Proposal for a COUNCIL REGULATION (EEC) amending Regulation (EEC) No 1768/89 relating to a definitive anti-dumping duty on imports of video cassette originating in Hong Kong
Date: 1992-04-30
Institutions: European Commission
Subjects: Hong Kong, anti-dumping duty, export price, free-at-frontier price, trading margin, video cassette

COMMISSION  OF  THE  EUROPEAN  COMMUNITIES 

COM(92) 157  final 

Brussels, 30 April  1992 

Proposal  for a 

COUNCIL REGULATION  (EEC) 

amending Regulation  (EEC) No  1768/89  relating  to a 

definitive  anti-dumping  duty on imports  of video 

cassettes originating  in Hong Kong 

(presented  by the  Commission) 

-  2 -

EXPLANATORY  MEMORANDUM 

(1)  By  Regulation  (EEC)  No  1768/89,  the  Council  imposed  a  definitive 

anti-dumping  duty of 21.9% on  imports of VHS video tape  in  cassettes 

originating  in Hong  Kong.  In this Regulation,  the  Council  indicated 

that  the  Commission  will  review  this  duty,  should  a  newcoming 

exporter make a substantiated  request  in this respect. 

(2)  By a notice published  in the Official Journal  on the  11 January  1991 

the  Commission  initiated  such  a  review  of  Regulation  (EEC)  No 

1768/89  as it concerned  a Hong Kong  company, Wai Shing. 

(3)  The  investigation  showed  that  Wai  Shing  had  begun  to  export  own 

produced  video  cassettes  to  the  European  Community  after  the  entry 

into  force of the above Regulation. 

(4)  Normal value was determined  on the basis of constructed  value of the 

models concerned. Export price was based on the actual price paid  or 

payable  for export. The dumping margin established  was  13.8%. 

(5)  Given  the  specific  economic  circumstances  of  this  case,  the  anti 

dumping  duty  to  be  imposed  should  be  a  variable  duty  equal  to  the 

difference  between  the  normal  value  and  the  net  price  free-at-the-

Community-frontier. 

(6)  In conclusion, it is proposed  that the Council  amends  its Regulation 

(EEC)  No  1768/89,  and  impose  on  VHS  video  tapes  in  cassettes 

manufactured  by  Wai  Shing  and  originating  in  Hong  Kong  the  above 

variable duty  for the models  exported  to the Community. 

-  3 -

Proposal  for a 

COUNCIL REGULATION  (EEC) 

amending Regulation  (EEC) No  1768/89 relating to a 

definitive  anti-dumping  duty on imports of video 

cassettes originating  in Hong Kong 

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(^),  and  in  particular 

Article  14 thereof, 

Having  regard  to  the  proposal  submitted  by  the  Commission  after 

consultation  within  the  Advisory  Committee  as  provided  for  under  the 

above Regulation, 

Whereas: 

I - PREVIOUS  PROCEDURE 

(1)  In  Regulation  (EEC)  No  1768/89(2),  the  Council  imposed  in 

particular  a definitive  anti-dumping  duty of 21.9% on  imports of VHS 

video  tape  in  cassettes  falling  within  CN  code  ex  8523  13 00 

originating  in Hong Kong, with the exception of  imports  from  several 

exporters  specifically mentioned which were  subject to a lesser  rate 

of duty or no duty at all. 

(1)  OJ No L 209, 2.8.1988, p. 1. 
(2)  OJ No L  174, 22.6.1989, p. 1 

- 4 -

(2)  In recital  43  of  Regulation  (EEC) No  1768/89, concerning  companies 

which  started  or will  start  exporting  own-produced  cassettes  to  the 

Community  after  the  investigation  period  (newcomers),  the  Council 

noted  that  the  Commission  was  ready  to  initiate  without  delay  a 

review  proceeding  if  the  exporting  company  could  show  the 

Commission,  and  supply  to  that  effect  sufficient  evidence,  that  it 

did  not  export  the  products  concerned  to  the  Community  during  the 

period  of  investigation.  The  company  also  had  to  demonstrate  that 

it only  started  those exports  after  the  said  period  and  that  it  is 

not  related  to  or  associated  with  any  of  the  companies  subject  to 

the  investigation. 

II - REVIEW  PROCEDURE 

(3)  By  a  notice  published  on  11  January  1991 (3),  the  Commission,  after 

consultation  with  the  Advisory  Committee  and  in  accordance  with 

Article  14  of  Regulation  (EEC)  No  2423/88  initiated  a  review  of 

Regulation  (EEC) No  1768/89  as it concerned  a Hong Kong  company, Wai 

Shing.  This  company  had  submitted  that  it  did  not  export  the 

products  subject to the anti-dumping  duty during the previous  period 

of  investigation  (1  January  -  30  November  1987). 

