COMMISSION OF THE EUROPEAN COMMUNITIES 
C0M(91) 360 final 
Brussels, 1 October 1991 
Proposal for a 
COUNCIL REGULATION (EEC) 
Imposing a definitive anti-dumping duty on Imports of video tapes In 
cassettes originating In the People's Republic of China and collecting 
definitively the provisional duty 
(presented by the Commission) 
z 
EXPLANATORY MEMORANDUM 
1. By Regulation (EEC) No 1034/91<1> the Commission imposed a 
provisional anti-dumping duty on Imports of video tapes In cassettes 
originating In the People's Republic of China. That duty was 
extended for a maximum period of two months by Regulation (EEC) 
No 2525/91(2). 
2. Following the imposition of provisional measures, the Commission has 
continued Its investigation and has examined the arguments of the 
complainants and exporters which have requested to be heard. 
3. For purposes of the Provisional Duty Regulation, normal value was 
based on prices paid or payable in the Community. This was done 
because no producers in third countries were found who were willing 
to cooperate In the Investigation. Subsequently, several Hong Kong 
producers stated their willingness to cooperate and the Commission 
was able to collect and verify information from those producers. 
Normal values could then be established using Hong Kong as an 
analogue market economy country. 
4. As a result of the use of different normal values, dumping margins 
have been substantially modified. 
5. In the provisional findings, a single uniform dumping margin was 
established for all Chinese exporters. For purposes of definitive 
findings the Commission has concluded that those exporters which are 
Joint ventures with foreign participation are able to freely 
transfer their profits out of China. In these circumstances and 
following the approach used in the small screen colour television 
receivers case (Regulation (EEC) No 2093/91) individual dumping 
margins have been established for such imports. 
(1) O.J. n- L 106, 26.4.1991, p. 15 
(2) O.J. n* L 236, 24.8.91 , p. 1 
3 
6. Provisional findings that the Community video cassette industry has 
suffered material Injury In terms of loss of market share, price 
undercutting, price depression and subsequent loss of profitability, 
were confirmed. It was also confirmed that the dumped imports from 
the People's Republic of China had, In isolation, caused material 
Injury to the Community Industry. Levels of duty necessary to 
remove the Injury were also confirmed. 
7. It Is also confirmed - no new facts or arguments having been 
presented - that It is In the Community's interest to eliminate the 
injurious effects of the dumping determined. The benefits of such 
protection for the current viability and future development of the 
Community Industry outweigh the temporary disadvantages to consumers 
of limited price Increases for certain imported cassettes. 
8. In the light of the economic structure of the exporters and price 
variations for very similar models, the Commission considers that 
the duty should take the form of a variable duty equal to the 
difference between price per cassette net, free at Community 
frontier, not cleared through customs, and a floor price established 
on the basis of the normal value for each individual model. 
9. It Is proposed therefore to Impose definitive anti-dumping duties in 
the form of a variable duty and in the amount established In 
Article 1(2) on imports of video tapes In cassettes originating In 
the People's Republic of China. 
It is also proposed that the amounts secured by way of the 
provisional duty should be collected up to the levels of the 
definitive duties finally determined. 
Proposal for a 
COUNCIL REGULATION (EEC) NO 
of 
Imposing a definitive antI-dumping duty on Imports of video tapes In 
cassettes originating in the People's Republic of China and collecting 
definitively the provisional duty 
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 subsidized Imports from countries not 
members of the European Economic Commun!ty<1), and In particular Article 
12 thereof, 
Having regard to the proposal submitted by the Commission after 
consultation within the Advisory Committee as provided for under the 
above Regulation, 
Whereas: 
A. PROVISIONAL MEASURES 
1. The Commission, by Regulation (EEC) No 1034/91(2>, (hereinafter the 
Provisional Duty Regulation), imposed a provisional anti-dumping duty 
on Imports Into the Community of video tapes in cassettes originating 
in the People's Republic of China and falling within CN Code ex 8523 
13 00. The Council, by Regulation (EEC) No<3) extended this duty 
for a period not exceeding two months. 
