Proposal for a Council Regulation (EC) imposing a definitive anti-dumping duty on imports of glyphosate originating in the People's Republic of China and collecting definitively the provisional duty imposed
Date: 1998-02-04
Institutions: European Commission
Subjects: China, anti-dumping duty, chemical product, dumping, import

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 04.02.1998 
COM(1998) 56  final 

Proposal for a 

COUNCIL REGULATION (EC) 

IMPOSING A DEFINITIVE 

ANTI-DUMPING DUTY ON IMPORTS OF GLYPHOSATE 

ORIGINATING IN THE PEOPLE'S REPUBLIC OF CHINA 

AND COLLECTING DEFINITIVELY THE PROVISIONAL DUTY IMPOSED 

(presented by the Commission) 

EXPLANATORY  MEMORANDUM 

1.  On  5 September  1997, the  Commission  imposed  a provisional  anti-dumping  duty of 
21.1% on imports of glyphosate originating in the People's Republic of China (PRC). 

2.  The  Commission  subsequently  continued  to  seek  all  the  information  it  deemed 

necessary for it definitive findings. The main conclusions are stated below. 

3.  Given that the PRC is a non-market economy country, Brazil  was used as an analogue 

market. On this basis the dumping margin was 38.2%. 

4.  As regards injury  and causality, the main conclusions were that, between  1991 and the 
IP (1 September  1994 to 31 August  1995) the Community industry suffered  significant 
reductions  in prices and profits,  in addition  to a continuous  loss in market  share. This 
situation  coincided  with  a  constant  increase  in  the  volume  and  market  share  of 
glyphosate originating in the PRC, at prices that undercut the prices of the Community 
industry. 

5.  Importers  in the Community  argued that the situation  of the Community  industry was 
mainly  due  to  the  expiry  of  the  patent  on  the  Community  market,  held  by  one 
complainant Community producer up to  1991. However, it was found  that  irrespective 
of  the  expiry  of  the  patent,  the  Chinese  dumped  imports  clearly  aggravated  the 
injurious  situation of the Community  industry. 

6.  As  regards  Community  interest  it  was  considered  that,  the  duties  would  ensure 

increased competition on the Community market. 

7.  Given that the injury  margin determined, is lower than the dumping margin found, the 
definitive  duty should be based on this lower level, in accordance  with the provisions 
of Article 9(4) of Regulation  (EC) N° 384/96. On this basis it is proposed to impose a 
definitive  anti-dumping  duty  of  24.0%  on  imports  of  glyphosate  originating  in  the 
People's Republic of China. 

8.  A  majority  of  Member  States  in  the  Anti-dumping  Advisory  Committee  were  in 

favour of the imposition  of definitive measures. 

COUNCIL REGULATION (EC) N° 

798 

OF 

IMPOSING A DEFINITIVE 

ANTI-DUMPING DUTY ON IMPORTS OF GLYPHOSATE 

ORIGINATING IN THE PEOPLE'S REPUBLIC OF CHINA 

AND COLLECTING DEFINITIVELY THE PROVISIONAL DUTY IMPOSED 

THE COUNCIL OF THE EUROPEAN UNION 

Having regard to the Treaty establishing the European  Community, 

Having  regard  to  Council  Regulation  (EC)  N°  384/96  of  22  December  19951  on 

protection  against  dumped  imports  from  countries  not  members  of  the  European 
Community,  as  amended  by  Regulation  (EC)  N°  2331/962,  and  in  particular  Article 

9(4) thereof, 

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

Advisory Committee, 

Whereas: 

OJL 56 of 6.3.1996 
O J L 3 n o f 6 J 2 . ! 9 96 

A. PROVISIONAL MEASURES 

(1)  By  Commission  Regulation  (EC)  N°  1731/97"  (hereinafter  referred  to  as  the 

"provisional  duty  Regulation")  provisional  anti-dumping  duties  were  imposed 

on  imports  of  glyphosate  falling  within  CN codes ex  29  31 00 80 and ex  3808 

30 27 originating in the People's Republic of China. 

B. SUBSEQUENT PROCEDURE 

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

of  interested parties submitted comments in writing. 

(3) 

Importers  in  the  Community,  Chinese  exporters,  and  both  complainant 

Community producers requested and were granted a hearing. 

