Proposal for a Council Regulation (EC) imposing a definitive anti-dumping duty on imports of woven polyolefin sacks originating in the People's Republic of China
Date: 1997-10-02
Institutions: European Commission
Subjects: China, anti-dumping duty, import, packaging product, plastics

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels,  02.10.1997 
COM(97) 485 final 

97/ 0246 (ACC) 

Proposal  for a 

COUNCIL REGULATION (EC) 

imposing a definitive  anti-dumping duty on imports of woven polyolefin  sacks 

originating in the People's Republic of China 

(presented by the  Commission) 

A 

Explanatory Memorandum 

Subject: 

Proposed  Council  Regulation  imposing  a  definitive  anti-dumping 
duty  on imports  of woven  polyolefin  sacks  originating  in the  People's 
Republic of China 

By  Council  Regulation  (EEC)  3308/90  the  Council  imposed  definitive  anti-dumping 

measures against imports of woven polyolefin  sacks originating  in the People's  Republic 

of  China.  The  measures  were  increased  in  1993,  following  a  finding  that  the  duty  had-

been  borne  by the  Chinese  exporters, by  Council  Regulation  (EEC)  2346/93.  A  review 

of  the  measures  was  announced  by  means  of  a  Notice  of  Initiation  published  in  the 

Official  Journal  of  the  European  Communities  No  C  271  of  17  October  1995.  All 

interested  parties  were  given  the  opportunity  to  make  themselves  known  and  to  submit 

their comments. 

No Chinese exporter co-operated with the review. 

On-the-spot  investigations  were  carried  out  at  the  premises  of  two  importers  in  the 

Community  which  agreed  to  cooperate  and  of the  Community  producers  making  up  the 

Community  industry.  An  on-the-spot  investigation  was  also  carried  out  at  the  premises 

of a producer in Turkey, which was chosen as analogue country  in view of China's  status 

as  a  non-market  economy.  The  findings  of  the  investigation  showed  the  existence  of 

dumping  and  the  threat  of  resultant  injury  to  the  Community  industry  if  the  existing 

measures were allowed to lapse. 

The investigation, taking into account all the interests involved, led to the conclusion that 

it  is  in  the  Community  interest  to  impose  definitive  anti-dumping  measures,  amended 

according to the findings  of the review. 

It is consequently proposed that the Council adopt the attached proposal  for a Regulation. 

^ 

COUNCIL REGULATION (EC) No 

191 

of.... 

imposing a definitive  anti-dumping duty on imports of woven polyolefin  sacks 

originating in the People's Republic of China 

THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty establishing the European Community, 

Having  regard  to  Council  Regulation  (EC)  No  384/96  of  22  December  19^5  on 

protection  against  dumped  imports  from  countries  not  members  of  the  European 
Community1,  as amended  by Regulation  (EC) No  2331/96 of 2 December  19962, and  in 
particular Articles 9,  11 and 23 thereof, 

Having  regard  to  the  proposal  submitted  by  the  Commission  after  consulting  the 
Advisory  Committee, 

Whereas: 

A.  PROCEDURE 

1. 

Measures in force 

(1) 

By  Regulation  (EEC)  No  3308/903,  the  Council  imposed  a  definitive  anti 
dumping  duty of 43.4% on imports of woven polyolefin  sacks originating  in the 

People's  Republic of China. 

1 
2 
3 

O J N o L 5 6,  6.3.1996, p. 1. 
OJNoL317,  6.12.1996,  p. 1 
OJNoL318,  17.11.1990, p.2. 

2 

By Regulation  (EEC) No 2346/934, the Council  amended  Regulation  (EEC)  No 
3308/90  and  imposed  an  increased  duty  of  85.7%  following  a  finding  that  the 

duty had been borne by the exporters concerned. 

2. 

Request for a review 

(2) 

Following the publication in April  1995, of a notice5 of the impending  expiry  of 
the measures in force, the Commission received a request for a review lodged by 

the  European  Association  for  Textile  Polyolefins  (EATP)  on  behalf  of  eight 

Community  producers  allegedly  representing  à  major  proportion^of  the  total 

production  of the product  concerned  in the  European  Community.  The  request 

contained  evidence  of  dumping  of  the  product  originating  in  China,  and  of-

renewed  material  injury  likely  to  result  in  the  event  of  expiry  of  the  existing 

measures.  This  evidence  was  considered  sufficient  to justify  the  opening  of  a 

review  investigation. 