(1) OJ No L 209, 2/1/1988, p. 1. 
(2) OJ No L 106, 26/4/1991, p. 15. 
(3) OJ No L 
s 
B. SUBSEQUENT PROCEDURE 
2. Following the Imposition of the provisional anti-dumping duty, the 
Interested parties who so requested were granted an opportunity to be 
heard by the Commission. They also made written submissions making 
known their views on the findings. 
3. Upon request, parties were Informed of the essential facts and 
considerations on the basis of which it was intended to recommend the 
imposition of definitive duties and the definitive collection of 
amounts secured by way of a provisional duty. They were also granted 
a period within which to make representations subsequent to the 
disclosure. 
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. 
5. Due to the complexity of the proceeding, In particular to the 
detailed verification of the voluminous data Involved and the 
numerous arguments put forward, including the study of related Issues 
which arose during the proceeding and which could not have been 
foreseen at Its outset, the investigation could not be concluded 
within the normal time limit. 
C. PRODUCT UNDER CONSIDERATION .LIKE PRODUCT . 
COMMUNITY INDUSTRY 
6. No comments from any of the interested parties were received 
concerning the conclusions of the Commission as set out In recitals 7 
to 11 of the Provisional Duty Regulation, relating to the product 
under consideration, the like product and the Community industry. 
The Council confirms these conclusions. 
D. DUMPING 
a. Normal Value 
7. For the purposes of provisional findings the Commission for the 
reasons and in the manner described in recitals 12 to 17 of the 
Provisional Duty Regulation, established normal value on the basis of 
the price payable In the Community for the like product. 
8. The Chinese exporters strongly objected to the use of Community 
prices as normal value and requested that normal value should be 
established, in accordance with the provisions of Article 2 (5) of 
Regulation (EEC) in 2423/88, by using Hong Kong as a market economy 
for reference. In this context, several Hong Kong producers of video 
cassettes, which had previously refused to cooperate in the 
investigation, stated, immediately prior to the imposition of 
provisional duties, their willingness to cooperate with the 
Commission in the conduct of the investigation. 
9. The complainants argued that Hong Kong could not be used as a 
reference market economy territory at this stage of the proceeding 
because the producers now willing to cooperate had previously refused 
cooperation and because there appeared to be close links between some 
of the Chinese exporters and some of the Hong Kong producers willing 
to cooperate with the investigation. 
10. The Commission considered that neither of the complainants arguments 
provide sufficient grounds not to select the Hong Kong market as 
reference for establishing normal value. The producers in Hong Kong 
are not interested parties in the proceeding and therefore their 
refusal to cooperate cannot be Judged in the light of the provisions 
of Article 7 (7)(b) of Regulation (EEC) No 2423/88. As to the 
alleged links of these Hong Kong producers with Chinese exporters, 
the Commission considers that, insofar as it was able to 
satisfactorily verify all data necessary for the purposes of the 
investigation the existence of those links is irrelevant for the 
establishment of normal value. 
} 
11. In the light of the above conclusions, the Commission addressed 
questionnaires to several Hong Kong producers and obtained 
satisfactory replies from two of them. The information contained In 
those replies was verified by means of on spot visits. 
12. Normal value was established on the basis of the prices paid or 
payable for the sales of the like product In the ordinary course of 
trade In Hong Kong. The Commission noted that these sales In the 
Hong Kong domestic market allowed the producers a considerable profit 
margin. 
For those models which were not sold In the Hong Kong domestic market 
normal value was constructed on the basis of the average cost of 
production plus the profit margin realised on the sales of the most 
sold model In Hong Kong which comprised substantially all the 
domestic sales of the product concerned In the Hong Kong market. The 
selling, general and administrative expenses Included in the cost of 
production were calculated by obtaining a weighted average for the 
two producers visited. 