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

for its definitive  findings. 

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

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

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

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

subsequent to this disclosure. 

OJL 243 of 5.9.1997 

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

considered,  and,  where  deemed  appropriate,  taken  into  account  in  the 

Commission's definitive findings. 

C. PRODUCT UNDER CONSIDERATION AND LIKE PRODUCT 

/. 

Product under consideration 

(7)  As  stated  in recital  (10)  of  the provisional  duty  Regulation,  the  product under 

consideration is glyphosate. This product can be produced in different  grades or 

forms  of  concentration  of  which  the  main  ones  are  the  following:  formulated 

(generally with 36% glyphosate content), salt (with 62%), cake (with 84%) and 

acid (95%), 

In  order  to  reduce  the  costs  of  transportation,  distributors  normally  purchase 

glyphosate  in  a  concentrated  form  (usually  acid,  but  also  salt)  and  further 

process it to obtain the formulated glyphosate, the only form that can be used as 

an end-product, i.e. as a non-selective herbicide. 

(8) 

The  Chinese  exporters  and  a number  of  importers  in  the  Community  claimed 

that the various forms of glyphosate above referred  to could not be considered as 

one  product  because  they  presented  substantial  differences 

in  cost  terms, 

customer  structure,  price  and  end  use.  One  importer  argued,  in  particular,  that 

the transformation  of acid  into formulated  glyphosate required  further  chemical 

processing  and  that  the  resulting  formulated  product  was  of  different  chemical 

composition 

than 

the  acid  form.  The  importers  considered 

that,  as  a 

consequence,  the acid  form,  which  accounted  for  the majority  of all  glyphosate 

imported  from  the  People's  Republic  of  China  during  the  investigation  period 

and  the  formulated  form,  which  accounted  for  the  majority  of  sales  of  the 

Community  industry  in  the  same  period,  could  not  be  considered  as  a  single 

product. 

(9)  However,  these  claims  were  not  considered  justified  for  the  following  main 

reasons : 

It  was  found  in  the  course  of  the  investigation  that  there  were  no  basic 

differences  in  the  chemical  characteristics  and  properties  of  all  above 

mentioned  forms  of  glyphosate.  Indeed,  although  the  acid  constitutes  an 

intermediate  stage  in  the  production  of  the  formulated  form,  the  acid 

already  contains  the  essential  chemical  properties  of  the  formulated 

product. 

Furthermore,  although  the  above-mentioned  forms  of  glyphosate  have 

different  grades^of  concentration,  thus  justifying  differences  in  cost  or 

price, the transformation cost from one to the other are not substantial. 

Finally,  it  should  be  noted  that  all  forms  are  dedicated  to  the  same  end-

use,  i.e.  as  a herbicide,  albeit  in the case  of  acid,  salt  and cake,  following 

further  processing  into  formulated,  and  cannot  be  used  for  any  other 

purpose. 

(10)  It  was  therefore  concluded  that  all  forms  should  be  considered  as  one  product 

for the purpose of the investigation, irrespective of the glyphosate  concentration. 

2. 

Like  product 

(11)  One  importer  claimed  that  the  glyphosate  production  process  used  in  the 

Community  and  in  Brazil  (the  analogue  country)  is  different  from  that  used  in 

the  People's  Republic  of  China  and  that,  as  a  consequence,  the  products 

resulting from these different  processes are not alike. 

(12)  The  investigation  has  confirmed  that  the  production  process  used  in  the 

Community  and Brazil,  on  one  hand, and that used  in  the People's  Republic  of 

China, on the other, were different.  However, the glyphosate  produced  by either 

processes was found to be identical  in all respects. 

(13)  In the absence of other arguments, it was confirmed  that the glyphosate exported 

to the Community by the People's Republic of China and that produced and sold 

by  the  Community  industry  were  alike  in  all  respects.  The  same  applied  to 

glyphosate produced  in Brazil, when compared  to glyphosate exported  from  the 

People's  Republic  of  China  and  to that  produced  in  the  Community.  All  these 

products  are  therefore  like  products  within  the  meaning  of  Article  1(4)  of 

Regulation (EC) N° 384/96 (hereinafter  the "Basic Regulation"). 