(3) 

On  17 October  1995, the  Commission  announced  by  a notice  published  in  the 
Official  Journal  of  the  European  Communities6  (hereinafter  referred  to  as  the 
"Notice  of  Initiation")  the  initiation  of  a  review  of  Regulation  (EEC)  No 

3308/90  and  commenced  an  investigation  pursuant  to  Articles  11(2)  and  11(3) 
of  Council  Regulation  (EC)  No  3283/947  which  was  replaced  during  the 
investigation  by  Council  Regulation  (EC) No  384/96  (hereinafter  referred  to  as 

"the basic Regulation"). 

3. 

Investigation 

(4) 

The  Commission  officially  advised  the  exporting  producers  and  importers 

known  to  be  concerned  as  well  as  their  associations,  the  representatives  of  the 

4 
5 
6 
7 

OJNo  L 215, 25.8.1993,  p.l. 
OJ No C 95,  19.4.1995, p.7. 
OJNo  C 271, 17.10.1995., p.3. 
OJ No L 349, 31.12.1994, p.l. 

exporting country and the complainant  Community producers of the initiation of 

the  review. 

3 

(5) 

Interested  parties  were  given  the  opportunity  to  make  their  views  known  in 

writing  and  to  request  a  hearing  within  the  time  limit  set  in  the  Notice  of 

Initiation. 

A number  of  importers  and  one  organisation  representing  such  importers  made 

their views known in writing.  The Commission sent questionnaires to all parties 

known  to  be  concerned  and  received  replies', from  four  CommunSy  producers 

and two importers in the Community. 

(6) 

The investigation  was hampered  by the fact  that no Chinese exporters  replied  to 

the Commission's questionnaire or made their views known in writing. 

(7) 

The Commission  sought  and verified  all information  they deemed  necessary  for 

the  purposes  of  a  determination  of  dumping  and  injury  and  carried  out 

investigations at the premises of the following  companies: 

(a) Complainant Community producers 

Condepols S.A., Valencia (Spain), 

Cotesi, Carvalhos (Portugal), 

Saint Frères Emballage S.A.,  Paris (France), 

Thrace Plastics Co., Athens (Greece); 

(b) Producer/exporter in the analogue country 

Debant Plastik, Istanbul, Turkey 

(c) Importers 

Blockx, Arendonk,  Belgium, 

Interjute,  Hulst, Netherlands 

4 

(8) 

The  investigation  of  dumping  covered  the  period  from  1  January  1995 "to 

30 September  1995 .(hereinafter  referred  to  as  "the  investigation  period").  The 

examination  of injury  covered  the period  from  1 January  1992 to  30  Septembei 

1995. 

B. 

PRODUCT UNDER CONSIDERATION AND LIKE  PRODUCT 

1. 

Product under consideration 

V 
'f 
The  product  under  consideration  is  woven  sacks  and  bags  of  a  kind  used  for 

•  <  • 

', 

(9) 

packaging  of  goods  not  knitted  or  crocheted,  obtained  from  a  polyethylene  or 
polypropylene  strip  or  the  like  of  woven  fabrics  weighing  120  gr./m2  or  less. 
There are many different  types of sacks and bags manufactured  from  either  raw 

material  but 

they  all  have  similar  physical,  chemical  and 

technical 

characteristics.  The  sacks  and  bags  are  used  for  packaging,  inter  alia,  industrial 

and agricultural products. 

Since the basic characteristics of the sacks and bags, whether physical,  chemical 

or technical, and their use, are similar, it was considered  that this  review  should 

cover  all  such  sacks  and  bags.  In  particular,  it  was  considered  that  sacks  and 

bags from  a fabric  woven from  strips of any width, and from  fabric  laminated  to 

any extent, should be covered by the scope of the investigation. 

(10) 

The product as described above normally falls now within CN codes 6305 32 81 

and  6305 33 91  in  accordance  with  Regulation  (EC)  No  2448/95». 

In  the 

framework  of the  current  review, however,  the  Commission  became aware  that 

the  sacks  and  bags  concerned  can,  if made  from  a fabric  which  is either  woven 

Commission  Regulation  (EC)  No  2448/95  of  10 October  1995  amending  Annex  I  to  Council 
Regulation (EEC) No 2658/87 on the tariff  and statistical nomenclature  and on the Common  Customs 
Tariff  (OJ  L 259, 30.10.1995, p.  1). The proceeding  was opened  for  products  falling  within  CN  code 
6305 3191,  which  the Regulation  in question  subsequently  replaced with the two CN-codes  given. 

