PROPOSAL FOR A COUNCIL REGULATION ( EEC ) IMPOSING A DEFINITIVE ANTI-DUMPING DUTY ON IMPORTS OF SMALL-SCREEN COLOUR TELEVISION RECEIVERS ORIGINATING IN HONG KONG AND THE PEOPLE' S REPUBLIC OF CHINA AND COLLECTING DEFINITIVELY THE PROVISIONAL DUTY
Date: 1991-06-24
Institutions: European Commission
Subjects: China, Hong Kong, anti-dumping duty, free-at-frontier price, import, television equipment

COMMISSION OF THE EUROPEAN  COMMUNITIES 

C0M(91) 231 final 

Brussels,  24  June 1991 

t_- 

^.. 

Proposal  for a 

COUNCIL  REGULATION  (EEC! 

imposing a definitive anti-dumping  duty on imports of 

small-screen  colour  television  receivers originating in 

Hong  Kong and the People's  Republic of China and 

collecting  definitively  the provisional  duty 

(presented  by the Commission) 

- 2 

EXPLANATORY M5MQRANPUM 

1. By Regulation  (EEC) No  129/91  the Commission  Imposed  a provisional 

anti-dumping  duty on  imports of  small  screen  colour  television 

receivers  (hereafter  SCTVs) originating  In Hong  Kong  and  the  People's 

Republic  of  China.  That  duty was extended  for  a maximum  period  of  two 

months  by  Regulation  (EEC) No 250/91. 

2.  Following  the  imposition  of  provisional  measures,  the Commission  has 

continued  its  investigation  and  has examined  the  arguments of  the 

complainants  and  exporters which  have demanded  to be  heard. 

3. The  findings made on  dumping  have,  in general, been  confirmed  although 

some  adjustments  have  been made  in response  to arguments  and  data 

presented  by  the parties.  The most  Important  was  that  some 

adjustments  were made  for  differences  in physical  characteristics  for 

some models  Imported  from  the People's  Republic  of  China. 

4. Provisional  findings  that  the Community  SCTV  Industry  has  suffered 

material  Injury  in terms of  loss of  sales  volume  and market  share, 

price  undercutting,  loss of  profitability, accelerated  relocation  of 

production  with  consequent  loss of  employment,  were  confirmed.  It was 

also confirmed  that  the dumped  imports  from  Hong  Kong  and  the People's 

Republic  of  China  had,  in  isolation, caused material  Injury  to  the 

Community  SCTV  Industry.  Injury  thresholds were  calculated  on  the 

basis of  the undercutting  found,  expressed  at  a c.i.f.  level. 

5.  In the provisional  findings, dumping  margins were established  for  the 

Chinese  exporters  Individually. 

As  the Chinese  exporters  cannot 

independently  fix  the conditions  for  exporting  their  products,  the 

Commission  considers  appropriate  to establish one  dumping  margin  and 

one  duty  for  all  Chinese  exporters.  Additionally,  it  is considered 

that  Individual  duties  could  lead  to circumvention  of  the duties  as 

all  exports  are  controlled  by a single  body. 

-  3 

However  for  two of  the exporters  which  are  Joint  ventures  with 

Japanese  participation,  it was established  that  they  cou id freely  fix 

their  export  prices and  therefore  Individual  dumping  margins  and 

duties were  determined  for  them. 

6.  It  is also  confirmed  - no new  facts or  arguments  having  been preser,u;o 

-  that  it  is  In the Community's  interest  to eliminate  the  injurious 

effects of  the dumping  determined.  The benefits of  such  protection 

for  the  current  viability  and  future  development  of  the Community  SCTV 

industry  outweigh  the  temporary  disadvantages  to consumers  of  limited 

price  Increases  for  certain  Imported  SCTVs. 

7.  It  Is proposed  therefore  to  Impose  definitive ant I-dumping  duties 

ranging  from  2.1% to 4.8% on  SCTVs  from  Hong  Kong  and  from 7.5%  to 

15.3% on  SCTVs  from  the People's  Republic of  China. 

It  Is also proposed  that  the amounts  secured  by way  of  the  provisional 

duty  should  be  collected up  to  the  levels of  the definitive  duties 

fInalI y  determined. 

- 4 -

Proposal  for a 

COUNCIL REGULATION  (EEC) 

imposing a definitive anti-dumping duty on  imports of 

small-screen colour  television receivers originating  In 

Hong Kong and the People's Republic of China and 

collecting definitively  the provisional  duty 

THE COUNCIL OF THE EUROPEAN COMMUNITIES, 

Having  regard  to the Treaty establishing  the European Economic Community, 

Having  regard  to  Council  Regulation  (EEC) No  2423/88  of  11  July  1988  on 

protection  against  dumped  or  subsidized  imports from  countries not  members 
of  the  European  Economic  Community^1),  and  in  particular  Article  12 

thereof, 

Having  regard  to  the  proposal  from  the  Commission  submitted  after 

consultation within  the Advisory  Committee  as provided  for under  the above 

Régulât ion, 

Whereas: 

A.  PROVISIONAL MEASURES 

(1) 

The  Commission,  by  Regulation  (EEC) No  129/91( 2 ),  (hereinafter  the 

Provisional  Duty  Regulation),  imposed  a  provisional  anti-dumping 

duty on  imports  into the Community of small-screen colour  television 

receivers  (hereinafter  referred  to  as  SCTVs)  originating  In  Hong 

Kong and the People's Republic of China and corresponding to CN code 

(1) 

(2) 

OJ No L 209, 2.1.1988, p. 1. 