D. DUMPING 

/. 

Analogue country 

(14)  Some exporters  and  importers  reiterated  their opposition  to the choice of  Brazil 

as analogue country and made a number of counterproposals. The exporters and 

importers  in particular argued that the Commission  did  not do enough  to  verify 

whether the alternative countries proposed were more appropriate than Brazil. 

(15)  In 

that  respect, 

the  Commission  made  a  close  examination  of 

the 

counterproposals.  It  should  be noted  that  in  Indonesia  all  producers  refused  to 

co-operate  with  the  Commission's  investigation.  Whereas  in  Brazil  there  are 

two producers  and  significant  imports of  the product  concerned  , in  Argentina, 

Australia,  India  and Malaysia  the  markets  are  largely  dominated  by  companies 

related  to  the  main  complaining  producer  located  in  the  Community,  i.e. 

Monsanto.  In those circumstances, it was concluded  that  none of the countries 

proposed were more appropriate than Brazil. 

2. 

Normal value 

(16)  Exporters  requested  the Commission  to give justification  for  the  determination 

of  a constructed  normal  value for  acid while domestic  prices  were used  for  the 

formulated  product. 

(17)  In this respect  it should  be noted  that  as clarified  to the exporters  in the course 

of the investigation, normal  value for acid was constructed  pursuant to Article 2 

(3) of  the Basic  Regulation  because  the  domestic  sales  to unrelated  customers, 

although  they  were  sold  in  representative  quantities,  were  not  sold  in  the 

ordinary  course  of  trade.  In  the  absence  of  further  arguments  concerning  the 

establishment  of  normal  value,  the  provisional  determination 

is  hereby 

confirmed. 

3. 

Export price 

(18)  In  the  absence  of  further  arguments  concerning  the  establishment  of  export 

price, the provisional determination is hereby  confirmed. 

4. 

Comparison 

(19)  Exporters claimed that the Commission  in determining the dumping margin had 

compared export prices of acid with the weighted  average normal  value of both 

acid and the formulated  product.  In this respect  it is noted that export  prices  for 

acid were only compared  with the normal  value for acid.  The same method was 

used  for  formulated.  On  that  basis  a  weighted  average  dumping  margin  was 

then calculated. 

5. 

Dumping margins 

(20)  The methodology  used  to determine  the definitive  dumping  margin  is the same 

as  that  used  for  the  calculation  of  the  provisional  dumping  margin. 

In  the 

absence  of  any  amendments  to  the  establishment  of  the  normal  value  and  the 

export price, the provisional determination  is hereby  confirmed. 

(21)  The  dumping  margin  established  for  definitive  determinations  expressed  as  a 

percentage of the CIF price at Community frontier,  remains at 38.2%. 

E. INJURY 

/. 

Consumption in the Community market 

(22)  In  determining  total  apparent  consumption  on  the  Community  market,  the 

Commission  added  the  sales  of  Community  producers  to  the  imports  into  the 

Community. 

(23)  A further  examination  of  the imports  volumes  originating  in  both  the  People's 

Republic  of  China  and  other  third  countries  resulted  in  minor  changes  in  the 

total  volume  of  imports  and,  consequently,  of  consumption  figures  for  the 

period  examined.  On  this  basis,  Community  consumption  increased  by  130% 

between  1991 and the investigation  period. 

2 

Volume and market share of imports 

fa 

(24)  A  number  of  importers  contested  the  determination  of  market  share  held  by 

imports  originating  in  the  People's  Republic  of  China,  as  established  in  the 

provisional  duty  Regulation.  They  alleged  that 

this  market  share  was 

overestimated  because  it  did  not  take  into  account  the  relative  importance  of 

imports  from  other  third  countries,  such  as  the  USA,  India,  Switzerland  and 

Japan,  which,  according  to  these  importers,  were  substantial  under  Eurostat 

statistics. 