In  addition,  it 

submitted  that  it  was  not  related  to  any  of  the  companies  subject 

to  the  previous  investigation  for  which  dumping  was  found  and 

provided  substantiated  evidence  that  it  just  had  begun  to  export 

video  cassettes  to  the  Community.  Accordingly,  the  Commission 

commenced  an  investigation  in  order  to  verify  that  Wai  Shing  could 

be  considered  as  a  newcomer  and  to  establish  a  dumping  margin,  if 

any,  for this  company. 

(3)  OJ Ho C 7, 11.1.1991, p. 2. 

-  5 -

III -  RESULTS OF THE  INVESTIGATION 

1. Newcomer 

(4)  The investigation  showed that Wai Shing began to export  own-produced 

video  cassettes  to  the  Community  after  the  previous  investigation 

period  mentioned  in recital  3.  In addition,  it was  found  that  this 

company  had  no  link  of  any  sort  with  the  exporters  involved  in  the 

previous  procedure  and  for  which  dumping  was  found.  The  Council 

confirms  that  it  should  accordingly  be  considered  as  a newcomer  and 

that a partial  review of Regulation  (CEE) No  1768/89 as it concerned 

Wai Shing was warranted. 

2. Normal value 

(5)  Since  Wai  Shing  did  not  sell  any  video  cassettes  on  the  domestic 

market during the  investigation period  for this review, normal  value 

was  determined  on  the  basis  of  the  constructed  value  of  the  models 

concerned  in  accordance  with Article  2(3)(b) of  Regulation  (EEC) No 

2423/88.  This  constructed  value  was  computed  on  the  basis  of  all 

costs,  both  fixed  and  variable,  in  the  country  of  origin,  of 

materials  and  manufacture  for  the  models  exported  to  the  Community 

plus  a  reasonable  amount  for  selling,  administrative,  other  general 

expenses and profit. 

(6)  As  far  as  selling,  administrative  and  general  expenses  were 

concerned,  they  were  calculated  by  reference  to  such  expenses 

incurred  by  another  Hong  Kong  manufacturer  for  its  sales  of  video 

cassettes  on  the  domestic  market,  since  it  was  verified  that  these 

expenses  corresponded  to  such  costs  as  they  were  stated  in  the 

audited  accounts of Wai Shing. 

As  far as profit was  concerned,  it was  found  appropriate  to  apply  a 

profit  rate  of  8%  on  turnover;  this  rate  was  used  in  Regulation 

(EEC) No  1768/89  for  the  Hong  Kong  exporters  and,  according  to  the 

information  available  to  the  Commission,  can  still  be  regarded  as 

the  profit  that  Hong  Kong  companies  can  normally  achieve  on  their 

domestic market.  The Council  confirms the foregoing  findings. 

-  6 -

(7)  On  this basis,  normal  value  was  established  for  the models  exported 

to  the  Community  and  for  the  three  qualities  of  tapes  used  by  Wai 

Shing  , namely  normal grade, high grade  and  super high grade. 

3. Export  price 

(8)  Export  prices were determined  on the basis of the prices, net of  all 

rebates,  actually  paid  or  payable  for  the  video  cassettes  sold  for 

export  by  Wai  Shing  to  the  Community.  Indeed,  since  exports  were 

made  directly  to  independent  importers  in  the  Community,  these 

export  prices were  found to be reliable. 

The Council  confirms  this  finding. 

4.  Comparison 

(9)  For the purpose of a fair comparison  between  normal value  and  export 

price,  the  Commission  took  account  of  differences  affecting  price 

comparability  in accordance with Article  2(9) and  (10) of  Regulation 

(EEC)  No  2423/88.  All  comparisons  were  made  at  ex-works  level,  at 

the  same  level of trade and,  for the export  price, on a 

transaction  by transaction basis. 

The  examination  of  the  facts  shows  the  existence  of  dumping,  the 

margin  of  dumping  being  equal  to  the  amount  by  which  normal  value 

exceeds  the  price  for  export  to  the  Community,  which,  as  expressed 

as a percentage  of total  c.i.f.  value, was  13.8%. 

The Council  confirms the above  findings. 

-  7 -

IV  -  AMENDMENT OF THE REVIEWED  MEASURES 

(10) No  new  investigation  was  carried  out  as  regards  injury  since  this 

was  not  requested.  In  addition,  the  Commission  considers  that  the 

injury  findings established  in Regulation  (EEC) No 1768/89  are  still 

valid.  Therefore,  since  the price  increase which  would  be  required 

to  eliminate  the  injury  level  exceeds  the  dumping  margin  found  for 

the company  concerned, as established  in Regulation  (EEC) No  1768/89 

(recital  7 1 ),  the  duty  to  be  imposed  should  correspond  to  the 

dumping margin. 

