Proposal for a Council Regulation amending Council Regulation (EC) No 2398/97 imposing a definitive anti-dumping duty on imports of cotton-type bed linen originating in Egypt, India and Pakistan and suspending its application with regard to imports originating in India
Date: 2001-07-19
Institutions: European Commission
Subjects: Egypt, India, Pakistan, anti-dumping duty, import, textile product

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 19.07.2001
COM(2001) 427 final

2001/0162 (ACC)

Proposal for a

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(presented by the Commission)

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In November 1997 the Council imposed definitive, anti-dumping duties on imports of certain
bed linen originating -inter alia in India- ranging from 2,6% to 24,7%.

On 12 March 2001 the WTO Dispute Settlement Body (‘DSB’)  adopted an Appellate  Body
report and a panel report on the case "European Communities-AD duties on imports of cotton-
type  bed  linen  from  India”  (hereinafter  "the  report").  The  report  concluded  that  the
Community  acted  inconsistently  with  the  WTO  Anti-dumping  Agreement  in  a  number  of
instances, notably concerning the dumping and the injury findings.

The Panel also expressed the opinion that non-dumped imports should be excluded from the
determination of injury.

A proposal for a Council Regulation on the measures  that may  be taken  by the  Community
following WTO  Dispute  Settlement  Body  reports  concerning  anti-dumping  and  anti-subsidy
measures was adopted by the Commission on 5 July 2001.

The attached proposal for a Council Regulation is presented with a view to implementing the
recommendations  contained  in  the  report  and  reflects  the  revised  findings  following  these
recommendations,  on  the  basis  of  the  information  collected  at  the  time  of  the  original
investigation, i.e. collected in 1996/1997.

The  reassessment  of  the  findings  in  the  light  of  the  recommendations  of  the  report
demonstrated  that  imports  from  Egypt,  India  and  Pakistan  were  still  injuriously  dumped.
Revised dumping margins for India were computed.

A wider examination of the impact of the recommendations set out in the report would have
necessitated  to  give  consideration  to  alternative  methods  to  construct  normal  values  for  the
dumping calculation, excluding those found to be inconsistent in the report. However, this has
not  proved  possible  in  this  case  since  the  necessary  information  was  not  collected  in  the
original  investigation.  The  construction  of  normal  values  was  based  on  the  methodology
which the Appellate Body report advocated. However, it is considered that this methodology
is  not  appropriate  in  this  particular  case,  not  least  because  it  implies  a  discriminatory
treatment between exporters.

Consequently,  for  the  above  reasons,  it  is  not  considered  appropriate  to  continue  to  collect
duties on exports from India. In these exceptional circumstances, the best course of action is
to  amend  the  definitive  Regulation  on  the  basis  of  the  new  dumping  margins  listed  in  this
proposal and to suspend the collection of duties at the new rates, while providing all interested
parties  concerned  with  an  opportunity  to  submit  information  and  observations  and,  if
appropriate, a request for a review.

It is, therefore, proposed that the Council adopt the present proposal for a Council Regulation
imposing  a  definitive  anti-dumping  duty  on  imports  of  cotton-type  bed  linen  originating  in
Egypt, India and Pakistan and suspending its application with regard to imports originating in
India.

2

2001/0162 (ACC)

Proposal for a

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THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article
133 thereof,

Having  regard  to  Council  Regulation  (EC)  ****  >WKLV(cid:3) ZLOO(cid:3) EH(cid:3) D(cid:3) UHIHUHQFH(cid:3) WR(cid:3) WKH(cid:3) QHZ
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aving regard to Council Regulation (EC) No 384/961 (‘the Basic Regulation’), on protection
against dumped imports from countries not members of the European Community;

Having  regard  to  the  proposal  made  by  the  Commission  after  consultation  of  the  Advisory
Committee,

Whereas:

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(1) 

The Council, by Regulation (EC) No 2398/97 of 28 November 19972, as last amended
by Council Regulation (EC) No 554/20003, imposed a definitive anti-dumping duty on
imports of cotton-type bed linen originating in Egypt,  India and Pakistan ("definitive
Regulation").  The  definitive  Regulation  was  preceded  by  Commission  Regulation
(EC) No 1069/974 imposing a provisional anti-dumping duty on imports of bed linen
originating in Egypt, India and Pakistan ("provisional Regulation").

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(2) 

On  12  March  2001,  the  Dispute  Settlement  Body(cid:3) of  the  World  Trade  Organisation
('WTO')  adopted  an  Appellate  Body  report  and  a  panel  report  as  modified  by  the

1

2

3

4

OJ L 56, 6.3.1996, p. 1. Regulation  as  last  amended  by  Regulation  (EC)  No  2238/2000  (OJ  L  257,
11.10.2000, p. 2).

OJ L 332, 4.12.1997 p. 1.

