Proposal for a Council Regulation (EC) imposing definitive anti-dumping duties on imports of certain seamless pipes and tubes of iron or non-alloy steel originating in Hungary, Poland, Russia, the Czech Republic, Romania and the Slovak Republic, repealing Regulation (EEC) No 1189/93 and terminating the proceeding in respect of such imports originating in the Republic of Croatia
Date: 1997-10-24
Institutions: European Commission
Subjects: Central and Eastern Europe, anti-dumping duty, import, piping, tube

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels,  24.10.1997 
COM(97) 535 final 

Proposal  for a 

COUNCIL REGULATION  (EC) 

imposing definitive  anti-dumping duties on imports of certain seamless pipes and 

tubes of iron or non-alloy steel originating in Hungary, Poland, Russia, the Czech 

Republic, Romania  and the Slovak Republic, repealing Regulation (EEC) No 

11S9/93 and terminating the proceeding in respect of such imports  originating in the 

Republic of Croatia 

(presented  by the  Commission) 

EXPLANATORY MEMORANDUM 

(1)  On  31  August  1996,  the  Commission  opened  two  parallel  anti-dumping 

investigations in respect of imports of certain seamless pipes and tubes: 

-  an  interim  review  investigation  of  the  existing  measures  concerning  Hungary, 

Poland and the Republic of Croatia; 

-  a new investigation with regard to Russia, the Czech Republic, Romania and the 

Slovak  Republic,  following  a  complaint  lodged  by  the  Community  industry 

concerned. 

(2)  On  31  May  1997,  having  established  the  existence  of  injurious  dumping,  the 
Commission,  by  Regulation  (EC) No  981/971,  imposed  a provisional  duty  on  all 

imports subject to the new investigation. 

(3)  For  its  definitive  findings,  the  Commission  analysed  the  information  gathered  for 

both  investigations  jointly.  This  analysis  leads  to  the  conclusion  that  protective 

measures,  in  the  form  of  ad  valorem  duties, are warranted  in respect  of  Hungary, 

Poland,  Russia,  the  Czech Republic, Romania and the  Slovak  Republic.  However, 

measures in respect of Croatia should be repealed. 

1 O J N oL  141,31.5.1997, p. 36. 

(4)  Having  been  informed  of the Commission's  intention to propose  to the  Council  the 

imposition  of definitive  duties, the Hungarian, Polish, Czech, Romanian  and  Slovak 

producers  listed  below have offered  price undertakings.  In  substance, the  producers 

offer  to  sell  their product  for  export  to the  Community  at revised  prices  so that  the 

injurious  effect  of dumping is eliminated. Further, they offer  to ensure that the prices 

of their products will follow a price structure in use in the Community for the trading 

of the seamless steel tubes concerned. 

These undertakings have been offered  in relation to annual quantities exempted  from 

the ad valorem duty. If these quantities are exceeded, the duty would apply. 

(5)  Having  verified  that  this  system  is workable  and  can  be  effectively  monitored,  the 

Commission is of the opinion that these undertakings are acceptable. 

(6)  In  respect  of  Russia,  the  Commission  also  examined  the  undertakings  offered  by 

three of the six Russian companies exporting to the Community. However, as Russia 

is  a  non  market  economy  country,  such  offers  require  guarantees  from  the  Russian 

authorities  to  allow  effective  monitoring.  Having  received  no  adequate  assurances 

from  the  Russian  authorities,  the  Commission  is  obliged  to  reject  the  undertakings 

offered  by the three companies concerned. 

(7)  In  the  light  of  the  above,  and  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  seamless  pipes  and  tubes 

originating  in  Hungary,  Poland,  Russia,  the  Czech  Republic,  Romania  and  the 

A. 

Slovak  Republic, with the exception  of those produced  and  sold  for  export  by the 

companies  for  which undertakings  are accepted.  For the Republic  of  Croatia,  it  is 

suggested that measures  be repealed and the proceeding accordingly terminated  for 

this  country.  Finally,  in  view  of  the  nature  of  the  definitive  measures  imposed, 

provisional duties should be released. 

Country 

Hungary 

Company 
Csepel Tubes Co. Ltd. 
Others 

Poland 

~  Huta Batory SA 

Huta Andrzej  SA 
Huta Czestochowa 
Huta Jednosc SA 
Others 
All companies 
Vftkovice  a.s. 
Nova Hut a.s. 
VT Chomutov a.s. 
Others 
SC Artrom  SA 
SC Silcotub SA 
SC Petrotub SA 
SC Republica SA Trade Co. 
Others 

Zeleziarne Podbrezovâ a.s. 
Others 

Russia 
Czech Republic 

Romania 

Slovak Republic 

Rate of duty 
36.5% 
36.5% 
7.1% 
30.1% 
30.1% 
30.1% 
30.1% 
26.8% 
5.1% 
5.1% 
28.6% 
28.6% 
9.8% 
9.8% 
9.8% 
9.8% 
38.2% 

7.5% 
7.5% 

All companies named above, with the exception of the Czech producers, Vitkovice 

a.s. and Nova Hut a.s., have offered  acceptable undertakings. 

<±é> 

(8)  When the Advisory Committee was consulted on the acceptance of the undertakings 

offered,  some objections were made. Therefore,  in.accordance with Article  8 (5)  of 

Regulation  (EC)  No  384/96,  the  Commission  sent  a report  to  the  Council  on  the 

results of the consultations and a proposal that the investigation be terminated by the 

acceptance of undertakings. Unless the Council decides otherwise within one month, 

it  will  be  possible  to  adopt  the  decision  accepting  the  undertakings  from  the 

exporters concerned. 

^ 

COUNCIL REGULATION (EC) NO 

of 

imposing definitive anti-dumping duties on imports of certain seamless pipes and 

tubes of iron or non-alloy steel originating in Hungary, Poland, Russia, the Czech 

Republic, Romania and the Slovak Republic, repealing Regulation (EEC) No 

1189/93 and terminating the proceeding in respect of such imports originating in the 

Republic of Croatia 

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 
Community1,  as  amended  by  Regulation  (EC) No  2331/962,  and  in  particular  Article 

9 (4) thereof, 

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

Advisory Committee, 

Whereas: 

1 OJ No L 56, 6.3.1996, p. 1. 
2  OJ No L 317, 6.12.1996, p. 1. 

A. PROCEDURE 

(1)  By Regulation (EEC) No  1189/933, the Council  imposed  definitive  anti-dumping 

duties  on  imports  of  certain  seamless pipes  and tubes  of  iron  or  non-alloy  steel 

originating  in Hungary, Poland and the Republic of Croatia. The rate of the duty 

was 21.7% for Hungary, 10.8% for Poland and 17.4% for the Republic of Croatia. 
In  addition,  the  Commission  accepted  undertakings4  offered  by  the  Hungarian, 

Polish and Croatian exporters. 

(2)  On  31  August  1996,  the  Commission  announced  by  a  notice  published  in  the 
Official  Journal of the European Communities5 the initiation of an interim review 

of Regulation  (EEC) No  1189/93 in respect  of imports of certain  seamless pipes 

and  tubes  of  iron  or  non-alloy  steel  originating  in  Hungary,  Poland  and  the 

Republic of Croatia and commenced an investigation pursuant to Article  11 (3) of 

Council  Regulation  (EC)  No  384/96  (hereinafter  referred  to  as  "the  basic 

Regulation"). 

(3)  This  interim  review  investigation  was  initiated  in  parallel  with  an  investigation 
opened  on  the  same  date6  in  respect  of  such  imports  originating  in  Russia,  the 

Czech Republic, Romania and the Slovak Republic following  a complaint  lodged 

by the Defence  Committee  of the Seamless  Steel Tube Industry  of the European 

Union. 

3O J N o L 1 2 0,  15.5.1993, p. 34. 
4O J N o L 1 2 0,  15.5.1993, p. 42. 
5 OJ No C253,31.8.1996, p. 25. 
6O J N o C 2 5 3,  31.8.1996, p. 26. 

(4)  By  Regulation  (EC)  No  981/977  (hereinafter  referred  to  as  the  "provisional 

Regulation"), the Commission imposed a provisional anti-dumping duty on imports 

into, the  Community  of  the  product  in  question  originating  in  Russia,  the  Czech 

Republic, Romania and the Slovak Republic. 

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

interested parties submitted comments in writing. 

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

Commission. 

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

its definitive  findings. 

(6)  On  22  May  1997,  the  Association  Councils  established  under  the  Agreements 

between the European Communities and their Member States, of the one part and 

the  Czech Republic,  Romania and the Slovak  Republic,  respectively,  of  the other 

part were  informed  by letter of the Commission's  intention to impose  provisional 

measures. 

The Czech, Romanian and Slovak authorities all objected that the Commission had 

acted in breach of the Europe Agreement (and in particular Article  34 (2)  thereof) 

by  failing  to  hold  consultations  either  before  the  proceeding  was  initiated,  or 

immediately after the initiation, or prior to the imposition of provisional duties. 

7O J N oL  141, 31.5.1997, p. 36. 

It  should  be  recalled  that,  when a complaint  is  received,  the  Commission  has to 

investigate the allegations contained therein. If the Commission is satisfied that the 

complainant  has  provided  sufficient  evidence  to  warrant  an  investigation,  it  is 

obliged,  under  the  provisions  of  its  own  anti-dumping  legislation,  to  open  a 

proceeding.  Regarding  the  Community's  legal  obligations  under  the  Europe 

Agreements, it is considered that these have been met in full. The Agreements state 

that the Association Councils have to be informed of any dumping case as soon as 

the  authorities  of  the  importing  country  have  initiated  an  investigation.  This 

requirement was met by the Commission. * 

Furthermore, the Europe Agreements state that if no satisfactory  solution has been 

reached within 30 days of the matter being referred to an Association Council, the 

importing party may adopt the appropriate measures.  Since no solution was  found 

within  the  required  time,  the  Commission  was  entitled  to  take  measures,  as 

appropriate,  which  it  did  on  31  May  1997.  The  actual  decision  to  impose 

provisional  duties  was  not  taken  until  21  May,  only  shortly  before  the  statutory 

deadline  expired.  Nonetheless,  the  Commission 

immediately 

informed  the 

Association  Council  and  provided  it  with  the  data  on  the  basis  of  which  the 

decision had been made. Consultations, first with the country  authorities  and then 

with the  exporters/producers  themselves  were  started within a matter of  days and 

were  pursued  throughout  the  investigation  with  a  view  to  reaching  a  mutually 

acceptable  solution.  Therefore,  the  Community  has  fully  complied  with  the 

requirements of the Europe Agreements, and in particular with Article  34  (2) and 

34 (3) (b) thereof. 

(7) 

In  the  interim  review  investigation,  the  Commission  officially  advised  the 

Hungarian, Polish and Croatian producers/exporters, and the importers known to be 

concerned, the representatives  of the exporting countries and the complainant, and 

gave the parties directly  concerned the opportunity to make their views  known in 

writing  and  to  request  a  hearing.  The  interested  parties  who  so  requested  were 

granted  an opportunity  to  be  heard  by  the  Commission.  They  also  made  written 

submissions, making known their views on the  findings. 

(8)  The  Commission  sent  questionnaires  to  all  parties  known  to  be  concerned  and 

received replies from the complaining Community producers, from five companies 

in the  Czech  Republic, from seven companies  in Romania, from one  company  in 

the  Slovak  Republic  and  from  six  companies  in  Russia,  from  one  company  in 

Hungary, from six companies in Poland and from one company in the Republic  of 

Croatia. The Commission also received replies from four unrelated importers in the 

Community, from a Community importer related to one Czech company  and  from 

two  importers  related  to  the  Slovak  producer,  one  of  which  was  located  in  the 

Community and the other in Switzerland. 

Verification  visits,  with  regard  to  both  investigations,  were  carried  out  at  the 

following companies: 

Community  producers 

- Voest Alpine, Kindberg, Austria 

- Vallourec Industries, Boulogne-Billancourt,  France 

- Benteler AG, Paderborn, Germany 

- Mannesmannrôhren-Werke AG, Mûlheim an der Ruhr, Germany 

- Dalmine S.p.A., Dalmine, Italy 

- Productos Tubulares S.A., Valle de Trapaga, Spain 

- Tubos Reunidos S.A., Amurrio, Spain  * 

- Ovako Steel AB Tube Division, Hofors, Sweden. 

