Council Regulation (EC) No 311/2002 of 18 February 2002 imposing a definitive anti-dumping duty on imports of certain magnetic disks (3,5″ microdisks) originating in Hong Kong and the Republic of Korea
Date: 2002-02-18
Institutions: Council of the European Union
Subjects: Hong Kong, South Korea, anti-dumping duty, import, magnetic medium, originating product

21.2.2002

EN

Official Journal of the European Communities

L 50/13

COUNCIL REGULATION (EC) No 311/2002

of 18 February 2002

imposing a definitive anti-dumping duty on imports of certain magnetic disks (3,5(cid:1) microdisks)
originating in Hong Kong and the Republic of Korea

THE COUNCIL OF THE EUROPEAN UNION,

(3)

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(2) thereof,

In December 1999 the product scope of the measures
was clarified. It was found that the microdisks based on
servo tracking technology or
optically continuous
magnetic sector servo tracking technology with a storage
capacity of 120 MB or more did not fall under the
scope of any of the existing anti-dumping measures on
3,5(cid:1) microdisks (6).

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

Current investigation

Whereas:

A. GENERAL INFORMATION

1. Procedure

Previous investigations

In September 1994, by Regulation (EC) No 2199/94 (2),
the Council imposed definitive anti-dumping measures
on imports of certain magnetic disks (‘3,5(cid:1) microdisks’)
originating in Hong Kong and the Republic of Korea
(‘Korea’).

(4)

Following the publication of the notice of impending
expiry of
the anti-dumping measures applicable to
imports of 3,5(cid:1) microdisks originating in Hong Kong
and Korea, the Commission received, in June 1999, a
request to review these measures pursuant to Article
11(2) of Regulation (EC) No 384/96 (‘the basic Regula-
tion’). The request was lodged by the Committee of
European Diskette Manufacturers (‘Diskma’) on behalf of
producers whose combined output constitutes a major
proportion of the total Community production of 3,5(cid:1)
microdisks (‘the product concerned’). The request was
based on the grounds that the expiry of the measures
would be likely to result in the continuation or recur-
rence of dumping and injury to the Community
industry.

(5)

after

consulting the Advisory
Having determined,
Committee, that sufficient evidence existed for the initia-
tion of an expiry review, the Commission initiated an
investigation (7) pursuant to Article 11(2) of the basic
Regulation.

Proceedings concerning other countries

Apart from measures on 3,5(cid:1) microdisks originating in
Hong Kong and Korea, it is recalled that definitive anti-
dumping duties have also been imposed on imports of
3,5(cid:1) microdisks originating in Japan, Taiwan and the
People's Republic of China (3) and Indonesia (4). The
measures on imports of 3,5(cid:1) microdisks originating in
Japan, Taiwan and the People's Republic of China are
currently subject to an expiry review (5).

(6)

(1) 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).

(2) OJ L 236, 10.9.1994, p. 2. Regulation as last amended by Regula-

tion (EC) No 2537/1999 (OJ L 307, 2.12.1999, p. 1).

(3) Regulation (EC) No 2861/93 (OJ L 262, 21.10.1993, p. 4). Regula-

tion as last amended by Regulation (EC) No 2537/1999.

(4) Regulation (EC) No 1821/98 (OJ L 236, 22.8.1998, p. 1). Regula-

tion as last amended by Regulation (EC) No 2537/1999.

(5) OJ C 322, 21.10.1998, p. 4.

Period of investigation

The investigation of the likelihood of continuation and
recurrence of dumping covered the period from 1
September 1998 to 31 August 1999 (‘IP’). The exam-
ination of
the
injury
likelihood of continuation and recurrence of
covered the period from 1995 up to the end of the
investigation period (‘the analysis period’).

for the assessment of

trends relevant

(6) Regulation (EC) No 2537/1999 (OJ L 307, 2.12.1999, p. 1).
(7) OJ C 256, 9.9.1999, p. 3.

(1)

(2)

L 50/14

EN

Official Journal of the European Communities

21.2.2002

2. Parties concerned by the investigation

technology, and they all show a high degree of inter-
changeability.

(7)

(8)

(9)

(10)

(11)

The Commission officially advised the four Community
producers supporting the request, the exporting produ-
cers and the importers known to be concerned as well as
the representatives of the exporting countries of the
initiation of
the investigation, and gave the parties
directly concerned the opportunity to make their views
known in writing and to request a hearing.

