Proposal for a Council Regulation (EC) imposing a definitive anti-dumping duty on imports of certain footwear with uppers of leather or plastics originating in the People's Republic of China, Indonesia and Thailand
Date: 1998-02-12
Institutions: European Commission
Subjects: China, Indonesia, Thailand, anti-dumping duty, footwear industry

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels,  12.02.1998 
COM(1998) 59  final 

98/ 0032 (ACC) 

Proposal for a 

COUNCIL REGULATION (EC) 

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

uppers  of leather or plastics originating in the People's Republic of China, 

Indonesia  and Thailand 

(presented by the Commission) 

EXPLANATORY  MEMORANDUM 

1.  The  Commission,  by  way  of  a  Notice  published  in  the  Official  Journal  of  the 
European  Communities  on  the  22  February  1995,  initiated  a  proceeding  concerning 
in  the 
imports  of  certain  footwear  with  uppers  of  leather  or  plastics  originating 
People's  Republic  of  China,  Indonesia  and  Thailand  and  commenced  and 
investigation. 

the  Community  producers.  The  first 

2.  Investigations  were carried out at the premises of the exporting producers, importers in 
the  Community  and 
these 
investigations, communicated  to the Advisory  Committee  in September  1996., showed 
the  existence  of  dumping  and  resultant  injury  to  the  Community  industry.  The 
investigations,  taking into account  all the interests  involved,  with  particular  regards  to 
the interests of the distributors, also led to the conclusion  that it was in the  Community 
interest to take measures. 

results  of 

3.  However,  in  the  light  of  the  fact  that  Council  Regulation  (EC)  No  519/941  had 
introduced  quantitative  restrictions  on  certain  types  of  footwear  originating  in  the 
People's  Republic  of China,  including those concerned  by the present  proceeding, and 
after  information  of the Advisory  Committee,  it was considered  that  an analysis  of the 
effects  of the quota on the imports concerned was necessary. 

4.  The  additional  analysis established  that,  although  the quota  had  in  1995 and  1996 the 
foreseeable  effect  of  limiting  the  volume  of  imports  concerned  originating  in  the 
People's Republic of China, no significant  evolution  of the corresponding  import  price 
could  be  noted.  In  view  of  the  persistence  of  the  injurious  price  practices,  it  was 
concluded that the taking of measures was warranted. 

5.  The measures  proposed  are in the form  of  a variable  duty  based  on  a minimum  price. 
The level of the measures corresponds  to the injury  elimination  margins, as these were 
found  to be lower than the dumping margins. The minimum  price- amounts to ECU  5.7 
per pair for the three countries concerned. 

6.  The attached  proposal  for  a Council  Regulation  contains  more detailed  information  as 
regards the data on the basis of which the calculations  of the proposed  minimum  price 
have been  established. 

7.  The  interested  parties  were  informed  of  the  essential  facts  and  considerations  on  the 
basis of which the Commission  might decide to propose to the Council  the  imposition 
of  anti-dumping  duties,  and  were  given  an  opportunity  to  comment.  The  comments 
were taken  into account, where appropriate. 

8.  In  accordance  with  Article 9 of Council  Regulation  (EC) No  384/96,  the  Commission 
therefore  proposes  that the  Council  impose  definitive  anti-dumping  duties  on  imports 
of  certain  footwear  with  uppers  of  leather  or  plastics  originating 
in  the  People's 
Republic of China, Indonesia and Thailand. 

OJ  L67,  10.3.1994,  p  89. 

Proposal  for a 

COUNCIL REGULATION  (EC) No 

/98 

of 

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

uppers of leather or plastics originating in the People's Republic of China, 

Indonesia  and Thailand 

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  and in particular Article 9 (4) thereof, 

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

Advisory  Committee, 

Whereas: 

A. 

PROCEDURE 

(1)  On  22  February  1995,  the  Commission  announced  by  means  of  a  notice 

published  in  the  Official  Journal  of  the  European  Communities2\  the  initiation 

of  an  anti-dumping  proceeding  with  regard  to  imports  into  the  Community  of 

certain  footwear  with  uppers  of  leather  or  plastics  originating  in  the  People's 

Republic of China, Indonesia and Thailand and commenced  an  investigation. 

OJ L  56,  6.3.1996,  p.  1.  Regulation  as  amended  by  Regulation  (EC)  No 2331/96  (OJ  L 317, 
6.12.r996, p. 1). 
OJC45,  22.2.1995, p. 2. 

c*_~ 

(2)  The proceeding  was  initiated  as a result  of a complaint  lodged  by the  European 

Confederation  of  the  Footwear  Industry  (CEC)  on  behalf  of  national  footwear 

federations  whose  complainant  members  (188  in  total)  accounted  for  a  major 

proportion  (namely  53%) of the Community  production  of the  footwear  subject 

to this investigation.  The complaint  contained  evidence  of dumping  of the  said 

product  and  of  material  injury  resulting  therefrom  which  was  considered 

sufficient  to justify  the initiation of a proceeding. 

(3)  The  Commission  officially  notified  the  exporters  and  importers  known  to  be 

concerned  and their representative  associations, as well  as the representatives  of 

the exporting  countries involved, of the initiation  of the proceeding.  All  parties 

directly  concerned  were  given  the  opportunity  to  make  their  views  known  in 

writing  and  to  request  a  hearing  within  the  time-limit  set  out  in  the  notice  of 

initiation. 

(4)  The  authorities  of  the  exporting  countries  concerned  as  well  as  a  number  of 

exporters,  Community  importers,  their  representative  associations  and  trade 

associations  made  their  views  known  in  writing.  All  parties  who  so  requested 

within the time limit were granted a hearing. 

(5) 

In  view  of  the  large  number  of  Community  producers  which  were  party  to  the 

complaint,  and  in  conformity  with  Article  17  of  Council  Regulation  (EC)  No 

384/963  (hereinafter  referred  to  as  "the  Basic  Regulation"),  it  was  considered 

appropriate  to  limit  the  investigation  to  a  number  of  these  producers  which 

could  reasonably  be  investigated  within  the time  available.  In  this  context,  the 

questionnaires used to collect data and thus permit an evaluation  of any injury  to 

the  Community  industry,  were  addressed  to  the  national  producers'  federations 

in  the  Community  and  to  89  of  the  188  Community  producers  expressly 

supporting  the  complaint.  Of  these  89  Community  producers,  87.submitted 

complete and meaningful  replies.  For verification  purposes, given the  difficulty 

in  carrying  out  detailed  on-the-spot  investigations  in  respect  of  the  above 

mentioned  87  Community  producers  (hereinafter  referred  to  as  "the  first 

group"),  15  of  those  Community  producers  (hereinafter  referred  to  as  "the 

verification  sample")  were  selected  and  their  responses  subjected  to  in-depth, 

on-the-spot  verifications. 

(6)  The Commission  also sent questionnaires to the  following: 

- 

the Chinese, Indonesian and Thai producers/exporters  listed in the complaint, 

- 

the Hong Kong exporters listed in the complaint, 

- 

the authorities of the exporting countries  concerned, 

- 

the exporters who, while not listed  in the complaint, made themselves  known 

and requested a questionnaire. 

OJ  L  56,  6.3.1996,  p.  1.  Regulation  as  amended  by  Regulation  (EC)  No 2331/96  (OJ  L 317, 
6.12.1996,  p. 1). 

In total,  13 replies to the questionnaire  were received  from  producers/exporters 

in Indonesia,  17 from  producers/exporters  in the People's Republic of China and 

three from  producers/exporters in Thailand. 

(7) 

In  view  of  this  number  of  replies,  33  in  total,  the  Commission  proposed,  in 

accordance with Article  17 of the Basic Regulation, to limit its investigation to a 

reasonable  number  of  cooperating  producers/exporters  representing  the  largest 

representative  volume  of  production  which  could  reasonably  be  investigated 

within  the  time  available.  Agreement  was  reached  with  the  cooperating 

producers/exporters  on  the  selection  of  a  sample  of  four  producers'/exporters 

from  the  People's  Republic of China and seven from  Indonesia.  Given  that,  in 

total,  only  three  producers/exporters  from  Thailand  cooperated,  all  three  were 

investigated. 

(8) 

In  addition,  the  Commission  sent  questionnaires  to  all  known  importers. 

Replies were received from  14 such importers. 

(9)  The Commission sought and verified  all the information  it deemed necessary  for 

the  purpose  of  a  determination  of  dumping  and  injury,  and  carried  out 

investigations at the premises of the following  companies: 

(a)  Community  producers 

(10)  The  verification  sample  referred  to  in  recital  5,  consisted  of  a  total  of  15 

Community  producers  situated  in France, Italy,  Portugal,  Spain  and  the  United 

Kingdom,  which  are  all  Member  States  with  a  significant  production  of  the 

footwear  under investigation.  Together these Member States accounted  for 89% 

of  total  Community  production  of  the  product  in  question  in  1994,  i.e.  the 

investigation period as defined  in recital  13. 

The  15  Community  producers  in  the  verification  sample  requested  that  their 

identities  be  kept  confidential  on  the  grounds  that  some  of  them  had  been 

threatened  with  commercial  retaliation  by  certain  customers  who  were  at  the 

same  time  importers  and  major  retailers  in  the  Community.  The  investigation 

confirmed  that  certain  Community  producers  had  been  subjected  to  severe 

commercial  pressure  to  stop  cooperating  in  the  investigation  and  to  withdraw 

their  support  for  the complaint.  Accordingly,  it was considered  appropriate  not 

to disclose the names of these  15 Community producers. 

The  representatives  of  certain  exporters  and  importers  have  criticised  the 

granting of such anonymity  on the grounds that complaining domestic  industries 

should be prepared to face any kind of "commercial retaliation".  In this  respect, 

it  has  to  be  stressed  that  the  anonymous  treatment  was  granted  because  the 

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

commercial  relations.  The  limited  protection  so  granted  was,  moreover, 

considered  particularly  appropriate  in the context  of a sampling  exercise, where 

a few  selected  Community  producers are particularly  exposed  as they  represent, 

and  act  for  the  benefit  of,  a  much  larger  group.  The  identities  of  the  87 

Community  producers  in the first group  were, however,  disclosed  to the  parties 

having so requested. 

(b)  Unrelated  importers/distributors 

-  Atlex SA, Rouen (F), 

British  Shoe Corporation Ltd, Leicester (UK), 

Chausseurop  SA, Le Havre (F), 

Groupe André SA, Paris (F), 

Intermedium  BV, Hoofddorp  (NL). 

(c)  Related importer 

Nick's  Sports and Leisure Footwear Ltd, Warrington (UK). 

(d)  Exporters/producers  in Indonesia 

PT Dragon, 

PT Emperor Footwear  Indonesia, 

PT Fortune Mate, 

PT Golden Adishoes, 

PT Indosepamas Anggun / PT Primashoes Ciptakreasi, 

PT Kingherlindo. 

(e)  Exporters/producers  in Thailand 

Bangkok  Rubber, 

-  CK Shoes, 

PSR  Footwear. 

(f)  Exporter  in Hong Kong 

Grosby (China) Ltd. 

(11)  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.  They  were  also  granted  a period  within  which  to  make  representations 

subsequent  to the disclosure. 

(12)  The  parties'  representations  were  considered,  and  the  Commission  altered  its 

conclusions where appropriate. 

(13)  The  investigation  of  dumping  covered  the  period  from  1 January  1994  to  31 

December  1994  (hereinafter  referred  to  as  "the  investigation  period").  The 

examination  of injury  covered  the period  from  1991 to the investigation  period. 

In addition,  for  the purpose  of the additional  examination  referred  to  in  recitals 

138  to  143, certain  developments  occurred  in  1995  and  1996  were  also  taken 

into account. 

The  geographical  scope  of the  investigation  was the  Community  as  constituted 

at the time of initiation of the proceeding, that is to say all  15 Member States. 

(14)  Owing  to  the  volume  and  complexity  of  the  information  gathered  from  many 

different  sources  and,  in  particular,  in  the  light  of  the  numerous  types  of 

footwear  covered  by  the  investigation  and  the  need  to  carry  out  an  additional 

examination  to  evaluate  the  effects  of  the  Community-wide  quota  imposed  in 

the  course  of  the  investigation  period  on  imports  of  the  footwear  concerned 

originating  in  the  People's  Republic  of  China,  the  investigation  exceeded  the 

normal  duration  provided  for  in Article  6 (9) of the Basic Regulation.  Pursuant 

to Article  24  of the  Basic  Regulation  this  investigation  is  indeed  not  subject  to 

the mandatory time limits provided for in Article 6 (9). 

B.  PRODUCT UNDER CONSIDERATION AND LIKE PRODUCT 

1.  Description  of the product under consideration 

(15)  The product under consideration in this proceeding is "non-sports" footwear,  not 

covering the ankle, with insoles of a length of 24 cm or more: 

•  with  outer  soles  of  rubber,  plastics  or  composition  leather  and  uppers  of 

leather,  falling  within  CN codes ex 6403 99 93 (if not  identifiable  as  men's 

or women's  footwear),  ex 6403 99 96 (if for  men) and ex 6403 99 98 (if  for 

women), 

•  with  outer  soles  of  rubber  or  plastics  and  uppers  of  plastics,  for  women 

(falling  within CN code ex 6402 99 98). 

It should  be noted that no footwear  for use in sporting activities, with a single or 

multi-layer  non  injected  moulded  sole,  manufactured  from  synthetic  materials 

specially  designed  to  absorb  the  impact  of  vertical  or  lateral  movements  and 

with  technical  features  such  as  hermetic  pads  containing  gas  or  fluid, 

mechanical  components  which  absorb  or  neutralise  impact  or  materials  such  as 

low-density  polymers,  which  can  be  classified  for  customs  purposes  in  all  the 

above mentioned  CN codes, is covered by this proceeding. 

(16)  For  practical  purposes  and  in  order  to  appropriately  gather  and  handle  the  data 

collected,  each  of  the  above  mentioned  CN  codes  was  considered  as  one 

"category".  Four categories were thus formulated  as follows: 

Category  1 :  CN code ex 6403 99 93 (i.e. "unisex" adults - leather uppers) 

Category  2:  CN code ex 6403 99 96 (i.e. men's - leather uppers) 

Category  3:  CN code ex 6403 99 98 (i.e. women's - leather uppers) 

Category 4:  CN code ex 6402 99 98 (i.e. women's - plastic uppers) 

(17)  Although  the  footwear  falling  within  any  of  the  above  categories  can  cover  a 

wide  range  of  styles  and  types,  as well  as  be  produced  by  different  production 

methods,  their  essential  characteristics,  their  uses  and  consumer  perception 

thereof  remain  basically  the  same.  Therefore,  for  the  purposes  of  this 

proceeding  and  in  accordance  with  consistent  Community  practice,  they  were 

regarded as forming  one product. 

2. 

Like product 

(18)  As  regards  the  footwear  produced  and  sold  domestically  in  Indonesia  and 

Thailand,  where  such  sales  had taken  place  and  information  in that  respect  had 

been  made  available,  the  investigation  showed  that  such  products  were  either 

alike in all respects to, or closely  resembling, those  exported  to the  Community 

from  the countries in question. 

(19)  Similarly,  footwear  subject  to  the  current  investigation  produced  in  Indonesia 

and  exported  to  the  Community  was  considered  to  be  a  like  product  to  the 

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

Community.  This  is particularly  relevant  in the  light  of the  fact  that  Indonesia 

has been used as the analogue country  for the determination  of normal  value  for 

the People's Republic of China as set out in recitals 42 and 43. 

(20)  The investigation  also established that the footwear  produced  in the  Community 

and that imported  from  the three countries concerned  were similar as far  as their 

overall design, general  characteristics  and uses are concerned.  While there may 

be  some  minor  differences  between  the  product  imported  from  the  countries 

concerned  and  the  Community  production,  these  differences  do  not  affect  the 

substantial characteristics, properties, perception and uses of the product. 

(21)  In  this  respect,  certain  parties  have  claimed  that  imported  and  Community-

produced  footwear  belong  to  different  product  segments  which  do not  compete 

with each  other.  They  argued that footwear,  imported  at a price higher than the 

average,  would  not  be  alike,  within  the  meaning  of  Article  1  (4)  of  the  Basic 

Regulation, to footwear  imported below or at the average price. 

