Proposal for a Council Regulation reimposing a definitive anti-dumping duty on imports of leather handbags originating in the People´s Republic of China and sold for export to the Community by Gainth Industrial Ltd, Macia Company Ltd, Yen Sheng Factory Ltd, Dongguan All Be Right Leathern Products Co. Ltd and Panyu Simone Handbag Ltd and amending Council Regulation (EC) No 2380/98 in order to apply the individual anti-dumping duty rates set for two exporting producers to related companies of the same exporting producers having started to produce leather handbags
Date: 2000-01-10
Institutions: European Commission
Subjects: China, anti-dumping duty, export, international trade, leather

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 10.01.2000
COM(1999) 753 final

Proposal for a

COUNCIL REGULATION

reimposing a definitive anti-dumping duty on imports of leather handbags
originating in the People's Republic of China and sold for export to the
Community by Gainth Industrial Ltd, Macia Company Ltd, Yen Sheng Factory
Ltd, Dongguan All Be Right Leathern Products Co. Ltd and Panyu Simone
Handbag Ltd and amending Council Regulation (EC) No 2380/98 in order to
apply the individual anti-dumping duty rates set for two exporting producers to
related companies of the same exporting producers having
started to produce leather handbags

(presented by the Commission)

EXPLANATORY MEMORANDUM

Attached is a proposal for a Council Regulation reimposing a definitive anti-dumping
duty on imports of leather handbags originating in the People's Republic of China and
sold for export to the Community by Gainth Industrial Ltd, Macia Company Ltd, Yen
Sheng Factory Ltd, Dongguan All Be Right Leathern Products Co. Ltd and Panyu
Simone Handbag Ltd and amending Council Regulation (EC) No 2380/98 in order to
apply the individual anti-dumping duty rates set for two exporting producers to related
companies of the same exporting producers having started to produce leather
handbags.

The proposal contains detailed information showing that the five applications for a
"new exporter" review should be rejected on admissibility grounds, as none of the
applicants could prove it complied with the conditions laid down in Article 11(4) of
the Basic Regulation to be granted "new exporter" status.

Consequently, it was concluded that the country-wide ad valorem anti-dumping duty
of 38% imposed by Regulation (EC) No 1567/97 should be reimposed in respect of
the five applicants and that this country-wide duty should be levied retroactively on
the imports which have been subject to registration pursuant to Article 3 of the
Regulation having initiated the "new exporter" review.

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Proposal for a

COUNCIL REGULATION

reimposing a definitive anti-dumping duty on imports of leather handbags
originating in the People's Republic of China and sold for export to the
Community by Gainth Industrial Ltd, Macia Company Ltd, Yen Sheng Factory
Ltd, Dongguan All Be Right Leathern Products Co. Ltd and Panyu Simone
Handbag Ltd and amending Council Regulation (EC) No 2380/98 in order to
apply the individual anti-dumping duty rates set for two exporting producers to
related companies of the same exporting producers having
started to produce leather handbags

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 11(4) thereof,

Having regard to the proposal submitted by the Commission after consulting the
Advisory Committee,

Whereas:

(1)

(2)

1

2

3

A. PREVIOUS PROCEDURE

By Regulation (EC) No 1567/972 (hereinafter referred to as "the definitive
Regulation"), as amended by Regulation (EC) No 2380/983,
the Council
imposed a definitive anti-dumping duty of 38% on imports of leather handbags
originating in the People’s Republic of China (hereinafter referred to as "the
PRC") with the exception of imports from several exporting producers for
which the Council imposed individual duty rates.

B. PRESENT PROCEDURE

The Commission subsequently received five applications to initiate a "new
exporter" review of the definitive Regulation, pursuant to Article 11(4) of
Council Regulation (EC) No 384/96 (hereinafter referred to as "the Basic
Regulation"). These applications were lodged by Gainth Industrial Ltd, Macia
Company Ltd, Yen Sheng Factory Ltd, Dongguan All Be Right Leathern

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).
OJ L 208, 2.8.1997, p. 31.
OJ L 296, 5.11.1998, p. 1.