OJ No L 14, 19.1.1991. p. 31. 

5  -

S528  10 71.  The  Council,  by  Regulation 

(lEEC)  No  1283/91<3> 

extended  this duty  for  a period  not  exceeding  two montre-* 

B. SUBSEQUENT  PROCEDURE 

Following  the  imposition  of  the  provisional  anti-dumping  duty, *' 

interested  parties  who  so  requested  were  granted  an  opportun sty  to 

be  heard  by  the  Commission.  They  also  made  written  submissions 

making  known  their  views on  the  findings. 

Upon  request,  parties  were  informed  of  the  essential  facts  and 

considerations  on  the  basis  of  which  it  was  intended  to  recommend 

the  imposition  of  definitive  duties  and  the definitive  collection  of 

amounts  secured  by  way  of  a  provisional  duty.  They  were  also 

granted  a  period  within  which  to make  representations  subsequent  to 

the  disclosure. 

The  oral  and  written  comments  submitted  by  the  parties  were 

considered  and,  where  appropriate,  the  Commission's  findings  were 

modified  to take  account  of  them. 

Due  to  the  complexity  of  the  proceeding,  in  particular  to  the 

detailed  verification  of  the  voluminous  data  involved  and  the 

numerous  arguments  put  forward,  including  the  study  of  related 

issues  which  arose  during  the  proceeding  and  which  could  not  have 

been  foreseen  at  its  outset,  the  investigation  could  not  be 

concluded  within  the normal  time  limit  as was mentioned  in Recital  5 

of  the Provisional  Duty  Regulation. 

(3) 

OJ  No L  122, 17.5.1991, p. 1. 

- 6 -

C. PRODUCT UNDER CONSIDERATION 

ORIGIN FOR CUSTOMS PURPOSES 

In  its  provisional  findings  the  Commission, subsequent  to  a  claim 

made  by  a  Hong  Kong  producer  exporter  and  consistently  with  the 
conclusions  in  Council  Regulation  (EEC)  No  1048/90<4)  imposing 

definitive  anti-dumping  duties  on  imports  of  SCTVs  originating  in 

the  Republic  of  Korea,  decided  to  exclude  from  the  scope  of  the 

proceeding SCTVs with a diagonal  screen size of  15.5 cm  (six  inches) 

or  less. 

As no objections by any of  the  interested parties have been made to 

this  course  of  action,  the  Council  confirms  the  conclusions 

contained  in Recitals 6, 7 and 8 of the Provisional  Duty Regulation, 

as  well  as  the  conclusions  set  out  in  Recitals  9  and  10  of  that 

Regulation  concerning  the  consideration  of  SCTVs  produced  by  the 

Community  industry, as  like products to the SCTVs exported  from Hong 

Kong  and  China  and  the  origin  of  those  SCTVs.  No  comments  were 

received  from  interested parties on those conclusions. 

D. DUMPING 

a. 

Normal  value 

For  the  purpose  of  definitive  findings,  normal  value  was,  in 

general, established on  the basis of  the same methods as those used 

in  the  provisional  determination  of  dumping,  after  taking  into 

consideration new facts and arguments presented by the parties. 

(4) 

OJ No L 107, 27.4.1990, p. 56. 

-  7 * 

!) 

Hgpg Kçng 

One of  the Hong  Kong  exporters  claimed  that  normal  value, which  hid 

been established  for OEM sales on  the basts of  the resale price of a 

related  trading  company  to  the  first  independent  purchaser  adjust*? 

by  the  allowable  selling  expenses  -  as  mentioned  In Recital  13 of 

the  Provisional  Duty  Regulation  -  should  have  been  established  on 

the  basis  of  the  sales  to  the  trading  company  which  should  be 

considered  as  unrelated,  and  that  the  commissions  paid  to  the 

trading  company  should  have been  deducted  from  the normal  value. 

The Commission  considers  that  there  is no  Justification  for  treating 

the  trading  company  as  an  unrelated  company.  The  trading  company 

and  the  producer  are  both  fully  owned  subsidiaries  of  the  same 

parent  company.  It  does  not  perform  any  activities  apart  from 

trading  and  selling  and  carried  out  all  the producer's  sales of  the 

product  concerned  in  the  domestic  market  during  the  reference 

period.  Even  if  it was  admitted  that, as  this exporter  claims,  the 

manufacturing  company  carried  out  certain  selling  activities,  it 

would  still  be  true  that  the  trading  company  performed  selling 

activities  normally  carried  out  by  a  sales  department  of  the 

manufacturer  and  this  would  fully  Justify  its  consideration  as  a 

related  sales  company. 

