Opinion of Mr Advocate General Ruiz-Jarabo Colomer delivered on 6 March 1997. - Rotexchemie International Handels GmbH & Co. v Hauptzollamt Hamburg-Waltershof. - Reference for a preliminary ruling: Finanzgericht Hamburg - Germany. - Dumping - Potassium permanganate - Reference country. - Case C-26/96.



European Court reports 1997 Page I-02817



Opinion of the Advocate-General

1 In the present case the Court of Justice is required to give a preliminary ruling on the question referred to it by the Finanzgericht (Finance Court) Hamburg on the validity of Council Regulation (EEC) No 1531/88 of 31 May 1988 imposing a definitive anti-dumping duty on imports of potassium permanganate originating in the People's Republic of China and definitively collecting the provisional anti-dumping duty imposed on those imports. (1)

2 The question was raised in proceedings between the undertaking Rotexchemie International Handels GmbH & Co. (hereinafter `Rotexchemie') and the Hamburg Customs Investigation Office concerning the post-clearance recovery of anti-dumping duties applicable to imports of potassium permanganate originating in China.

3 Between 21 July 1988 and 31 October 1989 Rotexchemie imported a total of 667 000 kg of potassium permanganate, CN code 2841 60 00 0100, for release into free circulation. In the 30 declarations which it submitted to various customs offices in the Land of Hamburg, Rotexchemie stated that the country of origin of the potassium permanganate was Taiwan, in respect of which a customs duty of 6.9% was applied, the rate for goods originating in non-member countries.

4 Following an inquiry, the Hamburg Customs Investigation Office established that the imported potassium permanganate came not from Taiwan but from the People's Republic of China. Accordingly, by an amended notice of 26 March 1991, it demanded payment of DM 1 494 170 in anti-dumping duties on the 30 consignments of potassium permanganate. Rotexchemie lodged an objection to that notice on 6 April 1991, which was rejected by the German customs authorities by decision of 7 February 1994, notified to Rotexchemie on 11 February 1994.

5 Following the rejection of its complaint, Rotexchemie appealed to the Finanzgericht Hamburg, claiming that Regulation No 1531/88, pursuant to which the post-clearance collection of the anti-dumping duties had been effected, was void. While it admitted that the imported potassium permanganate came from China, Rotexchemie considered that Regulation No 1531/88 was void because, inter alia, the United States had wrongly been chosen as the market economy reference country for the purpose of calculating the normal value of the potassium permanganate and, accordingly, determining the amount of the Community anti-dumping duty applicable to imports of that product from China.

6 In view of those allegations, the German court considered it necessary, in order to reach a decision in the main proceedings, to refer the following question to the Court of Justice for a preliminary ruling:

`Is Council Regulation (EEC) No 1531/88 of 31 May 1988 valid?'

7 Before examining the possible grounds on which Regulation No 1531/88 might be declared void, I shall outline the action taken by the Community in respect of dumping practices detected in imports of potassium permanganate.

Anti-dumping procedures relating to imports of potassium permanganate

8 Potassium permanganate is a powerful oxidant used, among other applications, in the treatment of drinking water and waste water, the polishing and cleaning of metal surfaces, the manufacture and processing of chemical substances, radioactive decontamination, the eradication of smells, and bleaching and special treatments in the textile industry. It is also used in aquaculture and as a disinfectant in agriculture and veterinary medicine.

9 World production of that oxidant is largely concentrated in countries with planned economies. Exports of potassium permanganate from those countries to the Community have been the subject of numerous Community trade-protection measures.

Those measures had their origin in a complaint lodged by the Community industry, as a result of which, in January 1986, the Commission initiated an anti-dumping procedure concerning imports of potassium permanganate originating in Czechoslovakia, the German Democratic Republic and the People's Republic of China. That procedure led to the adoption of Regulation (EEC) No 2495/86, (2) which imposed a provisional anti-dumping duty on those imports. By Decision 86/589/EEC (3) the Commission accepted the undertakings on prices given by the Chinese undertaking Sinochem and the Czechoslovakian and German producers. Accordingly, Regulation (EEC) No 3661/86 (4) imposed a definitive anti-dumping duty only on imports of potassium permanganate originating in China, with the exception of those exported by Sinochem.

