indonesia and Thailand

Definitive anti-dumping duties on sacks and bags were imposed in October 1997. The measure against India was reviewed and amended in October 2002. Subsequently, upon request of the Community industry an expiry review was initiated in October 2002.

The aim of the review was to determine whether the expiry of the measures would be likely, or unlikely, to lead to a continuation or recurrence of dumping and injury.

Exporting producers in India and Indonesia as well as the Community producers co-operated and submitted a reply to the questionnaire. However, in October 2003, the Community industry decided to withdraw its complaint.

An anti-dumping proceeding may be terminated where the request for a review is withdrawn unless such termination would not be in the Community interest. It was considered that a termination of the investigation would indeed not be against the Community interest and none of the interested parties objected to this conclusion.

Therefore, in February 2004, the investigation was terminated and the definitive anti-dumping duty in force repealed.

8.2.2. Interim reviews

Article 11(3) and Article 19 of the basic Regulations provide for the review of measures during their period of validity on the initiative of the Commission, at the request of a Member State or, provided that at least one year has elapsed since the imposition of the definitive measure, following a request containing sufficient evidence by an exporter, an importer or by the Community producers. In carrying out the investigations, it is being considered, inter alia , whether the circumstances with regard to dumping and injury have changed significantly. Reviews can be limited to dumping/subsidization or injury aspects.

During 2004, a total of 26 interim reviews were initiated, 10 of which were the so-called “enlargement reviews” (see point 3). Sixteen interim reviews were concluded with confirmation or amendment of duty and 2 investigations were terminated. The alphabetical list of cases which were concluded during 2004, together with the result of the investigation, can be found below. The asterisk refers to the enlargement reviews. More information can be obtained from the Official Journal to which reference is given in Annex G.

Product | Originating from | Result of the investigation/ Type[26] and level of measure |

Aluminium foil* | Russia | Amendment of the AD regulation imposing the measures in order to cover for the possibility of change to existing undertakings |

Ammonium nitrate* | Russia | Amendment of the AD regulation imposing the measures in order to cover for the possibility of undertakings |

Ammonium nitrate* | Ukraine | Amendment of the AD regulation imposing the measures in order to cover for the possibility of undertakings |

Coke | P.R. China | Amendment of the AD duty |

Colour television receivers* | P.R. China | Amendment of the AD regulation imposing the measures in order to cover for the possibility of change to existing undertakings |

Flat-rolled products of iron or non-alloy steel (hot-rolled coils) | Bulgaria South Africa | Termination on the basis of Article 9(5) of the basic regulation (non-discriminatory principle) |

Glyphosate (combined with expiry review) | P.R. China | Lowering of AD duty |

Grain-oriented electrical sheets (3 reviews) | Russia | Amendment of AD duty + withdrawal of undertaking |

Grain-oriented electrical sheets* | Russia | Amendment of the AD regulation imposing the measures in order to cover for the possibility of undertakings |

Potassium chloride* | Russia Belarus | Amendment of the AD regulation imposing the measures in order to cover for the possibility of undertakings |

Silicon carbide* | Russia Ukraine | Amendment of the AD regulation imposing the measures in order to cover for the possibility of change to existing undertakings or acceptance of new undertakings |

Tube and pipe fittings (2 reviews) | Thailand | Amendment of the AD duty |

8.2.3. “Other” interim reviews

A series of other reviews, not falling under Article 11(3) or Article 19 of the basic Regulations or for which no notice of initiation was published in the Official Journal, were concluded during 2004.

They more specifically concern :

- Re-imposition of duty rate following Judgment of Court of First Instance (seamless pipes and tubes)

- Amendment of duty rate following reports adopted by the Dispute Settlement Body of WTO (malleable tube and pipe fittings)

- Acceptance, voluntary withdrawal or breach of undertakings (sulphanilic acid, silicon, malleable tube and pipe fittings)

- Suspension of the measures (coke, seamless pipes and tubes)

- Amendment of the annex of the regulation in order to include new models (television camera systems)

- New exporters requests (cotton-type bed linen)

More information can be obtained from the Official Journal to which reference is given in Annex H.

8.2.4. New exporter reviews

As far as the anti-dumping measures are concerned, Article 11(4) of the basic Regulation allows for a review ("newcomer" review) to be carried out in order to determine individual margins of dumping for new exporters located in the exporting country in question which did not export the product during the investigation period.

Such parties have to show that they are genuine new exporters, i.e. that they are not related to any of the exporters or producers in the exporting country, which are subject to the anti-dumping measures, and that they have actually started to export to the Community following the investigation period, or that they have entered into an irrevocable contractual obligation to export a significant quantity to the Community.

When a review for a new exporter is initiated, the duties are repealed with regard to that exporter, though its imports are made subject to registration under Article 14(5) of the basic Regulation in order to ensure that, should the review result in a determination of dumping in respect of such an exporter, anti-dumping duties may be levied retroactively to the date of the initiation of the review.

As far as anti-subsidy measures are concerned, Article 20 of the basic Regulation allows for a review ("accelerated" review) to be carried out in order to establish promptly an individual countervailing duty. Any exporter whose exports are subject to a definitive countervailing duty but who was not individually investigated during the original investigation for reasons other than a refusal to co-operate with the Commission can request such review.

In 2004, 2 new exporter review (no accelerated reviews) were initiated. Since the Commission carried out the first reviews of this type in 1990, a total of 45 investigations have been initiated. Five investigations, of which 3 accelerated reviews, were concluded during 2004. Two investigations were terminated thereby maintaining the original level of duty.

More information can be obtained from the Official Journal to which reference is given in Annex I.

8.2.5. Absorption investigations

The possibility of "absorption" reviews, which deal with situations where the exporters directly or indirectly bear the cost of the duty and thereby increase the dumping margin without leading to sufficient movement in resale prices, is included in Article 12 and Article 19(3) of basic Regulations.

In 2004, one anti-absorption investigation concerning imports of sulphanilic acid originating in the People’s Republic of China was concluded with an increase of the duty. The investigation concerning imports of lamps originating in the People’s Republic of China was terminated without an increase of the duty.

More information can be obtained from the Official Journal to which reference is given in Annex J.

8.2.6. Circumvention investigations

The possibility of investigations being re-opened in circumstances where evidence is brought to show that measures are being circumvented was introduced by Article 13 and Article 23 of the basic Regulations.

Circumvention is defined as a change in the pattern of trade between third countries and the Community which stems from a practice, process or work for which there is insufficient due cause or economic justification other than the imposition of the duty. The duties may be extended to imports from third countries of like products, or parts thereof, if circumvention is taking place.

In 2004, 8 investigations were initiated and 8 were concluded with extension of the duty. A further 3 investigations were concluded without the extension of duty. More information can be obtained from the Official Journal to which reference is given in Annex K.

8.3. Safeguard investigations

Safeguard measures have always been and remain an exceptional instrument which the Commission would only apply in truly exceptional circumstances. Indeed, they are only used where it is clear that, applying the highest standards, such measures are necessary and justified because, due to unforeseen circumstances, there has been a surge in imports and this has caused or threatens to cause serious damage to the Community industry.

The Commission expects the Community’s commercial partners to follow a similarly strict approach. However, more and more countries are adopting safeguard measures, often in circumstances which do not appear to be entirely in line with Article XIX of the GATT 1994, the WTO Agreement on Safeguards and other WTO rules. Consequently, the activities of the Co