In these circumstances, the Commission  confirms  its consideration of 

the  two  companies  as  forming  part  of  the  same  economic  entity  and 

its determination  of  normal  value  as described  in Recital  13 of  the 

Provisional  Duty  Regulation. 

The Council  confirms  these conclusions. 

Another  Hong  Kong  exporter  contested  tho  method  used  to  establish 

the  constructed  values.  It  argued  that  the  sales,  general  and 

administrative  expenses  and  the  profit  which  had  been  used  in 

constructing  the  values,  as  explained  in  Recital  16  of  the 

Provisional  Duty  Regulation,  were  excessive  and  did  not  adequately 

reflect  its  situation,  mainly  because  the  company  whose  SG  &  A 

expenses  had  been  used  was  a  Stock  Exchange  listed  company  and 

therefore  required  a  larger  and more specialized  staff. 

The  Commission  considers  that  the  arguments  put  forward  by  the 

exporter  are  not  duly  Justified.  The  mere  a I legation  that  a  Stock 

Exchange  listed company  requires a  larger  and more specialized  staff 

than  a  comparable  fully  private  Company  cannot  be  considered 

sufficient  argument  to  reduce  the  SG  &  A  expenses  used  by  the 

Commission  on  constructing  the value.  The  investigation carried out 

by  the Commission  shows  that  this  Company  and  the  one  of  which  the 

SG t A  expenses  were  taken  in order  to  construct  the  normal  value, 

may  be  consi  red  comparable  as  far  as  costs  and  type  of  operation 

are concerned.  No  Justifiable argument  to the contrary  has been put 

forward.  In  any  event,  this  latter  Company  was  the  only  one  with 

domestic  sales  on  an  OEM  basis  which  could  be  considered 

representative  since  they  exceeded  5%  in volume  of  the sales  on  the 

same  basis  to  the  Community  market.  It  was  therefore  considered 

that  this  Company's  figures  which  were  verified  by  the  Commission, 

form  the most  reasonable  basis  for  the  addition  of  SG ft A  expenses 

to  manufacturing  costs  as  provided  for  by  Article  2(3)(b)(ii)  of 

Regulation  (EEC) No 2423/88. 

As  far  as  profit  is concerned,  this exporter  argued  that  the profit 

margin  taken  into consideration  (i.e. 5%)  should  not  be  the  same  as 

the one which  had  been used  in the previous  investigation  concerning 

9  -

the  Republic  of  Korea, the  Hong  Kong  market  being  more  competitive 

and having  lower profit margins.  The Commission considers that this 

argument  neglects  the  fact  that  the  Commission  investigation,  as 

indicated  In Recital  15 of  the Provisional  Duty  Regulation,  showed 

that  the  profit  margin  of  the  soie Company  with  representative OEM 

sales  in the domestic market exceeded  the 5% profit margin retained. 

The Council  confirms these conclusions. 

M) 

People's Republic of China 

10 

No  comments  from  any  of  the  interested  parties  were  received 

concerning  the  way  in which  the  Commission  had  established  normal 

values  for  all  export  sales  from  the People's  Republic of  China  to 

the Community on  the basis of  the constructed  values  for  comparable 

models manufactured  in Hong Kong as set out  in Recitals 17 and  18 of 

the Provisional  Duty Regulation. 

The Council  confirms these conclusions. 

b. 

Export price 

i) 

Hong Kong 

11 

For  purposes  of  the  Provisional  Duty  Regulation  the  export  prices 

were  established  on  the  basis  of  the  prices  paid  or  payable  for 

export  as  all  export  sales  were  made  either  directly  to  unrelated 

importers or  through  unrelated  trading  companies  in Hong  Kong.  No 

comments  from any party  have been made on  this  course of  action and 

10 -

the Council  confirms  the conclusions of  the Commission  as set out  in 

Recital  19 of  the Provisional  Duty  Regulation. 

N) 

People's Republic of China 

12 

The export  prices  for  the Chinese exporters have been establI shed on 

the basis of  prices paid or  payable  where  no related  importers  were 

involved  and  on  the basis of  resale  prices  to  the  first  independent 

buyer  adjusted  to  take  account  of  all  costs  incurred  between 

Importation  and  resale  including customs  duties  and  a  10% profit  on 

turnover  where  exports  were  made  to  related  importers  as  was  the 

case  for  FuJIan  Hitachi  Television  Co  Ltd  and  Huaquiang  Sanyo 

Electronics  Co  ltd  as  described  in  Recitals  20  and  21  of  the 

Provisional  Duty  Regulation. 

13 

One  of  the  exporters  considered  that  the  profit  margin  used  in  the 

construction of  the export  price could not  be considered  reasonable. 