- ESW Rôhrenwerke GmbH, Eschweiler, Germany 

- Rohrwerk Neue Maxhtitte GmbH, Sulzbach-Rosenberg,  Germany. 

Importers not related to exporters 

- Jannone ARM S.p.A., Naples, Italy 

- Geminvest  S.R.L., Limbiate, Italy 

- Starval, Marly La Ville, France 

- Voest Alpine Stahlhandel AG, Linz, Austria. 

Exporters and importers/trading companies subject to the new  investigation 

Importer related to two Czech producers: 

- Topham Eisen und Stahlhandelges.m.b.H., Vienna, Austria. 

Importers related to the Slovak producer: 

- Pipex International AG, Nidau, Switzerland 

- Pipex Italia S.p.A., Milan, Italy (a subsidiary of the above). 

Exporters in the Czech Republic 

- Vftkovice a.s. and Vftkovice Export a.s., Ostrava 

- Nova Hut a.s., Ostrava 

- Valcovny Trub Dioss and Dioss Trading, Chomutov. 

- Ferromet Long Products Ltd., Prague (trading company related to Nova Hut) 

- Incos s.r.o., Prague (unrelated trading company). 

Exporters in Romania 

- SC Artrom SA, Slatina 

- SC Silcotub SA, Zalau 

- SC Petrotub SA, Roman 

- SC Republica SA Trade Company, Bucharest 

- Intertube Ltd., Bucharest (trader related to SC Republica SA) 

- SC Metalexportimport SA, Bucharest (unrelated exporter/trader) 

- Sota Company, Bucharest (unrelated exporter/trader). 

Exporters in the Slovak Republic 

- Zeleziarne Podbrezovâ a.s., Podbrezovâ. 

Exporters subject to the review investigation 

Exporter in Hungary 

Csepel Tubes Co. Ltd., Budapest 

Exporters in Poland 

Huta Andrzej SA, Zawadzkie 

Huta Batory SA, Chorzôw 

Stalexport SA (related trader), Katowice 

Exporter in the Republic of Croatia 

Zeljezara Sisak, Sisak Steel Pipe Works, Sisak. 

In the course of the investigation, the Croatian exporter informed the  Commission 

that the company had changed its name to Zeljezara  Sisak  -  Sisak  Tubemills Ltd. 

The  Commission  concluded  that  the  change  in  name  in  no  way  affected  the 

findings  established in the investigation. 

(9)  For both investigations, dumping was examined for the period from 1 September 

1995 to 31 August 1996, "the investigation period". The examination of injury, and 

of the likelihood  of continuation or recurrence of injury,  covered the period from 

January 1992 to the end of the investigation period. 

(10)  All parties concerned were informed of the essential facts and considerations on the 

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

or the amendment of existing definitive measures. They were also granted a period 

within  which to make representations  and/or to offer  undertakings  subsequent  to 

these disclosures. 

B. PRODUCT UNDER INVESTIGATION 

1. Product concerned 

(11)  The product subject to both investigations is: 

a) 

seamless  pipes,  of  iron  or  non-alloy  steel,  of  a  kind  used  for  oil  or  gas 

pipelines, of an external diameter not exceeding 406.4 mm, 

b) 

seamless  tubes  of  circular  cross-section,  of  iron  or  non-alloy  steel,  cold-

drawn or cold-rolled, other than precision tubes, and 

c) 

other  tubes  of  circular  cross-section,  of  iron  or  non-alloy  steel,  other  than 

threaded or threadable, of an external diameter not exceeding 406.4 mm 

currently classifiable under CN codes 7304  10 10, 7304  10 30, 7304 31 99,  7304 

39 91 and 7304 39 93. 

In line with the position previously adopted by the Council8, and as confirmed  in 

recital  (10)  of  the  provisional  Regulation,  all  seamless  pipes  and  tubes  falling 

within the above-mentioned  CN codes are considered as one  product  (hereinafter 

referred  to  as  the  "product  concerned")  for  the  purpose  of  both  the  new 

investigation and the review investigation. 

2. Like product 

(12)  All seamless pipes and tubes subject to both investigations were found  to be alike 

in  their  essential  physical  and  technical  characteristics  and  in  their  end  uses, 

irrespective of whether they are manufactured  in the Community or in the countries 

subject to the investigations. 

Some exporters argued that their products should not be considered as like products 

with those of the Community  producers or those of other exporting producers on 

the grounds that there were quality and technical differences,  as well as differences 

in the distribution channels, use and perception by the market. 

8  OJNoL  120, 15.5.93, p. 34 

10 

It was  found,  however,  that the  product  concerned  is  distributed  through  similar 

channels.  Basic application and overall use are similar. There is a high degree  of 

interchangeability, and consequently of competition, between all imported products 

subject  to  both  investigations  and  those  manufactured  by  the  Community 

producers.  It  was  also  established  that  the  basic  technical  and  physical 

characteristics  of  all  these  imported  products,  despite  minor  differences,  were 

identical  to,  or  closely  resembled,  those  of  the  products  manufactured  by 

Community producers. 

In  conclusion,  the  products  originating  in  the  various  countries  covered  by  the 

investigation  and those  produced  and sold  in the  Community  are considered  like 

products within the meaning of Article 1  (4) of the basic Regulation. 

C. DUMPING 

Anti-dumping  investigation 

1.  Czech Republic 

(a) Cooperation 

(13)  The company  ruled to be non-cooperating  subsequently  wrote to the  Commission 

to  object  to  this  treatment,  claiming  that  the  provisions  of  Article  18  were  not 

applicable to it. It stressed that there had been no intention to mislead and argued 

11 

that the company had acted to the best of its ability; this meant that even though the 

domestic  and export  sales  listings, credit note listings, customer turnover figures 

and  cost  of  production  information  were  admitted  to  be  far  from  ideal,  the 

Commission  was  duty  bound  not  to  disregard  them.  It  also  criticised  the 

Commission  for  not  taking  sufficiently  into account  the privatisation  difficulties 

experienced by the company and the special problems of the Czech Republic in its 

transition to market economy status. Finally, it argued that since the company had 

changed ownership in April 1997 (having ceased production the previous month), it 

Would be unfair to impose sanctions on the new owner. 

The reasons which led the Commission to consider one of the Czech companies as 

not cooperating with the investigation are set out in recital (14) of the provisional 

Regulation. It is worth recalling here that the listings submitted to the Commission 

in  the  company's  reply  to  the  questionnaire  were  found  at  the  verification  to 

contain  several  hundred  domestic  and export transactions which had  never taken 

place. This  was not  only  highly  misleading  but meant that the  Commission  was 

unable to establish, with any degree of certainty, either a reliable normal value or a 

reliable  export  price.  Whatever  the  reasons  for  this  (and  at  this  point  the 

Commission  would  point  out  that  the  explanation  originally  provided  by  the 

company  was  totally  unsatisfactory  and  completely  different  from  the  one  it 

submitted  later  in  writing),  it  cannot  be  said to be  in accordance  with  generally 

accepted accounting principles. In the circumstances, the Commission had no other 

choice than to reject the reply and to apply Article  18 of the basic Regulation, not 

least  because  to  have  acted  otherwise  would  have  been  to  discriminate  against 

other, fully cooperating, companies in the investigation. 

12 

As regards the matter of the change of ownership, since it occurred after the end of 

the investigation period it is not a factor which can be considered relevant to this 

proceeding (see Article 6 (1) of the basic Regulation). 

(b) Normal value 

(14)  One  of  the  Czech  producers  questioned  the  methodology  employed  by  the 

Commission to determine normal value  for one product group (see  recital  (16)  of 

the provisional  Regulation); in particular,  it claimed that there was nothing  in the 

basic  Regulation  which justified  the Commission  calculating  normal  value  on the 

basis of the average of profitable sales only instead of the average of all sales in the 

group.  The  same  producer  objected  to  the  Commission's  use,  in  constructing 

normal value for certain groups, of a profit margin achieved on profitable  domestic 

sales in other product groups. 

This request could not be accepted  since  it is  in contradiction with both the basic 

Regulation and the Community institutions' consistent practice. With regard to the 

first point,  where  the  volume  of  domestic  sales  below  unit  cost  represents  more 

than 20% of sales, normal value is based on the profitable sales only, in accordance 

with the third paragraph of Article 2 (4) of the basic Regulation. With regard to the 

second point,  the  Commission  acted  in accordance  with Article 2 (6)  of  the  basic 

Regulation by applying the profit margin on sales  'in the ordinary course of trade, 

of the like product, by the exporter or producer under investigation'. 

13 

One  producer  also  objected  to  the  substitution  of  its  own  selling,  general  and 

administrative  (hereinafter  referred  to as SG&A) expenses by those  of its related 

company  (see recital (16) of the provisional Regulation) on the grounds that such 

expenses  should  be  based  on  'actual  data'  relating  to  the  producer  under 

investigation,  in  accordance  with  Article  2  (6)  of  the  basic  Regulation.  The 

Commission  considered  that the relevant accounting  documents  submitted  by the 

producer  insufficiently  supported  the  figures  submitted  in  its  reply  to  the 

questionnaire.  After  being notified  of the  Commission's  intentions, the company 

provided  further  explanations  and  tables  but,  since  these  constituted  additional 

information  which  was  not  verifiable,  the  information  could  not  be  taken  into 

account. 

Both  cooperating  producers  queried  the  removal from the  transaction  listings  of 

sales made to each other on the grounds that they were not related and that, even if 

they were, the Commission had failed to show that the prices were affected  by the 

relationship. 

This could not be accepted. Since both companies have a common shareholder (see 

recital (22) of the provisional Regulation and recital (17) below), they are related. 

Furthermore,  Article  2  (1)  of  the  basic  Regulation  clearly  states  that  'prices 

between parties which appear to be associated (...) may not be considered to be in 

the ordinary course of trade (...) unless it is determined that they are unaffected  by 

the relationship'.  Since it was not established that this was the case, the  disputed 

transactions were not reinstated. 

14 

No  further, comments  were  received  in respect  of normal  value  and  the  Council 

therefore confirms the findings as set out in the provisional Regulation. 

(c) Export price 

(15)  No  comments  were  received  concerning  the  determination  of  the  export  price. 

Nonetheless a small adjustment to the profit margin deduction was made in respect 

of the related Austrian importer (see recital (18) of the provisional Regulation) after 

reviewing the profit margins achieved by unrelated importers during the course of 

the investigation. 

(d) Comparison 

(16)  No comments were received under this heading and the Commission's findings are 

therefore  confirmed. 

(e) Dumping margin 

(17)  The cooperating companies objected to the Commission's decision to establish the 

dumping margin on the basis of a comparison of weighted average normal values 

with individual export prices (rather than weighted average export prices), arguing 

that the Commission had failed to provide sufficient justification  for its approach at 

recital (21) of the provisional Regulation. 

15 

In that  Regulation,  the  Commission  stated  that  its  approach  was justified  by  the 

need to reflect the full  degree of dumping being practised and because there was a 

pattern of  export prices which differed  significantly  between  Member  States and 

between  time  periods.  The  Commission  has  reviewed  its  calculations  and 

concluded  that the variations  in export prices between countries did not display  a 

sufficiently  clear pattern. However, the Commission stands by its finding that there 

was  a  pattern  of  export  prices  between  time  periods  which  led  to  a  significant 

increase  in  dumping  (constituting  a clear pattern)  after  the, expiry  of  quantitative 

restrictions  on  31  December  1995,  and  the  approach  adopted  in  the  provisional 

Regulation is therefore confirmed. 

The  Commission's  decision  to  treat both  cooperating  producers as  being  related, 

and  the  consequent  establishment  of  a  single  dumping  margin  for  them,  was 

strongly  objected  to  on  the  grounds  that  both  companies  were  managed 

independently  of  each  other  and had different  cost  and pricing  structures.  It  was 

further  argued  that  the  majority  shareholder  (the  National  Property  Fund)  acted 

merely  as a trustee and had no influence  over the commercial  management  of the 

companies. 

