Proposal for a COUNCIL REGULATION ( EEC ) imposing a definitive anti-dumping duty on imports of cotton yarn originating in Brazil, and Turkey; and collecting definitively the provisional duty
Date: 1992-02-28
Institutions: European Commission
Subjects: Brazil, Türkiye, anti-dumping duty, cotton, import, textile fibre

COMMISSION  OF THE EUROPEAN  COMMUNITIES 

C0MC92) 67 final 

Brussels, 28 February  1992 

Proposal  for a 

COUNCIL  REGULATION  (EEC) 

imposing a definitive  anti-dumping  duty on  imports of  cotton  yarn 

originating  in Brazil, and Turkey; and collecting definitively  the 

provisional  duty 

(presented  by  the Commission) 

EXPLANATORY MEMORANDUM 

1. The Commission, by Regulation (EEC) N' 2818/91  imposed a provisional 

duty on  imports of cotton yarn originating  in Brazil, Egypt and 

Turkey. 

2. Having been  informed of the main conclusions of the investigations, 

the relevant producers/exporters made known their views  in writing and 

were heard by the Commission. 

3. Whenever appropriate, the Commission's provisional  findings were 

modified to take account of those views.  Consequently, in accordance 

with the provisions of Article 12 of Council Regulation  (EEC) N' 

2423/88, the Commission, after consultation of the Advisory Committee, 

proposes to impose definitive anti-dumping duties on  imports of cotton 

yarn originating  in Brazil and Turkey. 

4. As regards the imports of cotton yarn originating  in Egypt, it is 

intended to terminate the proceeding, by Commission decision, since no 

significant margins of dumping have been found. 

- I^Vo 

Council Regulation (EEC) N* 

of 

imposing a definitive anti-dumping duty on  imports of cotton yarn 

originating  in Brazil, and Turkey; and collecting definitively the 

provisional duty 

THE COUNCIL OF THE EUROPEAN COtllUNITIES 

Having regard to the Treaty establishing the European Economic Community, 

Having regard to Council Regulation (EEC) N' 2423/88 of 11 July 1988<1>, 

on protection against dumped or subsidised  imports from countries not 

members of the European Economic Community and  in particular Article 12 

thereof, 

Having regard to the fact that the Commission applied on 18 December 1991 

to the EEC-Turkey Association Council, pursuant to Article 47(1) of the 

additional Protocol to the Agreement establishing an Association between 
the European Economic Community and Turkey<2) and that the Association 

Council has taken no decision  in this respect, within the time limit 

referred to in Article 47(2) of this Protocol, 

»• 

Having  informed the EEC-Turkey Association Council, pursuant to Article 47 

(2) of the above additional protocol, 

Having regard to the proposal  from the Commission, submitted after 

consultation within the Advisory Committee as provided for under the above 

Regulation, 

(1)  O.J. N- L 209, 2.8.1988, P.1. 

(2)  O.J. N* L 293, 29.12.1972, p.4. 

WHEREAS 

-  2 

-

A. PROVISIONAL MEASURES 

(1)  The Commission, by Regulation (EEC) N* 2818/91 of 23 September 

1991,(3) imposed a provisional  anti-dumping duty on  imports into 

the Community of cotton yarn originating  in Brazil, Egypt and Turkey 

and terminated the anti-dumping proceeding  in respect of this 

product originating  in India and Thailand.  The Council, by 
Regulation (EEC) N*171/92 of 24 January 1992<4>, extended this 

duty for a period not exceeding two months. 

B. SUBSEQUENT PROCEDURE 

(2)  Following the  imposition of the provisional  anti-dumping duty, the 

interested parties who so requested were granted an opportunity to 

be heard by the Commission.  They also made written submissions 

making known their views on the findings. 

(3)  Parties were  informed of the essential  facts and  considerations on 

the basis of which  it was intended to recommend the  imposition of 

definitive duties and the definitive collection of amounts secured 

by way of a provisional duty.  They were also granted a period 

within which to make representations subsequent  to the disclosure. 

(4)  The oral and written comments submitted by the parties were 

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

modified to take account of them. 

(3)  O.J. N* L 271, 27.9.91, p.17 

(4)  O.J. N* L 183 25.1.92, p.33 

-  3 -

(5)  Certain producers of cotton  yarn  in the exporting  countries  concerned 

made  themselves known  and  indicated  that  they  had  not  exported  cotton 

yarn  to the Community  during  the  reference period, but  had  since 

started  such exports or  had  the  intention of  doing  so.  These 

companies  asked  the Commission  to take  their  particular  situation 

into consideration. 

(6)  Due  to the complexity of  the procedure  and  the other  reasons 

indicated  in recital  11 of Commission  Regulation  (EEC) N' 2818/91, 

the  investigation could  not  be concluded within  the time period 

mentioned  in Article 7(9) (a) of  Regulation  (EEC) N' 2423/88. 

C. PRODUCT UNDER  CONSIDERATION 

(7) 

In  its provisional  findings  (Recitals 4 to 6 of  Regulation  (EEC) N' 

2818/91) the Commission  found  that  although  there are various  types 

of  cotton yarn, differing  namely  in thickness, they  have  physical 

characteristics closely  resembling each other  and  are  manufactured 

using essentially  the same  technology  and  the same  type of  equipment 

Moreover,  they  have a high  degree of  interchangeabiIity  in their  end 

use.  These  findings have not  been  substantially  questioned  by  the 

producers/exporters.  Some of  them,  however, claimed  again  that 

certain  specific  types of cotton  yarn which  they exported  to the 

Community  were of  different  quality  than  the products  manufactured 

and  sold  by  the EC  industry  and  should  not  be  treated  as a  like 

product. 