(25)  In this context,  it  is recalled  that, at the provisional  stage, the determination  of 

imports originating in third countries other than the People's Republic of China, 

was  based  on 

information  provided  by  co-operating 

importers 

in 

the 

Community. As regards these imports, it was not considered  appropriate  to use 

Eurostat, because no precise figures for these imports could be established under 

Eurostat  statistics.  Indeed,  Eurostat  is  available  per  CN  code  only.  As  the  CN 

codes  applicable  to  glyphosate  are  also  applied  to  products  other  than  the 

product concerned  this course of action  was deemed  appropriate. In addition, it 

has been confirmed  that as regards  imports  originating  in the USA  (by  far  the 

largest  single  import  quantities  declared  under  Eurostat),  products  other  than 

glyphosate  were  imported  under  the  same  CN  code  as  glyphosate,  during  the 

period examined. This would also appear to be the case as regards imports  from 

other  origins,  since  for  some  of  these  origins  the  import  volumes  reported  by 

Eurostat  largely  exceeded  the  import  volumes  of  glyphosate  reported  by 

importers. 

For  the  reasons  stated  above,  and  in  the  absence  of  information  which  would 

justify  a different  approach, the volume of imports originating  in third countries 

other  than  the  People's  Republic  of  China  was  definitively  determined  on  the 

basis of information  supplied by the importers. 

(26)  As regards imports originating in the People's Republic of China, at provisional 

stage,  these  imports  were  based  on  Eurostat,  since  the  Commission  was  not 

aware  of  products  other  than  glyphosate  being  imported  from  the  People's 

Republic  of  China  under  the  same  CN  codes  as  glyphosate.  However,  at  the 

definitive  stage  it  was  considered  appropriate  to  also  base  the  findings 

concerning the development  of Chinese imports on information  supplied  by the 

importers , since this information  was considered reliable. 

(27 )  The above analysis resulted  in small  changes  in the assessment  of consumption 

(recital  23  above)  and  consequently  of  the  market  shares  of  both  imports  and 

sales of the Community producers. 

(28)  Following  the  above,  the  total  volume  of  dumped  imports  of  glyphosate 

originating  in  the  People's  Republic  of  China  increased  continually  and 

substantially, from  a very low  level  in  1991 to  1487 tonnes  in the  investigation 

period. Glyphosate of Chinese origin  was sold in its three main forms  (acid, salt 

and formulated)  and was sold in larger quantities in some Member States than in 

others. 

10 

(29)  The  market  share  of  these  imports  followed  a  similar  progressive  trend,  from 

very  low  levels  between  1991  and  1993,  to  9%  in  1994  and  11%  in  the 

investigation period, i.e. showing a very rapid rate of increase after  1993. 

3. 

Prices of the dumped imports and price undercutting 

(30)  A number of arguments  were put forward  by both the Community  industry  and 

importers  regarding  the  price  undercutting  assessment  made  at  the  provisional 

stage. 

(31)  In this context,  it  is recalled  that prices  were compared  at  the  formulated  stage. 

In  order  to  ensure  a  fair  comparison  of  prices,  and  given  the  existence  of  a 

variety of types of formulated  glyphosate on the market, the prices of which can 

vary  considerably  both  according  to  the  concentration  of  the  product  and  the 

type  of  surfactant  used,  the  Commission  services  selected  the  most  common 

formulation,  called  "3A",  which  has  360g  of  glyphosate  content  per  litre. 

Consequently,  for  this  comparison,  one  type  of  "3A"  produced  by  the 

Community 

industry, 

containing 

a 

special 

type 

of 

surfactant 

(alkylpolyoalkylammoniumquat),  designed  to  increase 

its  efficiency,  was 

excluded from  the calculation. 

il 

(32)  One  Community  producer  argued,  however,  that  all  types  of  formulations 

having 

identical  concentrations  are 

interchangeable  from 

the  consumer 

viewpoint  irrespective  of  the  surfactant  used.  According  to  this  producer,  all 

such  types,  including  the  one  with  the  special  surfactant,  should  therefore  be 

used for a correct assessment of price undercutting by Chinese formulations. 

However,  the  information  available  indicated  that  the  product  with  special 

surfactant  was  of  better  quality  regarding  efficiency  and  environmental  impact 

than  other  types  of  identical  concentration  and,  indeed,  was  sold  at  a  price 

significantly  higher  than  that  of  more  common  "3A"  formulations  of  the 

Community  industry.  In  order  to  ensure  the  comparability  of  prices,  the 

approach followed  at provisional stage was therefore  maintained. 