OJ L 68, 16.3.2000, p. 1.
OJ L 156, 13.06.1997, p. 11.

3

                                                
Appellate  body  report  on  the  case  ’European  Communities  -  anti-dumping  duties  on
imports of cotton-type bed linen from India’ (Reports).5

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(3) 

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(4) 

The product concerned is certain bed linen of cotton fibres, pure or mixed with man-
made  fibres  or  flax  (flax  not  being  the  dominant  fibre),  bleached,  dyed  or  printed
originating in India, Pakistan and Egypt, falling within CN codes ex 6302 21 00 (taric
codes 6302 21 00*81, 6302 21 00*89), ex 6302 22 90 (taric code 6302 22 90*19), ex
6302 31 10 (taric code 6302 31 10*90, ex 6302 31 90(taric code 6302 31 90*90, ex
6302 32 90 (taric code 6302 32 90*19). The Reports do not affect the findings set out
in  the  definitive  Regulation  concerning  the  product  under  consideration  and  the  like
product.

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The  Commission  reassessed  findings  by  taking  account  of  the  recommendations  set
out  in  the  Reports  on  the  basis  of  information  which  was  collected  in  the  original
investigation  which  took  place  in  1996/97.  The  reassessment  shows  that  injurious
dumping still exists although at lower levels.

It is recalled that the investigation of dumping covered the period from 1 July 1995 to
30  June  1996  ("IP").  The  investigation  relating  to  the  parameters  relevant  in  the
context  of  the  injury  assessment  covering  the  period  from  1  January  1992  up  to  the
end  of  the  IP  (30  June  1996).  This  period  will  be  referred  to  as  "the  period
considered".

(cid:21)(cid:17)

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2.1

Introduction

(5) 

(a)

(b)

(6) 

This part sets out the reassessed findings based on the recommendations of the Reports
concerning

determination of sales, general & administrative expenses ("SG&A") and profit when
applying  Article  2(6)(a)  of  the  Basic  Regulation  for  the  purpose  of  constructed
normal values and

the practice of "zeroing" when establishing the weighted average margin of dumping.

All other calculation methods applied are those used in the original investigation. For
further details, reference is made to the  above-mentioned  provisional  Regulation  and
definitive Regulation.

2.2

Sampling

5

Document WT/DS141/9(cid:3)of(cid:3)22 March 2001.

4

                                                
(7) 

It is recalled that in view of the large number of exporters in the countries concerned,
it was decided during the original investigation to apply sampling in accordance with
Article 17 of the Basic Regulation.

2.3.

India

(8) 

(9) 

Since  only  one  out  of  the  five  companies  in  the  main  sample  for  India  had
representative global domestic sales and the profitable domestic types represented less
than 80% but more than 10% of total domestic sales, the amounts for SG&A and profit
used  to  construct  normal  value  were  those  actually  made  in  the  ordinary  course  of
trade  by  this  company,  in  accordance  with  the  first  sentence  of  Article  2(6)  of  the
Basic Regulation.

For  the  other  four  companies,  in  order  to  comply  with  the  recommendations  of  the
Reports and in accordance with  Article 2(6)(a) of the Basic Regulation, the amounts
for SG&A and profits used to construct normal value were the weighted average of the
actual  amounts  incurred  and  realised  by  the  company  with  representative  global
domestic sales mentioned above and a reserve company which had also representative
global domestic sales. It should be noted that sales not made in the ordinary course of
trade have not been eliminated when determining the profit margin attributable to the
other four companies.

(10)  No changes have been necessary as far as the original findings concerning the export
price and adjustments pursuant to Article 2(10) of the Basic Regulation are concerned.

(11)  The weighted average constructed normal value by type was compared with weighted
average  export  price  by  type,  as  determined  above.  In  compliance  with  the
recommendations  of  the  Report,  no  "zeroing"  was  applied  in  calculating  the  overall
dumping margin for each company.

(12)  The revised dumping margins expressed as a percentage of the CIF import price at the

Community frontier for India are the following :

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(13)  Co-operating  companies  not  selected  in  the  sample  for  India  were  attributed  the
average  dumping  margin  of  the  companies  in  the  sample,  weighted  on  the  basis  of
their export turnover to the Community. In accordance with Article 9(6) of the Basic
Regulation, when  calculating this average dumping margin  any  zero  and  de  minimis
margins  established  have  been  disregarded.  Expressed  as  a  percentage  of  the  CIF
import price at the Community frontier, this revised dumping margin for India is 5,7%.