(8)  The Commission,  having  re-examined  this claim,  found  that  the 

differences  in quality  did not  significantly  affect  the physical 

characteristics nor  the use of  the different  types of  cotton  yarn 

imported  as compared  to those manufactured  in the  Community. 

-  4 -

The Council  confirms  therefore  the conclusion  that  the cotton  yarn 

manufactured  and  sold  by  the Community  industry  is to be  considered 

as a "like product", within  the meaning of  Regulation  (EEC) N* 

2423/88, of  both  the product  manufactured  and  sold on  the  domestic 

market  of each of  the exporting  countries concerned  and of  that 

manufactured  and exported  to the EC. 

(9)  A Brazilian producer/exporter  contested  that  its exports of  cotton 

yarn wound  on cones and  then  requiring  further  processing  (such  as 

dyeing) after  having  been  imported  into the Community,  should  not  be 

considered  as falling within  the scope of  the present  procedure. 

This producer/exporter  argued  that  while  the complaint  related  only 

to cotton  yarn  not  put  up  for  retail  sale, the above  product  was 

destined  for  retail  sale  for  home knitting  and  not  suitable  for 

industrial  use,  i.e. weaving  or  knitting on  industrial  machines.  In 

addition,  the machinery  used  to produce  this particular  type of 

cotton  yarn could  not, without  expensive modifications, be used  for 

the production of  cotton  yarn  for  industrial  use. 

This exporter  requested  therefore  that  this product  should  not  be 

subject  to any anti-dumping  duty. 

The Commission,  having  consulted  a specialised  institute  for  the 

purpose of  determining  the exact  characteristics of  the cotton  yarn 

concerned  and  possible uses of  this product,  has  found  that  it  is in 

fact  suitable  for  special  industrial  uses which  are undertaken  in the 

Community  on a regular  basis.  Moreover,  it was  found  that  the 

machines used  to produce  this  type of  cotton  yarn  could  also be used 

for other  types without  significant  modification  expenditures.  For 

these  reasons  the Commission  considers  that  the product  concerned 

falls within  the  framework  of  the proceeding.  The Council  confirms 

this conclusion. 

- 5 -

D. COMMUNITY  INDUSTRY 

(10)  Some producers/exporters claimed that the Community producers 

investigated by the Commission were not fully representative of the 

EC cotton yarn industry. 

In recital 7 of Commission Regulation (EEC) N* 2818/91, the 

Commission outlined the method employed for  investigating the 

Community  industry and the reasons for  its approach.  In the view of 

the Commission, the selection of producers carried out according to 

size and geographic  location ensures that the companies concerned are 

représentât ive. 

The Council confirms the Commission's approach on this point. 

E. PRODUCERS/EXPORTERS 

(11)  As regards the selection of the exporting companies by the Commission 

for determination of normal values, the following objections have 

been made: 

- one cooperating Turkish producer/exporter, not selected for 

verification claimed that the method used by the Commission  is not 

specifically provided for by Regulation (EEC) N' 2423/88. 

Consequently  it requested an examination of  its individual situation 

concerning the dumping determination; 

- some importers argued that the exporting companies selected for 

verification were not fully representative of the other co-operating 

companies. 

-  6  -

(12)  The Commission  notes  that  neither  Regulation  (EEC) N*  2423/88  nor  the 

GATT Anti-Dumping  Code  requires  that  the entirety  of  the  producing/ 

exporting  companies  be  investigated  for  the purposes of  establishing 

normal  values.  Consequently,  the Commission  as well  as  the 

authorities of  other  GATT members, signatories  to  the Code,  have,  in 

cases  involving  a great  number  of  exporters, selected  companies  which 

together  can  be  considered  representative.  In the present  case,  the 

selection  criteria  applied  by  the Commission  ensures  représentâtivity 

as explained  in recital  8 of  Regulation  (EEC) N*  2818/91. 

Furthermore,  the methodology  used  by  the Commission  was  agreed  in 

advance  by  all  national  Associations, which  acted  on  behalf  of  the 

member  companies,  including  the Turkish  Association. 

As  regards  the claim  by  the Turkish  producer/exporter  that  its 

situation  be  individually  investigated,  the Commission  recalls  that 

it had,  prior  to on-the-spot  verification  in Turkey, offered  all 

exporters, which  so wished,  including  this exporter,  such  an 

opportunity.  No  request  to  this effect  was made  at  that  time by  the 

above producer/exporter.  Moreover,  the claim  in question  was 

received  well  after  the adoption of  the provisional  measures, and  at 

a moment  in time where  the completion  of  the  investigation would  have 

been unduly  delayed,  had  a new on-the-spot  verification  had  to be 

carried  out  by  the  Commission. 

In these circumstances,  the Council  confirms  the position  taken  by 

the  Commission. 

-  7  -

F. NORMAL  VALUE 

(a)  General 

(13)  For  the purposes of  the 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. 

(b)  Brazil 

(14)  Two of  the verified  Brazilian  exporters  claimed  that  the  Commission 

had wrongly  considered  sales of  cotton  yarn on  the domestic market  in 

certain months of  1989 as made  at  a  loss.  These exporters  objected 

to the Commission  having  deducted  the cost  of  credit  to  customers 

from  the domestic selling price when  comparing  it with  the cost  of 

production of  cotton  yarn, since  financing  costs were  included  in the 

latter. 

In order  to establish whether  domestic  sales were  in the  ordinary 

course of  trade  in the meaning  of  Article  2(3)(a) of  Regulation  (EEC) 

N' 2423/88, the Commission  had  to examine whether  these sales  were 

profitable.  To  this end,  the cost  of  production  was  calculated  by 

taking  into account  all  cost  elements,  including production  financing 

costs.  The  resulting  amount  was  then  compared  to  the domestic  sales 

prices at ex works  level.  Since  these prices do not  include, by 

definition, credit  to customers,  the amounts  relating  to  credit 

contained  in actual  invoiced  prices were  deducted. 

