Commission Regulation (EC) No 1043/2000 of 18 May 2000 imposing a provisional anti-dumping duty on imports of glycine originating in the People's Republic of China
Date: 2000-05-18
Institutions: European Commission
Subjects: China, anti-dumping duty, chemical product, import, originating product

L 118/6

EN

Official Journal of the European Communities

19.5.2000

COMMISSION REGULATION (EC) No 1043/2000

of 18 May 2000

imposing a provisional anti-dumping duty on imports of glycine originating in the People's
Republic of China

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

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 Community (1), as last
amended by Regulation (EC) No 905/98 (2), and in particular
Article 7 thereof,

After consulting the Advisory Committee,

Whereas:

three
that submitted market economy status claims,
Chinese
in the
trading companies, one producer
analogue country and two unrelated importers in the
Community. In addition, six users in the Community
replied to the questionnaire and provided information
which was sufficiently complete and representative to
use in the assessment of Community interest.

(6)

The Commission sought and verified all information it
deemed necessary for the purpose of a preliminary
determination of dumping,
injury and Community
interest and carried out verifications at the premises of
the following companies:

(a) Community producer

A. PROCEDURE

— Tessenderlo Chemie SA/NV, Brussels, Belgium

(1)

(2)

(3)

(4)

On 24 August 1999, the Commission announced, by a
notice (hereinafter referred to as ‘the notice of initiation’)
published in the Official Journal of the European Commu-
nities (3), the initiation of an anti-dumping proceeding
with regard to imports into the Community of glycine
originating in the People's Republic of China.

(CEFIC), on behalf of

This proceeding was initiated following a complaint
lodged in July 1999 by the European Chemical Industry
Council
the sole Community
producer of glycine. 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.

The Commission officially advised the complainant
Community producer, exporting producers and im-
porters, suppliers and users known to be concerned as
well as associations concerned and representatives of the
exporting country, of the opening of the proceeding.
Interested parties were given an opportunity to make
their views known in writing and to request a hearing
within the time limit set in the notice of initiation. All
parties who so requested were granted a hearing.

In order to allow producers in the People's Republic of
China to submit a claim for market economy status or
individual treatment, if they so wished, the Commission
sent market economy status/individual treatment claim
forms to the Chinese producers known to be concerned.

Claims for market economy status were received from
four individual companies and one group consisting of
two companies (hereinafter considered as one company).

(5)

The Commission sent questionnaires
to all parties
known to be concerned. Replies were received from the
sole Community producer, the five Chinese companies

(1) OJ L 56, 6.3.1996, p. 1.
(2) OJ L 128, 30.4.1998, p. 18.
(3) OJ C 239, 24.8.1999, p. 4.

(7)

(8)

(b) Importers/users

— Scanchem UK Ltd, Macclesfield, United Kingdom,

— Friskies Europe, New Malden, United Kingdom,

— Aventis CropScience, Lyons, France,

— BASF, Ludwigshafen, Germany

(c) Analogue country producer

— Nitrokemia 2000 Rt., Füzfögyártelep, Hungary.

The investigation of dumping and injury covered the
period from 1 July 1998 until 30 June 1999 (hereinafter
referred to as ‘the investigation period’). The examination
of trends in the context of the injury analysis covered
the period from January 1995 to the end of the inves-
tigation period (hereinafter referred to as ‘the analysis
period’).

B. PRODUCT UNDER CONSIDERATION AND LIKE

PRODUCT

1. Product under consideration

The product under consideration is glycine (amino acetic
acid). Glycine is produced in varying levels of purity and
is used as a taste enhancer, a buffering agent, a chemical
intermediate and a metal complexing agent. There are
basically two grades of glycine, depending on the purity:
the pharmaceutical or medical grade, and the regular
grade. The regular grade can be sold, mainly for
marketing purposes, under a variety of names such as
technical, normal, pure, industry, food, feed grade, etc.

Glycine is obtained by chemical synthesis, using either (i)
hydrogen cyanide (HCN) and formaldehyde or (ii) mono-
chloroacetic acid (MCCA) and ammonia.