Community

The Commission sent questionnaires
to all parties
known to be concerned and received full replies from
three
cooperating
producers
Community producers’) and one unrelated importer of
3,5(cid:1) microdisks originating in Hong Kong. No complete
replies were received from any exporting producers in
either Hong Kong or Korea.

(‘the

(12) On this basis, the 3,5(cid:1) microdisks as defined above are

to be considered as one product.

Like product

(13)

The various types of 3,5(cid:1) microdisks, as defined above,
which are manufactured and sold in the Community,
and those manufactured and sold in the countries
concerned or exported to the Community are alike in
their essential physical characteristics and technology
and show a high degree of interchangeability. Therefore,
they are considered to be like products within the
meaning of Article 1(4) of the basic Regulation.

The Commission sought and verified all
information
they deemed necessary for the purposes of determining
whether there was a likelihood of a continuation or
recurrence of dumping and injury and whether main-
the
taining the measures would not be
Community interest.

against

Verification visits were carried out at the premises of the
following companies:

Cooperating Community producers

— Sentinel N.V., Bodem, Belgium;

— Computer Support Italcard srl, Milan, Italy;

— Datarex srl, Assemini, Italy.

Importers

— Datamatic srl, Milan, Italy.

3. Product concerned and like product

(14)

(15)

Product concerned

B. LIKELIHOOD OF CONTINUATION OR RECURRENCE

OF DUMPING

1. General

The market share represented by imports of 3,5(cid:1)micro-
disks from Hong Kong was significant at the time of the
investigation, when it represented more than
original
10 % of
In the
the total Community consumption.
period following the imposition of the anti-dumping
measures, this market share decreased to 5,5 % in 1997
and during the IP of this investigation,
it represented
7,3 % of the total Community consumption.

the original

the time of

The market share represented by imports from Korea
represented at
investigation
more than 2 % of the total Community consumption.
After the imposition of the anti-dumping measures, the
market share of Korean imports decreased substantially,
and during the IP it represented less than 0,2 % of the
total Community
product
consumption
concerned.

the

of

The product concerned is the same as in the original
investigation and as clarified subsequently,
i.e. 3,5(cid:1)
microdisks used to record and store encoded digital
CN code
computer
ex 8523 20 90, with the exception of 3,5(cid:1) microdisks
based on optically continuous servo tracking technology
or magnetic sector servo tracking technology with a
storage capacity of 120 MB or more.

falling within

information

The 3,5(cid:1) microdisks concerned are available in various
types, depending on various factors, including, amongst
others, their storage capacity, formatting, degree of certi-
fication (this is a measure used to test the performance
of the microdisk which influences its market value) and
on the way in which they are marketed, i.e. whether sold
as branded products or in bulk. Despite the existence of
various types of 3,5(cid:1) microdisks, there are no significant
differences in their basic physical characteristics and

(16) As far as Hong Kong is concerned, four out of the 10
companies contacted came forward and stated that they
were no longer producing or
selling the product
concerned to the Community. The remaining companies
did not reply at all to the questionnaire.

(17)

In the case of Korea, neither of the two companies
named in the request for a review replied to the ques-
tionnaire. During the investigation no indication of the
existence of other Korean exporting producers was
found.
It should be recalled that only one company
cooperated in the investigation which led to the adop-
tion of the anti-dumping measures.

(18) Under these circumstances, findings concerning Hong
Kong and Korea were established on the basis of the
facts available, in accordance with Article 18 of the basic
Regulation.

21.2.2002

EN

Official Journal of the European Communities

L 50/15

(19)

(20)

(21)

2. Continuation of dumping

(a) H o n g K o n g

Normal value

In view of the non-cooperation, normal value was estab-
lished on the basis of the information provided in the
request for review, which was the only reliable informa-
tion available. The use of the normal value established in
the original
inappropriate,
investigation would be
because prices and costs for the manufacturing of the
product concerned have decreased significantly over the
period on all known international markets.