In support  of  its consideration  it was argued by  the exporter  that a 

5%  profit  margin  had  been  used  in  previous  proceedings  Involving 

consumer  products,  that  SCTVs  were  a  mature  and  well  established 

product,  the  10% margin  being  therefore  unrealistic,  and  that  the 

margin  of  10% was  not  adapted  to  the  size  and  organization  of  the 

related  importers  Involved. 

The  Commission  notes,  however,  that  it  has  been  consistent  in  its 

approach  with  the  methodology  used  in  the  previous  investigation 

concerning  SCTVs  originating  in  the  Republic  of  Korea.  The 

Commission  does not  contest  the  fact  that  the current  generation of 

SCTVs can be considered  as a technologically-mature product  but  this 

does  not  preclude  the  fact  that  the  SCTV  sector  was,  during  both 

11  -

reference  periods  for  the  Korean  and  the  Chinese  and  Hong  Kong 

Investigation,  quite  buoyant  and  profitable  for 

independent 

importers.  In this  respect,  it should  be  noted  that  in the  case of 

imports  of  another  consumer  electronic  product  whose  investigation 

period  corresponded 

in  large  part  to  that  of  the  Korean 

investigation  a  rate  higher  than  10%  was  used  for  definitive 

determinations. 

The  information collected  and  verified  from  independent  Importers  in 

the  course  of  this  proceeding  has  shown  that  the  level  of  profit 

during  the  reference  period  did  not  depart  significantly  from  that 

observed  and  used  for  definitive  determinations  In  the  Korean 

proceeding  and  therefore  the use of  a different  profit  rate was  not 

Justified.  As  far  as  the  size  and  the  organisation  of  the  related 

importer  are  concerned,  the  Commission  retained  the  profit  of  one 

independent  importer  as  explained  in Recital  17 of  Regulation  (EEC) 

No  1048/90,  whose  structure  and  size  are  comparable  to  both  the 

related  importers  Involved  in  that  proceeding  and  those  related 

importers  involved  In  the  present  proceeding.  This  independent 

importer  is  of  considerable  size,  is  well  established  in  the 

Community  market,  possesses  an  important  network, deals with  a wide 

product  range  and  sells  its products  under  a  very  well  known  brand 

name.  These  are  obviously  characteristics which  are  also  common  to 

the  related  importers  and  therefore  the  Commission  considers  that 

the  size  and  organization  aspects  have  been  properly  taken  into 

account. 

In  the  light  of  these  considerations  and  those  set  out  in  Recitals 

20,  21  and  22  of  the  Provisional  Duty  Regulation,  the  Council 

confirms  the Commission's  findings and conclusions. 

-  12 -

c. 

ComparIson 

14 

As  explained  in  the  Provisional  Duty  Regulation  at  Recitals  23  to 

27,  all  comparisons  were made  at  the ex-works  level  for  the  exports 

originating  in  Hong  Kong  and  at  f.o.b.  level  for  the  exports 

originating  in the  People's  Republic of  China.  For  the  purposes of 

ensuring  a  fair  comparison  between  normal  value  and  export  prices, 

the  Commission  took  account  where  appropriate  of  differences 

affecting  price  comparability,  such  as  differences  in  physical 

characteristics  and  selling  expenses,  where  a  direct  relationship 

between  these differences  and  the sales under  consideration  could  be 

satisfactorily  demonstrated.  Under  the  heading  of  selling  expenses 

for  export  sales  of  Hong  Kong  exporters,  adjustments  were  made  for 

differences  in commissions,  transport,  insurance,  handling,  loading 

and ancillary  costs, payment  terms, warranty  expenses  and  salesmen's 

salaries  and  for  export  sales of  Chinese  exporters  adjustments  were 

made  for differences  in warranty  expenses. 

i) 

Hong Kong 

15 

One of  the Hong Kong exporters disputed  the calculations made by  the 

Commission  in  the  determination  of  the  cost  of  transporting  the 

exported  product  to  the  Community.  The  Commission  informed  this 

exporter  in  writing  of  the  basis  of  its  calculation.  The  same 

exporter  also  disputed  the  allowance  made  by  the  Commission  for 

salesmen's  salaries  on  the  export  price  on  the  grounds  that  these 

were  not  true  salesmen.  The  Commission  informed  the  exporter  in 

writing  that  the  results  of  the  investigation  had  shown  that  these 

salesmen  were  wholly  involved  in  direct  selling  activities  and 

explained  the  basis  for  the  allocation  made  on  calculating  the 

- 13 

amount  of  the allowance,  «o  further  comments on  any of  these  points 

were  received  by  the Commission. 

16 

Another  Hong  Kong  exporter  claimed  that  a number  of  adjustments  for 

differences  in  physical  characteristics  should  have  been  made  with 

regard  to  the model  used  in the calculation of  the constructed  value 

referred  to  in  Recital  16  of  the  Provisional  Duty  Regulation.  It 

alleged,  in  particular,  that  the  model  on  which  the  constructed 

value  had  been  based  may  have  obtained  approval  in accordance  with 

German  certification  practice  and  may  have  been  equipped  with  an 

indoor  rod antenna  component. 