5 

from  a strip wider than  5 mm, or laminated  on both sides to an extent  visible" to 

the naked eye, be classified  under CN codes 3923 21 00, 3923 29  10 or 3923 29 

90 while still meeting the product description given above. 

2. 

Like product 

(11) 

The  investigation  showed  that  sacks  and  bags  exported  to  the  Community  by 

Chinese  companies  constituted  a  like  product  to  those  produced  in  Turkey, 

which  was  eventually  chosen  as  analogue  country  in  view  of  China  being 

considered  a  non-market  economy  country  (see  recitals  (14)  and  (15)  below). 

Similarly, the sacks and bags manufactured  by the Community  industry and sold 

on  the  Community  market  and  those  exported  to  the  Community  from  China-

were  alike  in  all  respects  as  regards  their  physical,  chemical  and  technical 

characteristics. 

It  was  found  that  the  printing  and  hemming  of  certain  bags 

referred  to  in recital  (36) did  not  render  them  different  from  any  other  bags.  It 

was  also  established  that  the  sacks  and  bags  had  the  same  end-uses  and 

competed with each other. 

(12) 

It was therefore  concluded  that, within  the meaning  of Article  1.(4)  of  the  basic 

Regulation,  the  sacks  and  bags  produced  and  sold  in  Turkey  constituted  a  like 

product  to  those exported  from  China to the  Community  and to those  produced 

and sold by the Community  industry. 

C. 

LIKELIHOOD  OF CONTINUATION  OR RECURRENCE  OF DUMPING 

1. 

Preliminary  remarks 

(13) 

The aim of the dumping investigation  was to consider whether or not it could be 

determined  that  expiry  of measures would  be likely  to  lead  to a continuation  or 

recurrence  of  dumping,  in particular  by  examining  whether  dumping  continued 

to take place. 

2. 

Analogue country 

(14) 

As the People's Republic of China is considered a non-market economy  country, 

the  Commission  announced  at  the  initiation  of  the  review  that  Turkey  was 

envisaged  as  an  appropriate  market  economy  third  country  (hereinafter  the 

analogue  country)  for  the  purpose  of  establishing  normal  value,  in  accordance 

with Article 2(7) of the basic Regulation. 

(15) 

All  interested  parties  were  given  the  opportunity  to  comment  on me  choice  of 

analogue  country.  The  Chinese  exporters  did  not  submit  any  comments 

concerning  this  choice.  One  importer  and  one  European  traders'  association-

objected  to  it on the grounds that the Chinese  and the Turkish  macro-economic 

situations  were  not  comparable  and  that  Turkish  capacity  was  not  sufficient. 

The  importer  proposed  Indonesia  as  an  alternative  analogue  country.  This 

proposal  was  rejected  as  it  was  established  in  an  anti-dumping  proceeding 

concerning  the  same  product  originating  inter  alia  in  Indonesia  that  the  latter 

market was not governed  by normal market  forces.  In these circumstances,  and 

given  the  fact  that  the  Turkish  and  Chinese  producers  use  the  same  machines 

and  the  same  raw  materials,  that  several  producers  manufacturing  the  like 

product  in  representative  quantities  compete  on  the  Turkish  market  and  that 

Turkish  capacity  is currently  sufficient,  Turkey  was  found  to  be  an  appropriate 

choice  of  analogue  country.  The  Commission  received  co-operation  from  one 

Turkish producer of the like product. 

3. 

Normal value 

(16) 

As  explained  in  recital  (15),  the  Commission  sought  and  verified  from  'one 

producer  in the analogue  country  all the  information  they  deemed  necessary  for 

the determination of normal value. 

(17) 

As  far  as this  determination  is  concerned,  the  Commission  established  whether 

the  co-operating  producer's  domestic  sales  in  the  analogue  country  were 

representative in accordance with Article 2(2) of the basic Regulation. 

7 

The  investigation  established  that  the  total  domestic  sales  of  the  co-opefatihg 

Turkish producer  represented  by volume  less than  5% of the Chinese  exports  of 

the like product to the Community. 