10 

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

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

footwear  that they simply  could not find in the Community, while other claimed 

that  they  order  in  the  People's  Republic  of  China,  Indonesia  or  Thailand 

sophisticated  products  manufactured 

in  accordance  with 

their  own 

specifications,  design  and  sometimes  raw  materials.  This  contradiction  shows 

that  the  People's  Republic  of  China,  Indonesia  and  Thailand  are  in fact  capable 

of  producing,  and  do  indeed  produce  and  export  to  the  Community,  the  full 

range of products on offer  on the market.  The argument  that  footwear  iniported 

from  the three countries concerned  and Community-produced  one would  belong 

to different  product segments cannot therefore  be accepted. 

(23)  Accordingly,  footwear  subject  to  this  proceeding  produced  in  the  People's 

Republic of China, Indonesia and Thailand  and exported  to the Community  was 

considered  to  be a like  product  to  footwear  produced  in the  Community  within 

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

C.  DUMPING 

1.  General 

(24)  It  has  been  the  consistent  practice  of  the  Institutions  to  consider  related 

producers/exporters,  or  producers/exporters  within  the  same  group,  as  one 

economic  entity  and  to  establish  a  single  dumping  margin  (and,  where 

appropriate, a single duty) for those producers/exporters.  This practice has been 

adhered  to  in  this  proceeding.  Calculating  individual  dumping  margins  and 

anti-dumping  duty  rates  in  such  circumstances  might  encourage  circumvention 

of  any  anti-dumping  measures  by  enabling  related  producers/exporters  to 

channel  their  exports  to  the  Community  through  the  related  producer/exporter 

(or the producer/exporter  within the same group) with the lowest duty. 

2. 

Indonesia 

(a)  Sampling 

(25)  As  mentioned  in  recital  7,  sampling  as provided  for  in  Article  17 of  the  Basic 

Regulation  was used and seven Indonesian producers/exporters  were selected as 

the sample, in agreement with the cooperating producers/exporters. 

(26)  In  accordance  with Article  9 (6) of the  Basic Regulation  it was  agreed  with  the 

other  Indonesian  producers/exporters  which  cooperated  with  the  investigation 

but  which  were  not  included  in  the  sample,  that  they  would  be  attributed  the 

weighted average dumping margin established for the producers/exporters  in the 

sample. 

12 

(27)  The producers/exporters  selected in the sample and which fully  cooperated  with 

the  investigation  were  informed  that  they  would  be  given  their  own  dumping 

margin (and, where appropriate, their own individual duty rate). 

(b)  Normal  value 

(28)  In  order 

to  establish  normal  value  for  each  of  the  seven  Indonesian 

producers/exporters  in  the  sample,  it  was  first  determined  whether  the  total 

domestic  sales of the footwear  concerned  by  each producer  were  representative 

when  compared  to  their  total  sales  of  the  footwear  concerned  exported  to  the 

Community.  In accordance with Article 2 (2) of the Basic Regulation,  domestic 

sales  are  normally  considered  representative  when  the  total  domestic  sales 

volume  of  the  like  product  sold  by  each  producer  represents  at  least  5%  of  its 

sales volume of the product under consideration  exported to the Community.  A 

further  representativity test was then carried out on a model by model basis. 

(29)  Only  one  of  the  cooperating  Indonesian  producers/exporters  in  the  sample  had 

sufficient  domestic  sales  of  two  models  of  the  like  product  in  the  ordinary 

course  of 

trade 

in 

the 

investigation  period  within 

the  meaning  of 

Article 2 (2) and (4)  of  the  Basic  Regulation  to  enable  normal  value  to  be 

calculated  on  such  a  basis.  Given  that  all  these  sales  were  profitable,  normal 

value  was therefore  calculated  on the basis  of the prices paid  or  payable  on  the 

domestic  market  for  all  these  sales.  Normal  value  for  this  company's  other 

models  was  constructed,  in  accordance  with  article  2  (3)  and  (6)  of  the  Basic 

Regulation,  by  adding  to  their  manufacturing  costs,  the  selling  general  and 

administrative  expenses  (hereinafter  referred  to  as  "SG&A")  and  profit  found 

for the two models referred  to immediately above. 

(30)  The  other  six  Indonesian  producers/exporters  in  the  sample  did  not  have 

sufficient  domestic  sales  of  the  footwear  concerned  during  the  investigation 

period  within  the  meaning  of  Article 2 (2)  of  the  Basic  Regulation. 

It  was 

therefore  considered  appropriate  to  construct  normal  value  on  the  basis  of 

Article  2 (3)  of  the  Basic  Regulation  by  adding  to  the  manufacturing  cost  of 

each model exported to the Community  a reasonable amount  for  SG&A and  for 

profit.  In this respect,  it was considered,  in accordance with  Article 2 (6) (a) of 

the  Basic  Regulation, 

that 

the  amounts  of  SG&A  and  profit  of 

the 

producer/exporter  which  did  have  sufficient  domestic  sales  (see  preceding 

recital)  should  be  used  to  construct  normal  value  for  the  six  other  Indonesian 

producers/exporters  in the sample. 

(31)  One  producer/exporter  which  had  agreed  to  be  included  in  the  sample,  did  not 

provide costs by model, despite several requests to do so.  Since it was  therefore 

impossible to calculate  domestic profitability  and constructed  normal  values  for 

this  producer/exporter,  facts  available  as  set  out  in  recital  41  were  applied  in 

establishing  the  dumping  margin  for  this  producer/exporter  in  accordance  with 

Article  18 of the Basic  Regulation. 

(c)  Export price 

(32)  Exports  for  six  of  the  seven  producers/exporters  included  in  the  sample  were 

made directly to independent  importers in the Community.  The export prices of 

these  producers/exporters  were  established  by  reference  to  the  prices  paid  or 

payable  for  the  footwear  sold,  in  accordance  with  Article  2 (8)  of  the  Basic 

Regulation.  The  export  price  of  one  Indonesian  producer/exporter  included  in 

the sample, which sold via a related company  in Taiwan, had to be adjusted  (see 

recital 36). 

14 

(d)  Comparison 

(33)  For  the  purpose  of  ensuring  a  fair  comparison  between  normal  value  and  the 

export  prices  of  the  producers/exporters  in  the  sample,  due  allowance  in  the 

form  of  adjustments  was  made  in  accordance  with  Article 2(10)  of  the  Basic 

Regulation  for  differences  affecting  price  comparability,  whenever  these  were 

claimed  and  duly  justified. 

In  consequence,  adjustments  were  made,  where 

appropriate,  for  differences 

in  transport,  insurance,  handling,  loading  and 

ancillary  costs,  credit  costs,  bank  charges,  guarantees/warranties  and  levels  of 

trade. 

(34)  In the case of one of the Indonesian producers/exporters  in the sample, a level of 

trade  allowance  was  claimed.  The  producer/exporter  contended  that  such  an 

allowance  was warranted  because its export  sales to the Community  were  made 

in large quantities to distributors and wholesalers, whilst its domestic sales were 

allegedly  made  in  small  quantities  to  retailers  and  traders.  Upon  further 

examination  during  the  on-the-spot  investigation,  it  was  established  that  the 

domestic  purchasers  were 

in 

fact  also  distributors  and  wholesalers. 

Consequently,  this claim was rejected,  since normal value and export price were 

at  the  same  level  of  trade  and  no  adjustment  was  therefore  required  or 

warranted. 

15 

(35)  An allowance was also claimed  by two of the Indonesian  producers/exporters  in 

the  sample  as  their  export  sales  were,  in  contrast  with  their  domestic  sales, 

allegedly  made  on  an  OEM  brand  basis.  This  was  verified  in  detail  by  the 

Commission  during the on-the-spot  investigations  and it was clearly  established 

that,  for  export  sales, there were  distinct  sales  channels  with  consistently  lower 

prices  for  OEM  customers.  Since  the  difference  in  level  of  trade  for  OEM 

customers  could  not  be  quantified  because  of  the  absence  of  the  same  sales 

channels  on  the  domestic  market  in  Indonesia,  a  special  adjustment  has  been 

granted,  in  accordance  with  Article 2 (10) (d) (ii)  of  the  Basic  Regulation,  by 

deducting  from 

the  own  brand  constructed  normal  values,  an  amount 

corresponding  to  10% of the gross profit  margin. 

(36)  One  Indonesian  producer/exporter  sold  footwear  for  export  to  the  Community 

through  a  related  trading  company  located  in  Taiwan.  It  has  been  determined 

that  because  of the relationship  between  the  two  companies,  the  prices  charged 

by the producing  company to the trading company  are not reliable.  To establish 

a reliable export price to the Community  from  Indonesia, the price charged  from 

Taiwan to the Community  was adjusted  to an ex-Indonesia  level.  As the related 

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

commission  basis,  an  adjustment  of  5%.  based  on  information  supplied  by  the 

company  itself,  was  therefore  deducted  from  the  prices  charged  by  the  related 

company  to  independent  customers  in  the  Community.  This  figure  was 

considered  reasonable given the degree of the related trader's  involvement  in the 

selling  activities  of  the  exporter.  No  information  was  provided  which  would 

indicate that the use of this figure  is inappropriate.  Thus, the export  prices were 

adjusted  accordingly. 

16 

(e)  Dumping  margins 

(37)  To  calculate  the  dumping  margin  of  each  Indonesian  producer/exporter  in  the 

sample,  a  comparison  was  made  between  weighted  average  normal  values  and 

the  weighted  average  export  prices  of  the  producers/exporters,  since  it  was 

clearly  established  that  there  was  no  pattern  of  export  prices  which  varied 

significantly  between  either  different  purchasers,  regions  or  time  periods,  in 

accordance with Article 2(11) of the Basic Regulation. 

(38)  The  comparison  showed  the  existence  of  dumping  of  the  footwear  concerned 

during  the  investigation  period  by all of the producers/exporters  included  in the 

sample.  Because  of  the  relationship  between  P.T.  Indosepamas  Anggun  and 

P.T.  Primashoes  Ciptakreasi,  these  producers/exporters  were  treated  as  one 

company  and  a  single  margin  calculated  therefor,  in  accordance  with  the 

Institutions'  established  practice as set out in recital 24. 

The  individual  dumping  margins  for  these producers/exporters,  thus  established 

and expressed  as a percentage of the CIF price at Community  frontier  are: 

P.T. Dragon 

P.T. Emperor Footwear 

P.T. Fortune Mate 

P.T. Golden Adishoes 

'.. 

P.T. Indosepamas  Anggun/P.T. Primashoes Ciptakreasi 

5.9% 

2.0% 

14.9% 

18.6% 

12.7% 

17 

(39)  The  dumping  margin  for  the  cooperating  producers/exporters  which  were  not 

selected  was  based  on  the  weighted  average  margin  of  the  individual  dumping 

margins established  for each producer/exporter  in the sample, with the exception 

of the  producer/exporter  referred  to  in  recital  31  (P.T.  Kingherlindo)  for  which 

facts  available were applied.  This company's  dumping margin  was  disregarded 

in  establishing  the  weighted  average  margin  for  the  sample  in  accordance  with 

Article 9 (6) of the Basic Regulation.  The dumping margin thus established  and 

expressed  as  a percentage  of  the  CIF  price  at  Community  frontier  was  12.3%. 

The producers/exporters to which this margin applies are: 

• 

• 

• 

• 

• 

• 

P.T. Bosaeng Java 

P.T. Karet Murni Jelita 

P.T. Koryo  International 

P.T. Lintas Adhikrida 

P.T. Universal  Wisesa 

P.T. Volmacarol 

(40)  For  those  producers/exporters  in  Indonesia  which  neither  replied  to  the 

Commission's  questionnaire  nor  made  themselves  known,  the  dumping  margin 

has, in accordance  with  Article  18 of the Basic  Regulation,  been determined  on 

the  basis  of  the  facts  available.  In  view  of  the  unusually  high  degree  of  non-

cooperation  in  this  case  on  the  part  of  Indonesian  producers/exporters  (more 

than  74%o), the  absence  of  other  reliable  information  from  independent  sources 

and  in order to  avoid  rewarding  non-cooperation,  it was  considered  appropriate 

to  base  the residual  dumping  margin  on the highest  margin  of  dumping  alleged 

in the complaint, i.e. 50%. 

(41)  In  determining  the  dumping  margin  for  the  producer/exporter  referred  to  in 

recital  31  (P.T.  Kingherlindo),  it  was  considered  that  the  partial  cooperation  it 

had  shown  should  be  distinguished  from  the  total  non-cooperation  of  the 

producers/exporters  referred  to  in  recital  40.  Accordingly,  it  was  decided  that 

the margin calculated  for this producer/exporter  should be lower than the margin 

calculated  for  the  non-cooperating  producers/exporters. 

Its  margin  was 

therefore  based  on  the  arithmetic  average  of  the  residual  margin  and  the 

weighted average margin calculated for the sample, i.e. 31.1%. 

3. 

People's  Republic of China 

(a)  Choice of analogue country 

(42)  In  accordance  with  Article 2 (7)  of  the  Basic  Regulation,  normal  value  was 

based  on  data  collected  from  producers  in  a  market  economy  country  (the 

"analogue country"). 

(43)  In  the  complaint,  Thailand  was  proposed  as  the  most  appropriate  analogue 

country.  However,  the  choice  of  this  country  was  opposed  by  a  number  of 

importers  as  well  as  the  Chinese  producers/exporters  on  the  grounds  that  the 

levels of economic development in the People's Republic of China and Thailand 

were  dissimilar.  Two  trade  bodies,  the  Foreign  Trade  Association  (FTA)  and 

the  Federation  of  the  European  Sporting  Goods  Industry  (FESI)  put  forward 

Indonesia,  as did the Chinese producers/exporters.  A number of other  countries 

were  also  proposed  at  various  stages  of  the  proceeding  by  certain  interested 

parties  without,  however,  providing  evidence  justifying  why  any  of  these 

countries should be given preference  to another. 

Having  examined  the  information  available  in  respect  of  all  the  countries 

suggested,  it was finally  considered  that,  in accordance  with  Article 2 (7) of the 

Basic  Regulation,  Indonesia  was  a  reasonable  choice  of  analogue  country  as 

there  appeared  to  be  a  large  number  of  suppliers  in  that  market  and  a  certain 

degree of similarity between the production processes employed there and in the 

People's  Republic  of  China.  Furthermore,  no  significant  differences  were 

apparent  as  regards  the  access  to  raw  materials. 

In  addition,  sales  on  the 

Indonesian domestic market were also representative when  compared  to  exports 

from  the  People's  Republic  of  China  to  the  Community.  Moreover,  Indonesia 

had  been  proposed  by  the  Chinese  producers/exporters  themselves  and  no 

objection  was  raised  by  the  Community  producers  on  the  Commission's 

intention in this respect. 

(b)  Individual  treatment 

(44)  In  accordance  with  Article 9 (5)  of  the  Basic  Regulation,  it  is  the  Institutions' 

policy  to  calculate  country-wide  dumping  margins  for  non  market-economy 

countries,  except  for  those  producers/exporters  who  can  demonstrate  that  they 

should  be  granted  individual  treatment,  i.e.  that  their  export  prices  should  be 

established  separately and their dumping margin be calculated  individually. 

20 

(45)  All  of  the  Chinese  producers/exporters  which  replied  to  the  Commission's 

questionnaire  requested  individual  treatment.  In  examining  the  merits  of  these 

claims, the Commission sought to verify  whether the producers/exporters  which 

cooperated 

in 

this  proceeding  enjoyed  a  degree  of 

legal  and 

factual 

independence  from  the  State,  comparable  to  that  which  would  prevail  in  a 

market economy country and which would justify  a departure  from  the principle 

of  determining  a  single  country-wide  dumping  margin.  To  this  end,  detailed 

questions  regarding  the  ownership,  management,  control,  determination  of 

commercial  and  business  policies  were  addressed  to  the  producers/exporters. 

None  of the responding  producers/exporters,  with  the  sole  exception  of  Grosby 

(China)  Limited,  were able to  show, to the  satisfaction  of the  Commission,  that 

their  operations  were  sufficiently  independent  from  the  Chinese  Authorities  to 

qualify  for  individual  treatment.  Their requests  were consequently  rejected  and 

the producers/exporters  informed  accordingly. 