19.5.2000

EN

Official Journal of the European Communities

L 118/7

the different
Certain Chinese companies argued that
grades of glycine should be considered as separate prod-
ucts but this contention has been rejected. All grades of
glycine should be considered as a single product
because:

(11) As mentioned in recital 4, five companies submitted
claims for market economy status. The examination
of
the claimant
companies met the criteria laid down in Article 2(7)(c)
of the basic Regulation.

their claims showed that none of

— they have the same basic chemical characteristics in
that they share the same basic chemical composition,
although they differ slightly in terms of purity (the
range of purity starts from 97,5 % for the regular
grade and up to nearly 100 % for the pharmaceutical
grade; one major impurity being chloride ranging
from 0,7 % to 0,007 %). The level of purity for a
given grade of glycine is always expressed as a range.
It has been found that for different grades of a given
producer and for the same grade of different produ-
cers these ranges overlap indicating that there is no
clear dividing line in terms of purity between the
various grades,

— they share the same basic physical characteristics
(glycine is a white free-flowing crystalline powder),

— with the exception of pharmaceutical or medical
grade, which needs to be accompanied by a certifi-
cate of purity (to comply with pharmaceutical regu-
lations), the possible uses of glycine determine the
various ‘names’ of grades. As mentioned above, these
names mainly serve marketing purposes for the
product concerned but the product is basically the
same.

Thus, although there are many different uses of glycine,
it is clear that the different grades are almost identical in
terms of physical and chemical characteristics and
should therefore be treated as one single product.

(12) One claim was rejected because it was not submitted by
the whole group involved in the production and sale of
the product but only by one company within the group.
Therefore,
it was not possible to verify whether the
group as a whole merited market economy status. More-
over, the claimant company was subject to restrictions
in its buying and selling activities both domestically and
for export, indicating that decisions were not taken in
response
reflecting supply and
signals
demand.

to market

(13) Another claim was rejected because the claimant was
also subject to selling restrictions and its activities were
influenced by State interference. Moreover, its accounts
were incomplete and contained significant errors and,
therefore, could not provide a basis for the establish-
ment of normal value.

(14)

The other three claims were rejected because the com-
panies concerned did not produce the product under
consideration. They claimed that they purchased low
purity glycine on which they performed a production
process which, however, did not change either the
chemical composition or the physical characteristics of
the product under
they
resembled traders of the product under consideration.
As only producers can obtain market economy status
their claims had to be rejected.

consideration. As

such,

2. Like product

(9)

The product exported to the Community from the
People's Republic of China as well as the one domes-
tically sold in the analogue country and the one manu-
factured and sold in the Community by the Community
producer were found to have the same basic physical
and chemical characteristics as well as the same uses and
are therefore considered as like products within the
meaning of Article 1(4) of Regulation (EC) No 384/96
(hereinafter referred to as the ‘basic Regulation’).

(15)

The Community industry was given the opportunity to
comment on the above findings. Moreover, the applicant
companies were also informed and given the oppor-
tunity to comment on the same findings.

1.2. Analogue country

C. DUMPING

(16)

1. Normal value

1.1. Market economy treatment

(10)

to Article 2(7)(b) of

Pursuant
the basic Regulation,
Chinese producers may request that their normal value
is determined in accordance with paragraphs 1 to 6 of
the said Article, i.e. in accordance with the provisions
which apply to market economy countries.

this purpose,

In accordance with Article 2(7) of the basic Regulation
an analogue market economy third country had to be
selected for the establishment of normal value for the
the
People's Republic of China. For
also the
Commission proposed India which was
proposal made in the complaint. Within the time limit
specified in the notice of initiation, the Chinese cooper-
ating
approach and
suggested the use of Hungary. They underlined that the
Indian domestic market of glycine was virtually non-
existent and that it was strongly protected because of
high import duties. In support of Hungary they alleged
that it had a sufficiently large production capacity of
glycine and was the fourth largest exporter to the
Community of the product concerned.

companies objected to this

L 118/8

EN

Official Journal of the European Communities

19.5.2000

(17)

expressed his willingness

the Commission contacted
In these circumstances,
producers in Hungary, India and the United States of
America. The producers in India and the United States
declined to cooperate in the investigation. A Hungarian
producer
to cooperate.
the few countries outside the
Hungary is one of
Community and the People's Republic of China where
glycine is produced and sold. Hungary is also an open
market where glycine is imported as well as exported.
On this basis, the Commission decided to use Hungary
as an analogue country.

1.3. Determination of normal value

(18) Normal value was established on the basis of domestic
prices of the Hungarian producer in accordance with
Article 2(7)(a) of the basic Regulation. In this respect, it
was found that domestic sales of the like product by the
Hungarian producer during the investigation period
were made in sufficient quantities and in the ordinary
course of trade. Normal value was, therefore, established
by grade on the basis of the weighted average prices
actually paid or payable by independent customers in
Hungary.

