COMVIISSION OF THE EUROPEAN COMMUNITIES 
C0M(94) 408 final 
Brussels, 22.09.1994 
Proposal for a 
COUNCIL REGULATION (EC) 
amending Regulation (EEC) No 2552/93 imposing a definitive anti-dumping 
duty on imports of artificial corundum originating in the People's Republic of 
China, the Russian Federation and Ukraine, with the exception of those 
imports sold for export to the Community by companies whose undertakings 
have been accepted, and definitively collecting the amounts secured by way of 
the provisional anti-dumping duty imposed by Commission Regulation (EC) No 
1418/94 
(presented by the Commission) 
Explanatory memorandum 
1. The Commission, by Regulation (EC) No 1418/941 imposed a provisional 
anti-dumping duty on imports into the Community of artificial corundum 
falling within CN code 2818 10 00 (Taric additional code : 8725), originating 
in the People's Republic of China and exported to the Community by six 
Chinese companies which had accepted undertakings. A provisional duty 
was imposed as the Commission had reason to believe that the 
undertakings of these exporters had been violated, and that Community 
interests called for such intervention. The duty was set at 30.8% of the net 
free-at-Community frontier price of the product before customs duty, and 
was based on the facts established before the acceptance of the 
undertaking. 
2. Following the imposition of the provisional anti-dumping duty, the European 
Chemical Industry Council (CEFIC), on behalf of the Community industry of 
artificial corundum, and the Machine Tool and Tool Branch Chamber of the 
Chinese Chamber of Commerce, on behalf of the exporters concerned, 
made their views known in writing and, at their request, were granted an 
opportunity to be heard by the Commission. Both parties were informed of 
the essential facts and considerations on the basis of which it was intended 
to recommend the imposition of a definitive anti-dumping duty and the 
definitive collection of the amounts secured by way of the provisional duty, 
and were granted a period within which to make representations subsequent 
to the disclosure. The views of both parties were considered, which resulted 
in the position adopted below. 
3. The facts as finally established show that both the procedural and 
substantive terms of the undertakings have been violated. As the exports 
concerned are thus no longer effectively controlled by the undertaking, the 
imposition of definitive duties is in the interest of the Community. The 
interest of users of artificial corundum is minor in comparison to the very 
existence which is at stake for the EC producers of artificial corundum, of 
which two have recently announced plant closures. The level of this duty 
should be 30.8 percent/as originally established for the People's Republic of 
China. The arguments submitted by the Chinese side do not change, but 
indeed confirm, the original findings regarding dumping and injury. The 
Commission therefore proposes to amend Regulation No 2552/93 imposing 
a definitive anti-dumping duty on imports of artificial corundum originating in, 
inter alia, the People's Republic of China, so as to delete the exemption from 
this duty from which the six Chinese exporters benefited until now. 
4. Given the seriousness of violating an undertaking, it is also proposed to 
collect definitively and in their entirety the amounts secured by way of 
provisional anti-dumping duty. 
OJ No L 155, 22.6,1994, p. 8. 
I 
COUNCIL REGULATION (EC) No 
of 
amending Regulation (EEC) No 2552/93 imposing a definitive anti-dumping 
duty on imports of artificial corundum originating in the People's Republic of 
China, the Russian Federation and Ukraine, with the exception of those 
imports sold for export to the Community by companies whose undertakings 
have been accepted, and definitively collecting the amounts secured by way of 
the provisional anti-dumping duty imposed by Commission Regulation (EC) No 
1418/94 
THE COUNCIL OF THE EUROPEAN UNION, 
Having regard to the Treaty establishing the European Community, 
Having regard to Council Regulation (EEC) No 2423/88 of 11 July 1988 on 
protection against dumped or subsidized imports from countries not members of the 
European Economic Community1, hereinafter referred to as 'the Basic Regulation', 
and in particular Article 12 thereof, 
Having regard to the proposal from the Commission submitted after consultation 
within the Advisory Committee, 
Whereas, 
A. Provisional measures 
(1) By Decision 91/512/EEC of 25 July 1991, the Commission accepted 
undertakings given in connection with the review of anti-dumping measures 
concerning imports of artificial corundum originating in the Soviet Union, 
OJ No L 209, 2.8.1988, p. 1. Regulation as last amended by Council Regulation (EC) 
No 522/94 (OJ No L 66, 10.3.1994, p. 10). 