The Council  confirms the appropriateness of  this calculation. 

- 8 -

(15)  As regards  the non-cooperating Brazilian producers/exporters,  the 

Commission  had  found  for  the purposes of  its provisional 

determinations,  that  the  level  of  cooperation  had  been  so  low as to 

render  the use of  the  findings made  in the  investigation 

unrepresentative.  Consequently, normal  value was  determined  on  the 

basis of  information  relating  to cost  of  production, supplied  by  the 

complainant  Community  industry, plus a reasonable  profit  margin. 

The Brazilian producers/exporters  in question  objected,  maintaining 

that  normal  value determined  on  the basis of  the complaint  was  the 

result  of  a mere estimation  and  that  the calculation  should  be based 

on more neutral  information  available  from  independent  sources  such 

as published  price  lists, official  import  statistics, etc. 

(16)  The Commission  has reconsidered  this situation  in the  light of  the 

above comments  and  accepts  to use  information concerning  certain  cost 

items for Brazilian  cotton  yarn  contained  in a  specialised 

publication, which,  in the present  case, can be considered  as a 

re Iiable source. 

Thus,  the Commission  constructed  normal  value  for  the Brazilian  non-

cooperating  producers/exporters  by using  for  raw material  costs  and 

profit  the weighted  average of  data concerning  the  cooperating 

companies, while all  other  costs are calculated  on  the basis of  the 

information  from  the above publication. 

(c)  Egypt 

(17)  For  the reasons explained  in recital  13  (a) of  Regulation  (EEC) N' 

2818/91,  the Commission  constructed  normal  value of  Egyptian  cotton 

yarn.  All  Egyptian  exporters objected  to this calculation  and 

claimed  that  normal  value  should  have been  calculated  on  the basis of 

the actual  domestic selling  prices. 

-  9 -

Furthermore,  they  insisted  that,  if constructed  values were  to be 

applied, the cost  of  cotton  imported  from  third  countries  (invoiced 

in dollars) should  be calculated  on  the basis of  the special  rate of 

exchange  in force  for  raw cotton  transactions  during  the 

investigation  period. 

Finally, the Egyptian  producers/exporters  claimed  that  the  Commission 

had erroneously  disregarded  certain  cost  factors  like the  percentage 

of waste  resulting  from  the cotton  yarn manufacturing  process  and  the 

value of  this waste when  subsequently utilised. 

(18)  In addition  to the comments  above, one  Egyptian  producer/exporter 

contested  the results of  the verification, claiming  that  its 

manufacturing  structure was very  similar  to that  of other  Egyptian 

producers/exporters  for which  a  lower margin of  dumping  had  been 

determined;  that  in 1989 costs of production  were exceptionally  high 

and  had decreased  in following  years; and  that  export  prices of 

Egyptian cotton  yarn  had been  increasing  since  1989. 

(19)  As regards  the use of  constructed  normal  values  for  Egyptian  cotton 

yarn,  the arguments  submitted  by  interested  parties were  the same  as 

for  the preliminary determination.  The Council  therefore  confirms 

that  the Commission's  approach, as outlined  in recital  13 of 

Regulation  (EEC) N' 2818/91,  is  justified. 

(20)  With  regard  to the rate of exchange used  for  the calculation  of  the 

cost  of  imported  cotton,  the Commission  found  that  the claim  of  the 

Egyptian  producers/exporters  was  justified.  Consequently  the cost 

was  recalculated  and  this modification  led  to a decrease of  normal 

va Iue. 

-  10 -

(21)  Concerning  the costs of  production  for  Egyptian  cotton  yarn,  the 

Commission  re-examined  its calculations  and made  the  necessary 

modifications  to take  into account, whenever  appropriate,  the claim 

relating  to the value of  the waste.  These modifications also  led to 

a decrease of normal  value. 

(22)  As regards  the objections  listed  in recital  18, the  Commission 

considers  them unfounded,  since  the differences  in normal  values  are 

explained  by differences  in the cost  of  production  found  in the 

course of  the  investigation.  Furthermore,  factors  relating  to a 

period outside  the period of  investigation cannot  be  taken  into 

consideration  to determine whether  dumping  exists.  The Council 

confirms this position. 

(d)  Turkey 

(23)  Two Turkish  producers/exporters  claimed  errors  in the calculation of 

the cost  of  production and  the determination of  profit.  The  claims 

were  found  to be  justified  and  adjustments  to normal  values were  made 

accordingly. 

(e) 

Complainants 

(24)  The complainants  contested  the Commission's  provisional  findings 

concerning  normal  value.  In particular  they  argued  that  the 

Commission  should,  in every  instance, have constructed  normal  value. 

Furthermore, where constructed  values were established,  they 

questioned  the  results of  the Commission's  calculations,  referring  to 

the figures contained  in specialised  publications. 

- 11 -

The Commission cannot accept these comments.  Indeed, normal values 

can be constructed only when conditions set out  in Article 2 (3)(b) 

of Regulation (EEC) N' 2423/88 are fulfilled. This rule has been 

respected  in the present procedure.  Furthermore, normal values have 

been calculated on the basis of costs verified during the 

investigation and these data must receive priority over  information 

which has not been the subject of a comparable verification. 

The Council confirms the Commission's view on this matter. 

G. EXPORT PRICE 

(a)  General 

(25)  With the exception of point (b) below, no substantial objections have 

been raised by any party concerning the provisional determination of 

export prices.  Consequently, the Council confirms these findings. 

