Proposal for a Council Regulation imposing a definitive countervailing duty on imports of certain ring binder mechanisms (RBM) originating in Indonesia and terminating the anti-subsidy proceeding in respect of imports of certain RBM originating in India
Date: 2002-05-21
Institutions: European Commission
Subjects: CCT duties, India, Indonesia, anti-subsidy proceeding, import, monetary compensatory amount, office supplies, originating product

C 227 E/292

EN

Official Journal of the European Communities

24.9.2002

Proposal for a Council Regulation imposing a definitive countervailing duty on imports of certain
ring binder mechanisms (RBM) originating in Indonesia and terminating the anti-subsidy
proceeding in respect of imports of certain RBM originating in India

(2002/C 227 E/03)

COM(2002) 245 final

(Submitted by the Commission on 21 May 2002)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European
Community,

Having regard to Council Regulation (EC) No 2026/97 of
6 October 1997 on protection against subsidised imports
from countries not members of the European Community (1)
and in particular Article 15 thereof,

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

Whereas:

A. PROCEDURE

1. Present investigation

(1) On 18 May 2001, the Commission announced by a
notice (hereinafter referred to as ‘Notice of Initiation’)
published in the Official
the European
Communities (2)
anti-subsidy
proceeding with
the
Community of certain ring binder mechanisms (here-
inafter referred to as ‘RBM’) originating in India and
Indonesia and commenced an investigation.

Journal
of
an
of
imports

initiation
to

regard

into

the

(2) The proceeding was initiated as a result of a complaint
lodged on 3 April 2001 by the following Community
producers: Koloman Handler AG (‘Koloman’), Austria,
and Krause Ringbuchtechnik GmbH & Co. KG (‘Krause’),
Germany (the
representing a major
proportion, in this case about 90 %, of the Community
production of RBMs. The complaint contained evidence
of subsidisation of the said product, and of material
injury
considered
sufficient to justify the initiation of a proceeding.

therefrom, which was

‘complainants’)

resulting

(3) The initiation of a parallel anti-dumping proceeding
concerning imports of the same product originating in
the same countries was announced by a notice published
in the Official Journal of the European Communities (3), on
the same date.

(1) OJ L 288, 21.10.1997, p. 1.
(2) OJ C 147, 18.5.2001, p. 4.
(3) OJ C 147, 18.5.2001, p. 2.

(4) Prior

to the

initiation of

the proceeding and in
accordance with Article 10(9) of Council Regulation
(EC) No 2026/97 (hereinafter referred to as the ‘basic
Regulation’), the Commission notified the Governments
of India and Indonesia that it had received a properly
documented complaint alleging that subsidised imports
of RBMs originating in India and Indonesia are causing
material
injury to the Community industry. Both
Governments were invited for consultations with the
aim of clarifying the situation as regards the contents
of
the complaint and arriving at a mutually agreed
solution. Consultations with both Governments were
held with the Commission in Brussels. Due note was
taken of the comments made by these Governments in
regard to the allegations contained in the complaint
regarding subsidised imports and material injury being
suffered by the Community industry, and a certain
number of the alleged schemes were subsequently not
included in the investigation.

(5) The Commission officially advised the Community
importers and users
producers, exporting producers,
known to be concerned,
the
exporting countries and the complainant of the initiation
of the proceeding. The parties concerned had the oppor-
tunity to make their views known in writing and to
request a hearing within the time limit set out in the
Notice of Initiation.

the representatives of

(6) The Commission sent questionnaires

of

India,

in the Notice of
from the Government

to all parties
known to be concerned and to all other companies
which made themselves known within the deadlines
set out
Initiation. Replies were
one
received
Community producer, one exporting producer in India,
the
as well as
Community
the
from two
Community as well as from one user related to the
importers. The Commission sought and verified all the
information it deemed necessary for the purpose of a
determination of subsidisation,
injury, causation and
Community interest. Verification visits were carried out
at the premises of the Government of India and the
following companies:

related exporter outside
in

from its
and

importers

(a) Community producers

— Koloman Handler AG, Austria

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(b) Exporting producers in India

B. PRODUCT CONCERNED AND LIKE PRODUCT

— ToCheungLee Stationery Mfg Co. Pvt. Ltd., Tiru-

vallore

(c) Related exporters outside the Community in Hong

Kong

1. Product concerned

(11) The product concerned is certain ring binder mech-
anisms (‘the product concerned’). These are currently
classifiable within CN code ex 8305 10 00. Lever-arch
mechanisms, falling within the same CN code, are not
included in the scope of this investigation.