(18) 

As the volume  of domestic  sales  of the  like product  was  not  representative  and 

as there were no other  domestic  sales by a co-operating  producer,  normal  value 

was  constructed.  In  accordance  with  Article  2(3)  of  the  basic  Regulation,  the 

constructed « normal  value  was  based  on  the  co-operating  Turkish  producer's 

average costs of production  per type of bag.  In accordance  with  Article  2(6)  of 

the basic Regulation, a reasonable amount for selling, general and -administrative 

costs  and  for  profits  was  added  to  these  costs.  The  former  was  established  on 

the  basis  of  actual  data  pertaining  to  the  production  and  domestic  sales  of  the -

like  product  made  by  the  co-operating  Turkish  producer.  With  regard  to  the 

profit  margin,  given  the  high  proportion  of  sales  at  a  loss  of  the  product 

concerned  made  by  the  co-operating  producer,  the  profit  margin  was  based,  in 

accordance  with  Article  2(6)(c)  of  the  basic  Regulation,  on  the  information 

obtained  from  other  Turkish  producers  on  the profit  normally  realised  on  sales 

of the like product in Turkey. 

(19) 

For the purpose  of the  investigation  the product  was  classified  by  type  (simple, 

lined  and  laminated).  The  different  costs  of  production  were  calculated 

separately  for the three different  types of bags (simple, laminated  and lined). 

4. 

Export Price 

(20) 

The exporter's questionnaire was sent to ten alleged producers in China but none 

of them replied. 

(21) 

Chinese  exports  of  the  product  concerned  were  made  to  independent  importers 

in  the  Community.  The  Commission  obtained  co-operation  from  two  of  the 
importers  of  the  like  products.  It  was  considered  that  the  prices  reported  by 
these  importers  were  the best evidence  available  for  the  purpose  of  establishing 

8 

the  export  price  because  the  volume  of  these  transactions  represenfed ~ a 

substantial  proportion  of the  imports  of  the  product  from  China  and  allowed  a 

calculation per type of bag. 

(22) 

The export prices were therefore  determined  on the basis of prices actually  paid 

by the two  importers  for  the product  concerned  during  the  investigation  period. 

These  transactions  concerned  two  types  of  the  product  concerned,  i.e.  simple 

and  lined  bags,  which  were  considered  representative  of  Chinese  exports.  This 

was because the transaction concerned  formed  a large proportion  of the  Chinese 

exports 

to 

the  Community,  since 

the  co-operating 

importers  represent 

themselves a very large proportion of all Chinese imports of the like products. 

5. 

Comparison 

(23) 

In  accordance  with  Article  2(10)  and  (11)  of  the  basic  Regulation,  the 

constructed  normal value by product type was compared to the weighted  average 

export  price  by  product  type  on  a free  on  board  basis  and  at  the  same  level  of 

trade. To calculate  the constructed  normal  value  free  on board  Turkish  port,  the 

inland  freight  cost to the closest  port was added to the constructed  normal  value 

established  above  in  order  to  make  a  fair  comparison  with  the  Chinese  export 

price which was reported FOB Shanghai. 

(24). 

As  set out  above, the  Chinese export prices obtained  from  the two  co-operating 

importers  for  the period  of  investigation  concerned  only  simple  and  lined  bags. 

The Commission therefore  limited its comparison to these two types. 

6. 

Dumping margin 

(25) 

The comparison  of the normal value with the export price showed  the existence 

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

normal value exceeded the price for export to the Community. 

(26) 

The weighted  average dumping margin expressed  as a percentage of the  free-at-

Community frontier  price, duty unpaid, is  102,4%. 

D. 

COMMUNITY  INDUSTRY 

(27) 

The  Commission  considered  whether 

the  Community  producers  which 

supported  the  request  for  a  review  and  cooperated  with  the  investigation 

represented  a major  proportion  of total  Community  production,  as provided  for 

in Article 4 (1) of the basic Regulation.  In this respect it was found  that the  four 

producers who co-operated  with the review manufactured  a major  share (at least 

65%) of the  Community's  total  output.  It was therefore  concluded  that the  four 

co-operating  producers  could  be  considered  to  constitute  the  "Community 

industry" for the purposes of the investigation. 

E. 

LIKELIHOOD  OF RECURRENCE  OR CONTINUATION  OF  INJURY 

1. 

Preliminary  remarks 

(28) 

The aims of the injury  investigation  were to consider whether  or not  it could  be 

determined  that expiry  of  measures  would  be likely  to  lead  to a continuation  or 

recurrence  of  injury,  in  accordance  with  Article  11(2)  of  the  basic  Regulation, 

and  whether  the  measures  were  either  no  longer  necessary  or  were  no  longer 

sufficient  to counteract the dumping which is causing  injury,  in accordance  with 

.  Article  11(3). 

