COMMISSION OF THE EUROPEAN COMMUNITIES 
Brussels, 30.07.1997 
COM(97) 431 final 
Amended proposal for a 
COUNCIL REGULATION (EC) 
imposing a definitive anti-dumping duty on imports of leather handbags 
originating in the People's Republic of China and terminating the 
proceeding concerning imports of plastic and textile handbags originating 
in the People's Republic of China 
(presented by the Commission pursuant to Article 189 a (2) 
of the EC-Treaty) 

EXPLANATORY MEMORANDUM 
In the original proposal of the Commission, it was stated that provisional duties paid 
should be collected. After discussion in COREPER on 25 July, changes have to be made 
to this proposai in order to satisfy requests by Member States that provisional anti­
dumping duties should not be collected but be released. Only on this basis a majority of 
the Member States could be achieved. 
In order to proceed to this release, it is now proposed to base definitive duties on "threat 
of injury*'. In such "threat of injury" cases, Article 10 (2) of the Basic Anti-Dumping 
Regulation provides that provisional duties are released ex lege, which leaves no 
discretion to the Council as far as this release is concerned. 
For these reasons, the following major changes regarding the original proposal have been 
made in the proposed Council Regulation: 
- in the title, the reference to the collection of provisional measures has been deleted 
- in recital 55, the decrease in sales quantities is expressed as a percentage 
- in recital 57, the overall profitability (all sales included) has been established at around 
5% 
- recital 61 has been adapted to show a precarious situation of the Community industry 
- recital 63 now refers to the precarious situation (and not to material injury) 
- recital 64 now shows that imports from China have increased considerably and will 
probably happen at such prices that price increases of the Community industry will be 
prevented 
- recital 69 now refers to the precarious situation 
- recital 118 refers to Article 10 (2) of the Basic Regulation and releases the provisional 
duties 
- the operative part has been adapted accordingly. 
A OU 
Amended proposal for a 
Council Regulation (EC) No /97 
of 
imposing a definitive anti-dumping duty on imports of leather handbags 
originating in the People's Republic of China and terminating the 
proceeding concerning imports of plastic and textile handbags originating 
in the People's Republic of China 
The Council of the European Union, 
Having regard to the Treaty establishing the European Community, 
Having regard to Council Regulation (EC) No 384/96 of 22 December 1995 on 
protection against dumped imports from countries not members of the European 
Community1, and in particular Articles 9(2), 9(4) and10(2) thereof, 
Having regard to the proposal presented by the Commission after consulting the 
Advisory Committee, 
Whereas: 
1 OJ No L 56, 6.3.1996, p. 1 
A. PROVISIONAL MEASURES 
(1) By Regulation (EC) No 209/972 the Commission imposed a provisional 
anti-dumping duty on imports into the Community of handbags 
originating in the People's Republic of China and falling within CN 
codes 4202 21 00 (leather), 4202 22 10 (plastic) and 4202 22 90 
(textiles). 
B. SUBSEQUENT PROCEDURE 
(2) Subsequent to the imposition of the provisional anti-dumping duty, the 
interested parties who so requested were granted an opportunity to be 
heard by the Commission. A number of these parties also made 
written submissions making their views on the findings known. 
(3) The Commission's services investigated further aspects of the 
Community interest and sought and verified all information deemed 
necessary for the definitive findings. Due to the large number of parties 
which made themselves known well after the expiry of the deadline 
and the arguments raised by interested parties at a very advanced 
stage of the investigation and immediately after the imposition of 
provisional measures, the Commission exceptionally accepted to 
include these parties in the investigation regarding Community 
interest. 
2 OJ No L 33, 4.2.1997, p.11. 
(4) Upon request parties were informed in writing of the essential facts 
and considerations on the basis of which it was intended to 
recommend both the imposition of definitive duties and the definitive 
collection of the amounts secured by way of provisional duty with 
respect to leather handbags, and further to terminate the proceeding 
with respect to plastic and textile handbags. 
(5) The oral and written comments presented by the parties were 
considered, and, where appropriate, the Commission's findings were 
modified to take account of them. 
C. Support for the complaint 
(6) Some interested parties have claimed that the complaint did not 
receive support from a major proportion of total Community production 
because there was no evidence that individual producers accounting 
for a major proportion gave such support. They also pointed out that 
the opposition of several National Associations affects the 
representativity of the complainant. 
(7) After examination prior to the initiation of the proceeding, it was 
determined that the National Associations of Belgium, France, Greece, 
Italy, Portugal, Spain and United Kingdom supported the complaint. 
The production of their associated members accounts for a major 
proportion (around 70%) of total Community production under the 
terms of Article 5 (4) of Council Regulation (EC) No 384/96 (hereinafter 
referred to as "the basic regulation"). 
(8) The support of the members of the National Associations (i.e. the 
individual companies) was obtained by CEDIM through the above-
mentioned National Associations, which have the legal capacity to 
represent their members. 
(9) No opposition was registered prior to initiation of the investigation as 
three other National Association members of CEDIM (Austria, 
Germany and The Netherlands) agreed within CEDIM not to oppose 
the complaint. Finally, no company or National Association from the 
remaining five other Member States (Denmark, Finland, Ireland, 
Luxembourg and Sweden) expressed opposition to the complaint. 