2. Export price

2.1. Individual treatment

(19) All

five companies

that were not granted market
economy status applied for individual treatment, i.e. the
determination of an individual dumping margin on the
basis of their individual export prices. The Commission
verified whether these companies enjoyed, both in fact
and in law, the necessary degree of independence from
the State.

three of

these
(20) As already mentioned in recital 14,
companies were not producers of
the product
concerned. Since the granting of individual treatment
applies only to producers,
it is clear that these three
companies do not qualify for individual treatment. For
the other two companies the absence of interference by
the State could not be excluded. One company was not
licensed to export and all its exports were made through
a trading company controlled by provincial State author-
ities. For the other company, one of its members was
not licensed to export whereas the other was subject to
quotas for its domestic and export sales. In addition, all
these companies were wholly or majority State-owned.
Consequently,
it was concluded that all applicant
companies did not meet the necessary requirements for
individual treatment.

(22)

(23)

(24)

Regulation on the basis of the prices paid or payable for
these exports.

3. Comparison

For the purposes of a fair comparison by grade between
the normal value at fob Hungarian frontier level and the
export price at fob Chinese frontier level, due allowance
was made for differences which were claimed and
demonstrated to affect price comparability. These adjust-
ments were made in respect of transport and insurance
the basic
costs in accordance with Article 2(10) of
Regulation.

4. Dumping margin

The comparison of normal values and export prices
revealed the existence of dumping with regard to
imports of the product concerned from all cooperating
Chinese companies, the dumping margins being equal to
the amount by which the normal value exceeded their
export prices to the Community.

In this respect,

In the absence of individual treatment being granted to
any of the companies concerned an overall weighted
average dumping margin was calculated for the whole of
the People's Republic of China.
the
the data concerning exports to the
comparison of
Community provided by the
cooperating Chinese
companies and Eurostat import statistics indicated that
these exports represented only 71,3 % of total Chinese
imports into the Community during the investigation
period. Thus, in calculating an overall dumping margin
for the People's Republic of China, the Commission
based the dumping margin for the volumes for which
cooperation was not obtained on the facts available. In
it was considered appropriate to set the
this respect,
dumping margin for these imports at the level of the
highest dumping margin established for the cooperating
exporter with representative export volumes.

(25) On this basis,

the provisional dumping margin for
imports originating in the People's Republic of China
expressed as a percentage of the cif price at Community
frontier level, duty unpaid, was 45,9 %.

D. INJURY

1. Definition of the Community industry

2.2. Determination of export price

(21)

Since Chinese companies which cooperated in the
investigation made exports directly to independent
customers in the Community,
the export price was
established in accordance with Article 2(8) of the basic

(26)

(CEFIC) acts on behalf of

The complainant
the sole
producer of the product concerned in the Community,
this
the
therefore,
‘Community industry’ within the meaning of Article 4(1)
and Article 5(4) of the basic Regulation.

considered

producer

is,

as

19.5.2000

EN

Official Journal of the European Communities

L 118/9

(27) As there is only one Community producer, information
concerning the Community industry and consumption is
only shown in the form of percentage changes, while
market shares for all market participants have been
rounded.

(34)

(28)

(29)

(30)

2. Community consumption

Community apparent consumption was established on
the basis of the sales volume of the Community industry
and Eurostat information on the total
imports of the
product concerned into the Community.

in volume terms,
From 1995 to 1997, consumption,
increased by 12 %,
then decreased to slightly below
1995 levels in the investigation period. The increase in
consumption in 1997 was due mainly to the develop-
ment in the use of glycine by the petfood industry. In
1998 and during the investigation period, most users
slightly reduced their consumption of glycine.

3. Imports from the country concerned

3.1. Volume and market share

The import volume of glycine originating in the People's
Republic of China rose from around 1 300 tonnes in
1995 to 2 500 tonnes in the investigation period, an
increase of almost 100 %. Most of this increase took
place between 1996 and 1997. Between 1997 and
1998, when Community consumption fell by 9 %,
imports of glycine originating in the People's Republic of
China increased by a further 4 %, but
fell slightly
between 1998 and the investigation period.

(31) Nevertheless, during the investigation period, imports of
glycine originating in the People's Republic of China
reached a market share of significantly more than one
third of total Community consumption, double their
1995 market share.

(32)

The People's Republic of China is by far the largest
exporter of glycine to the Community market. Its share
import volumes rose from 54 % in 1995 to
of total
84 % during the investigation period.

3.2. Prices

( i ) P r i c e e v o l u t i o n

(33)

The weighted average import prices of glycine origin-
ating in the People's Republic of China decreased by
23 % from 1995 to the investigation period, to reach a
level of EUR 2 292 per tonne.

( i i ) P r i c e u n d e r c u t t i n g

Price undercutting was established for the investigation
period on the basis of a comparison of Chinese ex-
porter's cif prices, at Community frontier, including post
importation costs and customs' duties paid with the
Community industry's ex-works prices, at the same level
of trade and net of all rebates and deductions. The result
of the comparison showed a weighted average price
undercutting margin, expressed as a percentage of
Community industry's prices, of 24,7 %.