10 

2. 

Community  consumption 

(29) 

Apparent  Community  consumption  on the market  for  free  circulation  (based  on 

questionnaire  replies,  Eurostat  data  and  market  information  available  to  the 

Commission)  increased  from  about  33,000  tonnes  in  1992  to  about  44,000 

tonnes in  1995, an increase of about 33%. 

(30) 

It  should  be  noted  that  sacks  and  bags  are  imported  under  different  import 

procedures.  Anti-dumping  and  conventional  duties  are  applicable  only  to 

imports for free  circulation. 

3. 

Volume and market share of the dumped imports 

(31) 

The quantities of the product concerned imported from  China for free  circulation 

decreased  from  3,884  tonnes  in  1992 to 2,672  tonnes  in  1995 The market  share 

of these  imports (calculated  on the basis of the apparent  consumption  figures  in 

recital (29) above) fell from  11.7% in  1992 to 6.1% in 1995. 

(32) 

It  can  be  noted  that  while  the  volumes  of  Chinese  imports  for  free  circulation 

have  fallen  in  recent  years,  they  retain  a  significant  market  share.  It  can  be 

considered  that  their  ability  to  undercut  Community  producers  on  the  free 

circulation  market,  even  with  the  current  measures  in  place  (see  recital  (37) 

below),  has  contributed  to  downward  pressure  on  prices  on  the  Community 

market. 

11 

4. 

Prices of the dumped  imports 

(33) 

The lack of co-operation  from  the Chinese exporters meant that the export  price 

for  the  undercutting  calculation  was taken  from  the  actual  transactions  (almost 

entirely  for temporary  import) of the two co-operating  importers.  These  figures 

constituted  the  best  information  available,  in  particular  since  they  allowed  a 

price comparison by type of sack or bag (simple, lined, laminated etc.). 

(34) 

The Commission services compared average prices by type of sack or bag on the 

basis of sales to the first  independent  importer, in the case of the imports, and to 

the first  independent customer, in the case of the Community producers. 

(35) 

Community  producers  sell  almost  entirely  direct  to  end  users. 

In  the  small 

number  of cases where they  sold to distributors, no appreciable  price  difference 

was observed.  The import transactions, on the other hand, were all to wholesale 

importers  with  associated  warehousing  costs.  In  order  to  take  account  of  this, 

the Commission  adjusted  the average  Community  producers'  prices  downwards 

by an appropriate adjustment  for the differences  in the level of trade. 

(36) 

All the import transactions  observed  were either (a) of simple sacks and bags or 

(b)  of  sacks  and  bags  lined  with  a polyethylene  liner.  All  the  lined  sacks  and 

bags  and  all  but  one transaction  of  simple  sacks  and  bags  were  hemmed  at  the 

top  of  the  sack  or  bag  and  most  were  unprinted  (printing  being  undertaken  by 

the importer).  By contrast most sales by Community  producers were of printed, 

unhemmed  sacks  or  bags.  The  selling  prices  of  Community  producers  were 

therefore  adjusted,  where appropriate, by the deduction  of printing  costs and the 

12 

costs of adding a hem.  The Commission then calculated  an average Communrty 

producers' price for each type of sack or bag imported,  weighted  by sales by the 

four co-operating producers of the type in question. 

(37) 

Once  these  adjusted  average  prices  per  type  of  sack  or  bag  were  arrived  at,  a 

calculation  was carried  out in order to establish the level  of actual  undercutting, 

with  the  current  measures  in  force,  on  the  market  in  sacks  and  bags  for  free 

circulation. - The  import  prices  were  increased  by  92.9%  (7.2%  conventional 

plus  85.7% AD  duty)  and  compared  with  the  adjusted  Community  producers' 

prices.  It should be noted that the import transactions were for temr&rary import 

and  would  not  therefore  have  incurred  duty,  but  in  the  absence  of  verified 

transactions  intended for free  circulation this was the best information  available. -

The result was undercutting margins of 4.7% for simple hemmed  sacks and bags 

and  28.6%  for  lined  hemmed  sacks  and  bags,  with  an  average  of  15.3% 

(expressed as percentages of the adjusted  EC producers' prices). 

5. 