(10) Subsequent to the initiation of the proceeding, the British Association 
decided to withdraw its support. The Austrian, German and Dutch 
Associations, which initially abstained, also decided to oppose the 
proceeding. This change in position cannot throw into question 
retrospectively the validity of the initiation of the proceeding. Given the 
low production in these countries (less than 7% of total Community 
production) such opposition does not put into question the fact that the 
complainant continues to represent a major proportion of total 
Community production. 
(11) Finally, almost all companies which expressed opposition to the 
proceeding are importers and retailers of handbags, which are not 
producing the product concerned. Their opposition is therefore 
irrelevant for evaluating the representativity of the complaint. 
(12) It can therefore be concluded that, prior to the initiation of the 
proceeding, the Commission sought and obtained, from the 
complainant, evidence that it fulfilled the requirement of Article 5(4) of 
the basic regulation with regard to representativity and that the 
required degree of support was maintained throughout the proceeding. 
D. Investigation 
(13) Some interested parties have claimed that the sample of Community 
producers as described in recital 5 of Regulation (EC) No 209/97 is 
neither representative nor statistically valid because the sampled 
companies were selected from a separate list of companies submitted 
by the respective National Associations and not from the membership 
lists used to assess the representativity of the complaint. These parties 
claim that the National Associations were thus allowed to pre-select 
either only Community producers who supported the complaint, or 
those whose financial indicators facilitated findings of injury or those 
willing to cooperate. 
6 
(14) The sample of Community producers was based on detailed 
information previously not available to the National Associations with 
that degree of detail or for the period in question. Therefore, it is 
considered that a valid sample of Community producers could not 
have been selected on the basis of the list of members submitted by 
the National Associations as the basis for the complaint. 
(15) The argument that the National Associations could have pre-selected 
those Community producers whose indicators facilitated findings of 
injury is also incorrect. Indeed, it should be recalled that general data 
concerning production, sales, consumption and employment has been 
assessed at total Community industry level where no pre-selection is 
possible. As far as data concerning the sampled Community producers 
is concerned, this information is of such a detailed and confidential 
nature that it is not normally submitted to the National Associations 
and therefore leaves no scope for any pre-selection by any National 
Associations. Thus, this argument should also be rejected. 
(16) Some parties have also argued that the non disclosure of the identity 
of the sampled Community producers has resulted in a denial of their 
right of defence. 
(17) The threat of commercial retaliation is considered to be a serious 
commercial pressure justifying the non disclosure of the identity of the 
Community producers. Moreover, it is not considered that the lack of 
knowledge of the identity of the sample Community producers 
hampers the rights of defence of interested parties who have access to 
the non-confidential versions of the responses to the questionnaires 
submitted by other interested parties during the proceeding. 
(18) One interested party has claimed that the sample of unrelated 
importers is distorted by the fact that only large unrelated importers 
have been sampled. Due to their bargaining power these importers 
tend to import at lower prices which has resulted in a distortion in the 
dumping margins found. 
(19) This allegation is unfounded; unrelated importers were sampled 
according to their volume of imports and employment, to reflect large, 
medium and small importers. 
The names of the sampled unrelated importers in France in recital (10) 
of Regulation (EC) No 209/97 should be amended as follows: instead 
of Dane et Galliay, it should read Pollyconcept. This does not affect 
the validity of the findings of the Commission since the data of the 
latter has been used consistently. 
(20) Subsequent to the imposition of the provisional anti-dumping 
measures, a producer/exporter (Gebr. Picard International Ltd.) was 
sent on its request an exporters' questionnaire and it submitted a 
complete reply. This producer/exporter had not been investigated prior 
to Regulation (EC) No 209/97 as it had initially focused on its role as 
an importer, and not as a related exporter, although it had as such 
manifested itself within the time limits established in paragraph 7 of the 
Notice of Initiation. 
(21) A large number of producers/exporters manifested themselves and 
offered to co-operate immediately before or following the publication of 
Regulation (EC) No 209/97, i.e. well beyond the time limit established 
in paragraph 7 of the Notice of Initiation. Accordingly, these 
companies have not been considered to be interested parties in the 
proceeding and their requests for individual treatment have been 
dismissed as being inadmissible on these grounds. 
E. PRODUCT UNDER CONSIDERATION - LIKE PRODUCT 
1. Product under consideration 
(22) For the purpose of the preliminary findings, the Commission 
considered leather, plastic and textile handbags to be one product, 
given the fact that they were considered to possess the same 
characteristics and be intended for the same use. 
(23) After the imposition of provisional measures, several interested parties 
claimed that a distinction should be made between leather handbags 
on the one hand and synthetic handbags (plastic/textile) on the other. 
Some parties have also claimed that a distinction should further be 
made between leather handbags, patch leather handbags and 
polyurethane (PU) coated split leather handbags in view of the alleged 
differences in style, quality, finish, use, price and consumer perception 
differences. 
(24) It should be recalled that it is the standard practice of the Commission, 
as confirmed by the European Court of Justice, that the product under 
consideration be defined according to its basic physical characteristics, 
use, interchangeability and consumer perception. 
10 
(25) In this respect, the investigation has shown that the different types of 
raw materials used in the manufacture of leather and synthetic 
handbags confer on the product distinctly different physical 
characteristics. 
While their general use is the same, it has now been found that the 
consumer has a clearly different perception of leather handbags and 
synthetic handbags respectively, consumer choice being governed 
mainly by the type of external raw material of the handbag. 