The  Commission  takes the view  that in a market economy  country  it is up to the 

majority shareholder to decide in which legal form it organises its business interests 

in  the  exporting  country.  Its  control,  or  potential  control,  over  such  interests  is 

16 

normally  the  same  if  they  are part of  one  legal  entity  or if  they  are  organised  in 

different  legal  entities.  More  specifically,  to  establish  different  dumping  margins 

for  related companies  entails the risk that exports may be channelled  through the 

company  with the  lowest  dumping  margin.  For this reason  it was  concluded that 

different  producers  in  the  exporting  country  must  nevertheless  be  treated  as  one 

single  entity  for  the  purposes  of  this  proceeding  where  control  of  all  those 

companies lies in the hands of the same shareholder. 

(18)  On the basis of the Commission's  provisional findings, described  in recitals  (14)-

(23)  of  the  provisional  Regulation,  and  taking  into  account  the  adjustment 

described  at  recital  (15)  above,  the  definitive  dumping  margins  expressed  as  a 

percentage of the OF free Community frontier value of imports established for the 

two cooperating companies are: 

-  Nova Hut a.s. 

-  Vftkovice  a.s. 

5.1% 

5.1% 

The calculation of the residual dumping margin was revised. Instead of taking the 

highest normal values found for the two Czech producers, weighted average normal 

values  have  been  used  in  the  final  determination.  On  this  basis  the  residual 

dumping  margin  expressed  as  a percentage  of  the  CIF  free  Community  frontier 

value of imports established for the two cooperating companies is now 28.6%. 

17 

2. Romania 

(a) Normal value 

(19)  One  company  claimed  that  cost  provisions  included  in  the  SG&A  costs  of  the 

company  should  be  removed  in  view  of  the  fact  that  unused  provisions  were 

cancelled  at the end of the year.  Where provisions  were indeed cancelled  and no 

other cost had then replaced such provisions, and insofar as it could be clearly seen 

from  information contained in the response to the questionnaire or provided during 

the on-spot verification that provisions did not represent a real cost, the calculation 

of SG&A costs was adjusted. 

One company made a claim that cost of production should be adjusted to reflect the 

absence  of  selling  costs, principally  for  packing,  incurred  for  sales  made  on the 

domestic market. It was argued that with regard to such selling costs, included in 

the calculation of normal value by the Commission, the company had in fact been 

reimbursed  by  its  customers.  The  Commission  accepted  this  and  an  appropriate 

revision  has  therefore  been  made  to  the  cost  of  production  calculation  for  this 

company. 

18 

One company claimed that the Commission when establishing normal value should 

use  all  sales  including  those  not  made  in  the  ordinary  course  of  trade,  i.e.  sales 

made at a loss. The Commission, in view of Article 2 (4) of the basic Regulation, 

considered that sales made at a loss have to be excluded from the establishment  of 

normal value where such sales constitute more than 20% of all domestic sales. The 

claim by this company could therefore not be accepted, given the terms of the basic 

Regulation and the institutions' consistent practice in the establishment  of normal 

value. 

Two  companies  argued  that  in  order  to  respect  the  Europe  Agreement,  the 

Commission should in establishing normal values always choose the method most 

favourable to the companies, citing Article 34 (2) of the Agreement. This argument 

was  rejected,  as  Article  34  (2)  of  the  Agreement  refers  only  to  the  choice  of 

measures  to  be  imposed  by the  Commission  once, dumping,  injury,  causality  and 

Community  interest  have  been  established,  and  not  to  the  actual  calculation 

methodologies used in the determination. 

One company claimed only at a very late stage in the proceeding (at the hearing for 

comments on provisional disclosure) that sales from stock should be excluded  from 

the calculation of normal value as not possessing  quality certificates  and therefore 

not  constituting  the  like  product,  and that  all  sales  made  using  compensation  as 

means of payment should likewise be excluded as not being in the ordinary course 

19 

of trade. These claims were not made in a timely manner, having neither been made 

in the response to the questionnaire, nor on-spot, nor at any subsequent stage of the 

proceeding  when  the  company  was invited  to  make  comments.  In  no  document 

submitted by the company was the Commission able to differentiate  between sales 

made  from  stock  or  otherwise,  or  between  sales  made  with  or  without  quality 

certificates.  In  addition,  during the course of the  investigation,  it was  found  that 

sales made using compensation were indeed made in the ordinary course of trade. 

Consequently, both claims were rejected. 

No further  comments were received. Taking into account the changes referred  to 

above,  the findings with  regard  to  normal  value  as  disclosed  in  the  provisional 

Regulation are confirmed. 

(b) Export price 

(20)  No  changes  were made to the methodology  used to  calculate  export  prices. The 

findings with regard to export prices as disclosed in the provisional Regulation are 

therefore  confirmed. 

(c) Comparison 

(21)  For the provisional findings, the Commission rejected  a request by two Romanian 

companies  for  an  adjustment  to  the  normal  value  for  credit  terms.  The  two 

companies  reiterated  their  request.  However,  it  was  established  during  the 

20 

investigation that, in the vast majority of cases in Romania, no actual cash changed 

hands  in the  settlement  of  transactions.  In fact,  payment  was  usually  effected  by 

'compensation',  consisting  either  of  barter  trade  or  the  exchange  of  trade  bills. 

Article 2 (10) (g) of the basic Regulation specifies that an adjustment shall be made 

for credit, provided that it is a factor taken into account in the determination of the 

prices  charged.  The  investigation  showed that  such costs  were  not  a factor taken 

into  account  in the  determination  of  prices  charged.  In fact,  where  compensation 

was  the means  of payment,  no  money  changed hands and there was therefore  no 

impact  on the financial situation  of  the  companies.  In addition,  the  investigation 

showed  that  for  all  means  of  payment, - dates  of  settlement  were  normally  not 

respected. The claims for a credit adjustment were therefore rejected again. 

One  company  claimed  that  for  export  sales  made  to  certain  customers  in  the 

European Community, no commission had been paid and that no adjustment to the 

export prices charged to those customers should be made. The Commission revised 

its calculations accordingly. 

One  company  claimed  an  adjustment  to  normal  value  for  differences  in  level  of 

trade. As  such a claim was not made at any point in the investigation prior to the 

company's  comments  on the provisional findings of the Commission,  it could not 

be considered valid. It was, furthermore, not substantiated by any evidence and was 

in  contradiction  with  information  the  company  had  reported  in  its  reply  to  the 

questionnaire and provided during the on-spot verification. 

21 

No  further  comments were received  with respect to comparison.  The provisional 

findings  are therefore  confirmed. 

(d) Dumping margin 

(22)  One company  claimed that the calculation  of the dumping margin  should  not be 

made  on the  basis  of a comparison  of weighted  average  normal  values  with the 

adjusted  export price of each corresponding group on a transaction-by-transaction 

basis, but on a weighted average to weighted average basis. 

This claim  was rejected  after  the methodology  used for  all Romanian  companies 

was reconsidered and it was found that: 

-  for  one  company,  there  was  no  difference  in  dumping  margin  between  both 

methods as all export transactions were made at dumped prices; 

-  for  three  companies, a pattern of export prices which differed  significantly  by 

destination or time period was found. 

In view of the above, and in accordance with Article 2 (11) of the basic Regulation, 

the  method  comparing  the  weighted  average  normal  value  by  time  period  to 

individual adjusted  export prices on a transaction-by-transaction basis was retained 

for the purposes of the definitive determination. 

22 

All  cooperating  Romanian  producers/exporters  contested  the  fact  that  the 

Commission had - on the grounds of a common majority  shareholding - imposed a 

single dumping margin, and they accordingly claimed individual treatment. For the 

reasons set out in recital (17), this request could not be accepted. 

Two  companies  argued  that  the  Commission  should  have  disclosed  to  them  all 

elements of the dumping calculations for all companies, since these had been used 

to establish the global dumping margin; by failing to do so, the Commission would 

had  infringed  their rights of  defence.  The  Commission  has,  in  accordance  with 

Article  20  (1)  of  the  basic  Regulation,  explained  in  detail  to  each  company  the 

essential facts and considerations on which it calculated that company's individual 

dumping margin and furthermore  explained the methodology used to establish the 

single dumping margin. As all companies have the same majority shareholder, they 

can  easily  exchange  all  information  via that  common  shareholder  and  thus  fully 

exercise their rights of defence. 

No further  comments  were received.  The findings as disclosed  in the  provisional 

Regulation are therefore  confirmed. 

(23)  The  weighted  average  dumping  margins  definitively  established  for  the  four 

cooperating  producers  expressed  as  a  percentage  of  the  CIF  free  Community 

frontier value of imports are: 

23 

SCArtromSA 

SCPetrotubSA 

9.8% 

9.8% 

SC Republica SA Trade Company 

9.8% 

SCSilcotubSA 

9.8% 

The residual dumping margin expressed as a percentage of the CIF free Community 

frontier  value of imports remains unchanged at 38.2%. 

3. Slovak Republic 

(a) Normal value 

(24)  The Slovak producer questioned the methodology employed by the Commission to 

determine normal value for two product groups (see recital (31) of the provisional 

Regulation);  in  particular,  it  claimed  that  the  Commission  was  wrong  to  have 

calculated normal value on the basis of the average of profitable sales only, and that 

it  should  have taken the average of all sales in the groups  instead.  The reason it 

gave  was  that  the  groups  were  profitable  overall  and  therefore  all  costs  were 

recovered over the investigation period on a weighted average basis. In addition, it 

was argued,  citing Article  34 (2) of the Europe Agreement, that the  Commission 

should  have  used  its  discretion  to  adopt  a  method  which  'least  disturb[s]  the 

functioning  of [that] Agreement'. 

24 

Both  these  arguments  were  rejected  for  the  same  reasons  given  at  recital  (19) 

above. 

No  further  comments  with  respect  to  normal  value  were  received  and  the 

Commission's findings as  disclosed  in  the  provisional  Regulation  are  therefore 

confirmed. 

(b) Export price 

(25)  The company objected to the Commission's construction of the export price (see 

recital (32) of the provisional Regulation), and in particular to its decision to deduct 

a 4% profit  margin from the prices charged by its Italian subsidiary. It argued that 

this margin was excessive and that the Commission  should have used the Italian 

company's own figures. It also claimed that the Commission had misinterpreted the 

SG&A figures submitted  by the company, and that the effect  of this had been to 

increase  its  SG&A rate and consequently  the dumping  margin.  It  also  suggested 

that  a  more  correct  approach  would  have  been  to  consolidate  both  companies' 

SG&A expenses and apply a single rate. 

25 

The  Commission  based  the  margin  of  4% on  the  average  of  the  profit  margins 

achieved by the four unrelated importers listed at recital  (6) (c) of the provisional 

Regulation.  However,  it  has  reviewed  the  figures  and  concluded  that,  for  the 

purposes  of  the  definitive  determination,  an  adjusted  figure  of  3.8%  should  be 

applied. Although it was objected that two of the four importers were in fact related 

to  Community  producers,  the  Commission  satisfied  itself  that the  profit  margins 

found  for  these  companies  reflected  the  profit  on  their  sales  to  independent 

customers  in  the  Community.  With  regard  to  the  SG&A  rate,  the  Commission 

reviewed  the  figures  and  concluded  not  only  that  the  expenses  had  indeed  been 

overstated,  but  also  that  it  would  have  been  more  appropriate  to  consolidate  the 

Swiss  and  Italian  trading  companies'  figures,  given  that  they  had  a  similar 

relationship  with  the  Slovak  exporter  and  operated  mostly  out  of  the  same 

premises. A global SG&A rate has accordingly been applied. 

(c) Comparison 

(26)  The  company  had  claimed  a  'distribution  channel  allowance'  which  the 

Commission,  it said, had failed to take account of in its provisional  determination. 

26 

It argued that such an allowance was justified  in order to reflect  the fact  that the 

company sold directly-to stockists on its domestic market whereas it sold through 

its related Italian and Swiss companies on the Community market; it also argued 

that the allowance was necessary to ensure a fair comparison with the constructed 

export sales price. 

