Amended proposal for a Council Regulation (EC) imposing a definitive anti-dumping duty on imports of certain footwear with textile uppers originating in the People's Republic of China and Indonesia
Date: 1997-10-24
Institutions: European Commission
Subjects: China, Indonesia, anti-dumping duty, footwear industry, textile industry

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 24.10.1997 
COM(97) 551  final. 

Amended proposal for a 

COUNCIL REGULATION (EC) 

imposing a definitive anti-dumping duty on imports of certain footwear with textile 

uppers originating in the People's Republic of China and Indonesia 

(presented by the Commission pursuant to Article 189 a (2) 
of the EC-Treaty) 

EXPLANATORY  MEMORANDUM 

(1)  The  Commission,  by  Regulation  (EC)  No  165/97l  ,  imposed  provisional  anti 

dumping  duties  on  imports  into  the  Community  of  certain  footwear  with  textile 

uppers originating in the People's Republic of China and Indonesia. 

(2)  Certain  interested  parties,  Community  producers,  exporters,  as  well  as  importers 

submitted  comments  in  writing.  Those  parties  who  so  requested  were  granted  an 

opportunity  to  be  heard  by  the  Commission.  The  Commission  considered  all  the 

views expressed before drawing its final  conclusions. 

(3)  The  Commission  accepted  the  claim  by  one  Indonesian  exporter  regarding  the 

omission  in  the  dumping  calculation  of  a factor  affecting  price  comparability,  and 

consequently  revised  downwards  its calculations  of  normal  value  and  dumping  for 

both  Indonesia  and for  China since Indonesia  was used  as the analogue  country  for 

the purpose of calculating normal value in respect of China. 

(4) 

It  was  further  considered,  with  the complainants'  consent,  that  slippers  as  well  as 

beach  shoes  should  be excluded  from  the proceeding,  the scope  of  which  was  thus 

limited to the majority  of imports, i.e. those of outdoor  footwear. 

(5) 

In  addition,  following  the  submissions  received  and  a  further  analysis  of  the  data 

available, the Commission  considered  that the adjustment  used  at provisional  stage 

to take into account the difference  of level  of trade between  the CIF imports and the 

Community  producers'  delivered  sales  in  the  calculation  of  the  injury  elimination 

levels ought to increased. 

1 OJ No L 29, 31.1.1997, p.3. 

(6)  Subsequent  to  the  imposition  of  provisional  measures,  the  Commission  -further 

examined  matters  deemed  relevant  in  analysing  the  issue  of  Community  interest. 

Having  examined  a wide  variety  of  aspects  and  the  various  interests  involved,  no 

compelling  reasons  have  come  into  light  which  would  lead  to  the  conclusion  that 

the  imposition  of  definitive  measures  would  not  be  in  the  interest  of  the 

Community. 

(7) 

In the light  of  the above,  the Commission  confirmed  its provisional  conclusions  to 

the  effect  that  the  footwear  concerned  originating  in  Indonesia  and  the  People's 

Republic  of  China  was  being dumped  in the Community  and  was causing  material 

injury  to  the  Community  industry,  and  concluded  that  it  is  in  the  Community 

interest  to  take  protective  measures  in  the  form  of  definitive  anti-dumping  duties 

and  to  collect  definitively  the  provisional  duties  at  the  duty  rate  definitively 

imposed. 

(8)  The  exclusions  and  adjustments  in  the  calculations  presented  above  affect  the 

provisional  findings,  to  the effect  that  the  individual  duty  rates  for  the  cooperating 

Indonesian  companies  are  reduced  to  a  range  from  0%  to  14.1%,  as  well  as  the 

residual  injury  elimination  levels  which  amount  to  14.1%  for  Indonesia  and 49.2% 

for the People's Republic of China. 

(9) 

In  accordance  with  Article  9  of  Council  Regulation  (EC)  No  384/96,  the 

Commission  therefore  proposes  that  the  Council  impose  definitive  anti-dumping 

duties on imports of certain  footwear  with textile uppers originating in the People's 

Republic  of  China  and  Indonesia.  In  the  light  of  the  extent  of  the  injury,  it  is  also 

recommended  that  the  Council  collect  the  provisional  anti-dumping  duties  to  the 

extent of the amount of the definitive  duties imposed. 

^hjL, 

Amended proposal for a 

COI JNCIL REGI JLATION (EC) 

imposing a definitive  anti-dumping duty on imports of certain footwear  with  textile 

uppers originating in the People's Republic of China and Indonesia 

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  1995  on 

protection  against  dumped  imports  from  countries  not  members  of  the  European 

Community^  and in particular Article 9(4) thereof, 

Having  regard  to  the  proposal  submitted  by  the  Commission  after  consulting  the 

Advisory  Committee, 

Whereas: 

A. 

PROVISIONAL  MEASURES 

(1.)  By  Commission  Regulation  (EC)  No  165/97(2>  (hereinafter  referred  to  as  'the 

provisional  duty  Regulation')  provisional  anti-dumping  duties  were  imposed  on 

imports  into  the  Community  of  certain  footwear  with  textile  uppers  falling  within 

Combined  Nomenclature  (CN) codes  6404  19 10 and  ex  6404  19 90 originating  in 

the People's Republic of China and Indonesia. 

1  OJ  No  L  56,  6.3.1996,  p.  1 Regulation  as  amended  by  Regulation  (EC)  No 2331/96  (OJNoL317, 

6.12.1996,  p. 1). 

2  OJ No L 29, 31.1.1997, p.3. 

B. 

SUBSEQUENT  PROCEDURE 

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

interested parties submitted comments in writing. 

(3)  Those  parties  who  so  requested  were  granted  an  opportunity  to  be  heard  by  the 

Commission. 

(4)  The Commission continued to seek and verify  all information  deemed necessary  for 

its definitive  findings. 

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

which  it  was  intended  to  recommend  the  imposition  of  definitive  anti-dumping 

duties  and  the  definitive  collection  of  amounts  secured  by  way  of  provisional 

duties.  They  were  also  granted  a  period  within  which  to  make  representations 

subsequent to this disclosure. 

(6)  The oral and written comments submitted by the interested parties  were considered, 

and,  where  deemed  appropriate,  taken  into account  in the Commission's  definitive 

findings. 

C.  PRODUCT UNDER CONSIDERATION AND LIKE PRODUCT 

1. 

Product under  consideration 

(7)  For  the  purpose  of  its  preliminary  findings,  the  Commission  considered  "non-

sports"  footwear  with  outer  soles  of  rubber  or  plastics  and  uppers  of  textile 

materials,  intended  for  use  either  indoor  or  outdoor  (falling  within  CN  codes 

6404  19 10 and ex  6404  19 90), as one single category  of products.  In  this  regard, 

certain  interested  parties  claimed  that  slippers  and  outdoor  footwear  were  too 

different,  in particular in terms of use, to belong to the same category  of products. 

In  particular,  the  parties  concerned  have  stressed  that  an  assessment  of  whether 

indoor  and  outdoor  footwear  can  be  regarded  as  one  single  category  of  products 

should entail  that  a twofold  "interchangeability test" be carried  out:  firstly  whether 

an  outdoor  shoe can  replace  an  indoor  shoe,  secondly  whether  an  indoor  shoe  can 

replace an outdoor shoe. 

(8)  As regards the first  question, it is worth noting that some light outdoor  shoes of the 

kind under consideration  can replace slippers for  indoor use.  Conversely,  slippers, 

due  to  their  usual  flimsiness,  do  no  appear  to  be  suitable  for  most  outdoor  uses. 

This  also  appears  to be confirmed  by the  consumers'  perception  of  both  products. 

It  has  therefore  to  be  concluded  that  the  second  "interchangeability  test",  i.e. 

whether  an  indoor  shoe  can  replace  an  outdoor  shoe,  is  not  satisfied  and 

accordingly  that  slippers  and  outdoor  footwear  of  the  kind  under  consideration 

cannot  be  regarded  as  one  single  category  of  products.  Such  a  conclusion  also 

meant  that  the  results  of  the  investigation  would  have  to  distinguish  between 

slippers and outdoor  footwear. 

Informed  of  this  conclusion,  the  representatives  of  the  complaining  Community 

industry,  while  indicating  that  they  did  not  fully  share  the  above  views,  did  not 

oppose the withdrawal of slippers from  the proceeding. 

(9)  Reffering 

to  the  exclusion,  at  the  provisional  stage,  of  certain  types_ of  footwear 

sometimes  known  as  "espadrilles",  several  interested  parties  have  requested,  on 

various  grounds,  the  further  exclusion  of  certain  allegedly  very  specific  products 

from  the scope of the proceeding.  These claims are analysed below. 

a) 

Neoprene  shoes 

(10)  Several  importers  requested  the  exclusion  of  certain  types  of  footwear  sometimes 

known  as "diving boots", made of neoprene  and used  for  certain  water  sports  such 

as  diving.  Indeed,  neoprene  is  a material  which  is  generally  strengthened  with  a 

textile  coating  when  used  for  manufacturing  footwear,  with  the  result  that  the 

constituent  material  of  the  upper  having  the  greatest  external  surface  area  is  the 

textile material, and thus the footwear  concerned  classifiable  under the CN heading 

6404.  In  addition,  since  certain  water  sports,  such  as  diving,  are  not  considered 

expressly  as  a  "sporting  activity"  within 

the  meaning  of 

the  Combined 

Nomenclature,  the  neoprene  shoes  concerned  were,  it  was  claimed,  classifiable 

under  CN  code  6404  19 90, although  such  a specific  product  would  not  belong  to 

the single category of products under consideration. 

(11)  Having  investigated  this  issue  in  more  detail  the  Commission  found  that  the 

neoprene  shoes  in  question  are  sold  in  water  sport  equipment  stores  and  not  in 

footwear  stores  and  clearly  belong  to  a  distinct  market. 

Their  physical 

characteristics  and  the  use  which  they  are  intended  for,  make  them,  in  the 

consumer's  perception,  a clearly distinct product from  those belonging to the single 

category  of "non-sports footwear  with textile uppers" under consideration. 