— ToCheungLee

(BVI)

Stationery Mfg. Co., Ltd.
company)

Limited/World Wide
(ultimate holding

(d) Unrelated importers

— Bensons
Kingdom

International

Systems

Ltd, United

— Bensons

International

Systems

BV,

The

Netherlands

(e) User

— Esselte, United Kingdom.

(7) The investigation of subsidisation and injury covered the
period from 1 April 2000 to 31 March 2001 (‘investi-
gation period’ or ‘IP’). For the purposes of analysing
the
trends
Commission has examined data relating to the period
1 January 1998 up to the end of
the IP (‘period
considered’).

assessment of

relevant

injury,

the

for

2. Provisional measures

(8) Given the need to further examine certain aspects of
injury, causation and Community interest, in particular
the
in
complainants, no provisional countervailing measures
were
imposed on RBMs originating in India and
Indonesia.

restructuring

view of

ongoing

the

of

3. Subsequent procedure

(9) All parties were informed of the decision not to impose
provisional measures. The Commission continued to
information deemed necessary for
seek and verify all
further on-the-spot
definitive findings.
In particular,
investigations were carried out at
the premises of a
user of RBMs in the Community and of two unrelated
importers in the Community.

(10) All parties were informed of

the essential

facts and
considerations on the basis of which it was intended
to recommend the imposition of definitive counter-
vailing duties. They were also granted a period within
which they could make representations subsequent to
this disclosure. The oral
and written comments
submitted by the parties were considered and, where
appropriate,
been modified
accordingly.

findings

have

the

(12) RBMs consist of two rectangular steel sheets or wires
with at least four half-rings made of steel wire fixed
on them and which are kept together by a steel cover.
They can be opened either by pulling the half-rings or
with a small steel-made trigger mechanism fixed to the
RBM. The rings can have different shapes,
the most
popular ones being round, rectangular or D-shaped.

(13) RBMs are used to file different kinds of documents or
papers. They are used,
inter alia, by producers of ring
binders, software and technical manuals, photo and
stamp albums, catalogues and brochures.

(14) Several hundred different models of RBMs were sold
during the IP in the Community. The models varied by
size, shape and number of rings, the size of the base
plate and the system to open the rings (pull open or
opening trigger). In the absence of a clear dividing line
in the range of RBMs and given that all of them have the
same basic physical and technical characteristics, and
that the models of RBMs can, within certain ranges,
replace each other, the Commission established that all
RBMs constitute one single product for the purpose of
the present proceeding.

2. Like product

(15) The Commission found that the RBMs produced and
in India and those
sold on the domestic market
exported to the Community from India had the same
basic physical and technical characteristics and uses.

(16) The Commission also found that there was no difference
in the basic physical and technical characteristics and
uses between the RBMs imported into the Community
originating in India and the RBMs produced by the
Community industry and sold on the Community
market.

(17) In view of the lack of cooperation from any Indonesian
producer, the Commission relied on facts available in
accordance with Article 28 of the basic Regulation. In
this regard and in the absence of any other information
available for the country, the Commission considered it
appropriate to make use of the information submitted in
the complaint, according to which the RBMs produced
and sold in Indonesia or exported to the Community
and
complainant
Community producers and sold on the Community
market are alike.

the RBMs

produced

the

by

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(18) It was therefore concluded that the RBMs produced and
sold by the Community industry on the Community
market, the RBMs originating in India and Indonesia
exported to the Community and the RBMs produced
and
and sold on the domestic market
Indonesia were all like products within the meaning of
Article 1(5) of the basic Regulation.

in India

(19) During the IP the product concerned was subject to a
conventional customs duty of 2,7 % in 2000 and 2,7 %
in 2001. However under the GSP regime the product
concerned imported from India and Indonesia benefited
from a reduction amounting to 100 % of the conven-
tional customs duty payable in 2000 and 2001. As a
result, the duty applied was 0 % in 2000 and 0 % in
2001.

C. SUBSIDIES

1. India

(a) Introduction

(20) On the basis of

the information contained in the
complaint and the replies to the Commission's ques-
tionnaire,
the Commission investigated the following
schemes that allegedly involve the granting of export
subsidies:

— Export Processing Zones/Export Oriented Units

(EPZ/EOU)

— Duty Entitlement Passbook Scheme (DEPB)

— Export Promotion Capital Goods Scheme (EPCG)

— Income Tax Exemption Scheme (ITE).