(26) The investigation has also shown that in the handbag market stable 
consumer preferences exist. Therefore, the interchangeability of the 
two types of handbags is almost non-existent, except to a very limited 
extent in the sector of leather-look plastic handbags. This has allowed 
a notable price differential between leather handbags and synthetic 
handbags, resulting in two different market segments, separated by 
clear dividing lines between which it is not considered that 
interchangeability can take place to a significant degree. 
(27) Therefore and in accordance with the well-established practice of the 
institutions concerning the product definition, leather and synthetic 
handbags are to be considered different products. 
11 
2. Like product 
(28) Several parties have argued that the leather handbags manufactured 
in the Community and those imported from the People's Republic of 
China are not like products in the sense of Article 1 (4) of the basic 
regulation due to the differences in quality, design and use. It has also 
been argued that the differences in quality between the imported 
handbags and those manufactured in the Community are such that 
both products are not in competition. 
(29) The investigation has further shown that, within each one of the two 
products under consideration (leather handbags/synthetic handbags) 
imported handbags cover the full range of types, from higher to lower 
quality, and as such are in direct competition with the entire range of 
the Community production. These findings are supported by the 
information supplied on this issue by several cooperating importing-
Community producers on this issue showing that the handbags 
manufactured in the Community and those imported from the People's 
Republic of China do not have quality differences, both items belong to 
the same collections and are sold to the same customers. Therefore, 
across the range there are no quality differences for comparable 
models. 
(30) Concerning differences in design, it cannot be concluded that these 
would be such as to constitute a different like product. In this respect, 
some importers have even acknowledged that they design their 
handbags in the Community, following the fashion of the season, as is 
the case with Community manufacturers. 
12 
F. DUMPING 
1. Normal value 
(31) As to the selection of the analogue country, one importer alleged that 
neither the Regulation (EC) No 209/97 nor the disclosure documents 
sufficiently explained why India or Taiwan were not selected as 
analogue countries. The Council considers however that recitals 24 to 
26 of Regulation (EC) No 209/97 are sufficiently precise on this point. 
(32) Several interested parties have requested that the names of the two 
co-operating Indonesian companies be disclosed alleging that this 
would be necessary to exercise their rights of defence effectively. The 
Council, however, does not consider it possible to disclose the names 
of these companies as the co-operation of these companies could only 
be secured provided a strict guarantee of confidential treatment of the 
identity of the companies was given by the Commission. In addition, 
supplying the actual names of the companies involved would not add 
to the rights of defence of these interested parties. In this regard, the 
essential economic facts characterising the situation of these two 
exporters have been set out in recitals 28 and 29 of Regulation (EC) 
No 209/97. 
13 
(33) In view of the fact that leather handbags and synthetic handbags have 
been considered to be different products, separate normal values were 
constructed for leather and synthetic handbags, in accordance with 
Article 2 (7) of the basic regulation, on the basis of the cost of 
production for these two products of the two co-operating Indonesian 
producers, to which a reasonable amount for profit and selling, general 
and administrative costs ("SGA") was added. The findings in recital 28 
(fourth indent) of Regulation (EC) No 209/97 on the representativity of 
the two Indonesian producers are confirmed in respect of both like 
products. 
(34) It has been alleged that the cost of production of the co-operating 
Indonesian producers should be adjusted to take into account the fact 
that the Chinese exporters predominantly import raw materials under 
inward processing relief procedures. In this respect, it should be noted 
that, the raw materials for both like products used by the co-operating 
Indonesian producers were found to be of non-Indonesian origin and 
imported into Indonesia free of customs duties under a procedure of 
inward processing relief. It follows that the procurement patterns in 
Indonesia and in China are the same and that therefore no adjustment 
is warranted in this respect. 
(35) It was submitted by one exporter that the percentage of SGA used by 
the Commission was not representative of the SGA incurred by the 
Chinese exporters. Accordingly, the SGA has been reviewed on the 
basis of the actual SGA incurred by the Indonesian exporters of 
handbags at the level of trade comparable to that of sales made by the 
Chinese exporters. 
14 
2. Export price 
(36) In view of the low level of co-operation of Chinese exporters (including 
exports of Gebr. Picard International Ltd) in this proceeding, which 
amounts to only 1,58% of all exports from the People's Republic of 
China, the export prices of the co-operating exporters could not be 
considered representative of the prices charged by exporters which did 
not co-operate. 
(37) For the purpose of the definitive findings, export prices of the co­
operating companies Shilton and Lee & Man in respect of the two like 
products were established using the same method as for the 
provisional findings. In respect of these companies, the findings set 
out in recitals 33 and 34 of Regulation (EC) No 209/97 are confirmed. 
(38) The third co-operating exporter (Gebr. Picard International Ltd), not 
granted individual treatment by Regulation (EC) No 209/97, was found 
to make all of its exports to the EC via a related company established 
in the Community; thus its export prices were constructed on the basis 
of Article 2 (9) of the basic regulation by deducting from the prices 
charged by the related importer to its first independent customers its 
SGA and a profit margin based on the average profit of unrelated 
importers. 
(39) Export prices of the non-cooperating Chinese exporters were 
established as explained under recital 32 of Regulation (EC) No 
209/97. This methodology is herewith confirmed. 