(12)  Asked  to  react  on  this  issue,  the  representatives  of  the  complaining  Community 

industry  raised  no  objections  but  indicated  that,  should  an  exclusion  be  granted, 

their  main  concern  would  be  that  the  description  of  the  footwear  concerned  be 

sufficiently  precise in order to avoid any circumvention of duties. 

(13)  For  all  the  above  reasons  and  in  consideration  of  the  fact  that  the  footwear 

concerned is clearly identifiable by the customs authorities, it is considered that the 

neoprene shoes sometimes known as "diving boots" or "water sports boots" should 

be excluded from the scope of the proceeding. 

b) 

" Trekking shoes " 

(14)  Within  the meaning of  the Combined Nomenclature,  "trekking" is  not  considered 

as a sporting activity and therefore trekking shoes with textile uppers generally fall 

within CN code 6404  19 90.  Certain parties requested that this product be excluded 

from the scope of the proceeding, on two grounds.  The first ground was based on 

the  fact  that  the  product  in  question  was  sold  at  a  high,  non  dumped,  price. 

Moreover, certain importers claimed that they could have legitimately expected that 

trekking shoes  would not be subjected to measures because the Spanish  version  of 

the notice  of  initiation^) had translated, in the list of  exclusions  contained therein, 

the  words  "cross-country  ski  footwear"  by  "botas  de  senderismo",  the  Spanish 

equivalent of "trekking shoes". 

O J N o C 4 5,  22.2.1995, p. 2. 

(15)  As  to  the  first  ground,  it  has  to  be  noted  that  the  information  made, available  by 

cooperating  exporters  and  used  by  the  Commission  for  the  investigation  of 

dumping did not confirm  the absence of dumping on this type of  footwear. 

(16)  As  regards  the  second  ground,  i.e.  the  allegedly  legitimate  expectation  of  certain 

importers  that  trekking  shoes  would  not be subjected  to measures  (stemming  from 

the  fact  that  the  Spanish  version  of  the  notice  of  initiation  had  mis-translated  the 

words  "cross-country  ski  footwear"),  this  argument  cannot  be  accepted  for  the 

following  reasons: 

Reference  should  first  be  made  to  the  Court  of  Justice's  jurisprudence  (CASE 

250/80, Anklagemyndigheden  v.  Schumacher  and  others, Judgment  of  27 October 

1981),  according  to  which  it  is  appropriate,  where  there  is  a  disparity  between 

various  language  versions  of provisions, to interpret  them  in their  context  and  and 

with particular regard to their objectives. 

It has been  a long  standing  approach  of  Community  institutions  to  set up  a closed 

list  of  so-called  "sporting  activities"  within  the  framework  of  the  Combined 

Nomenclature.  More  specifically,  it was  quite clear  that the  wording  of  the  notice 

of  initiation  was  a  mere  quotation  of  the  provisions  of  subheading  note  1  (b)  of 

Chapter  64  of  the  Combined  Nomenclature,  in  the  Spanish  version  of  which  the 

words  "ski-boots  and  cross-country  ski  footwear"  are  translated  by  the  words 

"calzado para esquiar" and not by the words "botas de esquî, senderismo". 

(17)  Finally,  it  must  be  stressed  that  the footwear  with  textile  uppers  of  the  type-called 

"trekking  shoes"  is  widely  produced  in  the  EC,  was  within  the  scope  of  the 

complaint  and  clearly  fell  within  the  scope  of  the  investigation.  Indeed,  most  of 

these products  may also be used, and are actually used, for  other purposes  than  the 

"technical"  one  which  they  are  supposed  to be  intended  for,  which  confirms  their 

belonging to the single category of product under consideration. 

Accordingly,  it  is  considered  that  the  so-called  "trekking  shoes"  should  remain 

within the scope of the proceeding. 

c) 

Medical  shoes 

(18)  Orthopaedic  shoes,  i.e.  intended  to  correct  a  specific  and permanent  disability  or 

physical  abnormality, belong to chapter 90 of the Combined  Nomenclature  and are 

not  covered  by  the  present  investigation.  The  product,  falling  within  CN  code 

6404  19 90, for  which  an exclusion  was claimed  is  a medical  footwear  of  the  type 

sold  in  chemists'  stores,  not  per  pair  but  per  "foot",  and  which  is  not  specifically 

adapted  to  a  given  person  but  is  intended  for  anybody  having  for  instance  a 

sprained  or broken  ankle.  This claim was made on the grounds that such a  specific 

product could  not belong to the single category of products under consideration. 

(19)  It is clear  that  the medical  shoes  in question  belong  to a different  market  (they  are 

not  sold  in  footwear  stores  but  by chemists).  In  addition,  they  are  marketed  in  a 

very specific  way (per "foot"  and not per pair, and in specific  shapes in order to fit a 

plaster  rather  than  a  foot),  which  makes  them,  in  the  consumer's  perception,  a 

clearly  distinct  product  from  those  belonging  to  the  single  category  of  product 

under  consideration. 

(20)  Asked  to  react  on  this  issue,  the  representatives  of  the  complaining-Community 

industry  argued  that some production  of medical footwear  exists  in the  Community 

but  did  not  oppose  the  conclusion  that  the  shoes  in  question  were  sufficiently 

specific,  in  terms  of  physical  characteristics  and  uses, for  them  to  fall  outside  the 

single category of "non-sports footwear  with textile uppers" under consideration. 

(21)  For  all  the  above  reasons  (and  in  consideration  of  the  fact  that  such  a  specific 

product  is  clearly  identifiable  by the customs  authorities),  it  is considered  that  the 

medical  footwear  of  the  type  sold  in  chemists'  stores,  not  per  pair  but  per  "foot", 

should be excluded from  the scope of the proceeding. 

d) 

"Beach shoes " 

(22)  "Beach  shoes" are shoes the upper of which is limited to a stripe of textile material, 

this upper being attached on both sides of a thick, lightweight  alveolar plastic, sole. 

Certain  interested  parties  claimed  that  such  a product  should vbe excluded  from  the 

scope  of  the  present  proceeding  on  the  ground  that  it  is  a  product  which  is  too 

specific  to  belong  to  the  single  category  of  products  under  consideration.  It  was 

also claimed that such a product is no longer produced in the Community. 

(23)  Asked to comment on this issue, the representatives of the complaining  Community 

industry  conceded  that,  whilst  production  of  such  footwear  still  exists  in  the 

Community, 

it 

is  nevertheless  of  marginal 

importance.  Moreover, 

the 

representatives  of  the  Community  industry  agreed  that,  provided  that  such  an 

exemption  is  limited  to  a product  which  cannot  be  used  for  walking  beyond  areas 

such  as  a  beach  or  swimming  pool,  and  given  that  it  can  be  distinguished  from 

other  types  of  footwear,  it  could  be  excluded  from  the  scope  of  the  present 

proceeding. 

(24)  For the above reasons, it is considered  that the so-called  "beach  slippers" should be 

excluded from the scope of the proceeding. 

2. 

Like product 

a) 

Arguments based on the existence of different production  methods 

(25)  The question  of vulcanised footwear,  already raised  at provisional  stage (see recital 

18  of  the  provisional  duty  Regulation),  has  again  been  addressed  by  certain 

interested  parties.  In  particular,  allegations  were  reiterated  that  the  Community 

industry  did  not  produce  shoes  with  vulcanised  soles  in  sufficient  quantities  and 

that  its production  is rather concentrated  on  injection  moulding.  The results  of  the 

further  examination  carried out are as follows. 

(26)  Whilst  it  is  clear  that  the  vulcanisation  process  is  different  to  that  of  injection 

moulding,  it  should  be recalled  that  the  main  relevant  criteria  in  the  determination 

of  the  "like  product"  are based  on  the  general  technical  or physical  characteristics 

and  the use or functions  of products  and  not  the  method  used  for  their  production. 

In this  context,  minor  differences  resulting  from  different  production  processes  are 

generally  disregarded. 

(27)  As  to  the  technical  arguments  raised  by  various  parties,  namely  the  fact  that 

vulcanisation  means rubber while injection  means inter alia PVC, thus  differences 

of access to the raw material, visual differences  (PVC is more "shiny" than rubber) 

and smell  (rubber has  a typical  smell  but PVC has  none)  and different  dissolving 

and melting  properties,  it cannot  be denied  that there  are differences  between  the 

chemical  and physical  reactions which take place during the manufacturing  process 

of  these  types  of  footwear.  However,  it  should  be  kept  in  mind  that  synthetic 

rubber  is  generally  used  in  the  manufacture  of  vulcanised  footwear.  Thus, 

irrespective  of  the  production  process,  the  raw  materials  involved  in  these 

processes, i.e. synthetic rubber and PVC, are all petrochemical derivatives. 

(28)  Synthetic  rubber  is  indeed  available  in  all  parts  of  the  world,  one  of  the  main 

applications  being  the  tyre  industry.  The  argument  that  producers  of  vulcanised 

footwear  in  developing  countries  enjoy  better  access  to  the  raw  materials  cannot 

therefore be considered as relevant; this may make the manufacturing process more 

cost effective  but it has no impact on the fact that the product concerned is alike to 

the Community  product.  It should also be noted that, to differentiate  the  shoes  in 

question, the parties had to invoke criteria which go far beyond the usual criteria.  If 

PVC, unlike  rubber, does  indeed melt,  it only  does  so  above  80°C,  well  above the 

temperatures that might be encountered under normal conditions  of use.  Similarly, 

customers  would  not,  under  normal  conditions,  perform  a  dissolving  test  before 

buying. 

10 

(29)  As  regards  the  alleged  decline  in  the  production  of  vulcanised  footwear  -in -the 

Community, it has to be stressed that this argument was raised by certain importers 

only at a very advanced  stage of the proceeding.  However, the evidence received 

shows that this production  process is still used  in the Community  (for  instance in 

Spain  where a number of producers  have declared  that they could  still  produce a 

total  of  22  million  pairs/year  of  this  type  of  shoe)  and  that  there  are  numerous 

producers in the Community willing and able to produce vulcanised footwear. 