The  Commission  cannot  accept  this  claim  as  it  could  not  obtain 

confirmation 

as  to  whether 

the  alleged 

certification  and 

incorporation  of  antenna  actually  existed  and,,  if  so,  on  what 

factual  basis  these  adjustments  should  have  been  made  and  what 

impact  those  differences  would  have  had on  the  price  comparability. 

In any event, even  if  it was established  that  all  mode is exported  to 

Germany  had  obtained  that  approval,  that  all  models  were  equipped 

with  the  indoor  rod  antenna  component  and  that  the  costs  indicated 

by  this  exporter  were  correct,  the  impact  on  the  outcome  of  the 

investigation would  be negligible. 

M> 

People's Republic of  China 

17 

The  China  Commercial  Chamber  of  Audio-Video  Products  Exporters 

requested  through  its  legal  representative  that  a  number  of 

adjustments  for  physical  characteristics be made  on  the models  used 

in  the  calculation  of  the  constructed  value  referred  to  in  Recital 

17 of  the  Provisional  Duty  Regulation.  In  particular,  the  Chamber 

requested  adjustments  for  the  lack of  cable  tuner  and  earphone  Jack 

and  for  the  different  number  of  preselections,  differences  in 

-  14 -

sound  output  available  and  differences  in  outlook  and  design.  The 

Commission,  in  view  of  the  arguments  presented  by  the  Chamber, 

recognized  that  a cable  tuner  was a feature  relevant  to consumers  in 

Hong  Kong  and  agreed  to  make  the  appropriate  adjustment.  The  rest 

of  the claimed  allowances  could  not, on  the contrary,  be accepted  by 

the Commission  as  they  did  not  prove  to be duly  Justified: 

the  sound  output  available  was  considered  not  to  be  of 

relevance  to consumers; 

a  large  majority  of  the  units  exported  from  the  People's 

Republic of China were equipped  with  earphone  Jacks; 

due  to the  limited number  of  channels  available  for  viewing  in 

Hong  Kong  during  the  reference  period  the  discussed  number  of 

preselections was  irrelevant  and 

in  so  fr  as  the  outlook  was  concerned,  it  appeared  that  the 

cost  of  manufacturing  a  conventionai-look  receiver  in  Hong 

Kong  was  higher  than  that  of  a monitor-look  receiver  and  that 

for  comparable  models  of  two  of  the  Hong  Kong  exporters 

involved  in the proceeding,  the price of  the conventionaI-look 

model  was  higher  than  that  of  the monitor-look model. 

For  all  those  reasons,  only  the  request  for  the  cable  tuner 

adjustment  can be accepted  by  the Commission  which must  reject 

the other  claims. 

The Council  confirms  these  conclusions. 

-  15 -

d. 

Dumping  margins 

18 

Export  prices  were  compared  on  a  transaction  by  transaction  basis 

with  normal  values  for  each  of  the  exporters  concerned  with  the 

exception mentioned  below.  The  final  examination of  the  facts  shows 

the  existence  of  dumping  in  respect  of  SCTVs  originating  in  Hong 

Kong  and  the  People's  Republic  of  China  from  all  the  exporters 

involved,  the  margin  of  dumping  being  equal  to  the  amount  by  which 

the  normal  value  as established  exceeds  the  price  for  export  to  the 

Community. 

19 

In  its  provisional  findings  contained  in  Recital  28  of  the 

Provisional  Duty  Regulation,  the  Commission  established  five 

individual  dumping  margins  for each of  the Chinese  exporters who  had 

cooperated  in  the  investigation.  However,  for  the  purposes  of 

definitive  findings,  the  Commission  took  the  view  that  a  single 

dumping  margin  should  be  established  for  all  the  Chinese  exporters 

with  the exception  of  the  two Sino-Japanese  Joint  venture  exporters. 

This  is  Justified  by  the  fact  that  the  Chinese  exporters,  even  if 

they  appear  as  independent  companies  which  invoice  their  customers 

directly,  have  in  fact  a  very  limited,  if  any,  degree  of 

independence  in their  relationship  with  importers  in other  countries 

as  they  lack  the  possibility  of  establishing  export  prices  and  any 

other  conditions  or  terms  of  sales  by  themselves.  The  three 

cooperating  Chinese  exporters  (i.e.  China  Great  Wall  Industry 

Corporation,  China  National  Electronics  Import  &  Export  Corporation 

and  China  National  Light  Industrial  Products  Import  &  Export 

Corporation)  are  members  of  the  China  Commercial  Chamber  of  Audio 

and 

Video 

Products 

Exporters  who  acknowledged 

during 

the 

investigation  that  the  export  of  SCTVs  from  all  their  members  was 

made  under  their  strict  control.  It  was  also  declared  by  the 

Chamber  that  all  exporters  had  to be members  of  the Chamber  and  that 

-  16 -

only  the  Joint  ventures  could  export  and 

import 

products 

independently. 

