Council Regulation (EC) No 2041/2000 of 26 September 2000 amending Regulation (EC) No 5/96 imposing definitive anti-dumping duties on imports of microwave ovens originating in the People's Republic of China, the Republic of Korea, Malaysia and Thailand
Date: 2000-09-26
Institutions: Council of the European Union
Subjects: South Korea, anti-dumping duty, customs duties, furnace, import, originating product

29.9.2000

EN

Official Journal of the European Communities

L 244/33

COUNCIL REGULATION (EC) No 2041/2000

of 26 September 2000

amending Regulation (EC) No 5/96 imposing definitive anti-dumping duties on imports of micro-
wave ovens originating in the People's Republic of China, the Republic of Korea, Malaysia and
Thailand

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European
Community,

Having regard to Council Regulation (EC) No 384/96 of 22
December 1995 on protection against dumped imports from
countries not members of the European Community (1), and in
particular Article 11(3) thereof,

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

Whereas:

A. PROCEDURE

1. Previous procedure

Following an investigation initiated in December 1993
(hereinafter referred to as the ‘original
investigation’)
under Article 7 of Regulation (EEC) No 2423/1988 (2),
the Council imposed definitive anti-dumping duties in
January 1996, pursuant to Regulation (EC) No 5/96 (3),
on imports of microwave ovens (‘MWOs’) originating,
inter alia, in the Republic of Korea. The duties applied to
all Korean exporting producers and ranged from 3,3 %
to 24,4 %.

In December 1996, the Commission initiated an invest-
igation into whether these duties had been absorbed by
the exporting producers (4). Commission Decision 98/
225/EC (5) terminated this review, however,
in March
1998 without changing the anti-dumping measures in
force.

2. Request for a review

for a partial

interim review of

A request
the anti-
dumping duty in force against it was made in February
1999 by the Korean exporting producer, LG Electronics
Inc. The request was limited in scope to an examination
of whether the continued imposition of the duty at its
current level was necessary to offset dumping for the
company concerned.

company alleged that

The
circumstances had
changed significantly in its particular case subsequent to
the imposition of the original measure due to, inter alia,
reductions in its manufacturing costs leading to lower

the

(1)

(2)

(3)

(4)

(1) OJ L 56, 6.3.1996, p. 1. Regulation as last amended by Regulation

(EC) No 905/98 (OJ L 128, 30.4.1998, p. 18).

(2) OJ L 209, 2.8.1988, p. 1.
(3) OJ L 2, 4.1.1996, p. 1.
(4) OJ C 19, 18.1.1997, p. 3.
(5) OJ L 85, 20.3.1998, p. 29.

normal values and that this had led to a situation where
the duty was no longer necessary to offset dumping. The
company also claimed that the lower costs were the
result of structural changes of a lasting nature and that
there would be no likelihood of dumping recurring in
the future.

3. Investigation

the

that

after

consulting the Advisory
Having determined,
Committee,
the
Commission initiated a partial interim review (6) (herein-
after referred to as ‘the review’), pursuant to Article
11(3) of Regulation (EC) No 384/96 (hereinafter referred
to as the ‘basic Regulation’).

evidence was

sufficient,

This notice also allowed other exporting producers in
Korea to request a review of their rates of anti-dumping
duty, provided that they could submit, within the dead-
line
the
continued imposition of the duty imposed against them
at the current level was no longer necessary to offset
dumping.

specified therein,

sufficient

evidence

that

Only one Korean exporting producer, Daewoo Electro-
nics Co. Ltd, made such a request within the deadline
and submitted the prima facie
required.
Accordingly, this company was admitted to the review.

evidence

The Commission also officially advised the repres-
entative association of the producers in the Community
of the initiation of the review and the representatives of
the exporting country. All parties directly concerned
were given the opportunity to make their views known
in writing and to request a hearing within the time limit
set in the notice of initiation.

In order to obtain the information deemed necessary for
its investigation and for the purposes of determining
whether dumping was likely to continue or recur, the
Commission sent questionnaires to the two Korean
exporting producers concerned and, where appropriate,
to their subsidiaries in the Community.

(5)

(6)

(7)

(8)

(9)

(10)

Visits to verify the replies to the questionnaires were
carried out at the premises of the following companies:

Producers in the Republic of Korea:

— LG Electronics Inc, Seoul (‘LGE’)

— Daewoo Electronics Co. Ltd, Seoul (‘DWE’)

(6) OJ C 167, 15.6.1999, p. 5.