(46)  Grosby  (China)  Limited  was  a legal  entity  incorporated  under  Hong  Kong  law 

but  manufacturing  the  like  product  m  a  production  facility  in  the  People's 

Republic  of  China.  No  legal  entity  existed  in  the  People's  Republic  of  China 

but  the  capital  goods  physically  present  there  were  included  as  assets  in  the 

accounts of the Hong Kong company. 

21 

The  Commission  carried  out  on-the-spot  verifications  at  the  premises  of  the 

company  in  Hong  Kong  in  order  to  examine  the  circumstances  under  which  it 

operated  and  its  relations  with  the  Chinese  State.  In  particular  the  company 

concerned  was  able  to  show,  to  the  satisfaction  of  the  Commission,  that  the 

management  and  control  of  the  factory,  both  in  terms  of  production  and 

marketing,  was clearly  in their hands and that their  operations  were  sufficiently 

independent  from  the  Chinese  Authorities. 

It  was  also  established  that  the 

export prices to the Community  and the marketing policies  were determined  by 

the Hong Kong company without any interference  from the Chinese State. 

In view of the above, it was considered  possible to grant individual  treatment  to 

Grosby  (China)  Limited  and,  consequently,  to  calculate  a  separate  dumping 

margin  as  an  exception  to  the  principle  of  calculating  country-wide  dumping 

margins in respect of non-market economy countries as required by Article 9 (5) 

of the Basic Regulation. 

(c)  Country-wide dumping margin for  the People 's Republic of China 

(47)  In  total,  17  exporters  in  the  People's  Republic  of  China  replied  to  the 

Commission's  questionnaire.  The  producers/exporters  concerned  however 

represented  only  14.3% of  total  exports  from  the  People's  Republic  of  China 

and  it  was  consequently  decided,  in view of the  particularly  high  level  of  non-

cooperation,  to  establish  the  margin  of  dumping  for  the  People's  Republic  of 

China on the basis of Article  18 of the Basic Regulation,  i.e. on the basis of the 

facts  available. 

22 

In order to calculate the single country-wide margin of dumping  for the  People's 

Republic  of China, the Commission  first  calculated,  the dumping  margin  of the 

16  cooperating  producers/exporters  to  which  individual  treatment  was  not 

granted  (see  (i)  below).  Secondly,  the  Commission  established  the  dumping 

margin for the non-cooperating producers/exporters (see (ii) below). 

The country-wide dumping  margin for the People's  Republic  of China was then 

calculated as the average of these two dumping margins (see (iii) below). 

(i) 

dumping margin for cooperating  producers/exporters 

Sampling 

(48)  As mentioned  in recital  7, sampling,  as  provided  for  in Article  17 of the  Basic 

Regulation, was used in respect of the  17 cooperating  producers/exporters  in the 

People's  Republic  of  China.  Four  producers/exporters  were  selected,  in 

agreement with the cooperating producers/exporters  concerned. 

However,  as  one  of  these  producers/exporters,  Grosby  (China)  Limited,  was 

subsequently  granted individual treatment, it was removed from  this sample (see 

recital 46). 

Accordingly, the three remaining producers/exporters  included  in the sample  for 

the People's Republic of China are: 

• 

• 

• 

Fujian  Footwear and Headgear Import & Export  Corporation 

Zhejiang Animal By-Products Import & Export  Corporation 

Zhangjiang  Yitai. 

23 

Normal  value 

(49)  Normal  value  for  the  Chinese  producers/exporters  included  in  the  sample  was 

calculated  on  the  basis  of  the  domestic  prices  in  Indonesia  and  on  constructed 

normal values established  for the producers/exporters  included  in the sample  for 

Indonesia, in accordance with Article 2 (7) of the Basic Regulation. 

It  should  be  noted  that  the  three  Chinese  producers/exporters  concerned  had 

been  requested  to  give  detailed  specifications  of  the  footwear  exported  to  the 

Community.  Only limited  information  was provided by the  producers/exporters 

and  the  Commission  consequently  had  to  establish,  on  the  basis  of  the  facts 

available, which Indonesian models were identical or, in the absence of identical 

models,  those  Indonesian  models  which  most  closely  resembled  the  Chinese 

models exported  to the Community.  On this basis, the Commission  was able to 

find  comparable  models  for  models  representing  34.7 %  of  the  total  exports 

from  the  three  producers/exporters  concerned.  For  these  models,  the  normal 

values  established  for  the  purpose  of  determining  the  Indonesian  dumping 

margins could  therefore  be used. 

(50)  For  those  Chinese  exported  models  for  which  there  was  no  like  domestically 

sold  Indonesian  model,  the  constructed  value  was  established  by  adding  a 

reasonable  amount  for  SG&A  expenses  and profit  to the  manufacturing  cost  of 

comparable  exported  Indonesian  models.  The  SG&A  and  profit  margin  were 

established  on the basis described  in recitals 29 and 30. 

24 

Export price  - calculation of export price 

(51)  The 

investigation 

showed 

that 

the  exports  of 

the 

three  Chinese 

producers/exporters  in the sample were made directly to independent  customers 

in the  Community.  It was, therefore,  possible  to  establish  export  prices  on the 

basis  of  prices  actually  paid  or payable,  in  accordance  with  Article 2 (8)  of  the 

Basic Regulation. 

Comparison 

(52)  For  the  purpose  of  ensuring  a  fair  comparison  between  normal  value  and  the 

export prices of the producers/exporters  in the sample, allowance  in the form  of 

adjustments  was made in accordance with Article 2(10) of the Basic  Regulation 

for  duly  justified  differences  affecting  price  comparability.  Consequently, 

adjustments  were  made  for  differences  in  physical  characteristics,  transport, 

insurance, handling, loading and ancillary costs, packing and credit costs. 

Dumping margin 

(53)  The  Commission  first  calculated  a  dumping  margin  for  each  of  the  three 

producers/exporters  in  the  sample.  For  this  purpose,  the  Commission  made  a 

comparison  between normal value at ex-works level and the export prices of the 

cooperating  Chinese  producers/exporters  at  FOB  level,  ex-Chinese  frontier. 

This comparison was based on the weighted  average selling price of each model 

of footwear  manufactured  by the producers/exporters in the sample and exported 

to  the  Community  during  the  investigation  period  for  which  a  comparable 

model of footwear  could be  found. 

25 

(54)  In  the  absence  of  any  significant  variations  in  export  prices  either  by  region, 

purchaser  or time period, the normal  value was compared  with  the export  price 

on  a  weighted  average  basis  in  accordance  with  Article 2 (11)  of  the  Basic 

Regulation. 

The  comparison  showed  the  existence  of  dumping  of  the  footwear  concerned 

originating 

in 

the  People's  Republic  of  China  and  exported  by 

the 

producers/exporters  in  the  sample  to  the  Community  during  the  investigation 

period.  The  weighted  average  dumping  margin,  expressed  as  a  percentage  of 

the CIF Community  frontier  price, amounts to AS.2%. 

(ii)  Dumping margin for non-cooperating  producers/exporters. 

(55)  The  dumping  margin  for 

the  non-cooperating  producers/exporters  was 

established  on  the basis  of the  facts  available  in  accordance  with  Article  18 of 

the  Basic  Regulation.  In this particular  case, given  the  unusually  high  level  of 

non-cooperation  and  in  the  absence  of  other  reliable 

information 

from 

independent  sources, the most  appropriate  facts  available  have  been  considered 

to  be  the  highest  dumping  margin  alleged  in  the  complaint.  The  dumping 

margin established on this basis was 50%) of the CIF Community  frontier  price. 

(iii)  Country-wide  dumping  margin  for  the  People's  Republic  of 

China 

(56)  As  indicated  in  recital  47,  a  single  dumping  margin  was  calculated  for  the 

People's  Republic  of  China  by  using  the  weighted  average  of  the  margins 

established  for  the  cooperating  producers/exporters  (i.e.  45.2%), see  recital  54) 

and the non-cooperating  producers/exporters  (i.e. 50%, see recital 55). 

The dumping  margin  thus established  for  all producers/exporters  in the  People's 

Republic  of  China,  except  Grosby  (China)  Limited.,  expressed  as  a  percentage 

of the CIF Community  frontier  price, was 47.6%. 

(d)  Dumping  margin for  Grosby (China) Limited 

(i)  Normal value 

(57)  As far as Grosby  (China) Limited was concerned,  it should be noted that  normal 

value  was  calculated  in  the  same  way  as  that  of  the  other  cooperating 

producers/exporters  in the People's  Republic of China, i.e. on the basis of prices 

or  constructed  values  of  comparable  models  produced  in the  analogue  country, 

i.e. Indonesia. 

27 

(ii)  Export price 

(58)  Since  Grosby  (China)  Limited  made  its  export  sales  via  a  related  importer, 

Nick's  Sports and Leisure  Footwear Ltd (UK), the export price  was  constructed 

pursuant  to Article 2 (9) of the Basic Regulation, i.e. on the basis of the price at 

which  the  imported  products  were  first  resold  to  an  independent  buyer. 

Adjustments  were  made  for  all  costs  incurred  between  importation  and  resale 

and  for  profits  accruing,  in  order  to  establish  a  reliable  export  price,  at  the 

Community  frontier  level.  A profit  margin  of  5% was  used  since  this-was  the 

profit  margin  found  for  the  independent  importer  which  had  the  most  similar 

trading  structure  to  that  of  Nick's  Sports  and  Leisure  Footwear  Ltd  (UK)  and 

had been the subject of an on-the-spot verification  visit. 

(iii)  Comparison 

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

price,  an  allowance  in  the  form  of  adjustments  was  made,  in  accordance  with 

Article 2(10) of the Basic Regulation for differences  in transport and insurance. 

(iv)  Dumping margin 

(60)  In  the  absence  of  any  significant  variations  in  export  prices  either  by  region, 

purchases  or time period, the normal  value was compared  with  the export  price 

on  a  weighted  average  basis,  in  accordance  with  Article 2 (11)  of  the  Basic 

Regulation.  On this basis, the dumping margin for  Grosby (China) Limited  was 

found  to be  1.3%. 

28 

4. 

Thailand 

(i) 

». 
dumping margin  for cooperating  producers/exporters 

(a)  Normal value 

(61)  In  order  to  establish  normal  value  for  each  of  the  three  co-operating  Thai 

producers/exporters,  it  was  first  determined  whether  the total  domestic  sales  of 

•the  footwear  concerned  by  each  producer/exporter  were  representative  when 

compared  to  their  total  sales  of  the  footwear  concerned  exported  to  the 

Community.  In accordance with Article 2 (2) of the Basic Regulation,  domestic 

sales  are  normally  considered  representative  when  the  total  domestic  sales 

volume  of  the  like  product  sold  by  each  producer  represents  at  least  5%> of  its 

sales volume of the product under consideration exported to the  Community. 

(62)  None  of  the  producers/exporters  had  sufficient  domestic  sales  of  the  footwear 

concerned  during the investigation  period within the meaning of Article 2 (2) of 

the  Basic  Regulation.  It  was  consequently  considered  appropriate  to  construct 

normal  value  on the  basis  of  Article 2 (3) of the  Basic Regulation  by  adding  to 

the manufacturing  cost  of each model  exported  to the  Community  a  reasonable 

amount  for  SG&A  and  for  profit.  Two  of the producers/exporters  were  related 

and  one  of  these  two  related  producers/exporters  sold  sports  shoes  and  sports 

wear,  i.e.  the  same  general  category  of  products,  on the  Thai  domestic  market. 

The  SG&A  and  profit  for  these  two  producers/exporters  was  established  by 

reference  to  the  domestic  sales  of  these  products  in  accordance  with  Article 

2 (6) (b)  of  the  Basic  Regulation.  In  the  absence  of  any  domestic  sales  of  the 

product  concerned,  or  the  same  general  category  of  products  by  the  third 

cooperating  Thai  producer/exporter,  their  SG&A  and  profit  was,  in  accordance 

with  Article  2 (6)  (c) established  on any  other reasonable  basis,  in this case  the 

SG&A and  profit  established  for  the other two  cooperating  producers/exporters 

referred  to immediately  above. 

29 

(63)  One  of  the  three  cooperating  Thai  producers/exporters  produced  and  exported 

shoes partly  made  from  raw materials  which  it obtained  free  of  charge  from  its 

customers  in the Community.  Because the prices of the raw materials  were not 

divulged  to  the  producer/exporter, 

it  was  unable  to  report  them  in  its 

manufacturing  costs.  As  the  producer/exporter  had  no  domestic  sales,  normal 

value  had  to  be  constructed. 

In  the  absence  of  a  full  information  on  raw 

material  costs the Commission  constructed  normal  value by using the  available 

company's  manufacturing  costs  and  the  SG&A  and  profit  as  established  in  the 

preceding recital.  Since both the constructed value and the export price-reported 

by  this  producer/exporter  excluded  the  same  raw  material  costs,  both  were 

directly comparable. 

(b)  Export price 

(64)  The  investigation  showed  that,  except  in  the  case  referred  to  in  recital  67, 

exports  were  made  directly  to  independent  customers  in  the  Community. 

Export  prices  were  consequently  established  on  the  basis  of  the  prices  actually 

paid or payable. 

(c)  Comparison 

(65)  For  the  purpose  of  ensuring  a  fair  comparison  between  normal  value  and  the 

export  prices  of  the  producers/exporters,  due  allowance  in  the  form  of 

adjustments  was made in accordance with Article 2 (10) of the Basic  Regulation 

for  differences  affecting  price  comparability,  whenever  these  were  claimed  and 

duly justified.  In  consequence,  adjustments  were  made, where  appropriate,  for 

differences  in transport,  insurance, handling,  loading  and  ancillary  costs,  credit 

costs, bank charges, guarantees/warranties  and levels of trade. 

30 

(66)  An  allowance  was  also  claimed  by one  of the  Thai  producers/exporters  as  their 

export sales were, in contrast to their domestic sales, allegedly made on an OEM 

brand  basis.  During the investigation  it was clearly  established  that export  sales 

were  made  at  a different  level  of trade  than  domestic  sales.  An  allowance  was 

consequently  granted  by  deducting  from  the  own  brand  constructed  normal 

values,  an  amount  corresponding  to  10%  of  the  gross  profit  margin  in 

accordance with Article 2(10) (d) (ii) of the Basic  Regulation. 

(67)  One Thai producer/exporter  sold footwear  for  export to the Community  through 

a  related  trading  company  located  in  the  USA. 

It  has  been  determined  that 

tjecause  of  the  relationship  between  the  two  companies,  the  prices  charged  by 

the Thai producing  company to the US company  were not reliable.  To establish 

a reliable export price to the Community  from  Thailand, the price charged to the 

Community  was  adjusted  to  an  ex-Thailand  level.  As  the  related  company's 

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

basis, an adjustment  of  5% was deducted  from  the prices charged  by the related 

company  to  independent  customers  in  the  Community.  This  figure  was 

considered reasonable given the degree of the related trader's  involvement  in the 

selling  activities  of  the  exporter.  No  information  was  provided  which  would 

indicate  that  this  figure  is inappropriate.  Thus, the  export  prices  were  adjusted 

accordingly. 

31 

(d)  dumping margins 

(68)  To  calculate  the  dumping  margin  of  each  cooperating  Thai  producer/exporter, 

the  Commission  made,  in  accordance  with  Article 2(11)  of  the  Basic 

Regulation,  a  comparison  between  weighted  average  normal  values  and  the 

weighted  average  export  prices  of  the  producers/exporters  since  it  was  clearly 

established  that there  was no pattern  of export prices which  varied  significantly 

between different  purchasers, regions or time periods. 

(69)  The  comparison  showed  the  existence  of  dumping  of  the  footwear  .concerned 

during 

the 

investigation  period  by  one  of 

the 

three 

cooperating 

producers/exporters.  The margin thus established  and expressed  as a percentage 

of the CIF price at Community frontier  is: 

• 

CK Shoes 

1.4% 

The 

investigation 

revealed 

that 

the 

two  other 

cooperating  Thai 

producers/exporters  were  related,  one  producer/exporter  holding  shares  of  the 

other.  In  addition,  shares  of  one  of  these  producers/exporters  were  held  by  a 

company  in the USA.  Both producers/exporters  exported the product  concerned 

to the Community during the investigation  period. 

Although  these  producers/exporters  maintained  separate  production  facilities 

only  one  dumping  margin  was  calculated  therefor  in  line  with  the  Institutions' 

established  practice as set out in recital 24. 