10 In 1987 the Community industry provided the Commission with evidence that the Chinese undertaking Sinochem had failed to comply with its undertakings and that it had exported potassium permanganate to France and Spain at extremely low prices. After verifying that information, the Commission, by Regulation No 360/88, (5) imposed a provisional anti-dumping duty on imports of potassium permanganate originating in China, including that produced and/or exported by Sinochem. At the same time, the Commission initiated a new anti-dumping procedure, which led to the adoption of Regulation No 1531/88, the validity of which is challenged in the present case, making definitive the provisional anti-dumping duty imposed on imports from the People's Republic of China.

11 In December 1992 the Commission published a notice (6) concerning the expiry of the anti-dumping duty applicable to imports of potassium permanganate originating in China. The Community producers lodged a request for a review and the Commission initiated a new procedure, which led to the adoption of Regulation (EC) No 2819/94 (7) imposing a new definitive anti-dumping duty on imports of potassium permanganate originating in the People's Republic of China.

12 In 1989 the Community industry submitted evidence that the Czechoslovakian producer had failed to comply with its price undertaking and the Commission initiated a procedure which led to the imposition, by Regulation (EEC) No 2535/89, (8) of a provisional anti-dumping duty which was made definitive by Regulation (EEC) No 385/90 (9) and which expired in 1995. Similarly, the Commission initiated in 1990 an investigation into imports of potassium permanganate from the Soviet Union, in the context of which a provisional anti-dumping duty was imposed by Regulation (EEC) No 1537/90; (10) the procedure was closed by Decision 91/24/EEC. (11)

The question referred to the Court

13 The Finanzgericht Hamburg has asked the Court to rule on the validity of Regulation No 1531/88. This general question concerning the validity of the regulation is accompanied by abundant reasoning in respect of four possible grounds which might affect its validity. The national court states that it has serious doubts as to the validity of the choice of the United States as market economy reference country for the purpose of determining the normal value of the potassium permanganate imported from China. The other three grounds relied on by Rotexchemie, namely the determination of the injury to the Community industry, the absence of Community interest and the amount of the anti-dumping duty, it considers, do not affect the validity of the regulation.

14 Having regard to the fact that the question formulated by the national court refers in general to the validity of Regulation No 1531/88 and that the parties which have submitted observations in the present case have analysed the effect of the four grounds of invalidity raised in the main proceedings, I consider it necessary that the Court should deal with all those grounds and not only with the one giving rise to major doubts on the part of the Finanzgericht Hamburg. The Court of Justice has shown itself to be in favour of analysing the possible grounds of nullity raised by the parties to the main proceedings where the national court has questioned the validity of a regulation in general terms without referring to those grounds, (12) and the same should apply where the national court more or less emphatically rejects the relevance of some of the grounds of nullity invoked.

I shall now go on to examine individually each of those grounds which might affect the validity of Regulation No 1531/88, although I shall devote special attention to the one which is the source of major doubts for the national court.

Determination of the normal value

15 Regulation No 1531/88 is an implementing measure adopted pursuant to Regulation (EEC) No 2176/84 (13) (hereinafter `the basic regulation').

16 According to Article 2(2) of the basic regulation, a product is to be considered to have been dumped `if its export price to the Community is less than the normal value of the like product'. Where the product is imported from non-market economy countries, normal value is to be determined in accordance with the criteria laid down in Article 2(5) of the basic regulation, which is worded as follows:

`In the case of imports from non-market economy countries ..., normal value shall be determined in an appropriate and not unreasonable manner on the basis of one of the following criteria:

(a) the price at which the like product of a market economy third country is actually sold:

(i) for consumption on the domestic market of that country; or

(ii) to other countries, including the Community; or

(b) the constructed value of the like product in a market economy third country;

(c) if neither price nor constructed value as established under (a) or (b) provides an adequate basis, the price actually paid or payable in the Community for the like product, duly adjusted, if necessary, to include a reasonable profit margin.'

17 Once normal value has been determined, the export price is established; then the two are compared, making any adjustments necessary to ensure that the comparison is accurate. This comparison gives, where appropriate, the dumping margin, defined in Article 2(13)(a) of the basic regulation as `the amount by which the normal value exceeds the export price'.