The Council confirms these conclusions. 
b. Export price 
13. Hong Kong 
For the purposes of the Provisional Duty Regulation, the export 
prices were established on the basis of the prices paid or payable 
for the products sold for export to the Community. No comments from 
any party have been made on this course of action except Insofar as 
the situation of companies with foreign participation is concerned. 
These arguments are considered in recital 18 below. The Council 
confirms the course of action followed by the Commission as set out 
in recital 18 of the Provisional Duty Regulation. 
s 
C. Comparison 
14. As explained in the Provisional Duty Regulation at recitals 20 and 
21, all comparisons were made at the ex-factory basis and at the same 
level of trade. For the purposes of ensuring a fair comparison 
between normal value and export prices, the Commission took account 
where appropriate of differences affecting price comparability, such 
as transport, packing, credit and other selling expenses. 
15. The China Association of Enterprises with Foreign Investment (CAEFI), 
representing several cooperating Chinese exporters, alleged that 
Chinese produced video cassettes were of a significantly lower 
quality than that of Hong Kong produced cassettes, mainly due to the 
use of inferior raw materials and processing methods, and requested 
an adjustment for differences in physical characteristics which it 
quant If led at 20%. 
The complainant contested the request of the exporters on the basis 
that both Chinese and Hong Kong producers were manufacturing the 
tapes under the same licence and should therefore obtain the same 
level of quality and that consumers made no distinction between Hong 
Kong and Chinese produced cassettes. 
16. After examination of the facts, the Commission considers that there 
are no differences in comparable physical characteristics which 
Justify an allowance as far as the comparison between Hong Kong and 
Chinese produced video cassettes Is concerned. Furthermore, the 
Commission considers that there is no difference in the consumer's 
perception of Hong Kong and Chinese made video cassettes. 
Consequently, the exporters' claim was rejected. 
The Council confirms these conclusions. 
d. Dumping margins 
17. For purposes of Its provisional findings, the Commission established 
a single dumping margin for all Chinese exporters. This was done 
9 
since the People's Republic of China is a non-market economy and, in 
accordance with previous Community practice, the Commission 
considered that, because of the lack of independence of the 
exporters, a single dumping margin should be established to avoid 
purely arbitrary results and the likelihood of circumvention. 
18. The Shenzhen Video Tape Manufacturers Association, acting on behalf 
of one cooperating exporter and CAEFI on behalf of four cooperating 
exporters, argued that these exporters were joint ventures with 
foreign participation which operated In an environment very similar 
to that of market economy companies and requested that, because of 
their specific characteristics, individual company findings should be 
determined for them. In addition the Shenzhen Video Tape 
Manufacturers Association requested that the Joint venture exporters 
which did not reply to the questionnaire be granted a different 
treatment than that given to State owned companies. 
19. The Commission considered that these cooperating Chinese exporters 
had supplied sufficient evidence to determine that they were 
genuinely Joint venture companies with foreign Investment, were able 
to freely establish their export prices and subject to certain 
administrative requirements, were able to transfer profits from China 
to their foreign shareholders. 
The Commission considered that this was also the case for two other 
cooperating exporters which had supplied information indicating that 
they were joint ventures with foreign participation. 
In these circumstances and following the Community's previous 
practice as set out in Council Regulation (EEC) No 2093/91 of 15 July 
1991 imposing a definitive anti-dumping duty on imports of small-
screen colour television receivers originating in Hong Kong and the 
People's Republic of China and collecting definitively the 
provisional duty*4), the Commission concluded that individual 
dumping margins could be determined for those companies. 
(4) OJ No L 195, 18/7/91, p. 1. 