The margin thus established was : 

• 

PSR Footwear/Bangkok  Rubber Company 

0%. 

32 

(ii)  dumping margin  for non-cooperating  producers/exporters 

(70)  For  those  producers  in  Thailand  which  neither  replied  to  the  Commission's 

questionnaire  nor  made  themselves  known,  the  dumping  margin  has,  in 

accordance  with  Article  18  of  the  Basic  Regulation,  been  determined  on  the 

basis  of  the  facts  available. 

In  view  of  the  unusually  high  degree  of  non-

cooperation  in  this  case  on  the  part  of  Thai  producers/exporters  (99%),  the 

absence  of  other  reliable  information  from  independent  sources  and  in  order  to 

avoid  rewarding  non-cooperation,  it  was  considered  appropriate  to  base  the 

residual  dumping  margin  on  the  highest  margin  of  dumping  alleged  in  the 

complaint, i.e. 50%. 

D.  COMMUNITY  INDUSTRY 

(71 )  As mentioned in recital  5, in view of the large number of Community  producers 

which  were party  to the complaint,  it was considered  appropriate to collect  data 

concerning  the  Community  industry  from  three  sources,  namely  the  national 

producers'  federations  in  the  Community,  the  87  Community  producers  in  the 

first group  and  the  15 Community  producers  in the verification  sample.  Injury 

indicators  were then  considered  at the most  appropriate  level  (i.e. on the  widest 

basis  for  general  indicators  and  on a narrower  basis  for  those which  could  only 

be collected  from  individual  companies). 

Accordingly: 

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

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

entire Community  production of the like product; 

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

the level of the 87 Community producers in the first group, which  were  selected 

with a view to covering, in as balanced  a way as possible, the  four  categories  of 

product under consideration, as well as reflecting  the various company  sizes and 

production structures in the main producer Member States; 

•  Price  undercutting  and  injury-elimination  level  calculations  were  earned  out 

on  the  basis  of  fully  verified  price  and  cost  data  collected  from  the  15 

Community  producers  in  the  verification  sample,  which  are  representative  in 

terms  of  size  and  product  range  as well  as  location  (they  are  all  located  in  the 

major  producing Member States). 

(72)  Certain  parties  have  claimed  that  the  above  methodology  was  deficient  on  the 

grounds  that  it would  depart  from  the provisions  of both  Article 5 (4)  and  4(1) 

of  the  Basic  Regulation,  according  to  which  the  representative  nature  of  the 

investigated  Community  industry  would  have  necessarily  to  be  established  on 

the  basis  of the  "major  proportion"  test,  and  thus  any  evidence  of  injury  would 

have  to  be  based  on  data  provided  by  producers  representing  at  least  25%  of 

total Community production of the like product.  In particular,  it was argued that 

the "total  Community  production" figure used  for  assessing  the  representativity 

of the  188 complaining Community producers would not be reliable. 

The  sampling  exercise  carried  out  by  the  Commission  was. also  questioned  on 

the  alleged  grounds  that  the  decision  to  resort  to  sampling  was  taken  at  an 

advanced  stage, in response to an insufficient  cooperation  from  the  complaining 

industry during the initial stages of the investigation. 

34 

1. 

Total Community  production 

(73)  it  should  first  be  stressed  that  the  level  of  support  for  the  complaint  was 

established  before  initiation  of  the  investigation.  During  the  course  of  the 

investigation  it was established  that the  188 complaining  Community  producers 

continued  to  represent  more  than  25%)  of  total  Community  output  (namely 

53%>).  Therefore,  the  complaining  Community  producers  represent  a  major 

proportion  of total  Community  output  of the like product within  the meaning  of 

Article 4(1) of the Basic  Regulation. 

Moreover,  it  has  also  to  be  stressed  that  the  "total  Community  production" 

figure  of the like product was set at the maximum possible level.  Indeed, due to 

the  lack  of  reliable  data,  no  examination  could  be  carried  out  in  order  to 

determine  whether,  in  accordance  with the provisions  of  Article 4 (1) (a)  of  the 

Basic  Regulation,  the production  volume  of  certain  non-complaining  producers 

should  have  been  excluded  from  the  "total  production"  figure,  on  the  grounds 

that  their  core  business  would  be  importing  rather  than  producing  within  the 

Community. 

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

considerable  imports,  are  also  known  to  produce  relatively  large  quantities  in 

the Community.  Had sufficient  information  in this respect been made available, 

it  is  likely  that  part  of  this  "total  Community  production"  would  have  been 

excluded.  Such  reduction  would  have  increased  the  share  of  Community 

production  of  the  complaining  Community  producers.  Conversely, 

the 

investigation  established that out of the  188 complaining Community  producers, 

87  (i.e.  the  Community  producers  in  the  "first  group"  as  defined  at  recital  5) 

were  neither  related  to  any  producers/exporters  nor  themselves  significantly 

importing the product covered by this  investigation. 

35 

2. 

Sampling 

(74)  In this respect, it has to be recalled that given the very  large number of potential 

parties  to  the  proceeding,  the  notice  of  initiation  of  this  proceeding  explicitly 

mentioned  the  fact  that  the  investigation  could  be  conducted  by  means  of 

sampling.  As  a result,  from  the  initial  stages  of  the  investigation,  cooperation 

was  sought  (via  national  federations)  from  89  Community  producers  selected 

amongst the  188 Community producers supporting the complaint. 

Meaningful  replies  were  received  from  87  producers  (referred  to  as. "the  first 

group" in recital  5), from  which, for verification  purposes,  15 were selected  and 

their  replies  subjected  to  in-depth  on-the-spot  verifications  (this  latter  group  of 

producers is referred  to as "the verification  sample" in recital 5). 

It should  be  noted  that  the provisions  of the  Basic  Regulation  do  not  require  in 

the case of sampling  that relevant  data be collected  from  Community  producers 

representing  a  major  proportion  of  total  Community  production  as  defined  in 

Articles  4(1)  and  5 (4)  of  the  Basic  Regulation.  Rather,  Article  17(1)  of  the 

Basic  Regulation  provides  for  the  possibility  of  collecting  data  from  a  sample 

which  is  representative  of  the  Community  industry.  The  very  purpose  of  such 

sampling  provisions  is to allow for  a situation  in which the  share of  production 

represented  by  such  sampled  Community  producers  could,  depending  on  the 

circumstances, be substantially  less than 25% of total Community  production. 

In any event, the 87 Community producers in the first group alone were found  to 

account  for  25.7%) of Community  output  of the like product,  thus qualifying,  in 

the absence of declared opposition to the complaint, as the Community  industry. 

36 

3. 

Conclusion 

(75)  In  the  light  of  the  above,  it  is  concluded  that  the  representative  nature  of  the 

investigated  Community  industry  was  assessed  in  a  reasonable  way  and  in 

conformity  with the relevant provisions of the Basic Regulation. 

E. 

INJURY 

1.  General  remark 

(76)  To  the  extent  possible,  all  Eurostat  figures  used  in  the  calculations  "detailed 

below  (relating  to  import  volumes,  values  and  thus  prices  per  pair)  were 

corrected  on  the  basis  of  data  available  (provided  by  the  Taric  database),  in 

order  to  exclude  footwear  involving  special  technology  (none  of  which,  as 

explained  in recital  15, is covered by this proceeding). 

2. 

Consumption  in the Community 

(77)  In  calculating  the  total  Community  consumption  of  footwear  subject  to  this 

investigation, the following  data were added  together: 

• 

the total  sales volume in the Community of all Community  producers  of the 

product  concerned  (using  information  obtained  from 

the  Community 

footwear  producers'  national  federations  in  combination  with  data  for 

exports outside the Community as per Eurostat), and 

• 

the  total  imports  into  the  Community  of  the  product  concerned  from  third 

countries including the People's Republic of China, Indonesia and Thailand. 

37 

On this  basis, Community  consumption  of the  product  concerned  was  found  to 

have  declined  from  327  million  pairs  in  1991  to  307  million  pairs  in  the 

investigation  period, a decrease of approximately  6%. 

3.  Volume  and  market  share  of  dumped  imports  during  the  investigation 

period 

(78)  The total volume of imports for the footwear  subject  to the present  investigation 

originating  in  the  People's  Republic  of  China  was  28.6  million  pairs  in  the 

investigation  period. 

The total  volume  of  imports  for  the  product  concerned  originating  in  Indonesia 

stood  at  15.9 million  pairs  in  the  investigation  period  whilst  the  corresponding 

figure  for Thailand was  11.8 million pairs. 

Calculated  on the basis  of  Community  consumption  (see preceding  recital), the 

share  of  the  Community  market  held,  during  the  investigation  period,  by 

Chinese  imports  was  9.3%)  whilst  that  of  Indonesia  was  5.2%)  and  Thailand 

3.9%. 

4. 

Cumulation 

(79)  In  accordance  with  Article 3 (4)  of  the  Basic  Regulation,  an  examination  was 

made  as  to  whether  or  not  the  effect  of  the  dumped  imports  from  the  three 

countries concerned  should be assessed  cumulatively. 

As  can  be  seen  from  the  preceding  recital,  the  individual  volume  of  imports 

from  the  People's  Republic  of  China  and  Indonesia  and  their  market  shares  in 

the  Community  (9.3%)  and  5.2%  respectively)  were  not  negligible  during  the 

investigation  period.  Furthermore,  dumping  margins  which  were  more  than de 

minimis  were established  for both countries (see recitals 56 and 38 to 41). 

Similarly,  although  not  as large as that  of the other  two countries  concerned  by 

this  investigation  and  in spite of  a slight  decline  over  the  period  1991 to  1994, 

the  Thai  market  share  in the  Community  was  3.9%), i.e.  more  than  de  minimis, 

as  was  the  residual  dumping  margin  of  50%  established  for  this  country  (see 

recital  70). 

(80)  The  investigation  also  showed  that  the  conditions  of  competition  on  the 

Community  market  for  the  footwear  imported  from  the  People's  Republic  of 

China,  Indonesia  and  Thailand  are  similar.  Indeed,  the  Chinese,  Indonesian, 

Thai and Community  products are: 

interchangeable  from  the consumer's point of view 

offered  for sale in the same geographical  areas of the Community 

sold through the same distribution  channels 

simultaneously present on the Community  market 

generally  aimed  at  the  same  segment  of  the  Community  footwear  market 

(i.e. the low to lower-middle priced part of the market). 

In  addition,  the  Chinese,  Indonesian  and  Thai  products  are  sold  at prices  found 

to undercut the Community  industry's prices (see recital 86). 

39 

(81)  On this basis, it is considered  that cumulation  is warranted and, accordingly,  the 

effect  of the dumped  imports from  all three countries  should  be assessed jointly 

for the purpose of injury  analysis. 

5.  Cumulated  volume, cumulated  market  share  and developments  of  dumped 

imports 

(82)  The total volume of imports from the People's Republic of China, Indonesia and 

Thailand  taken  together  rose  from  38.6  million  pairs  in  1991  to  56.3 million 

pairs  during  the  investigation  period,  a  significant  increase  of  more  than 45%. 

This corresponds  to an  increase  in combined  market  share from  11.8% in  1991 

to  18.4%) during the investigation period. 

6. 

Prices of dumped imports and undercutting 

(83)  Given the  different  product  mixes  which  can occur  within  each  of the  four  CN 

codes  in  question  (see  recital  17), any  general  examination  of  the  evolution  of 

the  import  prices  of  dumped  imports  between  1991  and  1994  using  only  the 

corresponding  categories  of  footwear  should  be  viewed  with  caution.  To  this 

end, using information  received from  importers and importers' organisations, the 

investigation  showed  that  there had  been  a gradual  shift  to  more  sophisticated, 

up-market  types  of  footwear  being  imported,  with  a  corresponding  overall 

increase in import prices. 

(84)  As  regards  price  undercutting,  comparisons  were  first  made  on  a  category-by-

category  basis  between  the  CIF  import  price  (as  reported  by  Eurostat,  after 

correction  in  order  to  exclude  footwear 

involving  special  technology  as 

explained  in recital  76), adjusted  to duty paid, customer-delivered  levels and the 

selling  prices  in the  Community  of the Community  producers  at the same  level 

of trade (i.e. to distributors/wholesalers). 

40 

A second  undercutting  exercise was also carried out by selecting  those  Chinese, 

Indonesian  and Thai models exported  to the Community  in the greatest  volumes 

by  the  three  Thai  cooperating  producers/exporters  and  the  Chinese  and 

Indonesian  producers/exporters  in  the  dumping  samples  (grouped  into  17 

representative  so-called  "families"  of footwear,  for example: men's lace up town 

shoes)  and  comparing  their adjusted,  customer-delivered  price  levels within  the 

Community  to  those  of  identical  or  comparable  models  produced  by  the 

Community  producers in the verification  sample. 

(85)  In  adjusting  import  prices  to  the  duty  paid,  customer-delivered  level,  account 

was taken  of the normal  duty rate or the duty rate applicable  under the  GSP  (as 

appropriate), as well as a margin for  all  unloading, transport  and  other  ancillary 

costs  incurred  specifically  in relation  with the imports, together  with the  profits 

achieved  by the importers.  On the basis of the evidence examined  in respect  of 

the product concerned  it was found  that, in order to be compared  in a fair way to 

the Community producers' prices and costs, the CIF import price for the product 

concerned had to be adjusted  2% upwards, reflecting  the variable costs  incurred, 

and  then  increased  by  an  amount  of  ECU 0.96  per  pair,  reflecting  the  average 

fixed amount of costs incurred, plus the customs duty. 

(86)  The two methods used to determine undercuting  described  in recital  84 resulted 

in the establishment  of average undercutting margins (expressed  as a percentage 

of the Community  industry's prices) in excess of 25%o for the People's  Republic 

of China and of  10%> for both Indonesia and Thailand. 

41 

7.  Conclusion  concerning  the  volume  of  dumped  imports  and  their  effect  on 

prices in the Community 

(87)  As has been shown above, there was a significant  increase of more than  45%) in 

the  combined  volume  of  dumped  imports  from  the  three  countries  in  question 

between  1991 and the investigation period.  Consumption, however,  declined  by 

about 6% over the same time scale. 

Even though  certain  increases  in  import  prices  which  reflected  the  evolution  of 

the  product-mix  were  observed  over  the  four  year  period  under  examination, 

these  prices  were  nevertheless  at  highly  dumped  levels  which  significantly 

undercut the prices of the Community producers. 

8. 

Situation  of the Community  industry 

Preliminary  remark 

(88)  As  concerns  the  type  of  data  given  below,  it  should  be  noted  that  not  all 

economic  factors  collected  at  the  level  of  individual  Community  producers  in 

the first group  and the  verification  sample  were  found  to have  a bearing  on  the 

state  of  the  Community  footwear  industry  for  the  determination  of  injury.  For 

example,  because  production  takes place  to order,  stocks  were  usually  not  held 

and consequently  were  found  to have  very  little  meaning  in the  injury  analysis, 

as was the case with capacity  and capacity utilisation  (since idle capacity  cannot 

be  strictly  allocated  only  to  the  like  product).  Thus,  in  accordance  with 

Article 3 (5)  of  the  Basic  Regulation,  in  the  analysis  of  the  situation  of  the 

Community  industry,  only  those  economic  factors  which  were  found  to  have a 

bearing on the state of this particular industry were taken into  consideration. 

42 

Production 

(89)  The  information  received  from  the national  federations  showed  that  production 

in  the  Community  fell  from  approximately  259  million  pairs  in  1991  to  224 

million pairs in the investigation period, a drop of 14%. 

Sales  volume 

(90)  The  data  obtained  from  the national  federations  and  Eurostat  showed  a massive 

decline  in  sales  volume  of  22%  between  1991  and  the  investigation  period 

(calculated  using  total  production  in the  Community  minus  exports  outside  the 

Community). 

Turnover 

(91)  The  decline  in  sales  value  of  the  product  concerned  was  found  to  be  16%> 

between  1991  and  the  investigation  period.  Such  a  decline,  although  less 

marked than in terms of volume, was nevertheless  significant. 

Market  share 

(92)  On the  basis  of  consumption  figures  as determined  in recital  77 and  using  data 

obtained  from  national  federations  and  Eurostat,  it  was  found  that  the  market 

share  of the  Community  producers  on the  Community  market  went  down  from 

64.5%)  in  1991 to 53.3%) during the investigation  period. 