18 According to the case-law of the Court, the aim of the basic regulation is to prevent account being taken of prices and costs in non-market economy countries, which are not the normal result of market forces. (14) The use of a market economy reference country constitutes a method of calculating the normal value of exports from planned economy countries which is employed out of necessity, but the application of which is undoubtedly a source of difficulties. (15) Accordingly, Article 2(5) provides that in those cases the normal value is to be determined `in an appropriate and not unreasonable manner', and it is therefore logical that the Court should have held that `the choice of reference country is a matter falling within the discretion enjoyed by the institutions in analysing complex economic situations'. (16)

However, it has also held that the exercise of that discretion is not excluded from judicial review, although such review must be limited to verifying whether the relevant procedural rules have been complied with, whether the facts on which the choice is based have been accurately stated and whether there has been a manifest error of appraisal or a misuse of powers. That means, as regards the choice of reference country, that the Court will verify whether the institutions neglected to take account of essential factors for the purpose of establishing the appropriate nature of the country chosen and whether the information contained in the documents in the case was considered with all the care required for the view to be taken that the normal value was determined in an appropriate and not unreasonable manner. (17)

19 The Community case-law (18) also seems to confirm the criteria which have evolved from the practice of the institutions in connection with the choice of a market economy reference country. According to that practice, the Commission requires there to be in the reference country a like product, a comparable volume and comparable methods of production, conditions of access to raw materials comparable with those in the country of export concerned and price conditions whose structure obeys market economy rules. (19)

20 In the present case the potassium permanganate exported to the Community originated in the People's Republic of China, a non-market economy country. Therefore the normal value of the potassium permanganate was determined in Regulation No 1531/88 in accordance with Article 2(5)(a)(i) of the basic regulation. As in the other anti-dumping regulations relating to imports of potassium permanganate originating in planned economy countries, the United States was chosen as the market economy reference country for the purpose of determining the normal value of that product.

21 The Commission used various arguments to justify calculating the normal value on the basis of prices on the United States domestic market: they are set out in the seventh to ninth recitals in the preamble to Regulation No 2495/86 and the tenth and eleventh recitals in the preamble to Regulation No 1531/88. Among the reasons relied on by the Commission in those regulations, the following deserve particular mention:

- The United States was the reference country suggested by the Community producers who had lodged the complaint. Some exporters objected that the United States had only one producer, the Carus Chemical Company, but they did not suggest any other reference country.

- The Chinese exporter suggested that normal value be calculated on the basis of costs of production in Thailand. That request was rejected by the Commission, because no potassium permanganate was produced in Thailand and because there was no provision for such a method of calculation in the basic regulation.

- The selling prices of potassium permanganate in the United States market were lower than those in India, the only other market economy country producing potassium permanganate.

- There were no price controls in the United States and there was sufficient competition as a result of substantial imports of potassium permanganate from other countries.

- The Commission verified that the prices charged by the sole United States producer guaranteed it a reasonable but not excessive profit.

22 Rotexchemie and the national court doubt that the choice of the United States as reference country satisfies the requirements of Article 2(5)(a)(i) of the basic regulation, which provides that the normal value is to be determined in an appropriate and not unreasonable manner, on the basis of the price at which the like product of a market economy third country is actually sold for consumption on the domestic market of that country.

23 Their doubts as to the validity of the choice of the United States derive, in the first place, from the characteristics of the domestic United States market in potassium permanganate. They assert that in the United States there is a single producer which is not subject to any type of competition and which, moreover, benefits from trade protection measures adopted by the United States authorities, namely anti-dumping duties imposed on imports from China and Spain. The high level of the anti-dumping duties imposed on imports from China and the collection, if confirmed, of an anti-dumping duty on imports from Spain allow the United States producer to maintain selling prices for potassium permanganate on its domestic market which are higher than those established by the Community producer. Consequently, the absence of effective conditions of competition in the United States prevents its being used as a reference country to determine the normal value of potassium permanganate exported to the Community.

24 Furthermore, the national court questions the reasons expressed by the Commission for using the United States and rejecting India and Brazil as market economy reference countries for the purpose of calculating the normal value of potassium permanganate exported to the Community from China.