4. Situation of the Community industry

4.1. Production, production capacity and capacity utilisation

(35)

Production over the period 1995 to the investigation
the analysis
period decreased by 17 %. Throughout
period, approximately 5 % of
the
Community producer was used internally by the
company to make other products.

the production of

(36) As production capacity was static, the capacity utilisa-
tion rate of the Community industry decreased from
58 % to 49 % over the analysis period.

(37)

The plant and equipment used by the Community
industry is totally dedicated to glycine because it
is
linked to specific storage, recycling and water treatment
machinery that has to comply with high safety and
environmental standards. Therefore, it cannot be split or
converted to other products. The current capacity level
was set in the mid-1980s when a growing demand for
glycine was expected.

4.2. Sales volume, unit prices and costs

(38)

(39)

The sales made by the Community industry to unrelated
customers on the Community market during the period
from 1995 to the investigation period decreased in
volume by 17 %. Average net sales prices fell by 3 %.

Total unit costs fell by 9 % between 1995 and 1996,
thanks mostly to higher production volumes. In 1997,
and again in 1998, however, unit costs increased owing
to severe contractions in volumes produced. During the
investigation period, even though production continued
to decrease slightly, the Community producer was able
to reduce its unit costs mainly by improving usage of
raw materials, by benefiting from lower prices of MCCA,
the major raw material, and by reducing manufacturing
overheads.

L 118/10

EN

Official Journal of the European Communities

19.5.2000

(40)

(41)

(42)

(43)

4.3. Market share

industry's

The Community
share of Community
consumption decreased by 16 % from 1995 to the
investigation period, to reach approximately half of the
market. The loss of market share was mostly concen-
trated between 1996 and 1997; at that time Community
consumption grew noticeably, but
imports from the
People's Republic of China grew even more rapidly and
increased their market share. Afterwards, in 1998 and
during the investigation period, the Community indus-
try's market share remained fairly stable at its reduced
level.

4.4. Profitability

In 1995, the Community industry made small losses on
its sales of glycine, due to high R & D expenditure; in
1996 increasing sales led to a small profit. However, in
1997 and 1998, profitability deteriorated, due to
decreasing sales, and losses were again registered. During
the investigation period, due to lower unit costs, profit-
ability improved to above break-even, but was still at a
level
inadequate to ensure the viability of glycine
production.

In this context, certain Chinese exporters argued that the
profit situation of the Community industry did not indi-
cate injury. In support of this contention, they cited the
profitable levels of prices for pharmaceutical glycine.
This argument is not acceptable because, even though
sold by the Community
pharmaceutical glycine is
industry at higher prices
the
than regular glycine,
volumes sold, at less than 5 % of total sales, are so low
that their impact on overall profitability is marginal. In
any event, it should be noted that in accordance with
Article 3(5) of the basic Regulation no one injury factor
can give decisive guidance in the analysis of the situation
of the Community industry.

4.5. Employment

The number of personnel directly
employed by
the Community producer in the production of glycine
has decreased by 17 % from 1995 to the investigation
period, to reach approximately 50 persons. Approxi-
mately 10 other
general
services and maintenance, have also to be taken into
consideration.

persons, working

on

5. Conclusion on injury

(44) A marked deterioration of

the

the
Community industry has been observed,
in particular
between 1996 and the investigation period, when quan-
tities imported from the People's Republic of China
increased by almost 100 % and doubled their share of

situation of

investigation period,

the Community market. During the investigation period,
the imports concerned were made at prices significantly
below those of the Community industry. From 1996 to
the
the Community industry
suffered a reduction in sales volumes, prices, market
share and employment levels. Despite a reduction in
total unit costs during the investigation period,
the
revenue generated by falling sales and falling prices was
not sufficient to generate profits at levels which would
ensure the viability of the Community industry.

(45)

In the light of the above findings,
it is provisionally
concluded that the Community industry has suffered
material injury within the meaning of Article 3 of the
basic Regulation.

E. CAUSATION

1. Introduction

(46)

(47)

(48)

the Commission examined whether

In accordance with Article 3(6) and (7) of the basic
Regulation,
the
material injury suffered by the Community industry had
been caused by the dumped imports or whether other
factors might have caused or contributed to that injury,
in order to ensure that injury from other factors was not
attributed to the dumped imports.

2. Effect of the dumped imports

Prices of imports from the People's Republic of China
decreased by 23 % between 1995 and the investigation
period, and were the lowest prices of all the significant
operators on the Community market. Over the same
imports from the People's Republic of China
period,
nearly doubled in volume and in market share.