15 
3. Comparison 
(40) The weighted average normal value FOB Indonesia for each of the 
leather and synthetic handbags was compared with the weighted 
average export price FOB China with respect to each of the two like 
products concerned. For the purpose of ensuring a fair comparison 
between normal value and the export price, due allowance in the form 
of adjustments was made in accordance with Article 2 (10) of the basic 
regulation, where claims were made and satisfactory evidence was 
supplied demonstrating that such differences affected price 
comparability. 
(41) It was argued by one exporter that the comparison of normal value and 
export price should be made in respect of every single handbag model 
or catalogue number (commonly referred to as "style number") rather 
than on the basis of averages of each like product. The Council 
considers however that, as a practical matter, a comparison at this 
level is not possible in view of the extreme variety of model numbers, 
each having different physical characteristics and combinations of 
features and accessories. In addition, no objective criteria were found 
to exist for distinguishing particular categories or models within the 
respective like product; for similar reasons, it was not possible for the 
Commission to compare normal value and export price on the basis of 
categories regrouping model or catalogue numbers. It follows that the 
only reasonable method for the Commission was to compare normal 
value and export price in respect of averages for each of the two 
products concerned (i.e. separately for leather handbags and synthetic 
handbags). 
16 
4. Dumping margins 
(42) As indicated above, three co-operating producers/exporters - all 
privately-owned companies based in Hong Kong with handbag 
factories in China - presented admissible requests for individual 
treatment i.e. the establishment of separate export prices and thus of 
individual dumping and injury margins. 
(43) The findings set out in recitals 37 to 40 of Regulation (EC) No 209/97, 
with respect to the two companies having been provisionally granted 
individual treatment are confirmed. 
(44) In addition, the claim for individual treatment of a third 
exporter/producer (Gebr. Picard International Ltd) was investigated. It 
was found that its factual situation was very similar to that of the two 
companies having been provisionally granted individual treatment and 
described in recitals 38 and 39 of Regulation (EC) No 209/97. 
17 
(45) The Council considers that the three co-operating companies claiming 
individual treatment enjoyed a degree of genuine independence from 
the public Chinese authorities comparable to that which would prevail 
in a market economy country, and thus that the risk of channelling of 
exports through these sources with individual anti-dumping duty rates 
would seem to be very limited. Accordingly, separate export prices 
and individual dumping and injury margins have been established for 
the three exporters concerned, as an exception to the principle of 
calculating country-wide dumping margins in respect of non-market 
economy countries (Article 9 (5) of the basic regulation). It should be 
pointed out that individual treatment is granted only in respect of the 
like product which was actually produced and exported to the 
Community by the exporter concerned during the investigation period, 
i.e. leather handbags in respect of Shilton and Gebr. Picard 
International Ltd and synthetic handbags in respect of Lee & Man. 
(46) The dumping margins established for the companies granted individual 
treatment have been established as follows: 
• Shilton, in respect of leather handbags: nil 
• Gebr. Picard International Ltd, in respect of leather handbags: 
7,7% 
• Lee & Man, in respect of synthetic handbags: 64,7 %. 
(47) The weighted average dumping margin for the exporters not granted 
individual treatment has been established at: 
• 83,5% in respect of leather handbags, and 
• 151 % in respect of synthetic handbags 
of the CIF export price Community frontier duty unpaid. 
18 
G. LEATHER HANDBAGS 
(1) Injury 
1. Consumption in the Community market 
(48) Between 1992 and the investigation period, the consumption of leather 
handbags in the Community increased from around 51 million units to 
52,3 million units, i.e. an increase of approximately 2,5%. 
2. Volume and market share of imports 
(49) Between 1992 and the investigation period, imports of leather 
handbags originating in the People's Republic of China increased from 
8,2 million units to 10,4 million units, i.e. by 27%. When measured in 
value, the increase amounts to 15%, from ECU 43,6 million in 1992 to 
ECU 50 million in the investigation period. 
(50) The share of the Community market taken up by imports of leather 
handbags originating in the People's Republic of China increased from 
16% in 1992 to 20% in the investigation period. 
19 
3. Prices of dumped imports and undercutting 
(51) As already mentioned in the provisional regulation, due to the non-
cooperation by the Chinese exporters, official statistical data has been 
used for the analysis of the price evolution of imported leather 
handbags. Thus, the average CIF import price of leather handbags 
has decreased by 9%, from ECU 5,29 per unit in 1992 to ECU 4,79 per 
unit in the investigation period. 
(52) The calculation of the price undercutting has followed the methodology 
used in Regulation (EC) No 209/97, that is, the CIF imports prices of 
the sampled unrelated importers, adjusted to customer deliver level, 
were compared to the selling prices in the Community of those 
Community producers whose production comprised the most baisc 
types sold, at the same level of trade 
(53) When expressed as a percentage of the Community producers' selling 
prices, the comparison with import prices of unrelated importers, as 
recalculated following substantiated arguments submitted by interested 
parties after the imposition of provisional measures, show an 
undercutting for leather handbags amounting to 31,4%. 
20 
4. Situation of the Community industry 
(a) Production 
(54) Production of leather handbags by the Community industry increased 
from an estimated 26,5 million units in 1992 to 30,3 million units in the 
investigation period. When measured in value, production increased 
from an estimated 905 million ECU in 1992 to 1.100 million ECU in the 
investigation period, i.e. by 21%. 
