COMMISSION OF THE EUROPEAN COMMUNITIES 
C0M<93) 413 final 
Brussels, 13 August 1993 
Proposal for a 
rnUMCAL REGULATION fEEC) 
imposing a definitive anti-dumping duty on imports of 
deedburned magnasit* originating in tha People's Republic of China 
(presented by the Commission) 
>l-
Explanatory Memorandum 
1. Commission Regulation (EEC) No 2799/92f1) imposed a provisional 
anti-dumping duty on imports of deadburned magnesite originating in 
the People•s Republic of China 
2. Council Regulation (EEC) No 104/93(2) extended this duty for a 
period of two months. The expiry date for this provisional duty 
was Thursday 26 March 1993. 
3. The Chinese exporters requested and were granted a hearing and made 
their views known in writing, as did other interested parties. 
4. A prolonged process of consultation was necessary in order to 
consider fully all views before the Commission was able to draw its 
final conclusion. This lengthy consultation has resulted in the 
provisional measures lapsing on 26 March 1993 before the imposition 
of definitive measures. 
5. With regard to normal value, following publication of the 
provisional measures and the subsequent disclosure of the 
Commission's dumping calculation, the Chinese exporters showed that 
insufficient allowance had been made to take into account the ease 
of access to raw materials found in China when compared to Turkey, 
the reference country. The commission modified its calculation 
accordingly. 
6. With regard to the comparison between normal value and export price 
the Chinese exporters showed that insufficient adjustment had been 
made to normal value to allow for differences in the burning 
process in China compared with Turkey. The Commission modified its 
calculation accordingly. 
7. As a result of these changes to normal value, the dumping margin 
for all Chinese exporters is reduced to 80.7%. 
8. As far as other points in the provisional measures are concerned, 
particularly with regard to injury and causality, various arguments 
were put forward by the Chinese exporters, the Community importers, 
and users, as to why definitive measures should not be imposed. 
These arguments are discussed in detail in the attached regulation, 
however, the Commission has proposed that definitive anti-dumping 
measures should be imposed. 
(1) 0J No L 282, 26.09.1992, p. 15 
(2) 0J No L 15, 23.01.1993, p. 1 
*^CL — 
9. With regard to the calculation of the definitive duty, the 
Commission has taken into consideration the contribution of the 
dumped imports to the poor economic situation of the Community 
industry. 
It considers that only a duty equal to the full dumping margin, 
which would bring the Chinese prices up to the normal value, is 
sufficient to remove the injury experienced by the Community 
industry. 
10. As far as the form of the duty is concerned the Commission notes 
that the deadburned magnesite market is very sensitive to the price 
instability generated by the dumped Chinese imports. The form of 
the duty should be such as to prevent further price decreases by 
the Chinese exporters. In these circumstances a minimum price at 
which the Chinese magnesite can be sold on the Community market has 
been established. This minimum price is 133 ECU per tonne for all 
grades. Consequently the duty shall be equal to the difference 
between this minimum price and the net free at Community frontier 
price before customs clearance. 
-Mb^ 
Proposal for a 
COUNCIL REGULATION (EEC) No 
of 
imposing a definitive anti-dumping duty on imports of 
deadburned magnesite originating in the People's Republic of China 
THE COUNCIL OF THE EUROPEAN COMMUNITIES, 
Having regard to the Treaty establishing the European Economic 
Community, 
Having regard to Council Regulation (EEC) No 2423/88 of 11 July 1988 
on protection against dumped or subsidised imports from countries not 
members of the European Economic Community(x) and in particular 
Article 12 thereof, 
Having regard to the proposal from the Commission, submitted after 
consultation within the Advisory committee as provided under the above 
Regulation, 
Whereas : 
A. PROVISIONAL MEASURES 
(1) The Commission, by Regulation (ECC) No 2799/92<2), (hereafter 
referred to as the Provisional Regulation) imposed a provisional 
anti-dumping duty on imports of deadburned magnesite 
originating in the People's Republic of China and falling within 
the CN Code 2519 90 30. 