1 
Hungary, Poland, Czechoslovakia and the People's Republic of China and in 
connection with the anti-dumping proceeding concerning imports of artificial 
corundum originating in Brazil and Yugoslavia2. By Council Regulation (EEC) 
No 2552/93, a definitive anti-dumping duty was imposed on imports of 
artificial corundum originating in the People's Republic of China, the Russian 
Federation and Ukraine, with the exception of those imports sold for export 
to the Community by companies whose undertakings had been accepted3. 
(2) The Commission, by Regulation (EC) No 1418/944 imposed a provisional 
anti-dumping duty on imports into the Community of artificial corundum 
falling within CN code 2818 10 00 (Taric additional code : 8725), originating 
in the People's Republic of China and exported to the Community by the 
following companies : 
CMEC-China National Machinery and Equipment Import and Export 
Co., Beijing, 
The second abrasive wheel factory of China, Zhengzhou, Henan, 
Mount Tai Co. of the fourth Grinding Wheel factory of China, 
Zhangian, ZiBo, Sha Dong, 
Shandong Machinery and Equipment Import and Export Co., 
Qingdao, 
Guandong Machinery and Equipment Import and Export Group Co., 
Guangzhou, 
CAEC - China Abrasives Import and Export Co., Zhengzhou, Henan. 
This provisional duty was imposed in accordance with Article 10 (6) of the 
Basic Regulation, as the Commission had reason to believe that the 
undertakings of the above-mentioned exporters had been violated, and that 
Community interests called for such intervention. The rate of duty was 30.8% 
of the net free-at-Community frontier price of the product before customs 
2 OJN0L275, 2.10.1991, p. 27. 
3 OJ No L 235, 18.9.1993, p. 1. 
4 OJNoL155, 22.6.1994, p. 8. 
k 
duty, and was based on the facts established before the acceptance of the 
undertaking. 
B. Subsequent Procedure 
(3) Following the imposition of the provisional anti-dumping duty, the European 
Chemical Industry Council (CEFIC), on behalf of the Community industry of 
artificial corundum, and the Machine Tool and Tool Branch Chamber of the 
Chinese Chamber of Commerce (CCC), on behalf of the exporters 
concerned, made their views known in writing and, at their request, were 
granted an opportunity to be heard by the Commission. Both parties were 
informed of the essential facts and considerations on the basis of which it 
was intended to recommend the imposition of a definitive anti-dumping duty 
and the definitive collection of the amounts secured by way of the 
provisional duty, and were granted a period within which to make 
representations subsequent to the disclosure. 
The views of both parties were considered, which resulted in the position 
adopted below. 
C. Definitive duty 
(4) The CCC contested the need for a provisional or definitive duty arguing that 
the exports covered by the undertaking were not dumped and had been 
made in small volumes only, and that the exporters concerned had not 
violated the substantive terms of the undertaking. Violation of the procedural 
terms of the undertaking was admitted. The idea was raised of a new price 
undertaking, without, however, a precise offer being made. A review was 
also requested, based on the same claim that exports covered by the 
undertaking were not dumped, and on the claim that the undertaking price 
was above EC market prices. 
(5) CEFIC argued for the quick introduction of definitive duties, given the alleged 
ineffectiveness of the undertaking. CEFIC underlined that the volume of 
imports of artificial corundum from China as a whole had more than 
quadrupled from 4,149 tonnes in 1991 to 17,324 tonnes in 1993 following 
the acceptance of the undertakings, that the largest part of these exports 
were covered by the undertaking, and that export prices had on average 
5 
fallen by 14 percent. This import situation had contributed to the announced 
closure of two plants of EC industry, and to a decline in production volumes, 
capacity utilisation, prices and profitability for the EC producers. CEFIC 
confirmed that, despite this precarious situation, an important Community 
industry for artificial corundum still existed, with an estimated 400 jobs at 
stake in the short term. 
(6) The Council considers that undertakings can only operate satisfactorily if 
strict compliance exists in respect of the reporting and other procedural 
obligations that permit the Commission to verify whether the substantive 
terms of the undertaking are being correctly implemented. It was precisely 
because of the non-compliance with the reporting requirement, admitted by 
the CCC, that the Commission was prevented from determining to what 
precise degree the Chinese exporters still complied with their substantive 
obligations. 
Furthermore, the Commission has written evidence in its possession that 
price offers and sales were made by Chinese exporters covered by the 
undertaking to Community customers at prices well below those stipulated in 
the undertaking. In some cases this concerned Chinese exporters, or local 
subsidiaries or branches thereof, that claimed not to have exported anything 
to the Community, thus discrediting the Chinese claim that exports covered 
by the undertaking were small in volume. This evidence was disclosed in 
non-confidential form to the CCC, which was unable to rebut it. In any case, 
even if the quantity exported under the undertaking was small, this is no 
excuse for not respecting the price stipulated in the undertaking. A violation 
of the substantive terms of the undertakings has therefore also been 
determined definitively. 