Factors  relating to the Community  industry 

(38) 

.In  the  following  paragraphs,  concerning  the  change  in  certain  key  factors 

between  1992  and  the  investigation  period,  figures  for  the  investigation  period 

have  been  adjusted  to  make  them  comparable  with  full  year  figures  since  the 

period was of nine months only. 

Production 

(39) 

Production  by  the  Community  industry  fell  from  9,500  tonnes  in  1992  to  a 

comparable figure of 8,900 tonnes in the investigation period, a fall of 6%. 

Sales volume and market share 

13 

(40) 

The  Community  industry's  sales  by  volume  on  the  Community  market  fell  by 

13%,  from  approximately  9,600  tonnes  in  1992  to  a  comparable, figure  of 

approximately  8,400 tonnes  in the  investigation  period.  This  represented  a  fall 

in market share from  30.2% in  1992 to  19.1% in the investigation period. 

Sales value * 

(41) 

The Community  industry's sales by value on the Community  markél fell  by  9%, 

from  approximately  23.7  million  ECU  in  1992  to  a  comparable  figure  of 

approximately 21.6 million ECU in the investigation  period. 

Profitability 

(42) 

Profitability  of  the  Community  industry  for  the  product  concerned  declined, 

with losses increasing from  0.14% of sales in  1992 to  1.80%  in the  investigation 

period. 

Conclusion 

(43) 

These  findings  confirm  that  the  Community  industry  is  in  a  weakened  state. 

This  would  be  exacerbated  in  the  event  of  undercutting  on  the  scale  which 

would arise in the event of the expiry of measures against imports from  China. 

6. 

Price undercutting in the event of expiry of  measures 

(44) 

A  second  undercutting  calculation  was  undertaken  to  establish  the  threatened 

level of undercutting  in the event of expiry  of measures.  The methodology  was 

the  same  as  for  that  described  in  recitals  (34)  to  (37)  above,  except  that  to  the 

import  prices  was  added  only  the  7.2%  conventional  duty  and  not  the  current 

14 

anti-dumping  duty  of  85.7%.  In  this  case  undercutting  margins"resulted "of 

47.0%  for  simple hemmed  sacks  and  bags, 60.2% for  lined  hemmed  sacks  and 

bags  and  52.9%  on  average,  expressed  as  percentages  of  the  adjusted  EC 

producers'prices. 

7.  x 

Conclusion 

(45) 

Although  imports  from  China  for  free  circulation  have  declined,  they  remain 

significant  compared  to  production  by  the  Community  industry. 

In  this 

economic  sector  it can be assumed  that the  Chinese  exporters  would  have  little 

or  no  difficulty  in  increasing  their  exports  back  to  previous  levels  if  thé 

economic conditions favoured  this.  •  •. 

(46) 

Even  with  the  current  measures  in  place,  imports  from  China  are  able  to 

undercut  EC  producers  on  the  "free  circulation"  market  for  sacks  and  bags. 

Were  measures  to  expire  the  level  of  this  undercutting  would  be  dramatically 

increased, providing  Chinese producers with a strong  incentive  to  increase  their 

exports  to  the  Community  and  creating  further  downward  pressure  on 

Community producers' prices. 

(47) 

The  sacks  and  bags  concerned  are  subject  to  a  quantitative  limit  (textiles 

category  33).  However, the limit currently provides no significant  constraint  on 

imports (30% utilisation  in  1995), in particular  since the condition that it  should 

apply  even to sacks and bags intended  for reexport  outside the Community  does 

not appear to be being rigidly applied. 

(48) 

It is therefore  concluded  that expiry of the measures would  be likely  to lead to a 

recurrence of  injury. 

15 

(49) 

A further exercise, in accordance with Article  11(3) of the basic Regulation,  was 

therefore  carried out to determine  whether the current measures  were  sufficient 

to  counteract the dumping  which  is causing  injury.  This  is  covered  in  recitals 

(62) to (64) below. 

F. 

COMMUNITY  INTEREST 

1. 

Introduction 

(50) 

No  interested  parties  came  forward  in  the  course  of  the  review  other  than 

producers  and  importers  (see  recital  (5)).  In  particular,  no  users  of  sacks  and 

bags came forward,  which can be taken as a sign that the effect  of the  measures 

on their interests was limited.  Nevertheless, an assessment  as set out below was 

done of the wider Community interests involved. 

2. 

