Proposal for a Council Regulation amending Regulation (EC) No 119/97 imposing a definitive anti-dumping duty on imports of ring binder mechanisms originating in the People's Republic of China
Date: 2000-09-13
Institutions: European Commission
Subjects: China, anti-dumping duty, book trade, originating product

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 13.09.2000
COM(2000) 556 final

Proposal for a

COUNCIL REGULATION

amending Regulation (EC) No 119/97 imposing a definitive anti-dumping duty on
imports of ring binder mechanisms originating in the People's Republic of China

(presented by the Commission)

EXPLANATORY MEMORANDUM

The purpose of the proposal is to amend Regulation (EC) No 119/97 imposing a definitive
anti-dumping duty on imports of ring binder mechanisms originating in the People's Republic
of China.

1.

2.

3.

4.

5.

6.

The present proposal to amend the measures in force follows a finding that the
measures imposed have been to a large extent absorbed.

This finding of absorption was based on a comparison of resale prices in the
Community charged prior to the imposition of measures and those charged during
the present investigation period, which showed that there was limited movement in
resale prices since measures were imposed.

Having established that resale prices failed to adequately reflect the cost of the anti-
dumping duty, export prices were reassessed on the basis of Article 2(9) of the Basic
Regulation since there appeared to be a compensatory arrangement between the
exporters and importers. On this basis, the recalculated dumping margin for World
Wide Stationery Manufacturing Company Ltd. amounts to 115.3% of the CIF value
and for all other exporters from the People's Republic of China 168.6% of the CIF
value.

As the measures currently in force are based on the level of injury found in the
original investigation period, the revised measures should also be established by
comparing the reassessed export prices with the injury level found in the original
investigation period. Accordingly,
the proposed level of duty expressed as a
percentage of the CIF value is 51.2% for World Wide Stationery Manufacturing
Company Ltd. and 78.8% for all other exporters from the People's Republic of
China.

The consultation of the Member States in the Advisory Committee has shown that
the United Kingdom, Denmark, Italy and Ireland were opposed to the proposed
amendment, the Netherlands and Germany abstained whereas the remaining Member
States were in favour of the proposed amendment.

is therefore proposed that

It
the Council decides to amend Regulation (EC)
No 119/97 by adopting the attached Regulation which increases the measures in
force to 51.2% and 78.8% for World Wide Stationery Manufacturing Company Ltd.
and all other exporters from the People's Republic of China respectively.

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Proposal for a

COUNCIL REGULATION

amending Regulation (EC) No 119/97 imposing a definitive anti-dumping duty on
imports of ring binder mechanisms originating in the People's Republic of China

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, as last
amended by Regulation (EC) No 905/982, and in particular Article 12 thereof,

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

Whereas:

A. PROCEDURE

1. Measures in force

(1)

(2)

In January 1997, by Regulation (EC) No 119/973, the Council imposed a definitive
anti-dumping duty on imports of ring binder mechanisms ("RBM") originating in the
People’s Republic of China. The rate of the definitive duty applicable to the net, free-
at Community frontier price, was 32,5% for World Wide Stationery, which obtained
individual treatment, and 39,4% for all other companies in the People’s Republic of
China.

2. Request for a review

On 7 December 1998, a request for a review of the above mentioned measures was
lodged pursuant to Article 12 of the Council Regulation (EC) No 384/96 (hereinafter
referred to as the "Basic Regulation"). The lodging was made on behalf of the
Community producers whose collective output of ring binder mechanisms constituted
a major proportion of the total Community production of that product within the
meaning of Article 5 (4) of the Basic Regulation, namely Koloman Handler AG
(Austria) and Robert Krause Ringbuchtechnik GmbH (Germany).

(3)

The request contained information which showed that the resale and subsequent
selling prices in the European Community of the product under consideration did not
adequately reflect the level of the anti-dumping measures imposed. This information

1

2

3

OJ L 56, 6.3.1996, p.1.
OJ L 128, 30.4.1998, p.18.
OJ L 22, 24.1.1997, p. 1.

3

was based on price lists and other information obtained from the Chinese exporters
in certain Member States, exporters
and their resellers. It was also alleged that
discounted their prices immediately after the imposition of measures and that the
insufficient movement in resale and subsequent selling prices after the imposition of
measures had led to the continued erosion of prices obtained by the Community
industry.