(b) Sales volume 
(55) A decline in sales volume in the Community of output manufactured by 
the Community industry between 1992 and the investigation period 
has been established. Indeed, sales decreased from around 21 million 
units in 1992 to 20 million units in the investigation period, i.e. a 
decrease of around 5%. When measured in value, sales decreased by 
around 8%, from around 600 million ECU in 1992 to 550 million ECU in 
the investigation period. 
(c) Market share 
(56) The share of the Community market occupied by the Community 
industry when measured in units decreased from around 41% in 1992 
to around 39% during the investigation period. 
21 
(d) Profitability and employment 
(57) Following Article 3(8) of the basic regulation, profitability and 
employment of Community producers has been calculated for the 
narrowest group of products for which information has been provided 
by the sampled Community producers, that is, handbags made of both 
leather and synthetics. 
The revised weighted average profitability concerning sales in the 
Community shows a decline from 5,9% in 1992 to 1,3% during the 
investigation period. 
On all sales, the Community industry achieved an overall profit of 
around 5%. 
(58) Employment figures in the handbag sector as extrapolated from the 
information received by Community producers in the Community 
interest analysis show that employment declined from about 18.600 
people in 1992 to 14.000 people in the investigation period, a drop of 
25%. 
22 
5. Conclusion on injury 
(59) The economic indicators of the Community industry examined in 
conjunction with the conclusions drawn in respect of the volume of 
imports and their prices show that the Community producers' situation 
has deteriorated between 1992 and the investigation period in respect 
of leather handbags. As has been demonstrated, the Community 
industry as a whole suffered declining sales volume, loss of market 
share, declining employment and declining profitability in the 
Community market. 
(60) As far as production is concerned, further reference is made to the fact 
that exports of the Community producers increased significantly. 
(61) It is therefore the view of the Council that the situation of the 
Community industry is clearly precarious, and the trend points to a 
further deterioration. 
23 
(2) Causation 
1. Effects of the dumped imports 
(62) The penetration of the Community market by imports of leather 
handbags from the People's Republic of China at dumped prices which 
significantly undercut the prices of Community producers coincided 
with a loss of market share and a deterioration of the financial situation 
of the Community industry. Given the increasing volume of low priced, 
dumped handbags, it became apparent during the investigation that 
many Community producers were unable to compete against the 
dumped imports. 
(63) Moreover, due to the fact that competition takes place across the 
range and to the fact that the distribution system is shared by products 
both manufactured in the Community and imported from the People's 
Republic of China, the high price differential in the form of undercutting 
is a direct cause of the precarious situation of the Community industry. 
(64) Accordingly, it is considered that dumped imports from the People's 
Republic of China increased at a significant rate and are likely to enter 
at prices which will prevent price increases. 
24 
2. Effects of other factors 
(65) Care was taken to ensure that any impact on the Community industry 
caused by other factors was not attributed to the imports concerned. 
(66) In this respect, particular reference was made by certain interested 
parties to imports into the Community of handbags originating in India. 
Available Eurostat data shows that the volume of imports of leather 
handbags from India has remained stable between 1992 and the 
investigation period at around 5 million units. As regards the prices of 
these imports, these have increased from around 8 ECU in 1992 to 
around 9,2 ECU in the investigation period, an increase of 15%, well 
above the prices of Chinese handbags. The share of volume of the 
Community market occupied by imports of handbags from India has 
decreased by 4% from 1992 to the investigation period. 
25 
(67) As to imports of leather handbags from Hong Kong, when measured in 
units, these have increased from around 400.000 units in 1992 to 
around 750.000 units in the investigation period. With respect to total 
imports of handbags into the Community, Hong Kong increased its 
share of the volume of Community handbag imports from 1,9% in 1992 
to 3,3% in the investigation period. However, the share of the 
Community market occupied by imports of handbags originating in 
Hong Kong has remained at relatively low levels, increasing from 0,6% 
in 1992 to 1,4% in volume in the investigation period. 
(68) As to imports from other third countries, their share of total imports has 
decreased from 32% in 1992 to 30% in the investigation period. The 
share of the Community market occupied by these imports has 
decreased from 12% of volume in 1992 to 11% in the investigation 
period. 
It should be noted that the Community market share of imports from all 
third countries, excluding the People's Republic of China, has 
remained stable from 1992 to the investigation period, at 23%, when 
measured in units. 
26 
3. Conclusion on causation 
(69) Although certain other factors may have contributed to the 
precarioussituation of the Community industry, taken in isolation, the 
high volumes of dumped imports from the People's Republic of China 
are threatening to cause material injury to the Community industry. 
This conclusion is based on the various elements set out above and in 
particular the level of price undercutting, the market share gained by 
imports of handbags from this country, at the expense of the 
Community industry, and the deterioration of the profitability of the 
Community producers. 
(3) Community Interest 
1. General considerations 
(70) It should be recalled from recitals 76 et seq. of Regulation (EC) No 
209/97 that an appreciation of the various interests, including the 
interests of the Community industry, importers, distributors and 
retailers was made, and that the Commission provisionally concluded 
that there were no compelling reasons not to take action against the 
imports in questions. Furthermore, the Commission undertook to 
conduct an examination of certain issues concerning Community 
interest which had not been sufficiently substantiated at the time of the 
provisional determination. 