(1) OJ No L 209, 02.08.1988, p. 1 
(2) OJ No L 282, 26.09.1992, p. 15 
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B. SUBSEQUENT PROCEDURE 
(2) Following the imposition of the provisional anti-dumping duty, 
five Chinese exporters and some independent importers requested 
and were granted an opportunity to be heard by the Commission. 
They also made written submissions making known their views on the 
findings as did other independent importers, some end users and 
the Chinese Authorities. 
(3) Parties were also informed of the essential facts and 
considerations on the basis of which it was intended to recommend 
the imposition of definitive duties. They were also granted a 
period within which they could make representations subsequent to 
these disclosures. 
(4) The oral and written comments submitted by the parties were 
considered and, where appropriate, the Commission's findings were 
modified to take account of them. 
C. PRODUCT UNDER CONSIDERATION - LIKE PRODUCT 
(5) Certain Chinese exporters, independent importers and end users 
have repeated the argument that deadburned magnesite originating 
in the community and elsewhere is not a like product to that 
originating in the People's Republic of China, in this respect, 
the Chinese exporters proposed that an independent technical 
expert be appointed by the Commission to determine the question of 
whether or not Chinese magnesite is a "like product" to any other 
deadburned magnesite, in terms of the quality of its mineral 
deposits, the extracting and processing methods, its chemical and 
physical characteristics and the application of the final product. 
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(6) The Commission accepts that an independent expert may provide 
factual information as to any such differences between Chinese 
magnesite and that from other sources. The existence of these 
differences is, however, accepted by the Community Institutions. 
It is also not contested that these differences do not alter the 
fact that the basic physical and chemical characteristics of all 
types of magnesite are identical. Only if these basic physical and 
technical characteristics were to be different, could it be 
considered that the different types of magnesite are not similar 
products. The fact that deadburned magnesite from whatever source 
can be used interchangeably by end users confirms that it is one 
like product. It was thus not considered necessary to appoint such 
an expert for these reasons and for those given in recitals 10, 
11 and 12 of the Provisional Regulation. 
The council confirms these findings and conclusions. 
D. DUMPING 
a) Reference country 
(7) In its Provisional Regulation, the Commission found that Turkey 
was an appropriate reference country for the determination of 
normal value for the People's Republic of China. After the 
imposition of provisional duties some of the exporters objected to 
the use of Turkey as a reference country and proposed 
Czechoslovakia as being more appropriate because of the nature of 
its reserves, its processing techniques, and the range of the MgO 
(magnesium oxide) grades. They argued that the former 
Czechoslovakia, while being a market economy, has an economic 
structure closer to that of china. 
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The Commission recalls however that, in conformity with Regulation 
(EEC) No 1765/82(3), the former Czechoslovakia cannot be regarded 
as a market economy during the investigation period of July 1990 to 
June 1991. According to the provisions of Article 2(5) of 
Regulation (EEC) No 2423/88, prices and costs in such a non market 
economy cannot be used as a basis for establishing normal value. 
When selecting a market economy country in which normal value can 
be established, the Commission takes several factors into account. 
It considers the access to raw materials, the representativity of 
the market in relation to the quantities exported by the exporting 
country and whether costs and prices of the product in question in 
that country are formed by competitive market forces. 
After a full examination of conditions in Turkey in the light of 
the above considerations, the Commission concluded, as in recital 
15 of the Provisional Regulation, that Turkey is an appropriate 
reference country. 
The Council confirms these findings and conclusions. 
b) Normal value 
(8) With regard to the price situation in Turkey, the Commission found 
that the high proportion of sales between related companies made 
it inappropriate to base normal value on selling prices. However, 
it was found, as shown in recital 16 of the Provisional 
Regulation, that the costs of production of the Turkish producer 
are determined through a process of competitive tendering. Costs 
of production are thus established in the ordinary course of trade 
and form an appropriate basis for normal value. 
(3) OJ No L 195, 05.07.1982 
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(9) The Chinese exporters argued, after the imposition of provisional 
duties, that the normal value as constructed for each MgO grade 
and as adjusted to take account of differences in conditions 
between china and Turkey, did not fully reflect the natural 
advantages of China, where they claimed magnesite can be extracted 
and processed more easily than in Turkey. 