(33)  Importers contested  the prices used for  the Chinese  imports, which  they argued 

were  not  representative  because  Chinese  imports  of  formulated  product 

accounted  for  a small  percentage  of  all  glyphosate  imported  from  the  People's 

Republic of China during the investigation period. 

(34)  As  mentioned  above  it  should  be  noted  that  the  price  undercutting  assessment 

was made for formulated  product combining both the prices of direct  imports of 

formulated  product  provided  by  one  exporter,  and  the  prices  of  formulated 

product  processed  in  the  Community  from  Chinese  acid,  provided  by  co 

operating importers  in the Community. On this basis, the prices used accounted 

for  a  representative  volume  of  all  imports  of  glyphosate  originating  in  the 

People's Republic of China. 

12 

(35)  On the basis of  the  above-mentioned  approach,  the price  undercutting  margins 

during  the  investigation,  period  were  found  to  range  from  2  to  13%  of  the 

Community industry's corresponding weighted average sales unit price. 

4. 

Situation of the Community industry 

4.1.  Market share 

(36)  The market share of the Community  industry decreased continuously  from 98% 

in  1991, to 95% in  1992, to 93% in  1993, to  86% in  1994 and  to  85% in  the 

investigation period. 

4.2.  Profitability 

(37)  The profitability  of  the Community  industry  was re-assessed  to take  account  of 

factors  such  as  financing  costs  which,  in  the  case  of  one  producer,  had  been 

incorrectly  determined  at  the  provisional  stage.  It  was  confirmed  that  one 

producer  was  incurring  heavy  financial  losses  in  the  investigation  period.  The 

profitability  of  the  other  producer  decreased  substantially  reaching  very  low 

levels in the investigation period. 

In  addition,  a  calculation  of  the  profitability  of  this  producer  for  the  product 

types  more  exposed  to  competition  from  the  People's  Republic  of  China  and 

used in the undercutting assessment revealed significant  financial  losses in sales 

of such product types. 

13 

4.3.  Employment 

(38)  One  importer  argued  that  the  employment  figure  for  the  Community  industry 

provisionally  determined,  seemed  overestimated  because glyphosate  production 

does  not  normally  require  as many people. The  Commission  confirms  that,  on 

the  basis  of  verified  information,  in  the  investigation  period  the  Community 

industry employed some 814 people in connection with the glyphosate activity. 

(39)  In the absence of other arguments, the other findings  concerning the situation of 

(he Community  industry, as slated  in recitals (46) to (53) of the provisional duly 

Regulation, are confirmed. 

4.4.  Conclusion on  injury 

(40)  Importers  argued  that  in  the light  of  the  increase  in capacity,  production,  sales 

volume and employment  of the Community  industry, it could not be considered 

that this industry had suffered  material injury  in the period examined. 

However,  it  is  recalled,  that,  in  accordance  with  Article  3(5)  of  the  Basic 

Regulation, any one or more of the injury  factors  set out in this provision cannot 

necessarily  give  decisive  guidance  as  to  the  impact  of  the  dumped  imports  on 

the situation of the Community  industry. 

14 

In this context, it is noted, that in spite of the positive development of the above 

factors, which took place, in the context of a significant  expansion  of the market, 

during  the period  examined,  the Community  industry's  market  share  decreased 

significantly,  as did  its prices and profits.  Furthermore, it is recalled  that,  in the 

investigation period, and as underlined by the analysis of imports prices made in 

recitals  (41)  to  (44)  of  the  provisional  duty  Regulation,  the  Chinese  dumped 

prices  of  acid  were  found  to  be  below  the  manufacturing  costs  of  acid  of  the 

Community  industry.  This  shows  the magnitude  of  the  impact  of  such  imports 

on the situation of this industry. 

The conclusion  whereby the Community industry suffered  material injury  during 

the period  examined,  as set out  in recitals  (54) and  (55) of  the provisional  duty 

Regulation, is, therefore,  confirmed. 

F. CAUSATION 

/. 