Price and  quantity effects  of measures 

(51) 

Since  imposition  of  measures  in  1990,  imports  of  sacks  and  bags  for  free 

circulation  from  China  have  fallen. 

In  that  time  apparent  Community 

consumption has increased, so it can be assumed that purchasers have used other 

sources of supply rather than bought fewer  sacks and bags.  It can be  concluded, 

in  the  absence  of  any  representation  or  indication  to  the  contrary,  that  the 

measures have not resulted in a shortage of supply. 

(52) 

The  price  before  duty  of  imports  from  China  fell  until  1994  but  recovered  ' -» 

1995.  Assessment on the basis of EUROSTAT statistics suggests that duty paid, 

imports for  free  circulation from  China were some 70% more expensive  in  1995 

than in  1990 before the imposition of measures. 

(53) 

Even  at  the  proposed  new  rates  of  duty,  Chinese  prices  will  undercut 
Community  producers'  prices,  since  the  new  rate  of  duty  is  below  the  level  of 
undercutting  which would occur in the event of expiry  of measures. EC  demand 

16 

is apparently increasing. It can be considered unlikely, even after  the imposition 
of the proposed new measures, that the Chinese exporters will reduce their duty 
free price or will be obliged to reduce their sales volumes on the market for  free 
It  can  reasonably  be 
circulation  by  comparison  with  the  current  situation. 
assumed  that  the  price  of  Chinese  imports  on  the  market, for  free  circulation 
(after  duties  are paid)  will  rise  marginally  (less  than  10%) as  a  result  of  the 
proposed new measures. 

3. 

Interests of the Community industry 

f 

Current turnover of the cooperating EC companies is currently of the order of 23 
million  ECU  and  employment  of  650. people  (scaled  up  to  all  EC producers, 
estimates of 35 million ECU and 1200 employees). 

The investigation  has shown that the Community  industry  has made efforts  to 
rationalise  and to switch  to production  of more specialised  types of  sacks and 
bags  (such  as  Flexible  Intermediate  Bulk  Containers),  indicating  that  the 
industry  can  remain  viable.  The  significant  investments  made  in  order  to 
achieve  this  rationalisation  would  be^wasted  if  the  industry  concerned  is  not 
protected  against unfair  and injurious  imports.  Continuation  of  Anti-Dumping 
measures  would  serve  to  put  the  EC  industry  on  a  level  playing  field  with 
imports from China by counteracting unfair competitive practices. 

4. 

Interests of users 

(54) 

(55) 

(56) 

The  sacks  and  bags concerned  are an industrial  product  whose  main  use  is to 
package, inter alia, agricultural and chemical products. 

17 

(57) 

By  definition  the  competitiveness  in  third  country  markets  of  users  in  the 

Community  ofthe  sacks and bags (such as agricultural  exporters)  should  not  be 

affected  by  measures  since  sacks  and  bags  for  reexport  after  filling  will  not  be 

subject to the duty.  Measures could however affect  the competitiveness of users 

on the EC market vis-à-vis third country competitors.  However,  for  the  reasons 

given below this effect  is considered to be minimal. 

(58) 

In order to assess the likely  impact on users (in the absence  of any  submissions 

or  complaints  by  them  in  the  course  of  the  investigation),  the  likely  cost 

increases  as a result  of measures  were expressed  as proportions  of'the  value  of 

the likely  contents  of  a sack  or bag  (agricultural  commodities  etc.),  in  order  to 

estimate  the  percentage  increase  in  costs.  This  analysis  showed  that  the  cost 

increase for the large majority  of users of Chinese sacks would be ofthe  order of 

0.5%  of this value.  Since the  price  of the  contents  is only  a part  of  users'  total 

costs, the  cost  increase  expressed  as a proportion  of total  costs  would  be  lower 

still. 

5. 

Interests of  importers 

(59) 

Only  two  importers  cooperated  with  the  investigation  out  of  more  than  40 

contacted  by  the  Commission,  and  submissions  were  received  from  one 

association of importers. 

(60) 

It  should  be  noted  that  the  proposed  amended  measures  are  not  expected  to 

reduce quantities of Chinese imports.  Furthermore,  importers  are able to switch 

to  other  sources  of  supply,  and  are  in  any  case  largely  involved  in  handling 

temporary  imports  which  will  be  unaffected  by  the  new  measures. 

In  these 

circumstances  the  impact  of the proposed  limited  duty  increase  on  importers  is 

not expected to be substantial. 