The Commission, to some extent, agrees with this argument. As far 
as the differences in the mining and processing methods are 
concerned, the Commission accepts that for Chinese produced 
deadburned magnesite, due to the natural advantages, some cost 
factors do not exist in china. In the Provisional Regulation 
normal value was adjusted to allow for beneficiation and sorting 
processes found in Turkey but not found in China. The commission 
now considers that an additional allowance should be made for the 
ease of access to raw materials in China in comparison with that 
! 
of Turkey. Therefore, taking into account the actual ore/spoil ! 
! 
ratio found in Turkey and the level of adjustment suggested by the ! 
| Chinese exporters, the costs of extraction have been reduced by ! 
! 
20%, as found in Turkey. 
On this basis, the normal value, as established for the Turkish 
producer, is considered to reflect the natural advantages in 
China. The Chinese exporters argued that a further allowance 
should be made in the light of the claimed proximity of the open 
cast mines to the kilns in China. In this respect it must be 
stated that the decision to locate the kilns near to the mines, 
and to move them as the mines move, is one which is influenced by 
the non market cost structure in China and that to make 
adjustments on this account would be incompatible with the 
purposes of Article 2(5) of the Basic Regulation. 
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(10) The normal value thus established is confirmed by the Council. 
(c) Export Price 
(11) The Council confirms the method used to establish export prices 
set out in recital 18 of the Provisional Regulation as no 
substantiated comments in this respect were made by interested 
parties. 
E. COMPARISON AND DUMPING MARGIN 
(12) The Chinese exporters argued that Chinese producers use simple, 
low cost, coke burning, shaft kilns and that an adjustment of 10% 
should be made to reflect lower burning costs in China. The 
Commission established, however, that the Turkish producer also 
uses shaft kilns. By contrast the Commission accepted that an 
allowance should be made to reflect the higher cost of the fuel 
oil used by the Turkish producer and costs of production have thus 
been reduced by 3%. No other observation having been raised by any 
other party, the findings and conclusions in recital 19 of the 
Provisional Regulation are hereby confirmed by the council. 
The final examination of the facts showed the existence of 
dumping, the margin of dumping being equal to the amount by which 
the normal value exceeds the price for export to the Community. 
This margin is equal to ECU 60 per tonne. 
(13) For the purpose of the provisional findings the Commission has 
established a single dumping margin for all Chinese exporters. The 
co-operating Chinese exporters contested the single dumping margin 
and argued that the Commission should calculate a dumping margin 
for each co-operating exporter. 
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The Commission recalls however that, with regard to exports from a 
non-market economy, individual treatment must remain a strict 
exception to be applied solely in cases where the producer 
concerned has provided evidence that it is free to establish 
export prices without the influence of the state authorities. The 
state, through its control, could modify the pattern of production 
and trade, so as to take advantage of the lowest dumping margin 
and thus undermine the effectiveness of any measures. In this 
respect, as explained in recital 21 of the Provisional Regulation, 
these exporters which are state controlled enterprises are not 
independent of any state influence and are not free in fixing 
their export prices. Therefore only one dumping margin for all 
Chinese exports has been established. The Council confirms the 
above findings and conclusions. 
F. INJURY Ï" 
! I 
i! 
'• ! 
(14) The commission concluded in its Provisional Regulation (see !j \ i recitals 22-32) that the Community industry had suffered material |} 
injury as a result of the dumped imports of deadburned magnesite 
originating in the People's Republic of China. Imports of the 
product concerned from the People's Republic of China increased 
from 117.000 tonnes in 1988 to over 176.000 tonnes during the f 
investigation period of 1 July 1990 to 30 June 1991, the market 
share of the community producers decreased in a growing market and 
their prices were significantly depressed. All sales by Community 
producers were loss making or at a low profit level. In this 
respect no new arguments were put forward by interested parties. 
The Council, therefore, confirms the Commission findings and 
conclusions as in recital 32 of the Provisional Regulation. 
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(15) The Chinese exporters argued that there can be no injury for 
grades above 92% MgO as the community producers of these grades 
have, allegedly, continually increased sales, production volume 
and capacity utilisation. 