Patent expiry 

(41)  Importers  claimed  that  the  situation  of  the  Community  industry  and,  in 

particular,  the  decrease  in  prices  and  profits  of  this  industry,  was  mainly  a 

consequence of the expiry of the patent held by one Community  producer up to 

1991. The importers argued, in particular, that the decrease in glyphosate prices 

on the Community market was in line with other cases of patent expiry and that, 

as a consequence, the decrease in profitability  of the former  patent holder was to 

be expected. 

15 

As regards any losses suffered  by the other producer, these were claimed  by the 

importers to be due to lack of anticipation  of the price evolution  that the market 

would  follow  after  the expiry  of  the patent. The  importers  further  claimed  that 

the  prices  of  glyphosate  on  the  Community  market  during  the  investigation 

period  were  comparable  to  prices  of  the  product  on  other  world  markets,  e.g. 

Argentina, which showed that following  the expiry of the patent the prices in the 

Community market had reached a normal level. 

(42)  It should be noted, in the first  instance, that no new evidence  was submitted on 

this subject  following  provisional  findings,  which  would justify  a change  in the 

conclusions  regarding  causality.  In  particular,  it  is  noted  that  as  regards  the 

comparison  of  prices  of  glyphosate  in  the  Community  and  Argentina,  no 

sufficient  evidence was provided on the prices in the latter market or, indeed, on 

whether  the  conditions  of  competition  in  Argentina  would  be  comparable  to 

those in the Community  following  the expiry  of  the patent.  It should  further  be 

noted  that  given  the different  situations  for  different  markets  as  regards  patent, 

no world price could be established for this product. 

(43)  Concerning  the  profitability  of  the  Community  industry,  it  is  recalled  that  in 

spite  of  considerable  reductions  in  costs  of  this  industry,  its  prices  decreased 

further  than  costs.  In  addition,  the  investigation  revealed  that  this  decrease  in 

prices was considerably  accelerated  between  1993 and  the  investigation  period, 

when  the  Chinese  imports  appeared  on  the  Community  market  in  significant 

volumes. This shows that, irrespective of the patent expiry, the Chinese  imports 

had a negative impact on the level of Community  market prices. 

16 

(44)  It is further  noted  with  regard  to the other  Community  producer  which  entered 

the market  after  the expiry of the patent, that  it had made detailed  forecasts  of 

the decrease  in prices that would follow  the expiry of the patent. However,  it is 

clear that prices went to much lower levels than anticipated. 

(45)  Finally, it is stressed that in the investigation period, the Chinese imports of acid 

were found  to be below the manufacturing  costs of the Community  industry, i.e. 

at a level excluding  any general, sales or administrative  expenses, thus exerting 

a continuous downward pressure on the prices of the formulated  product. 

(46)  In  view  of  all  the  above  elements,  the  conclusion  in  the  provisional  duly 

Regulation  is maintained  that the dumped  prices  largely  influenced  the  level of 

prices  and  profits  of  the  Community  industry  in  the  period  examined. 

Furthermore,  it  is  recalled  that  the  impact  of  the  dumped  Chinese  imports 

resulted  in an increase of market  share of these imports, to the detriment  of the 

market share of the Community  industry. 

2.  Other imports 

(47)  As  regards  the  effects  of  imports  other  than  those  originating  in  (he  People's 

Republic  of  China,  one 

importer  claimed 

that 

the  Commission  had 

underestimated the volume of these imports, in particular of those originating in 

Hungary. 

17 

For the reasons explained  in recital  (25) above, it is recalled  that the volume of 

imports  was  based  on  information  provided  by importers.  In  this context,  it  is 

noted that other  imports were found  to have taken  place from  Hungary,  Korea, 

Taiwan, Slovenia, India and Malaysia.  The total market share of these imports 

was, in the investigation  period, 3.2%, with individual  market shares of less than 

1 % in all cases with the exception  of Hungary,  As regards Hungary, its market 

share  was 2% in  the  investigation  period,  however,  there  was  no evidence  that 

the Hungarian prices were dumped. 

(48)  In  the  light  of  the  above,  it  is  unlikely  that  other  imports  had  any  significant 

impact on the situation of the Community  industry. 