In the request, normal value was constructed separately
for bulked and branded/packed microdisks, by adding to
the cost of production of the product concerned in the
European Community a reasonable margin of profit
(10 %, as in the original investigation). Given the nature
of data available for the export price, i.e. Eurostat, which
does not distinguish between different types, a single
weighted average normal value was established. The
weighing was done on the basis of the export shares of
bulked
the
Community, as evidenced by the few import invoices
available. On the basis of this information, it was estab-
lished that 3,5(cid:1) microdisks marketed in bulk represented
almost 80 % of
in the
Community, while the remaining 20 % were branded/
packed microdisks.

branded/packed microdisks

the imports of microdisks

and

to

The Hong Kong Economic and Trade Office (‘HKETO’)
objected to the possible use of the cost of production
submitted in the request for review to establish the
normal value for Hong Kong exports. However, the only
alternatives suggested by the HKETO were the use of
either the domestic sales or the cost of production in
Hong Kong. As none of these methods could be applied
because of the non-cooperation, the evidence provided
by the complainant remained the most reliable informa-
tion available to the Commission. After disclosure, the
HKETO claimed that normal value should instead have
been based on the exports from Hong Kong to other
countries, as resulting from Hong Kong's trade statistics.
This claim was rejected, notably as these trade statistics
(at the 6 digit level of the international nomenclature:
Harmonised System) also include products other than
the product under consideration.

Export price

(22)

In view of the non-cooperation, the export price was
established on the basis of Eurostat data. However, Euro-
stat figures (on a per month and individual Member
State basis) sometimes showed high unit values that
were entirely irreconcilable with sales prices of 3,5(cid:1)
microdisks in the Community. This seems to be due to

the fact that other products such as CD-Rs have been
recorded under the CN code covering 3,5(cid:1) microdisks.
The Eurostat figures concerning the IP were therefore
adjusted in order to exclude monthly data having an
average unit value higher than 0,17 EUR/unit. This was
a very conservative approach because:

significantly

— the export prices for Hong Kong set out in the
review request were
below this
threshold. The import prices resulting from the
invoices made available by the sole cooperating
unrelated importer
in the Community, which
however represented only a small share in the total
import volume from Hong Kong were also signifi-
cantly below this level;

— the threshold of 0,17 EUR/unit corresponds to the
weighted average unrelated importers/Community
producers' resale/selling price of 3,5(cid:1) microdisks in
the Community market during the IP. The weighing
was carried out on the basis of sales quantities of the
Community industry and the total import volumes
of 3,5(cid:1) microdisks from all origins. It was in fact
reckoned that
imports from Hong Kong should
reasonably not take place at cif Community frontier
average prices higher than the average resale/selling
prices prevailing in the Community market.

The HKETO claimed that the abovementioned methodo-
logy was arbitrary and incorrect, and that values and
quantities reported under the total CN code should have
been used to calculate the export price. This claim is
rejected for the reasons outlined above.

Comparison

(23) Normal value and export price were compared on an
ex-works basis, in accordance with Article 2(10) of the
basic Regulation. Due allowance in the form of adjust-
ments was made for differences in transport, insurance,
handling, loading and ancillary costs on the basis of the
information contained in the request for a review.

(24)

(25)

Dumping margin

In accordance with Article 2(11) of the basic Regulation,
the weighted average normal value was compared with
the weighted average export price to the Community.

exceeded the

This comparison showed the existence of a margin of
dumping of between 10 % and 15 %,
the dumping
margin being equal to the amount by which the normal
a
value
percentage of the cif import price at the Community
border, duty unpaid. This compares with a residual
margin of dumping of 27,4 % established in the course
of the original investigation (when individual dumping
margins ranged from 6,7 % to 13,3 %).

export price,

expressed as

L 50/16

EN

Official Journal of the European Communities

21.2.2002

(26)

Should the comparison be made between the normal
value calculated as described in recitals 17 to 19 and the
export prices obtained from the invoices made available
from the cooperating unrelated importer, the dumping
margin would be even bigger. However, as mentioned
above, this importer only accounted for a fairly small
imports from Hong Kong.
share of total

Conclusion

(27)

The above findings show the existence of a continuation
of dumping for imports of 3,5(cid:1) microdisks originating
in Hong Kong established on the basis of significant
export volumes.

(b) K o r e a

Methodology

by

the

following

(28) Normal value and export price concerning Korea were
established
same methodology
described above for Hong Kong, though in the case of
Korea no import invoices were available from the coop-
erating unrelated importer. The comparison between
normal value and export price was also carried out by
applying the same methodology used for Hong Kong. It
should however be noted that the results of the exam-
ination of continuation of dumping were not decisive in
this case in view of the low volume of imports from
Korea as described at recital 49.