As established in recital 34 of the Provisional Regulation, the 
Commission did not find, during its investigation, that Community 
producers had increased sales, production volume and capacity 
utilisation for these grades. In addition, this argument ignores 
the fact that according to Article 4(4) of Regulation EC No 
2423/88 injury has to be established in relation to the Community 
production of the like product, which consists of all types and 
grades of magnesite which are largely interchangeable. If sales in 
the Community by the Community producers of certain grades are not 
affected by dumped imports in an identical way to other grades, 
this has to be seen in the global context of the Community 
industry's performance on the Community market for the like 
product as a whole, which means all types and grades. This 
argument has, therefore, to be rejected. The Council confirms the 
above findings and conclusions. 
G. CAUSATION OF INJURY 
(16) As set out in recitals 33 and 34 of the Provisional Regulation, 
the Commission found that the Community industry had suffered 
material injury through the effect of dumped imports within the 
meaning of Article 4(1) of Regulation (EEC) No 2423/88. However, 
after the imposition of provisional measures, the Chinese 
exporters and some importers argued that the rising costs of 
production incurred by Community producers indicated that injury 
was self inflicted and not attributable to imports from China. 
They also argued that injury had been caused by imports from North 
Korea. 
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(17) With regard to the first argument, the Commission did not find 
that Community producers' costs had risen significantly between 
1988 and the investigation period. The worsening financial 
position of the community industry was the result of the downward 
pressure on prices from dumped imports from China while costs 
remained stable. The Commission, therefore, cannot accept that 
there was any self inflicted injury on the part of the Community 
industry due to rising costs of production and this argument, 
therefore, has to be rejected. 
(18) With regard to imports from North Korea the Commission notes that 
China is by far the largest source of imports of deadburned 
magnesite into the Community. North Korea accounted for 15% of 
imports of deadburned magnesite into the Community during the 
reference period, whereas China accounted for 46% of the imports. 
Accordingly, while it cannot be excluded that factors other than 
dumped imports from China also had negative effects on the 
Community industry, it must be concluded that the very substantial 
expansion in volume and the low prices of the dumped Chinese 
exports have been responsible for the fall in market share and 
deteriorating financial position of the Community producers. These 
exports taken in isolation, must, therefore, be considered to have 
caused material injury to the Community industry. 
(19) The refractory producers argued that imports from China used by 
them had not caused injury to the Community producers as the 
Community producers did not offer for sale deadburned magnesite 
with the appropriate chemical profile. 
-lo­
in this respect, the Commission recalls that all the products 
imported and the magnesite produced by the Community industry are 
like products having the same basic and identical physical and 
chemical characteristics and the same applications. The Commission 
found in addition, that the Community industry is able to provide 
all types of magnesite, including those which meet the 
requirements of the above mentioned users. The fact that, in this 
specific case, the Community industry could not sell these types 
of magnesite to these users, while the Chinese exporters could, 
due to their low prices, is a further indication that the 
Community industry was injured by the dumped imports from China. 
The Council confirms the above findings and conclusions. 
H. DUTY 
(20) As far as the amount of the duty is concerned, the Commission 
established in recital 44 of the Provisional Regulation that only 
a duty equal to the full dumping margin (as established in recital 
12) which would bring the Chinese prices up to the normal value, 
is sufficient to remove the injury, caused by dumping, experienced 
by the Community industry. No arguments concerning this duty 
amount were put forward, subsequent to the imposition of the 
provisional duty, the council, therefore, confirms the 
Commission's findings and conclusions in this respect. 
As far as the form of the duty is concerned, the Commission 
considers that the structure of a State controlled economy gives 
the Chinese exporters considerable room for manoeuvre to further 
decrease their export prices and such falls in price by Chinese 
exporters have indeed taken place since 1988. The magnesite market 
is very sensitive to price instability thus the form of the duty 
should be such as to prevent further price decreases by the 
Chinese exporters. Therefore, neither a fixed amount of duty nor 
an ad-valorem duty seem to be appropriate. 
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In these circumstances it is considered that a minimum price at 
which the Chinese magnesite should be sold on the Community market 
should be established. This minimum price has been calculated on 
the basis of the weighted average normal value of deadburned 
magnesite as established in recital 9 and as adjusted to CIF 
Community frontier value. This minimum price is 133 ECU per tonne 
for all grades. Consequently, the duty should be equal to the 
difference between this minimum price and the net free at 
Community frontier price before customs clearance. This is 
confirmed by the Council. 