25 Having regard to the case-law of the Court of Justice on the determination of the normal value of imports from non-market economy countries, those arguments are not to my mind capable of affecting the validity of Regulation No 1531/88.

26 First, the choice of the United States as reference country was imposed by one all-important fact, namely that it was virtually the only market economy country in which there was any significant production of potassium permanganate in 1987, the calendar year covered by the Commission's investigation prior to the adoption of Regulation No 1531/88.

27 In Regulation No 2495/86, India was mentioned as another market economy country where potassium permanganate was produced. However, the Community institutions chose the United States rather than India as the reference country because the selling prices of potassium permanganate in India were higher than those on the United States domestic market, because no Community importer and no undertaking exporting potassium permanganate from China suggested India as reference country and because production in India was carried out on a small scale and, moreover, amounted to only 36 tonnes in 1985, the period investigated prior to the adoption of Regulation No 2495/86.

28 The information on potassium permanganate production in India was submitted to the Commission by the Community producer which had lodged the complaint and the Community institutions justifiably took the view that if there had been any change in that information between 1985 and 1987 the Community importers of Chinese potassium permanganate would have brought it to their notice. Since that did not happen, the Community institutions had no evidence to justify a detailed investigation of potassium permanganate production in India prior to adopting Regulation No 1531/88.

In any event, the small-scale nature of production in India, the high selling price on its domestic market and the small quantities produced (36 tonnes in 1985) in comparison with Chinese exports to the Community (1 850 tonnes in 1987) meant that India was manifestly inappropriate as a reference country for the purpose of determining the normal value of potassium permanganate imported into the Community from China.

29 During the procedure prior to the adoption of Regulation No 2819/94, which imposed a new anti-dumping duty on imports of potassium permanganate from China, the Commission became aware of the existence of a potassium permanganate production centre in Brazil. The 29th recital in the preamble to that regulation, in the German and French versions (`In anderen Ländern wurde die Produktion eingestellt (Brasilien) oder noch nicht aufgenommen ...' and `dans d'autres pays, la production a été interrompue (Brésil) ou n'a pas encore commencé ...'), gives the impression that potassium permanganate was produced in Brazil prior to 1994. That is not so, however, because the production centre in Brazil was not in operation in 1994 and had not been beforehand, as may be inferred from the English version (the original version) (`Finally, production in other countries is not operational (Brazil) or has not yet started ...') and the Spanish version (`Finalmente, la producción en otros países no es operativa (Brasil), todavía no ha empezado ...').

30 It is clear from the foregoing considerations that the United States was in fact the only market economy country which the Community institutions could use for the purpose of determining the normal value of potassium permanganate from China, in accordance with Article 2(5) of the basic regulation.

31 Secondly, in the United States domestic market there were minimum conditions of competition, which ensured that the price of potassium permanganate was established in accordance with market economy rules.

32 Rotexchemie and the Finanzgericht Hamburg consider, however, that the prices of potassium permanganate in the United States are not the result of market forces because there is only one producer in that country, the Carus Chemical Company, which charges extremely high prices because it is not exposed to competition. They assert that the anti-dumping duties imposed by the United States authorities on imports of potassium permanganate originating in China are 39.5%, a high rate which suggests that the intention is not only to neutralize dumping by Chinese producers but also to protect national production. That protective aspect is also confirmed by the imposition, from 1984, of an anti-dumping duty on imports of potassium permanganate originating in Spain, levied at 16.16% in 1986.

33 Those arguments of Rotexchemie and the Finanzgericht Hamburg cannot be upheld.

34 The fact that there is only one producer of potassium permanganate in the United States does not eliminate competition in the United States market, owing to imports from other countries - of the same quality as domestic production, since permanganate is a primary chemical product. Although the Commission and the Council did not provide the precise volume of those imports, since that was confidential information supplied by the United States producer, they indicated that they were significant. That appears to be borne out by the 29th recital in the preamble to Regulation No 2819/94, where it is stated that between 1 July 1992 and 30 June 1993 imports accounted for between 25 and 30% of the United States market.

35 The sole United States producer was also required to contend with competition from other oxidants, such as ozone and pure oxygen, which compete with potassium permanganate for numerous applications. That circumstance has an effect on the prices of potassium permanganate and obliged the United States producer to maintain prices which were in reasonable proportion to production costs.

