Council Regulation (EC) No 2380/98 of 3 November 1998 amending Regulation (EC) No 1567/97 imposing a definitive anti-dumping duty on imports of leather handbags originating in the People's Republic of China
Date: 1998-11-03
Institutions: Council of the European Union
Subjects: China, anti-dumping duty, fancy leather goods and glove-making industry, import, leather, originating product

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I

(Acts whose publication is obligatory)

COUNCIL REGULATION (EC) No 2380/98

of 3 November 1998

amending Regulation (EC) No 1567/97 imposing a definitive anti-dumping duty
on imports of leather handbags originating in the People’s Republic of China

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European
Community,

there were sufficient grounds warranting, excep-
tionally, the initiation of an early interim review of
the existing measures limited to the aspect of indi-
vidual treatment.

Having regard to Council Regulation (EC) No 384/96 of
22 December 1995 on protection against dumped imports
from countries
the European
Community (1), and in particular Article 11(3) thereof,

not members

of

Having regard to the proposal submitted by the Commis-
sion after consulting the Advisory Committee,

Whereas:

(1)

(2)

I. PREVIOUS PROCEDURE

the Council

By Regulation (EC) No 1567/97 (2) (hereafter ‘the
definitive Regulation'),
imposed a
definitive anti-dumping duty on imports of leather
handbags,
falling within CN code 4202 21 00,
originating in the People’s Republic of China. The
measures consist of an ad valorem anti-dumping
duty of 38 % applicable to all exporters except for
the companies Jane Shilton (Pacific) Ltd (0,0 %)
and Picard International Ltd (7,7 %).

II. REVIEW

On 13 September 1997, the Commission published
a notice (3), inviting Chinese exporters of leather
handbags to submit information in order to estab-
lish whether
evidence
warranting the initiation of an interim review of
the definitive Regulation limited to the issue of
individual treatment of exporters. On the basis of
the information received following the publication
the Commission considered that
of

this notice,

there was

sufficient

(1) OJ L 56, 6. 3. 1996, p. 1. Regulation as last amended by
Regulation (EC) No 905/98 (OJ L 128, 30. 4. 1998, p. 18).

(2) OJ L 208, 2. 8. 1997, p. 31.
(3) OJ C 278, 13. 9. 1997, p. 4.

(3)

(4)

(5)

(4)

after

consulting

Consequently, by a notice published in the Official
Journal of the European Communities
the
Commission,
the Advisory
Committee and in accordance with Article 11(3) of
Regulation (EC) No 384/96 (hereafter the ‘basic
Regulation'), initiated a review of the anti-dumping
measures in force and commenced an investigation.
The review was limited to the aspect of whether the
cooperating exporters qualified for individual treat-
ment in respect of their export price, in which case
individual dumping and injury margins could be
established for these exporters.

The Commission officially advised the authorities
of the exporting country. Furthermore, it gave the
parties directly concerned the opportunity to make
their views known in writing and to request a
hearing.

The Commission sent questionnaires to the parties
known to be concerned and received detailed in-
formation from the following companies with
respect to exports to the Community of leather
handbags produced by themselves or by companies
related to them in the People’s Republic of China:

— The Well Leatherware Manufactory Limited,

Hong Kong *,

— The IP Handbag Connections Limited, Hong
(in respect of IP Handbag Industrial

Kong *
Ltd),

— Lucci Creation Limited, Hong Kong *,

(4) OJ C 378, 13. 12. 1997, p. 8.

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— South Sea Leatherwares Limited, Hong Kong *
(in respect of Shundi South Sea Leather
Handbag Factory Ltd and Nam Chow Leather
Products Co. Ltd),

(9)

— Colleen Handbags Manufacturer Limited, Hong
Shenzhen Colleen

(in respect of

Kong *
Handbag Co. Ltd),

— Crownwick Enterprises Limited, Hong Kong
(in respect of Shenzhen Crownwick Leather-
wares Co. Ltd),

— C-Duck Leather Goods Company Limited, the

People’s Republic of China,

— Lai Wah Industries Limited, Hong Kong *,

— W. K. Maxy Industries Limited, Hong Kong *
(in respect of W. K. Maxy Industries Ltd and
W. K. Maxy Leather Goods Industries Zhong-
shan Co. Ltd),

— Wideland Trading Company, Hong Kong *,

— Sitoy (H. K.) Handbag Fty. Limited, Hong
Kong * (in respect of Dongguan Sitoy Leather
Products Factory Ltd),

— Superior Leather Limited, Hong Kong (in
of Ever Trust Leather Products

respect
Shenzhen Co. Ltd),

— C & S Company Limited, Kyongki-Do, South
Korea (in respect of Kunshan C & S Leather
Products Co. Ltd),

— Taiwan Yamani Inc., Taipei, Taiwan (in respect

of Yamani Continental Inc.).