(29)

(30)

Dumping margin

In accordance with Article 2(11) of the basic Regulation,
the weighted average normal value was compared with
the weighted average export price to the Community.

exceeded the

This comparison showed the existence of a margin of
dumping of between 20 % and 25 %,
the dumping
margin being equal to the amount by which the normal
a
value
percentage of the cif import price at the Community
border, duty unpaid. This compares with a margin of
dumping margin of 8,1 % established in the course of
the original

export price,

expressed as

investigation.

Conclusion

(31)

The above findings show the existence of a continuation
of dumping for imports of 3,5(cid:1) microdisks originating
in Korea, although the import volumes on the basis of
which this conclusion had been reached were very small.

3. Likelihood of recurrence of dumping

(a) H o n g K o n g

(32)

The market share represented by imports of 3,5(cid:1) micro-
disks from Hong Kong was significant at the time of the
investigation, when it represented more than
original
10 % of
In the
the total Community consumption.
period following the imposition of the anti-dumping
measures, this market share decreased to 5,5 % in 1997,

(33)

(34)

(35)

(36)

it represented 7,3 % of the total
and, during the IP,
Community consumption. It should also be mentioned
that imports from Hong Kong have shown, after the IP,
a significant decrease.

The HKETO claimed, at the initiation of the invest-
igation, that there was only one Hong Kong exporting
producer of 3,5(cid:1) microdisks still active in the market
and that the production capacity of this company,
if
too limited to cause injury to the
exported, was
Community industry even if the anti-dumping duties
were allowed to lapse. In addition, after disclosure, the
HKETO claimed that after the IP production of micro-
disks in Hong Kong had ceased altogether and that
recurrence of
therefore there was no likelihood of
dumping any more.

In this respect, it should be pointed out that Hong Kong
has held a substantial market share throughout
the
period analysed (mostly around 7 %). It should also be
noted that imports of 3,5(cid:1) microdisks from Hong Kong
significantly decreased after the IP while there was a
commensurate increase of imports of this product from
Macao which is not subject to anti-dumping measures.
Following disclosure, the HKETO has provided informa-
tion claiming that production and exports
to the
Community of microdisks originating in Hong Kong has
ceased after the IP. However, this cannot compensate for
the fact that manufacturing activities for the product
concerned have been found to be mobile and, if meas-
ures were repealed it is likely that certain exporting
producers would relocate their production back to Hong
Kong, or resume their export should they only have
suspended them temporarily. It should also be noted
that, because of
the lack of cooperation shown by
exporting producers during the IP, it was not possible to
ascertain whether the source(s) of dumped exports had
indeed ceased its(their) activities after the IP.

(b) K o r e a

the original

the time of

The market share represented by imports from Korea
represented at
investigation
more than 2 % of the total Community consumption.
After the imposition of the anti-dumping measures, the
market share of Korean imports decreased substantially,
and during the IP it represented less than 0,2 % of the
product
consumption
total Community
concerned. It was therefore considered whether there
was a likely risk of a recurrence of dumping of Korean
imports at above de minimis levels.

the

of

Two companies had been named in the request for a
review as producers of the product concerned, however
neither of them cooperated. For one of these two produ-
cers, exports to the Community represented a very
substantial proportion of its total sales during the orig-
inal
this company had a
production capacity which used to satisfy an important
part of Community consumption (close to 5 %). In the
absence of cooperation by this company, it can therefore
be assumed that substantial unused production capacity

investigation. Moreover,

21.2.2002

EN

Official Journal of the European Communities

L 50/17

still exists in Korea which could be exploited, should the
measures be repealed.
Information available indicates
that this producer is still manufacturing the product
concerned.

investigation. Furthermore, even when taking these
producers into account,
the cooperating Community
producers would still represent more than 25 % of
production taking place in the Community. The HKETO
claim was, therefore, rejected.

(37) Moreover, given the abovementioned ease of relocation
of production for the product concerned, it cannot be
excluded that certain exporting producers would relo-
cate their production back to Korea, should they have
shifted production to locations outside Korea.