27 
2. Impact on the Community industry 
(a) Current situation of the industry 
(71) The information received from the 50 Community producers 
responding to the questionnaire on Community interest addressed to 
interested parties and representing around 20% of total handbag 
Community production, shows that a major proportion of the 
production in the Community is of leather handbags. In terms of value, 
93% of the total Community production is of leather handbags. 
(72) Substantial creative value is added to the product in the Community in 
the form of design, innovation and quality. Community producers have 
a special know-how in working the leather, which is the result of a long 
tradition in this sector in the Community. 
(73) The share of the Community leather handbag market held by the 
Community industry was 39% in the investigation period, a sign of its 
economic importance. 
(74) The viability of the Community industry is also evident from its 
performance on the export markets, significant and increasing due to 
the locomotive effect of the brand names promoting handbags "made 
in Europe". Exports of leather handbags by the Community industry 
have increased from around 6 million units in 1992 to around 10 million 
units in the investigation period. 
28 
(b) Effects of the imposition/non-imposition of measures 
(75) In the absence of anti-dumping measures, there is no element that 
indicates that the negative situation of the Community industry would 
not continue, to the detriment of an industry that is inherently both 
viable and competitive. 
(76) The situation of importing producers in the Community has been 
examined and it is concluded that the majority of the companies 
investigated by the Commission manufacture leather handbags in the 
Community and import synthetic handbags from the People's Republic 
of China. In those cases where such importing producers imported 
leather handbags, such imports are, in general, ancillary. 
3. Impact on importers-traders 
(77) Further investigation has shown that the full amount of the provisional 
anti-dumping duty (39.2%) is being shared, generally in an equal 
proportion, by the different steps in the distribution chain: in particular 
the importer, the retailer and, finally, the consumer. This seems to be 
possible due to the average mark up of importers and retailers 
respectively of around 70% on CIF including a profit of 14% on 
turnover. 
(78) The impact of any definitive measures on importers and traders has to 
be seen in the light of the findings of the product concerned. Indeed, a 
reduction in the scope of application of the measures to leather 
handbags only (see recitals 118 et seq) will minimise the impact of 
measures on these interested parties. 
29 
(79) Some importers have claimed to having had to cease their activity or to 
be experiencing financial difficulties. Since importers are generally 
purchasing in US Dollars, they are currently suffering from the strength 
of the US Dollar against European currencies. It is concluded, 
therefore, that the weak financial situation of certain importers/traders 
is also attributable to currency fluctuations. 
(80) As to the argument that the imposition of anti-dumping duties will not 
have the effect of increasing sales of the Community producers but 
would make importers purchase from other third countries, it should be 
mentioned that it is not the purpose of any anti-dumping measure to 
limit imports from third countries at non-dumped prices. Moreover, the 
investigation has confirmed that it is not likely that a major proportion 
of importers will source leather handbags from other third countries, 
due to the skilled labour and know-how necessary to manufacture 
leather handbags currently available in the People's Republic of China. 
(81) Given the above, measures on imports of leather handbags are not 
likely to endanger the business performance of the distribution chain. 
30 
4. Impact on consumers 
(82) As has been mentioned above, the full amount of the duty is currently 
being shared by the different steps in the distribution chain. Therefore, 
the effect of the duty on the consumer in the form of a price increase is 
not likely to exceed 9%. 
(83) Furthermore, leather handbags being a fashion product not purchased 
on a regular basis, a moderate increase in the prices for the consumer 
should be seen in the light of the lack of a clear perception of the 
appropriate price for a handbag for a consumer, which is not likely to 
affect demand substantially in the long term. 
(84) In view of this, it is not expected that definitive measures on imports of 
leather handbags will have a significant impact on the consumer. 
5. Conclusion on Community interest 
(85) In the light of the above, it is considered that the conclusions drawn by 
the Commission in the Regulation (EC) No 209/97 concerning 
Community interest should be confirmed with respect to leather 
handbags. There are no compelling reasons which would lead to the 
conclusion that adopting definitive measures would not be in the 
interest of the Community. 
31 
H. Synthetic handbags 
(A) Injury 
1. Consumption in the Community market 
(86) Between 1992 and the investigation period, the consumption of 
synthetic handbags in the Community increased from 73 million units 
to 96 million units, i.e. an increase of approximately 31%. 
2. Volume and market share of imports 
(87) Between 1992 and the investigation period, imports of synthetic 
handbags originating in the People's Republic of China increased from 
53 million units to 78 million units, i.e. by 47%. When measured in 
value, the increase amounts to 31%, from ECU 152 million in 1992 to 
ECU 199 million in the investigation period. 
(88) The share of the Community market taken by imports of handbags 
originating in the People's Republic of China increased from 73% in 
1992 to 81% in the investigation period. 
32 
3. Prices of dumped imports and undercutting 
(89) The average CIF import price of synthetic handbags as reported by 
Eurostat has decreased by 10%, from ECU 2,8 per unit in 1992 to 
ECU 2,5 per unit in the investigation period. 
(90) The undercutting margin amounts to 27,8 % for synthetic handbags. 
4. Situation of the Community industry 
(a) Production 
(91) The estimated production of synthetic handbags by the Community 
industry has remained stable at around 14 million units between 1992 
and the investigation period. 