43 

Prices of the Community producers 

(93)  As explained  in recital  83 concerning  the prices of imports, it is considered  that 

given  the  different  product  mixes  which  can  occur  within  each  of the  four  CN 

codes in question, any general examination  of the evolution  of the import  prices 

of  dumped  imports  between  1991  and  1994  using  only  the  categories  of 

footwear  should  be  viewed  with  caution.  This  also  applies  when  analysing  on 

this aggregate level data relating to the Community  industry. 

On  a category  basis,  the  investigation  did,  however,  show  certain  trends  in  the 

Community  producers'  prices  since  it  was  found  that  only  the  Community 

producers' weighted average selling price of the product belonging to category 1 

("unisex"  footwear)  went  up  by  a  significant  amount  between  1991  and  the 

investigation period.  This price increase is likely to result from  the fact  that this 

category  includes a very large proportion of fashion  footwear,  very popular with 

young people, which have been very much in demand during recent years. 

On  the  other  hand,  the  prices  of the products  belonging  to  the  other  categories 

either remained  stable or only went up slightly, but in any case this increase has 

been below the average  level  of inflation  for the period under consideration  and 

does  not  reflect  the  increase  in  the  production  costs.  The  conclusion  can 

therefore  be drawn that prices have been suppressed. 

44 

Profitability 

(94)  The profitability  (in relation  to turnover)  on sales  in the Community  of the  like 

product  for  the Community  producers  in the first group  increased  slightly  from 

+6.8%o  in  1991  to  +13%  during  the  investigation  period.  The  Community 

producers  in  the  verification  sample  also  confirmed  this  relatively  stable  trend 

with  margins  going  up  from  +8.1% to  +8.2%>.  The  Community  producers' 

capacity  to maintain  their  profitability  in the face  of the above  mentioned  price 

suppression  is  the  result  of  a  considerable  effort  of  rationalisation  and  cost 

reduction on the part of the surviving Community producers. 

More  importantly,  the  cost  structure  of this  particular  industry  explains  that  its 

operating  businesses  are  either  profitable  or  do  disappear.  Indeed,  with  direct 

expenses  (raw materials and labour etc.) representing up to 80% of the cost of a 

shoe, footwear  is only  made to order, after  a direct costing showing  a  sufficient 

profit  for  each  order.  In  this  situation,  no  company  can  show  losses  for  more 

than  a few  months  without  being  forced  to close  down.  This  explains  why  the 

Community  producers  in  the  first  group  and  the  verification  sample  were,  on 

average, not loss making. 

This  cost  structure  together  with  the  increasing  leverage  of  a  number  of  large 

retailers-importers  who  are able to select  and  change their  source  of  supply  for 

any  order  on  the  sole  basis  of  price  (in  the  case  of  the  People's  Republic  of 

China, Indonesia and Thailand dumped prices) is a key element  and explains the 

extreme vulnerability  of this labour intensive industry which has no means, over 

an  extended  period  of  time,  to  resist  sustained  pressure  from  low-priced, 

dumped imports. 

45 

The  Community  industry  had  therefore  no  choice  but  to  try  to  maintain 

profitability  at  the  expense  of  market  share.  This  was  still  feasible  and 

profitability  remained stable at around 7%> over the period covered  since, despite 

a  fall  of  more  than  11 percentage  points  in  their  market  share  since  1991, the 

Community producers still held 53% of the Community market in  1994. 

Employment  and company closures 

(95)  In  the  light  of  the  above,  the  analysis  of  employment  developments  and 

company  closures  appeared  to  be  particularly  relevant. 

Information  received 

from  the  national  federations  showed  that  employment  in  the  sector  producing 

the footwear  under investigation declined  from  about  127,250 people in  1991 to 

114,000 people in the investigation period, a drop of approximately 10%>. 

As  concerns  the  number  of  Community  producers  manufacturing  the  footwear 

subject  to  the  current  investigation  which  ceased  produotion between  1991 and 

1994,  details  of  the  closure  of  67  factories  in  seven  Member  States  (Belgium, 

France,  Italy,  the  Netherlands,  Portugal,  Spain  and  the  United  Kingdom)  were 

received  from  national  producers'  federations.  Given  that  some  Member  States 

do  not  keep  detailed  statistics  for  very  small  companies,  the  true  figure  on 

company closures may have been much higher. 

9.  Conclusions  on injury 

(96)  All of the economic  indicators mentioned  above, based on  information  supplied 

by the national footwear  producers federations  clearly show that the Community 

producers'  situation  has  deteriorated  between  1991  and the  investigation  period 

(i.e.  as  regards  production,  sales  volume,  market  share,  employment  and 

company  closures). 

46 

(97)  Figures  from  individual  companies  (such  as  those  relating  to  profitability), 

examined  at the end  of the injury  analysis period, relate to  "survivors"  and  thus 

the  most  resilient  producers.  It  follows  that  such  data  understate  the  level  of 

injury  as  a  whole  as  far  as  the  entire  Community  production  of  the  footwear 

under  investigation  is  concerned. 

It  is  only  when  the  global  situation  is 

examined  that the disappearance of producers, the reduction in production,  sales 

and employment and thus the full  extent of the injury  becomes evident. 

In  addition,  any  apparent  "well-being"  of  the  Community  producers  belonging 

to  the  first  group  or  the  verification  sample  may  also  have  come  about  due  to 

their taking  over of part of the market  share previously  held  by the  Community 

producers  which  went  out  of  business  during  the  four  year  period  under 

examination.  These  Community  producers have also been obliged  to shift  their 

production  towards  certain  types  of  footwear  which,  up  until  the  present  time, 

have  been  less  subject  to  the  pressure  exerted  by  dumped  imports  (e.g.  fashion 

footwear  which has formed  one of the "niches" on the market). 

In  this  respect,  it  has  been  claimed  by  a  number  of  interested  parties  that  the 

Community  producers  have  very  successfully  engaged 

in  a  strategy  of 

specialisation  in up-market  fashion  products.  The result  of this  is alleged  to be 

that  the  Community  producers  no  longer  have  the  capacity  to  make  large 

volumes  of  low-cost  product  of  the  type  produced  in  the  exporting  countries 

concerned  by this proceeding. 

47 

It  is  true,  that,  given  the  advantages  of  their  geographical  proximity  to  the 

Community  markets and their ability to make quick delivery  to meet rising, and 

very often  short-lived, consumer demand for  fashion  footwear,  it is to this sector 

that  many  of  the  Community  producers  have  retreated  with  all  or  part  of  their 

output.  Some  producers  have  had  to  relinquish  altogether  production  of  less • 

fashionable,  cheaper  and  less  value-added  but  high  volume  lines to  the  imports 

from  outside  the  Community,  whilst  others  have  tried  to  produce  a mixture  of 

fashion  footwear  and  high  volume,  "classic"  lines.  These  "classic"  lines  are 

indeed  the  only  ones  generating  the  volumes  required  for  maintaining  an 

industrial and commercial  structure of a viable size. 

(98)  It  was  therefore  concluded  that,  overall,  the  Community  producers  of  the 

footwear  under investigation have suffered  injury  which  is sufficient  for  it to be 

classified  as material. 

F.  CAUSATION 

(99)  In accordance  with  Article 3 of the  Basic  Regulation,  it was  examined  whether 

the  material  injury  suffered  by  the  Community  industry  was  caused  by  the 

Chinese,  Indonesian  and  Thai  dumped  imports,  or  whether  other  factors  had 

caused or contributed  to that  injury. 

48 

1. 

Effect  of the dumped  imports 

(100) In examining the effects  of the dumped  imports, it has to be borne  in mind  that, 

because of the nature of the products concerned  and the leverage of certain  large 

distributors,  the  Community  footwear  market  is,  at  least  at  wholesale  level, 

transparent  and  price  sensitive.  Moreover,  as  mentioned  in  recital  80,  the 

imports  of dumped  products  from  the  countries  concerned  are  affecting  mainly 

the  lower  to  lower-middle  end  of the  market,  which  is  generally  recognised  as 

being  the  most  sensitive  to  price  variations  and,  consequently,  the  segment 

where sales at low prices have inevitably  substitution  effects. 

In  addition,  it  should  be  recalled  that  the  footwear  subject  to  this  proceeding 

which  is  produced  in  the  Community  and  the  equivalent  footwear  imported 

from  the  People's  Republic  of  China,  Indonesia  and  Thailand  are  in  direct 

competition  with each other  since they are sold through the same sales  channels 

and  there  are  very  often,  for  the  consumer,  few  perceptible  or  significant 

differences  in quality  between  the imported  products and the products  produced 

in the Community. 

( 101 ) In this context it was found  that the increasing volume and market  share of those 

imports,  in  conjunction  with  the  significant  undercutting  found,  coincided  with 

the loss of market share and general decline of the Community  industry. 

It  was  accordingly  concluded  that  the  low-priced,  dumped  imports  from  the 

countries  concerned  are  linked  to the  deteriorating  situation  of  the  Community 

industry. 

49 

2. 

Effect  of other factors 

(102) Consideration  has also been  given to the question  of whether  factors  other  than 

the  dumped  imports  from  the  People's  Republic  of  China,  Indonesia  and 

Thailand  might  have  caused,  or  contributed  to,  the  material  injury  suffered  by 

the  Community  industry  in  order  to  ensure  that  any  injury  caused  by  other 

factors  is not attributed to the dumped imports. 

(a)  Imports from  other third countries 

(103) The  question  whether  imports  from-countries  other  than  the  three  currently 

under  investigation  may  have  contributed  to the  material  injury  suffered  by  the 

Community  industry  was  firstly  examined.  In this  respect,  particular  reference 

was  made  by  certain  interested  parties  to  imports  into  the  Community  from 

Vietnam.  Eurostat  data  showed  (after  correction  in  order  to  exclude  footwear 

involving  special  technology  as  explained  in  recital  76)  that  the  volume  of 

imports  in  the  Community  of  the  products  concerned  from  Vietnam  increased 

very significantly  from  approximately  30,000 pairs in  1991 to  15.9 million pairs 

in 1994. 

Given the surge in the volume of imports from  Vietnam, it cannot be denied that 

these  imports  may  also  have  had  a  detrimental  effect  on  the  situation  of  the 

Community  industry.  However,  as concerns  the  prices  of these  imports,  given 

the  lack  of  information  on  the  product  mix,  it  was  not. possible  to  establish 

reasonable  data  upon  which  conclusions  could  be  drawn. 

It  was  therefore 

considered  that  the  evidence  produced  to  date  concerning  the  pricing  of 

Vietnamese  exports to the Community was insufficient  to warrant  extending  the 

scope of the current investigation to Vietnam. 

50 

( 104) Moreover,  it  should  be  noted  that  the  Community  market  share  of  all  third 

countries  including  Vietnam,  but  excluding  the  People's  Republic  of  China, 

Indonesia and Thailand, increased by  12%> between  1991 and  1994, whereas the 

market  share  of  the  three  countries  concerned  by  this  investigation  increased 

more substantially, i.e. by 46%>, during the same period. 

(105) It  is  therefore  concluded  that,  even  if  imports  from  other  third  countries  may 

have contributed  to the injury  suffered  by the Community  industry, their  impact 

cannot  be  considered  as  such  as  having  broken  the  causal  link  between  the 

dumped  imports  from  the  three  countries  concerned  and  the  material  injury 

suffered  by the Community  industry. 

(b)  Intra-Community competition 

(106) It has been argued by several interested parties that there was significant  internal 

competition  in the  Community  between  producers  in  Italy,  Portugal  and  Spain 

and producers  in the other Member  States and it was for this reason that  certain 

Community  producers found  themselves  in an adverse economic situation.  The 

competitive  devaluations  of  some  Member  States'  currencies  and 

the 

Commission's  decision  not  to  allow  the  payment  of  a  State  aid  to  the  Italian 

footwear  industry4  on the  ground,  inter  alia,  of  its  good  health,  have  also  been 

cited  as  further  indication  that  any  injury  the  Community  industry  might  have 

suffered  has been largely  self-inflicted. 

(107) In'addressing  the  above  arguments,  however,  a  distinction  should  be  made 

between  fair  competition  and unfair  competition  and  it  should  be  recalled  that, 

within  the  framework  of  a  single  market,  there  are  mechanisms  to  ensure  that 

competition  between Community producers remains equitable. 

4  By Commission  Decision  96/542/EC (OJ  L231,  12.9.1996, p. 23). 

5! 

In addition, in the assessment  of the injury  suffered  by the Community  industry, 

the  situation  of  the  Community  producers  of  the  products  in  question  in  all 

Member  States  where  these  types  of  footwear  are  produced  in  significant 

quantities  has  been  considered.  The  results  of  this  assessment  reflect  the 

situation  of  the  Community  industry  as a  whole.  Accordingly,  the  aggregated 

data used for the injury  assessment would compensate for internal differences,  if 

any,  in  the  Community  industry's  performance. 

In  this  respect,  it  is,  for 

instance,  worth  noting  that  if  internal  competition  had  been  the  only  driving 

force  on  the  market,  the  Community  industry's  market  share  would  hot  have 

experienced  a  decline  from  64.5%  in  1991  to  53.3%  in  1994  as  the  loss  of 

market share by some would have been the gain of the others. 

The investigation  has shown that the diminishing  production,  market  share, and 

employment  of  producers  in  some  Member  States  have  in  no  way  been 

compensated  by  an improvement  of the  situation  of producers  in other  Member 

States, as a number of interested parties have argued. 

It must also be stressed that the Commission's decision not to allow the  granting 

of a State aid to the Italian footwear  industry was based on an assessment  of this 

industry  as a whole, as opposed  to the segment  of the  market  concerned  by  the 

present  investigation.  Furthermore,  this  decision  was based  on  the  impact  that 

such  a  measure  might  have  had  on  the  functioning  of  the  internal  market  and 

specifically  acknowledges,  inter  alia,  the  difficult  situation  of  employment  in 

this sector in all Member States. 

52 

(108) Further  to  the  final  disclosure,  certain  interested  parties  have  argued  that,  in 

view  of  the  fact  that  certain  Community  producers  reported  strongly  negative 

developments  in recent  years  while others  maintained  their turnover,  the  injury 

suffered  by the Community  industry  might result  from  disparities  in the  quality 

of the companies'  management, and not from  the impact of the dumped  imports 

concerned. 

(109) In  this  respect,  it  should  be  stressed  that,  due  to  differences  in  their  product 

range,  it  is  normal  that  not  all  companies  are  as  acutely  confronted  with  the 

competition  from  the  low-priced,  dumped  imports.  It  is  also  normal  that,  in  a 

competitive  market,  some  companies  perform  better  than  others  and  it  is 

precisely  the  number  of  Community  producers  which  ensures  that  competition 

exits.  Moreover,  no  evidence  of  mis-management  (relating  for  instance  to 

investment  or  employment  policies)  was  found 

in 

the  course  of 

the 

investigation.  As stated above, internal competition  cannot, in particular,  be the 

cause  of  the  overall  decrease  in  market  share  of  the  Community  industry  and 

therefore  considered  as  a  factor  breaking  the  causal  link  between  the  dumped 

imports and the injury  suffered  by the Community  industry. 

(c)  Recourse to subcontracting of labour intensive operations 

(110) In  addition,  it  was  also  argued  that  a  number  of  Community  producers  have 

transferred  some  of  their  more  labour  intensive  operations  to  third  countries 

with  low labour costs, thereby  contributing  to the overall  injury  suffered  by the 

Community  industry,  particularly  with  regard  to employment.  In this  regard,  it 

is  considered  that  the  fact  that  some  producers  have  had  to  resort  to  such  a 

course of action, which  is a defensive  step taken  in order to keep costs at  levels 

which  enable  them  to  compete  with  the  low-priced  imports,  is  additional 

evidence of the pressure exerted by the dumped imports. 

3. 