(b)  Brazil 

(26)  The Brazilian exporters maintained the claim mentioned  in recital 17 

of Regulation (EEC) N* 2818/91.  They  insisted that the application 

of the official  rate of exchange of 1 Novo Cruzado for 1 US dollar, 

during the first quarter of 1989, had depressed export prices, with 

the effect of creating artificial dumping, since at the same time 

inflation had continuously  increased prices on the Brazilian market. 

(27)  This position was supported by the Brazilian authorities, which 

confirmed that the exchange rate between the Novo Cruzado and the US 

dollar was frozen  in the first quarter of 1989 for the purposes of 

domestic economic policy. 

- 12 -

The Brazilian authorities expressed the view that, as a resuit of 

that exceptional  situation, the use of the official exchange rates 

applicable for that period would prevent a fair comparison between 

normal value and export price.  They requested that the exchange rate 

be adjusted so as to fully reflect the actual depreciation of the 

Novo Cruzado  in 1989 in accordance with the rate of  inflation in 

BraziI. 

(28)  The establishment, by the competant authorities, of the exchange rate 

of a third country's currency  is a decision which cannot be the 

subject of appreciation by the Community  institutions  in the 

framework of an anti-dumping proceeding.  It is, therefore, the 

Commission's constant practice, confirmed  in the jurisprudence of the 

Court of Justice, to use the official exchange rate applied to 

international commercial  transactions.  To adjust this exchange rate 

for the purposes of dumping calculations would be  inappropriate and 

contrary to the principle of neutrality as regards the monetary 

aspects of an anti-dumping case. 

The Council confirms this position and consequently considers the 

claim inacceptable. 

H. COMPARISON 

(29)  No new arguments were made by the interested parties concerning the 

method followed by the Commission  in the comparison between normal 

value and export price, as described  in recitals 18 to 20 of 

Commission Regulation (EEC) N" 2818/91.  Thus, the Council confirms 

this method. 

- 13 -

I. DUMPING MARGIN 

(a)  Cooperating producers/exporters 

(30)  In comparing normal values for domestically sold cotton yarn of the 

cooperating producers/exporters with their export prices to the 

Community, the final examination of the facts shows the existence of 

dumping  in respect of cotton yarn originating  in Brazil, Egypt and 

Turkey.  For the cooperating producers/exporters which were visited, 

individual dumping margins have been established on the basis of the 

amount by which the normal value exceeds the export price to the 

Community. 

Furthermore, for the cooperating producers/exporters which were not 

visited, the dumping margins were established according to the method 

described  in recital 8 of Regulation (EEC) N* 2818/91. 

(31)  The dumping margins, expressed as a percentage of the total CIF value 

of the product concerned varied according to the exporters as 

fo11ows: 

- (i) 

BraziI 

Fàbrica de Rendas Arp SA 

7.OX 

Fiaçâo e Tecelagem Kanebo do Brasil 

15.8% 

Nisshinbo do Brasil  Industria Text il Ltda  12.1% 

The weighted average of the dumping margins found for the 

above companies is 12,9%. 

-  14 -

-  (ii) 

Egypt 

Misr  El Amria  Spinning & Weaving  Co. 

0.4% 

Misr  Iran Textile Co  -Miratex" 

0.1% 

Misr  Shebin El Kom  For  Spinning 

&  Weaving  (Shebintex) 

Unirab Spinning  & Weaving  Co. 

0.1% 

0.0% 

The weighted  average of  the dumping  margins  found  for  the 

above companies  is 0.1%.  These margins  are of  such  a  level 

as to be considered  de miminis. 

-  ( M i) 

Turkey 

Yalova Elyaf  ve  Iplik Sanayii  ve 

Ticaret  AS 

5.6% 

Ceytas  (Ceyhan TekstM  Sanayii  AS) 

12.1% 

Yidas 

Birko  (Birlesik Koyunlulular  Mensucat 

Tic ve San AS) 

Taris  (Tarim Satis Kooperatif 1eri 

Birli  Keri) 

4.9% 

7.7% 

8.6% 

-  15 -

Sôktas Pamuk  ve Tarim Urunerini  Degerlendirme 

Ticaret  ve Sanayii  As 

9.5% 

The weighted  average of  the dumping  margins  found  for  the  above 

companies  is 9,0%. 

(b)  Non-cooperating  producers/exporters 

(32)  For  the purposes of  the provisional  findings concerning  those 

Brazilian  producers/exporters  that  neither  replied  to the 

Commission's  questionnaire nor otherwise made  themselves known, 

dumping  had been determined  on  the basis of  the  facts available  in 

accordance with  the provision  of Article 7  (7) (b) of  Regulation 

(EEC) N' 2423/88. 

The Commission  considered  it appropriate  to apply  the highest  margin 

of  dumping  found  for  non- cooperating producers/exporters  from 

Turkey. 

The Council  confirms this view since no new evidence  has been 

provided  showing  that  the margin of  dumping  of  the non-cooperating 

producers/exporters was actually  lower  than  that  of  the  highest 

margin  found  for  a cooperating  company. 

(33)  For  the Brazilian  non-cooperating producers/exporters,  the margin of 

dumping  resulting  from  the re-caluclation of  normal  value  as 

described  in recital  16  is of  16.6%. 

-  16 -

(34)  The Council  has also considered  the situation of  producers  of  cotton 

yarn  in the exporting  countries concerned  that  did  not  have  any 

exports of  cotton  yarn  to the Community  during  the  reference  period, 

but  have since  started  such exports or  have  the  intention of  doing  so 

(so-called  "newcomers").  The Council  notes  that  the Commission  is 

ready  to  initiate without  delay  a review proceeding  for  exporters  who 

supply  sufficient  evidence  to the Commission  that  they  did  not  export 

cotton  yarn  to the Community  during  the reference  period;  that  they 

only  started  such exports after  the said  period  or  have  a  firm 

intention of doing  so*, and  that  they  are not  related  to or  associated 

with  any of  the exporters subject  to the ant I-dumping  duty. 