(b) Sales volume 
(92) A decline in sales volume in the Community of handbags 
manufactured by the Community industry of around 70% between 
1992 and the investigation period has been established. Indeed, sales 
decreased from around 6 million units in 1992 to around 2 million units 
in the investigation period. 
(c) Market share 
(93) The share of the Community market occupied by the Community 
industry when measured in units decreased from around 9% in 1992 to 
around 3% during the investigation period. 
(d) Profitability and employment 
(94) The overall profitability of Community producers declined progressively 
from 5,9% in 1992 to 1,3% during the investigation period. 
(95) Employment figures in the handbag sector declined from about 18.600 
people in 1992 to 14.000 people in the investigation period, a drop of 
25%. 
33 
5. Conclusion on injury 
(96) It is considered that the Community industry of synthetic handbags 
suffered material injury within the sense of Article 3 of the basic 
regulation. 
(97) This stems from the deterioration of the economic factors of the 
Community industry during the period 1992 to the investigation period, 
namely declining sales volume, loss of market share, declining 
employment and declining profitability, as seen in the light of the 
increase in the volume of imports of synthetic handbags from the 
People's Republic of China and its prices. 
(B) Causation 
1. Effects of the dumped imports 
(98) Given the above findings, it is considered that the imports of synthetic 
handbags from the People's Republic of China had, taken in isolation 
a material impact on the situation of the Community industry. 
(99) Indeed, given that synthetic handbags manufactured in the Community 
and those imported from the People's Republic of China compete 
across the range, where the distribution system is common to both 
products, the undercutting found indicates that, taken in isolation, 
imports of synthetic handbags from the People's Republic of China 
caused material injury to the Community industry. 
34 
2. Effects of other factors: imports from third countries 
(100)The Commission has examined the impact on the Community industry 
of factors other than imports of synthetic handbags from the People's 
Republic of China, namely, imports from other third countries. 
(101)Concerning India, available Eurostat data shows that even if the 
volume of imports from India has increased from 1,6 million units in 
1992 to 3,4 million units in the investigation period, their share of total 
imports of synthetic handbags into the Community has only increased 
from 2,6% in 1992 to 3,6% in the investigation period. The share of the 
Community synthetic handbag market occupied by these imports has 
remained at a low level, being 3,5% in the investigation period. 
(102)Regarding imports of synthetic handbags from Hong Kong, when 
measured in units these have increased from 1,5 million units in 1992 
to 6,5 million units in the investigation period. However, their share of 
the Community synthetic handbag market has remained at a relatively 
low level, increasing from 2% in 1992 to 7% in the investigation period. 
(103)As to imports from other third countries, their share of the total import 
of synthetic handbags into the Community has decreased from 11% in 
1992 to 5,5% in the investigation period. The share of the Community 
synthetic handbags market occupied by these imports has decreased 
from 9,7% in 1992 to 5% in the investigation period. 
35 
3. Conclusion on causation 
(104)The above analysis shows that, even if certain other factors might 
have contributed to the injury suffered by the Community industry, it is 
considered that taken in isolation, the high volume of synthetic 
handbags imported from the People's Republic of China at dumped 
price have caused material injury to the Community industry. 
(C) Community Interest 
1. Community industry 
(105)The indicators of the Community synthetic handbag industry show that 
it is not likely that the Community industry would benefit from any anti­
dumping measure imposed. The imposition of measures would not have 
the effect of increasing the sales of the Community synthetic handbags 
manufacturers, given that it is likely that synthetic handbags will be 
sourced from other third countries in the medium term. Indeed, it has 
been ascertained that the production process in the synthetic sector is of 
such a nature that it can be transferred to another third country within a 
relatively short period of time. In this respect, evidence has been 
provided by some interested parties showing that this has already taken 
place in some instances. There are, therefore, strong reasons to expect 
that most of the volume and price benefits which anti-dumping measures 
may have will not go to the Community industry but to imports from other 
third countries. 
36 
(106)Sn addition, the consequences of the non-imposition of measures on 
the employment levels of the Community synthetic handbag producers is 
relatively limited, given the low sales volume in the Community of 
Community produced synthetic handbags and the estimated employment 
figures for synthetic handbags of around 500 employees. While these 
jobs may be exposed to competition from dumped imports of handbags 
from the People's Republic of China, this figure has to be compared to a 
total employment figure for the entire Community handbags sector of 
around 14.000 employees. In this respect, it is expected that an increase 
in the sales volume of the Community manufacturers of leather handbags 
may have the effect of offsetting this negative impact, if any. 
2. Impact on importers/traders 
(107)ln view of the high share of the Community synthetic handbag market 
held by imports from the People's Republic of China, if definitive anti­
dumping measures of the provisional amount were to be imposed, a 
substantial impact on Community importers and traders would be 
expected. 
(108)Indeed, a comparison of the market shares held respectively by the 
Community industry (around 2% in the investigation period) and the 
imports from the People's Republic of China (around 80% in the 
investigation period) indicate that the negative impact on importers and 
traders of the product that would result, would be clearly 
disproportionate to any possible benefit in the short term to the 
Community industry which would be gained through the imposition of 
anti-dumping measures. 