Conclusions  on causation 

(111) Although  certain  factors  other  than  dumped  imports  from 

the  countries 

concerned  may  have  contributed  to  the  injury  suffered  by  the  Community 

industry,  it  is  nevertheless  concluded  that  a  causal  link  exists  between  low-

priced,  dumped  imports  from  the  People's  Republic  of  China,  Indonesia  and 

Thailand,  taken  in isolation, and the material  injury  suffered  by the  Community 

industry.  This conclusion  is based on the various elements  set out above and in 

particular  the level of price undercutting, the significant  market  share gained  by 

these  countries  (and  the  corresponding  loss  in  market  share  suffered  by  the 

Community  industry)  and  the  huge  increase  in  the  quantities  concerned  which 

resulted  in a great number of producers situated  in the Community  being  forced 

to  close.  This  conclusion  is moreover  strengthened  by the  fact  that  the  overall 

efficiency  of  the  Community  footwear 

industry  producing 

the  products 

concerned  is not in question, as evidenced, inter alia, by the achievements of the 

Community  producers  on  export  markets  outside  the  Community  (exports  in 

volume  by  the  Community  industry  indeed  rose  by  25%  between  1991  and 

1994). 

54 

G.  COMMUNITY  INTEREST 

(112) On  the  basis  of  all  evidence  submitted,  an  examination  was  made  of  whether, 

despite  the  conclusion  on  dumping  and  injury  caused  thereby,  compelling 

reasons  existed  which  would  lead  to  the  conclusion  that  it  was  not  in  the 

Community  interest  to  impose  measures  in  this  particular  case.  For  this 

purpose,  and  pursuant  to  Article 21 (1)  of  the  Basic  Regulation,  the  impact  of 

possible  measures  for  all  parties  concerned  as  well  as  the  consequences  of  not 

taking measures were examined. 

In making such an appreciation, the need to eliminate the trade distorting  effects 

of  injurious  dumping  and  to  restore  effective  competition  was  given  special 

consideration. 

1. 

Impact on the Community  industry and its suppliers 

(a)  Interest of the Community industry 

(113) Without  measures  to  correct  the  effect  of the  dumped  Chinese.  Indonesian  and 

Thai  imports,  it  is  considered  inevitable  that  the  position  of  the  Community 

producers  would  further  deteriorate.  More  Community  producers,  and  finally 

the Community  industry  as a whole, would  begin  to incur  financial  losses,  with 

the  result  that  there  would  be  further  factory  closures  and  considerable  job 

losses  in  addition  to  those  resulting  from  rationalisation  and  technological 

improvements. 

It  should  also  be  borne  in  mind  that  if  fewer  producers  are 

present  on 

the  Community  market,  competition  may  be 

reduced 

commensurately. 

55 

(114) Certain  interested  parties  argued  that,  given  the  mobility  of  the  footwear 

industry  world-wide,  anti-dumping  measures  against  the  People's  Republic  of 

China, Indonesia and Thailand  would  have no positive effect  on the situation  of 

. the  Community  industry  due  to  a  likely  shift  of  supply  to  other  cheap  labour 

third  countries  such  as  Bangladesh,  India  or  Vietnam. 

It  has  been  argued 

moreover  that  the  situation  of  the  industry  producing  footwear  with  uppers  of 

leather  or  plastics  was  comparable  in  this  respect  to  that  of  the  synthetic 

handbags  manufacturers  and  that  accordingly  the  Council  should  also  in  the 

present case refrain  from  taking measures'. 

(115) Shift  of  supply  between  various  countries  has  been  an  important  factor  on  the 

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

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

partly  compensate  for  the  importer's  constant  search  of  countries  with  the 

lowest labour costs.  This could however  not be the case in the face  of the surge 

in  dumped  imports  from  the  three  countries  concerned  by  this  proceeding.  As 

far  as  the  alleged  parallelism  between  the  present  proceeding  and  the  synthetic 

handbags  case  is  concerned,  it  should  be  stressed  that  the  substantial  market 

share  still  held  by the complainant  Community  industry  in this  case, the  nature 

of  the  capital  holders  in  most  exporting  companies,  as  well  as  the  important 

industrial  investment  necessary  to  produce  footwear,  clearly  exclude  any 

reasonable  and  meaningful  comparison  between  the  two  industries.  The 

Council cannot accept therefore  that for the sake of consistency,  it should  refrain 

from  taking measures in the present case. 

5  See recitals  105 and  106 of Council  Regulation  (EC) No  1567/97 (OJ L 208, 2.8.1997, p. 31). 

56 

In  addition,  the  fact  that  producers/exporters  could  transfer  their  production 

facilities  to other  countries  in order to  avoid payment  of anti-dumping  duties  is 

not,  in  itself,  a  sufficient  reason  for  the  Council  not  to  impose  measures  in  a 

case  where  exports  have  been  found  to  have  been  dumped  on  the  Community 

market  and  to  have  caused  material  injury  to  the  Community  industry.  Were 

such  a  situation  to  arise,  the  Community  industry  could  lodge  a  complaint 

requesting,  for  instance,  the  initiation  of  an  anti-dumping  proceeding  against 

such imports or the initiation  of circumvention  investigation  in accordance  with 

Article  13 of the Basic Regulation. 

(116) It was  further  argued  that  if measures  were to be imposed,  Chinese,  Indonesian 

and  Thai  producers/exporters  would  switch  to  the  production  of  those  types  of 

footwear  where  the  Community  producers  have  a  technological  and  fashion-

related advantage, thereby causing further  injury  to the Community  industry. 

Leaving  aside the  fact  that  this  type  of  argument  cannot  lead  to  the  conclusion 

that  the  Council  should  refrain  from  adopting  measures  in  the  presence  of 

injurious  dumping,  there  is  nothing  to  suggest  that,  even  in  the  absence  of 

measures,  producers/exporters  in the above mentioned  countries  will  not,  in the 

future,  decide  to  expand  the  range  of  footwear  which  they  manufacture  and 

export.  Indeed,  a number  of  submissions  by  importers  pointed  out  that  a trend 

towards  higher  quality  imported  goods, with  correspondingly  higher  prices  had 

been  observed.  As  has  been  mentioned  previously,  this'" trend  had  already 

started before the investigation period. 

57 

(b)  Interest  of  companies  supplying  the  Community  industry  (with  raw 

•>  materials and machinery) 

(117) It has been a notable  feature  of this investigation  that the Community  producers 

(and  their  raw  material  or  component  suppliers  etc.)  in  many  Member  States 

tend  to  be  grouped  together  geographically.  The  closure  of  one  factory  can 

therefore  have  an  adverse  knock-on  effect  on  other  companies  in  the  area  in 

particular with regard to employment. 

(118) It  has  been  argued  that,  should  measures  be  imposed,  this  would  jeopardise 

Community  footwear  machinery  producers'  sales  to  the  People's  Republic  of 

China, Indonesia and Thailand. 

As  far  as  the  suppliers  of  footwear  production  machinery  are  concerned,  no 

evidence  has  been  received  showing  that  producers/exporters  in  the  People's 

Republic of China, Indonesia or Thailand are the main or most  important  clients 

of the Community equipment  manufacturers. 

In any event, it should be noted that the Community  industry  is clearly  investing 

in  automation,  and  in  the  injection  process  in  particular.  This  automation, 

which  contributes 

to 

the 

technological 

improvement  of 

the 

footwear 

manufacturing  process  in  the  Community,  is  linked  with  investments  in 

machines and moulds produced in the Community. 

2. 

Impact on consumers 

(119) Although  no  representations  were  received  from  consumer  organisations 

following  the  publication  of  the  notice  of  initiation  of  this  proceeding,  some 

parties  have  argued 

that  anti-dumping  measures  would  seriously  affect 

Community  consumers, particularly those with the lowest income. 

58 

This  argument  concerning 

the  foreseeable 

impact  of  measures  on 

the 

consumers'  buying  price  has  been  examined  in  detail.  The  results  of  this 

examination, which has been based on the information  available, are as follows: 

(a) Impact  in absolute terms 

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

given  the  level  of  competition  and  the  number  of  suppliers  either  in  the 

Community  (where the Community  industry  still  has a 53.3% market  share), or 

in third  countries  not  concerned  by this proceeding  (imports  from  which  total  a 

28.3% market share), these suppliers  would  not  be able to significantly  increase 

their prices without running the risk of losing market share. 

As  for  Indonesia  and  Thailand,  it  should  be  borne  in  mind  that  the  injury-

elimination  levels established  for these countries are considerably  lower than  for 

the  People's  Republic  of  China,  their  average  import  price  being  during  the 

investigation  period  ECU  6.97  and ECU  7.16  per  pair  respectively.  Given  that 

the  market  share  of  footwear  originating  in  the  People's  Republic  of  China  is 

9.3%),  (with  an  average  price  of  ECU  5.47  per  pair  during  the  investigation 

period)  and  in  view  of  the  duty  level  proposed,  the  average  maximum 

foreseeable  impact  of  the  measures  proposed  on  the  price  of  the  footwear 

concerned as a whole amounts to ECU 0.4 per pair. 

59 

Thus, consumers  would  only  have to pay  an additional  amount  of  ECU  0.4  per 

pair  if  distributors  decide  to  keep  their  margins  unchanged  and  pass  the 

increased  costs  on  to  the  consumer.  Since  the  average  consumption  of  the 

footwear  concerned  in the Community  is below one pair per person per year, the 

impact  of  the  proposed  measures  on  the  average  consumer's  annual  budget 

would be clearly marginal. 

(b) Impact  in relative terms, effect of price  on consumption 

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

footwear  concerned  at  delivered-warehouse  distributor  level, namely  ECU  13.5 

per  pair,  which  takes  into  account,  for  the  imports,  the  adjustment  for 

differences  in  level  of  trade  referred  to  in  recital  85  of  this  Regulation.  Using 

the  lowest  mark-up  found  among  the distribution  channels  analysed  below,  i.e. 

125%,  it  is  estimated  that  the  average  price  for  the  consumer  of  the  product 

concerned  is  above  ECU  30  per  pair;  including  all  costs  and  duties  incurred 

between  importation  and  sale  to  the  final  customer.  As  a  consequence,  the 

impact of the anti-dumping duties on the price to the consumer would amount to 

approximately  1.3%. 

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

absolute  value  of  the  increase  (ECU  0.4  per  pair)  and  the  general  evolution  of 

prices  over  the  injury  investigation  period. 

Indeed,  over  the  four  years 

examined, and due to the penetration of the dumped imports, the average market 

price  at  delivered-warehouse  distributor  level  decreased  in  absolute  terms,  this 

decrease  being  of  more  than  10%  when  adjusted 

in  order  to  take  into 

consideration  the general inflation  rate. 

60 

( 122) It  should  be  added  that,  even  if  consumers  do  compare  the  prices  which  are 

simultaneously  offered  in  different  shops,  they  are  generally  less  sensitive,  as 

regards the product  under  investigation,  to developments  in the  general  level  of 

prices. 

Indeed,  the  above  mentioned  decrease  in  prices  did  not  prevent  the 

global consumption of the product concerned to decrease by 6%. 

This  can  be  explained  by  a  certain  saturation  which  can  be  observed  for 

products  which  are  consistently  sold  at  such  low  prices  that  consumers  are 

unlikely to react to a limited overall change in the level of prices.  It is  therefore 

doubtful  that  the  full  reflection  of  the  duty,  i.e.  a  maximum  price  increase  of 

1.3%, will  have  any  significant  impact  on the  current  trends  of  demand  on  the 

Community  market. 

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

was concluded  that the impact of the proposed measures on the consumer  of the 

footwear  concerned was likely to be minimal. 

3. 

Impact on distribution 

(a) Impact on distribution as a whole 

(124) It  has  been  argued  that  the  imposition  of  measures  would  also  have  a  strong 

negative  impact  on  importers.  More  generally,  diverging  views  have  been 

expressed  on the situation of the whole footwear  distribution chain which, it has 

been argued, is an activity with a far greater significance  in the Community  than 

footwear  production, in terms of both turnover and  employment. 

It  should  first  be  pointed  out  that,  by  its  very  nature,  for  a  given  quantity  of 

footwear, 

the  distribution  chain  will  have  a  higher 

turnover 

than 

the 

manufacturing  companies  it  buys  from,  simply  by  virtue  of  its  distribution 

margin.  Secondly, the employment  figures  for  footwear  distribution  in  general, 

which  include  sales  of  all types of footwear,  cannot  be compared  with  those  of 

the Community production of the product concerned only. 

As final consumers  in the Community  do not buy shoes in significant  quantities 

outside  the  Community,  negative  consequences  of  anti-dumping  duties  for 

distribution  as  a  whole  could  only  result  from  a  significant  reduction  of 

consumption  and therefore  of turnover,  or a downward  pressure  on  distribution 

margins  in  order  to  minimise  an increase  in consumer  prices  and  a decrease  in 

consumption. 

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

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

unlikely  that consumption  of the product  concerned  would  drop  significantly  as 

a  result  of  anti-dumping  measures,  even  if  the  distribution  sector  were  to 

maintain its current margins. 

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

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

taken  to  make  an  in-depth  analysis  in  the  light  of  the  structure  of  footwear 

distribution  in the Community. 

62 

(b) Structure  of footwear  distribution in the Community 

(125) Footwear  distribution  in  the  Community  comprises  four  different  channels  of 

sale  to  the  end  customer:  branded  retail  chains,  independent  retailers,  non-

specialised  supermarkets  and  other 

types  of  generally  non-specialised 

distribution, for example clothing stores. ' 

(i) 

Independent  retailers 

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

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

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

number of producers or tend to group in purchasing associations while  retaining 

their  independence. 

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

competitive  situation  due  to  both  their  individual  lack  of  price  control  on 

suppliers  and  the  high  margins  of  between  150% to  200% that  are  required  to 

cover the  fairly  high costs of operating  in urban, often  upmarket,  areas.  In  fact, 

they  have  lost  ground  in  a  certain  number  of  Member  States  to  more  recent 

forms  of  distribution  falling  within  the  other  three  categories  and  in  particular 

the branded chains. 

63 

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

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

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

independent  retailers  are  still, at  least  in  terms  of value  added  and  employment 

(over  250  000  persons),  the  most  important  distribution  channel  in  the 

Community,  although  probably  not  the  largest  one  in terms  of  market  share  in 

volume. 

(ii)  Branded retail chains 

(127) These  chains,  which  are  sometimes  also  involved  in  production 

in  the 

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

country,  which  in turn  own  several  brands and  operate  across the whole  market 

range.  They  operate  from  out-of-town  super or discount  stores, which,  because 

of  their  sales  volume,  prices  and  specialisation,  can  resist  the  non-specialised 

supermarkets'  pressure. 

The  branded  retail  chains  also  sell  through  town  centre  shops  replacing  the 

independent 

retailers  with 

less  costly, 

standardised  premises  which 

accommodate  the  need,  on  the  part  of  some  customers  for  an  alternative  retail 

buying  environment  to  discount  stores.  Due  to  their  leverage,  their  access  to 

world  supply  since  they  import  on  their  own  account  and  the  relatively  low 

margins  with which  they operate, generally  around  25% of the cost of sales  for 

the central trading arm and  100% on average for the shops, branded retail chains 

are  able  to  gain  market  share- rapidly  once  they  enter  a  market  and  to  achieve 

growth rates in excess of 5% per year. 

64 

(iii)  Non-specialised  supermarkets 

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

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

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

sometimes  buy  directly  from  suppliers  located  outside  the  Community,  they 

usually  rely  on  specialised  importers  for  their  imports,  which  constitute  an 

important  part  of  their  footwear  sales.  Their  traditional  mark-up  is  around 

100%),  but  it  can  range  from  around  60%  on  promotional" operations  to  over 

130% on some Community products.  Due to the additional level  of the  importer 

and  the  fixed  part  of  the  costs  incurred,  imports  from  the  countries  concerned 

through  this  sales  channel  usually  reach  the consumer  at  a price  which  is  three 

times higher than the CIF level. 

(iv)  Other sales channels 

(129) Other  sales  channels,  such  as  mail  order  companies  or  garment  stores,  have 

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

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

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

Community-wide  apparel  chains  of  "small"  shops  also  introduce  footwear  in 

their  stores  as a fashion  branded  accessory,  generally  with  higher  margins  than 

on their usual clothing articles.  Due to the fashion  aspect of these sales, they are 

in competition with the branded chains, although to a lesser extent than the large 

general city centre stores. 