B. REVIEW INVESTIGATION PURSUANT TO ARTICLE 12 OF THE BASIC
REGULATION

(4)

(5)

(6)

(7)

(8)

(9)

1. Initiation of the review pursuant to Article 12

On 19 January 1999, the Commission announced by a notice published in the Official
Journal of the European Communities4 the initiation of a review, pursuant to Article
12 of the Basic Regulation, of the anti-dumping measures applicable to imports of
certain imports of ring binder mechanisms originating in the People’s Republic of
China and commenced and investigation.

The Commission officially advised the producers/exporters known to be concerned,
the representatives of the exporting country and the applicant Community producers of
the initiation of the review. Interested parties 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.

The Commission services sent questionnaires to all exporters known to be concerned,
namely: World Wide Stationery Manufacturing Company Ltd., Hong Kong ("WWS");
Guangzhou Wah Hing Stationery Manufactury Limited, PRC; Hong Kong Stationery
Manufacturing Company Limited, Hong Kong; Champion Stationery Manufacturing
Co. Ltd., PRC; and Sun Kwong Metal Manufacturing Co. Ltd., PRC.

From the above exporters, only WWS, Hong Kong, provided a complete reply to the
Commission's questionnaire.

One exporting producer provided false and misleading information in its reply to the
Commission's questionnaire. The information provided by this exporting producer did
not coincide with declarations made to the national customs authorities. In fact, some
of the goods of Chinese origin were declared to national customs authorities as being
of Thai origin and thus avoided payment of the anti-dumping duties normally due.
Moreover, certain consignments from the People's Republic of China were entered
under the wrong CN code which again meant that there was no payment of the anti-
dumping duties. The precise extent of these practices could not be accurately
identified and as a result, the whole reply to the questionnaire had to be disregarded.

In these circumstances, findings had to be made on the basis of the facts available, in
accordance with Article 18 of the Basic Regulation. In this regard, the facts available
that
indicated absorption of the anti-dumping duty as demonstrated by the fact
invoices of this exporting producer showed that export prices were on an "anti-
dumping duty paid" basis, i.e. the duties were paid by the exporter.

For the other three producers/exporters, one of which refused to submit a complete

4

OJ C 14, 19.1.1999, p. 4.

4

questionnaire reply on the grounds that a full reply would impose an unreasonable and
disproportionate burden on it and for the remaining two producers/exporters which did
not make themselves known, findings were made on the basis of facts available in
accordance with Article 18 of the Basic Regulation.

(10) Questionnaires were also sent to independent importers known to have imported RBM
from the People's Republic of China so as to ascertain the resale prices of the product
concerned before and after the imposition of the anti-dumping duties. In this regard, it
should be noted that a high level of cooperation was obtained by the unrelated
importers. Replies to the questionnaires were received from the following unrelated
importers: Bensons International Systems B.V., The Netherlands, (“Bensons NL”);
Bensons International Systems Ltd, United Kingdom, (“Bensons UK”); KWH Plast
Vertriebsges. GmbH, Germany, (“KWH Germany”); KWH Plast (Danmark) AS,
Danmark, (“KWH Danmark”); and KWH Plast (UK) Limited, United Kingdom,
(“KWH UK”).

Verification visits were carried out at the premises of KWH Germany and Bensons
NL.

(11)

(12)

The investigation period of this review ("new investigation period") ran from 1
January 1998 to 31 December 1998. This new investigation period was used to
determine the level of export prices, resale and subsequent selling prices charged after
the imposition of anti-dumping measures to ascertain whether the measures were
failing to achieve their intended effects because of increased dumping.

In establishing whether resale and subsequent selling prices had moved sufficiently,
the price levels charged in the new investigation period were compared to those
charged during the original investigation period which had covered the period from 1
October 1994 to 30 September 1995.

(13) Owing to the volume of data gathered and examined, in particular in view of the
complexity of the analysis regarding the movement
in the resale and subsequent
selling prices of the unrelated importers as well as the enquiries and examination of
one exporting company's practices as set out above in recital 8, the investigation
exceeded the normal period of 6 months provided for in Article 12(4) of the Basic
Regulation.

2. Product concerned

(14)

The product concerned by the request and for which the review was initiated is the
same as in the original investigation, i.e. certain ring binder mechanisms used as
fittings for loose-leaf binders or files, but excluding lever arch mechanisms, which
consists of two or more round, arched or D-shaped sturdy metal rings. The product is
currently classifiable within CN code ex 8305 10 00.