In  addition,  the  Commission  considered  that  maintaining  individual 

dumping  margins  for  the Chinese  exporters  subject  to  the  control  of 

the  Chamber  could  provide  an  opportunity  for  circumvention  as 

exports  to  the  Community  could  be  channelled  through  the  company 

with  the  lowest  dumping  margin. 

The  lack  of  independence  of  these  exporters  in  conducting  their 

export  policy 

is  further  confirmed  by  the  fact  that  the 

representation of  the  three Chinese  exporters  in this proceeding  has 

been  carried  out  by  the  Chamber  and  its  legal  representatives  which 

at  all  times  have  submitted  Joint  arguments  and  considerations  for 

all  three exporters  without  individualizing any  positions.  In these 

circumstances,  the  Commission  considered  that  the  establishment  of 

three  individual  dumping  margins  led  to  purely  arbitrary  results 

which  were  net  Justified  and  that  a  single  dumping  margin,  obtained 

by comparing  all  export  transactions  of  the  three Companies  with  the 

normal  values,  should  be  established.  All  the  cooperating  Chinese 

exporters were  informed  by  the Commission  of  its  intention  to follow 

this course of  action. 

20 

In so  far  as  the other  two Chinese  exporters  are  concerned  (i.e. the 

two  Sino-Japanese  Joint  ventures)  the  Commission  was  able  to 

establish  to  its satisfaction  that  these  companies, even  if they  did 

not  operate  fully  on  a  market  economy  basis,  enjoyed  a  high  degree 

of  independence  in their operations  basically  because  they were  able 

to  import  components  and  export  finished  products  without  control 

from  the Chamber  or  from  any other  body.  Furthermore,  the  fact  that 

these  companies  were  able  to  transfer  their  profits,  subject  to 

certain  administrative  requirements, out  of  the People's  Republic of 

- 17 

China,  ensured  that  these  profit-oriented  companies  enjoyed  a 

sufficient  degree of  independence  which  Justifies  their  individual 

treatment.  For  these  reasons  the  Commission  considered  that 

individual  dumping  margins  should  be established  for the two Joint 

venture exporters who cooperated with the investigation by comparing 

the normal  values and the export prices established on the basis set 

out  in Recitals 10 and 12. 

The  Council  confirms  the  above  conclusions  in  Recitals 18,  19 

and 20. 

21 

The weighted  average  margins, expressed  as a  percentage  of  c.i.f. 

frontier prices varied according to exporter as follows: 

i.  Hong  Kong 

Cony Electronic Products Ltd 

Hanwah Electronics Ltd 

Kong Wah Electronic Enterprises Ltd 

Koyoda Electronics Ltd 

' 

Luks  industrial Co Ltd 

Tai Wah Television  Industries Ltd 

3.19 

4.88 

3.13 

4.61 

4.17 

2.16 

i I.  People's  Republic  of  China 

Fujian Hitachi  Television Co Ltd 

Huaquiang Sanyo Electronics Co Ltd 

All other cooperating Chinese 

exporters 

17.04 

7.55 

15.31 

-  18 -

E.  INJURY 

22 

The  Commission  concluded  in  its  provisional  findings  that  the 

Community  SCTV  industry  had  suffered  material  injury.  It based  this 

finding  principally  on  the  Hong  Kong  and  Chinese  exporters'  rapid 

increase  in  volume  of  exports  and  in  market  share,  the  price 

undercutting  practised  by  these  exporters  in  the  Community  market 

and  the  price  erosion  resulting  therefrom  for  the  complainant 

producers'  selling  prices.  In  addition,  further  relocation  of 

Community  industrial  capacity  in  third  countries  was  foreseeable 

with consequent  loss of Community  employment  and  the continuation  of 

the  significant  losses  incurred  by  the  complainant  Community 

producers which  increased  dramatically  in 1988. 

23 

No  new  facts  concerning  these  findings  were  submitted  to  the 

Commission  after  the publication of  the Provisional  Duty  Regulation. 

Some  exporters,  both  Chinese  and  from  Hong  Kong  contested  the 

cumulation  o;  imports  from  both  countries effected  by  the  Commission 

when  assessing  the  impact  of  dumped  imports  on  the  Community 

industry.  The  Commission,  however, maintains  its  arguments  set  out 

in Recitals  30 and  31 of  the  Provisional  Duty  Regulation,  i.e. that 

the  SCTVs  exported  by  both  countries  are  homogenous  and  similar  to 

the  Community  products,  that  they  competed  with  each  other  and  with 

the  Community  products  and  were  sold  through  the  same  distribution 

channels  and  that  the  volumes  imported  from  each  of  the  two 

countries  taken  in  isolation  can,  in  no  way,  be  described  as 

negligible.  In  addition,  the  Commission  notes  that  the  market 

behaviour  of  the  Chinese  and  the  Hong  Kong  exporters  can  be 

considered  very  similar.  In these circumstances,  in accordance  with 

the  standard  practice  in antI-dumping  proceedings,  it  is  considered 

appropriate  to  cumulate  the  injurious  effect  of  imports  from  Hong 

Kong  and  from  the People's Republic of  China. 