65 

(c) Specific impact of the proposed  measures on the various sales  channels 

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

employment  in  Community  footwear  distribution,  the  general  conclusion 

presented  in recital  124 of this Regulation  is strengthened  by the  fact  that  a low 

proportion  of  their  supplies  of  the  product  concerned  usually  originates  in  the 

People's  Republic  of China,  Indonesia  or Thailand.  It should  be added that  they 

are  grouped  in  a  confederation  representing  eight  Member  States  on  a 

representative  level, and that no submission  opposing the possible  imposition  of 

anti-dumping  measures  was  received  from  this  source  or  any  other  on  their 

behalf. 

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

imposition  of  anti-dumping  duties.  Although  the  general  conclusion  is  also 

applicable  to  them,  the  fact  that  some  of  them  rely  on the  dumped  imports  for 

the supply of the product concerned more than the independent retailers explains 

why,  within  the  distribution  chain,  they  could  fear  a  negative  effect  of  the 

measures on their comparative competitive  situation. 

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

companies would be negligible if the amount of the duty were to be fully  passed 

on to the consumer.  Indirect  adverse financial effects  could  only be expected  if, 

due  to  this  price  increase,  consumers  were  to  significantly  reduce  their 

purchases  of  the  product  concerned.  However,  should  this  happen,  it  would 

only be to a limited extent, as explained  in recital  122. 

66 

Moreover,  the  product  concerned  is never  the  sole  source  of  revenue  for  these 

specialised  shops  and,  due  to  its  particularly  low  prices,  represents  less  than 

12%o of the turnover of the cooperating  companies operating branded  chains.  In 

this  perspective,  even  a  small  contraction  in  the  demand  for  the  product 

concerned,  which  appears  unlikely,  would  have  a  negligible  impact  on  the 

companies as a whole, in particular if the demand  is at least partly re-oriented  to 

footwear  with a higher price, with probably a higher margin in absolute terms. 

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

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

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

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

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

channels  was  examined,  as  the  portion  of  their  turnover  based  on  products 

imported  from  the  countries  concerned  was  found  to  be  significant.  These 

companies  are  generally  run  with a very  limited  and  flexible  structure  allowing 

them to sell only when the trading margin they foresee  covers the costs incurred. 

Their expertise on the market and their ability to design and sell are not  affected 

by  the  country  of  origin  of  the  goods.  The  anti-dumping  measures  having  an 

impact  on  footwear  distribution  as  a  whole,  these  importers  will  be  able  to 

benefit  from  any  market  situation,  and  continue  to  supply  their  clients  with 

Chinese,  Indonesian  or  Thai  imports,  or  any  non-dumped  products,  as  well  as 

Community-produced  ones. 

67 

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

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

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

part of it. 

4.  Conclusion concerning Community  interest 

(135) Having examined  all the various interests involved, it is considered  that  positive 

reasons exist for taking measures and that there are no compelling reasons not to 

take  action  against  the  dumped  imports  in  question. 

Indeed,  leaving  the 

Community  industry  without  adequate  protection  against  the  injurious  dumping 

would  add to the difficulties  of this industry and could  lead to its  disappearance 

or  relocation  outside  the  Community.  The  limited  price  increase  resulting  for 

consumers  from  the  imposition  of  anti-dumping  measures  can  by  no  means  be 

considered to be of the same magnitude as the cost of the total disappearance  of 

a major  Community  industry. 

« 

Finally,  in  view  of,  inter  alia, the time  which  has elapsed  since  the  completion 

of  the  investigation  of  dumping  and  injury,  it  is  considered  appropriate  that 

definitive  anti-dumping  duties  on  the  imports  of  the  product  concerned  be 

directly  imposed,  i.e.  without  resorting  to  the  intermediate  step  of  provisional 

duties. 

6 S 

H.  DEFINITIVE DUTY 

1. 

Simultaneous  application  of  anti-dumping  measures  and  quantitative 

restrictions 

(a)  Legal  aspects 

(136) Certain  interested  parties  argued  that  no  anti-dumping  measures  should  be 

imposed  on  imports  of  the  products  subject  to  the  present 

investigation 

originating  in the People's Republic of China since they  are already  subject  to a 

Community-wide  quantitative  quota  imposed  by  Council  Regulation  (EC) 

No 519/946, i.e. during the investigation period. 

(137) The  Community  Institutions  cannot  subscribe  to this point  of  view which,  they 

consider,  is  based  on  an  incorrect  interpretation  of  the  rationale  of  the  above 

mentioned  Regulation.  That  Regulation  introduced  a  new  trade  regime  which 

led  to  the  abolition  of  some  4,617  national  restrictions  provided  for  under  the 

previous  regime  vis-à-vis  non  market  economy  countries,  almost  all  of  which 

concerned  the  People's  Republic  of China.  These  restrictions  were replaced  by 

Community  quotas for  seven Chinese products and Community  surveillance  for 

26 other products. 

Overall,  these  autonomous  quotas,  restricted  to  few  particularly  sensitive 

products,  cannot  be  considered  as  an  exception  to  some  hypothetical  liberal 

trading regime with the People's  Republic of China but are part  of the means of 

achieving the goal of a more liberal and, above all, more uniform  trading  regime 

with  the  People's  Republic  of  China,  while  any  action  under  the  Basic 

Regulation  is directed against injurious  dumping. 

6 

OJ L 6 7,  10.3.1994, p. 89. 

69 

Accordingly,  the  injury  which  the  imposition  of  anti-dumping  measures  would 

attempt  to  remedy  has  not  been  addressed  by  means  of  another  commercial 

defence  instrument.  Therefore,  following  an  anti-dumping  investigation  which 

has  shown  that  measures  are  warranted  with  a  view  to  remedying  injurious 

dumping,  the  imposition  of  such  measures  may  be  considered,  irrespective  of 

the  existence  of  any  quantitative  restrictions  which  may  be  applicable  to  the 

products  in question.  This  conclusion  had however to be subjected  to a  further 

analysis, from  an economic angle. 

(b)  Economic aspects (impact of the quotas on import trends) 

(138) Data  available  when  preliminary  findings  were  established  (restricted  to  1995) 

were showing that, after  the end of the investigation period, import volume  from 

the  People's  Republic  of  China  had  decreased  significantly,  while  prices 

appeared to have increased. 

These  circumstances  were  considered  as  sufficiently  exceptional  to  warrant  an 

additional  examination,  on  the  basis  of  the  most  recent  data  available,  of  the 

trends  in imports which occurred after  the investigation  period.  During the time 

needed  to  cany  out  this  additional  examination,  it  was  considered  appropriate 

not to impose any provisional measures. 

(139) In order to examine the import trends for the product concerned  in the two years 

following  the  imposition  of  the  quota,  consideration  was  given  to  some 

methodological points: 

70 

First,  since  the  quota  is  allocated  on  an  annual  basis  and  for  calendar  years, 

estimates  on  the  basis  of  partial  data  corresponding  to  only  some  months  of 

1996  were  considered  as  insufficiently  accurate.  Accordingly,  the  analysis 

detailed  below  was  carried  out  on  the  basis  of  full-year  data  concerning  both 

1995 and  1996 and could  only be completed  when such data were available  for 

1996. 

Secondly, Regulation  (EC) No 519/94, as amended, while imposing  quantitative 

restrictions  on  certain 

footwear 

falling  within 

the  same  nomenclature 

subheadings  as those concerned  by the present proceeding, excluded  from  these 

restrictions  footwear 

involving  "special  technology",  which  is  by  definition 

sold  at least  at ECU  9 (originally  ECU  12) per pair at CIF level.  As  explained 

in  recital  15,  footwear 

intended  for  the  same  use  and  with  the  same 

characteristics  as  footwear  involving  special  technology,  but  irrespective  of  its 

price, was excluded from  the present anti-dumping  investigation. 

(140) For  the  years  1995  and  1996,  footwear  involving  special  technology  was 

excluded  from  the total  imports reported  under the CN codes  concerned,  on  the 

basis of TARIC data, in order to establish the import volumes and values for  the 

product  concerned.  In  the  absence  of  complete  TARIC  statistics  before  1995, 

corrections were made for previous years, taking that year as a reference.  When 

comparing  figures  concerning  imports  from  the  People's  Republic  of  China  in 

1995  and  1996  with  those  referring  to  the  years  prior  to  thé  imposition  of  the 

quota, two conclusions can be drawn: 

71 

As  foreseen,  the  quota  had  an  obvious  impact  on  import  volumes  from  the 

People's  Republic  of China, which  declined  most  noticeably  between  1994 and 

1995 from  28.6 to  16.1 million pairs.  More in detail, import volumes  decreased 

for  all  four  categories  of  the  product  concerned,  corresponding  to  the  four  CN 

codes,  between  1994  and  1995.  However,  the  volumes  imported  increased 

again between  1995 and  1996, where they reached  19.1 million pairs. 

Furthermore,  and  more  significantly 

in  the  context  of  an  anti-dumping 

proceeding,  prices  were  not  found  to  have  increased  as  a  consequence  of  the 

implementation  of the  quota.  Although  one could  have  expected  prices to  rise 

in  parallel  to  the  decrease  in  import  volumes  imposed  by  the  quota,  no  such 

thing  happened.  Indeed,  the  average  import  price  remained  stable  since  the 

imposition  of the quota, ranging  from  ECU  5.75  per pair in  1993, peak  year  for 

the  volumes,  to  ECU  5.69  per  pair  in  1996.  For  none  of  the  four  categories 

concerned  could  a  change  in  the  trend  of  the  import  price  from  the  People's 

Republic  of  China  be  observed.  It  should  also  be  noted  that,  of  the  exporting 

countries concerned, the Chinese price levels are, by far, the lowest. 

(141) Within  the  four  CN  codes  analysed,  it  could  not  be  established  either  that  a 

progressive  shift  to footwear  involving  special  technology,  which  was  excluded 

from  the  investigation  and  highly  priced,  had  taken  place,  which  could  have 

explained  the stagnation  of the import price for the remaining products.  Indeed, 

the  proportion  of  footwear  involving  special  technology  in the  total  imports  of 

the  codes  concerned  remained  stable  between  1995  and  1996  both  in  volume 

and value terms. 

72 

(142) As  far  as  Thailand  and  Indonesia  are  concerned,  no  significant  change  in  the 

overall  trends  of  their  imports  and  of  the  competitive  conditions  on  the  market 

could  be  established  which  would  contradict  the  findings  detailed  in recitals  78 

to 87. 

(143) In the  light  of the above, it has been concluded  that the impact on import  trends 

of  the  quantitative  restrictions  applicable  to  imports  of  the  footwear  concerned 

originating  in  the  People's  Republic  of  China  is  not  such  as  to justify  a  global 

reconsideration  of  the  conclusion  that,  in  the  present  case,  anti-dumping 

measures  are  warranted.  However,  as  explained  below,  it  is  considered 

appropriate  that,  for  the  determination  of  the  form  for  the  measures,  the  above 

described trends be taken into account. 

2. 

Injury elimination  level 

(a)  Methodology 

(144) In  accordance  with  Article 9 (4)  of  the  Basic  Regulation,  an  examination  was 

carried  out  with  a  view  to  determining  the  level  of  duty  which  would  be 

adequate  to  remove  the  injury  suffered  by  the  Community  industry  as  a 

consequence of dumping. 

Accordingly,  it was  considered  that  the export  price  of  dumped  imports  should 

be  increased  to  a  non-injurious  price  level  corresponding  to  the  Community 

industry's  cost  of  production  and  a reasonable  profit  (hereinafter  referred  to  as 

the  "non-injurious  price"). 

As  far  as  the  cost  of  production  is concerned,  it  was  considered  appropriate  to 

take  as  a  reference  the  cost  of  production  of  the  Community  producers  in  the 

verification  sample. 

As far  as the profit  margin  is concerned,  it was considered  that  a margin  of  7% 

on turnover  could  be  regarded  as an  appropriate  minimum,  taking  into  account 

the need  for  long-term  investment  and, more particularly, the amount which the 

Community  industry  itself  was  able  to maintain  as  a minimum  during  the  four 

year period under examination (1991-1994), at the expense of its market share. 

(145) As  explained  in  recital  16, at  the  outset  of  the  investigation  it  was  considered 

appropriate  to divide  the product  in question  into  categories, and  perform  price 

comparisons  on  the  basis  of  these  categories.  However,  as  mentioned  in 

recital  84,  during  the  course  of  the  investigation  it  appeared  that,  as  far  as  the 

cooperating producers/exporters  were concerned, greater certainty  in the product 

matching  could  be  achieved  by  using  an  even  more  detailed  product  split.  To 

this  end, 

the  most  exported  models  of 

the  Chinese  and 

Indonesian 

producers/exporters  in  the  samples  and  the  most  exported  models  of  the 

cooperating  Thai  producers/exporters  were  selected  and  separated  into  17 

families  of  footwear. 

74 

In  order  to  calculate  the  injury-elimination  margin,  the  CIF  import  price, 

adjusted  to  duty  paid,  customer-delivered  levels  was  compared  to  the  non-

injurious  price  of  the  Community  producers  at  the  same  level  of  trade.  Given 

the  high  level  of  non-cooperation  from  all  three  countries  concerned,  this 

calculation  was  carried  out  on  a  category-by-category  basis  and,  only  for 

cooperating  producers/exporters,  on  a  family-by-family  basis  whenever  the 

greater precision  conferred  a benefit  to them  for  their cooperation.  It should  be 

noted that import prices were adjusted  to the duty paid, customer-delivered  level 

by  using  the  adjustment  methodology  used  for  the  undercutting  assessment,  as 

presented  at recital 85. 

(b)  People's Republic of China 

(146) Since  the  dumping  margin  established  for  Grosby  (China)  Limited  was  de 

minimis  (1.3%)  and  should  thus  result  in  any  definitive  anti-dumping  duty  for 

this company to be set at 0%, no injury-elimination  level calculation was carried 

out for Grosby (China) Limited. 

(147) As far  as  other  exports  from  the People's  Republic  of  China  are  concerned,  the 

residual  injury-elimination  margin  was  found  to  be 46.0%), which  is  lower  than 

the  established  dumping  margin  and  should  therefore,  in  accordance  with 

Article 9 (4) of the Basic Regulation, constitute  the basis  for  the definitive  anti 

dumping  duty  for  all  other  imports  originating  in  the  People's  Republic  of 

China. 

75 

(c)  Indonesia 

(148) Individual  injury-elimination  margins for cooperating producers/exporters  in the 

sample  for  Indonesia,  expressed  as  a  percentage  of  CIF  price,  were  found  to 

range  from  0%  to  99.5%,  with  an  average  to  be  applied  to  the  cooperating 

producers/exporters  outside the sample of 33.6%. 

For the producers/exporters  in the sample, these margins were found  to be, in all 

cases  except  two  (P.T.  Golden  Adishoes  and  P.T.  Indosepamas  Anggun / P.T. 

Primashoes  Ciptakreasi),  higher 

than 

the 

respective  dumping  margins 

established.  In accordance  with  Article 9 (4) of the  Basic  Regulation,  the  level 

of  the  definitive  anti-dumping  duty  for  all  cooperating  producers/exporters  in 

Indonesia  should  therefore  be  based  on  the  dumping  margins  established,  with 

the exception  of: 

-  P.T.  Golden  Adishoes,  whose  injury-elimination  margin,  lower  than  its 

dumping  margin, was found  to be nil  and should  thus result  in any  definitive 

anti-dumping  duty for this company to be set at 0%>, 

and 

-  P.T. Indosepamas  Anggun / P.T. Primashoes  Ciptakreasi,  whose  common 

injury-elimination  margin  (2.6%)  was  lower  than  their  dumping  margin  and 

should  thus  constitute  the  basis  for  the  definitive  anti-dumping  duty 

applicable to both producers/exporters  as explained in recital 24. 

76 

(149) As regards the producer/exporter  referred  to in recital  31 (P.T. Kingherlindo)  for 

which  facts  available  had  to  be  applied,  it  was  also  considered  in  this  context 

that  the  partial  cooperation  it  had  shown  would  have  to  be  distinguished  from 

the total  non-cooperation  of those producers  in  Indonesia  which  neither  replied 

' 

to  the  Commission's  questionnaire  nor  made  themselves  known.  However, 

since a calculation  based on the same methodology  as the one used  for  dumping 

calculations  (see  recital  40)  would  have  resulted  in  the  injury-elimination 

margin applicable to the company to amount to 26.9%, i.e. to be higher than the 

one  found 

for  non-cooperating  producers/exporters, 

it  was  considered 

appropriate  to  align  P.T.  Kingherlindo's  injury-elimination  margin  on  the 

residual  injury-elimination  margin, which, as explained  in the  following  recital, 

amounted to 20.3%. 