In answer to the written question put to them by the Court of Justice, and also at the hearing, the Commission and the Council further stated that potassium permanganate prices on the United States market were lower than those charged by the Community producer on the Community market, contrary to what is stated in the order of the Finanzgericht Hamburg.

36 Furthermore, the fact that a State imposes anti-dumping duties does not prevent it from being chosen as reference country, provided that they are aimed solely at ensuring fair conditions of competition. That appears to be the case of the anti-dumping duties imposed by the United States on imports of potassium permanganate from China, which came to 39.8% in 1987, in the absence of any evidence that they pursued a protectionist objective over and above the neutralization of the injury caused to domestic production by dumping by Chinese producers of potassium permanganate.

37 The anti-dumping duties on imports from Spain, at the rate of 16.6%, it appears, were not collected by the United States authorities in 1987 and the rate was significantly reduced in subsequent years, according to the information submitted by the Spanish Government. Furthermore, there were imports from other countries, such as the former German Democratic Republic, which were not subject to anti-dumping duties.

38 On the basis of that information, the Commission justifiably reached the conclusion that the selling prices of potassium permanganate on the United States market followed the rules of free competition and allowed the sole domestic producer to make a reasonable but not excessive profit. There is no reason to consider that the Commission disregarded essential factors in determining the choice of market economy reference country or that it failed to consider the information in the file with the proper care.

39 It follows from the foregoing considerations that the fact that the normal value of potassium permanganate was determined on the basis of the selling price of that product in the United States is not such as to affect the validity of Regulation No 1531/88.

Injury to the Community industry

40 Dumping is exceptionable only where it causes or threatens to cause significant injury to production within the Community. Accordingly, when the Commission has established the existence of a dumping margin, it must ascertain whether the dumped imports are causing injury to the Community industry which manufactures a product similar to the imported product. (20) Thus Article 4(1) of the basic regulation provides as follows:

`1. A determination of injury shall be made only if the dumped ... imports are, through the effects of dumping ..., causing injury i.e., causing or threatening to cause material injury to an established Community industry or materially retarding the establishment of such an industry ...'.

41 For the purpose of determining the injury, it is necessary to ascertain that the dumped product is identical to the domestic product, to determine the existence of genuine injury in accordance with the criteria set out in Article 4(2) of the basic regulation, to establish the causal link between the dumping and the injury and to determine whether the producers affected constitute a `Community industry'.

42 Article 4(5) of the basic regulation provides that `Community industry' is to be interpreted as referring to `the Community producers as a whole of the like product or to those of them whose collective output constitutes a major proportion of the total Community production of those products ...'.

43 In the present case Rotexchemie has challenged only the fact that the sole Community producer, the Spanish undertaking Asturquímica SA, was regarded as a `Community industry' affected by the dumping by the Chinese producers of potassium permanganate. Rotexchemie takes the view that Article 4(5) of the basic regulation refers to `producers', which means that a sole producer is unable to constitute a `Community industry' for the purpose of the application of the anti-dumping duties. Were the contrary to be accepted, the anti-dumping duties would eliminate competition within the Community market and operate to the advantage of the dominant position of the Community producer and of a pricing structure designed to ensure its profitability.

44 Those arguments cannot be upheld, since, as the Finanzgericht Hamburg states, and as the Council and the Commission maintain in their joint observations, the concept of `Community industry', as defined in Article 4(5) of the basic regulation, does not require the existence of a number of producers in the Community. If there is only one producer of potassium permanganate in the Community that producer necessarily represents the Community production as a whole and there is no reason why it should not be given protection against dumped imports in the form of the relevant anti-dumping duties, as was the case when Regulation No 1531/88 was adopted. That conclusion is supported by the practice of the Community institutions and there is no indication to the contrary in the case-law of the Court of Justice.

Furthermore, the application of anti-dumping duties in respect of a product which has only one producer in the Community does not adversely affect free competition on the Community market, since anti-dumping duties are intended to neutralize an unfair commercial practice (which dumping is), which is what in fact distorts the conditions of competition.