I. COMMUNITY INTEREST 
(21) In assessing the need for the measures, two basic elements were 
taken into account. The first is that to prevent distortions of 
competition arising from unfair commercial practices and thus to 
re-establish open and fair competition on the community market is 
the purpose of anti-dumping measures and is fundamentally in the 
general Community interest. The second is that, in the particular 
circumstances of the present proceeding, to refrain from re­
establishing a fair market situation would endanger the future 
existence of the deadburned magnesite industry since the Community 
industry is at present unable to generate the profits necessary to 
continue trading. The community deadburned magnesite industry 
would cease to be a source of technical expertise, employment and 
investment (see recital 40 of the Provisional Regulation). 
(22) Certain importers and end users argued that any increase in costs 
for refractory producers would seriously affect their ability to 
compete with other producers outside the Community. 
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The Commission accepts that this industry is currently facing a 
difficult trading situation both within and outside the Community 
which could be exacerbated by increases in the price of deadburned 
magnesite. The Commission considers, however, that the impact of 
the duty in the form of a minimum price per tonne, as established 
in recital 20 above, will be such as to enable users of the 
higher grades to buy deadburned magnesite at prices which are not 
significantly higher than those of their competitors outside the 
Community and thus maintain their competitive position. In 
addition, in general, while there might be a short term price 
advantage to users if no duty is imposed, to refrain from 
establishing fair competition on the Community market would, in 
the longer term, lead to less competition and higher prices. 
(23) Some importers argued that there was no need to protect the 
Community Industry in respect of supplies of deadburned magnesite 
which it cannot deliver. 
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While it is true that production in the Community is, at present, 
insufficient to meet demand for the product concerned, the 
Commission found that the Community industry is currently operating 
below a reasonable capacity utilisation level and has large 
reserves available. It was only the low priced dumped imports from 
China which prevented the Community industry from utilising 
existing capacity and expanding production facilities. In addition, 
this argument is based on a mistaken view of the effects of anti­
dumping duties. Even with the application of duties, community 
consumers will still be able to buy Chinese magnesite at 
competitive prices. Indeed, as in this proceeding, where the duty 
is equal to the dumping margin, but lower than the amount required 
to fully remove the injury, it is only the unfair element of the 
exporters' price advantage which will be eliminated. There are also 
many other non Community suppliers of deadburned magnesite on the 
Community market. The Commission sees no danger of any shortage of 
supply. 
(24) The Chinese exporters repeated the argument that it was not in the 
Community interest to impose ineffective measures in that anti­
dumping duties imposed on Chinese deadburned magnesite would 
result in a large increase in low priced imports from North Korea. 
As indicated in recital 41 of the Provisional Regulation, the 
Commission would be made aware of Chinese imports being replaced 
to a large extent by allegedly dumped imports from North Korea and 
in such circumstances appropriate action would be considered. 
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(25) For the reasons given above and in recitals 40 to 43 in the 
Provisional Regulation, the commission concludes that the 
Community interest calls for intervention in this case. The 
Council confirms the above findings and conclusion. 
J. COLLECTION OF PROVISIONAL DUTY 
(26) The Council considers that it is not appropriate, in view of the 
change in the form of the duty, in this particular case, to 
definitively collect the provisional anti-dumping duty, 
HAS ADOPTED THIS REGULATION 
Article 1 
1. A definitive anti-dumping duty is hereby imposed on imports of 
deadburned magnesite falling within CN Code 2519 90 30 originating 
in the People's Republic of China. 
2. The amount of the duty, shall be the difference between ECU 133 per 
tonne and the net, free-at-community-frontier price before customs 
clearance, if this price is lower. 
3. The provisions in force concerning customs duties shall apply. 
Article 2 
This Regulation shall enter into force on the day following its 
publication in the Official Journal of the European Communities. 
This Regulation shall be binding in its entirety and directly 
applicable in all Member States. 
Done at Brussels, For the council 

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COM (93) 413 final 
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