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that

Products Co. Ltd and Panyu Simone Handbag Ltd (hereinafter referred to as
"the applicants"). The applicants claimed that they met the conditions for
individual treatment,
they were not related to any of the exporting
producers subject
to the existing measures with regard to the product
they had not exported the product concerned to the
concerned,
Community during the period of investigation on which the anti-dumping
measures were based, i.e. the period from 1 April 1995 to 31 March 1996
(hereinafter referred to as "the original investigation period"), but that they had
exported the product concerned to the Community subsequently.

that

(3)

(4)

(5)

(6)

(7)

(8)

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5

The Commission examined the evidence submitted by the applicants, and
considered it sufficient to justify the initiation of a review pursuant to Article
11(4) of the Basic Regulation. After consultation of the Advisory Committee
and after the Community industry concerned had been given the opportunity to
comment, the Commission initiated, by Regulation (EC) No 152/19994, a
review of the definitive Regulation with regard to the five applicants and
commenced its investigation.

The Regulation initiating the review also repealed the anti-dumping duty
imposed by the definitive Regulation with regard to imports of the product
concerned, produced and exported to the Community by the applicants, and
directed customs authorities, pursuant to Article 14(5) of the Basic Regulation,
to take appropriate steps to register such imports.

The product concerned by the review was the same product5 as the one set out
in Article 1(2) of the definitive Regulation.

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 applicants. All five applicants
submitted replies to the questionnaire and two of them requested also market
economy status.

In the course of the investigation, Dongguan All Be Right Leathern Products
Co. Ltd abandoned its application for a "new exporter" review. Consequently,
subsequent to on-the-spot verifications relating to market economy status, no
on-the-spot verification relating to "new exporter" status and export prices was
carried out at its premises.

The Commission sought and verified all information it deemed necessary for
the purposes of its investigation and carried out on-the-spot verifications at the
premises of the following companies:

OJ L 18, 23.1.1999, p. 10.
Namely: "bags, whether or not with shoulder strap, including those without handle, with outer
surface of leather, of composition leather or patent leather, designed primarily to contain
small objects for personal use, such as keys, purses, make-up and cigarettes, regardless of
their size and form".

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–

–

–

–

–

–

–

Dongguan All Be Right Leathern Products Co. Ltd, Dongguan and
Beijing, PRC,

York Star Co. Ltd., Hong Kong (in respect of Dongguan All Be Right
Leathern Products Co. Ltd),

Dongguan Hsin Wan Foreign Trade Development Co., Dongguan,
PRC (in respect of Dongguan All Be Right Leathern Products Co. Ltd),

Panyu Simone Handbag Ltd, Guangzhou, PRC,

Simone Accessories Collection Ltd., Kyungki-do, Republic of Korea
(in respect of Panyu Simone Handbag Limited),

Gainth Industrial Ltd, Hong Kong,

Macia Company Ltd, Hong Kong, and Yen Sheng Factory Ltd, Hong
Kong (as these two applicants are related, their applications were
treated jointly).

(9)

The investigation period for the current investigation was 1 April 1996 to
31 December 1998 (hereinafter
investigation
period").

referred to as "the current

(10)

(11)

(12)

C. "NEW EXPORTER" STATUS

the criteria for

It was examined whether the applicants met
individual
treatment, were not related to any of the exporting producers subject to the
existing measures with regard to the product concerned, had not exported the
product concerned to the Community during the original investigation period
and had exported the product concerned to the Community subsequent to the
original investigation period. The findings regarding the various applicants are
as follows:

1. Gainth Industrial Ltd

it had exported 6,400 units of the
This company originally claimed that
product concerned to the Community subsequent to the original investigation
period. However, upon verification, this figure was found to be incorrect. The
applicant admitted the inaccuracy of its first submission and eventually
claimed that 86 units of the product concerned were exported to the
Community. These 86 units concern one single model.

The information submitted by the applicant and verified on the spot revealed
that the model concerned was a document bag or briefcase and not a handbag.
Indeed, it is part of a collection composed of leather briefcases exclusively.
The relevant
invoice indicated "leather document bag" and the importer
declared the model concerned in the Single Administrative Document under
the CN code 4202 11 906.

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Trunks, suitcases, vanity cases, executive-cases, briefcases, school satchels and similar
containers.

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(13)

The applicant contested the classification of document bag for the model
concerned and put forward two arguments:

–

–

to

the

applicant,

According
products
corresponded to a redesigned version of the original leather briefcase
collection, and the model concerned does as a consequence not relate
to a briefcase anymore.

exported

actually

the

In this respect, it should be pointed out that the applicant has submitted
different versions of design specifications of the model concerned and
failed to bring any indisputable evidence as to the exact physical
appearance of the model actually exported. However, these design
specifications do in all cases not significantly differ from those of the
other document bags or briefcases contained in the collection.
Furthermore, the explanation given by the importer confirms that the
model concerned is not a leather handbag, as his designer conceived
the new collection as multifunctional bags to meet the need of the
executive woman for a bag able to contain as well documents as small
objects. Consequently,
the
in the definitive
definition of the product concerned as set out
Regulation.

the model concerned does not meet

The applicant further claimed that the model concerned falls under the
definition of handbags set out in the definitive Regulation, as this
definition refers to handbags "regardless of their size and form". The
company put forward that Council Regulation (EC) No 2380/98, which
amended the definitive Regulation, expressly brought backpacks and
shopping bags into the scope of the product concerned.