3. Movement of export prices from the People's Republic of China and of resale

prices in the Community

(15)

The purpose of this investigation was to establish whether measures were having the
intended effects and whether any failure to have such effects was as a result of
increased dumping through a fall in export prices. For the purpose of the present
investigation, such a fall in export prices may be reflected by a fall in the direct export

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(16)

(17)

(18)

prices charged by exporters to the Community or it may be reflected in a lack of
movement or insufficient movement in resale prices or subsequent selling prices in the
Community due to a compensatory arrangement.

In this case, it was decided that the problem of absorption should be addressed in
relation to movements in resale prices of the product concerned in the Community.

The movement of resale prices in the Community was assessed separately on the one
hand, for WWS since this company had been granted individual treatment and on the
other, for the other Chinese exporters. The duty rate applicable to it is 32.5%.

The comparison was made between resale prices both prior to and following the
imposition of measures. This comparison was based on the information on resale
prices provided by the five co-operating unrelated importers in the Community. The
imports of the above five companies account for the great majority of export sales
from the People's Republic of China to the EC during the new investigation period. In
order to make a proper comparison, a sufficient degree of representativeness was
ensured during both the original and new investigation periods in terms of quantity,
value and the number of the product types sold and used for comparison.

(19)

The comparison showed that
the movement of resale prices between the two
investigation periods was limited. It was established that on a weighted average basis,
for all product types concerned and for all co-operating unrelated importers, the level
of movement was 3.1%, while prices should have increased by over 30%.

(20) With regard to the non-cooperating parties, findings were made in accordance with
Article 18 of the Basic Regulation (see recitals (8) and (9) above). In this context, the
incomplete information available to the Commission on export prices for these parties
indicated that full absorption was taking place. On this basis and given that
cooperating parties were absorbing most of the duties, it is reasonable to consider that
the non-cooperating parties were absorbing in full.

4. Claims made by interested parties

(a) General

(21)

Interested parties were provided with an opportunity to provide evidence that could
justify a lack of movement in prices in the Community following the imposition of
measures. The reasons which can justify such a lack of movement include a reduction
in the selling, general and administrative (hereinafter referred to as "SG&A") expenses
(efficiency gains) and profit of the importer or a fall
in normal value. These
allowances cannot be granted for every fall in the level of these items. Rather, they
must be restricted to those reductions which can be said to have offset the cost of the
anti-dumping duty and which consequently need not be fully reflected in the resale
prices. Credit will also be given to the importers and exporters concerned for any
amount by which the resale prices have increased between the original and the new
investigation period.

(b) Claims for change in normal value

(22)

Together with its reply to the questionnaire, WWS requested market economy status
and asked the Commission to take into account changed normal values. WWS was

6

informed, however, that a market economy status review should be pursued under
Article 11(3) of the Basic Regulation.

Similarly, other non-cooperating companies which requested a revision of normal
values in relation to a market economy treatment request were informed that the
request for market economy treatment should be pursued under Article 11(3) of the
Basic Regulation.

(c) Reduction in SG&A and profit

It was also examined whether the lack of movement of resale prices was due to a
lasting decrease in the SG&A expenses and profits of the unrelated importers. All five
co-operating importers supplied information to that effect.

It was found that for all co-operating unrelated importers, SG&A expenses had
increased by 0.86% and profits have decreased by 4.72% between the original and the
new investigation periods.

(23)

(24)

(25)

(26) As regards the changes in the profit, it was established that of the total decrease of
4.72%, 3.8% was related to offsetting the cost increases of the anti-dumping duty.
Therefore, credit of 3.8% was granted for a fall in profit at resale level, which
corresponds to 7.6% at CIF level.

(d) Increase in resale prices

(27) Credit was also granted for the amounts by which the resale prices had increased
between the original and the new investigation period. Based on the information
provided by the five co-operating importers, on an overall level, resale prices had
moved between the original and the new investigation period by 3.1%.

(28) As regards the movement in resale prices between the two investigation periods, the
co-operating unrelated importers argued that when converting national currencies into
the Euro (or its predecessor, the ECU), the exchange rates prevailing during the
original and new investigation period respectively should have been used.

(29)

In this regard, it should be noted that the methodology adopted to compare the resale
prices between both investigation periods, that is, using the exchange rate prevailing
during the original investigation period for both investigation periods, was simply used
to provide the same result as if the comparison was calculated in each national
currency. The reasoning behind the use of a single denominator was that it allowed the
calculation of a weighted average result for the Community as a whole. Movements in
exchange rates are, therefore, irrelevant.