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Official Journal of the European Communities

29.9.2000

Importers in the Community:
— Daewoo Electronics Benelux b.v, Dordrecht, Nether-

lands

— Daewoo Electronics S.A, Paris, France
— Daewoo Electronics Sales UK Ltd, Wokingham, UK

MWOs exported by each producer to the Community (cf
Article 2(2) of the basic Regulation). In this regard, it
was found that both exporting producers had sold
substantially more MWOs
in Korea than to the
Community.

(11)

The investigation concerning whether dumping had
continued following the imposition of
the definitive
duties in the original investigation was based on infor-
mation pertaining to the period from 1 April 1998 to
31 March 1999 (the ‘review investigation period’).

(18)

It was then determined whether the total domestic sales
of each MWO model which was identical or equivalent
to the model exported to the Community constituted
5 % or more of the export sales volume of that model.

B. PRODUCT UNDER CONSIDERATION AND LIKE

PRODUCT

1. Product under consideration

(12)

The product under consideration in this review is the
same as in the two previous investigations, namely
microwave ovens (‘MWOs’), currently classifiable under
CN code 8516 50 00.

2. Like product

(13) As in the two previous investigations, it was established
that MWOs produced in Korea and sold domestically
had sufficiently similar characteristics and functions to
those exported to the Community for them to be
considered as like products within the meaning of
Article 1(4) of the basic Regulation.

C. DUMPING

1. Preliminary remark

(14)

(15)

The purpose of the review is, pursuant to Article 11(3)
of the basic Regulation, to determine whether or not the
continued imposition of the anti-dumping duties against
each exporting producer is necessary to offset dumping.

This is done by determining whether either company
had continued to dump after the adoption of the anti-
dumping measures in the original
investigation and
whether there would be a likelihood of the dumping
continuing or recurring if the anti-dumping duties were
to be removed or varied.

(16) Accordingly, an examination was first made as to
the two Korean exporting producers were

whether
dumping during the review investigation period.

2. Normal value

(17)

In order to establish normal value,
it was first deter-
mined whether the total domestic sales of MWOs of
each exporting producer concerned were representative
in terms of volume,
they
accounted for 5 % or more of the total sales volume of

is to say, whether

that

(19) As one exporting producer was found to have made
sufficient domestic sales of models equivalent to those
exported to meet the 5 % test, it was then established
whether these sales had also been made in the ordinary
course of trade (cf. Article 2(4) of the basic Regulation).
It was found that the volume of domestic sales above
unit production cost represented at least 80 % of the
sales of each model, therefore normal value was estab-
lished on the basis of the weighted average price actually
paid for all domestic sales of the model concerned.

(20)

(21)

(22)

The other exporting producer was found to have made
no domestic sales of models which were identical or
equivalent to those models exported to the Community.
Consideration was
therefore given to establishing
normal value for this company on the domestic selling
prices of the other cooperating producer in Korea (cf.
Article 2(1) of the basic Regulation). However, given the
often significant differences in the physical and technical
characteristics of
the two exporting
the MWOs of
producers and the need to make substantial adjustments
to prices to take account of such differences,
this
approach was considered to be neither reasonable nor
practical.

Instead, normal value was constructed on the basis of
the cost of manufacturing incurred by the second
producer for each of the exported models in question,
selling, general and
plus a reasonable amount
administrative costs
(cf.
Articles 2(3), 2(5) and 2(6) of the basic Regulation).

(‘SG&A costs’) and profit

for

The SG&A costs added to the cost of manufacturing of
the exported models concerned were based on such
costs incurred by the exporting producer with regard to
all its sales of MWOs on the Korean market which, as
mentioned above, were found to be representative for
this purpose.

(23) As concerns the profit margin used, this was calculated
on the basis of the weighted average profit margin of the
company for those MWO models sold in Korea in the
ordinary course of trade in sufficient quantities.

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3. Export price

(24)

In cases where export sales were made directly to inde-
pendent
importers in the Community, export prices
were determined on the basis of the prices paid or
payable by these unrelated importers (cf. Article 2(8) of
the basic Regulation).

(31)

related to the

(25) However, where exports were made to importers in the
exporting
Community which were
producer in Korea, the prices charged were considered
unreliable (cf. Article 2(9) of
the basic Regulation).
Instead, export prices were constructed on the basis of
the price at which the product was resold by the related
importer to an independent buyer, adjusted for all costs
incurred between importation and resale (including
customs duties and anti-dumping duties paid), and a
reasonable margin for profit.

(26)

In the absence of any new information that profitability
in this business sector had changed, where export prices
were constructed, it was considered reasonable to retain
the profit margin of 5 % used in the two previous inves-
tigations.