In this respect, it should be pointed out that Council Regulation (EC)
No 2380/98 did not bring backpacks and shopping bags into the scope
of the product concerned, but only clarified the scope of the definitive
measures7. This clarification specifies that backpacks and shopping
bags have to fall under the definition of handbags (see footnote 5
above) given in the definitive Regulation in order to be covered by the
definitive measures. This clarification was added in order to avoid
circumvention by declaration of imports under CN codes other than the
one corresponding to leather handbags.

(14)

(15)

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In the light of these findings, it was concluded that the applicant failed to
prove that
it had actually exported leather handbags to the Community
subsequent to the original investigation period.

It should also be noted that the applicant requested to take into account sales
made to a German company posterior to the current investigation period and
the initiation of the present review. It should be pointed out
this
information was submitted far beyond the deadline established in the initiating

that

See recital 9: "(...) 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 aforesaid description, regardless of the particular size and form these
products may have."

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Regulation pursuant to Article 6(2) of the Basic Regulation and after the on-
the-spot verification took place, making it impossible to verify its accuracy as
required by Article 6(8) of the Basic Regulation. This seems particularly
important considering the large number of material errors in the information
submitted by the applicant.

Moreover, it should be noted that the consistent application of Article 6(1) of
the Basic Regulation by the Community institutions has been to limit findings
to the investigation period unless the effects of new circumstances are
manifest, undisputed, lasting, and not open to manipulation or do not stem
from deliberate action of interested parties. These conditions are not met in
this case. These sales are sporadic exports to the Community.

(16) On the basis of the foregoing,

the application had to be rejected as

inadmissible.

2. Macia Company Ltd and Yen Sheng Factory Ltd

(17) As mentioned above, these two applicants are related companies and their

applications were therefore examined jointly.

(18)

In its response to a deficiency letter, Macia Company Ltd claimed that one of
the manufacturing units it operated in the PRC did not have a legal identity.
However, during the on-the-spot verification,
this
manufacturing unit was a Sino-foreign co-operative joint venture and
consequently a separate legal entity. Consequently, misleading information on
the corporate structure of the applicants has been submitted and thus, all
information regarding their corporate structure shall be disregarded in
accordance with Article 18 of the Basic Regulation. This resulted in the
applicants' inability to prove that they complied with the conditions as laid
down in Article 11(4) of the Basic Regulation.

it was discovered that

Even though the applicants submitted subsequent to this finding a response to
the part of the questionnaire relating to individual treatment in respect of this
related company, this submission constituted a substantial quantity of new
information which was received by the Commission far beyond the deadlines
set
the Basic
Regulation, rendering impossible a proper verification of it.

in the initiating Regulation pursuant

to Article 6(2) of

(19) Moreover, even in the event this newly submitted information would have
been provided within a reasonable period, the Commission would not have
been able to verify that the conditions for "new exporter" status are met, as
important information was missing. Particularly, the applicants were unable to
prove whether the above-mentioned related joint venture had not exported the
product concerned to the Community during the original investigation period.
As a matter of fact, neither proper audited accounts nor documents showing
the destinations of sales have been provided. In this respect, it should be noted
that the related company sold the product concerned to customers located in
the PRC in 1995. However, the company was subject to a restriction to sell on
the domestic market. This restriction implies that a part of the production must
have been exported in 1995, which is largely covered by the original

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investigation period, the Community being amongst possible destinations.
Consequently, the final destination of these sales is unknown.

(20) On the basis of the foregoing,

the applications had to be rejected as

inadmissible.

3. Panyu Simone Handbag Ltd

(21)

(22)

(23)

This applicant was unable to demonstrate that it had actually produced the
leather handbags it sold for export to the Community during the current
investigation period. Consequently, it could not be established that Panyu
Simone Handbag Ltd was the exporting producer of the goods in question.

Furthermore, the applicant was unable to demonstrate to the satisfaction of the
Commission that it did not sell leather handbags for export to the EC during
the original investigation period.