(e) Total allowances

(30) At resale level, the overall credit granted amounted to 6.9%, i.e. 3.8% for decrease in
profit and 3.1% for increase in resale prices. Expressed as a percentage of the CIF
value, this overall credit was 13.8%.

5. Reassessment of the export prices

(31) As it was established that the resale and subsequent selling prices failed to reflect the
full amount of the anti-dumping duty, export prices were reassessed on the basis of

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Article 2(9) of the Basic Regulation. Export prices were reconstructed since there
appeared to be a compensatory arrangement between the exporters and importers. The
reassessment was made by reference to the export prices found in the original
investigation period, deducting the amount of the anti-dumping duty in force and
adding any adjustments found to be warranted i.e. any reduction in the SG&A
expenses of importers, any reduction in the profit level of importers and any amount
by which resale prices had increased since the imposition of measures.

(32)

(33)

In the case of WWS, these adjustments amounted to 13.8% at CIF level. Thus, export
prices were reassessed by taking the old export prices, deducting the anti-dumping
duty applicable to WWS, i.e. 32.5% and adding an allowance of 13.8% for decrease in
profit and increase in resale prices.

In the case of other non-cooperating exporters from the People's Republic of China,
the reassessment of the export prices was made in accordance with Article 18 of the
Basic Regulation. Consequently, export prices were re-assessed by taking the export
prices found in the original investigation and deducting the amount of the anti-
dumping duty paid. For the reasons outlined above in recital (20) no adjustments were
granted.

(34) One party alleged that export prices should not have been reassessed in accordance
with Article 2(9) of the Basic Regulation since no compensatory arrangement between
the exporters and the importers has been proven. This argument was rejected on the
grounds that it appeared that the export price was unreliable due to an association or
compensatory arrangement and this was considered sufficient reason to reassess
export prices on the basis of Article 2(9) of the Basic Regulation.

(35)

It was also argued that there was no compensatory arrangement since any decrease of
the export prices was due to an increase in the value of the US dollar to which the
Hong Kong dollar,
the currency in which sales are invoiced, was pegged. This
argument was rejected as currency movements cannot on their own, without taking
account of all factors which could have affected the dumping margins, be used to
the cost of measures in resale prices and
justify a failure to adequately reflect
subsequent selling prices. In any event,
taking account of these
movements would not have changed the result.

in this case,

6. Recalculation of the dumping margin taking account of reassessed export

prices

(36) As required under Article 12 of the Basic Regulation, the dumping margin for the
Chinese producers/exporters concerned was recalculated. This was done by comparing
the reassessed export prices with the normal values established in the original
investigation. For WWS, which has been granted individual treatment in the original
investigation, the recalculated dumping margin, expressed as percentage of the CIF
value is 115.3%. For all other Chinese exporters, the recalculated dumping margin,
expressed as percentages of the CIF value, is 168.6%.

7. New level of duties

(37)

The measures currently in force are based on the level of injury found in the original
investigation which for WWS was 32,5% and the residual duty for all other exporters
from the People's Republic of China was 39,4%. In order to ensure that injury is

8

eliminated, the revised measures should be established by comparing the reassessed
export prices with the non-injurious price found in the original investigation period.
Since the injury margin calculated on this basis is lower than the dumping margin, the
new level of the duty should be based in the former. Accordingly, the proposed level
of duty expressed as a percentage of the CIF value is 51.2% for WWS and 78.8% for
all other exporters from the People's Republic of China.

(38) One party argued that measures should not have been increased on the grounds of
Community interest since such increase would unfairly penalise importers who had
co-operated with the investigation and demonstrated that they had passed on the duties
in terms of reduced profits and increased prices. This argument cannot be accepted
since the investigation showed that the cost of the anti-dumping duty had not been
adequately reflected in the resale prices and an allowance was made for the increase in
prices and reduction in profits. In any event, Community interest is not taken into
account in Article 12 investigations as these are carried out to verify whether the
measures imposed, which were deemed to be in the interest of the Community, are
having their intended effects and that such effects are not being undermined through
increased dumping.

HAS ADOPTED THIS REGULATION:

Article 1

Article 1, paragraph 2 (b) of Regulation (EC) No 119/97 is hereby replaced by the following:

"(b) for mechanisms other than those with 17 or 23 rings (Taric code: 8305 10 00*10)

Rate of duty

Taric additional code

Malaysia

People's Republic of China:

- WWS

- all other companies

."

----

8934

8900

10,5 %

51.2 %

78,8 %

9

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

Article 2

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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