This claim is covered under the discounts and quantities allowance already granted 

to the company. Article 2 (10) of the basic Regulation explicitly states that  '[a]ny 

duplication when making adjustments  shall be avoided, in particular in relation to 

discounts, rebates, quantities and level of trade'. Since the normal value has already 

been  adjusted  downwards  to  reflect  the  fact  that  sales  in  the  Community  were 

mainly to large customers, there is no justification for granting a further allowance. 

No further  comments were received  and the Commission's findings are  therefore 

confirmed. 

(d) Dumping margin 

(27)  The  company  objected  to  the  Commission's  decision  to  establish  the  dumping 

margin on the basis of a comparison of weighted  average adjusted  normal values 

with adjusted  individual export prices (rather than weighted average export prices), 

arguing  that  the  Commission  had  failed  to provide  sufficient  justification  for  its 

approach at recital (34) of the provisional Regulation. 

27 

Whilst  the  Commission  stands  by  its  reasoning  set  out  at  the  above-mentioned 

recital,  the  modifications  it  has  since  made  to  the  figures  used  to  calculate  the 

dumping margin have resulted in the difference between the two methods no longer 

being  of  such  a  magnitude  as  to  justify  its  original  approach.  It  has  therefore 

decided, for the purposes of the definitive determination, to revert to the method of 

.  comparing  the  weighted  average  normal  value  with the  weighted  average  export 

price. The provisional findings have been amended accordingly. 

(28)  On the basis of the Commission's previous findings, described in recitals (31)-(35) 

of  the  provisional  Regulation,  and  taking  into  account  the  changes  referred  to 

abovo, the dumping margin expressed as a percentage of the CIF free Community 

•  » 

frontier  value of imports established for the cooperating producer is: 

Zeleziarne Podbrezovâ a.s. 

7.5%. 

The residual dumping margin is set at the same level. 

4. Russia 

(a) Cooperation 

(29)  Five  of  the  six  Russian  companies  wrote  to  the  Commission  to  object  to  its 

decision  to  treat  them  as  non-cooperating.  The  reasons  for  the  Commission's 

28 

decision  are  set out  in recital  (36) of the provisional  Regulation.  The companies 

argued  that,  despite  any  deficiencies  the  replies  may  have  contained,  they 

themselves had been willing to cooperate with the investigation and had been ready 

to supply any additional information the Commission might have required. Certain 

companies requested individual treatment, or offered  to subscribe to an individual 

undertaking,  or  asked  for  their  comparative  advantages  to  be  taken  into 

consideration. 

The  Commission,  however,  remains  of  the  view  that,  by  failing  to  provide 

information  which was accurate, complete, and in the form requested, the Russian 

companies have forfeited  their right to be considered as cooperating parties in the 

investigation. Although it is not disputed that some replies were more detailed than 

o 

others, they  were  all  deficient  in one, overriding  respect:  they  did  not  allow the 

Commission to arrive at an accurate determination either of normal value or of the 

export price because of the way in which individual products and transactions had 

been grouped together. Some companies submitted further  information  subsequent 

to the Commission informing  them of its decision to apply Article  18 of the basic 

Regulation, and some continued to submit new or revamped information  even after 

the  publication  of the provisional  Regulation.  The  fact  remains, though,  that  the 

information  in  the  Commission's  possession  at  the  time  of  the  deadline  for 

submitting replies was deemed insufficient  in respect of all six companies. It would 

be discriminatory  to other  interested  parties cooperating  with the  investigation  if 

information  were  taken  into  account  which  was  submitted  days,  weeks  and 

sometimes months after the deadline for submitting it has passed. 

29 

The Commission's findings are therefore  confirmed. 

(b) Dumping margin 

(30)  The Commission recalculated the Russian dumping margin using the same normal 

values as were used in revising the Czech residual margin (see recital (18)). On this 

basis  a  dumping  margin  expressed  as  a  percentage  of  the  CIF  free  Community 

frontier  value of imports of 26.8% was established. 

Review investigation 

1. General 

(31)  The  producers/exporters  in  Poland  and  Hungary  failed  to  provide  detailed 

information  on individual products as requested by the Commission in the product 

description  table  included  in  all  questionnaires  sent,  but  presented  it  split  into 

product groups, covering  a range of products, classified  together  by reference  to 

certain criteria e.g. wall thicknesses. In some cases, therefore, the groups contained 

products classified  under different  CN codes. For this reason, and because of the 

impossibility of collecting more detailed information  on-the-spot, the Commission 

could  only  base  its  calculations  on  product  groups,  rather  than  on  individual 

products. 

30 

2. Hungary 

(a) Normal value 

(32)  During  the  investigation  period,  the  sole  Hungarian  producer/exporter  sold  four 

product groups in the European Community. Groups  1, 2, and 3 fell entirely under 

CN  code  7304  39  91, whereas  group 4  included  a  mix  of  models  partly  falling 

under CN code 7304 39 91, and partly under CN code 7304 39 93. The technical 

information  provided  and  verified  was  not  detailed  enough  to  enable  the 

Commission to split product group 4 into the two CN codes. Taking into account 

that Eurostat  statistics  showed considerable  imported quantities falling  under CN 

code  7304  39  93  for  the  investigation  period,  and  that  only  one  Hungarian 

producer/exporter  had  sold  the  product  concerned  to  the  European  Community 

during  the  same  period,  the  Commission  considered  product  group  4  as  falling 

entirely under CN code 7304 39 93. 

It was found  on-the-spot that the detailed export figures provided by the company 

were  unreliable  as  one  Community  customer,  accounting  for  7% of the  reported 

sales to the European Community of the product concerned, had been omitted and 

the  computer  file  of  export  transactions  was  also  found  to  be  incorrect  in  other 

respects,  a  deficiency 

the  company  could  not  correct.  The  5%  global 

representativity  test  was  then  performed  by  comparing  the  quantities  sold 

31 

domestically  with Eurostat import statistics from Hungary, which the  Commission 

selected as an independent source of information, in accordance with Article  18 (5) 

of  the  basic  Regulation.  On  this  basis  it  was  determined  that  in  all  cases  the 

domestic  sales could be considered representative  for the establishment  of normal 

value, both globally and at product group level, in accordance with Article 2 (2) of 

the basic Regulation. 

For  each  of  the  four  groups  mentioned  above,  it  was  then  determined  whether 

domestic  sales  could  be  considered  to  have  been  made  in the  ordinary  course  of 

trade. For groups 2 and 3, profitable sales constituted less than 10% of the domestic 

sales of these product groups. Therefore,  for these groups, normal value had to be 

constructed in accordance with Article 2 (3) of the basic Regulation. This was done 

on the basis of the cost of manufacture plus an amount for SG&A costs and profit. 

For this purpose, the producer/exporter's  actual  data pertaining  to production and 

sales  in  the  ordinary  course  of  trade  were  taken  into  account.  As  far  as  product 

groups  1 and  4  were  concerned,  between  10% and  80% of  domestic  sales  were 

profitable.  Accordingly,  for these  two  groups, normal  values  were  established  on 

the  basis  of  profitable  sales  only,  in  accordance  with  Article  2  (4)  of  the  basic 

Regulation.  As  the  four  product  groups  defined  by the  company  corresponded  to 

CN codes  7304  39 91  and 7304  39 93, the Commission decided to determine one 

normal  value  per  CN  code.  Since  the  export  transaction  listing  was  found  to  be 

32 

unreliable and could not be used as a basis to weight the first three product groups, 

it was impossible to determine the weighted average of the normal values found for 

the  three  groups.  Therefore,  the  arithmetical average  of  the  normal  values 

calculated  for  the three  corresponding  product  groups was taken  into  account  in 

order to establish normal value for CN code 7304 39 91. As explained  above, the 

Commission considered CN code 7304 39 93 as corresponding to product group 4. 

Accordingly,  the normal value for CN code  7304 39 93 was that  determined  for 

product group 4. 

(b) Export price 

(33)  As explained  in the preceding recital, in the course of the verification  visit at the 

premises of the sole Hungarian exporter concerned, it became apparent that the data 

submitted  in  the  questionnaire  reply  concerning  exports  showed  significant 

divergences from the company's internal records. 

Further to the verification  visit, the company was informed  in writing that, due to 

the  substantial  anomalies  found  on-the-spot  and  the  impossibility  of  properly 

establishing  the  real  export  figures,  it  was  impossible  to  use  the  information 

submitted  for  the  determination  of  the  export  price  to  the  Community  and  that 

findings  concerning the export price would have to be based on the facts available 

in accordance  with Article  18 of the basic Regulation.  The company  was, at the 

same time, given an opportunity to submit comments. At that point, a completely 

33 

new  file  was  submitted,  which  was  allegedly  the  correct  version  of  the  export 

transaction  listing.  This  file  was  rejected  by  the  Commission,  as  the  new 

information could not be verified. 

In  order  to  establish  Hungarian  export  prices,  the  Commission  selected  as  an 

independent  source  of  information  the  official  import  statistics  published  by 

Eurostat, in accordance with Article  18 (5) of the basic Regulation. However, only 

the quantities reported therein for the two  CN codes which were exported  by this 

producer to the European Community were taken into account. 

(c) Comparison 

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

at  ex-works  level,  due  allowance  in  the  form  of  adjustments  was  made  for 

differences  which  were  claimed  and  demonstrated  to  affect  price  comparability. 

The  adjustments  were  made,  in  accordance  with  Article  2  (10)  of  the  basic 

Regulation,  in  respect  of  transport,  insurance,  handling  and  ancillary  costs  and 

credit costs. 

34 

As far as requests for adjustments for 

•  Import charges and indirect taxes 

•  Discounts, rebates and quantities 

•  Level of trade 

•  Currency conversion 

are concerned, the following should be noted: 

Import charges and indirect taxes 

The  company  claimed  an allowance  of  8% for  extra customs  duties  paid  on raw 

materials  imported, in accordance with Article  2 (10) (b) of the basic Regulation. 

However,  in  the  course  of  the  on-the-spot  verification,  the  Commission  officials 

found that no duties were refunded for the exported products. Therefore, the claim 

was considered to be unfounded. 

Discounts, rebates and quantities 

The company requested an adjustment of 4% for differences  in volumes bought by 

domestic and European Community customers in accordance with Article 2(10) (c) 

of  the  basic  Regulation,  claiming  that  lower  prices  were  paid  for  larger  orders. 

Since no evidence was produced in support of this claim, it was rejected. 

35 

Level of trade 

The company claimed an allowance of 12% for differences  in distribution channels 

between  the European  Community  and the domestic markets  in  accordance  with 

Article  2  (10)  (d)  of  the  basic  Regulation.  It  was  alleged  that  all  European 

Community  customers  were  independent  traders  whereas  49%  of  domestic 

customers  were  end-users.  This  figure,  reported  in  the  table  describing  the 

distribution  channels  in the  domestic  sales  section  of the  questionnaire,  was not 

consistent with the data contained in the domestic customer list, where all domestic 

customers  were  listed  as  'independent  traders',  a  situation  equivalent  to  that 

prevailing  on  the  European  Community  market.  The  exporter  claimed  that  this 

inconsistency  was  due  to  a  "language  error".  Whether  or  not  this  was  indeed  a 

"language  error"  is  irrelevant  since,  in  addition  to  this  inconsistency  in  the 

company's  reply,  the  Commission  officials  also  found  that  the  domestic  prices 

applied  by  the  company  were  subject  to  the  same  pricing  policy/price  list, 

regardless  of the type of customer. This claim could, therefore,  not  be taken into 

account. 

Currency conversion 

As  far  as  the  conversion  of  export  price  is  concerned,  the  exporter  argued  that 

monthly exchange rates should have been used, rather than a yearly rate. However, 

36 

it should be recalled that the determination of export price was based on Eurostat 

data since the transaction-by-transaction listing submitted by the exporter could not 

be used. Since Eurostat data do not focus on the date of sale, but on the date of the 

importer's  customs  declaration,  the  use  of  monthly  data  would  not  have  more 

appropriately reflected the terms of sale. The claim made by the exporter could not, 

therefore, be accepted. 

(d) Dumping margin 

(35)  The  comparison,  on  a  CN  code  basis,  of  weighted  average  normal  values  and 

weighted  average  export prices, revealed  the existence  of dumping, the  dumping 

margin  corresponding  to  the  amount  by  which  the  normal  value  exceeded  the 

export price. 