45 The 16th to 22nd recitals in the preamble to Regulation No 1531/88 adequately establish the injury sustained by the Community potassium permanganate industry, consisting of a single undertaking. There is nothing therein to affect the validity of that regulation.

Community interest

46 In addition to the existence of dumping and evidence of injury to the Community industry, the provisional and definitive anti-dumping duties are imposed, pursuant to Articles 11(1) and 12(1) of the basic regulation, where the interests of the Community so require.

This third condition is not defined in the basic regulation, which does not specify what factors are to be taken into consideration for the purpose of determining whether or not the interests of the Community call for the adoption of anti-dumping duties. (21) This means that the Commission and the Council have a wide discretion, which has given rise to a practice which principally consists in weighing up two opposing factors, namely the interest of consumers, users and processors in the Community in having access to goods at the lowest possible price and the need to protect Community producers against dumping, in order to ensure fair competition in the economic sector concerned and hence the viability of Community production. (22)

47 In the main proceedings Rotexchemie argues that there is no Community interest in imposing an anti-dumping duty only on imports of potassium permanganate from China, because the prices of potassium permanganate within the Community will remain low as a result of imports from Czechoslovakia and the German Democratic Republic.

48 That argument is unfounded and must be rejected. The Council provided sufficient justification in the 23rd recital in the preamble to Regulation No 1531/88 for the Community interest in imposing an anti-dumping duty on imports of potassium permanganate from China. Those arguments, which were already found in the 22nd to 24th recitals in the preamble to Regulation No 2495/86, were set out in greater detail in Regulation No 2819/94, which establishes a new anti-dumping duty on the same product.

The Council considered that the Community had an interest in adopting the anti-dumping duties against imports of potassium permanganate because the Community industry faced serious difficulties as a result of the price reductions on the Community market caused by those imports. Without this trade protection measure the Community producer would be unable to maintain its position on the market and increase its productivity, with all the resulting adverse effects on employment. In addition, the application of the anti-dumping duties would have a negligible effect on prices for users of products which use potassium permanganate.

49 Lastly, Regulation No 1531/88 imposed an anti-dumping duty on imports of potassium permanganate originating in China because the Chinese undertaking Sinochem failed to comply with the price undertaking which it had given to the Community institutions and which was given effect in Decision 86/589, which avoided the definitive collection of the provisional anti-dumping duties established in Regulation No 2495/86. The Community institutions were unaware that the Czechoslovakian and German producers had thus far failed to comply with the price undertakings in which they had also participated. In 1989 the Commission was informed by the Community industry that the Czechoslovakian exporter had failed to comply with the price undertaking and, accordingly, adopted Regulation No 2535/89 imposing a provisional anti-dumping duty, which was made definitive by Regulation No 385/90.

50 Therefore, when Regulation No 1531/88 was adopted the Community only had an interest in imposing anti-dumping duties on imports of potassium permanganate from China, which were entering the Community at very low prices. If the prices of potassium permanganate did not rise on the Community market as a result of the application of the anti-dumping duty established by Regulation No 1531/88 on imports from China, that was because potassium permanganate from China was imported with false declarations of origin with the intention of evading payment of the anti-dumping duty. In the present case, for example, the potassium permanganate imported by Rotexchemie was initially declared as originating in Taiwan, where no production exists. According to the information provided by the Commission, that was not an isolated case, since in 1988 and 1989 approximately 667 tonnes of potassium permanganate from China, imported into the Community with false declarations of origin, were detected.

51 Having regard to the foregoing reasoning, I consider that the Council adequately established the Community interest in the adoption of the anti-dumping duty provided for in Regulation No 1531/88.

The rate of the anti-dumping duty

52 The determination of the rate of the anti-dumping duty is governed by Article 13 of the basic regulation, which provides as follows:

`1. Anti-dumping ... duties, whether provisional or definitive, shall be imposed by Regulation.

2. Such Regulation shall indicate in particular the amount and type of duty imposed, the product covered, the country of origin or export, the name of the supplier, if practicable, and the reasons on which the Regulation is based.

3. The amount of such duties shall not exceed the dumping margin provisionally estimated or finally established ...; it should be less if such lesser duty would be adequate to remove the injury.

...'

53 According to Article 16(1) of the basic regulation, `[w]here an importer can show that the duty collected exceeds the actual dumping margin ..., consideration being given to any application of weighted averages, the excess amount shall be reimbursed'.