There is a clear coincidence in time between the deteri-
orating situation of the Community industry, especially
the loss of sales and market share, and the volume,
prices and growth of dumped imports from the People's
Republic of China. This was especially true in 1997
when these imports grew dramatically and prices fell by
8 % from their 1996 level. Several sales agents reported
to the Community producer that their clients were being
offered much lower prices by Chinese companies.

(49) As Chinese prices continued to decrease after 1997,
efforts made by the Community industry to reduce costs
and lower prices did not bring a recovery in market
share, sales volume or profitability, which had deteri-
orated particularly between 1996 and 1997 and
remained at a low level until the investigation period.

(50)

It is clear that the dumped imports from the People's
Republic of China have caused material
injury to the
Community industry.

19.5.2000

EN

Official Journal of the European Communities

L 118/11

3. Other factors

3.1. Imports from other countries

(51) During the investigation period,

imports

into the
Community from other countries originated mainly in
Japan and India. The volumes imported were 10 to 20
times
than those imported from the People's
Republic of China, and their shares of total imports were
respectively 9 % and 4 %.

less

(52)

(53)

(54)

(55)

Imports from Japan have fallen by 50 % over
the
analysis period, while their prices were fairly stable and
actually above those of the Community industry. These
imports could not contribute to the injury suffered by
the Community industry, as they lost market shares and
did not contribute to the depression of prices.

their market

Import volumes from India showed some erratic move-
ments during the analysis period. Even though average
import prices have decreased and are quite close to
prices of glycine originating in the People's Republic of
China,
significantly smaller
share was
during the investigation period than in 1995, and, in
any case, was so small compared to those originating
from the People's Republic of China that they did not
have a significant
the
Community industry.

impact on the situation of

3.2. Development of consumption

In 1997, Community consumption of glycine was 12 %
higher than in 1995. This increase was more than
absorbed by imports from the People's Republic of
China, as the Community industry's sales fell by 5 %,
while imports from countries other than the People's
Republic of China were down by nearly 20 %.

Consumption decreased significantly between 1997 and
1998 (– 7,4 %) and continued to fall up to the inves-
tigation period. However, this decrease only partially
contributed to the deterioration of the situation of the
Community industry as its sales during this time fell by
more than consumption (– 10,5 %).
In fact, between
1997 and 1998, the volume of dumped imports from
the People's Republic of China, despite the negative
development of consumption, continued to increase
(+ 4 %) and to gain market share.

Community industry at a time of decreasing consump-
tion. The Community market was, however, of a suffi-
cient size to have allowed the Community industry to
achieve capacity utilisation levels that are profitable, and
indeed,

in 1996, this was the case.

(57)

In fact, the primary cause of reduced utilisation levels,
and thus overcapacity, is to be found in the pronounced
effect of the dumped imports from the People's Republic
the Community
of China on the sales volumes of
industry.

4. Conclusion on causation

(58)

(59)

The investigation has shown that the pricing behaviour
of Chinese exporters led to a significant increase in their
sales volumes on the Community market; they absorbed
all of the increase in Community consumption in 1997,
and also gained market share at the expense of all the
other suppliers in the Community.

To resist the pressure imposed by the increased quan-
tities of low-priced imports from the People's Republic
forced to
the Community industry was
of China,
decrease its prices while consumption declined from
1997 up to the investigation period. These imports
caused reduced production and sales, and,
in turn,
reduced capacity utilisation and led to unsatisfactory
financial results for the Community industry.

(60) Other factors, such as a reduction in demand from 1998
to the investigation period, imports from India, and the
dedicated production capacity also contributed to the
negative situation of the Community industry. However,
these effects were not such as to break the causal link
between dumped imports and injury suffered by the
Community industry.

(61)

It is, therefore, provisionally concluded that, considered
the dumped imports from the People's
in isolation,
Republic of China have caused material
injury to the
Community industry.

F. COMMUNITY INTEREST

1. Preliminary remarks

3.3. Overcapacity

(56) As explained above, the plant and equipment used by
the Community producer is entirely dedicated to glycine,
and cannot be adjusted to variations in sales volume. In
this respect, the inability to alter capacity can be seen as
contributing to the material injury experienced by the

(62)

In accordance with Article 21 of the basic Regulation,
the Commission examined whether the imposition of
anti-dumping measures would be against the interest of
the Community as a whole. The determination of the
Community interest was based on an appreciation of all
interests involved, i.e. those of the Community industry,
the importers and traders and the users of the product
concerned.

L 118/12

EN

Official Journal of the European Communities

19.5.2000

(63)

The Commission sent questionnaires to the Community
industry, to known or potential industrial users of the
product concerned, i.e. to 12 individual companies or
groups (in the sectors of petfood, agrochemicals and
pharmaceuticals), and to 13 importers/traders. Question-
naire responses were received within the time limits set
from one petfood manufacturer,
two agrochemical
companies,
three pharmaceutical companies and two
importers/traders.