Expressed as a percentage of the CIF free at Community frontier value of imports, 

the dumping margin for the sole Hungarian producer/exporter is: 

Csepel Tubes Co. Ltd. 

36.5%. 

Since the sole known producer accounted for  almost all Hungarian exports of the 

product concerned to the Community, the residual dumping margin was set at the 

same level. 

37 

3. Poland 

(a) Cooperation 

(36)  Replies  to  the  Commission's  questionnaire  were  received  from  six  companies, 

three  of  which  (submitted  by  two  producer/exporters  and  one  related  trading 

company) were judged to be insufficient.  It was therefore concluded that these three 

companies had failed to provide, within the time limits set, the information deemed 

necessary  to  the  investigation  and  the  companies  were  informed  of  the 

Commission's intention to apply Article 18 (1) of the basic Regulation and to base 

its findings on the facts available. 

The  three  other  companies,  whose  replies  were  considered  sufficient  (two 

producers/exporters and one trading company related to a producer/exporter), were 

subsequently  verified  on-the-spot.  Of  the  two  producers/exporters,  one  refused, 

however, to provide the Commission officials  with copies of basic documents such 

as the domestic sales, customer and price listings, original domestic sales invoices, 

and the  list  of  export  customers  corresponding  to the  codes  in their  export  sales 

listing. The verification  also  showed that the company  had  failed  to report  in its 

reply its sales to the European Community during the investigation period  effected 

via  a  related  company.  In  view  of  these  deficiencies  and  the  impossibility  of 

verifying  essential  parts  of  the  information  provided  by  the  company,  the 

38 

Commission was unable to use the information submitted for the determination  of 

the  normal  value  and  the  export  price  to  the  Community.  Accordingly,  the 

company  was  subsequently  informed that,  as  a result  of  its  non-cooperation,  the 

Commission  would  base  its  findings  on  the  facts  available  in  accordance  with 

Article 18 of the basic Regulation. 

(b) Normal value 

Cooperating parties 

(37)  As  mentioned  in  recital  (36)  above,  only  one  Polish  producer/exporter  and  one 

Polish trading company  could  be considered  as cooperating  parties  in the present 

review  investigation.  As  no  individual  dumping  calculation  is  meaningful  in  the 

case  of  a  trading  company,  one  normal  value  for  the  single  cooperating 

producer/exporter was established. 

During the  investigation period, the  single  cooperating  producer/exporter  sold  six 

product groups on both the domestic market and in the European Community. The 

global  representativity  test showed that, during the  same period, the total quantity 

of  the  product  concerned  sold  domestically  was  more  than twice  as  great  as  the 

quantity exported to the European Community. The 5% test was then performed on 

a product group basis, from which it resulted that all six product groups were sold 

in  sufficient  quantities  on  the  domestic  market,  and  could  thus  be  considered 

39 

representative  for the determination of normal value, in accordance  with Article  2 

(2) of the basic Regulation. 

The profitability test showed that of six product groups, the domestic prices paid in 

the ordinary course  of trade could be used as a basis  for normal  value  for  five  of 

them,  in  accordance  with  Article  2  (4)  of  the  basic  Regulation.  Thé  remaining 

product group had insufficient profitable sales and normal value was constructed on 

the basis of the cost of manufacture plus an amount for SG&A costs and profit,  in 

accordance  with  Article  2  (3)  of  the  basic  Regulation.  For  this  purpose,  the 

producer/exporter's  actual  data  pertaining  to  production  and  sales  of  the  like 

product on the domestic market and in the ordinary course of trade, were taken into 

account. 

Non-cooperating parties 

For the four non-cooperating parties, in accordance with Article  18 (6) of the basic 

Regulation,  normal  value  was  determined  on  the  basis  of  the  cooperating 

producer's  product  group  which  corresponded  to  the  highest  normal  value,  since 

any  other  choice  would  have  rewarded  non-cooperation.  However,  this  was 

mitigated  by  the  fact  that  all  products  sold  by  the  cooperating  producer  on  its 

domestic  market  belong  to  the  larger  diameter  product  groups  covered  by  this 

investigation,  which  are  relatively  cheaper  than  the  smaller  diameter  product 

groups, exported exclusively by the non-cooperating parties. 

40 

(c) Export price 

Cooperating parties 

(38)  During  the  investigation  period,  the  cooperating  producer  sold  the  product 

concerned  in  the  European  Community  both  directly  and  via  a  related  Polish 

intermediary.  The export price was determined  by taking  into  account  the  direct 

transactions  as  well  as the  transactions  concluded  via  one  of  the  related  trading 

companies. For transactions effected  via the trading company, the export price was 

established  by reference to the prices actually paid or payable to it. As the related 

trader's  functions  can  be  considered  similar  to  those  of  a  trader  acting  on  a 

commission  basis,  a  commission  was  estimated  on  the  basis  of  the  trading 

company's  mark-up verified  at its premises. This mark-up was deducted from the 

prices  charged  by  the  related  company  to  independent  customers  in  the 

Community. 

Non-cooperating parties 

In accordance with Article 18 (5) of the basic Regulation, the Commission selected 

as an independent  source of information  the Eurostat import statistics for the CN 

codes concerned for the three non-cooperating producer/exporters. The export price 

was  then  established  on  this  basis,  after  deducting  from  the  total  imports  the 

41 

quantity  and  value  of  goods  sold  by  the  cooperating  producer  in  the  European 

Community both directly and via the cooperating related trading company. 

(d) Comparison 

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

at  an  ex-works  level,  due  allowance  in  the  form  of  adjustments  was  made  for 

differences  which  were  claimed  and  demonstrated  to  affect  price  comparability. 

The  adjustments  were  made,  in  accordance  with  Article  2  (10)  of  the  basic 

Regulation, in respect of physical characteristics, transport, insurance, handling and 

ancillary costs, commissions, and credit costs. 

(e) Dumping margin 

(40)  The dumping  margin for  the cooperating producer was established,  on a product 

group basis, by comparing the weighted  average normal value with the weighted 

average  export  price, in  accordance  with Article  2 (11)  of  the  basic  Regulation. 

Expressed  as a percentage  of the total CIF Community frontier value of imports, 

the dumping margin for the sole cooperating producer is: 

Huta Batory SA 

7.1%. 

42 

For  non-cooperating  parties  a  residual  dumping  margin  was  calculated  by 

comparing the normal value as established in the last paragraph of recital (37) with 

the export price  as determined  in the  last paragraph  of recital  (38). The residual 

margin, expressed as a percentage of the CIF Community frontier value of imports 

is 33.2%. 

4. Republic of Croatia 

(41)  In  view  of  the 

findings  on  injury  with'  regard  to  the  Republic  of  Croatia  (see 

recitals  (51)  and  (69)  below),  it  was  not  considered  necessary  to  pursue  the 

investigation  into  dumping. 

<» 

D.  C O M M U N I TY  I N D U S T RY 

(42)  The same Community  producers cooperated  in the two investigations  (see recital 

(8)).  These  companies  represented  more  than  90%  of  the  total  Community 

production of the product subject to the investigation, and constituted, therefore, a 

major  proportion  of  the  total  production  of  the  product  concerned  in  the 

Community. 

43 

(43)  A number of exporters alleged that their products were purchased and imported by 

certain  complainant  Community  producers.  They  claimed  that  these  producers 

should  be  excluded  from  the  determination  of  the  Community  industry  for  the 

purpose  of  the  injury  assessment  pursuant  to  Article  4  (1)  (a)  of  the  basic 

Regulation. 

No  substantiating evidence to support this assertion was provided. In addition, the 

investigation  carried  out  by  the  Commission  has  shown  that  none  of  the 

Community producers imported the products concerned and that certain importers, 

related  to  such  Community  producers,  imported  small  quantities  of  the  products 

concerned  during  the  investigation  period.  These  imports  were  resold  in  the 

Community  market  exclusively  by  these  related  importers,  which  were  found  to 

have acted independently  and even to have operated in competition with the sales 

departments  of their related producers. In any event,  the examination  of  the  facts 

revealed that the volume  of these  imports accounted  for  less  than  3% of the total 

sales  volume  of  these  products  on  the  Community  market  for  each  of  the 

Community producers. 

It is, therefore,  considered  that such a low  level  of  imports  could  not have  led  to 

any injury to the Community producers and consequently there are no grounds for 

excluding these producers. 

44 

Consequently the producers mentioned in recital (8) will be referred  to  hereinafter 

as  the  "Community  industry"  within  the  meaning  of  Article  4  (1)  of  the  basic 

Regulation. 

E. INJURY 

1. Preliminary remark 

(44)  It  should  be  mentioned  that  the  anti-dumping  measures  presently  in  force  with 

respect  of  Hungary,  Poland  and  the  Republic  of  Croatia  are  undertakings, 

combining quantitative ceilings and certain pricing commitments, with residual ad 

valorem duties. 

Further, it should be noted that imports of all seamless pipes and tubes (including 

therefore the product concerned), originating in the Czech Republic and the Slovak 

Republic were, between  1993 and  1995*, subject to a tariff  quota system, i.e. duty 

free  within the limits of a quantitative ceiling; as soon as the ceiling was reached, a 

duty of 30% was levied. This system lapsed at the end of 1995. 

(45)  It  should  also  be recalled that the present  Regulation  combines  the result  of two 

investigations, one of which has led to the publication of a provisional Regulation. 

All findings  regarding injury,  causation and Community interest should be read in 

conjunction with the findings described in the provisional Regulation. 

45 

2. Consumption 

(46)  In  recital  (48)  of  the  provisional  Regulation,  it  was  stated  that  Community 

consumption  in tonnes per month amounted to  89,900 tonnes in  1992, 69,700 in 

1993, 84,070 in  1994, 92,730 in  1995 and 92,130 during the investigation period. 

These findings were not contested and are confirmed. 

3. Dumped imports 

(a) Cumulation 

(47)  In the provisional Regulation, the Commission concluded that the dumped imports 

from Russia,  the  Czech  Republic,  Romania  and  the  Slovak  Republic  should  be 

assessed  cumulatively  for  the purpose of injury  analysis, on the grounds that the 

products  concerned  were  imported  from  each  exporting  country  in  substantial 

quantities, held a significant  market share and competed with each other and with 

those manufactured by the Community industry. 

(48)  Some exporters claimed that due to differences  in volume and rates of growth of 

imports, as well as in conditions of competition, the impact of these exports to the 

Community should be examined on an individual basis. 

46 

(49)  In this respect, the Commission recalls that the criteria set out in Article 3 (4) of the 

basic  Regulation were found to be met in order to  cumulate the  imports from all 

four countries concerned, namely: 

-  the margin of dumping established and relating to each country was more than 

de minimis (i.e. between 5.1% and 38.2%); 

-  the  volume  of  imports  from  each  country  was  not  negligible;  none  of  the 

exporting  countries  held  a de  minimis market  share,  namely  below  1%,  since 

their market shares ranged from 3% to 8.3%; 

-  with  regard  to  the  conditions  of  competition  both  between  imported  products 

and  products  sold  by  the  Community  industry,  the  imported  products  were 

found to be interchangeable, to be following similar price, trends, to have similar 

channels of distribution and similar low-price policy resulting in a high level  of 

price undercutting (i.e. between 17.5% and 43.2%), to be simultaneously present 

in  the  same  geographical  areas  and to  compete  therefore  with  each  other  and 

with those manufactured by the Community industry. 

The fact that imports of the product concerned originating in the Czech Republic 

and the Slovak Republic were subject to a tariff-quota  system applying until 31 

December  1995 does not alter the conclusion that these imports fulfil  the criteria 

47 

laid  down  in Article  3  (4)  of  the  basic  Regulation.  It  should  be  noted,  in  any 

case,  that,  after  the  expiry  of  this  system,  the  market  shares  of  the  imports 

concerned increased from 6.7% in 1995 to 9.6% during the first eight months of 

1996 for Czech imports and from 2.1% to 3.4% over the same period for Slovak 

imports. 

For all the above reasons, it is concluded that the conclusions reached in recital (49) 

of the provisional Regulation should be maintained. 