The investigation has also shown that, contrary to allegations made by a number of 

parties,  vulcanised  footwear  imported  from  the  People's  Republic  of  China  and 

Indonesia is sometimes sold as a branded product, packed in a cardboard box and 

sold  in  specialised  shoe  shops  whilst  Community  produced  injection  moulded 

footwear  can  be  sold  as  a  non-branded  product,  in  plastic  bags  and  in  discount 

stores. 

(30)  The  conclusion  to  be  drawn  from  the  above  is  that  notwithstanding  technical 

differences  in  the  manufacturing  process  used,  vulcanised  footwear  is  in  direct 

competition  with injection  moulded footwear.  Indeed, these types of footwear  are 

so  similar  in  all  respects  that  the  average  consumer  would  not  be  able  to 

differentiate  them. 

H 

There  is  thus  no  reason  to  consider  that  vulcanised  footwear  produced-in-the 

People's Republic of China and Indonesia and exported to the Community is not a 

like product to injection  moulded footwear produced in the Community, within the 

meaning  of  Article  1(4) of Regulation  (EC) No 384/96 (hereinafter  referred  to as 

'the Basic Regulation'). 

b) 

Arguments based on the alleged existence of different  "product segments " 

(31)  Certain  parties  have  reiterated  that  imported  and  Community  produced  footwear 

belong to different  product segments which do not compete with each other.  They 

claimed  that  footwear,  imported  at a price higher  than  the average, would  not be 

alike,  within  the  meaning  of  Article  1(4)  of  the  Basic  Regulation,  to  footwear 

imported below or at the average price. 

(32)  This issue has been the source of repeated and seemingly contradictory  statements 

by importers, some of them claiming that they import low quality footwear that they 

simply could not find in the Community, while others claimed that they order in the 

People's Republic of China or in Indonesia sophisticated products manufactured  in 

accordance with their own specifications, design and sometimes raw materials. 

This contradiction simply shows that the People's Republic of China and Indonesia 

are  in  fact  capable  of  producing,  and  do  indeed  produce  and  export  to  the 

Community, the full  range of products on offer  in the market.  This is not apparent 

from  import statistics because the average prices are driven by the bulk of imports 

which  indeed  comprises  low-priced  footwear.  The  imports  in  question  and  the 

products  manufactured  by the Community  industry  are  therefore  alike  within  the 

meaning of Article 1(4) of the Basic Regulation. 

12 

c) 

Conclusion 

(33)  In the light  of  the above, it is confirmed  that footwear  subject  to this proceeding 

produced  in  the  People's  Republic  of  China  and  Indonesia  and  exported  to  the 

Community  is a like product  to footwear  produced  in the Community  within  the 

meaning of Article  1(4) of the Basic Regulation.  Similarly, footwear subject to the 

current  investigation  produced  in  Indonesia  is  a  like  product  to  the  footwear 

produced and exported from the People's Republic of China to the Community. 

D.  DUMPING 

1. 

Indonesia 

(a) 

Normal value 

(34)  The Indonesian exporters contested the Commission's  use, in constructing  normal 

value,  of  a  profit  margin  established  on  the  basis  of  one  company's  profitable 

domestic sales of a product other than the product concerned, in this case footwear 

with  leather or plastic uppers.  They alleged that this profit  margin  was excessive 

and not representative of the industry. 

In addition, as the profit  margin had been used in the construction  of normal value 

for  all companies in the sample for Indonesia, the normal values and by extension 

the dumping margins were allegedly excessive and unfair.  They contended that the 

use of the profit margin of 7% deemed acceptable by the Commission in the case of 

the Community industry should have been used. 

13 

(35)  This  argument  could  not  be  accepted.  Firstly,  Article  2 (6) (b)  of  the-Basic 

Regulation  provides  that  where  there  are  no  domestic  sales  of  the  product 

concerned, the SG&A and profit  used  in the construction  of  normal  value can be 

established on the basis of the actual amounts applicable to production and sales of 

the same general category of products for  the exporter or producer  in question in 

the domestic market of the country of origin.  This was the methodology applied in 

the case of the company referred to at recital 34 of the present Regulation. 

In the case of two of the sampled companies  which had neither domestic  sales of 

the product  concerned  nor of  the same general category of product,  normal  value 

had to be established  in accordance with. Article 2 (6) (c) of the Basic Regulation 

i.e.  any  other  reasonable  method.  It  was  held  that  in  the  circumstances  of  this 

investigation  the most reasonable method  was to use the SG&A and profit  found 

for the company referred to at recital 34 of the present Regulation. 

Secondly, the 7% profit  margin used in the calculation of a non-injurious  price for 

the Community industry is the minimum that the Commission considers necessary 

to remove the injury  suffered  by the Community  industry  and has thus nothing to 

do with the profit margin used in the construction of normal value, which has to be 

based  on  the  actual  profit  achieved  on  the  Indonesian  market.  In  this  regard,  it 

should be noted that the European Court of Justice has consistently  indicated that 

preference should be given to the use of actual profit margins in the construction of 

normal value. 

14 

(36)  One  of  the  Indonesian  companies  included  in  the  sample  contended  that-  in 

calculating  its  normal  values, the Commission  should  have used  the cost  estimates 

which  they  had  submitted  during  the  on  the  spot  verification.  In  this  context,  it 

should  be  pointed  out  that  the company  concerned  did  not  have  a cost  accounting 

system,  and  had  only cost  estimates  which  had  been  used  to  make  price  offers  to 

potential  customers.  The  latter  were  the  costs  reported  in  their  response  to  the 

questionnaire. 

,_ 

This  claim  had  to  be  rejected  since  the  company  was  unable  to  demonstrate  the 

correctness  of  the  cost  estimates.  Furthermore,  for  some  of  the  models,  no 

information  at all regarding cost  was available.  Moreover,  no information  beyond 

direct  material  cost  was  available  for  any  of  the  models.  Therefore,  the  approach 

adopted  in  the provisional  duty Regulation,  i.e. to recalculate  costs  by  reallocating 

the  total  cost  of  sales,  exclusive  of  SG&A  and  profit,  over  the  models  concerned 

using the turnover in the company's own accounts is confirmed,  as this was deemed 

to  be  the  most  appropriate  method  for  establishing  the  costs  of  each  model  of 

footwear. 

(b) 

Export price 

(37)  In  the  absence  of  any  comments  on  the  establishment  of  export  prices  the 

provisional determinations  are hereby  confirmed. 

15 

(c) 

Comparison 

(38)  The  Indonesian  exporter  whose  profitable  domestic  sales  were  used  in  the 

construction  of  normal  value  for  Indonesia  and  referred  to  in  recital  34  of  the 

present Regulation  claimed that the Commission  omitted to take account of a factor 

affecting  price  comparability  as  provided  for  in  Article  2  (10)  of  the  Basic 

Regulation  by  not  granting  an  allowance  to  normal  value  for  credit  costs.  As  the 

Commission  established  that  this  adjustment  was  indeed  omitted,  it  has  now 

reviewed  its calculations  accordingly.  As the SG&A  of  this company  was used  in 

the construction  of normal value for  the other Indonesian  companies  in the sample, 

a reduction  of their normal value was also required to reflect  the allowance granted. 

All dumping calculations have been adjusted  accordingly. 

(39)  The company  referred  to  at recital  36 of  the present  Regulation  contended  that  the 

dumping  margin  had been  created  by averaging the costs  of  individual  models  and 

the  application  of  an  artificially  high  profit  margin  in  the  construction  of  normal 

value.  It claimed  that  the use of  averaging  meant  that  normal  values  were  inflated 

and  all  low  priced  exports  dumped. 

It  further  contended  that  the  use  of  the 

individual  normal  values it had submitted  and the application  of a reasonable  profit 

would have led to a finding  of no dumping. 

In  view  of  the  circumstances  outlined  in  recital  36  of  the  present  Regulation,  the 

Commission  considered  that,  in order to arrive at a reasonably  accurate  calculation 

of costs it had no alternative other than to recalculate the costs using the  company's 

own accounting records and to reallocate the total cost of sales, exclusive of  SG&A 

and profit,  over the models concerned. 

16 

(d) 

Dumping margins 

(40)  The  methodologies  used  to  calculate  definitive  dumping  margins  are  the  same  as 

those  used  for  the  calculation  of  the  provisional  dumping  margins.  However, 

dumping  margins  have  been  amended  in  order to take account  of  the allowance  to 

normal value now granted as described in recital 38 of the present  Regulation. 

(i) 

Cooperating companies in the sample 

(41)  The  margins  thus  established  and  expressed  as  a  percentage  of  the  cif  price  at 

Community frontier  are the following: 

-  P.T. Dragon 

-  P.T. Emperor Footwear 

-  P.T. Sindoll Pratama 

4.0% 

0.0% 

24.9%. 

(ii) 

Cooperating producers/exporters  not investigated 

(42)  In view of the above changes in the dumping margins of the cooperating  companies 

in  the  sample,  the  margin  established  for  the  two  cooperating  companies  not 

investigated,  expressed  as  a  percentage  of  the  cif  price  at  Community  frontier,  is 

now definitively  established at 14.2%. 

(iii)  Residual dumping margin 

(43)  In view of the above changes in the dumping margins of the cooperating  companies 

in  the  sample,  due  account  being  given  to  the  restriction  in  the  product  coverage 

mentioned  in  recital  8,  the  margin  established  for  definitive  determinations, 

expressed  as a percentage of the cif price at Community frontier,  is now 39.7%. 

17 

2. 

People's Republic of China 

(a) 

Individual treatment 

(44)  The Chinese exporters argued that the Commission did not sufficiently  motivate its 

rejection  of  the  requests  for  individual  treatment  by  the  cooperating  Chinese 

exporters.  They  insisted  that  individual  treatment  be  granted  for  definitive 

determinations. 