(38) As imports from Korea were made at significantly
dumped prices, albeit in limited quantities, and as spare
production capacity is reckoned to exist in the country
and in view of the possibility of a relocation of produc-
tion,
is concluded that, should the measures be
repealed, there is a likelihood of recurrence of dumping
at significant export volumes.

it

(44) On this basis and given that the cooperating Community
producers represent a major proportion,
in this case
more than 75 %, of the Community production, they are
the Community
therefore
industry within the meaning of Article 4(1) and Article
5(4) of
the basic Regulation. They are hereinafter
referred to as the ‘Community industry’.

considered to constitute

D. THE COMMUNITY MICRODISKS' MARKET

C. DEFINITION OF THE COMMUNITY INDUSTRY

1. General

(39)

In the Community, during the IP, 3,5(cid:1) microdisks were
manufactured by:

(45)

— three Community producers, which fully cooperated
with the Commission during the investigation;

— another producer which supported the request for

review but did not supply data;

— other economic operators related to Japanese, Taiwa-

nese and Chinese exporting producers.

(40) As in the previous proceedings, the Commission found
that the assessment of the situation of the Community
industry would be distorted if Community producers
related to those producers from countries involved in
prior proceedings found to be dumping the product
concerned, and causing material injury to the applicant,
the
were not
‘Community production’. Consequently, the production
of the economic operators which are related to produ-
cers in the countries concerned have been excluded from
the definition of the ‘Community production’.

excluded from the definition of

(41)

(42)

The production of the three cooperating Community
producers and of the other producer supporting the
complaint constitute therefore the Community produc-
tion within the meaning of Article 4(1) of the basic
Regulation.

The HKETO argued that companies related with Japa-
nese, Taiwanese or other non-Community-owned
producers should not be excluded from the definition of
the Community production and stated this exclusion
inflated the applicants' standing.

(46)

(47)

(43) As explained above, these producers were excluded from
the definition of the Community production, because
they were found to be related to parties dumping on the
Community market and no reasons have been given as
to why this approach should be changed in the review

The market
for 3,5(cid:1) microdisks is mature, and is
currently characterised by a situation of falling demand.
Other products such as Zip discs, other high capacity
microdisks such as HiFDs and optical-magnetic data
storage media, such as recordable compact disks (CD-Rs)
are progressively replacing the market held by 3,5(cid:1)
microdisks. However, given the significant base of PCs
with 3,5(cid:1) microdisk disk drives incorporated (currently
estimated at 30 million units in the Community), it is
clear that there will be a continuing need for these
microdisks in the Community. Furthermore, according
to recent market
studies, most PC manufacturers
continue to incorporate 3,5(cid:1) microdisk drives in the
basic configuration of their machines. It is estimated that
by the year 2002 there will be 38 million microdisk
drives in the Community. The Community microdisk
market will therefore remain important.

2. Consumption

of

3,5(cid:1) microdisks

on

the

Community market

Figures for consumption in the Community are based on
information contained in the request for review crossed
checked by verified production and sales
figures
provided by the Community industry and total import
volumes obtained from Eurostat.

In Eurostat data however, 3,5(cid:1) microdisks are only a
part of the CN heading concerned. During the analysis
period they were deemed to be by far the largest part of
this heading since the market
for other non-rigid
magnetic discs was very small. It has become evident to
the Commission that in 1998 and 1999 some record-
able CDs (CD-Rs) were misdeclared to the customs
authorities under
this CN heading. Volume import
figures were corrected using detailed confidential statist-
ical

information to reflect this misdeclaration.

L 50/18

EN

Official Journal of the European Communities

21.2.2002

(48)

Consumption fell by 50 % during the analysis period.

Total consumption of 3,5(cid:1) microdisks in the
Community

1995

1996

1997

1998

Millions of units

1 300

1 100

1 000

Index 1995 = 100

100

85

77

800

62

IP

650

50

3. Imports from the countries concerned

Preliminary remark

(49) Due to the lack of cooperation, Eurostat and custom information (TARIC) was used to estimate
imported volumes. For Hong Kong, the Commission has used custom information concerning the
product concerned for 1995 to 1998. For the IP, it was considered that 20 % of the trade registered
by Eurostat under the relevant heading could be linked to a misdeclaration of CD-Rs and volumes
were corrected accordingly, while prices were estimated as explained at recital 20. For Korea, the
custom information was used across the analysis period for volume and prices.

