Keywords

Summary



Keywords

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1. Common commercial policy - Protection against dumping practices - Dumping margin - Determination of the normal value - Constructed value - Selling, administrative and other general expenses of sales subsidiaries - Inclusion - System different from that applied when constructing export price - Possible application of allowances for which provision is made for the purposes of the comparison between the normal value and the export price

(Council Regulation No 2176/84, Art. 2(3)(b)(ii), (8)(b), (9) and (10)(c))

2. Common commercial policy - Protection against dumping practices - Dumping margin - Determination of the normal value - Constructed value - Calculation of the profit margin - Average profit earned by other exporters on profitable sales of like products

(Council Regulation No 2176/84, Art. 2(3)(b)(ii))

3. Common commercial policy - Protection against dumping practices - Dumping margin - Determination of the normal value - Constructed value - Calculation of the profit margin - Combined margin of the economic entity formed by the producer and its sales subsidiary

(Council Regulation No 2176/84, Art. 2(3)(b)(ii))

4. Common commercial policy - Protection against dumping practices - Dumping margin - Determination of the normal value - Constructed value - Trade-in discount - Inclusion

(Council Regulation No 2176/84, Art. 2(3)(b)(ii))

5. Common commercial policy - Protection against dumping practices - Dumping margin - Comparison between the normal value and the export price - Allowances - Differences in the conditions and terms of sale - Account taken subject to the existence of a direct link with the sales considered - Costs not having such a link - Exclusion

(Council Regulation No 2176/84, Art. 2(10)(c))

6. Common commercial policy - Protection against dumping practices - Dumping margin - Comparison between the normal value and the export price - Allowances - Differences in the levels of trade - Burden of proof

(Council Regulation No 2176/84, Art. 2(9) and (10)(c))

7. Common commercial policy - Protection against dumping practices - Dumping margin - Determination of the normal value and the export price - No requirement that an identical method of determination be used - Methods of comparison - Discretion of the institutions - Transaction-by-transaction method - Use not confined to cases where dumping practices disguised

(Council Regulation No 2176/84, Art. 2(9) and (13)(b))

Summary

1. When, in connection with sales on the domestic market, it is established that a manufacturer entrusts tasks which are normally the responsibility of an internal sales department to its sales subsidiaries with which it forms a single economic entity, the fact that selling, administrative and other general expenses of the subsidiaries are included in the constructed normal value whereas all the expenses incurred by its sales subsidiaries in the Community were deducted when the export price was constructed, in accordance with Article 2(8)(b) of the basic anti-dumping regulation, Regulation No 2176/84, is not a breach of Article 2(3)(b)(ii) and (9) thereof.

By including the selling, administrative and other general expenses of the sales subsidiaries in the constructed normal value, it is possible to avoid a situation where expenses necessarily included in the selling price of a product when it is sold by a sales department forming part of the manufacturer' s organization are not included when that product is sold by a company which, although financially controlled by the manufacturer, is a legally distinct entity.

Moreover, determination of the normal value and determination of the export price are governed by separate rules and therefore selling, administrative and other general expenses need not necessarily be treated in the same way in both cases.

The selling, administrative and other general expenses of a sales subsidiary controlled by the manufacturer which acts as an internal sales department on the domestic market are in reality only comparable to those of its export department, whose equivalent expenses are not deducted from the export price, not to those of its European subsidiaries. Any differences in the amount of those expenses could if necessary be taken into account under the allowances provided for in Article 2(10)(c) of Regulation No 2176/84.

2. The aim of constructing the normal value is to establish a normal value which comes as close as possible to the selling price that the product in question would have if it were sold in the country of origin or exporting country in the ordinary course of trade.

To achieve that objective the institutions may take into consideration either the profit margin realized on sales of the same manufacturer' s other models or the profit margin realized by another company. They may also have recourse to an average profit realized by other exporters on those of their models which, during the reference period, were sold on the domestic market on average at above production cost. That method cannot, however, result in the institutions also taking into consideration, in order to determine average profit, sales of a given model even though overall no profit was made; the purpose of constructing the normal value could not be achieved in those circumstances, since, if they did so, the institutions would establish a normal value which did not correspond to the price obtained in the ordinary course of trade.

3. When constructing the normal value the institutions are not under any obligation to choose as the reasonable margin of profit, within the meaning of Article 2(3)(b)(ii) of the basic anti-dumping regulation, Regulation No 2176/84, the profit margin of the manufacturer rather than that of its sales subsidiary in the domestic market and they are fully entitled to adopt the combined profit margins of the two companies in view of the fact that they constitute a single economic entity.

4. Trade-in discounts granted to buyers of new models when old models are traded in, corresponding to the value attributed by the manufacturer to the withdrawal of used machines from the market, must be taken into account for the purposes of determining the constructed normal value in accordance with Article 2(3)(b)(ii) of the basic anti-dumping regulation, Regulation No 2176/84

5. Salaries paid to sales staff who do not sell the products in question directly to purchasers, ordinary transport costs and salesmen' s travelling expenses, warehousing, transport, insurance and credit costs borne not by the sales subsidiary but by the manufacturing company cannot be regarded as directly related to sales within the meaning of Article 2(10)(c) of the basic anti-dumping regulation, Regulation No 2176/84, so as to justify an adjustment to the normal value on the ground of differences in conditions and terms of sale.

6. A manufacturer which does not prove that the sales on the basis of which the normal value and the export price were determined concerned different categories of purchasers and were consequently at different levels of trade does not justify a claim for allowances on the ground of different levels of trade within the meaning of Article 2(9) and (10) of the basic anti-dumping regulation, Regulation No 2176/84.

7. Article 2(9) of the basic anti-dumping regulation, Regulation No 2176/84, does not require the normal value and the export price to be calculated according to the same method. Article 2(13) merely states the various possibilities for calculating the dumping margin without imposing any requirement that the methods chosen for calculating the normal value and the export price should be similar or identical.

The freedom to choose one of the methods specified in Article 2(13)(b) of Regulation No 2176/84 is specifically intended to ensure the application of the method most appropriate to the purpose of the anti-dumping proceeding and that choice requires an appraisal of complex economic situations.

Application of the transaction-by-transaction method, which is particularly appropriate when the exporter has been guilty of manoeuvres aimed at disguising dumping, is not confined to cases in which such conduct has been observed by the institutions.