(64)

The cooperating users represent approximately 40 % of
the imports concerned and also approximately 40 % of
Community consumption, while the importers/traders
represent approximately 40 % of the imports concerned.

(65) On this basis,

it was examined whether, despite the
conclusions on dumping, injury and causation, compel-
ling reasons exist which would lead to the conclusion
that it is not in the Community interest to impose
measures in this particular case.

2. Interest of the Community industry

(66) As mentioned above, the Community industry consists
of a sole producer which suffered material injury caused
by dumped imports originating in the People's Republic
of China.

(67)

If measures are not imposed on imports originating in
the People's Republic of China, it is probable that the
Community producer will have to close its glycine
production facility, taking into account its present very
low profit margins and the financial losses suffered in
1997 and 1998. Indeed, without measures, the price-
depressive effect of the dumped imports will continue to
outweigh
the
Community industry to achieve a satisfactory level of
profitability.

rationalisation

efforts

the

all

of

(68) On the other hand,

in the Community,

imposition of measures would
enable this industry to maintain and restore the level of
its activities
securing the
employment of at least 50 persons in a region affected
by industrial decline (Limburg in Belgium), and the
running of a plant capable of generating a turnover of
approximately EUR 20 million a year.

thus

3. Interest of importers/traders

importer argued that, not only would the jobs directly
involved be threatened, but the whole company would
be endangered if it were to stop importing glycine.

(70) As the objective of anti-dumping measures is not to
prevent imports, but to ensure that they are made at fair
prices, it is considered that the risk of imports of the
product concerned originating in the People's Republic
of China ceasing completely if measures are introduced
is very small, especially taking into account the effect of
a price increase on the downstream industries described
below. Nevertheless, import volumes may decrease after
the imposition of measures, and it cannot be excluded
that at
face some negative
consequences as a result.

least one importer will

4. Interest of users

(71)

There are three major groups of users: the petfood,
agrochemical and pharmaceutical

industries.

4.1. Petfood industry

(72)

(73)

The petfood industry is estimated to represent more
than 50 % of the Community consumption of glycine. It
is a large industry with more than 10 000 employees.

The investigation has shown that glycine represented
less than 1 % of manufacturing costs in this industry.
The impact of any anti-dumping duty can, therefore, be
deemed as marginal. Competition is, however, very
strong in this industry, and it was claimed that other
sources of cheap glycine, or even a cheaper substitute,
would be sought. This claim was not substantiated,
however.

if

the

too expensive

(74) Users in this industry also expressed concern that
glycine might become
sole
Community producer benefited from a monopoly situa-
tion, particularly if duties were so high that Chinese
producers were
as
happened on the US market after the imposition of
anti-dumping duties there. However,
the cooperating
petfood producer did in fact recognise that it was im-
portant for competition on the Community market to
have at least one Community producer. The Community
producer's reliability and efficiency in terms of delivery
was also acknowledged.

eliminated from the market,

(69)

Two importers replied to the Commission's question-
naire. Both opposed anti-dumping measures, which,
they stated, would cause them to lose sales because the
imported product would be priced out of the market.
One of these companies would not be much affected
because the product concerned only consisted a small
its sales. The other, however, would clearly
part of
suffer, because
concerned represented
slightly more than a quarter of its turnover and was by
far the largest item contributing to its profitability. This

the product

(75)

It was noted that the petfood industry has undergone
dramatic restructuring in recent years,
leading to the
creation of
two major players on the Community
market with more than half of the market. The buying
power of these companies is thus very important in
terms of the product concerned, as they account for
more than 50 % of the Community glycine market and
use global sourcing to negotiate large annual contracts
and, therefore, exercise downward pressure on prices.

(77)

(78)

19.5.2000

EN

Official Journal of the European Communities

L 118/13

(76) On this basis,

it

the Community
is considered that
petfood industry would face only marginal increases in
manufacturing costs if anti-dumping measures were
imposed, because glycine
represents a very small
percentage of total costs. There would thus be little or
no effect on employment or investment in this industry.

4.2. Agrochemical

industry

(81)

The Commission noted, however, that the profitability
of producing this fungicide increased between 1995 and
1998 and that the company concerned was not able to
give precise information on the possible impact of an
increase in the cost of glycine owing to the imposition
of duties. Furthermore, the glycine originating in the
People's Republic of China used was imported under the
inward-processing customs regime, and would not be
affected by anti-dumping duties. The major problem
alleged by this company related to the competition on
the Community glycine market that would, the company
claimed, be significantly reduced if anti-dumping duties
were imposed (see recital 97).