Volume and market share

(50)

Based on the above methodology, the development of the volume of imports of 3,5(cid:1) microdisks into
the Community was as follows:

Imports into the Community
(millions of units) and market share (%)

Imports from Hong Kong

1995

89,1

1996

72

1997

54,7

1998

62,1

IP

47,2

Market share Hong Kong

6,9 %

6,5 %

5,5 %

7,8 %

7,3 %

Imports from Korea

5,7

1,7

0,1

0,5

1,2

Market share Korea

0,5 %

0,2 %

0 %

0,2 %

0,2 %

imports from Hong Kong and

94,7

73,7

54,8

62,6

48,4

Total
Korea

Total market share of Hong Kong and
Korea

7,3 %

6,7 %

5,5 %

7,8 %

7,4 %

(51)

(52)

(53)

(54)

The volume of imports from Hong Kong fell throughout the analysis period from 89 million units in
1995 to 47 million units during the IP. The market share of imports originating in Hong Kong fell
initially from 6,9 % in 1995 to 5,5 % in 1997 before rising again in 1998, to reach 7,3 % in the IP.

The volume of imports from Korea was at low levels throughout the period analysed, falling from 6
million units in 1995 to almost zero in 1997 and rising to just over 1 million units during the IP.
Korean market share remained at negligible levels throughout the analysis period.

Price behaviour of exporting producers

The Commission compared average cif prices of imports originating in Hong Kong and in Korea
with sales prices of the Community industry in the Community.

The comparison showed, on a weighted average basis, that the prices of the imports originating in
Hong Kong were 5 % lower than those of the sales of the Community industry during the IP, and
that the prices of the imports originating in Korea were 14 % lower than those of the sales of the
Community industry during the IP.

21.2.2002

EN

Official Journal of the European Communities

L 50/19

4. Imports from other third countries

(55) During the IP, imports from other countries develop as follow. They were originating mainly in India

and Singapore (5,7 % and 8,7 % of market share respectively).

Imports
million of units)

from other

countries

(in

637,5

237,6

198,4

167,5

190,5

Market share imports from other
countries

49,0 %

21,6 %

19,8 %

20,9 %

27,9 %

5. Situation of the Community industry

Production, capacity and capacity utilisation

(56)

The production volume of the Community industry decreased by 30 % over the analysis period.
Over the same period, the rate of capacity utilisation by the Community industry decreased by 29
percentage points.

Production in million of units

Index 1995 = 100

Capacity in million of units

Capacity utilisation

Sales, market share and growth

1995

225

100

234

96 %

1996

208

92

273

76 %

1997

190

84

235

81 %

1998

178

79

240

74 %

UP

157

70

235

67 %

(57)

Sales made by the Community industry decreased by 31 % over the analysis period. Whilst the total
Community consumption for 3,5(cid:1) microdisks has decreased over the analysis period by 50 %, the
Community industry's market share has increased by 6 percentage points. This gain reflects a
consolidation of the position of the Community industry that was permitted by anti-dumping
measures in force.

Sales of 3,5(cid:1) microdisks in the Community
by the Community industry

1995

1996

1997

1998

Millions of units

Index 1995 = 100

218

100

205

94

187

86

168

77

IP

149

69

Percentage market share

17 %

19 %

19 %

21 %

23 %

Price development

(58)

The development of prices of the Community industry for sales to unrelated customers during the
analysis period is as follows. Prices fell by 44 % during the analysis period.

Development of prices of 3,5(cid:1) microdisks
of the Community industry

1995

1996

1997

1998

IP

Average price per unit (euro)

0,2599

0,2065

0,1796

0,1531

0,1453

Index 1995 = 100

100

79

69

59

56

Inventories

(59)

Inventories are relatively stable over time and therefore they do not add any relevant information as
to the situation of the Community industry.

L 50/20

EN

Official Journal of the European Communities

21.2.2002

Profitability, return on investments and cash flow

(60)

It was found that throughout the analysis period, the Community industry had recorded financial
results (i.e. losses) which were well below the profit rate deemed appropriate for the Community
investigation. Profit levels for 1995 are not available due to industry
industry in the original
restructuring. Overall during the analysis period, losses fell from − 5,57 % in 1996 to − 1,75 % in the
IP.

(61)

Return on investments has been negative during the analysis period and, in general terms, in line
with the trend of profitability. Cash flow has slightly improved in line with profitability.

Employment, productivity, wages

(62)

Between 1995 and the IP, the Community industry reduced its labour force by 35 % from 252 to
163 employees. Accordingly, its productivity rose by 9 % during the same period, and total wages
decreased by 23 % (wages per employee increased by 19 %).

Investments and ability to raise capital

(63)

Production of 3,5(cid:1) microdisks is capital intensive and production facilities typically operate 24 hours
daily all year round. After some insignificant investments made in 1995 and 1996, there has been
no new net investment in this industry.