J.  INJURY 

(a) 

Cumulation 

(35)  In  its provisional  findings, the Commission  concluded  that  the 

effects of Brazilian, Egyptian, and Turkish  dumped  imports  had  to be 

assessed  cumulatively.  A number  of exporters and  importers  objected 

to this conclusion. 

(36)  The Commission  notes  that  its provisional  findings were  based  on  the 

standard  practice of  the Community  institutions  to cumulate  imports 

from  several  countries when  these  imported  products  compete  with  each 

other  and with  the  like product  of  the Community  industry  and  when 

the dumped  imports  are not  negligible as such. 

The Council  considers  that,  in the present  case, these conditions are 

met  for  the  imports  from Brazil  and Turkey, while  the  Egyptian 

imports  for which  no significant  dumping  has been  finally  determined, 

are not  to be  taken  into account  for  the purpose of  injury 

assessment. 

- 17 -

(37)  The Brazilian  exporters  claimed  that  their  exports  should  not  be 

cumulated  with  those  from other  countries, since  the  volume  of  their 

exports  in 1989 was different  from  that  considered  by  the  Commission 

in  its provisional  findings  and  at  such  a  low  level  as  to be 

negligible.  In this context  they  provided  the Commission  with  the 

Brazilian official  statistics  concerning  exports  of  cotton  yarn  to 

the EEC showing  a  total  volume of  exports  actually  lower  than  that 

indicated  by  Eurostat. 

(38)  The Commission  has again examined  this question  and  confirms  the 

accuracy  of  the data used  which  corresponds  to Eurostat  figures. 

The Council  agrees wih  this  position. 

(39)  The Brazilian  exporters  argued  also  that  their  market  share  in  1989 

was  lower  than  that  considered  by  the Commission  in  its  provisional 

findings.  They  claimed  that, based  upon  an overall  EC  consumption  of 

1.728.571  tonnes of  cotton  yarn  in 1989, the Brazilian  market  share 

did  not  exceed  1,55%. 

The  Commission  notes  that, as  indicated  in recital  28 of  Regulation 

(EEC) N' 2818/91, the overall  EC consumption  amounted  to  1.184.000 

tonnes.  Under  these  conditions,  the market  share  of  dumped  imports 

from Brazil  corresponded  in 1989  to 2.25%, which  cannot  be  considered 

as negIi g i bIe. 

(40)  The Council  confirms  the above  findings  and  concludes  therefore  that 

the effects of  Brazilian  and  Turkish  imports  have  to be  assessed 

cumulatively. 

(b)  Volume  and market  share of  dumped  imports 

18 -

(41)  As concluded  in recital  36, for  the purposes of  the definitive 

findings  the volume  and market  share of  dumped  imports must  refer,  to 

the products exported  from Brazil  and Turkey.  In considering  the 

period  between  1986 and  1989, dumped  imports  from  these  two  countries 

were approximately  111  305 tonnes  in 1986, 120 682  tonnes  in 1987, 

117 824 tonnes  in 1988 and  104 130 tonnes  in 1989.  The market  share 

of  the Brazilian  and Turkish  exporters considered  together  was as 

follows: 9.6%  in 1986, 9.3%  in 1987, 9.8%  in 1988 and 8.7%  in 1989. 

The Council  confirms these  findings. 

(c)  Price undercutting of  dumped  imports 

(42)  No comments  having  been made by  the  interested  parties,  the Council 

confirms  the  findings and conclusions of  the Commission,  as described 

in recitals  31  and  32 of Commission  Regulation  (EEC) N' 2818/91. 

(d)  Other  relevant  economic  factors 

(43) The Commission  concluded  in  its provisional  findings  (recitals  33 to 

40 of Regulation  (EEC) N*  2818/91) that  the Community  industry  had 

suffered  material  injury which manifested  itself,  in particular,  by a 

sharp decline of  selling prices,  financial  losses especially  in 1988 

and  1989,  lack of  return  in  investment,  closure of  a  large number  of 

plants and substantial  loss of  jobs. 

(44) No new  facts concerning  the  injury  findings were  submitted  to the 

Commission  but  the exporters  concerned  objected  that  some  relevant 

economic  factors  relating  to the Community  industry,  like the 

evolution of  its production and of  its market  share proved  that  this 

industry was not  suffering  from material  injury.  The 

producers/exporters  pointed  to the  fact  that  the Community  producers 

investigated,  increased  their  production  in the period  from  1986  to 

1989 by 5% and  their market  share  from  19.5% to 20.5%, while  their 

capacity  utilisation was stable.  Furthermore,  they  invested  the 

amount  of  542 million  ECU  in only  two years. 

- 19 -

(45)  The Commission  considers  that, as established  by  Regulation  (EEC) N' 

2423/88,  the  relevant  economic  factors of  injury  must  not  be 

evaluated  in  isolation since  no one or  several  of  them  can 

necessarily  give  decisive  guidance.  When  examining  these  factors, 

the Commission  agrees  that  the  figures concerning  the evolution of 

the EC producers' output  as well  as of  their  market  share, were  not 

substantially  negative  from  1986  to  1989.  Nevertheless,  these 

figures must  be analysed  in close  conjunction  with  those  relating  to 

other  important  factors  like profitability,  investment,  plant 

closure, employment  etc. 

As explained  in Commission  Regulation  (EEC) N*  2818/91,  the  cotton 

yarn  prices of  the Community  producers  declined  from  ECU  3.47  per 

kilo  in 1986  to ECU  3.12  in 1989.  In the same period  there was a 

decrease  in profitability of  14 percentage  points.  In particular,  in 

1989  losses were  registered  amounting  to 5.7%, and  out  of  all  the 

Community  producers  investigated only  4 showed  profits. 