5

(14)  For non co-operating companies in India a revised dumping margin was determined on
the basis of the facts available in accordance with Article 18 of the Basic Regulation.
The  level  of  co-operation  during  the  original  investigation  was  high.  Therefore,  it  is
considered appropriate to set the dumping margin for non  co-operating companies in
India  at  the  level  of  the  highest  dumping  margin  established  for  a  company  in  the
sample.  Indeed,  it  would  constitute  a  bonus  for  non  co-operation  to  assume  that  the
dumping margin attributable to exporters/producers which did not co-operate is lower
than  the  highest  found  for  a  co-operating  exporter/producer.  This  revised  residual
dumping  margin  for  India,  expressed  as  a  percentage  of  the  CIF  import  price  at  the
Community frontier, is 9,8%.

2.4.

Egypt and Pakistan

(15)  The  findings  on  dumping  with  regard  to  imports  originating  in  Egypt  and  Pakistan
have not been revised. The relevant dumping margins are set out in recitals 29 to 31 of
the definitive Regulation.

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(16)  The  findings  concerning  the  definition  of  the  Community  industry  and  standing
remain  unaffected  by  the  conclusions  set  out  in  the  Reports  (see  recital  34  of  the
definitive  Regulation).  The  same  is  true  with  regard  to  sampling  of  the  Community
industry (see recitals 58 to 61 of the provisional Regulation).

(cid:23)(cid:17)

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4.1

Preliminary remark

(17)  The  Reports  conclude  that  the  Community  acted  inconsistently  with  the  WTO
Agreement on Implementation of Article VI of the General Agreement on Tariffs and
Trade ("ADA ")

by  considering  information  for  producers  not  part  of  the  Community  industry  as

(i)
defined by the Council in analyzing the state of the industry;

by  failing  to  evaluate  all  relevant  factors  having  a  bearing  on  the  state  of  the
(ii)
Community  industry,  and  specifically  all  the  factors  set  forth  in  Article  3.4  ADA.  In  this
respect,  it  is  recalled  that  the  determinations  concerning  productivity,  stocks,  utilisation  of
capacity,  ability  to  raise  capital  or  investments,  cash  flow,  wages  and  the  magnitude  of
dumping margins were not fully described in the provisional and definitive Regulation.

The Panel also expressed the opinion that imports attributable to a  producer/exporter
found  not  to  be  dumping  could  not  be  considered  as  falling  within  the  notion  of
"dumped  imports"  for  purposes  of  injury  analysis.  However,  since  India  had  not
contested  the  injury  finding  on  this  ground  and  there  were  no  Indian  producers  who
had  been  found  not  to  be  dumping,  the  Panel  reached  no  conclusions  in  this  regard.
The  claim  that  India  had  made  –  that  non-dumped  transactions  should  be  excluded
from the injury analysis – was rejected by the Panel as unfounded.

(18)  The  injury  findings  established  in  the  original  investigation  were  reexamined  in  the
light of the Panel's conclusions. It was also examined whether the exclusion of Indian
exporters  found  not  to  have  dumped  would  have  led  to  any  change  in  the  injury
findings. The results of this reexamination are set out below.

6

(19)  The  approach  described  in  recital  62  of  the  provisional  Regulation  was  revised  by
eliminating data relating to producers which were not part of the Community industry.
In the present Regulation, the data were analysed as follows:

(i)
at  the  level  of  the  Community  industry,  for  trends  concerning  production,  sales  by
volume,  market  share,  employmentand  growth.  The  relevant  data  were  obtained  from  the
verified  questionnaire  responses  in  the  case  of  the  17  sampled  producers,  and  from  the
information collected with regard to the further 18 producers forming part of the Community
industry.

(ii)
at the level of the sampled Community producers, for the trends concerning prices and
profitability, cash flow, ability to raise capital and investments, stocks, utilisation of capacity,
wages and productivity, on the basis of the aforementioned questionnaire responses.

In addition, the magnitude of the margin of dumping was examined.

4.2

Consumption in the Community

(20)  The findings set out in recital 63 of the provisional Regulation remain unaffected by
the recommendations in the Reports. It is recalled that Community consumption of the
product concerned (as measured by production plus imports minus exports) decreased
from around 200.000 tonnes in 1992 to around 186.000 tonnes in the IP, a decrease of
approximately 7%.

Cumulation, volume, market share and prices of the imports from the three countries

4.3
concerned

(21) 

(22) 

In the original investigation it was found that dumped imports from the three countries
concerned increased from 33.825 tonnes in 1992 to 46.656 tonnes during the IP, i.e. an
increase  by  38%  during  the  period  considered.  During  the  same  period,  the  market
share  of  dumped  imports  increased  from  16,9%  to  25,1%.  (see  recital  67  of  the
provisional Regulation).

If the imports from exporters found not to have dumped are excluded, the increase in
volume  of  dumped  imports  would  remain  significant,  as  shown  in  the  table  below,
namely an increase of 30%. The market share of the remaining imports increased by
40%  during  the  period  considered.  It  still  represented  more  than  21%  of  the
Community market during the IP.