4. Comparison

(27)

as

appropriate

For the purpose of ensuring a fair comparison, and in
accordance with Article 2(10) of the basic Regulation,
adjustments were made
each
exporting producer to allow for differences claimed in
respect of physical
charges,
level of trade, transport and other
discounts, rebates,
related costs, packing, credit and after-sales costs,
commissions and currency conversions costs, which
were found to affect prices and price comparability.

characteristics,

import

for

(28)

The ex-factory normal values established by model for
each company were compared at ex-factory level to the
export prices established by model of each company on
a weighted average to weighted average basis (cf. Article
2(11) of the basic Regulation).

5. Dumping margin

dumping duties imposed against either of these compa-
nies were to be removed or varied.

In this regard, the question of spare production capacity
in Korea was considered, as well as the MWO sales
trends of the two companies in Korea, the Community
and export markets other than the Community. In addi-
tion, an examination of whether such sales to non-
Community markets were non-profitable or dumped
was carried out, together with an analysis of the possible
incentives for the two exporting producers to dump
again on the Community market.

2. Capacity utilisation

(32) Analysis of data provided, together with information
received and verified during the on-spot visits, showed
that the MWO production facilities in Korea of the two
exporting producers concerned were operating almost to
their maximum installed capacities, with little scope for
extra production.

3. Sales

a) Volume

(33)

The investigation also established that between 1997
and the review investigation period, LGE and DWE both
suffered declining sales volumes in Korea, apparently
due to oversupply and falling demand on that market.

and definitive

(34) As concerns exports, LGE reduced its sales volumes to
the Community following the imposition of the provi-
sional
anti-dumping measures. The
company therefore needed to find alternative markets
for
In this regard it was
successful, as its export sales volumes to countries
outside the Community increased almost to the same
levels as those previously achieved in Korea and the
Community.

its Korean-made MWOs.

(29)

The comparison between the normal values and the
export prices, expressed as a percentage of
the cif,
free-at-Community-frontier price, showed the following
dumping margins:

LG Electronics Inc.
Daewoo Electronics Co. Ltd

0,0 %
0,0 %

exports

(35) With regard to DWE, it was noticeable that the compa-
ny's
to non-Community markets declined
slightly between 1997 and the review investigation
period; however, unlike LGE, it increased its exports to
the Community following the imposition of provisional
anti-dumping duties to a point where such sales almost
entirely offset the company's reduced sales volumes in
Korea and export markets outside the Community.

D. LIKELIHOOD OF RECURRENCE OF DUMPING

b) Prices

1. Introductory remark

(36)

(30) Although it was established that neither exporting
producer
involved in the review investigation was
dumping during the review investigation period, as
mentioned previously, a reasoned forecast also had to be
made as to whether dumping would recur if the anti-

In order to assess if there would be any incentive for the
companies to switch their exports from non-Community
countries to the Community at dumped prices if the
anti-dumping duties were to be removed or varied, a
price analysis was also made in respect of a repres-
entative sample of MWO models manufactured in Korea
and exported by each company to such markets.

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For almost all the models selected it was established that
the average sales price to independent customers in
countries outside the Community was above the cost of
production of the particular model concerned. Taken
overall,
the level of profit achieved on these MWO
models was found to be significant.

(43)

In addition, if the company were to increase production
in Korea, it is considered that further economies of scale
could be achieved,
leading to lower unit production
costs, with even less likelihood of dumping recurring in
the future.

(37)

(38)

In addition, using the general methodology outlined
to the
above concerning whether or not exports
Community were dumped in the review investigation
period, an examination was also carried out as to
whether sales to non-Community destinations were at
dumped levels. Significantly, such an analysis also failed
to show the presence of dumping on these other
markets by either of the two companies concerned.

4. Conclusion concerning likelihood of recurrence

of dumping

a) LGE

(39) With regard to its reasons for requesting the review, LGE
has not hidden the fact that it would export higher
quantities of MWOs to the Community if the current
anti-dumping duty were to be reduced. The issue, there-
fore, which has had to be assessed is whether such
increased exports would continue to be at non-dumped
levels.

(40)

(41)

In making such an assessment, it is necessary to take
into account whether the company will make use of its
limited spare production capacity in Korea to source
such sales and/or divert production and sales of MWOs
currently exported to non-Community countries.