(21) The first three schemes are based on the Foreign Trade
(Development and Regulation) Act 1992 (effective from
7 August 1992). The Foreign Trade Act authorises the
Government of
India to issue notifications regarding
export and import policy. These are summarised in
‘Export and Import Policy’ documents which are issued
every five years and updated annually. The document
relevant to the investigation period of this case covers
the policies for the years 1997 to 2002.

(22) The last scheme, the Income Tax scheme, is based on the
Income Tax Act of 1961 which is amended yearly by
the Finance Act.

(23) One company replied to the questionnaire for exporting
producers. A company outside the Community related
to this exporting producer also replied to the ques-
tionnaire. On the basis of
import data reported by
Eurostat, the exporting producer in India accounted for
all Indian exports to the Community.

b) Export Processing Zones

(EPZ)/Export Oriented Units

(EOU)

(I) Legal basis

(24) An instrument under the Export Import Policy involving
export related incentives is the Export Processing Zones
(hereinafter
(hereinafter
‘EPZ’)/Export Oriented Units
‘EOU’) scheme which was introduced in 1965. During
the IP the scheme was regulated by Customs Notification
No 53/97, 133/94 and 126/94. Details of the schemes
are contained in Chapter 9 of the 1997/2002 Export
and Import Policies as well as the relevant Handbook
of Procedures.

(II) Eligibility

(25) In principle, companies undertaking to export

their
entire production of goods may be set up under the
EPZ/EOU scheme. Once this status is granted,
those
companies can avail
themselves of certain benefits.
There are seven identified EPZs in India. EOUs can be
located anywhere in India. They are bonded units under
the surveillance of Customs officials in accordance with
Section 65 of the Customs Act. Although EOU/EPZ are
generally obliged to export their entire production, the
Government of India allows those units to sell a part of
their production on the domestic market under certain
conditions. The cooperating exporting producer has
been granted the status of EOU.

(III) Practical implementation

five years of,
projected

(26) Companies requesting EOU status or setting up in an
EPZ must apply to the relevant authorities. Such
application must include details for a period covering
inter alia, planned production
the next
quantities,
import
value
requirements and indigenous requirements. If the auth-
orities accept the company's application, the terms and
conditions
be
communicated to the company. Companies in EPZs
and EOUs can be involved in the production of any
product. The agreement is valid for a five-year period,
and may be renewed for further periods.

acceptance will

attached

exports,

the

to

of

(27) EPZ/EOU units are entitled to the following benefits:

capital

(i) exemption from import duties on all types of goods
and
goods,
(including
consumables)
the manufacture,
production, processing, or in connection therewith,
provided they are not prohibited items
in the
Negative List of Imports;

raw materials

required

for

(ii) exemption from excise duty on goods procured

from indigenous sources;

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(iii) exemption of

income, on which income tax is
normally due in accordance with Section 10A or
10B of the Income Tax Act, for a 10-year period;

(iv) reimbursement of Central Sales Tax paid on goods

procured locally;

(v) 100 % foreign equity ownership;

(vi) facility to sell a part of production in the domestic

market.

(28) The importer should maintain in the specified format, a
imports concerned and of the
proper account of all
consumption and utilisation of all
imported materials
and of the exports made. These should be submitted
periodically, as may be required, to the Development
Commissioner.

(29) The importer must also ensure minimum net foreign
exchange earnings as a percentage of exports and
export performance as stipulated in the Policy. The
entire operations of an EOU/EPZ are to be done in
Customs bonded premises.

(IV) Conclusion on EPZ/EOU

of

capital

(30) In the present proceeding, the EOU scheme was used for
imports
and
goods,
consumables, as well as for the procurement of goods
the Commission
on the domestic market. Therefore,
only
these
of
concessions.

countervailability

raw materials

examined

the

(31) In this

regard,

the EOU/EPZ scheme involves

the
granting of subsidies as the concessions granted under
the scheme constitute financial contributions by the
Government of
revenues
otherwise due are forgone and a benefit is conferred
on the recipient.

since Government

India,

(32) The suspension of the collection of duties on capital
goods has the same effect as an exemption since, as
is
long as the export
solely within the discretion of
the company if and
when to de-bond the capital goods.