54 As regards imports of potassium permanganate from China, the 15th recital in the preamble to Regulation No 1531/88 indicates that the dumping margin has a weighted average of 30%. Article 2(2) of that regulation provides that the amount of anti-dumping duty applicable to imports of potassium permanganate originating in China `shall be equal to either the amount by which the free-at-Community-frontier price per kilogram net, before duty, is less than 2,25 ECU or 20% of that price per kilogram net, free-at-Community-frontier, before duty, whichever is higher'.

The rate of anti-dumping duty is arrived at by combining an ad valorem duty of 20% and a variable duty representing the difference between the import price and the amount of ECU 2.25 per kilogram. In any event, the higher of the two duties is collected, and that will always be a minimum of 20%.

55 Rotexchemie considers that the anti-dumping duties imposed on its imports of potassium permanganate from China, at the rate of 92%, were much higher than the dumping margin of 30% determined in Regulation No 1531/88. Accordingly, it takes the view that the method of determining the rate of anti-dumping duty provided for in that regulation is contrary to Article 13(3) of the basic regulation, pursuant to which the amount of the anti-dumping duties is not to exceed the dumping margin.

56 To my mind this argument of Rotexchemie's is unfounded, as the Finanzgericht Hamburg and the Commission and the Council point out. The Court of Justice has recognized that the Community institutions have a wide discretion when they establish the methods of calculating anti-dumping duties. (23)

In practice, the Community institutions impose three types of anti-dumping duties, namely specific, ad valorem and variable. In Regulation No 1531/88 they chose a combination of an ad valorem duty of 20% and a variable duty established with reference to a minimum price. The ad valorem duty is lower than the dumping margin of 30% established in Regulation No 1531/88. The variable duty, which represents the difference between the export price of Chinese potassium permanganate and the reference price of ECU 2.25 per kilogram, was established to prevent imports at prices considerably below those prevailing when the Commission carried out its investigation. The minimum price was established at a level which was substantially lower than the dumping margin but which ensured sufficient profit for the Community producer. In contrast to the situation as regards the ad valorem duty, the dumping margin does not act as a ceiling in the case of the variable duty because a significant drop in the export prices of Chinese potassium permanganate may lead, as in the present case, to the imposition of a duty higher than the dumping margin. However, the usefulness of a variable duty, such as that established in Regulation No 1531/88, lies in its very flexibility as a means of neutralizing dumping in the event of a drop in import prices without the necessity for adopting a new Community regulation.

57 Consequently, I consider that the Community institutions acted within the discretion which the Court has recognized that they enjoy when they established the amount of the anti-dumping duty and that no factors have been disclosed of such a kind as to affect the validity of Regulation No 1531/88.

Conclusion

58 In the light of the foregoing considerations, I propose that the Court of Justice should answer the question referred to it by the Finanzgericht Hamburg as follows:

In the present case no factors have been disclosed such as to affect the validity of Council Regulation (EEC) No 1531/88 of 31 May 1988 imposing a definitive anti-dumping duty on imports of potassium permanganate originating in the People's Republic of China and definitively collecting the provisional anti-dumping duty imposed on those imports.

(1) - OJ 1988 L 138, p. 1.

(2) - Commission Regulation (EEC) No 2495/86 of 1 August 1986 imposing a provisional anti-dumping duty on imports of potassium permanganate originating in Czechoslovakia, the German Democratic Republic and the People's Republic of China (OJ 1986 L 217, p. 12).

(3) - Commission Decision 86/589/EEC of 26 November 1986 accepting undertakings given in connection with the anti-dumping proceeding concerning imports of potassium permanganate originating in Czechoslovakia, the German Democratic Republic and the People's Republic of China and terminating the investigation (OJ 1986 L 339, p. 32).

(4) - Council Regulation (EEC) No 3661/86 of 26 November 1986 imposing a definitive anti-dumping duty on imports of potassium permanganate originating in the People's Republic of China and definitively collecting the provisional anti-dumping duty imposed on imports of potassium permanganate originating in Czechoslovakia, the German Democratic Republic and the People's Republic of China (OJ 1986 L 339, p. 1).