(64)

The losses experienced during the analysis period were such that no financing for new investment by
the Community industry was possible during the last three years.

Exports by the Community industry

(65)

The exports remained stable between 2 and 3 % of total turnover over the analysis period.

Magnitude of dumping margin and recovery from past dumping

(66)

The situation of the Community industry improved to a certain extent after the imposition of
measures, but it has not completely recovered from past dumping as evidenced mainly from its weak
financial situation.

(67) As concerns the impact on the situation of the Community industry of the magnitude of the actual
margin of dumping during the IP, this is not considered a relevant factor in the present review
examination as the imposition of duties is meant to remedy the dumping found.

Submission by the Hong Kong Economic and Trade Office

(68)

(69)

The HKETO claimed that the Community industry has had good economic results during the
analysis period, taking into account the decrease in demand and that it was not showing any
weakness. They also claimed that, because of the declining trend in the volume and value of imports
from Hong Kong,
it was doubtful that these imports had caused an injury to the Community
industry and would do so in the future.

These claims could not be accepted. Indeed, the above analysis describes the situation of the
Community industry as improved in a difficult context of declining demand although it is clearly
concluded that this industry has not completely recovered from past dumping from Hong Kong and
from other countries subject to anti-dumping measures. Moreover,
it must be underlined that
imports from Hong Kong continued to be dumped as concluded at recital 25 and that Hong Kong
was the largest supplier to the Community during the IP, with a market share of more than 7 %.
Finally, it must be stressed that, in the context of an expiry review, it is necessary to establish
whether there is a likelihood of recurrence of injury should measures expire.

21.2.2002

EN

Official Journal of the European Communities

L 50/21

Conclusions

(70)

The overall picture that emerges of the situation of the Community industry from the foregoing is
that of an industry still in a weak situation, despite an improved market share and a successful effort
at significantly reducing costs of production (reduced by 40 % over the period examined). Production
methods have been modernised and facilities are now almost entirely automated in order to improve
efficiency, maintain market share and maximise profits. However, the Community industry has not
yet been able to reach a satisfactory financial situation.

E. LIKELIHOOD OF CONTINUATION AND/OR RECURRENCE OF INJURY

(71)

It is recalled that it was concluded at recitals 33 and 37 that a likelihood of a recurrence of dumping
in significant volumes existed for both Hong Kong and Korea.

(72)

It was concluded above that the Community industry was in a vulnerable situation during the IP.

(73)

(74)

Should measures expire, dumped imports from Hong Kong and Korea are likely to push down the
prices of the Community industry which are already depressed.

In such conditions, the Community industry, already loss-making, would not be able to compete
with high quantities sold at such low prices because firstly, a difference in prices in this market
(microdisks are a commodity-like product) leads to immediate substitution in supplies and secondly,
the Community industry has already made all the necessary efforts to restructure itself and is already
operating at very low costs. It is therefore likely that the Community industry would see a further
deterioration of its financial situation bringing its very survival

into question.

(75)

In the light of the above findings it is concluded that the expiry of the measures would be likely to
lead to a continuation and/or recurrence of injury for the Community industry.

F. COMMUNITY INTEREST

1. General considerations

(76)

(77)

(78)

(79)

The Commission examined whether the maintenance of the anti-dumping measures on 3,5(cid:1) micro-
disks would be in the interest of the Community. It has been found that there is a likelihood of
continuation and/or recurrence of injurious dumping. The investigation also considered whether or
not there are any overriding interests against maintaining the measures and also took account of the
past effects of duties on all the various interests involved.

It should be recalled that, in the previous investigation, the adoption of measures was considered not
to be against the interest of the Community. It should also be noted that, since this is an expiry
review investigation, this investigation should also show the impact of the existing measures in
particular on users, consumers and traders.

2. Interests of the Community industry

In view of the conclusions on the situation of the Community industry set out at recital 68,
especially in terms of its negative profitability, the Commission considers that, in the absence of
measures against injurious dumping, the Community industry is likely to experience a worsening of
its financial situation.

The Community industry is viable and capable of supplying the market for a product which,
although at a mature stage of its life cycle, constitutes the basic storage device for a large number of
computer users. Indeed, the Community industry has shown a willingness to maintain a competitive
presence on the Community market. Examples of such steps taken are:

(a) keeping prices at a minimum to maintain its market share;

(b) progression towards greater consolidation;

L 50/22

EN

Official Journal of the European Communities

21.2.2002

(c) closure of manufacturing units;

(d) widespread use of modern production techniques (e.g. increased mechanisation and computerisa-

tion);

(e) improvements in productivity;

(f) investing in production of other digital storage media products.