This situation  had  strong  negative consequences  especially  in  terms 

of  job  losses and  plant  closures.  Only  in the Community  companies 

investigated,  the  job  losses  in the  years  1988 and  1989 amounted  to 

2.149.  When  the situation  is considered  in respect  of  the  entire 

Community  industry,  it appears  from  the  information  available  to  the 

Commission  that,  in 1989 only,  29 cotton  spinners  closed  definitively 

their  plants with  a  loss of 7.263  jobs. 

(e) 

Conclusion  on  injury 

(46)  In the  light of  the above,  the Council  concludes  that  the  Community 

industry  suffered  material  injury, within  the meaning  of  Article  4(1) 

of  Regulation  (EEC) N' 2423/88. 

-  20 -

K. CAUSATION OF  INJURY 

(a)  General 

(47)  For  the purposes of  its provisional  findings, the Commission  had 

concluded  that  the  investigation had not  revealed  any  factors 

causing material  injury  to the Community  industry other  than  the 

dumped  imports  from Brazil, Egypt  and Turkey.  This conclusion  was 

based mainly  on  the fact  that  the  loss of profitability  and  the other 

negative economic  circumstances had coincided  with  the  continuing 

price  depression  and price undercutting  on  the Community  market, 

owing  to the  low prices of  dumped  imports. 

The exporters concerned  objected, maintaining  that  the  difficulties 

faced by  the Community  industry were due  to reasons other  than  the 

imports of  cotton  yarn  in question.  They  argued  that  the  Commission 

had omitted  to consider  the following points: 

-  the Community  industry  had  taken wrong  commercial  and 

financial  decisions when  investing heavily on  automated 

spinning mills and concentrating on open  end  technology 

instead of  persisting  in the traditional  ring  spun  cotton 

yarn.  Moreover,  these  investments  have had  the effect  of 

removing many manual  tasks. 

-  a part  of  the Community  industry  had  voluntarily  withdrawn 

from  the EC cotton  yarn market, since  their  production  efforts 

were concentrated  on viscose  and other  blended  yarns. 

-  EC producers' costs had gone up  in the period  between  1986 

and  1989 because of a substantial  increase of  interest  rates. 

-  Some of  the Community  industry's difficulties were  the 

consequence of  internal  factors such  as  the  increased 

competition  among Community  producers  in the course of  the 

completion  of  the EC's single  market. 

-  21  -

(48)  The Commission  considers  that  most  of  the arguments  listed  in recital 

47 have already  been answered  in the Regulation  imposing  the 

provisional  duties.  It agrees  that, as  indicated  in recital  37 of 

Regulation  N*  2818/91, the Community  industry  made  considerable 

investments  to modernise  plant  and equipment  but  this was  due  to  the 

reasonable  purpose  to remain  in the  ranks of  the  technologically  most 

advanced  spinners  in the world  in order  to keep  a high  level  of 

compet it iveness. 

Furthermore, as  regards  investments on  the open end  technology, a 

comparison  relating  to the period  between  1980 and  1989, showed  that 

in fact  the EC producer  investments  in the sector  were  less  than 

those of  the North American  spinners. 

Indeed,  regarding  the  installation of  new machinery,  for  every  100 

new spindles  there were  49 new  rotors  in North America  and  only  21  in 

the Community.  This clearly  shows  that  the Community  industry 

investments  in the sector  were  not,  in the period  considered, 

abnormal I y high. 

Furthermore,  the Commission  notes  that  the considerable  amounts 

invested  by  the Community  industry  for  restructuring  indicate  its 

precise  intention  to be present  and  competitive  in the whole  cotton 

yarn market,  rather  than  to partially  withdraw  from  this market  or  to 

concentrate  on  the production of  special  types of  cotton  yarn. 

As  regards  the  interest  rates operating  in the cotton  yarn 

manufacturing  sector,  the Commission  found  that  they  increased  in the 

EC  from  1987  to  1989 by only  0.5% which  cannot  be considered  a cause 

of  abnormal  increase of  the Community  industry's  costs. 

-  22  -

As  indicated  in recital  43 of  Regulation  (EEC) N*  2818/91,  the 

Commission  is aware  of  the  fact  that  some  Job  losses might  have  been 

the  consequence  of  investments  in high  technology  plants  removing 

manual  tasks.  In addition,  the Commission  cannot  exclude  that  the 

internal  competition  between  Community  spinners  may  have  had  negative 

effects  for  some of  them.  However,  these  factors  do  not  exclude  that 

the dumped  imports  had  a clear  detrimental  impact,  due  especially  to 

their  low prices, on  the  state of  the Community  industry. 

(b) 

Effects of  quantitative  restrictions 

(49)  Exporters  argued  that  the existence  of  bilateral  agreements  with  the 

interested  countries  establishing  quantitative  restrictions  for 

imports  of  cotton  yarn  had  the  consequence  that  no  injury  could  have 

been  caused  to  the Community  industry  by  these  imports. 

The  Commission  reiterates  in this context  its considerations  in 

recital  45 of  Regulation  (EEC) N'  2818/91.  Indeed,  quantitative 

restrictions  protect  the Community  industry  from  excessive  volumes  of 

imports,  but  do not  prevent  injury  resulting  from  unfair  trading 

practices such  as dumping  imports  at  very  low prices. 

(50)  Furthermore,  it has been  argued  by  the Turkish  exporters  that  their 

exports  of  cotton  yarn  to EC were  subject,  in addition  to 

quantitative  restrictions,  to a system  of  minimum  prices  applied 

until  1988 and  that  it  followed,  from  the  combined  effect  of  this 

system  and  the quantitative  restrictions,  that  no  injury  could  have 

been  caused  by  Turkish  exports,  at  least  up  to  1988. 