requirements are fulfilled,

it

(33) This

is

subsidy

contingent

in law upon export
performance within the meaning of Article 3(4)(a) of
the Basic Regulation,
since it cannot be obtained
without the company accepting an export obligation,
and is therefore deemed to be specific and counter-
vailable.

a period of 7 years, which reflects

(35) The benefit to the company has been calculated on the
basis of the amount of unpaid customs duty due on
imported capital goods by spreading this amount
across
the
depreciation period for capital goods actually imported
by the company and which is considered to reflect the
normal depreciation of such assets in the industry
concerned. The amount so calculated which is attrib-
utable to the investigation period has been adjusted by
adding interest during the investigation period in order
to establish the full benefit to the recipient under this
scheme. Given the nature of
this scheme, which is
equivalent to a one-time grant, the commercial interest
rate during the investigation period in India, i.e. 10 %
was considered appropriate. This amount has then been
allocated over
total exports during the investigation
period.

(36) On this basis, the company received benefits under this

scheme at a rate of 2,42 %.

Exemption from customs duties due on imports of raw
materials and consumables:

(37) The Indian exporting producer used the EOU scheme in
order to obtain an exemption from customs duties due
on imports of raw materials and consumables.

(38) During the verification visit, the nature and quantities of
these imported materials were verified. The company
was able, for all raw materials being imported during
the IP, to demonstrate a clear link to the quantities of
the exported finished products and it could be estab-
lished that no imports in excess of imported quantities
of inputs actually used in the exported products had
taken place.

(39) These imports therefore fall within the exception to item
(I) of the Illustrative List of Export Subsidies contained in
Annex I of the Basic Regulation since all the goods
which were imported free of duty were incorporated
into the exported product and no excess remissions of
import duty have occurred.

Exemption from excise duty on goods procured from
indigenous sources:

(40) The Indian exporting producer used the EOU scheme in
order to obtain an exemption from excise duty on goods
procured from indigenous sources.

(V) Calculation of the subsidy amount

Suspension of
goods:

import duty on purchases of capital

(34) The Indian exporting producer used the EOU scheme in
the import duties

order
to obtain a suspension of
normally payable on capital goods.

(41) However,

status)

the excise duty paid on purchases by a
(i.e. any company operating without
non-EOU unit
is credited as drawback (under
any special
CENVAT/MODVAT) and is utilised towards payment of
excise duty on domestic sales. Thus by exempting excise
duty on purchases by an EOU unit no additional revenue
is forgone by the Government of India. Consequently, no
additional benefit accrues to the EOU.

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Reimbursement of central sales tax paid on goods
procured locally:

(42) The Indian exporting producer used the EOU scheme in
order to obtain the reimbursement of central sales tax
paid on goods procured locally. This reimbursement
involves the granting of subsidies, since Government
revenues otherwise due are forgone and a benefit
is
conferred on the recipient.

(43) The benefit was calculated on the basis of the amount of
central sales tax refundable for local purchases during
it could be
the investigation period.
established
producer
procured practically all of
its local purchases in the
State within which it is located (Tamil Nadu), and that
central sales tax applies only to inter-state transactions.
The amount of central sales tax refundable to this
company was therefore limited to 0,01 %.

In this respect,
Indian

exporting

that

the

through export activities can be deducted from the
taxable income, and is therefore deemed to be specific
and countervailable.

(V) Calculation of the subsidy amount

(49) The Indian exporting producer, being an EOU, was
eligible for Income Tax Exemption under Section 10B
of
the Income Tax Act, and introduced a claim for
deduction during the IP. The benefit was calculated by
applying the notional tax rate which would have been
applied on the profits if no deduction would have been
made.

(50) On this basis, the company obtained benefits under this

scheme at a rate of 0,15 %.

(c) Income Tax Exemption Scheme (ITE)

(d) Other subsidy schemes

(I) Legal basis

(44) The Income Tax Exemption Scheme is based on the
Income Tax Act 1961, which sets out the basis for the
taxes as well as various exemptions/
collection of
deductions which
the
be
exemptions which can be claimed are those covered
by Sections 10A, 10B and 80HHC of the Act, which
provide an income tax exemption on profits obtained
from export sales.

claimed. Among

can

(II) Eligibility

(45) Exemption under Section 10A can be claimed by firms
located in Free Trade Zones, exemption under Section
10B can be claimed by Export Oriented Units and
exemption under Section 80HHC can be claimed by
any firm which exports goods.