4o 
20. As to the remaining three cooperating exporters, namely Dong Guan 
Changan Jlekou Magnetic Tape Factory, Long Gung Xln Shen Fung Fu 
Plastic Mfg. and Shantou Ocean Audio-Video Gen. Corp., the Commission 
received no evidence or information indicating that these companies 
were joint ventures with foreign participation. The Commission 
considered that, because of their lack of independence, the same 
approach as the one set out in recital 22 of the Provisional Duty 
Regulation should be applied and a single dumping margin calculated 
for these three exporters. 
The Council confirms the above conclusion. 
21. On this basis, export prices were compared on a transaction by 
transaction basis with normal values for each of the exporters 
concerned with the three exceptions mentioned in recital 20 above. 
The final examination of the facts shows the existence of dumping in 
respect of the product concerned originating in the People's Republic 
of China from all the exporters involved, the margin of dumping being 
equal to the amount by which the normal value as established exceeds 
the price for export to the Community. 
22. The weighted average margins, expressed as a percentage of CIF 
Community frontier prices varied according to the exporter as 
fo11ows: 
Acme Cassette Manufacturing 9,3% 
BujI Bant Ian Oscar Video Products Fty. 5,1% 
Fuzhou Wonderful Video Tapes Co. Ltd. 6,4% 
Fuzhou Fortune Video Tapes Co. Ltd. 3,8% 
Nan-Hua Magnet Electricity Co. Ltd. 5,4% 
Song Gang Hang Sing Cassette Factory Song Gang 1,3% 
All other Chinese exporters 12,5% 
23. For those producers that neither replied to the Commission's 
questionnaire, nor otherwise made themselves know, dumping was 
determined on the basis of the facts available in accordance with the 
provision of Article 7 (7) (b) of Regulation (EEC) No 2423/88. In 
this conection, the Commission considered that the result of its 
investigation concerning other companies provided the most apropriate 
A^ 
basis for determination of the margin of dumping. Since It could 
create an opportunity for circumvention of the duty, If the dumping 
margin for those producers was any lower than the highest dumping 
margin found In their respective countries determined with regard to 
those producers who had cooperated In the investigation, it is 
considered appropriate to use the highest dumping margin found in 
their respective country for these groups of producers. 
E. INJURY 
24. The Commission concluded in its provisional findings (See recitals 33 
to 35) that the Community industry had suffered material injury as a 
result of the dumped imports of video tapes In cassettes originating 
in the People's Republic of China. 
25. Both CAEFI and the Shenzen video Tape Manufacturers Association 
objected to the Commission's findings concerning Injury by Indicating 
that: 
the volume of sales of the Community producers increased between 
1986 and 1989, 
stocks decreased in the same period, 
the decrease in capacity utilisation between 1986 and 1989 was 
the result of an increase In capacity and not of the existence of 
dumped imports, 
the decrease in employment was due to cost rationalization and 
automat izat ion, 
one of the Community producers already incurred losses in 1986 at 
a time when imports of video tapes In cassettes from China were 
minimal. 
26. The Commission considers that these arguments neglect the basic 
facts. Imports of the product concerned from the People's Republic 
of China increased from 0,74 million units in 1986 to 38,67 million 
units In 1989, the market share of the Community producers decreased 
in a fast growing market and their prices were significantly 
depressed decreasing by 28,6% from 1986 to 1989. 
'U 
These facts are by themselves sufficient to establish the existence 
of material injury to the Community Industry, taking Into account 
that Article 4(2) of Regulation (EEC) No 2423/88 does not require 
that all the factors listed therein show a negative trend. 
27. In addition to these arguments, the Commission notes that the 
exporters have not objected to the findings concerning price 
undercutting as set out in recital 28 of the Provisional Duty 
Regulation, except to request a 40% adjustment instead of the 20% 
used. The exporters based their request for this further adjustment 
on pretended differences in physical characteristics among Community, 
Hong Kong and Chinese produced video tapes. 
Given the very similar nature of the Hong Kong and Chinese produced 
video tapes (see recital 16), the Commission considers that the 
evidence submitted is not conclusive enough to indicate that any 
adjustment for differences in physical characteristics and the 
perceptions of imported and Community produced video tapes by 
consumers should differ from that used provisionally. 