(80)

It is also to be noted that the production of data storage media is an area of technological
importance for the Community as a whole. The production technology and experience gained by the
Community industry in 3,5(cid:1) microdisk production has provided, and will continue to provide, a
basis for further innovation in the manufacture of other related data storage media products. For the
Community industry, remaining viable in the microdisk sector is the economic basis for participating
in the growing market of other storage media.

3. Interests of unrelated importers/traders

(81) Only one unrelated importer cooperated with the investigation. It stated that imports were restricted
by the existence of anti-dumping duties. However, it was obvious that imports were still possible for
this importer. Should measures be maintained, this company would still be able to source 3,5(cid:1)
microdisks from the countries concerned and from other third countries, including countries not
subject to anti-dumping measures.

(82)

Furthermore, the limited cooperation of importer in this case leads to the conclusion that the
measures in force on imports originating in Hong Kong and Korea did not have any significant
impact on the situation of unrelated importers and traders of 3,5(cid:1) microdisks in the Community.

(83)

Therefore, it is concluded that the continuation of the measures is not likely to affect the situation of
unrelated importers and traders of 3,5(cid:1) microdisks in the Community.

4. Interests of component suppliers

(84) Any further shrinking and/or deterioration of the Community industry would not only have negative
implications for employment and investment in the industry itself but may have a knock-on effect
among the industry's suppliers of inter alia, shells, cookies, shutters, hubs,

liners and springs.

(85)

The Community producers source the large majority of their materials and components from
suppliers located in the Community. Therefore, the continuation of the anti-dumping measures
would clearly be in the interest of the Community component supplier industry.

5. Interests of users and consumers

(86) Major users of 3,5(cid:1) microdisks include duplicators and final consumers. Neither sector has made
representations in this review investigation. The Commission, therefore, considers that the findings
of the original investigation in this context are still applicable, i.e. the increase in costs applicable to
this sector when compared to overall costs can be considered as negligible and would have very little
or no impact on prices to retail consumers.

(87) On the contrary the expiry of the measures would seriously threaten the viability of the Community
industry, the disappearance of which would reduce supply and competition, to the detriment of
duplicators and consumers.

6. Conclusion

(88) After weighing the interests of the various parties involved, the Commission concludes that there are

no compelling reasons of Community interest against the continuation of measures.

(89) Due to the long duration of the investigation, it is considered appropriate that the measures be

limited to four years.

21.2.2002

EN

Official Journal of the European Communities

L 50/23

(90)

The anti-dumping duties imposed by Regulation (EC) No 2199/94 should be maintained at existing
levels,

i.e.:

G. PROPOSED DUTIES

Country

Company

Hong Kong

Jackin Magnetic Co. Ltd

Plantron (HK) Ltd

Technosource Industrial Ltd

All other companies

Republic of Korea

All companies

Duty

7,2 %

6,7 %

13,3 %

27,4 %

8,1 %

HAS ADOPTED THIS REGULATION:

Article 1

A definitive anti-dumping duty is hereby imposed on imports of 3,5(cid:1) microdisks used to record and
1.
store encoded digital computer
information falling within CN code ex 8523 20 90 (TARIC code
8523 20 90*40) and originating in Hong Kong and the Republic of Korea, with the exception of 3,5(cid:1)
microdisks based on optically continuous servo tracking technology or magnetic sector servo tracking
technology with a storage capacity of 120 MB or more.

The rate of definitive anti-dumping duty applicable to the net, free-at-Community-frontier price before

2.
duty, shall be as follows for the products manufactured by:

Country

Company

Rate of AD duty

TARIC additional

Hong Kong

Jackin Magnetic Co. Ltd

Plantron (HK) Ltd

Technosource Industrial Ltd

All other exporting producers

Republic of Korea

All exporting producers

7,2 %

6,7 %

13,3 %

24,7 %

8,1 %

8775

8776

8778

8999

—

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

Article 2

The anti-dumping duties shall be imposed for a period of four years from the date of entry into force of
this Regulation.

Article 3

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

Article 4

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

Done at Brussels, 18 February 2002.

For the Council

The President

J. PIQUÉ I CAMPS