The two cooperating companies in this industry repre-
sented approximately one quarter of the Community
consumption of
the product concerned. Total staff
employed was less than 100 persons in the two com-
panies considered together.

(82)

It was concluded that the claims of these two user
companies have not been confirmed by the results of the
investigation. It has also been found that these compa-
nies would face only a limited increase in their manufac-
turing costs if measures were imposed.

Both companies opposed the
imposition of anti-
dumping measures, stating that the product concerned
represented a substantial share in terms of raw materials,
and a little less than 10 % of their total manufacturing
costs (thus significantly less than total costs). They
pointed out that any increase in the price of glycine
would affect their competitiveness.

(79) One company is using glycine to produce a certain type
of vitamin. It stated that the price of its product on the
Community market was very low and this was due to
competition from producers located in the People's
Republic of China. The investigation, however, did not
confirm this claim as the competition actually takes
place between producers located in western Europe, and
from the People's Republic of China are
imports
regarded as being very marginal. Furthermore,
the
investigation has shown that the situation on the vita-
mins market has apparently been made uncertain
following investigations and judgments by US anti-trust
authorities on an agreement
restricting competition
between the world's major vitamin-producers. Because
the cooperating company in question is already making
losses, it may decide to stop this activity. But, in the
particular
the vitamin-market described
above, it is difficult to conclude that the imposition of
anti-dumping measures concerning one cost element
would be the determining factor. This company also
claimed that the Community industry could not deliver
glycine in the required packaging format and with a
certain necessary additive, but the investigation has not
confirmed this claim.

situation of

(80)

The other company is producing a fungicide described
as a mature product,
the life expectancy of which
depends on the need to reduce costs. This company
explained that highly competitive substitutes exist on the
fungicide market, and that it was in the Community
interest
industries
making derivatives of glycine, because they bring more
economic benefits and jobs
than the Community
industry producing glycine.

the competitiveness of

to favour

4.3. Pharmaceutical

industry

(83)

(84)

(85)

The pharmaceutical
industry uses small quantities of
glycine (less than 10 % of Community consumption).
Pharmaceutical-grade glycine accompanied by a certifi-
cate of analysis is mostly used. Most of this glycine is
purchased from the Community producer for quality
reasons. It is a very small input in terms of volume and
cost.

This industry made the point that they were keen to
keep a reliable Community producer on the market, but
they did not wish to see a monopoly situation develop
on the Community market if imports originating in the
People's Republic of China were completely discouraged
by measures.

It was concluded that the impact on the pharmaceutical
industry would be marginal
if anti-dumping measures
were imposed, as it imports little from the People's
Republic of China, and glycine represents a very small
share in the manufacturing costs of the downstream
products.

5. Competition on the Community market and

trade distorting effects

(86)

Interested parties presented several allegations in this
connection:

— anti-dumping measures would leave the Community
industry in a monopoly position, able to increase
prices to an unjustifiable extent,

— duties would not help the Community industry, as
there are plentiful supplies of glycine on the world
market that could replace glycine originating in the
People's Republic of China,

— the Community industry had tried to protect

its
position on the Community market through agree-
ments with other major world producers of glycine.

L 118/14

EN

Official Journal of the European Communities

19.5.2000

(87)

that,

the Community producer

It was noted that the Community producer was indeed
the sole producer of glycine in the Community between
1995 and the investigation period, but that imports
represented almost half of
from various countries
Community
the period,
consumption throughout
showing that a strong degree of competition existed.
Further, there is no reason to doubt the stated intention
of
if measures are
imposed, it would improve its situation by increasing its
sales volumes in order to raise capacity utilisation and
reduce unit costs, rather than by increasing prices. In
addition, the Commission does not consider that, in the
circumstances of the present investigation, the introduc-
tion of anti-dumping measures would lead to the sole
Community producer being able to exercise monopoly
power on the Community market: the market would
remain open to imports at
fair prices. The loss of
Community production due to injurious dumping,
however, would leave exporting producers
in the
People's Republic of China in the position of being able
to supply over 80 % of Community demand, owing to
the large amount of spare capacity that exists in the
People's Republic of China, leading to a quasi-monopoly
situation.

in any event, be considered as
investigation can,
marginal in the restructuring this industry has to face.

(92) On balance,

it cannot be clearly concluded that the
in the
imposition of anti-dumping measures is not
Community interest, as it is considered that the benefit
of removing the unfair elements of the dumped prices of
glycine originating in the People's Republic of China by
the imposition of anti-dumping measures outweighs the
possible negative effects on downstream industries. This
conclusion took into account, in particular, the fact that
the cessation of glycine production by the Community
industry is likely if measures are not imposed and, in the
long term, this would be detrimental to the interests of
users of the product under consideration.