Once an undertaking has been violated, whether in terms of procedure or 
substance, or, as in this case, both, there is normally no valid reason for the 
Commission to maintain or renew the undertaking. By not complying with the 
terms of the undertaking, exporters know and accept in advance the 
consequences that may flow therefrom. In this case, it was established that 
ail six Chinese exporters violated the terms of the undertaking in one way or 
another. In addition, it was established that the CCC, which has acted as co­
signatory of the undertaking and has represented ail of the six exporters 
concerned before the Commission, could not be relied upon to ensure the 
£ 
correct functioning of the undertaking in respect of those exporters. This 
undertaking has therefore proven unreliable as a whole. The Council thus 
considers that the imposition of a definitive duty on all six Chinese exporters 
is in the interest of the Community, in order to prevent injury to the EC 
Industry from imports into the Community that are no longer effectively 
controlled by an undertaking. 
(7) This interest is not outweighed by the interests of the industrial users of 
artificial corundum. They have had an exceptional advantage resulting from 
unfair low prices, which under normal trading conditions would not have 
existed. It is the basic purpose of anti-dumping measures to restore normal 
trading conditions. This price benefit to companies which use artificial 
corundum as one input into their production process is, in any case, minor in 
comparison with the very survival of an entire EC industry which is at stake 
in the case of artificial corundum, as documented by CEFIC. The Council 
therefore considers that in this respect the same considerations regarding 
Community interest still apply as mentioned in Commission Decision 
91/512/EEC of July 1991 accepting the undertakings, and confirmed in 
September 1993 by Regulation 2552/93 imposing a residual duty. No 
comments were received from users of artificial corundum that contested this 
view. 
(8) The arguments by the CCC that exports are not dumped have been 
examined. In this context it was submitted that China is no longer a non-
market economy country, that Chinese export prices are higher than prices 
in the Chinese market, and that under the market mechanism prices cannot 
be lower than cost of production. The Council observes, in this respect, that 
China is regarded as a non-market economy country, that its domestic prices 
therefore cannot be used to prove an absence of dumping, and that, even in 
a market economy, experience indicates that it is quite possible for prices to 
be below full cost of production. 
It was also argued that the undertaking price would be above EC market 
prices. Even if true, this would not be relevant as there is no reason to 
believe that the undertaking price is at a level higher than necessary to 
remove the injury to the EC industry. The prices currently prevailing in the 
EC market are not prices that permit the EC industry a reasonable profit, the 
more so as those prices are influenced by the same Chinese exporters that 
I 
violated their undertaking by offering artificial corundum at lower prices. The 
closure of two additional plants of the EC industry is an indication that 
reasonable profits are in fact not being made. 
(9) In its September 1993 Regulation imposing a residual duty, the Council 
considered that the findings of the original investigation, including those on 
dumping and injury resulting therefrom, remained reliable and that the 
residual duty introduced at that time for other Chinese exporters than the 
ones from which undertakings had been accepted could be based thereon. 
The export prices now advanced by the CCC to demonstrate an absence of 
dumping are well below the injury threshold and do not indicate that these 
findings need to be revised downward. The Council therefore considers that 
the level of the duty should be set at 30.8 percent, as determined originally 
for the People's Republic of China. 
(10) Regulation No 2552/93 exempted the six Chinese exporters concerned from 
the country-wide duty of 30.8 percent, on the basis that undertakings had 
been accepted from them. Since those undertakings have now been 
violated, this exemption should be revoked. The Council thus considers that 
Regulation No 2552/93 should be amended so as apply the same duty of 
30.8 percent to all Chinese exporters. 
D. Collection of provisional duty 
(11) In view of the seriousness of violating an undertaking, it is considered 
necessary to collect definitively and in their entirety the amounts secured by 
way of provisional anti-dumping duty pursuant to Commission Regularion 
(EC) No 1418/94, 
HAS ADOPTED THIS REGULATION, 
Article 1 
The references to the People's Republic of China and the six Chinese exporters 
mentioned in Article 1 (5) of Regulation (EEC) No 2552/93 are deleted. 
Article 2 
The amounts secured by way of the provisional anti-dumping duty imposed 
pursuant to Regulation (EEC) No 1418/94 shall be definitively collected. 
Articles 
This Regulation shall enter into force on the day following its pubKcation in the 
Official Journal of the European Communities. 
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ISSN02S4-147S 
COM(94) 408 final 
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