The Commission sought and verified all informa-
tion it deemed necessary for the purposes of its
investigation and carried out on-the-spot verifica-
tions at the premises of the companies indicated
above with an asterisk.

In addition, the following importers, located in the
Community, cooperated in the investigation and
their replies were verified on the spot:

— Plastimoda SpA, Italy,

— Medici Grimm KG, Germany.

Since the scope of the investigation was limited to
the issue of individual treatment, and in order to
enable the Commission to expedite its invest-
igation, it was considered appropriate exceptionally
to use for the review the same investigation period
as that for the initial investigation, i.e. 1 April 1995
‘the investigation
to 31 March 1996 (hereafter
period') so as to compare export price and normal
value within the same time period (as required by
Article 2(10) of the basic Regulation).

(6)

(7)

(8)

III. PRODUCT UNDER CONSIDERATION

The product under consideration is the same as
that described in Article 1 of the definitive Regula-
tion, i.e. ‘handbags with outer surface of leather, of
composition leather or patent leather, whether or
not with a shoulder strap, including those without
handle, designed primarily to contain small objects
for personal use such as keys, purses, make-up and
cigarettes, regardless of their size and form and
currently classifiable under CN code 4202 21 00'
(hereafter ‘leather handbags').

In this respect, it should be clarified that so-called
backpacks and shopping bags are considered to be
‘handbags' and thus covered by the investigation
(and by the measures imposed) if they fit the afore-
said description, regardless of the particular size
and form these products may have. So-called belt-
bags, i.e. bags which are not designed to be carried
by hand and/or on shoulders, are not covered by
the investigation.

IV. DUMPING

1. Normal value

(10)

Since the investigation is limited to individual
treatment,
i.e. an issue concerning the deter-
mination of an individual dumping margin on the
basis of a comparison of the exporter’s individual
export prices with the normal value established in
the analogue country, the normal value as estab-
lished in the initial investigation in Indonesia —
selected as analogue country in accordance with
the basic Regulation has been
Article 2(7) of
retained.

This was considered appropriate, even more so as
the investigation period of the review coincides
with that of the initial investigation, i.e. the export
prices and normal value compared were effectively
established for the same time period, as required by
Article 2(10) of the basic Regulation.

2. Export price

(a) Individual treatment

(11) All exporters cooperating in the investigation
requested individual treatment pursuant to Article
9(5) of the basic Regulation.

it was

verified whether
sufficiently demonstrated that

these
Consequently,
companies
they
enjoyed a degree of legal and factual independence
from the authorities in the People’s Republic of
China, comparable to that which would prevail in a
market economy country, so as to ensure that, if
these companies were to be granted individual
treatment, no genuine risk would ensue that

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exports from companies subject to a higher anti-
dumping duty rate would be channelled through
them. To this end,
the Commission addressed
detailed questions to these companies regarding
ownership, management and control of production
and commercial policies.

(14)

The companies having submitted questionnaire
responses in the present investigation were incorp-
orated in the Hong Kong Special Administrative
Region (which is not part of the customs territory
of the People’s Republic of China) or outside the
People’s Republic of China but exported to the
Community leather handbags manufactured at
operations
in the People’s Republic of China
controlled by them. These operations were either
entities without a legal
their own,
so-called
producing handbags on the basis of
‘processing with foreign materials' agreements, or
legal entities in their own right under Chinese law,
structured as so-called ‘Sino-foreign cooperative
‘wholly-owned foreign enter-
joint ventures' or
prises'.

identity of

the ex-
influence the commercial behaviour of
porters concerned, considering also that the costs
and procedures involved to close down the manu-
facturing operations are very limited. Consequently,
is not an
it was concluded that
obstacle to granting individual treatment since it
does not create a genuine risk of circumvention via
possible channelling (see recital 11).

this constraint

In the course of
investigation an
the present
exporter came forward which cooperated in the
initial investigation and which was granted indi-
vidual treatment and a zero duty rate in the defin-
to have
itive Regulation, as it was found not
dumped. The company informed the Commission
about a change in the structure of its operations
which took place after the investigation period and
as a result of which the legal entity identified as the
‘exporter' in the definitive Regulation was found to
have changed. Upon submitting the appropriate
evidence requested by the Commission,
it was
found that the new legal entity continues to satisfy
all requirements for individual treatment and that
therefore the zero duty rate has to be attributed to
it. The operative part of the definitive Regulation
will have to be amended so that the name of the
new legal entity will now be mentioned.