It should be reiterated that it is the Commission's policy to calculate a country-wide 

duty for non-market economy countries except in those cases where companies can 

demonstrate  independence  from  the  State.  However,  none  of  the  companies 

concerned  were  able to  adequately  demonstrate  such  independence  since  they all 

had  links  to  the  Chinese  State,  either  directly  or  via  Provincial  or  municipal 

authorities.  In the absence of any further  information  on this issue, the provisional 

findings  with regard to the non-acceptance of the requests for  individual treatment 

are hereby confirmed. 

(b) 

Normal value 

(45)  The  Chinese  exporters  alleged  that  they  received  insufficient  information  by the 

Commission regarding the Indonesian shoes used for comparison with the exported 

Chinese  models.  They  alleged,  in  particular,  that  insufficient  information  was 

disclosed  to  them  concerning  raw  materials  used  and  production  processes 

employed  in  the  production  of  the  Indonesian  shoes  to  enable  them  to  claim 

adjustments for differences  in physical characteristics. 

18 

In this regard,  it should be pointed out that, in an effort  to come up with  the  fairest 

model  comparison, the Commission  made repeated  efforts  to get  information  from 

the Chinese exporters concerning the design  and make up of,  and  material  used  in, 

the  models  which  they  exported  to  the  Community.  Despite  this,  the  Chinese 

exporters only supplied very partial information.  Accordingly, the Commission  had 

to  make  its  assessment  of  comparability  on  the  basis  of  the  information  available 

and  as  was  the  case  for  provisional  measures,  the  Indonesian  models  used  were 

those  found  to be  similar  or,  in  the absence  of  similar  models,  those  most  closely 

resembling  the  Chinese  models  exported  to  the  Community  by  the  Chinese 

companies  in  the  sample.  All  the  information  upon  which  the  comparison  was 

based was made available to the Chinese exporters. 

(c). 

Export price 

(46)  In  the  absence  of  any  comments  on  the  establishment  of  export  prices  the 

provisional determinations are hereby  confirmed. 

(d) 

Comparison 

(47)  Since Indonesia was the analogue country used to establish the normal  value for  the 

People's  Republic  of  China,  the single  margin  for  the  People's  Republic  of  China 

was  also  adjusted  downwards  to  reflect  the  granting  of  the  allowance  for  credit 

costs,  to  Indonesian  normal  values  referred  to  in  recitals  38  and  40  of  the  present 

Regulation. 

19 

(e) 

Dumping margin 

(48)  The  Chinese  exporters  questioned, 

in  some 

instances, 

the  Commission's 

comparison  of  weighted  average  normal  values  to  Chinese  export  prices  of 

individual  export  transactions  to the Community.  They  claimed  that export  prices 

did not sufficiently  differ  amongst different  purchasers, regions or time periods and 

that consequently,  in  accordance  with  Article  2 (11) of  the Basic  Regulation,  both 

export  price  and  normal  value  should  be  compared  on  a  weighted  average  basis. 

Having  reviewed  its  calculations,  the  Commission  found  that  the  differences  in 

prices  were  small  and  that  for  the purposes  of  definitive  determinations  weighted 

average  normal  values  should  indeed  be  compared  with  weighted  average  export 

prices. 

On  that  basis,  withdue  account  being  given  to  the  restriction  in  the  product 

coverage  mentioned  in  recital  8,  the  single  dumping  margin  calculated  for  the 

People's  Republic  of  China,  expressed  as  a  percentage  of  the  cif  price  at 

Community  frontier,  was found  to be 133.2%. 

E.  COMMUNITY  INDUSTRY 

(49)  Certain  parties  have reiterated  and expanded  their  allegations  that  the  Commission 

has  failed  to  establish  the  representative  nature  of  the  Community  industry 

providing  evidence  of  injury.  This  was  based  on  the  alleged  non  reliability  of  the 

"total  Community  production" figure  used  and entailed  a criticism  of  the  sampling 

technique  applied  by  the  Commission.  The  justification  of  the  "anonymous 

treatment" granted to certain Community producers was also questioned. 

20 

1.  Total Community production 

(50)  It should be recalled that the level of support for the complaint was checked before 

initiation.  The total estimated EC production volume of the like product on which 

the  standing  of  the  68  complaining  Community  producers  was  assessed,  was 

subsequently  re-examined  (in  respect  of  1991  until  1994)  at  the  premises  of 

national footwear federations and confirmed to be accurate. 

Moreover, it has to be stressed that the "total production" figure of the like product 

on which the standing was assessed, was set at the maximum possible production in 

the Community.  Indeed, due to the lack of reliable data, no examination could be 

carried  out  in  order  to  determine,  in  accordance  with  the  provisions  of 

Article 4 (1) (a) of the Basic Regulation, whether the production  volume of certain 

non^complaining producers should have been excluded from the "total production" 

figure,  on the grounds that their core business  is importing rather  than  producing 

within the EC. 

Such  would-be  Community  producers,  of  which  some  are  known  to  have  made 

considerable imports, are also known to produce a relatively large number of pairs 

in  the  EC.  Had  sufficient  information  in  this  respect  been  made  available,  it  is 

likely  that  part  of  this  Community-produced  volume  would  have  been  excluded 

from  the total production  figure.  Conversely, the "core business" test was carried 

out  vis-à-vis  the 28 companies  in the  "first  group" as defined  at  recital  6 of  the 

provisional  duty Regulation  and  all  were found  (as explained  at  recital  55 of the 

provisional duty Regulation) to have their core business in the Community. 

(51)  The  representative  nature  of  the  investigated  Community  industry,  assessed  in  a 

reasonable way and on the basis of fully accurate figures, is therefore  confirmed. 

21 

2. 

Sampling 

(a)  Initial investigation 

(52)  In  this  respect,  it  should  be  recalled  that  given  the  very  large  number  of  potential 

parties  to  the  proceeding,  the  notice  of  initiation  of  the  present  proceeding 

mentioned  that  the  investigation  might  have  recourse  to  sampling.  As  a  result, 

from  the  beginning  of  the  investigation,  cooperation  was  sought  (via  national 

federations)  from  a limited  number  of  Community  producers  selected  amongst  the 

68 companies supporting the complaint. 

Meaningful 

replies  were  received  from  28  producers,  amongst  which,  for 

verification  purposes, 9 were selected and their replies subjected  to in depth  on-spot 

verifications  (this  latter  group  of  producers  is  referred  to  as  "the  verification 

sample" in the provisional duty Regulation). 

The  28  companies  in  the  first  group  do  account  for  slightly  more  than  25%  of 

Community  output  of  the  like product,  thus  qualifying,  in  the  absence  of  declared 

opposition to the complaint, as the Community  industry.. 

22 

(b)  Subsequent developments 

(53)  As  has  been  mentioned  in  recital  8  of  the  present  Regulation,  it  was  decided  to 

restrict  the  scope  of  the  present  proceeding  to  footwear  intended  for  outdoor  use 

and to exclude slippers.  A separate examination  of information  relating exclusively 

to outdoor footwear  covered by the present proceeding was thus deemed  necessary. 

This  examination  has  shown  that  17 out  of  the  above  mentioned  28  Community 

producers  in  the  first  group  and  8  out  of  the  9  Community  producers  in  the 

verification  sample produce  footwear  intended  for  outdoor  use.  It  was  established 

that, in line with the criteria used in assessing the representativity  of the first  group 

(see recital  59 of the provisional  duty Regulation), the  17 producers  mentioned  are 

equally representative of the Community  industry producing outdoor footwear.  The 

fact  that  these  17  Community  producers  were  found  to  represent  22,3%  of 

Community output of the like product, the definition  of which had been  resticted  in 

the  course  of  the  present  investigation,  does  not  alter  the  above  mentioned 

conclusion  on the representativity  of the Community  industry. Indeed, in a situation 

such as the present, where the number of Community producers  is such  as to justify 

the  recourse  to  sampling,  it  is  almost  inevitable  that  the  sample  selected,  whilst 

being representative of the Community  industry, will not reach the 25% threshold. 

(54)  Concerning the representativity of the investigated Community industry, it has to be 

stressed  that  the  injury  findings  were based  on  verified  information  collected  from 

various appropriate sources, all representative of the Community  industry: 

23 

•  Production,  sales,  market  share  and  employment  in  the  Community,  were 

established  at  the  level  of  each  national  footwear  federation  and  thus  cover  the 

entire  Community  production  of  the  like  product.  This  fact  clearly  contradicts  the 

allegation  made  by  an  interested  party  further  to  the  final  disclosure  according  to 

which  figures  relating  to  the  Italian  footwear  federation  had  been  omitted  when 

overall injury  indicators were established; 

•  General  trends  concerning  prices,  costs  and  profitability  were  established  at  the 

level of the cooperating producers in the first group; 

•  Undercutting  and  underselling  exercises  were  carried  out  on  the  basis  of  fully 

verified  price and cost data collected from  the companies in the verification  sample, 

which  are  representative  in  terms  of  size  and  product  range  as  well  as  located  in 

major producing Member States. 

3.  Anonymous treatment of the companies in the verification  sample 

(55)  Certain  parties  have reiterated  and expanded  their  allegations  that  the  Commission 

was  unjustified 

in  granting  "anonymous  treatment"  to  the  companies  in  the 

verification  sample.  These  parties  have  claimed  that  complaining  domestic 

industries  should be prepared to face any kind of "commercial  retaliation" and have 

requested that at least the names of the companies  in the first  group be disclosed. 

24 

(56)  In this respect, it has to be stressed  again  that the anonymous treatment  was granted 

because the threat exerted went far beyond what could be considered  as "normal" in 

commercial  relations.  The  limited  protection  so granted  was  moreover  considered 

particularly  appropriate  in the context  of a sampling exercise, where  a few  selected 

companies  are particularly  exposed,  although  they represent,  and  act for  the  benefit 

of,  a much larger group. 

(57)  As  regards  the  companies  in  the  first  group,  the  company  names  on  the  non 

confidential  questionnaire  responses  were  generally  replaced  by  an  identification 

symbol  and  most  national  footwear  federations  (which  transmitted  the  answers) 

listed  separately  the  names  of  the  companies  having  replied,  without  of  course 

disclosing the correspondence  between  the identification  symbols  and the names in 

the list.  It should  thus  be stressed  that  all  interested  parties  have  had  access  to  the 

non-confidential  data  provided  by  both  the  producers  in  the  first  group  and,  in  a 

separate file,  to the verified  and confirmed  data of the companies  in the  verification 

sample. 