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15,2% 20,6%

21,4%

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(23)  Furthermore, it is recalled that during the period considered, the prices of imports from
India  and  Egypt  had  actually  fallen  by  up  to  18%  (see  recital  80  of  the  provisional
Regulation). This decrease is not significantly changed if the imports from the Indian
exporters found not to have dumped are excluded.

7

(24)  During  the  IP,  the  level  of  undercutting  of  the  dumped  imports  originating  in  India
ranged from 13,8% to 40,7%, expressed as percentages of the adjusted average prices
of the Community industry,  and this  is also unaffected if imports from the exporters
found not to have dumped are excluded. It is recalled that, with respect to Pakistan the
level  of  undercutting  ranged  from  27,9%  to  34,4%  and  with  respect  to  Egypt  from
23,8% to 53,7%.

4.4

Situation of the Community industry

4.4.1 General remarks

(25) 

(26) 

It should be recalled that during the original investigation, not all injury factors listed
in Article 3.4 of the ADA (Article 3(5) of the Basic Regulation) were found to have a
bearing  on  the  state  of  the  Community  industry.  This  was  the  case  for  stocks  and
capacity of production.

In addition, it was also found that some factors were in fact closely linked to a number
of injury factors set out in detail in the regulations. This was the case in particular for
productivity  with  production  and  employment,  and  cash  flow  and  return  on
investments with profitability. Accordingly, only the developments of the main injury
factors were fully addressed in the provisional and definitive Regulations.

(27)  The findings below only relate to the Community industry as defined in recital 34 of
the  definitive  Regulation.  Obviously,  the  indicators  listed  in  subparagraph  (ii)  of
recital 17 above have been established at the level of sample.

4.4.2 Stocks and capacity of production

(28)  These  indicators  were  found  not  to  have  a  bearing  on  the  state  of  the  Community

industry.

(29)  As  to  stocks,  this  is  the  case  for  two  reasons.  Firstly,  production  (e.g.  of  printed
patterns)  often  takes  place  in  response  to  or  in  anticipation  of  orders  placed  by
particular clients, thus reducing the possibility to produce purely for stocks. Secondly,
stock valuation often takes place at 31 December, which is towards the end of a peak
period  of  activity  for  the  bed  linen  sector.  Large  stock  variations  can  take  place
between  one  year and  another  simply because of  large  orders  leaving  the  warehouse
on 30 December in one season and 2 January the next. While some increase in stocks
was  observed  in  some  companies,  neither  the  complainant  nor  any  sampled
Community producer adduced increase in stocks as evidence of injury. An increase in
stocks in this sector can thus indicate increased actual or anticipated orders rather than
unsold production.

(30)  As to production capacity, the Community industry is characterised by a large number
of  highly  flexible  small  and  medium-sized  companies.  Machinery  can,  relatively
easily, be bought, sold or used for other products. Under these circumstances, reliable
capacity  of  production  figures  were  extremely  difficult  to  establish  throughout  the
period  considered  in  the  present  case.  However,  the  investigation  showed  that  many
producers  were  able  to  maintain  a  high  rate  of  capacity  utilisation  and  even  had  to
subcontract  surplus  production,  to  allow  them  to  run  at  high  utilisation  even  in
depressed periods.

4.4.3 Production, employment and productivity

8

(31)  The findings of recitals 81 and 91 of the provisional Regulation concerning production
and employment of the Community industry are confirmed. The Community industry
was  able  to  increase  its  total  production  of  bed  linen  from  39.370  tonnes  in  1992  to
42.781  tonnes  during  the  IP,  namely  an  increase  by  8,7%.  In  the  meantime,
employment  declined  by  5,3%.  This  trend  was  also  replicated  at  the  level  of  the
sampled producers.

(32)  The combination of these two factors explains the improvement in productivity of the

sampled Community producers during the period considered.

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4.4.4. Wages

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(cid:20)(cid:19)(cid:19)

(cid:20)(cid:19)(cid:21)

(cid:28)(cid:27)

(cid:20)(cid:19)(cid:26)

,3

(cid:20)(cid:20)(cid:20)

,3

(cid:20)(cid:19)(cid:26)

(33)  Despite  the  fall  in  personnel  employed  the  overall  amount  of  wages  paid  to  the
employees directly working in the bed linen sector increased by 7% during the period
considered. Average wages per employee increased by 6% from 1993 up to the end of
the  IP  but  should  be  compared  with  the  5,5%  increase  in  consumer  price  in  the
Community during the same period (see recital 86 of the provisional Regulation).

4.4.5 Sales volume, market share and price development

(34)  The figures on sales volume, value, market share and price developments as set out in
recitals 82 to 88 of the provisional Regulation refer, unless otherwise indicated, to the
sampled Community producers. They are herewith confirmed.