In view of the above the Commission confirms Its conclusions 
concerning the level of undercutting (59,9%) and concerning the 
existence of material Injury to the Community industry. 
The Council confirms these conclusions. 
F. CAUSATION OF INJURY 
28. In recitals 36 to 38 of the Provisional Duty Regulation, the 
Commission concluded that the imports of video tapes In cassettes 
originating in the People's Republic of China had caused material 
injury to the Community industry. 
The representatives of the exporters have contested this conclusion. 
In support of their contention they have argued that the only fact 
alleged by the Commission to establish the existence of a causal link 
between the dumped Chinese Imports and the existence of material 
injury to the Community industry was simultaneity and that this time 
13 
factor by Itself Is not sufficient, according to the provisions of 
Article 4 of Council Regulation (EEC) No 2423/88, to establish the 
existence of a causal link. The exporters have argued that the 
Injury suffered by the Community industry must have been caused by 
imports from other sources. 
29. The Commission cannot accept these arguments. Simultaneity is not 
the only factor which determines the existence of a causal link. The 
Commission notes that the Chinese imports arrive in the Community 
market at very low prices and, as the market Is very price sensitive, 
this results in a general price depression of the Community prices 
which prevents the Community producers from increasing their prices 
and restoring their profitability to acceptable levels. 
30. As to the argument concerning injury caused by Imports from other 
sources the Commission considers that the fact that the Increase of 
market share of the Chinese Imports has been done at the expense of 
the Hong Kong and Korean exports does not render the causal link non 
existing nor the Injury non material. The very low prices of the 
Chinese Imports and the heavy price undercutting have caused Injury 
by not allowing the community Industry to reach acceptable levels of 
profitability which might secure Its continuing operation. The 
exporters also referred to the surge of Imports from unidentified 
sources as a possible cause of injury to the Community Industry. The 
Commission notes that none of the parties involved has provided any 
information on prices of these imports which are not known to 
undercut Community prices. However, even If it was admitted that 
these Imports from unidentified sources were undercutting Community 
prices and causing injury to the Community industry, the volume and 
low prices of the dumped imports are such that this would not modify 
the finding that the Chinese exports, taken in isolation, have caused 
material Injury to the Community Industry. 
In view of the above, the Commission confirms Its conclusions In 
recitals 36 to 38 of the Provisional Duty Regulation. 
The Council confirms these conclusions. 
*<, 
G. COMMUNITY INTEREST 
31. No further facts or arguments concerning this subject were submitted 
to the Commission by any of the parties. The Council therefore 
confirms the Commission's conclusions set out in recitals 39 to 47 of 
the Provisional Duty Regulation, that it is in the Community's 
interest to eliminate the Injurious effects to the Community Industry 
of the dumping determined. The benefits of such protection for the 
current viability and future development of that industry outweigh 
the possible disadvantages, of a temporary nature, for the consumer 
in terms of limited price increases for certain imported video tapes 
in cassettes. 
H. DUTY 
(a) Level of duty 
32. Provisional measures took the form of anti-dumping duties. These 
were imposed at the level of the increase in price considered 
necessary to prevent injury being caused during the proceedings. 
This duty was established (recital 49 of the provisional Duty 
Regulation) at the level of 25,8%. 
33. Subsequently both the exporters and the complainant contested the 
method followed by the Commission on establishing the level of duty 
necessary to remove the injury. 
34. The Commission considers that, since the dumping margins definitively 
determined are significantly below the level required to eliminate 
the injury caused, neither the argument of the exporters nor that of 
the complainants has any practical relevance in terms of the final 
result. 
35. As the dumping margins established are in all cases lower than the 
percentage needed to remove the injury, duties should be established 
at the level of the dumping margins. 
The Council confirms these conclusions. 