(58)  Given that the questionnaire responses of the companies in the first  group as well as 

the  lists  established  by  federations  was  made  accessible  to  all  parties  before  the 

Commission  became  aware  of  the  above pressures,  it  was considered  that  the  files 

in  question,  which  permitted  the  identification  of  most  companies,  could  not  be 

made  anonymous  ex post  and should  thus continue  to be accessible  in  an  unaltered 

form.  Under  these  circumstances,  it  was considered  appropriate  to  include,  in  the 

final  disclosure sent to all parties, the list of companies in the first  group, whilst the 

name of the companies in the verification  sample was kept undisclosed. 

25 

F. 

INJURY 

1.  Cumulative assessment of the effects  of the dumped imports 

(59)  Certain  parties  have  claimed  that  the  impact  of  Indonesian  and  Chinese  imports 

should  not  be  cumulatively  assessed.  In  particular,  it  has  been  alleged  that  two 

conditions, which ought to be fulfilled  to make cumulation possible, were not met: 

(60)  Firstly,  it  has  been  argued  that  in  order  to  determine,  for  the  purpose  of  applying 

Article 3 (4) of the Basic Regulation, whether the margin of dumping established  in 

relation  to  the  imports  from  each  country  (for  which  cumulation  with  others  is 

considered)  was  more  than  de minimis,  the  Institutions  should  not  take  account  of 

residual  margins  but  should  rather  rely  on  the  margins  found  for  cooperating 

exporters.  This  assertion  cannot  be  accepted,  in  particular  in  consideration  of  the 

low  level  of cooperation  obtained from  Indonesian  exporters.  In addition,  it is also 

worth  noting  that the margins  of dumping  established  in respect  of  two  Indonesian 

cooperating  exporters  (out  of  three  selected  in  the  sample)  were  more  than  de 

minimis. 

(61)  Secondly,  it  has  been  argued  that  certain  differences  in  conditions  of  competition 

(allegedly  evidenced  by  average  import  prices  per pair,  said  to be  markedly  higher 

in  the  case  of  Indonesia  when  compared  to  the  People's  Republic  of  China)  were 

such  as  to  make  cumulation  unwarranted. 

In  this  respect,  although  the  alleged 

differences  are somewhat confirmed  at Eurostat level, it was considered that: 

26 

' - these  differences  are  not  such  as to allow  a clear  distinction  to  be  made  between 

the Indonesian  and Chinese  pricing policies, (in particular  when  the  average  prices 

of both  Indonesia  and the People's  Republic of China are compared  to the  average 

price of the other  third  countries  supplying  the Community  market,  which  is  much 

higher than the average prices of both countries under investigation); 

-  a  detailed  examination  of  the  available  information  shows  that  imports  from 

Indonesia,  as  well  as  those  from  the  People's  Republic  of  China,  cover  the  full 

range of prices; and 

-  on  the  basis  of  the  information  available,  the  most  plausible  explanation  of  the 

existing difference  is a slightly different  product  mix  rather than  a clearly  different 

pricing policy. 

(62)  Further  to  the  exclusion  of  slippers  from  the  single  category  of  products  under 

consideration,  the conclusions  as to whether  the cumulative  assessment  of  imports 

from  both  countries  was  warranted  were  reexamined.  In  1994,  the  volume  of 

footwear  imported  under CN code 6404  19 90 originating in  the People's  Republic 

of China stood at  101.1 million pairs,  .id that originating in Indonesia at 24 million 

pairs.  The  market  shares  of  these  dumped  imports  for  the  same  period  stood  at 

50.5% and  12% respectively. 

Moreover,  substantial  dumping  margins  have  been  confirmed  in  respect  of  these 

products,  and  the  conclusions  set  out  in  recital  68  of  the  provisional  duty 

Regulation  as  regards  the  conditions  of  competition  on  the  market  could  be 

confirmed  after  the exclusion  of slippers from  the proceeding. On  this basis, it was 

considered  that  the cumulative  assessment  of  the effects  of  the dumped  imports  of 

outdoor  footwear  from  the  two  countries  concerned  was  warranted.  Accordingly, 

the  provisional  findings  in  this  respect  (as  set  out  in  recital  64  to  69  of  the 

provisional  duty  Regulation)  should  be  confirmed  in  respect  of  the  restricted 

category of outdoor  footwear. 

(63)  The  total  volume  of  imports  of  outdoor, footwear  from  the  People's  Republic  of 

China  and from  Indonesia taken  together  increased  from  65.4 million  pairs  in  1991 

to  125.1  million  pairs  in  1994,  a  significant  increase  of  more  than  90%.  This 

corresponds  to an increase in combined  market  share from  40.5% in  1991 to 62.4% 

in  1994. 

2.  Undercutting  calculation 

(64)  It has been  alleged  that  undercutting  was  not  always practised,  if  at all, at the  level 

indicated  in  the  provisional  duty  Regulation.  During  the  hearings  certain  parties 

have  shown  samples  of  allegedly  comparable  models  where  imported  models 

(generally  manufactured  in  accordance  with  the  importer's  own  specifications  and 

design) were more expensive than Community-produced  ones. 

28 

Although  these claims  may be true in  some  particular cases,  it  has  to  be  stressed 

that they were not confirmed  on a broader basis by the investigation  into both the 

exporters' prices for certain models and Eurostat prices.  In these circumstances, the 

Commission  considered  it  appropriate,  for  the  purpose  of  establishing  definitive 

findings,  to continue to rely exclusively  on the detailed  and/or global  information 

collected  (and  verified  to  the  maximum  extent  possible)  in  the  course  of  the 

investigation,  on  the  basis  of  which  the existence  of  price  undercutting  has  been 

positively established. 

(65)  It  has  been  claimed  that  the  adjustment  for  differences  in  level  of  trade  was 

insufficient  and ought to be revised.  In particular, evidence was provided showing 

that the  13% adjustment granted at provisional  stage to take account of  differences 

in  the  level  of  trade  between  importers  and  Community  producers'  clients,  only 

covered intra EC transport and other ancillary costs. 

A  further  analysis  was  carried  out,  concentrating  on  the  importers  for  which 

corroborated  data  relating  to  this  adjustment  had  been  provided,  i.e.  the  five 

cooperating  importers  named in the provisional  duty Regulation.  These  importers 

had been  the  subject  of  a verification  visit  and together  represented  12.5% of  the 

import volume concerned during the investigation period. 

29 

It could be verified  that three of  them had not sourced the product concerned  in a 

significant  way from Community producers during the investigation period, but had 

rather the same customers as the Community producers.  It was therefore concluded 

that,  to be  compared  in  a fair  way,  import prices  had to be  adjusted for  the  costs 

incurred between the importation and the point when the products actually reached 

the customers, and for a reasonable profit.  For this purpose, all costs  which could 

be allocated to the product concerned were taken into account,  with the exception 

of  those  which  appeared to be part of  the production  costs  (such  as raw  materials 

provided by the importer to the producer in the exporting country) and thus to have 

been included in the customs value of the goods as reported in Eurostat. 

Conversely, two of the five  importers appeared to be customers of the Community 

producers,  and  thus  only  their  costs  from  CIF  to  delivered  duty  paid  at  their 

warehouse level (DDP) were taken into account, as this corresponded to the level of 

trade where the Community producers' prices and costs had been established. 

For each  importer,  the  relation  between  the  average  import  price  for  the  product 

concerned  and  the  costs  mentioned  above  was  examined.  It  resulted  from  this 

analysis  that,  to  adjust  the  CIF price to  a level  of  trade comparable  to that  of  the 

Community  producers'  deliveries,  two  elements  had  to  be  taken  into  account. 

Indeed, although a part of  the costs can be considered  as proportional  to the value 

of the goods, an adequate adjustment was found to require also a fixed  amount per 

pair, to reflect  the costs incurred inevitably by any importation, independently from 

the goods' value. 

30 

(66)  On the basis of the evidence examined it was found that, in order to be compared in 

a fair way to the Community producers' prices and costs, the CIF import price for 

the product  concerned  had to be adjusted  20% upwards and then  increased  by an 

amount of 0.2 ECU per pair, plus the normal customs duty rate. 

(67)  Calculations have been  amended accordingly, resulting in the confirmation  of the 

existence  of  the  undercutting  practices  established  in  the  provisional  duty 

Regulation.  On the basis of Eurostat, as for the cooperating exporters subject  to a 

provisional  anti-dumping  duty,  average  undercutting  margins,  expressed  as  a 

percentage of the Community industry's prices, were found  to be in excess of 7% 

for Indonesia and 18% for the People's Republic of China. 

3.  General injury factors 

(68)  Since  no new  representations  were made by any interested  parties  as regards  the 

provisional  assessment  of  general  injury  factors  (such  as, inter alia, consumption 

on the Community market, production,  sales, profitability, and employment  of the 

Community industry), no re-examination of the findings concerned was undertaken. 

31 

(69)  However,  given  the  exclusion  of  slippers  from  the  single  category, of  products 

under consideration,  the  main findings  relating to the  market  and the  Community 

industry  manufacturing  outdoor  footwear,  which  were  not  detailled  in  the 

provisional duty Regulation, are outlined below: 

• 

• 

• 

the total Community consumption increased from  161.3 million pairs in 1991 

to 200.4 million pairs in 1994. 

the production decreased from 40.4 million pairs in 1991 to 30.8 million pairs 

in 1994, a 24% drop. 

the sales  experienced  a decrease of  45% in volume terms and 32% in value 

terms  over  the  same  period,  corresponding  to  a  fall  in  market  share  from 

20.8% to 9.2%. 

• 

the profitability  on sales of outdoor footwear for companies in the first group 

experienced a decrease from  12.3% in  1991 to 2.8% in  1994, this downward 

trend being  confirmed  by that established  in  relation  with  the companies  in 

the control sample. 