(35)  During  the  period  considered,  sales  by  the  Community  industry  slightly  increased
from 36.205 tonnes to 36.553 tonnes, an increase of 1%. In that period, their market
share  also  increased  slightly,  from  18,1%  to  19,7%  because  of  more  sales  of  higher
value niche products.

&RPPXQLW\(cid:3)LQGXVWU\

(cid:20)(cid:28)(cid:28)(cid:21)

(cid:20)(cid:28)(cid:28)(cid:22)

(cid:20)(cid:28)(cid:28)(cid:23)

(cid:20)(cid:28)(cid:28)(cid:24)

,3

Sales volume - tonnes

36.205

34.505

37.726

37.555

36.553

,QGH[

100

(cid:28)(cid:24)

(cid:20)(cid:19)(cid:23)

(cid:20)(cid:19)(cid:23)

(cid:20)(cid:19)(cid:20)

4.4.6 Profitability, cash flow and return on investments

(36)  The findings made in recital 89 of the provisional Regulation concerning profitability
are confirmed. Profitability of the Community industry decreased from 3,6% to 1,6%
of turnover during the period considered, namely a fall by over 50%.  In other words
Community industry’s profits shrunk from ECU 10 million in 1992 to ECU 4,6 million
during  the  IP,  namely  a  reduction  by  around  ECU  5,4  million  during  the  period
considered.

9

(37)  The cash flow generated by the Community industry developed as follows:

&RPPXQLW\(cid:3)LQGXVWU\

(cid:20)(cid:28)(cid:28)(cid:21)

(cid:20)(cid:28)(cid:28)(cid:22)

(cid:20)(cid:28)(cid:28)(cid:23)

(cid:20)(cid:28)(cid:28)(cid:24)

,3

Cash flow (000 ECU)

25.566

16.663

20.446

17.475

18.432

,QGH[

(cid:20)(cid:19)(cid:19)

(cid:25)(cid:24)

(cid:27)(cid:19)

(cid:25)(cid:27)

(cid:26)(cid:21)

(38)  Between  1992  and  the  IP  cash  flow  remained  positive  but  declined  by  28%  or  by
around  ECU 7 million.  Thus, cash flow  and  profitability  of  the  Community  industry
followed a similar decreasing trend during the period considered.

(39)  As  to  return  on  investment,  the  investigation  showed  that  the  maintenance  of  the
production  tools  was  the  main  purpose  of  the  Community  industry’s  investments
during the period considered:

&RPPXQLW\(cid:3)LQGXVWU\

(cid:20)(cid:28)(cid:28)(cid:21)

(cid:20)(cid:28)(cid:28)(cid:22)

(cid:20)(cid:28)(cid:28)(cid:23)

(cid:20)(cid:28)(cid:28)(cid:24)

,3

Profit / investments

16%

7%

14%

8%

7%

,QGH[

100

(cid:23)(cid:24)

(cid:27)(cid:26)

(cid:24)(cid:19)

(cid:23)(cid:24)

(40)  The  overall  trend  followed  by  the  return  on  investments  is  similar  to  that  of

profitability.

4.4.7 Ability to raise capital

(41)  During  the  period  considered,  the  capital  raised  via  bank  credits  by  the  Community

industry increased by 3%.

&RPPXQLW\(cid:3)LQGXVWU\

(cid:20)(cid:28)(cid:28)(cid:21)

(cid:20)(cid:28)(cid:28)(cid:22)

(cid:20)(cid:28)(cid:28)(cid:23)

(cid:20)(cid:28)(cid:28)(cid:24)

,3

Credits raised
(000 ECU)

141.400

118.700

117.000

133. 800

145.100

,QGH[

(cid:20)(cid:19)(cid:19)

(cid:27)(cid:23)

(cid:27)(cid:22)

(cid:28)(cid:24)

(cid:20)(cid:19)(cid:22)

(42)  During  the  investigation  there  was  no  claim  from  the  Community  industry  nor  any
indication  that  the  Community  industry  encountered  problems  to  raise  the  capital
needed for its activity. Given that no major investments were made by the Community
industry it can reasonably be assumed that most of the credits were used to finance the
daily activity in the bed linen sector. This additional need in  credits during the  IP  is
likely to be justified by the decrease in cash flow.

4.4.8 Growth and factors affecting domestic prices

(43) 

It  is  noted  that  the  growth  of  the  Community  industry  was  particularly  negative
between  1994  and  the  IP  in  term  of  sales  volume  (-  1  173  tonnes).  The  growth  in
market share was  very limited  in the  same period (+ 0,2 percentage  points)  and  was
even negative between 1995 and the IP. At the same time, the growth of market share
of low-priced dumped imports remained always positive and was significant. Between
1994 and the IP, dumped imports increased by 35% (+ 10 315 tonnes) and the growth
in market share was as high as 6,2 percentage points.

10

(44)  When evaluating factors affecting domestic prices the analysis focussed primarily on

the contraction of demand and raw cotton prices.