(93) Given the above, it is provisionally concluded that there
are no compelling reasons to consider that taking meas-
ures would be against
the
Community.

the overall

interest of

(88) As to the replacement of imports from the People's
Republic of China by glycine from other sources, this is
unlikely to happen, due to the fact that glycine produced
in the USA, in Japan or in Hungary is approximately as
costly as the one produced in the Community. Imports
originating in these countries are only expected to
recover their position prior to the arrival of dumped
imports on the Community market. As to the cheap
glycine produced in India, it seems that it is not able at
the moment to meet the requirements of Community
users. Indeed imports from India were very small during
the investigation period.

(89)

The allegation concerning agreements with other major
world producers was not supported by any evidence,
and the investigation did not point to the existence of
such agreements.

(94)

(95)

6. Conclusion on Community interest

(90)

Inevitably, any price rise resulting from anti-dumping
measures tends to increase the costs of the downstream
industries. However, this increase is estimated by the
Commission services to be marginal for the companies
cooperating in this investigation, apart from one user
producing a certain type of vitamin, which has separate
concerns.

(91)

The potential number of job losses which would result
from closure of
the
Community user most concerned are roughly compar-
able. However, the vitamin industry is in fact emerging
from a post cartel situation, and the outcome of this

the Community industry or

G. PROVISIONAL MEASURES

1. Injury elimination level

the conclusions reached with regard to
In view of
dumping,
injury, causation and Community interest,
provisional measures should be adopted in order to
prevent further injury being caused to the Community
industry by the dumped imports.

For the purpose of determining the level of these meas-
ures, account has been taken of the level of the dumping
margin found, and of the amount necessary to eliminate
the injury sustained by the Community industry. As the
injury consists principally of a reduction in profitability
from 1997 onwards and a loss of market share, the
removal of such injury requires that the industry should
be able to increase sales volume and revenues. To
achieve this, prices of imports of the product concerned
originating in the People's Republic of China should be
increased to a non injurious-level. To this end,
the
Commission determined a non-injurious price based on
the Community industry,
the production costs of
together with a reasonable profit margin (6 %),
this
being considered necessary to ensure the viability of the
industry and to represent a profit which this industry
could expect in the absence of dumped imports. This
non-injurious price was compared with the prices of the
dumped imports used to establish undercutting. The
differences between these prices (on a weighted average
basis and expressed as a percentage at cif Community
frontier level duties unpaid) showed an injury elimina-
tion level of 39,7 %.

(96) As

the injury elimination level

than the
dumping margin established, the provisional measures
should be based on the former.

lower

is

19.5.2000

EN

Official Journal of the European Communities

L 118/15

2. Form of the measures

(97) Given that the investigation has shown that prices of
glycine originating in the People's Republic of China
were still decreasing after the investigation period, there
is a risk of absorption of an ad valorem duty and there-
fore a specific amount duty of EUR 910 per tonne is
considered the most appropriate measure.

3. Final provisions

(98)

In the interest of sound administration, a period should
be fixed within which the interested parties may make
their views known in writing and request a hearing.
Furthermore, it should be stated that the findings made
for the purposes of this Regulation are provisional and
may have to be reconsidered for the purposes of any
definitive duty,

HAS ADOPTED THIS REGULATION:

Article 1

1.
A provisional anti-dumping duty is hereby imposed on
imports of glycine falling within CN code 2922 49 10 origin-
ating in the People's Republic of China.

2.

The amount of duty applicable is EUR 910 per tonne.

3.
In cases where goods have been damaged before entry
into free circulation and, therefore, the price actually paid or
payable is apportioned for the determination of the customs

value pursuant to Article 145 of Commission Regulation (EEC)
No 2454/93 (1), the amount of anti-dumping duty, calculated
on the basis of the fixed amounts set out above, shall be
reduced by a percentage which corresponds to the appor-
tioning of the price actually paid or payable.

4.
Unless otherwise specified,
concerning customs duties shall apply.

the provisions

in force

5.
The release for free circulation in the Community of the
product referred to in paragraph 1 shall be subject to the
provision of a security equivalent to the amount of provisional
duty.

Article 2

Without prejudice to Article 20 of Regulation (EC) No 384/96
interested parties may make their views known in writing and
apply to be heard orally by the Commission within one month
of the date of entry into force of this Regulation.

Pursuant to Article 21(4) of Regulation (EC) No 384/96, the
parties concerned may comment on the application of this
Regulation within one month of the date of its entry into force.

Article 3

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

Article 1 of this Regulation shall apply for a period of six
months.

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

Done at Brussels, 18 May 2000.

For the Commission

Pascal LAMY

Member of the Commission

(1) OJ L 253, 11.10.1993, p. 1.