19 -

24 

Some exporters contested  the model  comparison which  formed  the basis 

for  the  Commission's  analysis  of  undercutting.  Their  arguments  on 

the  question  referred  basically  to  the  fact  that  the  Community 

models  used  in  the  comparison  offered  an  enhanced  appeal  to 

consumers  as  a  result  of  the  presence  of  a  number  of  features  or 

characteristics  incorporated  in  them  and  which  were  lacking  in  the 

exported  models. 

The  China  Commercial  Chamber  of  Audio  and  Video  Products  Exporters 

argued  that  the  Community  models  which  had  been  used  for  the  price 

undercutting  comparison  contained  more  and  better  features  than  the 

Chinese  models  with  which  they  had  been  compared  and  proposed  that 

either  adjustments  on  the  basis  of  market  value  differences  should 

be made  or  that  all  Chinese models  should  be  compared  to  the  lowest 

featured  of  the  Cor*; «unity  models  used  in  the  comparison.  The 

Commission  considered  that  accepting  adjustments  on  the  model 

comparison  would  imply  a significant  departure  from  the  methodology 

used  in the  recent  SCTVs Korean  investigation which was confirmed  in 

the present  investigation.  This methodology  has not  been challenged 

by  any  of  the  parties  involved  in  either  proceeding  with  the 

exception  of  the  Chamber.  Furthermore,  it  was  considered  that  the 

wide variety of models and of  technical  characteristics would make a 

comparison  based  on  adjustments  too  complicated  and  unworkable. 

However,  the  Commission,  recognizing  that  some  of  the  Community 

models used  in the comparison may  be over featured  in relation  to the 

Chinese  models, has proceeded  to compare  all  but  one of  the Chinese 

models,  with  the  exception  of  those  exported  by  the  Joint  venture 

exporters, with  the  lowest-featured  Community  models. 

25 

On  that  basis  and  applying  the  method  of  comparison  explained  in 

Recital  39  of  the  Provisional  Duty  Regulation,  the  overall  average 

-  20 -

undercutting  results  expressed  at  c.l.f.  level  is  16.85%  for  the 

exporters  represented  by  the  China  Commercial  Chamber  of  Audio  and 

Video Products Exporters. 

For  all  the other  exporters  the undercutting  comparison  findings  as 

set  out  in Recital  40 of  the Provisional  Duty  Regulation  are  hereby 

confirmed. 

26 

No other  arguments nor  facts concerning  determination of  injury were 

presented  to the  Commission. 

The Council  confirms the conclusions of  the Commission  as set out  in 

Recitals  30  to  39  and  41  to  48 of  the  Provisional  Duty  Regulation 

and  in Recitals 22 to 25 of  this Regulation. 

\ 

27 

In  Recitals  49  to  53  of  the  Provisional  Duty  Regulation,  the 

F. CAUSATION OF  INJURY 

Commission  concluded  that  the  cumulated  dumped  imports  from  Hong 

Kong  and  the  People's  Republic  of  China  had  caused  material  injury 

to  the  Community  industry.  The  Commission  found  that  the  rapid 

increase of  Hong  Kong  and  Chinese  low priced  imports  coincided  with 

an  equally  rapid  loss  of  market  share  by  the  Community  industry, 

price  erosion  for  the Community's  SCTV models  and  heaviIy-increased 

financial  losses on  the part of Community  companies  together  with an 

accelerated  relocation  of  Community  producers'  assembly  facilities 

outside  the  Community. 

In  this  respect,  the  Commission  notes  that  prices  play  a  very 

important  role  in  the  market  and  price  undercutting  due  to  dumping 

has  therefore  an  immediate  negative  effect  on  the  prices  practised 

by  the  Community  industry.  It  should  be  stressed,  as  already 

-  21 -

indicated  in Recital  40 of the Provisional  Duty Regulation, that the 

effects  of  the  price  undercutting  found  do  not  refer  only  to  the 

models  of  SCTVs  in  the  Community  which  may  be  considered  to  be 

directly  comparable  to  the  Hong  Kong  and  Chinese  exports, but  that 

they apply  to the whole range  including  the newest and most  enhanced 

models.  Undercutting  at  the  lower-priced  end  of  the  range  -  the 

major  volume market  segment  -  naturally  has a  depressive  effect  on 

price  throughout  the  whole  SCTV  range  by  reducing  the  consumer's 

perception of the value of the product and of  the different  features 

of the various models. 

No  new  facts  nor  new  arguments  concerning  these  findings  were 

submitted  to the Commission after  the publication of  the Provisional 

Duty  Regulation.  The Council  therefore  confirms  the conclusions of 

the  Commission  as  set  out  in Recitals  49  to  53 of  the  Provisional 

Duty Regulation. 