In this regard,
the investigation showed that LGE's
Korean factory is now geared towards producing so
called ‘high-end models’, which are more sophisticated
and contain more technical features than cheaper, higher
volume ‘low-end’ MWOs (which it also used to produce
in Korea in the original investigation period). An exam-
ination of
the dumping calculations in the original
investigation was carried out within the framework of
the current investigation revealed that LGE's high-end
MWO models with high export prices tended either not
to be dumped when exported to the Community, or
dumped at much lower levels than the low-end models.

(42)

This
trend continued into the review investigation
period, where the findings of the investigation, as deter-
mined above, showed that the high-end MWO models
produced by LGE were not being sold on the
Community market at dumped price levels.

(44) With regard to whether LGE has any incentive to switch
exports of Korean-made MWOs from other third coun-
tries to the Community if the anti-dumping duty were
removed or varied,
it should be recalled that such
exports to these countries were both profitable, and at
non-dumped levels. Although the possibility exists that
the
to the
in order for them to be dumped, LGE
Community,
would have to reduce their prices significantly and,
therefore, their profits, a course of action for which
there seems little economic justification.

company might divert

such MWOs

(45)

(46)

In addition, the fact that LGE is a major producer of
MWOs in the Community must also be taken into
account when assessing the likelihood of the company
dumping again in the Community. Given that
its
production in the Community currently accounts for
between 10 and 20 % of all MWOs
sold in the
Community with EU origin, it is considered that LGE
will be less inclined in the future to destabilise prevailing
prices or otherwise cause injury to the Community
market, in which it is now a major player, by exporting
from Korea at low prices.

In view of all
unlikely that
Community would be at dumped prices.

it
the above,
the company's

is therefore considered
to the
future exports

b) DWE

(47) As with LGE, the question which the Commission has
had to consider is whether DWE's sales volumes of
MWOs at current, or even increased levels, would
continue to be at non-dumped price levels if the current
anti-dumping duty were to be removed or varied.

(48)

Significantly, the investigation showed that the company
expanded its export sales to the Community at profit-
able, non-dumped price levels, at a time when it had an
anti-dumping duty in force against it. In addition,
it
maintained high capacity utilisation in Korea and also
made profitable, non-dumped export sales on non-
Community markets.

(49) As also concerns the question of whether or not there
would be a likelihood of recurrence of dumping by
DWE in the future if the anti-dumping duty currently in
force against
this
company is also among the largest producers of MWOs
in the Community with production and sales volume
levels in the Community of MWOs with EU origin of a
similar magnitude to LGE.

it were to be removed or varied,

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(50)

lack of economic
In conjunction with the apparent
incentives to revert to its previous dumping practises, it
is considered that DWE will, like LGE, be less inclined in
the future to dump from its Korean operation and desta-
bilise or otherwise cause injury to the Community
in which it has a major economic presence.
market,

E. INJURY AND COMMUNITY INTEREST

(51) Given that the original request for a review by LGE (and
subsequent application to participate in the review by
in the current investigation was limited to an
DWE)
examination and possible revision of
the dumping
margin applicable to each company under Article 11(3)
of the basic Regulation, it was not necessary to carry out
an examination of injury or Community interest.

F. CONCLUSION

(52) On the basis of the above facts and considerations, and
in view of the information available at the present time,
it is considered reasonable to conclude that dumping by
LGE or DWE is unlikely to recur if the anti-dumping
the two companies
duties currently imposed against

were to be reduced to the level of the dumping margins
established for each of
them in the present review,
namely 0,0 %. In any event, the two exporting producers
may, in the future, be subjected to further review, if such
a course of action is considered necessary.

(53) All parties concerned were informed of the essential
facts and considerations on the basis of which the modi-
fication to the existing duties for the two exporting
producers would be based. No submissions were made,
however, by any of these parties.

(54)

This review does not affect the date on which Regulation
(EC) No 5/96 will expire (cf. Article 11(2) of the basic
Regulation), nor the rights of importers to request reim-
bursement of anti-dumping duties collected (cf. Article
11(8) of the basic Regulation),

HAS ADOPTED THIS REGULATION:

The table in Article 1(2) of Regulation (EC) No 5/96 shall, with regard to the Republic of Korea, be replaced
by the following:

Article 1

‘Country

Products manufactured by

Rate of duty
(%)

TARIC additional
code

Republic of Korea

— Daewoo Electronics Co. Ltd

— LG Electronics Inc.

— Korea Nishin Co. Ltd

— Samsung Electronics Co. Ltd

— Other companies

Article 2

0,0

0,0

24,4

3,3

24,4

8829

8830

8831

8832

8833’

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

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

Done at Brussels, 26 September 2000.

For the Council

The President

C. TASCA