• 

As far as employment and company closures are concerned, due to the ability 

of most companies in the sector to produce both indoor and outdoor footwear, 

no  absolute  figures  limited  to outdoor footwear  production  were  established 

in  the  course  of  the  investigation.  In  view,  however,  of  the  indicators 

presented above,  when compared to those established in the provisional  duty 

Regulation,  the negative  trend of employment  and the significant  number of 

company  closures  could be confirmed  in respect  of  the Community  industry 

manufacturing outdoor footwear. 

32 

4.  Conclusion on injury 

(70)  In the light of the above and in the absence of other arguments, it is confirmed  that, 

as  was  established  in  recital  84  of  the  provisional  duty  Regulation  for  the 

Community  industry  producing  both  outdoor and indoor footwear,  the  Community 

industry  producing  outdoor  footwear  has  suffered  material  injury  within  the 

meaning of Article 3 of the Basic Regulation. 

G.  CAUSATION 

(71)  Most  exporters  and  importers  again  raisecj  the  case  of  imports  from  Vietnam  as 

being  a cause of the injury  suffered  by the Community  industry.  In this  respect,  it 

has to be stressed that at the time of the lodging of the complaint  Vietnam's  known 

share  of  the  outdoor  footwear  market  was  relatively  limited.  The  increase  which 

took place afterwards  was already noticeable during the investigation  period,  where 

the market  share held  by the products  originating  in  Vietnam  was, however,  much 

more  limited  than  that  of  Chinese  products.  It  follows  from  the  above  that  the 

effects  of  Vietnamese  imports  could  not  have  broken  the  causal  link  established 

between  the  imports  subject  to the current  investigation  and  the  injury  suffered  by 

the Community  industry. 

(72)  Since  no  other  potential  cause  of  injury  has  been  put  forward  with  substantiated 

evidence, the provisional  findings  in this respect as set out at recitals  85 to 95 of the 

provisional  duty  Regulation  are therefore  confirmed.  Furthermore,  in  view  of  the 

above  trends,  it  is considered  that the above conclusion  applies  equally  to  outdoor 

footwear. 

33 

H.  COMMUNITY  INTEREST 

1. 

Impact on consumers 

(73)  Although  no  representations  have  been  received  either  from  consumers  or 

consumer  organisations  following 

the  publication  of 

the  provisional  duty 

Regulation,  some parties  have argued  that  anti-dumping  measures  would  seriously 

affect  the  Community  consumers  and,  among  these,  in  particular  those  with  the 

lowest income. 

This  argument  concerning  the  foreseeable  impact  of  measures  on  the  consumers' 

buying  price  has  been  examined  in  detail.  The  results  of  this  examination  are  as 

follows: 

(a) 

Impact in absolute terms 

(74)  Firstly,  as  far  as  footwear  prices  to  distributors  are  concerned,  it  is  likely  that  the 

Community  industry,  with  a  9.2%  market  share  and  a  5.1  ECU  per  pair  average 

price, would not be able to increase its prices above the 4.2% necessary to reach  the 

reasonable profit  as defined  in the provisional  duty Regulation  (recital  106) without 

running the risk of worsening  its current  strong downward trend  in terms of  market 

share. 

In  addition,  imports  from  countries  not  concerned  by  this  proceeding 

represent  28.4%  of  the  market  for  the  product  concerned  and  it  is  expected  that 

producers  in  these  third  countries  will  not  be  willing  or  able  to  command 

significant  price increases. 

34 

As for  Indonesia,  it should  be recalled  that the injury  elimination  level  foreseen.for 

this  country  is  considerably  lower  than  for  the  People's  Republic  of  China,  the 

average  price  of  the  imports  being  2.57  ECU  per  pair.  The  market  share  of 

footwear  originating  in  the  People's  Republic  of  China  being  50.5%,  (with  an 

average  price  of  1.83  ECU  per  pair)  and  in  view  of  the  duty  rate  proposed,  the 

average  maximum  foreseeable  impact  of  the  measures  proposed  on  the  market  of 

the footwear  concerned as a whole amounts to 0.5 ECU per pair. 

Thus,  only  if  distribution  chooses  to  keep  its  margins  unchanged  and  charges  the 

entirety of its increased costs to the consumers, would the latter have in turn to pay 

the  corresponding  amount  of  0.5  ECU  per  pair.  Since  the  average  per  head 

consumption  of  the  footwear  concerned  in  the  Community  is  below  one  pair  per 

person  per  year,  the  impact  of  the  proposed  measures  for  the  consumer  remains 

clearly marginal. 

(b) 

Impact  in relative terms, effect of price on consumption 

(75)  In relative terms, the basis of the calculations  was the average price of the  footwear 

concerned  at  delivered-warehouse  distributor  level,  namely  3.6  ECU  per  pair, 

which  takes  into account, for  the imports, the adjustment  for  differences  in level of 

trade referred  to in recital  66 of the present  Regulation.  Using the lowest  mark-up 

found  among  the  distribution  channels  analysed  below,  i.e.  125%, it  is  estimated 

that the average price for  the consumer  of the product concerned  is above  8.1  ECU 

per  pair.  As  a  consequence,  the  impact  on  the  consumer  price  of  fully  reflected 

duties would be below 6.5%. 

35 

This  percentage  should,  as  explained  above,  be  examined  in  light  both .of.the 

absolute  value  of  the  increase  (0.5  ECU  per  pair)  and  the  general  evolution  of 

prices.  Indeed,  over  the four  years examined,  and  due  to  the  penetration  of  the 

dumped imports, the average market price at delivered-warehouse distributor level 

decreased of more than 16% when corrected from the general inflation rate. 

(76)  In the absence of any other element or reaction from consumer organisations, it was 

therefore  concluded that the impact pf the proposed measures on the consumer of 

the  footwear  concerned  was  likely  to  be  minimal.  It  could  as  a  consequence  be 

concluded that no significant  contraction  in demand was to be foreseen  as a result 

from a possible full reflection of the duty on the consumer price. 

2. 

Impact on the distribution 

(a) 

Impact on the distribution as a whole 

(77)  It has been  argued that the imposition  of  measures  would  have  a strong negative 

impact on the importers.  More globally, diverging views have been expressed on 

the  situation  of  the  whole  distribution  chain  which,  it  has  been  argued,  was  an 

activity  with  a  far  greater  significance  in  the  Community  than  the  footwear 

production, in terms of both turnover and employment. 

36 

It should be recalled first that, by its very nature, for a given quantity_of footwear, 

the distribution chain will have a higher turnover than the manufacturing companies 

it buys from, simply by virtue of its distribution margin.  Secondly, the employment 

figures for the footwear distribution in general, where all types of footwear are sold, 

cannot  be  compared  with  those  of  the  Community  production  of  the  product 

concerned only. 

As  consumers  do  not  buy  shoes  in  significant  quantities  outside  the  Community, 

negative consequences of anti-dumping duties for the distribution as a whole could 

only result  from  a significant  reduction  of  consumption  and therefore  of  turnover, 

or a downward pressure on distribution margins in order to minimise an increase in 

consumer prices (and a decrease in consumption). 

As explained above, in the light of the foreseeable  impact of possible measures on 

the consumers of the product concerned, it can be considered as highly unlikely that 

consumption  of  the  product  concerned  would  drop  significantly,  even  if  the 

distribution sector were to maintain its current margins. 

37 

Taken  as  a  whole,  it  can  therefore  be  concluded  that  the  effects  of  possible 

measures on the distribution chain will be very limited.  Care was however taken to 

make an in-depth analysis in the light of the structure of footwear distribution in the 

Community. 

(b) 

Structure of the footwear  distribution in the Community 

(78)  Among  the  footwear  distribution  in the EC, four  different  channels  of  sale  to the 

end  customer  are  generally  identified.  These  are  the  branded  chains,  the 

independent  retailers,  the non-specialised  supermarkets,  and, as  a fourth  category, 

the other types of generally non-specialised distribution (clothing and general stores 

for example). 

(i) 

The independent retailers 

(79)  The  traditional  distribution  channel  consists  of  independent  retailers,  generally 

buying from wholesalers.  In the evolution of the distribution however, wholesalers 

tend  to  disappear  as  retailers  enter  into  a closer  relationship  with  a more  limited 

number of producers, or tend to group in purchase associations while keeping their 

independence. 

38 

As  far as the retailers  themselves  are concerned, they face  an adverse  competitive 

situation due to both their individual lack of price control on suppliers and the high 

margins they require to cover the fairly  high costs  of  the city centres  retail  outlets 

from  which  they  predominantly  operate  (150% to  200%).  In fact,  they  have  lost 

ground in certain Member States to more recently developed  forms  of  distribution 

falling within the other three categories, in particular the branded chains. 

However,  as a consequence  of  their strong presence in some other Member States 

and their situation at the upper end of the market where they maintain a continuous 

commercial  relationship  with their customers,  it should be noted  that  independent 

retailers  are still,  at least  in terms of  value  added and employment  (over  250  000 

persons),  the  most  important  distribution  channel  in  the  Community,  although 

probably not the first one in terms of market share (in volume). 

(ii) 

The branded chains 

(80)  These  chains,  which  are  sometimes  involved  in  production  activity  in  the 

Community,  are generally  owned by one  or two  large companies  in  each country, 

which  own  several  brands  and  operate  across  the  whole  market  range.  They 

operate  from  out-of-town  super  or discount  stores,  which,  because  of  their  sales 

volume,  prices  and  specialisation,  can  resist  the  non-specialised  supermarkets' 

pressure. 

39 

The  branded  chains  also  sell  through  in-town  shops  replacing  the_ independent 

retailers  with  less  costly,  standardised  shops  which  accomodate  the  need,  on  the 

part of  some  customers'  for  an  alternative  retail  buying  environment  to  discount 

halls. Due to their purchasing power, their access to world supply  (they import on 

their  own  account)  and  the  relatively  low  margins  they  operate  with,  generally 

around 25% of the cost of sales for the central trading arm and 100% on average for 

the shops, they are able to gain market share rapidly once they enter a market and to 

achieve growth rates in excess of 5% per year. 