The investigation clearly showed that the gap left by Community factory closures and
the fall in imports from certain other third countries during the period considered was
filled by imports from the countries concerned, of which most of them were found to
be  dumped.  Given  that  the  prices  of  the  dumped  imports  were  the  lowest  of  all  the
operators  selling  bed  linen  on  the  Community  market  it  is  concluded  that  the
contraction  of demand  in  itself  did  not  have  an  overriding  impact  on  prices,  notably
those of the Community industry.

(45)  The price of raw cotton, which can represent up to 15% of the total cost of bed linen,
increased  significantly  during  the  period  considered.  Normally,  in  fair  market
conditions, producers should have been able to pass on this cost increase to customers.
The investigation has shown that the Community industry was not able to do so in this
case.

(46) 

It is also noted that there was significant price undercutting as described in recital 24
above.

4.4.9 Magnitude of the dumping margin

(47)  As  concerns  the  impact  on  the  Community  industry  of  the  magnitude  of  the  actual
margin of dumping, given the volume and the prices of the imports from the countries
concerned, this impact cannot be considered to be negligible.

(cid:23)(cid:17)(cid:24)(cid:17)

&RQFOXVLRQ(cid:3)RQ(cid:3)LQMXU\

(48)  The  investigation  clearly  established  that  imports  from  the  countries  concerned
significantly increased during the period considered. In terms of volume, the increase
was  as  high  as  38%  or  12.800  tonnes  and  their  market  share  increased  by  8,2
percentage points.

(49)  The  investigation  also  established  that  prices  of  the  imports  concerned  decreased
considerably  and  that  there  was  significant  price  undercutting  by  all  three  countries.
Prices declined by up to 18% and undercutting margins ranging from 11,9% to 53,7%
were found to exist.

(50)  While the Community industry, as defined above, managed to increase production and
to slightly increase its sales volume and market share by concentrating on more sales
of  higher  value  niche  products,  it  nevertheless  suffered  declining  and  inadequate
profitability, which is basically the result of prices which had not been able to reflect
the  increases  in  the  costs  of  raw  cotton  or  to  keep  pace  with  inflation  in  prices  of
consumer  goods.  The  injury  indicators  related  to  profitability  such  as  cash  flow  and
return  on  investments  also  showed  declining  trends.  The  same  holds  true  for
employment.

(51)  On  this  basis,  and  in  particular  because  of  the  declining  and  inadequate  profitability
and  price  suppression  suffered  by  the  Community  industry,  the  finding  of  the
definitive  Regulation  that  the  Community  industry  had  suffered  material  injury  is
confirmed.

11

(cid:24)(cid:17)

5.1

&$86$7,21

Introduction

(52)  Based on the above findings on dumping and injury, the causal link analysis set out in

the provisional and the definitive Regulation was likewise re-examined.

(53) 

In  compliance  with  the  Panel’s  and  the  Appellate  Body’s  recommendations,  a  causal
link  had  to  be  demonstrated  between  the  dumped  imports  and  the  situation  of  the
Community  industry,  i.e.  the  above-mentioned  35  producers.  Thus,  the  references
found  for  existing  producers  which  were  not  part  of  the  Community  industry  or
producers  which previously closed down their bed linen operations  (see  recitals 105,
109 and 110 of the provisional Regulation) were not considered relevant for the causal
link analysis.

5.2

Effect of the dumped imports

(54) 

It  is  recalled  that  dumped  imports  from  the  three  countries  concerned  increased  by
12.800 tonnes in absolute terms and by 38% in percentage terms (9.200 tonnes or 30%
if  the  imports  from  exporters  found  not  to  have  dumped  are  excluded).  The  market
share held by the dumped imports increased during the period considered from 16,9%
to 25,1%, namely by 8,2 percentage points (15,3%  to  21,4%, namely  6,1  percentage
points  if  the  imports  from  the  Indian  exporters  found  not  to  have  dumped  are
excluded).  During  the  IP, their weighted  average  undercutting  margin  was  at  around
29%.

(55)  Sales  by  the  Community  industry  increased  by  348  tonnes  and  its  market  share
increased  from  18,1%  to  19,7%,  namely  by  1,6  percentage  point.  The  Community
industry’s weighted average sales price remained by and large stable.

(56) 

It  is  also  recalled  (recital  97  of  the  provisional  Regulation)  that  the  market  for  bed
linen is characterised by product substitutability and transparency.  Large Community
purchasers  of  bed  linen,  which  can  ensure  a  high  level  of  production  capacity  and
therefore some economy of scale, are very sensitive to prices. On this basis, it can be
concluded that the low prices offered by the exporting producers  concerned, coupled
with  their  substantial  and  increasing  market  share,  have  exercised  continuous
downward pressure on prices on the Community market.