(5) - Commission Regulation (EEC) No 360/88 of 4 February 1988 imposing a provisional anti-dumping duty on imports of potassium permanganate originating in the People's Republic of China (OJ 1988 L 35, p. 13).

(6) - OJ 1992 C 319, p. 4.

(7) - Council Regulation (EC) No 2819/94 of 17 November 1994 imposing a definitive anti-dumping duty on imports of potassium permanganate originating in the People's Republic of China (OJ 1994 L 298, p. 32).

(8) - Commission Regulation (EEC) No 2535/89 of 2 August 1989 imposing a provisional anti-dumping duty on imports of potassium permanganate originating in Czechoslovakia (OJ 1989 L 245, p. 5).

(9) - Council Regulation (EEC) No 385/90 of 12 February 1990 imposing a definitive anti-dumping duty on imports of potassium permanganate originating in Czechoslovakia and definitively collecting the provisional anti-dumping duty imposed on those imports (OJ 1990 L 42, p. 1).

(10) - Commission Regulation (EEC) No 1537/90 of 28 May 1990 imposing a provisional anti-dumping duty on imports of potassium permanganate originating in the USSR (OJ 1990 L 145, p. 9).

(11) - Commission Decision 91/24/EEC of 11 January 1991 terminating the anti-dumping proceeding concerning imports of potassium permanganate originating in the USSR (OJ 1991 L 14, p. 56).

(12) - Joined Cases 103/77 and 105/77 Royal Scholten-Honig v Intervention Board for Agricultural Produce [1978] ECR 2037, paragraphs 16 and 17, and Case C-323/88 Sermes v Directeur des Services des Douanes de Strasbourg [1990] ECR I-3027, paragraph 13.

(13) - Council Regulation (EEC) No 2176/84 of 23 July 1984 on protection against dumped or subsidized imports from countries not members of the European Economic Community (OJ 1984 L 201, p. 1).

(14) - Case C-16/90 Nölle v Hauptzollamt Bremen-Freihafen [1991] ECR I-5163, paragraph 10, and Joined Cases C-305/86 and C-160/87 Neotype Techmashexport v Commission and Council [1990] ECR I-2945.

(15) - The problems associated with the use of the `market economy reference country' rule in calculating the normal value of goods imported from planned economy countries, and their possible solutions, are examined in depth by López-Jurado Romero de la Cruz, C., in El control jurisdiccional de la actividad comunitaria en materia de dumping y de subvención, University of Granada Press, Granada, 1993, p. 162 et seq.

(16) - Nölle v Hauptzollamt Bremen-Freihafen, cited above, paragraph 11. See also Case T-164/94 Ferchimex v Council [1995] ECR II-2681, paragraph 66.

(17) - Nölle v Hauptzollamt Bremen-Freihafen, cited above, paragraphs 12 and 13, and Ferchimex v Council, cited above, paragraph 67.

(18) - Nölle v Hauptzollamt Bremen-Freihafen, cited above, paragraphs 14 to 29, and Ferchimex v Council, cited above, paragraph 68.

(19) - See, inter alia, Hermitte, M.-A., Dumping en droit communautaire. Éléments constitutifs, Jurisclasseur Europe, vol. 2311, p. 7 et seq.; Van Bael, I. and Bellis, J.-F., Anti-dumping and other Trade Protection Laws of the EC, CCH Europe, Bicester, 1996, p. 92 et seq.; Vermulst, E. and Waer, P., E.C. Anti-Dumping Law and Practice, Sweet & Maxwell, London, 1996, p. 200 et seq.

(20) - See López-Jurado Romero de la Cruz, C., op. cit., p. 191 et seq.

(21) - The criteria which may be used by the Community institutions for the purpose of determining whether or not there is a Community interest in imposing the anti-dumping duty are set out in Article 21 of Council Regulation (EC) No 384/96 of 22 December 1995 on protection against dumped imports from countries not members of the European Community (OJ 1996 L 56, p. 1).

(22) - For a detailed analysis of Community practice, see Van Bael, I. and Bellis, J.-F., op. cit., p. 502 et seq.

(23) - Case C-189/88 Cartorobica v Ministero delle Finanze dello Stato [1990] ECR I-1269, paragraph 25.