18 

6. 

Conclusion 

(61) 

The Commission weighed up all the factors outlined above and considered that 

there were  no  compelling  reasons  not to maintain measures  in  force,  amended 

according to the outcome ofthe  review, in order to restore a competitive  regime 

of  fair  pricing  and to  remove  the  threat  of  injury  to  the  Community  industry 

which would result if measures were allowed to expire. 

G.  ANTI-DUMPING  MEASURES 

1. 

Injury elimination level 

(62) 

In the  course  of the  injury  investigation  it became  clear  that  the  mix  of type  of 

sacks  and  bags  imported  was  different  from  that  produced  by  the  Community 

producers.  No  laminated  sacks or bags, for  example, were  observed  among  the 

Chinese  imports  whereas  they  represent  an  important  part  of  the  production  of 

most  Community  producers.  It was found  that simple -sacks and  bags  (the most 

imported  kind)  were  much  less profitable  for  Community  producers  than  other 

types. 

(63) 

A calculation  was therefore  made  on the basis of cost  of production  per  type  of 

sack  or  bag.  In  the  case  of  some  producers  these  costs  had  to  be  constructed, 

either  because  the  company's  standard  costings  by type  were  found  not  to  be  in 

line with their verified  total costs or because no such standard costings existed. 

(64) 

To  the  costs  thus  arrived  at  an  adjustment  was  made  to  take  account  of 

differences  in the level of trade between the imports and the sales of  Community 
producers  (as in recital  (35) above) and a profit  margin was added.  Comparison 

was made  by type  with  the CIF prices ofthe  observed  imports, adjusted  for  the 

7.2%  conventional  duty.  The  weighted  average  margin  thus  arrived  at, 

19 

expressed  as  proportion  of  the  CIF  value  of  the  imports  and  representing  the 

threat of underselling  in the event of expiry of measures, and therefore  the  level 

of duty required to eliminate injury, was  120.9%. 

It  was  therefore  determined  that  the  current  measures  of  85.7%  were  not 

sufficient  to counteract the dumping which is causing  injury. 

2. 

Definitive duties 

' 

(65) 

Since  the  result  of  the  comparison  sftows  higher  injury  margfns  than  the 

dumping  margin  established,  and  since  the  new  dumping  margin  was  higher 

than  the  level  of  the  duty  subject  to  review,  the  duty  should  be  based  on  the 

dumping  margin found  in accordance  with Article 9(4) ofthe  Basic Regulation. 

On  the  basis  of  the  above  the  level  of  anti-dumping  duty  should  be  set  at 

102.4%, 

HAS ADOPTED THIS  REGULATION: 

Article 1 

1. 

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

bags  of  a  kind  used  for  packaging  of  goods,  not  knitted  or  crocheted,  obtained  from  a 
polyethylene  or polypropylene  strip or the like, of woven fabrics  weighing  120 gr./m2 or 
less  and  originating  in the  People's  Republic  of  China,  falling  within  the  following  CN 

codes: 

CN code 

6305 32 81 

6305 33 91 

ex3923 21(T0 

ex3923 29  10 

ex3923 29 90 

Tarie code 

-

-

3923 2100  10 

3923 29  10  10 

3923 29 90  10 

20 

2. 

The  rate  of  the  definitive  anti-dumping  duty  applicable  to  the  net,  free-at-

Community-frontier  price, before duty, shall be 102.4%. 

3. 

Unless  otherwise  specified,  the  provisions  in  force  concerning  customs  duties 

shall apply. 

• 

• 

Article 2 

Regulation  (EEC) No  3308/90  as amended  by Regulation  (EEC) No  2346/93  is  hereby 

repealed. 

Article 3 

This Regulation  shall  enter  into force  on the day following  its publication  in the Official 
Journal of the European  Communities. 

It  shall  expire  five  years  after  its  entry  into  force,  save  that  should  any  review  of  the 

measures adopted by this Regulation be pending on that date, it shall remain in force until 

that review is concluded. 

This  Regulation  shall  be  binding  in  its  entirety  and  directly  applicable  in  all  Member 

States. 

Done at Brussels, 

For the Council 

o2, 

ISSN 0254-1475 

COM(97) 485 final 

DOCUMENTS 

EN 

02  11 

Catalogue number  :  CB-CO-97-495-EN-C 

ISBN  92-78-25063-5 

Office  for  Official  Publications of the European  Communities 

L-2985 Luxembourg