(50)  Taking  into  account  the  two  simultaneous  investigations,  it  was  also  examined 

whether effects  of  imports from Hungary,  Poland and Croatia should be  assessed 

cumulatively with those of the new investigation. 

(51)  With regard to  imports from Croatia, it was  established  that its  share held  in the 

Community  market  declined  from  1.8%  in  1992  to  0.7%  in  the  investigation 

period.  Given  the  low  and  sharply  decreasing  level  of  these  imports,  a  situation 

contrary to the one  found  for the other imports, it was  not considered  appropriate 

that  these  imports  should  be  analysed  cumulatively.  In  the  light  of  the  fact  that 

imports  from  Croatia  are  subject  to  anti-dumping  measures,  this  conclusion  is 

reached also taking into account the findings in recital (70) below on the absence of 

likelihood of recurrence of inj ury. 

48 

(52)  With respect to imports from Hungary and Poland, it was found  that, as with the 

imports of the new investigation, quantities imported  and dumping margins were 

significant. 

Concerning  imports  originating  in  Hungary,  it  has  been  claimed  that  they  are 

negligible  and  should  therefore  be  disregarded  for  cumulation  purposes  in 

accordance with Article 3 (4) of the basic Regulation. However, the investigation 

did not show that these imports were actually negligible. 

In addition,  for  both investigations, the conditions  of competition  found  between 

the  imported  products  and  between  the  imported  products  and  the  Community 

products  were  similar,  in particular,  because  all the products  were considered  as 

like  products  and  were  sold  at  prices  substantially  undercutting  those  of  the 

Community industry (i.e. from 17% to 21.3% for Poland, 25.4% for Hungary). The 

fact  that these imports were subject to quantitative undertakings during the period 

considered  has no bearing on the conclusion that they can be cumulated with the 

other imports under investigation for injury  examination purposes. Indeed, even if 

there  were  limitations  to the  quantities  exported to the Community  and  a certain 

increase  in  their  price  level  as  compared  with  the  prices  of  the  exporters  in the 

49 

countries  subject  to  the  new  investigation,  imports  originating  in  Hungary  and 

Poland  have, nevertheless,  continued  to  be  made  at  dumped  prices  undercutting 

quite significantly those of Community producers. 

(53)  The  above  considerations  on  cumulation  led,  therefore,  to  the  conclusion  that  a 

cumulative  assessment  of  the  effect  of  the  dumped  imports  from  the  countries 

subject  to  both  investigations,  with  the  exception  of  Croatia,  was  warranted 

(hereinafter the "exporting countries"). 

(b) Cumulated volume and market share of dumped imports 

(54)  The  provisional  findings  according  to  which,  on  a  cumulated  basis,  imports 

decreased  from  201,920  tonnes  in  1992  to  96,080  tonnes  in  1993,  and  then 

increased to 195,220 tonnes in 1994,230,810 tonnes in 1995 and 268,670 tonnes in 

the investigation period were not contested and are therefore  confirmed. 

The same applies to the corresponding market shares amounting to  18.7% in 1992, 

11.5%  in  1993,  19.4% in  1994, 20.7% in  1995  and  24.3% in  the  investigation 

period. 

50 

(c) Prices of dumped imports 

(55)  For the determination of price undercutting regarding the exporting countries, the 

data analysed referred to the investigation period. For this purpose, comparison was 

made between weighted average selling prices of the exporting countries concerned 

and weighted average sales prices of Community producers for the seamless steel 

tubes  concerned.  Price  comparison  was  made  on  the  basis  of  sales  to  the first 

independent  customer  in  the  Community.  In  order  to  ensure  comparability,  the 

prices  of  Community producers  and those of the imported  products  were, where 

appropriate,  adjusted  in  terms  of  transport  cost  to  ex-works  or  CIF  Community 

frontier  level. In addition, the import prices were adjusted by an importer's margin, 

including  customs  clearance,  handling  charges,  commission, financing cost  and 

profit based on information available. 

The results of the comparison showed margins of undercutting for all countries and 

exporters  concerned.  The weighted  average price undercutting  margins  expressed 

as a percentage of Community producers' prices were as follows: 

51 

Czech Republic: 

from 

21.2% to 43.2% 

Hungary: 

Poland: 

Romania: 

Russia: 

Slovak Republic: 

25,7% 

from 

17.0% to 21.3% 

25.8% 

41.5% 

17.5% 

4. Situation of the Community industry 

(56)  For ease of reference, the results already presented in the provisional Regulation on 

the  situation  of  the  Community  industry  are  once  again  shown  below  and 

confirmed  for  the  purpose  of  the  definitive  determination  since  they  were  not 

disputed by the parties. 

(a) Capacity, production and utilisation rate 

(57)  Between  1992 and the investigation period, eleven production plants and  facilities 

ceased  production,  representing  a  reduction  of  about  one  fourth  of  the  total 

production  capacity  of  seamless  steel  tubes  existing  in  the  Community  at  the 

beginning of the period. 

52 

Production  of  the  Community  industry  fell  from  1,136,640  tonnes  in  1992  to 

996,036 tonnes in  1995 and to 938,184 tonnes during the investigation period. In 

line with the substantial reduction of capacity, th,e corresponding rates of capacity 

utilisation rose from 63.5% to 75.9%, and fell back to 71.3% over the same period. 

(b) Sales volume and market share 

(58)  Sales of Community producers declined from 781,770 tonnes in  1992 to 775,721 

tonnes in 1995 and to 722,042 tonnes during the investigation period. 

The market share held by the Community industry decreased from 75.2% in 1992 

to 72.1% in 1995, and dropped by a further 4.8% to 67.3% during the investigation 

period. 

(c) Sales prices 

(59)  On average, unit prices of the product concerned sold by the Community producers 

on the Community market, expressed in ECU per tonne, were 576 in  1992, 578 in 

1995 and 593 during the investigation period, corresponding to an overall increase 

of 3%. 

53 

(d) Profitability 

(60)  The Community industry incurred financial losses on its sales of the like product 

during  the  period  under  consideration.  Between  1992  and  1994,  these  losses 

averaged 8%. There followed an improvement in return on sales in  1995 (-2.1%), 

and  in  the  investigation  period  without  reaching  break-even.  Profitability 

percentage levels were as follows: 

1992 

-7,0 

1993 

-12,2 

1994 

-7,9 

1995 

-2,2 

Investigation period 

-0,7 

This reduction in losses was to a considerable extent possible because of the anti 

dumping measures in force  in this sector. In the absence of these measures, there 

would have been even less, if any, reduction in financial  losses. Furthermore, the 

slight  recovery  took  place  during  a period  when  substantial  restructuring  efforts 

were  made,  leading,  inter alia, to the  above-mentioned  closure  of  plants.  These 

developments  were, however, not sufficient  to generate the level of earnings that 

would  be required  by the Community  industry to  cover its  increasing  production 

costs and the high  investment  in restructuring,  make a reasonable profit,  recover 

from  previous years' losses and ensure its long term viability. 

54 

(e) Employment 

(61)  Employment  in the  Community  industry  declined  continuously  by  around  35% 

between  1992 and the end of the investigation period, amounting in absolute terms 

to a loss of about 2,800 jobs. 

5. Final conclusion on injury 

(62)  The examination of the economic performance  of the Community industry during 

the period under consideration showed that, between  1992 and August  1996, there 

was a decline in production, sales volume and market share as well as a reduction 

in employment, despite considerable restructuring efforts  intended to reduce costs 

of production. 

i  * 

These  restructuring  efforts  and  the  measures  in  place  enabled  the  Community 

industry  to  increase  capacity  utilisation  and  improve  its financial results,  which, 

however, remained negative during the investigation period (- 0.7%), i.e. under the 

break-even point, and were insufficient  to enable the Community industry to ensure 

its long term viability. 

55 

It is therefore concluded that during the period under consideration, the Community 

industry has suffered  material injury  within the meaning of Article 3 of the basic 

Regulation,  in  the  form  of  decreased  sales  and  loss  of  market  share,  reduced 

employment and financial losses. 

F. CAUSATION 

1. Effect of dumped imports 

(a)  Cumulated effect of imports from the Czech Republic, Hungary, Poland, 

Romania, Russia and the Slovak Republic 

(63)  While consumption in the Community remained relatively stable, imports from the 

Czech  Republic,  Hungary,  Poland,  Romania,  Russia  and  the  Slovak  Republic 

increased their total market share by around 5.6 percentage points, from 18.7% in 

1992 to  24.3% in the investigation  period.  By contrast, the  Community  industry 

lost  market  share by  about  7.9 percentage  points from 75.2% to  67.3% over the 

same period. Bearing in mind that significant price undercutting was found for each 

exporting  country,  and considering  that the  increase of market  share held  by the 

dumped  imports  concerned  coincided  with  the  deterioration  in  the  Community 

industry's  situation,  it  is  concluded  that,  taken  together,  imports  from  the  six 

countries  concerned  had  a  negative  impact  on  the  situation  of  the  Community 

industry. 

56 

(b) Effects of imports originating in Croatia 

Considered in isolation, the imports originating in Croatia cannot be considered as 

having significantly  caused material injury to the Community industry due to their 

declining volume and market share. 

2. Effect of other factors 

(a) Other imports 

(64)  Certain exporters claimed that imports from other countries, for example Argentina, 

had  been  made  in quantities  and at prices that were  injurious  to the  Community 

industry.  The  examination  revealed  that  imports from other  third  countries,  not 

covered by the two investigations, increased their market share from 4.3% in 1992 

to 6.5% in  1995 and to 7.7% during the investigation period. Although they were 

increasing  in volume, the prices of these imports were found,  on the basis of the 

statistical data available, to be distinctly higher than those of the dumped imports, 

and there was no indication that imports from third countries not subject to the two 

investigations had been dumped. It is, therefore, concluded that the other imports in 

question had little, if any, impact on the situation of the Community industry. 

(b) General economic situation 

(65)  As stated in the provisional Regulation, Community consumption declined in 1993 

due to the world economic recession, which affected  in particular the users of the 

57 

product  concerned  (car  industry,  construction,  etc.).  In  that  year,  the  volume  of 

imports,  and  the  corresponding  market  share  held  by  the  exporting  countries 

concerned,  also reached a low  level,  and the Community industry experienced  its 

poorest results in terms of sales on the Community market, prices and profitability. 

On  this  basis,  it  is  evident  that  the  deterioration  of  the  market  in  1993  had  a 

negative effect on the situation of the Community industry. 

However,  save  in  the  exceptional  situation  of  1993,  consumption  remained 

generally stable during the other years of the period considered (1992, and 1994 to 

the investigation period). This stability, however, was mainly to the benefit  of the 

dumped imports from the countries concerned whose market share increased while 

the  Community  industry's  market  share  declined  continuously.  The  general 

economic  situation  cannot,  therefore,  be  considered  as  a  factor  continuously 

responsible  for  the  precarious  situation  still  faced  by  the  Community  industry. 

Indeed, given the considerable efforts  of rationalisation and restructuring  made by 

Community producers, and the trade defence measures in force  during this period, 

the  Community  industry  should  clearly  have  recovered  to  a  greater  extent  and 

obtained more satisfactory results in 1995 and 1996. 

58 

(c) Restructuring of the Community industry 

(66)  It  was  alleged  by  certain  exporters  that  the  unsatisfactory  performances  of  the 

Community industry in the period examined was due not to the effect  of dumped 

imports but to the restructuring carried out by the industry at that time. 

Without doubt, the restructuring process undergone by the Community industry in 

the face of excess capacities would have been responsible for some of the decrease 

in production, sales and employment. However, given the volume and market share 

of  the  dumped  imports  from  the  countries  concerned  and  the  margin  of 

undercutting  established,  it is clear that the dumped imports in isolation played a 

significant role in the material injury suffered by the Community industry. 