This  argument  cannot  be  accepted  since  the price mechanism  mentioned 

above was  suspended  in 1988 upon  the  request  of  the  Commission 

because  it was  ineffective  and  could  easily  be  circumvented. 

(c)  Effects of other factors 

23 -

(51)  The Commission examined whether  its conclusions on causation of 

injury  in Regulation (EEC) N' 2818/91 could be maintained, given that 

the dumping margins for cotton yarn  imports from Egypt were found to 

be insignificant and that these imports therefore have to be 

disregarded from the framework of the present proceeding. 

The Commission considers that taking due account of the considerable 

market share held by Brazilian and Turkish exports and the important 

margin by which these exports undercut Community producers' prices, 

the dumped  imports from Brazil and Turkey taken  in isolation have to 

be considered as causing material  injury to the Community  industry. 

The Council confirms this conclusion. 

L. COMMUNITY  INTEREST 

(52)  In its provisional  findings, the Commission considered and weighed up 

the interests of the Community  industry as well as those of other 

parties like importers of cotton yarn, end-users, etc.  For the 

reasons given  in recitals 42 to 49 of Regulation (EEC) N' 2818/91, it 

concluded that the interest of the Community called, on balance, for 

granting protection to the Community  industry against unfair 

competition from dumped imports. 

(53)  Following the provisional measures, a number of submissions were 

received from Community  importers and, in particular, users of cotton 

yarn.  In these submissions  it was argued that an  increase  in import 

prices of cotton yarn from the countries concerned due to anti 

dumping dut ies would have negative effects on their businesses. 

-  24 -

Weavers of  cotton  yarn especially  complained  that  an  increase  in the 

price of  their  raw material  would  reduce  their  competitiveness  vis-à-

vis weavers  in third  countries, and would  bring  about  an  increase  in 

ready-made  textiles exports  to the Community.  It was submitted  that 

the result  could  be  job  losses and mill  closures  in the  Community 

weaving  industry, especially  in the case of  single-stage  weaver 

(weaving mills that  are not  integrated  with  spinning  mills).  Some 

weavers claimed  difficulties  in sourcing  cotton  yarn  from a 

particular  area of  the Community  arguing  that  the spinning  industry 

in that  area  had  already  been  "decimated  beyond  revival". 

Others argued  that  it would  have been more  logical  if the  Community, 

in taking  action  against  unfairly  low-priced  imports, had  started  at 

a higher  stage  in the production  process  leading  to finished  garments 

and  fabrics. 

(54)  Since  the basic purpose of  anti-dumping  duties  is to remove  the 

injury which  dumped  imports cause  to a Community  industry  and  thereby 

to re-establish open  and  fair  competition  In the Community  market  for 

the product  concerned,  prices of  cotton  yarn should  normally  increase 

due  to anti-dumping  duties on dumped  imports. As  regards end-users of 

cotton  yarn, the Commission  considers  that  an advantage,  in terms of 

low prices, cannot  justify unfair  commercial  practices, which  are 

detrimental  to the Community  producers of  this product  and  that  the 

importers  have no vested  rights  that  this advantage  persists. 

(55)  With  respect  to the alleged  difficulties of  sourcing  cotton  yarn  in a 

particular  area of  the Community,  the Council  sees no  reason  why 

sourcing  should  be  restricted  to a particular  area of  the  internal 

market.  Taking  the Community  spinning  industry  as a whole,  it 

appears unfounded,  provided  that measures  are  taken  against  unfairly 

priced  imports, to declare  its demise  beyond  revival. 

25 -

(56)  Furthermore,  the Council  notes  that, should  definitive  anti-dumping 

measures not  be  taken, the number  of  cotton  yarn  spinners  in the 

Community  would  continue  to decline with  additional  loss of  jobs. 

Indeed,  the trend  in factory  closures due  to dumped  imports  is such 

that, without  measures, the continued existence of  the  industry  as a 

whole may be said  to be  in danger.  From  1989 to the end of  1991, 87 

production units of cotton  yarn  in the Commmunity,  including  3 of  the 

EC producers verified, were  forced  to close, causing  a  loss of  17,423 

jobs.  This amount  does not  include  job  losses due  to the 

restructuration of companies which  are still  operational. 

Similar  views were expressed  by  the European Trade Union  Committee 

for Textiles, Clothing  and Leather, representing Community  workers  in 

these  industrial  sectors. 

(57)  The Council  also notes  that  Eurocoton  and  the European  Trade  Union 

Committee  for Textiles, Clothing  and Leather  represent  producers  and 

workers  in both  the spinning  and  the weaving  industries of  the 

Community.  It can be assumed  that,  in strongly  supporting  definitive 

anti-dumping  duties, both organisations have carefully weighed  the 

interests of  all  their members,  including weavers. 

Provided  that  the  injury  from dumped  imports  is removed,  the 

Community  spinning  industry  should  be able  to be  fully  competitive, 

the more  so as  it has made  significant  investments  in  technology, 

enabling  it to compete with  low-labour  cost  countries,  to well  adapt 

to market  requirements  in the  Community. 

(58)  No submissions were  received  from Community  consumers of  products 

made  from  cotton  yarn.  The Council  considers  that  in the medium-term 

consumers  should  benefit  from  a sound  competitive situation  in which 

the number  of  suppliers of  cotton  yarn  is not  diminished  by  unfair 

trading. 

-  26 -

(59)  In the  light of  the above, the Council  confirms  the  Commission's 

findings  that  it  is  in the Community's  interest  to  impose  anti 

dumping measures  to eliminate  the  injurious effects of  imports of 

cotton yarn originating  in Brazil  and Turkey. 