3. Conclusion on causation 

(49)  Although  it  is  not  contested  that  the  patent  expiry  had  an  impact  on  the 

Community  industry's  situation,  it  was  concluded  that  the  imports  concerned 

have,  in  isolation,  caused  material  injury  to  the  Community  industry  The 

findings  set  out  in  recitals  (56)  to  (60)  of  the  provisional  duty  Regulation, 

concerning causation, are confirmed 

F. 

COMMUNITY INTEREST 

/. 

Impact on importers/fqrmulators 

(50)  Importers in the Community claimed that the imposition  of anti-dumping  duties 

would  force  them  to  cut  down  an  important  part  of  their  activities.  However, 

since this claim was not substantiated  and for the reasons set out  in recitals (66) 

and (67) of the provisional duty Regulation, it could not be considered justified. 

2. 

Competition in the Community 

(51 )  One importer alleged that the imposition  of duties would strengthen  the position 

of  the  former  patent  holder  in  the  Community  market,  thus  preventing 

competition from  developing in this market. 

(52)  In this respect, it is considered  that, on the contrary, measures would ensure the 

viability  of  new  producers  in  the  Community,  as  well  as  o\'  (hose  already 

producing, thus enlarging the number of competitors on the market. 

(53)  As explained  in  recitals  (70)  and  (71)  of  the  provisional  duty  Regulation,  it  is 

noted  that, following  the expiry of  the patent,  two  new producers  have entered 

the Community market. However, the investments made by these new producers 

are  being jeopardised  by  the  continued  presence  of  the  dumped  imports,  the 

prices  of  which  have  apparently  continued  to  decrease  after  the  investigation 

period. 

It  is  therefore  considered  essential  that  fair  conditions  of  competition  are 

established  on  the  Community  market  in  order  to  ensure  the  viability  of  these 

producers, while encouraging the emergence of new ones. 

(54)  Furthermore, given the difficulties  encountered  by the new producers due to the 

Chinese  dumped  prices  there  is  a  likelihood,  that  without  the  imposition  of 

measures, competition  in the Community  would  be limited  to the former  patent 

holder  and  the  Chinese,  to  the  extent  that  the  former  patent  holder  would 

economically  be  in  a position  to compete  with  the  very  low  dumped  prices of 

the  Chinese  exporters.  It  is considered  that  new  entrants  would  ensure  a more 

effective  competition  on  the  Community  market  as  there  would  be  a  greater 

number  of  players  involved  on  that  market.  In  doing  so,  a  greater  variety  of 

reliable sources of supply  for Community consumers  would  be maintained  than 

would  be  the  case  if  Chinese  imports  were  the  only  alternative  to  the  former 

patent holder products. 

3. 

Conclusion on Community interest 

(55)  In  the  absence  of  any  other  arguments, the conclusions  on  Community  interest 

as  stated  in  recitals  (61)  to  (74)  of  the  provisional  duty  Regulation  are 

maintained. 

20 

H.  DEFINITIVE DUTY 

f a 

(56)  The  product  type  useâ  as  a  reference  to  determine  the  duty  rate  was  the  acid 

form  of  the  product  concerned,  because  the  acid  form  represented  67% of  the 

volume of glyphosate  imported  from  the People's  Republic of China during the 

investigation  period.  Moreover,  acid  is  the  common  base  of  all  forms  of 

glyphosate  exported  from  the  People's  Republic  of  China  and  produced  in  the 

Community. 

(57)  For  the  purpose  of  calculating  the  injury  elimination  level,  the  Commission 

considered  that the prices  of  the dumped  imports  should  be compared  with  the 

production  costs  of  acid  of  the  Community  industry  plus  a  reasonable  level  of 

profit.  In this context, the Community  industry contested  both the determination 

of  its  cost  of  production  at  provisional  stage,  in  so  far  as  it  did  not  include 

certain  R&D  costs  claimed  by  this  industry,  and  the  profit  level  used  by  the 

Commission,  which  the  industiy considered  to be underestimated  for  a product 

in the agrochemical sector. 

(58)  Specifically, 

the  Community 

industry  argued,  that 

the  Commission,  at 

provisional  stage,  had  improperly  classified  glyphosate  acid  as  a  commodity 

product  and that this had resulted  in an underestimation  of both  the R&D costs 

and  the  profit  margin  attributed  to  this  product.  The  Community  industry 

claimed  that  glyphosate  acid  is  a  highly  technical  product  that  requires 

continued  research  and  development  for  compliance  with  environmental 

requirements. 