(iii)  The non-specialised supermarkets 

(81)  Important  in  terms  of  volume,  but  less  in  terms  of  value  on  the  total  footwear 

market  due  to  the  low  average  price  of  their  sales,  non-specialised  supermarkets 

have a strong influence  at the lower end of the market.  Although they  sometimes 

buy  directly  from  suppliers  located  outside  the  Community,  they  usually  rely  on 

specialised  importers for their imports, which  constitute  an important part of  their 

footwear  sales.  Their  traditional  mark-up  is  around  100%, but  it  can  range  from 

around  60%  on  promotional  operations  to  over  130%  on  some  Community 

productions.  Due to the  supplementary  step of  the importer and the  fixed  part of 

the costs incurred, imports from the countries concerned through this sales channel 

usually reach the consumer at a price 3 times higher than the CIF level. 

40 

(iv)  Other sales channels 

(82)  Other  sales  channels,  such  as  mail  order  companies  or  garment  stores,  gained  a 

significance  in certain  Member States but none of  these has individually  acquired 

an importance on a Community-wide basis.  In certain Member States,  specialised 

mail-order firms have a cost structure similar to the branded chains.  Community-

wide  apparel  chains  of  "small" shops  also  introduce  footwear  in  their  stores  as a 

fashion  branded  item,  generally  with  higher  margins  than  on  their  usual  articles. 

Due  to the fashion  aspect  of  these  sales, they are in competition  with  the branded 

chains, although to a lesser extent than the large general city centre stores. 

(c) 

Specific impact of the proposed measures on the various sales channels 

(83)  As  regards  the  independent  retailers,  which  still  constitute  the  largest  source  of 

employment  in  the  Community  footwear  distribution,  the  general  conclusion 

presented in recital 77 of the present Regulation is strengthened by the fact that they 

usually have a low proportion of their supplies of the product concerned originating 

in  Indonesia  or the  People's  Republic  of  China.  It  should  be  added  that  they are 

grouped in a confederation  representing 8 Member States on a representative level, 

and that no submission opposing the possible imposition of anti-dumping measures 

was received from this source or any other. 

41 

(84)  The companies  owning  branded chains have contested the need for the  imposition 

of anti-dumping duties.  Although the general conclusion is also applicable to them, 

the fact that some of them rely more than the independent retailers on the dumped 

imports  for  the  supply  of  the  product  concerned  explains  why,  within  the 

distribution, they could fear a negative effect  of the measures on their comparative 

competitive situation. 

The direct effect  of possible measures on the financial  situation of these companies 

will  be  negligible  if  the  amount  of  the  duty  were  to  be  fully  passed  on  to  the 

consumer.  Indirect  financial  effects  could  only  be  expected  if,  due  to  this  price 

increase,  consumers  would  significantly  reduce  their  purchases  of  the  product 

concerned.  However,  should this happen, it would be only to a limited extent, as 

explained in recital 76. 

Moreover,  the product concerned is never sold separately in specialised  shops and 

due to  its  particularly  low  prices,  represents  less  than  10% of  the  turnover  of  the 

cooperating companies  operating branded chains.  In this perspective, even a small 

contraction  in  the  demand  for  the  product  concerned,  which  appears  unlikely, 

would  have  a negligible  impact  on the companies  as  a whole,  in  particular  if  the 

demand is at least partly reoriented to footwear with a higher price, with probably a 

higher margin in absolute terms. 

(85)  As  far  as  non  specialised  supermarkets  or  other  non-specialised  stores  are 

concerned, in view of  the even more limited extent to which their sales rely on the 

product  concerned,  their  situation  should  not  be  affected  by  the  imposition  of 

measures even in the case of the market evolution envisaged above. 

42 

(86)  The situation of the importers supplying these non-specialised distribution channels 

was examined,  as they imported  in some cases  a more important  portion  of  their 

turnover  from  the  countries  concerned  than  their  clients.  These  companies  are 

generally run with a very limited and flexible  structure allowing them to sell only 

when the trading margin they foresee covers the costs incurred.  Their expertise on 

the market  and  their  ability  to design  and  sell  are not  affected  by the country of 

origin of the goods.  The anti-dumping measures having an impact on the footwear 

distribution  as a whole, these  importers  will  be  able  to benefit  from  any market 

situation, and continue to supply their clients with Chinese or Indonesian imports, 

or any non-dumped product, as well as Community-produced ones. 

(87)  In  conclusion,  it  could  not  be  established  that  the  imposition  of  anti-dumping 

measures  on  the footwear  concerned  would  be such  as to affect  significantly  the 

financial situation of either the footwear distribution chain as a whole or of a part of 

it. 

3 

Impact on the Community industry and its suppliers 

- * 

(88)  The argument  according to which the measures  would have no positive  effect  on 

the  situation  of  the Community  industry  due to the  shift  of  supply  to  other  third 

countries has been presented  again. It has been argued moreover that the situation 

of  the  textile  footwear  industry  in  this  respect  was  comparable  to  that  of  the 

synthetic handbags manufacturers  and that  accordingly the Council  should  also in 
the present case refrain  from taking measures4. 

4  See recitals  105 and  106 of Council  Regulation  (EC) No.  1567/97 (OJ No L208, 2.8.1997, p.31.) 

43 

Shift  of  supply  between  various  countries  has  been  an  important  factor-on-the 

footwear  market for a number of years.  In this regard, it should  be noted that the 

Community  industry has been able, by its automation and rationalisation,  to partly 

compensate, by its own increase in exports, for the constant change of country from 

which varying volumes were imported in the Community.  This could however not 

be  the  case  for  the  massive  surge  in  dumped  imports  from  the  two  countries 

concerned  in the present proceeding. As far as the alleged parallelism  between the 

present  proceeding  and  the  synthetic  handbags  case  is  concerned,  it  should  be 

stressed that the significant  market share still held by the complainant  Community 

industry in this case, the nature of the capital holders in most exporting companies, 

as  well  as  the  important  industrial  investment  necessary  to  produce  footwear, 

clearly  exclude  any  reasonable  and  meaningful  comparison  between  the  two 

industries. The Council  cannot accept therefore  that for the  sake  of  consistency,  it 

should refrain from taking measures in the present case. 

(89)  It  has  been  argued  again  that,  should  measures  be  imposed,  this  would  have 

negative  consequences  on  the  footwear  machine  manufacturers  which  would  be 

limited in their sales to Indonesia and the People's Republic of China. 

As  far  as  the  machine  suppliers  are  concerned,  it  should  be  noted  that  the 

Community industry is clearly investing in automation, and in the injection process 

in  particular.  This  automation  is  linked  with  investments  in  machines  and  in 

moulds  produced  in the Community,  which continue  to create  a virtuous  circle  of 

technological  improvement.  No  evidence  has  been  received  on  the  other  hand 

showing  that  exporters  in  Indonesia  or  the  People's  Republic  of  China  are main 

clients of the Community equipment manufacturers. 

44 

(90)  No  new  evidence  having  been  submitted  in  respect  of  these  arguments, - the 

conclusions presented in recitals 99 and  104 of the provisional duty Regulation are 

accordingly confirmed. 

4. 

Conclusion concerning Community interest 

(91)  As  a  conclusion,  and  having  examined  all  the  various  interests  involved,  it  is 

considered  that  there  are  no  compelling  reasons  not  to  take  action  against  the 

dumped  imports  in  question.  The  conclusions  set  out  in  recital  105  of  the 

provisional duty Regulation are therefore confirmed. 

45 

I. 

ANTI-DUMPING MEASURES 

1. 

Injury elimination level 

(a)  General considerations 

(92)  It  should  be  recalled  that  the  calculations  used  to  establish  the  injury  elimination 

level at the provisional  stage were based on two different  sets of price comparisons. 

As far as the cooperating exporters were concerned, the prices of the most  exported 

models  were  compared  to  the  Community  industry's  corresponding  non-injurious 

prices  on  the  basis  of  a grouping  into  16 so-called  families  of  footwear,  of  which 

13, relating  to outdoor  footwear,  were considered  for  the purpose  of  the  definitive 

determination.  For  the  vast  majority  of  imports,  however,  in  the  absence  of 

cooperation  from  any exporters, the injury  elimination  level had to be calculated on 

an  average  basis  for  the CN code concerned,  this  approach  having  been  called  the 

category  comparison. 

(93)  It has been  argued that, in performing  these comparisons, the Commission  failed  to 

take into account the alleged differences  between  vulcanised  and injected  footwear. 

Further  to what has been  explained  at recitals 26 to 30 of the present  Regulation,  it 

is  considered  that  there  are  no  differences  between  vulcanised  and  injected 

footwear  which  are such as to significantly  affect  global price comparisons. 

Indeed, the difference  in the manufacturing  processes used for  the production  of the 

soles of two comparable models does not result in a different  consumer  perception. 

As  far  as  the  cooperating  exporters  are  concerned,  in  the  case  where  imported 

vulcanised  models  were  compared  to  Community-produced  injected  footwear 

because  these  were  the  most  similar  models  found,  the  exporters  were  given  the 

opportunity  to  comment  on  the  basis  of  the  documents  and  non-confidential  files 

available to them, and none of them contested the comparison made. 

46 

(94)  Exporters  from  the  People's  Republic  of  China  claimed  that  the  descriptive 

elements  of  the  Community  produced  models  used  for  comparison  purposes  were 

insufficient.  In this  respect,  it should  be recalled  that  the exporters  were  provided 

with  copies  of  the  non-confidential  files  where  photographs  of  the  Community-

produced models used as a reference  in each family  were provided.  This was done 

in addition  to the written  explanations  given  and the calculation  sheets  included in 

the disclosure. 

(95)  Following  the  claim  made  by  importers,  and  in  order  to  perform  the  price 

comparisons  in  the  calculation  of  the  injury  elimination  level,  CIF  import  prices 

were  adjusted  to  the  duty-paid,  customer-delivered  price  level  by  using  the 

adjustment  methodology  used  for  the  undercutting  assessment,  as  presented  at 

recital 66 of the present  Regulation. 