3. Conclusion 

(67)  Although the world economic recession of 1993 as well as the restructuring of the 

Community  industry  may have had  some negative  impact on the performance  of 

the Community industry during the period considered, it must be concluded, on the 

basis of the above considerations, that the cumulative effect  of the dumped imports 

from  the  Czech  Republic,  Hungary,  Poland,  Romania,  Russia  and  the  Slovak 

Republic, considered in isolation, have, through substantial price undercutting and 

significant  quantities of dumped imports, caused material injury to the Community 

industry, and that the existing anti-dumping measures under review have not  fully 

59 

achieved  their  intended  effect.  Imports  originating  in  Croatia"  considered 

separately, cannot be considered to have caused material injury to the Community 

industry. 

It  is  worthwhile  noting  that  the  injury  caused  by  the  dumping  suffered  by  the 

Community  industry  could  only  become  worse  if  the  measures  which  apply  to 

certain cumulated imports were to be repealed. Indeed, in Hungary and Poland high 

volumes of capacity are available for export to the Community, taking into account 

that  internal  consumption  or  exports  to  third  countries  could  not  absorb  any 

additional output. Furthermore, it should .be noted that capacity in Poland increased 

subsequent to the investigation period by around 15%. 

G. LIKELIHOOD OF CONTINUATION OR RECURRENCE OF INJURY 

CROATIA 

(68)  The investigation with regard to Hungary, Poland and the Republic of Croatia was 

an interim review which was initiated in parallel with the new investigation in order 

to examine globally the situation with regard to all imports of seamless pipes and 

tubes  into the Community. Actual  injury,  caused by dumped  imports which were 

assessed  cumulatively  for  the purpose of examining  their effect,  was established. 

There was therefore  no need to  further  examine whether  there  is  a  likelihood  of 

continuation or recurrence of material injury if the existing anti-dumping measures 

concerning imports originating in Hungary and Poland were removed or altered. 

60 

However, in the case of imports of Croatian origin, which were not cumulated with 

the other imports under investigation, such an examination must be made. 

(69)  Following  the  imposition  of  anti-dumping  measures,  imports  from  Croatia  fell 

sharply from 19,201 tonnes in 1992 to 8,077 tonnes during the investigation period, 

representing a decline in market share from 1.8% to 0.7% as stated above in recital 

(51). 

During  the  period  under  consideration,  exports  of  the  Croatian  producer  to  the 

European Community remained far below the level of the quantitative undertaking 

accepted in  1993. Because of the war-like situation in Croatia in the last few years, 

production facilities  of  seamless tubes were partially damaged and the work  force 

was  considerably  reduced.  As  a  result,  only  one  quarter,  approximately  35,000 

tonnes per year of the theoretical production capacity was pperational.  The output 

of  the  product  concerned  dropped from around  34,000  in  1992  to  10,515  tonnes 

during  the  investigation  period,  thus  reducing  capacity  utilisation  from  97%  to 

37%.  Domestic  sales  declined from 8,000  tonnes  to  2,100  tonnes  over  the  same 

period, while exports to non European Community countries were negligible. 

61 

No sizeable increase of export volumes to the European  Community  is expected, 

and  any  price  undercutting  should  have  a  limited  effect  on  price  depression  or 

prevention  of  price  increases  for  Community  producers.  Moreover,  growing 

reconstruction  activities in former  Yugoslavia should increase domestic sales and 

concentrate Croatian exports on the markets in this area. 

Should the measures in force for Croatia be repealed, there appears to be no clearly 

foreseeable 

threat  of  increasing 

import  volumes  from  Croatia.  There  is 

consequently no likelihood of recurrence of material injury. 

Conclusion 

(70)  With regard to Croatia, it is considered that recurrence of injury, should the existing 

anti-dumping  measures be repealed,  is unlikely  and that,  in the circumstances  as 

established, these measures are therefore no longer necessary. 

H. COMMUNITY INTEREST 

1. Introduction 

(71)  Considering that both the new anti-dumping  investigation  and the interim review 

referred  to the same market, i.e. the Community market of the seamless pipes and 

tubes  in  question,  the  examination  of  the  Community  interest  issue  was  made 

62 

jointly  for  both  investigations.  The purpose  of this analysis  was  to  determine the 

possible  impact of measures and the consequences  of  not taking  measures  for all 

parties involved in both proceedings. 

(72)  It  should  be  recalled  in  this  respect  that recitals  (68)  et  seq.  of  the  provisional 

Regulation contained an appreciation of all the various interests, including those of 

the  Community  industry,  of  the  importers/traders  and  of  the  downstream  user 

industries.  On the basis of the information  available at the time of the provisional 

Regulation, the Commission concluded that there was no compelling reason hot to 

remedy the trade distorting effects of injurious dumping. 

(73)  After publication of the provisional Regulation, none of the parties concerned made 

comments on the Commission's provisional conclusions on the Community interest 

issue. 

However, although no user industry had^cooperated in the course of the provisional 

examination,  the  Commission  pursued  its  investigation  in  order  to  complete  its 

analysis on the possible effect of measures on those industries. It approached in this 

respect  the  complainant,  importers  and  a  federation  of  different  processing 

industries  using,  inter alia,  the product concerned.  On the  basis  of  these  sources, 

seven  industrial  users were identified  and ad hoc questionnaires  were sent to each 

of  them.  Meaningful  comments  or  replies  were  received  from  only  four  user 

companies. 

63 

On the basis of the additional information  obtained from these replies, and taking 

into account the absence of comment on the findings contained  in the provisional 

Regulation, the following conclusion can be reached. 

2. Impact on the Community industry 

(a) Likely effect of the imposition of anti-dumping measures 

(74)  Following  the  adoption  of  anti-dumping  measures,  the  prices  of  the  imported 

product  can be expected to rise. This would be reflected  in a fall  in the volumes 

imported  and a reduction  in market  supply,  allowing the  Community  industry  to 

increase output and sales. 

The  Community  industry's  prices  would  probably  increase  to  some  extent,  but 

certainly  not  by  anything  like  the  level  of  the  duty,  given  the  overcapacity 

described above and the transparency of the market. 

The  increase  of  the  Community  industry's  production  volume  would  result  in a 

higher utilisation rate of capacity and thus a reduction of unit costs of the product 

concerned  which, as a result, would enable the Community  industry  to achieve a 

more satisfactory financial situation. 

64 

(b) Likely effect of non-imposition of measures 

(75)  Although the situation of the Commumty industry has improved somewhat during 

the period under consideration, it remains unsatisfactory. In these circumstances, if 

anti-dumping  measures  are  not  adopted  or  maintained,  the  situation  could  be 

expected to deteriorate again in terms of depressed production levels and capacity 

utilisation rates, loss of market share, financial losses and reduction in employment. 

This would further  threaten its capacity to produce the whole range of products at 

competitive costs. 

As  noted  in  recital  (73)  of  the  provisional  Regulation,  the  sector  in  question  is 

dependent on a reasonable capacity utilisation rate. This can only be achieved by a 

satisfactory  level of production of standardised commercial, or oil, tubes which are 

in direct competition with the dumped products. A decrease  in the production of 

these  standard  pipes  would jeopardise  the  production  of  higher  quality  product 

categories and, therefore, the viability of the whole seamless tube sector. 

3. Impact of measures on importers/traders 

(76)  In  recital  (74)  of  the  provisional  Regulation,  the  Commission  concluded  that, 

because  Community  importers  are known  in general  to handle  all  steel  products 

and  only  a  small  percentage  of  their  turnover  consists  of  the  seamless  tubes  in 

65 

question, the measures can be expected to have no more than a minimal effect  on 

their overall situation, given the wide diversity of the products they trade. 

Having received no further  comments in this respect, it is reasonable to conclude 

that anti-dumping measures will indeed have only a minimal effect,  if any, on the 

situation of importers/traders of the product concerned. 

4. Impact on downstream industrial users 

(77)  As stated in recital (71) of the provisional Regulation, there are several downstream 

user industries of the product concerned, i.e. the machinery  industry, transport of 

fluids  (oil,  gas,  water,  etc.),  the  chemical  and  petro-chemical  industries,  power 

stations (including nuclear), the automobile and construction industries. 

From  the  analysis  of  the  comments  or  replies  received  as  mentioned  above 

(recital  (73)),  it  is  concluded  that  the  impact  on  the  costs  of  downstream  user 

industries  of  any price  increases  resulting from adoption  or  continuation  of anti 

dumping measures would be insignificant. 

Furthermore, it should be noted that at least 85% of the dumped imports from the 

countries subject to both the new anti-dumping investigation and the interim review 

are sold to large traders, which appear to have been taking advantage of the dumped 

prices to improve profit margins. In so far as traders adjust margins to take account 

66 

of some or all of the effects  of the measures, they could not be reflected  at all in 

their sales prices. 

In the light of the above, it is concluded that any price effect  resulting from anti 

dumping measures will be negligible with respect to downstream industrial users. 

5. Conclusion 

(78)  On the  basis  of the  above  elements, it  is  concluded  that  there  is  no  compelling 

reason not to remedy the trade-distorting effects  of injurious dumping and that  the 

respective  adoption and continuation  of protective measures are in the interest of 

the Community. 

I. DEFINITIVE DUTY 

1. Countries under the new investigation 

(79)  It should be recalled from recital (78) et seq. of the provisional Regulation that in 

order  to  prevent  further  injury  being  caused  by  the  dumped  imports  concerned 

before  the end of the proceeding, the Commission decided to adopt anti-dumping 

measures, in the form of provisional duties. 

67 

(a) Injury margins 

(80)  For the purpose of determining what level of duty would be adequate to remove the 

injury  to  the  Community  industry  caused  by  dumping,  it  was  considered  that  a 

price  level  based  on  the  Community  producers'  cost  of  production  plus  a 

reasonable profit margin should be calculated. A profit margin of 5% was regarded 

as an appropriate minimum, taking into account the need for long term investment 

and  the  return  which  the  Community  industry  could  reasonably  expect  in  the 

absence of injurious dumping. 

The  injury  elimination  level  was  calculated  by  comparing  the  weighted  average 

CIF import prices, duly adjusted  for an independent importer's margin, to the non-

injurious price of the Community producers, established as above at the same level 

of  trade.  The  amounts  resulting  from  this  calculation  were  expressed  as  a 

percentage  of  the  weighted  average, free-at-Community-frontiers, value  of  the 

imported goods. The injury margins calculated on that basis are set out below. 

Czech Republic 

from 

37.4% to 97.9% 

Romania 

Russia 

Slovak Republic 

48.3% 

87.8% 

31%. 

68 

Having received  no further  comments in this respect, the above determination  of 

the injury elimination level is confirmed. 

(b) Definitive duty 

(81)  As  the  injury  elimination  margins  found  above  are  higher  than  the  dumping 

margins that have been calculated, definitive  anti-dumping duties should be set at 

the  level  of  the  latter,  in  accordance  with  Article  9 (4)  of  the  basic  Regulation. 

These  duties,  expressed  as  a  percentage  of free-at-Community frontier prices, 

amount to: 

Czech Republic 

Vftkovice a.s. 

Romania : 

Nova Hut a.s. 

Other imports 

SC Artrom SA 

SC Silcotub SA 

SC Petrotub SA 

5.1% 

5.1% 

28.6% 

9.8% 

9.8% 

9.8% 

SC Republica SA Trade Company  9.8% 

Other imports 

Slovak Republic 

Zeleziarne Podbrezovâ a.s. 

Other imports 

Russia : 

All imports 

38.2% 

7.5% 

7.5% 

26.8%. 

69 

2. Countries under the review investigation 

(a) Hungary and Poland 

(82)  As a result of the findings concerning Hungary and Poland, confirming  that despite 

the existing measures, dumping has caused injury, and considering that it is in the 

Community's  .interest  that  anti-dumping  measures  with  regard  to  these  two 

countries be maintained, a determination of a revised duty has been made. 

The injury  margins required to remove the injury  caused by imports of Hungarian 

and Polish origin and calculated on the basis of the same methodology as that used 

for  the countries  under the new investigation,  as explained  above  in recital (80), 

are: 

for Hungary : 

45.9% (Csepel Tubes Co. Ltd., 

sole Hungarian producer) 

for Poland:  Huta Batory SA 

37.2% 

Others 

30.1%. 