(59)  In this context,  the producer  concerned  provided  sufficient  additional  evidence 

showing the link of certain R&D costs with the product type concerned. 

(60)  Therefore,  the cost of production  of the Community  industry, for the purpose of 

establishing  the  non  injurious  price  level,  was  adjusted,  where  appropriate,  to 

take account of these R&D costs. 

(61)  No  further  evidence  was  provided  on  R&D  costs  relating  to  glyphosate  which 

should  be  taken  into  account  at  definitive  stage.  Furthermore,  as  far  as  the 

former  patent holder is concerned, and given the effective  duration of the patent 

protection  for  this  company,  it  can  be  considered  that  any  other  significant 

research costs in relation to this product were already recovered. 

(62)  As regards profit,  the Community  industry argued  that  a profit  level  higher than 

that used at provisional  stage would  be adequate  for  the glyphosate  business. In 

this  respect,  it  should  be  noted  that  during  much  of  the  period  examined,  the 

prices  on  the  Community  market  were  influenced  by the  former  existence  of a 

patent, and latterly, by the presence of dumped Chinese prices. Therefore,  it was 

not possible to obtain reliable information  on the profit  level this industry would 

be able to obtain in normal conditions of competition. 

22 

(63)  In any event, it should be borne in mind that, irrespective of whether acid should 

be qualified  as a commodity, glyphosate has benefited  during  an extended  time 

period  from  patent  protection. Therefore,  the  level  of profit  of  5% on  turnover 

was considered  reasonable. It should  be noted  that the same  level  of  profit  was 

considered  appropriate for producers in the analogue country (see recital  (26) of 

the provisional duty Regulation). 

(64)  Furthermore,  a  small  downward  correction  was  found  to  be  required  in  the 

amount of post importation  adjustment  added to the Chinese CIF export price of 

acid, in order that the comparison be made at the same level of trade. 

(65)  On  the  basis  of  the  revised  figures,  the  weighted  average  export  price  of  acid, 

for the investigation  period, on a CIF Community frontier  level, adjusted  to take 

account  of  customs  duty  and  post  importation  costs,  was  compared  with  the 

weighted  average cost of production  of the Community  industry, increased  by a 

profit  margin of 5%. 

(66)  This comparison  resulted  in an  injury  margin  of 24.0%, on the basis of  the  net, 

free-at-Community  frontier  average price before duty. 

(67)  Since the injury  margin  is lower than  the dumping  margin  found,  the  definitive 

anti-dumping duties should be based on this lower level, in accordance with the 

provisions of Article 9(4) of the Basic Regulation. 

?  ) 

I. 

COLLECTION OF THE PROVISIONAL DUTY 

(68)  Considering the conclusions on dumping and injury definitively  established, and 

that  the rate of  definitive  duty  is higher than  that provisionally  determined,  the 

amounts  secured  by  way  of  the  provisional  anti-dumping  duty  should  be 

definitively  collected at the rate established  in the provisional duty Regulation. 

HAS ADOPTED THIS REGULATION: 

Article 1 

1.  A  definitive  anti-dumping  duty  is  hereby  imposed  on  imports  of  glyphosate 

falling  within  CN Code ex 2931 00 95 (code Taric 29310095*80) and  ex  3808 

30 27 (code Taric 38083027*  10) originating in the People's Republic of China. 

24 

2. 

The rate of duty applicable to the net, free-at-Community-  frontier  price,  before 

duty shall be 24%.0.  r  { 

3.  Unless  otherwise  specified,  the  provisions  in  force  concerning  customs  duties 

shall apply. 

Article 2 

The amount secured  by way of provisional  anti-dumping  duty pursuant  to Regulation 

(EC) N°  1731/97 shall be definitively  collected at the duty rate provisionally  imposed. 

Article 3 

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, 

The President 

25 

ISSN 0254-1475 

COM(98) 56 final 

DOCUMENTS 

EN 

11  02  10 

Catalogue number  : CB-CO-98-056-EN-C 

ISBN  92-78-30776-9 

Office  for Official  Publications of the European Communities 

L-2985 Luxembourg 

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