(57) 

Indeed, despite the fact that(cid:3)the Community industry managed to shift production and
sales  to  higher  value  products  in  order  to  maintain  production  and  sales’  levels,
average sales prices did not increase.

(58)  As stated in recital 99 of the provisional Regulation, price suppression and consequent
decreasing  profitability  were  the  main  indicators  to  conclude  that  the  Community
industry  suffered  material  injury.  In  view  of  the  coincidence  in  time  between  the
deterioration  of  the  state  of  Community  industry  and  the  significant  increase  of  the
low-priced dumped imports, it is confirmed that there was a direct link between these
imports and the material injury found. Thus, the conclusions set out in recitals 96 to 99
of the provisional Regulation can be confirmed.

Effects of other factors

5.3
(cid:11)(cid:24)(cid:28)(cid:12)(cid:3) The  effect  of  other  factors  on  the  situation  of  the  Community  industry  was  likewise

examined.

12

5.3.1.

Increase in raw cotton prices

(60)  The  findings  set  out  in  recitals  102  and  103  of  the  provisional  Regulation  can  be

confirmed.

5.3.2 Development of Community consumption

(61) 

It  is  recalled  that  certain  exporters  suggested  that  any  injury  being  suffered  by  the
Community industry should be ascribed to the steady decrease in total consumption of
the product concerned, by 7% between 1992 and the IP.

The investigation showed that sales by the Community industry increased slightly by
348  tonnes,  imports  from  other  third  countries  undercutting  the  prices  of  the
Community  industry  increased  by  over  5.000  tonnes,  and  dumped  imports  from  the
three  countries  concerned  increased  by  around  12.800  tonnes.  The  impact  of  the
decrease in consumption was felt notably  by Community  producers  not forming  part
of the Community industry.

(62) 

In addition, it should be recalled that the Community industry managed to increase its
sales  of  niche  products  by  adapting  and  expanding  its  existing  range  of  products  to
certain  segments  of  the  market.  Thus,  it  is  clear  that  the  Community  industry  was
hardly affected, if at all, by the developments in Community consumption.

5.3.3

Imports from other third countries

(63)  The findings in recitals 100 and 101 of the provisional Regulation remain unaffected.

5.3.4 Competition from non-complainant producers in the Community

(64)  The findings in recitals 107 and 108 of the provisional Regulation remain unaffected.

5.4

Conclusion on causation

(65)  The above analysis shows that there is a clear and direct link between the increase in
volume and the price effect of dumped imports, and the material injury suffered by the
Community industry.

(66)  The  investigation  has  shown  that  the  countries  concerned  increased  their  exports  by
38%  or  by  12.800  tonnes.  This  corresponds  to  an  increase  in  market  share  of  8,2
percentage  points(cid:17)(cid:3) It  is  clear  that  the  presence  of  increasing  volumes  of  low-priced
imports had a considerable impact on the market overall.

(67)  Although  the  Community  industry  managed  to  slightly  increase  its  sales  volume
because of higher sales of niche products, it is clear that the imports from the countries
concerned prevented that industry of taking any significant share of the market left by
other third country and Community operators during the period considered.

(68)  The direct link  between the effect  of  the  dumped  imports  and  the  injury  suffered  by
the Community industry is further demonstrated by the existence of high undercutting
margins which can  explain  the  gain in  market  share  of  the countries concerned.  It is
also  evidenced  by  the  impact  which  the  fall  in  import  price  had  on  the  Community
industry.  Prices  were  suppressed  and  profitability  fell  from  3,6%  in  1992  to  1,6%
during the IP.

13

(69)  The  analysis  of  the  effects  of  other  factors  than  dumped  imports  on  the  state  of  the

Community industry has likewise confirmed the above direct causal link.

(70)  Consequently, the conclusion reached in recital 43 of the definitive Regulation that the
dumped  imports  from  Egypt,  India  and  Pakistan  have  caused  the  material  injury
suffered by the Community industry is confirmed.

(cid:25)(cid:17)

&20081,7<(cid:3),17(5(67

(71)  The contents and conclusions reached in recitals 44 to 46 of the definitive Regulation

remain unaffected by the Reports.

((cid:17)

*5281’6(cid:3))25(cid:3)7+((cid:3)6863(16,21(cid:3)2)(cid:3)7+((cid:3)0($685(6

(72)  As  shown  above,  a  full  examination  of  the  facts  established  in  the  original
investigation  taking  account  of  the  recommendations  set  out  in  the  Reports
demonstrates  that  imports  from  Egypt,  India  and  Pakistan  were  still  injuriously
dumped. Notwithstanding this, the Council does not consider it appropriate to continue
to collect duties for exports from India for the reasons given below.

(73) 

It  is  recalled  that  the  findings  are  based  on  information  which  was  collected  in
1996/97.