In accordance with Article 9 (4) of the basic Regulation, the rates of duty should be 

based on the lower of either the injury  elimination margin or the dumping margin 

established. The dumping margins with regard to the Polish producer Huta Batory 

70 

and the  sole  Hungarian  producer  being  below  the  injury  margin  found,  the  duty 

should  be  based  on  this  lower  level.  For the  other  Polish  producers,  the  duty  is 

limited to the injury margin established. 

(83)  On this basis, the existing anti-dumping duties which amount to  10.8% for Poland 

and 21.7% for Hungary should be replaced by the following duties: 

Hungary: 

Csepel Tubes Co. Ltd. 

36.5% 

Others 

Poland: 

Huta Batory SA 

Others 

(b) Republic of Croatia 

36.5% 

7.1% 

30.1% 

(84)  Based on the conclusions reached in recital (51) and taking into account that there 

is no clearly  foreseeable  threat of increasing import volumes from the Republic  of 

Croatia  (see  recital  (69))  and that,  under  these  circumstances,  the  recurrence  of 

material  injury  is  not  imminent,  no  determination  of  a  definitive  duty  has  been 

made in respect of the Republic of Croatia. 

71 

J. DEFINITIVE MEASURES 

(85)  The conclusions reached  above as to dumping,  injury,  causation  and  Community 

interest  call  for  definitive  measures,  both  for  the  countries  under  the  new 

investigation  and for  those under the review investigation,  with the  exception  of 

Croatia,  for  which  the  anti-dumping  proceeding  should  be  terminated.  These 

measures should be in the form of ad valorem duties, the rates of which have been 

fixed individually  for cooperating companies. Non-cooperating  companies, on the 

other hand, should be subject to the residual duties. 

(86)  However,  as  regards  Hungary,  Poland,  the  Czech  Republic,  Romania  and  the 

Slovak  Republic,  it  has  been  found  appropriate,  taking  into  account  the  specific 

history  of  previous  anti-dumping  proceedings  concerning  this  product,  in  which 

those  countries  were  subject  either to quantitative  restrictions  or tariff  quotas, to 

accept  price  undertakings  which  have  been  offered  up  to  a  certain  quantity 

threshold on a  company by company basis. In other words, the elimination of the 

injury is achieved by two means : first, a price undertaking up to an annual volume 

threshold exempt from the duty, and then an ad valorem duty for the remainder. 

To ensure that the quantity of imports exempted from the ad valorem duty does not 

exceed  the  quantity  in  respect  of  which  the  undertaking  has  been  offered,  the 

exemption  should  be  conditional  on the presentation  to  Member  States'  customs 

services  of  a  valid  production  certificate  clearly  identifying  the  producer,  the 

product  concerned  and  the  details  listed  in  the  Annex.  In  cases  of  doubt,  the 

Commission  should make a determination as to the certificate's  validity, and take 

measures as appropriate. 

72 

(87)  As regards Russia, the  Commission has examined  an offer  of  a joint  undertaking 

from  three  of  the  six  companies  which  made  themselves  known  during  the 

investigation,  and  has  considered  the  possibility  of  these  Russian  producers 

benefiting  from  a  similar  form  of  undertaking  to  that  of  the  producers  in  the 

associated  countries.  However, this offer  was not acceptable  as it did  not  contain 

the  necessary  guarantees  on the part of the Russian  authorities  to  allow  adequate 

monitoring,  particularly  with  regard  to  the  duty  free  threshold.  In  these 

circumstances  an  ad  valorem  duty  should  be  imposed  at  the  level  definitively 

established. 

The  Council  notes,  however,  that  the  measure  in  respect  of  Russia  could  be 

modified, if  and when there was a change in circumstances such that the conditions 

for the acceptance of an undertaking were met. 

73 

K. COLLECTION OF PROVISIONAL DUTY WITH REGARD TO COUNTRIES 

UNDER THE NEW INVESTIGATION 

(88)  In view of the circumstances of the present investigation; i.e. the change in the form 

and nature of the definitive measures, as compared with the provisional ad valorem 

duties  imposed  on  imports from the  Czech  Republic,  Romania  and  the  Slovak 

Republic, and with the existing undertakings in respect of imports from Hungary, 

Poland and the Republic of Croatia, the Council considers that it is not appropriate 

to collect the provisional duties. The Council has therefore decided, in accordance 

with Article 10 (2) of the basic Regulation, that the amounts secured by way of the 

provisional duty imposed pursuant to Commission Regulation (EC) No 981/97 on 

imports  of  the  product  concerned  originating  in  Russia,  the  Czech  Republic, 

Romania and the Slovak Republic should be released. 

L. FINAL PROVISION 

(89)  The  Commission  consulted  the  Advisory  Committee  on the  acceptance  of  these 

undertakings  and,  since  some  objections  were  raised,  sent  a  report  on  these 

consultations  to  the  Council.  The  Council  not  having  decided  against  the 

acceptance  of  the  undertakings,  the  undertakings  offered  were  accepted  in 

accordance  with  Article  8 (5)  of  the  basic  Regulation  by  Commission  Decision 
97/..../EC9, 

9 See page 

of this Official Journal. 

74 

HAS ADOPTED THIS REGULATION : 

Article 1 

1.  Definitive  anti-dumping  duties  are  hereby  imposed  on  the  following  imports 

originating  in  Hungary,  Poland,  Russia,  the  Czech  Republic,  Romania  and  the 

Slovak Republic 

a)  seamless  pipes,  of  iron  or  non-alloy  steel,  of  a  kind  used  for  oil  and  gas 

pipelines,  of  an external  diameter  not  exceeding  406.4  mm  (currently  falling 

within CN codes 7304 10 10 and 7304 10 30); 

b)  seamless tubes of circular cross-section, of iron or non-alloy steel, cold-drawn or 

cold-rolled, other than precision tubes (currently falling within CN code 7304 31 

99); 

c)  other  tubes  of  circular  cross-section,  of  iron  or  non-alloy  steel,  other  than 

threaded  or  threadable,  of  an  external  diameter  not  exceeding  406.4  mm 

(currently falling within CN codes 7304 39 91 and 7304 39 93). 

2.  The rate of definitive  anti-dumping  duties applicable to the net  free-at-Community 

frontier  prices before duty, shall be as follows : 

75 

Country 

Manufacturer 

Rate of duty (%) 

Hungary 

Poland 

Russia 
Czech Republic 

Romania 

Slovak Republic 

Csepel Tubes Co. Ltd. 
Others 
Huta Batory SA 
Huta Andrzej SA 
Huta Czestochowa 
Huta Jednosc SA 
Others 
All companies 
Vftkovice a.s. 
Nova Hut a.s. 
VT Chomutov a.s. 
Others 
SC Artrom SA 
SC Silcotub SA 
SC Petrotub SA 
SC Republica SA Trade Company 
Others 
Zeleziarne Podbrezovâ a.s. 
Others 

36,5% 
36,5% 
7,1% 
30,1% 
30,1% 
30,1% 
30,1% 
26.8% 
5.1% 
5.1% 
28.6% 
28.6% 
9.8% 
9.8% 
9.8% 
9.8% 
38.2% 
7.5% 
7.5% 

Taric 
additional 
Code 
8717 
8900 
8476 
8719 
8482 
8493 
8900 

8058 
8463 
8464 
8900 
8059 
8467 
8468 
8469 
8900 
8060 
8900 

3.  Unless otherwise  specified,  the provisions in force  concerning customs duties shall 

apply. 

76 

Article 2 

1. 

Imports  shall  be  exempt from the  anti-dumping  duties  imposed  by Article  1 (1) 

provided  that  they  are  produced  and  sold  for  export  to  the  Community  by  the 

companies listed in paragraph 4 below which have offered  undertakings accepted 

by the Commission  and provided that the conditions of paragraphs  2, 3 and 4 of 

this Article are met. 

2.  When the declaration for release for free circulation is presented, exemption from 

the duty  shall  be conditional  upon presentation to the competent  Member  States' 

customs  services  of  a  valid,  original  production  certificate  issued  by  one  of  the 

companies  listed  in paragraph  4 below.  The production  certificate  shall  conform 

with the requirements  for  such certificates  set out in the undertaking  accepted by 

the  Commission,  the  essential  elements  of which  are  listed  in the  Annex  to  this 

Regulation. 

3. 

The above-mentioned production certificate must be presented within three months 

of  its  date  of  issue.  The  quantities  presented  to  the  Member  States'  customs 

services  for  import  into  the  Community  free  of the  anti-dumping  duty  shall  not 

exceed  those  stipulated  on  the  certificate.  When  quantities  stipulated  on  the 

certificate  are  exceeded, the excess  shall be subject  to the  duty,  and  be declared 

under the relevant Taric additional code of Article 1  (2). 

77 

4. 

Imports  accompanied  by  a  production  certificate  shall  be  declared  under  the 

following Taric additional codes : 

Country 

Product manufacturer 

Hungary 

Poland 

Csepel Tubes Co. Ltd. 

Huta Batory SA 
Huta Andrzej SA 
Huta Czestochowa 
Huta Jednosc SA 

Czech Republic 

VT Chomutov a.s. 

Romania 

SCArtromSA 
SASilcotubSA 
SCPetrotubSA 
SC Republica SA Trade Company 

Slovak Republik 

Zeleziame Podbrezovâ a.s. 

Article 3 

Taric 
additional 
Code 

8521 

8517 
8518 
8519 
8520 

8507 

8508 
8509 
8514 
8515 

8516 

Member States' reports to the Commission pursuant to Article 14 (6) of Regulation (EC) 

No  384/96,  shall  indicate  for  each  release  for  free  circulation,  the  year  and  month  of 

import,  the  CN, Taric and Taric additional  codes, the type  of measure, the  country  of 

origin, the quantity, the value, the anti-dumping  duty, the Member State of import and, 

where appropriate, the serial number of the production certificate. 

78 

Article 4 

Regulation (EEC) No 1189/93 is repealed. 

Article 5 

The  anti-dumping  proceeding  against  imports  of  the  product  concerned  originating  in 

Croatia is hereby terminated. 

Article 6 

The  amounts  secured  by way  of provisional  anti-dumping  duties  imposed  pursuant  to 

Regulation  (EC) No 981/97 on imports of the product concerned originating  in Russia, 

the Czech Republic, Romania and the Slovak Republic shall be released. 

Article 7 

This Regulation shall enter into force on the day following  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 

79 

ANNEX 

Main elements of the production certificate' 

a)  The number of the certificate; 

b)  Identification showing whether the certificate is an original; 

c)  The date of expiry of the certificate; 

d)  The following text : 

"Production  certificate  issued by <the Company> pursuant to Article  2 (2)  of  the 

Council  Regulation  (...)  for the export to the European Community  within TARIC 

additional Code XXXX of certain Seamless Steel Pipes and Tubes." 

e)  The name and full  address of the Company, and possible identification  number such 

as national registration number for incorporated companies; 

f)  The  name  and  full  address  of  the  customer  of  the  Company  in  the  Community 

importing the goods or the name and full  address of the unrelated trader outside the 

Community exporting the goods; 

g)  The number of the Company invoice to which the production certificate relates; 

h)  The exact description of the goods, including : 

A product description sufficient  to identify the Products, which will be identical 

to the product description on the invoice; 

-  CN code; 

Quantity (in metric tonnes). 

* 

Under the undertaking offered  and accepted by the Commission, each box on the certificate  will be in 
four  languages, the  language of the country of the producer, English, French  and  German. 

r> 

i)  The name of the official  of the Company responsible  for the issue  of the  certificate 

and the following signed declaration : 

"I, the undersigned, certify that the sale for export to the European Community of the 

goods covered by this certificate  is being made within the scope and under the terms 

of  the  undertaking  by  <the  Company>,  and  within  the  permitted  volume  for  anti 

dumping duty free imports into the Community  set out in the undertaking  accepted 

by  the  Commission  pursuant  to  Decision  (...). 

I  declare  that  the  information 

provided in this certificate is complete and correct." 

j)  Space for use by the competent authorities Of the Community. 

r> 

ISSN 0254-1475 

COM(97) 535  final 

DOCUMENTS 

EN 

02  n 

Catalogue  number  :  CB-CO-97-551-EN-C 

ISBN  92-78-26088-6 

Office  for  Official  Publications of the European  Communities 

L-2985  Luxembourg 

£1