(96)  It  was  argued  by certain  importers  that,  even  if  it could  be  admitted  that  injurious 

dumping  in  respect  of  footwear  with  an  import  price  below  three  US  dollars  was 

taking  place,  this  was  not  the  case  for  more  sophisticated  footwear.  The  latter 

category,  according  to  the  importers  in  question,  should  be  attributed  a 0%  injury 

elimination  level. 

In  this  respect,  it  should  be  recalled  that,  although  huge  volumes  of  outdoor 

footwear  are  indeed  imported  below  2.5  ECU  (equivalent  to  3  US  dollars),  these 

imports  covered,  in  the  sample  of  the  importers'  transactions  examined,  only 45% 

of  the  value  of  the  imports  concerned.  The  fact  that  a  majority  of  the  import 

turnover was above the alleged price break  shows that, in reality, the imports  of the 

product  concerned,  though  made  at  extremely  low  prices  when  compared  to  what 

they  would  be  if  normal  competitive  conditions  prevailed,  are  spread  over  a  wide 

price range. 

47 

Moreover,  the  non-injurious  price 

levels  established  for  the-  investigated 

Community  producers  were  also  both  below  and  above  the  alleged  price  break, 

adjusted to the  appropriate customer-delivered  level  (3.7  ECU), depending  on the 

shoe  type.  In  the  absence  of  any  other  evidence  relating  to  this  aspect  of  the 

market, this claim should therefore be rejected. 

(97)  No  other  remarks  having  been  submitted,  the  general  injury  elimination  level 

methodology,  as  established  in  recitals  106  to  112  of  the  provisional  duty 

Regulation, are therefore confirmed. 

The reduction in the product coverage of the proceeding and the change in the level 

of trade adjustment, however, affect the provisional findings, as set out below. 

(b)  Indonesia 

(98)  In conformity  with the methodology set out in the provisional  duty Regulation, the 

revised  injury elimination  levels  for the  cooperating  companies  in  the  sample  for 

Indonesia,  expressed  as  a percentage  of  the  CIF  import  price,  ranged  from  0  to 

31.5%, with an average to be applied to cooperating companies outside the sample 

of  14.1%.  As  regards the calculation  of  the residual  injury elimination  margin, it 

was considered that, in the case of a market economy country such as Indonesia, the 

most  reasonable  basis  was  to use the average  level  found  on the  basis  of  verified 

data established in respect of the cooperating exporters in the sample, i.e.  14.1%. 

(c)  People's Republic of China 

(99)  In accordance with the methodology set out in the provisional  duty Regulation, the 

revised  single  injury  elimination  level  for  the  People's  Republic  of  China  was 

found to be 49.2%. 

48 

2.  Duty 

(100) One of  the  cooperating  Indonesian  companies  not  included  in  the  sample  objected 

to the fact  that it had been attributed a duty based on the weighted average dumping 

margin found  for the sample. 

This  argument  could  not  be  accepted  since  Article  9(6)  of  the  Basic  Regulation 

provides  that,  where  the  Commission  has  limited  its  examination  in  accordance 

with  Article  17,  any  anti-dumping  duty  imposed  on  cooperating  companies  not 

included  in  the  sample  shall  not  exceed  the  weighted  average  margin  of  dumping 

established  for  the parties  in the sample.  Moreover,  it will be recalled  from  recital 

23 of the provisional  duty Regulation  that the Indonesian  companies concerned  had 

agreed to this methodology. 

(101) Since the residual  injury  elimination  level  for  Indonesia  and the People's  Republic 

of  China,  as  well  as the  individual  level  for  PT  Sindoll  Pratama,  is  lower  than  the 

corresponding  dumping  margins,  the  anti-dumping  duty  should  be  based  on  these 

levels.  For  the  other  cooperating  exporters  in  Indonesia,  the  anti-dumping  duty 

should be based on the dumping margins established above. 

(102) The anti-dumping duty rates, applicable to the net, free  at Community frontier  price 

before  duty should therefore be as follows: 

Country 

Manufacturer  and exporter 

Rate of duty 

PEOPLE'S  REPUBLIC OF CHINA  All companies 

• 

INDONESIA 

PT Dragon 

49.2% 

4X)% 

PT Emperor Footwear Indonesia 

0% 

PT Sindoll Pratama 

PT Bosaeng Jaya 

PT Volmacarol 

All other companies 

0% 

14.1% 

14.1% 

14.1 % 

49 

J.  COLLECTION OF THE PROVISIONAL DUTIES  . 

(103) In view of the magnitude of the dumping margins found for the exporting producers 

and  countries,  and  in  the  light  of  the  seriousness  of  the  injury  caused  to  the 

Community industry, it is considered necessary that the amounts secured by way of 

provisional  anti-dumping  duty  under  Regulation  (EC)  No  165/97  should  be 

definitively  collected at the rate of the duty definitively  imposed.  However, to the 

extent to which it can be established, to the satisfaction  of the customs authorities, 

that  imports  related  to footwear  falling  within  CN Code 6404 19 10 (slippers)  or 

shoes excluded from the scope of the present proceeding, as described under Article 

1 (3) (b), (c) and (d) of the present Regulation, the amounts secured of provisional 

anti-dumping duty should be released in their totality, 

HAS ADOPTED THIS REGULATION: 

Article 1 

1.  A definitive  anti-dumping  duty is hereby  imposed  on  imports  of  footwear  falling 

within  CN  code  ex 6404 19 90  (Taric  code  6404 19 90*90),  originating  in  the 

People's Republic of China and Indonesia, except as regards the footwear described 

in paragraph 3, 

2. 

The  rate  of  the  definitive  anti-dumping  duty  on  the  basis  of  the  net,  free-at-

Community-frontier  price, before duty, shall be: 

50 

Country 

Products  manufactured 

rate of 

Taric 

by 

duty 

(%) 

Additiona 

1 

Codes 

People's Republic of 

All companies 

49.2% 

-

China 

Indonesia 

All companies 

14.1% 

8900 

with the exception of:  % 

P.T. Dragon 

P.T. Emperor Footwearlndonesia 

P.T. Sindoll Pratama 

4.0% 

0.0% 

0.0% 

8941 

8942 

8942 

3. 

The duty shall not apply to: 

a)  shoes  sometimes  known  as  "espadrilles",  which,  for  the  purpose  of  the  present 

Regulation,  are shoes with canvas uppers  and unheeled  plaited  fibre  soles,  whether 

or  not  strengthened  with  rubber  or  plastics  over  a  variable  surface,  which  are  not 

thicker than 2.5 cm (Taric code 6404  19 90 * 10); 

b) shoes sometimes known as "diving boots" or "water sports boots", which, for the 

purpose  of  the  present  Regulation,  are  shoes  with  an  upper  made  of  neoprene, 

whether  laminated  on  one  or  both  sides  with  textile  material,  where  the  neoprene 

thickness  is of  2.5mm  or more, covering  the entirety  of  the foot,  with  an  abrasion-

resistant  sole  ,  and  designed  for  certain  water  sports  such  as  diving  (Taric  code 

6404  19 90*20); 

51 

c)  shoes  sometimes  known  as  "medical  shoes",  which,  for  the  purpose, of.  the 

present  Regulation,  are  shoes  which,  although  not  manufactured  according  to  the 

individual  medical  need of one person, are designed  for  easing the recovery  during 

or after  a therapy or a medical operation, as for example shoes to walk while having 

a plastered  or bandaged foot.  These shoes do not cover the foot  entirely  and have a 

wide opening  which enables even  a banded  foot  to fit  inside. They  are sold  not per 

pair,  but  individually,  and  show  at the  same time  more  than  one  of  the  following 

characteristics: 

- The closing device can be adjusted  to the bandage or plaster size 

- Special internal soles or pads can be inserted for medical  purposes 

- The design of the sole is such that it prevents certain harmful  contacts from  the 

foot  with the ground, but at the same time bans a non medical use of the shoe 

- The  design  is functional  and does not  include  decorations  or other  fashionable 

accessories 

(Taric code 6404  19 90*  30); 

d) shoes  sometimes  known  as "beach  shoes", which, for  the purpose  of  the present 

Regulation,  are  shoes  the  upper  of  which  is  limited  to  a  stripe  of  textile  material, 

this upper being attached  on both  sides of  a thick,  lightweight  alveolar plastic  sole, 

in contact  both  with  the foot  and the ground.  This textile stripe  leaves the front  as 

well  as the rear part of the foot  uncovered,  and its width does  not  exceed  one third 

of  the  shoe's  length.  As the back of the foot  is not enclosed  by the  shoe, the  wearer's 

heel  lifts  from  the  sole when  walking.  Beach  shoes  are designed  to be  worn  with 

wet  or  sandy  feet  on  the  beach  or  around  swimming  pools,  and  their  design 

excludes  any  practical  use  for  walking  over  a  longer  distance.  (Taric  code 

6404  19 90*40). 

52 

• ^ { b v. 

4.  Unless  otherwise  specified,  the  provisions  in  force  concerning  duties  and  other 

customs practices shall apply. 

Article 2 

y 

1. 

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

(EC)  No  165/97  shall  be definitively  collected  at the rate of  the duty  definitively 

imposed, with the exception of the amounts for which it can be established,  to the 

satisfaction  of  the  customs  authorities,  that  they  related  to  imports  of  footwear 

falling  within CN code  6404  19 10 or shoes described  in Article  1  (3) (b), (c) and 

(d), which amounts shall be released. 

2.  Amounts  secured  in  excess  of  the  definitive  rate  of  anti-dumping  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  all  Member 

States. 

Done at Brussels, 

For the Council 

The President 

53 

ISSN 0254-1475 

COM(97) 551 final 

DOCUMENTS 

EN 

02  11 

Catalogue number  :  CB-CO-97-569-EN-C 

ISBN  92-78-26275-7 

Office  for Official  Publications of the European Communities 

L-2985 Luxembourg 

S~0