Finally, as various products were classified under "leather handbags" for
internal purposes, the description of the product on the invoices did not
coincide with the product sold. The verification of the transaction-by-
transaction listing of export sales of the product concerned revealed that
products such as PVC handbags and cosmetic bags had wrongly been
included.

(24) Consequently, as this applicant was unable to prove it complied with the
criteria laid down in Article 11(4) of the Basic Regulation, its application had
to be rejected as inadmissible.

4. Dongguan All Be Right Leathern Products Co. Ltd

(25) As this applicant abandoned its application for a "new exporter" review in the
course of the investigation and consequently cooperated insufficiently, the
Commission was unable to establish whether the company was indeed a "new
exporter".

D. CHANGE IN THE STRUCTURE OF OPERATIONS OF TWO
EXPORTING PRODUCERS, BENEFITING FROM AN INDIVIDUAL DUTY
RATE ESTABLISHED IN COUNCIL REGULATION (EC) No 2380/98

(26)

investigation period,

Two exporting producers, benefiting from individual duty rates established in
Council Regulation (EC) No 2380/98, informed the Commission that after the
they set up new factories involved in the
original
manufacture and export to the Community of the product concerned. These
companies also provided appropriate evidence requested by the Commission
in this respect. The situation was examined and it was concluded that this
development did not result in a significant change.

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E. RESULTS OF THE INVESTIGATION

(27)

In view of the inadmissibility of the five "new exporter" applications, it was
not necessary to establish export prices, normal values and dumping margins
in respect of the applicants.

As the calculation of normal value was not necessary, no determination on
market economy status pursuant to Article 2(7) of the Basic Regulation was
carried out in respect of the applicants that requested such status.

(28) Consequently,

it was concluded that

the country-wide ad valorem anti-
dumping duty of 38% imposed by the definitive Regulation should be
reimposed in respect of the five applicants.

(29)

In respect of the two exporting producers having changed the structure of their
operations as explained at recital 28, it was concluded that the individual anti-
dumping duty rates set for these companies should apply to the newly
established factories.

F. RETROACTIVE LEVYING OF THE ANTI-DUMPING DUTY

(30)

The country-wide anti-dumping duty of 38% applicable to the five applicants
should be levied retroactively on the imports which have been subject to
registration.

G. DISCLOSURE AND DURATION OF THE MEASURES

(31)

The applicants were informed of the facts and considerations on the basis of
which it was intended to recommend the reimposition of the country-wide
duty rate imposed by the definitive Regulation on their exports to the
Community.

(32)

This review does not affect the date on which the definitive Regulation will
expire pursuant to Article 11(2) of the Basic Regulation,

HAS ADOPTED THIS REGULATION:

Article 1

1.

The definitive anti-dumping duty imposed by Council Regulation (EC) No
1567/97 is hereby reimposed on imports of handbags with outer surface of
leather, of composition leather or patent leather falling within CN code
4202 21 00 originating in the People's Republic of China and produced by
Gainth Industrial Ltd, Macia Company Ltd, Yen Sheng Factory Ltd
(including its related manufacturer Dongguan Dalang Huqiu Leathers Co.
Ltd), Dongguan All Be Right Leathern Products Co. Ltd and Panyu Simone
Handbag Ltd.

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2.

3.

4.

5.

For the purpose of this Regulation, leather handbags shall be understood to
mean bags, whether or not with shoulder strap, including those without
handle, with outer surface of leather, of composition leather or patent leather,
designed primarily to contain small objects for personal use, such as keys,
purses, make-up and cigarettes, regardless of their size and form.

The rate of duty applicable to the net free-at-Community-frontier price
before duty shall be 38%.

The duty hereby imposed shall be levied on imports of the product concerned
which have been registered in accordance with Article 3 of Commission
Regulation (EC) No 152/1999.

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

Article 2

Article 1(2) of Council Regulation (EC) No 2380/98 is hereby amended as follows:
The words "Lucci Creations Ltd" shall be replaced by "Lucci Creations Ltd including
its related company Wiemer Leathergoods Manufacturing Co. Ltd." and the words
"Ever Trust Leather Products Shenzen Co. Ltd." shall be replaced by "Ever Trust
Leather Products Shenzen Co. Ltd. including its related company Superior Leather
Ltd.".

This Regulation shall enter into force on the day following its publication in the
Official Journal of the European Communities.

Article 3

This Regulation shall be binding in its entirety and directly applicable in all Member
States.

Done at Brussels,

For the Council
The President

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