(11) The  complainants  and Wai  Shing  were  informed  of the  essential  facts 

and  considerations  on the basis of which  it was  intended  to  propose 

the  replacement  of  the  duty  imposed  by  Regulation  (EEC) No  1768/89 

in  respect  of  Wai  Shing  by  an  anti-dumping  duty  established  on  the 

basis  of  the  above  and  were  given  every  opportunity  to  comment. 

After this disclosure, Wai Shing offered  a price undertaking. 

However,  in the  light of the economic  structure  of  the  exporter,  in 

particular  the  fact  that  it  supplies  and  exports  to  the  Community 

video  cassettes  of  various  origins,  and  given  the  evolution  of  the 

flows  of  trade  for  this  product  from  Hong  Kong,  the  monitoring  of 

such undertaking would  not be manageable.  Therefore, the  Commission 

considered, after consultation, that the undertaking  offer  submitted 

by Wai Shing was not acceptable. 

(12) In addition, the Commission  found that the prices of video  cassettes 

originating  in  Hong  Kong  were  subject  to  a  high  volatility.  The 

Commission  thus  considered  that,  for  the  models  investigated,  the 

duty  should take the form of a variable duty equal to the  difference 

between  price  per  cassette  net,  free-at-Community-frontier,  not 

cleared  through  customs, and  a  floor price  established  on  the  basis 

of  the  normal  value  for  each  individual  model.  Since  it  cannot  be 

excluded  that  the  exporter  will  also  export  models  which  were  not 

covered by the  investigation,  it appears appropriate to establish  an 

ad  valorem  duty  at  the  level  of  the  dumping  margin  found  for  all 

other  video  cassettes  exported  to the Community  by  this  company.The 

Council  confirms the above findings. 

- 8 -

(13) Accordingly,  it  is  considered  appropriate  that  Regulation  (EEC) No 

1768/89  should  be  amended  in  respect  of  Wai  Shing  and  that,  until 

the  Regulation's  expiry,  a  definitive  anti-dumping  duty  shall  be 

imposed  on  VHS  video  tapes  in  cassettes  manufactured  by  Wai  Shing 

and originating  in Hong Kong in respect of the models E-30, E-60, E-

90,  E-120,  E-180,  E-195  and  E-240,  either  normal  grade,  or  high 

grade  or  super  high  grade.  This  duty  shall  be  equal  to  the 

difference  between  a  floor  price  based  on  this  normal  value  and 

their  net  price  free-at-the-Community-frontier  not  cleared  through 

customs,  payable  by  the  first  importer.  All  other  models  of  video 

cassettes  manufactured  by  Wai  Shing  and  originating  in  Hong  Kong 

shall be subject to a duty of 13.8% ad valorem, 

HAS ADOPTED THIS REGULATION: 

Article 1 

The  following  subparagraph  is  added  to Article  1(3) of  Regulation  (EEC) 

No 1768/89: 

"The duty  specified  in paragraph  2(b) shall not apply  to models of  video 

tape  in  cassettes  E-30,  E-60,  E-90,  E-120,  E-180,  E-195  and  E-240  in 

quality  normal  grade  (NG), high  grade  (HG) or  super  high  grade  (SHG) as 

specified hereafter and manufactured  and sold for export to the Community 

by Wai Shing  (Hong Kong)  (TARIC additional Code 8255); these models  shall 

instead  be  subject  to  a  duty  equal  to  the  difference  between  the  price 

mentioned hereunder  for each of the models concerned  and their net price, 

free-at-Community-frontier before duty: 

E-30 

SHG 

E-60 

SHG 

HG 

E-90 

SHG 

ECU 

Additional Taric Code 

0,55 

0,68 

0,66 

0,81 

8626 

8627 

8628 

8629 

E-120 

SHG 

HG 

E-180 

SHG 

HG 

NG 

SHG 

HG 

SHG 

HG 

E-195 

E-240 

-  9 -

0,94 

0,85 

1,20 

1,13 

1,10 

1,27 

1,20 

1,47 

1,36 

8630 

8631 

8632 

8633 

8634 

8635 

8636 

8637 

8638 

For  all  other  video  tapes  in  cassettes  produced  by  Wai  Shing  the  duty 

shall  be  13.8%  of  their  net  price,  free-at-Community-frontier  before 

duty." 

Article 2 

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 all Member States. 

Done at Brussels, 

For the Council, 

^  10  -

ISSN 0254-1475 

COM(92) 157 final 

DOCUMENTS 

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Catalogue number : CB-CO-92-175-EN-C 

ISBN 92-77-43474-0 

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