(12)

(13)

the exporters were
It was found that some of
subject to a restriction in the People’s Republic of
China concerning the proportion of the output
which may be sold on the Chinese domestic
market. However,
the above restriction, which
appeared not to be strictly enforced by the Chinese
authorities, had to be assessed in the concrete
economic context within which each of
these
companies were operating in the People’s Republic
of China, in order to appraise whether the author-
ities in that country would have sufficient leverage
to induce
into channelling
companies
exports of other Chinese manufacturers subject to a
higher
leverage
anti-dumping duty rate. This
hinges on the level of investment at risk in the
People’s Republic of China relative to turnover.
The level of investment in turn mainly depends on
the characteristics of
the manufacturing process
used for the products concerned.

these

In this respect, it should be pointed out that the
manufacturing of leather handbags is a particularly
labour-intensive and hardly automated industry.
The value of the assets deployed at the manufac-
turing facilities in the People’s Republic of China
was found to be very small, particularly when
compared with the turnover generated. The limited
light and relatively
machinery used consists of
conventional equipment,
sewing and
stitching machines, which in many cases had
moreover been fully depreciated.

such as

In the light of these findings, it is considered that
the authorities in the People’s Republic of China
would not have sufficient leverage to effectively

(b) Determination of the export price

(15)

In accordance with Article 2(8) of the basic Regula-
tion, where exports were made to unrelated im-
porters in the Community, the export prices were
established on the basis of the prices actually paid
or payable for export to the Community.

Where exports were made to a related importer in
the Community or a compensatory arrangement
existed between the importer and the exporter, the
export price was established, in accordance with
Article 2(9) of the basic Regulation, on the basis of
resale prices to the first independent buyer adjusted
to take account of all costs incurred between
importation and resale, including customs duties
and a 5 % profit on turnover, i.e. the average profit
of the unrelated importers that cooperated in the
initial investigation.

3. Comparison

(16)

In accordance with Article 2(10) and 2(11) of the
basic Regulation,
the weighted average normal
value was compared with the weighted average
export price at an FOB level. In order to make a
fair comparison between normal value and export
price, adjustments claimed made for differences in

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import charges,
insurance, handling

level of
physical characteristics,
trade,
charges,
transport,
packing costs, credit, discounts and warranty were
granted, provided it could be demonstrated that
they affected prices and price comparability.

(17) A number of exporters claimed, pursuant to Article
2(10)(a) of the basic Regulation, that an adjustment
should be made to take into account differences in
physical characteristics between the leather hand-
bags produced in Indonesia, on the basis of which
normal value was computed, and the exported
in the People’s
leather handbags produced
Republic of China, used to calculate export prices.
Where it was found that the outer surface of leather
handbags exported from the People’s Republic of
China to the Community was of a type of leather of
a significantly lower quality (split or suede leather
and patchwork leather) than that of the handbags
used to establish normal value in Indonesia
(genuine leather), the normal value was adjusted to
reflect the impact of such difference on the market
value of the leather handbags.

(19)

4. Dumping margins

(18)

The dumping margins expressed as a percentage of
the cif Community frontier value of the imports
were found to be as follows with respect to the
exporters eligible for individual treatment:

— C-Duck Leather Goods Company Ltd:

0,0 %

— Wideland Trading Company:

— Lucci Creation Ltd:

— Kunshan C & S Leather

Products Co. Ltd:

— Yamani Continental Inc.:

— IP Handbag Industrial Ltd:

— W. K. Maxy Industries Ltd and
W. K. Maxy Leather Goods
Industries Zhongshan Co. Ltd:

— Lai Wah Industries Ltd:

0,0 %

0,0 %

0,0 %

0,0 %

0,0 %

0,0 %

3,1 %

— Shenzhen Colleen Handbag Co. Ltd:

4,2 %

— The Well Leatherware Manufactory Ltd: 6,5 %

— Shenzhen Crownwick Leatherwares

Co. Ltd:

12,4 %

— Shundi South Sea Leather Handbag

— Ever Trust Leather Products

Shenzhen Co. Ltd:

— Dongguan Sitoy Leather Products

Factory Ltd:

45,2 %

58,3 %

It should be noted that the names of some of the
companies above differ from the ones listed in
recital 5 in those instances where the manufac-
the product concerned takes place at
turing of
companies
in the People’s Republic of China
which have their own legal identity according to
Chinese law and which must therefore be consid-
ered to be the exporter for purposes of the present
investigation.

V. AMENDMENT OF THE MEASURES BEING

REVIEWED

In accordance with the lesser-duty-rule as set out in
Article 9(4) of the basic Regulation,
it was also
examined whether, for each company eligible for
individual treatment, the amount of the duty based
on the injury margin would be lower than the duty
based on the dumping margin. The methodology
used to calculate injury margins was the same as
that in the initial investigation. In all cases the
injury margins were found to be higher than the
dumping margins and the duty rates should there-
fore be based on the dumping margins found.

It was submitted that the duty rates established in
the present
investigation should take retroactive
effect as from the date of entry into force of Regu-
lation (EC) No 1567/97. This argument could not
be accepted in view of the prospective nature of
measures adopted further to review investigations
and, also, as this would result, for those exporters
which receive as a result of the present invest-
igation a lower duty rate than the residual duty, in
an unwarranted bonus for their non-cooperation in
the initial investigation.

(20) Given the relatively low volume of exports of the
companies which should receive individual treat-
ment, as compared with the total volume of exports
from the People’s Republic of China of the product
concerned to the Community,
it was concluded
that a change of the country-wide duty rate speci-
fied in the definitive Regulation was unnecessary.

(21)

The interested parties were informed of the facts
and considerations on the basis of which it was
intended to amend the definitive Regulation, and
were given an opportunity to comment. Their
comments were taken into account and, where
appropriate,
the findings were modified accord-
ingly.

Factory Ltd and Nam Chow Leather
Products Co. Ltd:

39,0 %

(22) Given the above, the Council concludes that the
definitive Regulation should be amended.

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(23)

the date on which
This review does not affect
Regulation (EC) No 1567/97 will expire, pursuant
to Article 11(2) of the basic Regulation,

HAS ADOPTED THIS REGULATION:

Article 1

Article 1(3) of Regulation (EC) No 1567/97 is hereby
amended as follows:

1. The words ‘Jane Shilton (Pacific) Ltd' shall be replaced
by ‘Zengcheng Jane Shilton Leather Goods Company
Ltd'.

2. The following shall be added:

‘— C-Duck Leather Goods Company Ltd: 0,0 %

(Taric additional code: 8961),

— Wideland Trading Company: 0,0 % (Taric addi-

tional code: 8961),

— Lucci Creation Ltd: 0,0 % (Taric additional code:

8961),

— Kunshan C & S Leather Products Co. Ltd: 0,0 %

(Taric additional code: 8961),

— Yamani Continental Inc.: 0,0 % (Taric additional

code: 8961),

— IP Handbag Industrial Ltd: 0,0 % (Taric additional

code: 8961),

— W. K. Maxy Industries Ltd and W. K. Maxy
Leather Goods Industries Zhongshan Co. Ltd:
0,0 % (Taric additional code: 8961),

— Lai Wah Industries Ltd: 3,1 % (Taric additional

code: 8310),

— Shenzhen Colleen Handbag Co. Ltd: 4,2 % (Taric

additional code: 8311),

— The Well Leatherware Manufactory Ltd: 6,5 %

(Taric additional code: 8451),

— Shenzhen Crownwick Leatherwares Co. Ltd:

12,4 % (Taric additional code: 8452),

— Shundi South Sea Leather Handbag Factory Ltd
and Nam Chow Leather Products Co. Ltd: 39,0 %
(Taric additional code: 8453),

— Ever Trust Leather Products Shenzhen Co. Ltd:

45,2 % (Taric additional code: 8454),

— Dongguan Sitoy Leather Products Factory Ltd:

58,3 % (Taric additional code: 8455).'

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, 3 November 1998.

For the Council

The President

B. PRAMMER