(150) The  injury-elimination  margin  for  non-cooperating  producers/exporters 

in 

Indonesia was found  to be 20.3% and therefore  lower than the residual  dumping 

margin  of  50%  established  for  this  country.  Accordingly,  the  residual  anti 

dumping  duty  for  imports  originating  in Indonesia  should  be established  on  the 

basis of this injury-elimination  margin. 

(c)  Thailand 

(151) Since 

the  dumping  margin  established  for 

the  three  cooperating  Thai 

producers/exporters  (namely  CK  Shoes  and  PSR  Footwear/Bangkok  Rubber 

Company)  were  found  to  be  either  nil  or  de  minimis  and  should  thus  result  in 

any definitive  anti-dumping  duties for these producers/exporters  to be set at 0%, 

no 

injury-elimination 

level 

calculations  were 

carried  out 

for 

the 

producers/exporters  concerned. 

77 

(152) For  Thai  non-cooperating  producers/exporters,  the  injury-elimination  margin 

was  found  to  be  24.7%,  i.e.  lower  than  the  residual  dumping  margin  of 50%> 

established  for  this  country.  Accordingly,  the  residual  anti-dumping  duty  for 

imports originating in Thailand  should  be established  on the basis of this  injury-

elimination  margin. 

3. 

Form of definitive  duties 

(153) On the basis of the analysis detailed in recitals  138 to  143, it appeared  that while 

the  imposition  of  the  quota  had  the  obvious  desired  effect  of  limiting-  import 

volumes of the product concerned originating  in the People's  Republic  of China 

and  thus the cumulated  volumes  originating  in the three countries  concerned,  it 

had  no  apparent  effect  on  the  prices  of  the  imports  in  question,  which  can 

therefore  be assumed to have remained injurious.  This effect  arises mainly  from 

the concentration of imports on the low to lower-middle end of the range. 

(154) In  these  circumstances,  it  was  considered  that  an  ad-valorem  duty  would 

disproportionately  affect  relatively  expensive  footwear,  while  having  a  lesser 

effect  on the low to lower-middle end sector.  Conversely, a variable duty, based 

on  a  minimum  price,  would  precisely  target  the  injurious  price  element  left 

unremedied  by  the  quota.  Accordingly,  it  was  considered  that  the  definitive 

anti-dumping  duty  should take the form  of a variable  duty based  on a minimum 

price. 

78 

Such  a  measure  will  indeed  encourage  price  increases  relating  to  the  bulk  of 

imports,  which  are  concentrated  at  the  low  to  lower-middle  end  sector.  The 

expected  price  increase  will  thus take  place  in  the  product  range  most  affected 

by  the  dumped  imports,  while  at  the  same  time  minimizing  the  effect  on  the 

price  of  the  least  injurious  imports  of  more  sophisticated  footwear.  Therefore, 

while the quota has obviously created a safety  net against sudden and  potentially 

injurious  surges  in imports of the product  concerned,  a variable  duty  appears  to 

be particularly  appropriate  as  a complementary  safety  net  against  the  injurious 

prices of these imports. 

(155) As  far  as  the  level  of  the  minimum  price  is  concerned,  the  following 

considerations were taken into account: 

On  the  Community  industry  side,  it  was  considered  that  the  effects  of  the 

proposed  measures  should  allow the average  import price, when adjusted  to  the 

delivered  importer  warehouse  level  (in  accordance  with  the  methodology 

presented  in  recital  85),  to  be  equal  to  the  average  non-injurious  price 

established  for  the  calculation  of  the  injury  elimination  level  for  the  product 

concerned  as explained  in recitals  144 and  145, which amounted, on a weighted 

average  basis  for  the  four  categories  concerned,  to  ECU  9.6  per  pair  on  a 

delivered  basis. 

79 

(156) As  regards  the  imported  products  and  their  price  breakdown,  Eurostat 

information  on both  import  volumes and  average  prices was analysed  in greater 

detail  in  the  light  of  data  relating  to  individual  export  transactions  provided  by 

cooperating  producers/exporters  and  importers.  On this basis  it was  established 

that, by setting the minimum price at ECU 5.7 per pair on a CIF basis, the price 

breakdown  of  imports  would  be  changed  to  the  effect  that  the  foreseeable 

average  import price  for  products originating  in the People's  Republic  of  China 

would  be ECU  7.5 per pair at CIF level, equivalent  to the non  injurious  price of 

ECU 9.6 per pair at a delivered-warehouse-importer  level. 

Indeed,  both  in  volume  and  value  terms,  a  majority  of  the  total  imports  and  a 

part  of  the  imports  in  each  category  took  place  under  the  proposed  minimum 

price.  The increase in the price of these predominant  imports resulting  from  the 

imposition of the variable duty is thus expected to have a strong influence  on the 

average  foreseeable  import  price. 

In  doing  this  analysis,  care  was  taken  to 

ensure that the effect  of the quotas on the import volumes, as presented  in recital 

140, be reflected  in an appropriate way. 

(157) The  data  available  in  relation  with  products  originating  in  Indonesia  and 

Thailand  were  for  certain  categories 

too 

limited 

to  be  considered  as 

representative  of  the  total  imports  from  these  countries.  However,  the  general 

conclusions  presented  in the  preceding  recital  could  be  confirmed  to  the  effect 

that some imports originating  in these countries did in fact  take place during the 

investigation  period  below  the  level  foreseen  for  the  minimum  price.  It  could 

also be confirmed  that the setting of the minimum  price at ECU 5.7 per pair  for 

Indonesia  and  Thailand  would,  in  line  with  the  conclusions  drawn  in  recitals 

150  and  152,  ensure  that  imports  be  made,  on  average,  at  non-injurious  price 

levels. 

80 

(158) As regards producers/exporters  for which  individual  duty rates were foreseen,  it 

is considered  that the duty  applicable  should  be the one based  on the  minimum 

price,  if  such  a  duty  is  lower  than  the  one  resulting  from  their  individual  ad 

valorem duty rate. 

For  all  those  producers/exporters  for  which  a dumping  margin  of  less than 2%, 

i.e.  de minimis,  was established,  no duty  shall  apply  thereto  in  accordance  with 

Article 9 (3) of the Basic Regulation. 

(159) Further  to  the  final  disclosure,  certain  interested  parties,  while  opposing  any 

measures,  have  questioned  the  appropriateness  of  a  duty  based  on  a  single 

minimum  price  applicable  to  all  four  categories  of  footwear  concerned  and 

claimed that, in order to reflect  price differences,  at least two different  minimum 

prices, one for the category  of footwear  with uppers of plastics, the other for  the 

three  categories  of  footwear  with  leather  uppers, should  be  set.  Conversely,  in 

the  knowledge  of  .the  above  claim,  other  interested  parties  have  beforehand 

opposed  any split mainly on the ground  that it would result in an increase of the 

minimum price applicable to footwear  with leather uppers. 

( 160) It cannot be denied in this respect that average import prices relating to  footwear 

with  uppers  of  plastics  are  lower  than  those  relating  to  footwear  with  leather 

uppers.  However,  it  should  be  stressed  that  imports  of  both  types  also  spread 

over  wide  and  overlapping  price  ranges.  Moreover,  they  are  one  like  product 

and it is often  beyond  the consumer's  perception capacity to differentiate  plastic 

material  from  leather.  In this  context,  it  can  be expected  that  the  measure  will 

have a very  limited  impact,  if any, on the usual  hierarchy  of prices  amongst  the 

four  footwear  categories  concerned.  It  is  therefore  considered  that  a  variable 

duty  based  on a single  minimum  price constitute  an appropriate  and  reasonable 

way  to  obtain  the  expected  average  price  increase  for  all  footwear  categories 

concerned. 

(161) The representatives  of the complaining  Community  industry  expressed  concern 

about the remedial  effect  one could expect  from  an anti-dumping  duty  based on 

a  minimum  price  in  the  case  of  imports  which  are  spread  over  a  wide  price 

range.  They  accordingly  requested  that  an  ad  valorem  duty  be  considered 

instead. 

(162) The  Council  cannot  agree  with  this  line  of  reasoning  and  confirm  that  the 

various  considerations  detailed  in recitals  153 to  157  should  have  an  influence 

on the form  of the measures and will be appropriately  taken  into account by the 

setting  up  of  a variable  anti-dumping  duty  based  on a minimum  price.  Such a 

measure  will  indeed  not  lead  to  the  automatic  collection  of  a  duty  but  should 

nevertheless  result,  for  imports  originating  in  the  three  countries  concerned,  in 

average  price  increases  which  are consistent  with  the conclusions  of the  injury-

elimination  level calculations. 

82 

(163) The definitive  anti-dumping duty should therefore  be calculated as  follows: 

a) 

People's  Republic  of  China:  for  all  producers/exporters,  with  the  exception  of 

Grosby  (China)  Limited,  for  which  a  de  minimis  dumping  margin  was  found, 

the duty  should  be equal  to the difference  between  the minimum  price  of  ECU 

5.7 per pair and the net, free at Community  frontier,  before duty, price per pair. 

b) 

Indonesia:  for  all  producers/exporters,  with  the  exception  of  P.T.  Golden 

Adishoes,  whose  exports  were  found  to  have  been  sold  at  prices  above  the 

injury-elimination  level, the duty  should  be equal  to the  difference  between  the 

minimum  price  of  ECU  5.7  per  pair  and  the  net,  free  at  Community  frontier, 

before  duty, price per pair. 

For  the  following  cooperating  Indonesian  producers/exporters,  the  duty  should 

be equal  to the  following  rates  or to the difference  between  the minimum  price 

of ECU  5.7  per pair  and the net, free  at  Community  frontier,  before  duty,  price 

per pair, whichever  is the lowest: 

P.T. Emperor Footwear 

P.T. Indosepamas Anggun 

P.T. Primashoes Ciptakreasi 

P.T. Dragon 

P.T. Fortune Mate 

P.T. Bosaeng Jaya 
P.T. Karet Murni Jelita 
P.T. Koryo International 
P.T. Lintas Adhikrida 
P.T. Universal  Wisesa 
P.T. Volmacarol 

P.T. Kingherlindo 

2.0%) 

2.6% 

2.6%> 

5.9% 

14.9% 

12.3% 
12.3% 
12.3% 
12.3% 
12.3% 
12.3% 

20.3% 

83 

c) 

Thailand:  for  all  producers/exporters,  with  the  exception  of  Bangkok  Rubber, 

CK  Shoes  and  PSR  Footwear,  for  which  no  or  de  minimis  dumping  margins 

were  found,  the  duty  should  be  equal  to  the  difference  between  the  minimum 

price  of ECU  5.7  per pair  and  the net,  free  at Community  frontier,  before  duty, 

price per pair. 

I. 

NEW EXPORTING  PRODUCERS 

(164) Pursuant  to  Article  11 (4)  of  the  Basic  Regulation,  a  new  exporter's  review  to 

determine  individual  dumping  margins  cannot  be  initiated  in  this  proceeding 

with  regard  to  Indonesia  as  sampling  was  used  in  the  original  investigation. 

However,  in  order  to  ensure  equal  treatment  between  any  new  exporting 

producers  and  the  producers/exporters  cooperating  in this  investigation  but  not 

selected  in  the  sample,  it  is  considered  that  provision  should  be  made  for  the 

weighted  average, ad valorem, duty rate (12.3%) applicable, as an alternative to 

the  variable  duty,  to  the  latter  producers/exporters  to  be  applicable  to  any  new 

exporting  producers  which  would  otherwise  be entitled  to  a review  pursuant  to 

Article  11 (4), 

HAS ADOPTED THIS  REGULATION: 

Article 1 

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

falling  within  CN  codes  ex  6402 99 98  (Taric  code  6402 99 98 * 90),  ex 

6403 99 93 

(Taric  code  6403 99 93 * 90),  ex  6403 99 96 

(Taric  code 

6403 99 96 * 90)  and  ex  6403 99 98  (Taric  code  6403 99 98 * 90),  originating 

in the People's Republic of China, Indonesia and Thailand, except as regards the 

footwear  described  in paragraph 3. 

84 

2. 

The definitive  anti-dumping duty shall be: 

Country 

Products  manufactured  by 

Variable or ad valorem  duty 

All  producers/exporters 

People's 
Republic of 
China 

equal  to  the  difference  between  a 
minimum  price  of  ECU  5.7  per  pair 
the  net,  free  at  Community 
and 
frontier  price per pair, before  duty 

with the exception of: 
Grosby (China)  Limited 

0% 

Indonesia 

AH producers/exporters 

equal  to  the  difference  between  a 
minimum  price  of  ECU  5.7  per  pair 
and 
the  net,  free  at  Community 
frontier  price per pair, before  duty 

Taric 
Additional 
Codes 

8900 

8759 

8900 

0% 

8759 

equal  to  the  following  rates  or  to  the 
difference  between  a  minimum  price 
of  ECU  5.7  per  pair  and  the  net,  free 
at  Community  frontier  price  per  pair, 
before  duty, whichever  is the  lowest: 

2.0% 

2.6% 

2.6% 

5.9% 

14.9% 

12.3% 
12.3% 
12.3% 
12.3% 
12.3% 
12.3% 

20.3% 

8760 

8761 

8761 

8763 

8764 

8765 
8765 
8765 
8765 
8765 
8765 

8762 

8900 

8766 
8766 
8766 

Thailand 

All  producers/exporters 

equal  to  the  difference  between  a 
minimum  price  of  ECU  5.7  per  pair 
and 
the  net.  free  at  Community 
frontier  price per pair, before  duty, 

with the exception of 
Bangkok  Rubber 
CK Shoes 
PSR  Footwear 

0% 
0% 
0% 

with the exception of: 
P.T. Golden  Adishoes 

and of the following 
producers/exporters: 

P.T. Emperor  Footwear 

P.T.  Indosepamas Anggun 

P.T. Primashoes  Ciptakreasi 

P.T. Dragon 

P.T. Fortune Mate 

P.T. Bosaeng Jaya 
P.T. Karet Murni Jelita 
P.T. Koryo  International 
P.T. Lintas Adhikrida 
P.T. Universal  Wisesa 
P.T.  Volmacarol 

P.T. Kinsherlindo 

3. 

The duty  shall  not  apply  to  footwear  for  use in sporting  activities, with  a  single 

or  multi-layer  moulded,  not  injected  sole,  manufactured 

from  synthetic 

materials  specially  designed  to  absorb  the  impact  of  vertical  or  lateral 

movements  and  with  technical  features  such as hermetic pads  containing  gas  or 

fluid,  mechanical  components  which  absorb  or  neutralise  impact  or  materials 

such 

as 

low-density 

polymers 

(Taric 

codes 

6402 99 98 * 11 

and 

6402 99 98 * 19,  6403 99 93 * 11  and  6403 99 93 * 19,  6403 99 96 * 11  and 

6403 99 96 * 19 and 6403 99 98 * 11 and 6403 99 98 * 19). 

4.  Where  any  Indonesian  party  provides  sufficient  evidence  to  the  Commission 

that  it  did  not  export  the  goods  described  in  paragraph  1 to  the  Community 

during the investigation  period, that  it is not related  to any exporter  or  producer 

subject  to the measures  imposed  by this Regulation  and that  it has exported  the 

goods  concerned  to  the  Community  after  the  investigation  period,  or that  it  has 

entered into an irrevocable contractual obligation to export a significant  quantity 

to  the  Community,  then  the  Council,  acting  by  simple  majority  on  a  proposal 

submitted  by  the  Commission,  after  consulting  the  Advisory  Committee,  may 

amend  paragraph 2  by  attributing  that  party,  as  an  alternative  to  the  variable 

duty, the ad valorem duty rate applicable to cooperating exporting producers not 

in the sample, i.e.  12.3%. 

86 

5.  Unless  otherwise  specified,  the provisions  in  force  concerning  duties  and  other 

customs practices shall apply. 

Article 2 

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 

87 

ISSN 0254-1475 

COM(98) 59 final 

DOCUMENTS 

EN 

02  11  10 

Catalogue  number  :  CB-CO-98-062-EN-C 

ISBN  92-78-30833-1 

Office  for  Official  Publications of the European  Communities 

L-2985  Luxembourg 

?e