37 
(109)The estimated employment for the distribution chain of synthetic 
handbag has been estimated at around 4.100 employees. It is 
considered that the imposition of anti-dumping measures on imports of 
synthetic handbags will have, at least in the medium term, a negative 
impact on this employment. Indeed, since the expected switch in the 
source of supply to other third countries will take place in the medium 
term, it is expected that in the meantime a certain number of jobs in 
the distribution sector will be at risk. On the other hand it is not 
expected that the employment levels of the Community synthetic 
handbags manufacturers will decrease to a significant extent, in view 
of the fact that the Community industry is concentrating on the export 
markets. 
3. Impact on consumers 
(110)ln this respect, it has to be recalled that, should a definitive duty be 
imposed, a shortage in supply will occur, at least in the short term, thus 
restricting consumer choice. 
The effect on the consumer in the form of a certain price increase 
should also be seen in the light of the likely absence of any benefit for 
the Community producer and the negative impact on the distribution 
chain. 
38 
4. Conclusion on Community interest 
(111)ln view of the above mentioned facts and trends which differ 
significantly from those established in respect of leather handbags, it is 
considered that there are compelling reasons why the imposition of 
definitive measures on imports of synthetic handbags is not in the 
interest of the Community. The negative impact of definitive anti­
dumping measures on imports of synthetic handbags from the 
People's Republic of China would be disproportionate to any actual 
benefit to the Community industry. 
I. Duty 
1. Leather handbags 
(112)Some interested parties have argued that the duty should take the 
form of a variable duty. However, given the wide variety of leather 
handbags and the fact that it is considered that competition is taking 
place across the whole range of leather handbags and not among 
those in the lower price range, it is considered that measures should 
take the form of an ad valorem duty. 
The provisional conclusions with respect to the type of duty to be 
applied are therefore confirmed. 
(113)As for the calculation of the injury threshold, i.e. price underselling, the 
Council confirms the methodology followed by Regulation (EC) No 
209/97 (recitals 103 to 105). Thus, to the percentage of the 
undercutting found, the weighted average profit shortfall of the 
sampled Community producers during the investigation period was 
added. On this basis, the weighted average injury margin for leather 
handbags, expressed as a percentage of the free-at-the-Community-
frontier price amounts to 38%. 
39 
(114)For the companies which requested and were granted individual 
treatment, their injury margin, when expressed as a percentage of the 
free-at-the-Community-frontier price amounts to the following: 
• For Shilton, given that the dumping margin found is nil, in 
accordance with Article 7 (2), it was not considered 
necessary to calculate an individual injury margin. 
• For Picard, the injury margin amounts to 32,7%. 
(115)ln accordance with Article 7(2) of the basic regulation, as the injury 
elimination level is below the dumping margin found, the anti-dumping 
duty calculated on the basis of the free-at-frontier price should amount 
to 38%. 
(116)For the companies which requested and were granted individual 
treatment, the anti-dumping duty should amount to the following: 
• For Shilton: nil. 
• For Picard: 7,7%, which is the dumping margin established 
for this company. 
40 
2. Synthetic handbags 
(117)ln view of the fact that it is considered that there are compelling 
reasons not to adopt anti-dumping measures concerning synthetic 
handbags, the proceeding with respect to imports of plastic handbags 
(4202 22 10) and textile handbags (4202 22 90) should be terminated. 
J. Collection of provisional duties 
(118)Concerning leather handbags, since the Community industry is 
suffering a threat of material injury, the Council considers it appropriate 
to decide that, pursuant to Article 10(2) of the basic regulation, the 
amounts secured by way of provisional anti-dumping duty under 
Regulation (EC) No 209/97 for leather handbags be released . 
(119)The provisional duties secured with respect to plastic and textile 
handbags should also be released 
41 
HAS ADOPTED THIS REGULATION: 
Article 1 
1. A definitive anti-dumping duty is hereby imposed on imports of handbags 
with outer surface of leather, of composition leather or patent leather 
falling within CN code 4202 21 00 originating in the People's Republic of 
China. 
2. For the purpose of this .Regulation, leather handbags shall be understood 
to mean, bags whether or not with shoulder strap, including those without 
handle, with outer surface of leather, of composition leather or patent 
leather, designed primarily to contain small objects for personal use such 
as keys, purses, make-up, cigarettes, etc., regardless of their size and 
form. 
3. The rate of the duty shall be 38% of the net, free-at-frontier price, before 
duty (Taric 8900), with the exception of imports of leather handbags 
which are manufactured by the following companies, which shall be 
subject to the following rates of the duty: 
Jane Shilton (Pacific) Ltd.: 0,0 % (Taric additional code 
8961) 
Gebr. Picard International Ltd. 7,7 % (Taric additional code 
8087) 
42 
Article 2 
1. The anti-dumping proceeding concerning imports of handbags with outer 
surface of plastic sheeting or with outer surface of textile materials falling 
within CN codes 4202 22 10 and 4202 22 90 is hereby terminated. 
2. The amounts secured by way of provisional anti-dumping duties under 
Commission Regulation (EC) No 209/97 shall be released. 
Article 3 
This Regulation shall enter into force on the day following its publication in 
the Official Journal of the European Communities. 
This Regulation shall be binding in its entirety and directly applicable in all 
Member States. 
Done at Brussels, 1997. 
For the Council 
The President 
V3 
ISSN 0254-1475 
COM(97) 431 final 
DOCUMENTS 
EN 02 11 
Catalogue number : CB-CO-97-435-EN-C 
ISBN 92-78-23862-7 
Office for Official Publications of the European Communities 
L-2985 Luxembourg