(74)  A  wider  examination  of  the  impact  of  the  recommendations  set  out  in  the  Reports
would  have  necessitated  consideration  being  given  to  the  application  of  the  various
other alternatives (e.g. other methods of calculating SG&A and profit provided for in
Article  2(6)(b)(c)  of  the  Basic  Regulation)  excluding  those  found  inconsistent  in  the
Reports.  However,  this  has  not  proved  possible  in  this  case  since  the  necessary
information was not collected in the original investigation. Indeed, prior to the Reports
it was not considered relevant either to collect such information or to program it into
the  verification  process.  The  determination  of  the  profit  margin  when  constructing
normal  value  for  exporters  without  sufficient  sales  in  the  ordinary  course  of  trade  is
based  on  a  methodology  which  the  Appellate  Body  report  advocated.  However,  the
Council  considers  that  the  methodology  as  specified  by  the  Appellate  Body  is  not
appropriate  in  this  particular  case,  not  least  because  it  implies  a  discriminatory
treatment  between  exporters,  whose  own  profit  margin  is  used,  and  exporters  which
fall under Article 2(6)(a) of the Basic Regulation (i.e. for which the weighted average
SG&A and profit margins of other exporters are used). It is also in contradiction with
the principle to base in general the normal value on data relating to sales made in the
ordinary course of trade.

(75) 

In these exceptional circumstances it was considered that the best course of action is to
amend  the  definitive  Regulation  on  the  basis  of  the  dumping  margins  established  in
recitals 12 to 14 which are in all cases lower than the injury margins and to suspend
the  collection  of  duties  at  the  rates  established  above  while  providing  all  interested
parties  concerned  with  an  opportunity  to  submit  information  /  observations  and,  if
appropriate, a review request.

(76)  All parties directly concerned, i.e. the Indian authorities, the Indian exporters and their
association  and  the  Community  industry,  received  disclosure  of  the  reassessed
findings  and  were  given  an  opportunity  to  comment  and  to  be  heard.  The  oral  and
written comments submitted by these parties were considered but have not altered the
conclusions reached in the present Regulation.

14

(77)  Any  requests  for  a  review  and  any  observation/submission  of  information  must  be

made in writing and be sent to the following address:

European Commission
Directorate General for Trade
Directorates B and C
TERV - 0/13
Rue de la Loi/Wetstraat 200
B-1049 Brussels
Fax (32 2) 295 65 05
Telex COMEU B 21877.

(78) 

If no review is initiated within six months from the entry into force of this Regulation
on the  basis of a  review  request by any interested parties, the anti-dumping measure
shall automatically expire with regard to imports originating in India. If such review is
initiated  within  the  aforementioned  six  months  period,  suspension  shall  continue
during the review investigation.

HAS ADOPTED THIS REGULATION:

$UWLFOH(cid:3)(cid:20)

Paragraphs 2, 3 and 4 of Article 1 of Council Regulation (EC) 2398/97, as last amended by
Council Regulation (EC) No 554/2000, are hereby amended as follows:

The  rate  of  duty  for  India  specified  in  paragraph  2  is  9,8%  (Taric  additional  code

The  rate  of  duty  for  India  specified  in  paragraph  3  is  5,7%  (Taric  additional  code

a.
8900).

b.
8042).

c.

The rates of duty for the Indian companies specified in paragraph 4 are as follows:

&RXQWU\

India

0DQXIDFWXUHU

Anglo French Textiles
The Bombay Dyeing & Manufacturing Co. Ltd
Nowrosjee Wadia & Sons Ltd
Madhu Industries Ltd
Madhu International
Omkar Exports
Prakash Cotton Mills Ltd

5DWH(cid:3)RI
GXW\
9,8%
5,5%
5,5%
3,0%
3,0%
0,0%
0,0%

7DULF
DGGLWLRQDO(cid:3)FRGH
8044
8045
8045
8046
8046
8047
8048

$UWLFOH(cid:3)(cid:21)

The  application  of  the  anti-dumping  duty  specified  in  Article  1  is  hereby  suspended

1.
with regard to imports originating in India.

The  anti-dumping  duty  specified  in  Article  1  expires  six  months  after  the  entry  into
2.
force of this regulation with regard to India unless a review has been initiated before that date.
During such a review investigation, if any, the application of the anti-dumping duty remains
suspended pursuant to paragraph 1.

15

$UWLFOH(cid:3)(cid:22)

This  Regulation  shall  enter  into  force  on  the  day  of  its  publication  in  the  2IILFLDO

1.
-RXUQDO(cid:3)RI(cid:3)WKH(cid:3)(XURSHDQ(cid:3)&RPPXQLWLHV(cid:17)

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

2.
States.

Done at Brussels,

)RU(cid:3)WKH(cid:3)&RXQFLO
7KH(cid:3)3UHVLGHQW
>«@

16