M.  UNDERTAKINGS 

Both  the Turkish  and Brazilian authorities, having been  informed of  the 

essential  facts and considerations on  the basis of which  it was  intended  to 

recommend  the  imposition of definitive duties, offered, on behalf of  the 

exporters concerned, a form of  undertaking. 

In the case of Turkey, this offer  did not  correspond  to the provisions of 

Article  10 of Regulation  (EEC) n* 2423/88, and  in particular  the 

possibility of  imposing duties  in the case of  violation or withdrawal  as 

provided  for  in article  10 (6) of Regulation  n*  2423/88.  In addition, the 

Commission considers  that effective monitoring of  the adherence of 

companies  to such an undertaking would  not  be practicable. 

As regards the Brazilian offer  which  provides  for  voluntary  quantitative 

export  restrictions, the Commission was not  satisfied  that  its acceptance 

would eliminate  the  injurious effects of  the dumping. 

The Council  notes  that  for  these  reasons both  these offers of  undertaking 

have, after  consultation, been  rejected. 

N. DUTY 

(60)  Provisional  anti-dumping  duties were  imposed at  the  level  of  the 

dumping margins determined, with  the exception of one Brazilian 

exporter  for which  the  level  imposed was  that  adequate  to remove  the 

injury caused.  On  the basis of  the definitive  findings, this result 

remains unchanged. 

- 27 -

O. COLLECTION OF PROVISIONAL DUTIES 

(61)  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 secured by way of provisional anti-dumping 

duties, with the exception of those relating to the  imports of 

Egyptian cotton yarn, should be definitively collected to the extent 

of the amount of the duty definitively imposed. 

HAS ADOPTED THIS REGULATION: 

Article 1 

(1)  A definitive anti-dumping duty  is hereby  imposed on  imports of cotton 

yarn falling within C.N. codes 5205 11 00 to 5205 45 90 and 5206 11 

00 to 5206 45 90 and originating  in Brazil and Turkey. 

(2)  The rate of the duty applicable to the net free-at-Commun!ty-front1er 

price before duty shall be as follows: 

(a) 

16,6% for cotton yarn originating  in Brazil, Taric additional 

code 8551 with the exception of  imports manufactured by the 

following companies, which shall be subject to the rate of 

duty mentioned hereunder: 

Rate of  Taric additional 

duty 

code 

Fàbrica de Rendas Arp. SA 

7.0% 

8552 

Nisshinbo do Bras il Indûstria 

TôxtiI Ltda 

12.1% 

8553 

-  28 -

Fiaçao e Tecelagem  Kanebo 

do BrasiI 

11.2% 

8554 

Filobel  SA  Indûstrias Téxtels 

do BrasiI 

12.9% 

8555 

Toyobo do BrasiI  Indûstria 

TéxtiI  Ltda 

12.9% 

8555 

Indûstria Têxtil  Tsuzuki  Ltd 

12.9% 

8555 

SA Text il Nova Odessa 

12.9% 

8555 

Coton!fieio de Sao Bernardo 

12.9% 

8555 

Companhla BrasiIeira 

de Fiaçào 

12.9% 

8555 

(b) 

12,1% for  cotton  yarn originating  in Turkey, Tarie  additional 

code 8562 with  the exception of  imports manufactured  by  the 

following companies, which  shall  be subject  to  the  rate of 

duty mentioned  hereunder: 

Rate of 

Taric additonal 

duty 

code 

Birko  (Birlesik Koyunlulular 

Mensucat  Tic ve San  AS) 

7.7% 

8563 

Ceytas  (Ceyhan Tekst iI 

SanayiI  AS) 

12.1% 

8564 

-  29 -

Sôktas Pamuk  ve Tarim Urunerini 

Degerlendirme Ticaret  ve 

Sanay i i AS 

9.5% 

8565 

Tar is (Tar im Sat is 

Kooperatifieri  Birli  keri) 

8.6% 

8566 

Yalova Elyaf  ve  Iplik SanayM  ve 

Ti caret  AS 

5.6% 

8567 

Yidas 

4.9% 

8568 

Sonnez Pamuklu Sanayii  AS 

9.0% 

8569 

Cukurova  Sanayi  isletmeleri 

TAS 

9.0% 

8569 

Akip TekstiI 

9.0% 

8569 

Karsu  (Tekstil  Sanay  ve 

Tic AS) 

9.0% 

8569 

Trakya  Iplik Sanayi  AS 

9.0% 

8569 

Bisas Bursaiplik  Sanayii  AS 

9.0% 

8569 

Meptas Manisali  Errensel 

Pazadama  ve Ticaret  AS 
Hateks  (Hatay  TekstiI 
isletmeleria AS) 

9.0% 

8569 

9.0% 

8569 

The  free-at-Community-frontier price as  indicated  in paragraph  2 

shall  be net  if the actual  conditions of  payment  provide  for  payment 

within  30 days of  the arrivai  of  the goods on  the customs  territory 

of  the Community.  It shall  be  increased  by  1 %  for each  further 

month  by which  the period  for payment  is extended. 

-  30 -

4. 

In cases where  the exporting company  is not  the same as the producing 

company  the rate of  duty  applicable  to the  imports of  the products of 

the producing  company  shall  apply. 

5. 

The provisions  in force concerning  customs duties  shall  apply. 

Article  2 

The amounts secured  by way of  provisional  anti-dumping duty  under 

Regulation  (EEC) N' 2818/91  concerning  the  imports  from Brazil  and  Turkey, 

shall  be definitively collected at  the duty  rate definitively  imposed. 

Amounts secured  in excess of  the definitive  rate of  duty  shall  be  released 

Article  3 

This Regulation shall  enter  into force on  the day 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 

il  -

ISSN 0254-1475 

CO M (92) 67 final 

EN 
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ISBN 92-77-41663-7 

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