G. COMMUNITY  INTEREST 

28 

No further  facts or arguments concerning  this subject were submitted 

to  the  Commission  by  any  of  the  parties.  The  Council  therefore 

confirms  the Commission's  conclusions  set  out  in Recitals  54  to  57 

.-"*- =~«K..&r 

of  the  Provisional  Duty  Regulation,  that  it  is  in  the  Community's 

interest  to  eliminate  the  injurious  effects  to  the  Community 

industry of  the dumping determined.  The benefits of such protection 

for  the  current  viability  and  future  development  of  that  industry 

outweigh  the possible  disadvantages, of  a temporary  nature,  for  the 

consumer  in  terms  of  limited  price  increase  for  certain  Imported 

SCTVt. 

-  22 -

H.  DUTY 

29 

Provisional  measures  took  the  form  of  anti-dumping  duties.  These 

were  imposed  at  the  level  of  the  dumping  margins  determined,  with 

the  exception  of  one  Chinese  Joint  venture  exporter  for  which  the 

level  imposed  was  that  adequate  to remove  the  injury  caused. 

30 

Although  the  Commission's  findings  on  injury  set  out  in  the 

Provisional  Duty  Regulation  have  now  been  modified,  the  level  of 

duty  necessary  to  remove  the  injury  remains  higher  than  the  dumping 

margin  definitively  determined,  with  the  exception  of  one  Chinese 

Joint  venture  exporter.  Therefore,  duties  should  be  imposed  at  the 

level  of  the  dumping  margins  found  except  for  FuJIan  Hitachi 

Television  Co  Ltd  for  whom  the  duty  should  be  imposed  at  a  level 

sufficient  to eliminate  the price  undercutting. 

31 

As  explained  above  in  Recital  19,  the  Commission  decided  to 

establish  a single  dumping  margin  for  all  the Chinese  exporters  with 

the exception  of  the  two  Joint  ventures  concerned  and,  consequently, 

a single  duty  was established  for  these  companies. 

The Council  confirms  these  conclusions. 

I. COLLECTION OF  PROVISIONAL  DUTIES 

32 

In  view  of  the  dumping  margins  established,  and  the  seriousness  of 

the  injury  caused  to  the  Community  industry,  the  Council  considers 

it  necessary  that  amounts  collected  by  way  of  provisional  anti 

dumping  duties should  be definitively  collected  to  the extent  of  the 

amount  of  the duty  definitively  imposed. 

HAS ADOPTED THIS REGULATION: 

-  23 -

Article 1 

1. 

A  definitive  anti-dumping  duty  is  hereby  imposed  on  imports  of 

small-screen  colour  television  receivers  with  a  diagonal  screen  size  of 

more than 15.5 cm but no greater  than 42 cm, whether or not combined  in the 

same housing with a radio broadcast  receiver  and/or  a clock, falling within 

CN  code  ex  8528 10 71  (Taric  code:  8528  10 71*10)  and  originating  In 

Hong Kong or  in the People's Republic of China. 

2.  The  rate of  duty  shall  be  4.8% of  the net  free-at-Community-front 1er 

price  before  duty  for  products originating  in Hong  Kong  (Taric  additional 

code:  8500)  and  15.3% of  the  net  free-at-Community-front1er  price  before 

duty  for  products  originating  in  the  People's  Republic  of  China  (Taric 

additional  code: 8506). 

However,  the  rates  of  duty  for  products  specified  in  paragraph  1  and 

manufactured and sold for export by the following companies shall  be as set 

out below, expressed  as a percentage of  the net,  free-at-Community-frontier 

price before duty: 

Rate of duty  Taric additional 

£ojje_ 

a.  Hong Kong 

Cony Electronic Products Ltd 

Hanwah Electronics Ltd 

Kong Wah Electronic Enterprises Ltd 

Koyoda Electronics Ltd 

Luks  industrial  Co Ltd 

Tai Wah Television  Industries Ltd 

3.1 

4.8 

3.1 

4.6 

4.1 

2.1 

8494 

8495 

8488 

8497 

8498 

8499 

-  24 -

b.  People's Republic of China 

FuJIan Hitachi  Television Co Ltd 

Huaquiang Sanyo Electronics Co Ltd 

13.1 

7.5 

8504 

8505 

3.  The provisions  in force concerning  customs duties shall  apply. 

Article 2 

The  amounts  collected  or  secured  by  way  of  provisional  anti-dumping  duty 

under  Regulation  (EEC) No  129/91  shall  be  collected  at  the  rates  of  duty 

definitively  imposed  where  the  definitive  rate  of  duty  is  lower  than  the 

provisional  anti-dumping  duty  and  at  the  rates of  provisional  duty  in all 

other  cases.  Secured  amounts  which  are  not  covered  by  the  rates  of  duty 

definitively  imposed shall  be released. 

Article  3 

This  Regulation  shall  enter  into  force  on  the  day  following  that  of  its 

publication  in the Official  Journal  of  the European Communities. 

This Regulation shall  be binding  In  its entirety and directly applicable  in 

a 11 Member States. 

Done at Brussels, 

For  the Council 

The  President 

-  25  -

ISSN 0254-1475 

COM(91) 231 final 

DOCUMENTS 

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02 

Catalogue number : CB-CO-91-277-EN-C 

ISBN 92-77-73603-8 

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