IS" 
(b) Form of duty 
36. In the light of the economic structure of the exporters and price 
variations for very similar models, the Commission considers that the 
duty should take the form of a variable duty equal to the difference 
between price per cassette net, free at Community frontier, not 
cleared through customs, and a floor price established on the basis 
of the normal value for each individual model. 
In order to avoid difficulties in the application of the duties 
should developments in the market result in the appearance of 
cassettes with different lengths from those known at present, the 
models of cassettes are to be described in such a way that all 
possible future combinations are included. 
37. The Commission notes that the variable duty provides Individual 
results for the cooperating Chinese Joint venture exporters as the 
duty for each one of them will be the equivalent to the difference 
between their export prices and the normal value. 
The Council confirms these conclusions. 
I. COLLECTION OF PROVISIONAL DUTIES 
38. in view of the dumping margins established, and the seriousness of 
the Injury caused to the Community industry, the Council considers it 
necessary that amounts collected by way of provisional anti-dumping 
duties should be definitively collected to the extent of the amount 
of the duty definitively imposed, 
HAS ADOPTED THIS REGULATION 
ARTICLE 1 
1. A definitive anti-dumping duty is hereby imposed on imports of video 
tapes of VHS standard In cassettes falling within CN Code ex 8523 13 00 
(TARIC codes: see Annex) and originating in the People's Republic of 
China. 
K 
2. The amount of the duty shall be equal to the difference between the 
minimum prices listed below and the price per cassette net, free at 
Community frontier, not cleared through customs for cassettes with tapes 
having a playing time : 
up to and including 30 minutes 0.76 ECU 
exceeding 30 minutes and up to 60 minutes 0.92 ECU 
exceeding 60 minutes and up to 90 minutes 1.08 ECU 
exceeding 90 minutes and up to 120 minutes 1.26 ECU 
exceeding 120 minutes and up to 180 minutes 1.57 ECU 
exceeding 180 minutes and up to 195 minutes 1.74 ECU 
exceeding 195 minutes and up to 240 minutes 1.95 ECU 
exceeding 240 minutes 2.22 ECU 
3. The provisions in force concerning customs duties shall apply. 
ARTICLE 2 
Amounts secured by way of the provisional anti-dumping duty imposed by 
Regulation (EEC) No 1034/91 will be definitively collected to the extent 
of the amounts resulting from the application of the definitive duty as 
fixed in Article 1 (2). 
Secured amounts in excess of these amounts will be released. 
ANNLA 
1} 
ARTICLE 3 
This Regulation shall enter into force on the day following its 
publication In the Official Journal of the European Communities. 
This Regulation shall be binding in its entirety and directly applicable 
in a 11 Member States. 
Done at Brussels, For the Council 
The President 
ANNEX n 
CN 
CODE TARIC 
SUBHEADING D E S C R I P T 0 N 
85231300 
85231300 
85231300 
85231300 
85231300 
85231300 
85231300 
85231300 
85231300 
85231300 * 21 
* 23 
* 25 
* 27 
* 28 
* 31 
* 33 
* 35 
* 39 
* 49 Video tapes : 
- - - - in cassettes : 
- - - - - falling under VHS standards : 
______ having a playing time : 
_______ up to and including 
30 minutes 
------- exceeding 30 minutes 
and up to 60 minutes 
_______ exceeding 60 minutes 
and up to 90 minutes 
------- exceeding 90 minutes 
and up to 120 minutes 
------- exceeding 120 minutes 
and up to 180 minutes 
------- exceeding 180 minutes 
and up to 195 minutes 
------- exceeding 195 minutes 
and up to 240 minutes 
------- exceeding 240 minutes 
Other 
Other 
T3 
ISSN 0254-1475 
COM(91) 360 final 
DOCUMENTS 
EN 02 
Catalogue number : CB-CO-91-410-EN-C 
ISBN 92-77-75888-0 
Office for Official Publications of the European Coi-ununities 
L-2985 Luxembourg