(III) Practical implementation

(46) The claim for deduction of export profits is submitted
alongside the usual annual income tax declaration.

(IV) Conclusion on the ITE

(47) Under the ITE scheme, the Government of India confers
a financial contribution to the company by forgoing
Government revenue in the form of direct taxes which
would otherwise be due. This financial contribution
confers a benefit upon the recipient by reducing its
income tax liability.

(48) This Income Tax Exemption Scheme is contingent in law
upon export performance within the meaning of Article
3(4)(a) of the basic Regulation, since only profits earned

(51) The investigation has determined that

the exporting
the other investigated
It is therefore not necessary to assess their

producer did not use any of
schemes.
countervailability.

(e) Amount of countervailable subsidies

(52) The amount of countervailable subsidies in accordance
with the provisions of the basic Regulation, expressed ad
valorem, for the investigated exporter is 2,5 %. This rate
is below the de minimis level, and under these circum-
stances,
to be
the
considered negligible.

subsidy margin for

India has

2. Indonesia

(a) Introduction

relevant

information. However,

(53) Further to the consultations referred to in recital (4), the
Commission services decided to limit the investigation to
two schemes (BKPM and Cakung EPZ). Accordingly, a
questionnaire was sent to the Government of Indonesia
requesting the
the
Government of Indonesia subsequently did not provide
any reply to the questionnaire. Therefore, no verification
visit to the Government of Indonesia was carried out.
The sole known exporting producer in Indonesia did not
reply to the questionnaire, despite an extension of the
deadline for submitting the reply. In view of the above
non-cooperation, this company was duly informed that
definitive findings for it would be based on the facts
available pursuant to Article 28(1) of the basic Regu-
in accordance with
lation, with the
Article 28(6) of the basic Regulation,
that the result
may be less favourable for it than if it had cooperated.
In accordance with Article 26(1) of the basic Regulation,
no verification visit was carried out at the premises of
this exporting producer.

consequence,

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facts

(54) Consequently, in accordance with Article 28 of the basic
Regulation, subsidisation and export price have to be
available. The
determined on the basis of
its
Commission considered it appropriate
to base
the
on
findings
submitted
information available from a
complaint as well as
concerning
previous
Indonesia (1).
this
information was also checked, where possible, against
data from independent sources.

anti-subsidy
In accordance with Article 28(5),

information

proceeding

the

in

(b) BKPM schemes

(55) It appears

from the complaint

this exporting
producer availed itself of benefits available from the
Investment Coordinating Board (BKPM), which is a
Government
and
promotion of investment.

in charge of planning

agency

that

(56) The previous investigation cited above has shown that
the BKPM may approve both foreign (PMA) and
domestic (PMDN)
that are
approved as PMA or PMDN companies will be granted
exemption or relief from import duty and levies on the
importation of
goods, namely machinery,
spare parts and auxiliary equipment, as
equipment,
well as on the importation of raw materials.

investments. Companies

capital

(57) The BKPM schemes constitute a subsidy as the financial
contribution by the Government of
Indonesia in the
form of unpaid duties confers a direct benefit upon
the recipient.

(58) The schemes do not qualify as drawback schemes in
accordance with the provisions of Annexes I to III to
the basic Regulation,
since capital goods are not
consumed in the production process, and there is no
obligation to export
the finished product containing
the raw materials.

(59) The BKPM schemes are not contingent in law upon
export performance or the use of domestic goods over
imported goods.

(60) The criteria for eligibility are set by BKPM and appear to
be updated frequently. The BKPM schemes explicitly
limit access to the subsidy to certain enterprises which
are not operating in certain sectors. Also, the granting
authorities can exercise a certain discretion during the
approval process, and eligibility is not automatic.

granting authority must establish objective criteria which
are neutral, do not favour certain enterprises over others,
and which are economic in nature and horizontal
in
application. Hence,
these programmes are considered
to be specific under Article 3(2)(a) of the basic Regu-
lation since they explicitly limit access to the subsidy to
certain enterprises. The fact that the exporting producer
and the Indonesian government did not cooperate made
it impossible to determine precisely to what extent this
producer has availed itself of the scheme.

(c) Indonesian Bonded Zones — Cakung EPZ

(62) The address of the non-cooperating exporting producer
indicates that
its facilities are located in the Cakung
Export Processing Zone, which is an area designated as
‘Nusantara Bonded Zone’. The company confirmed this
information. Companies located in such a zone are
eligible for certain benefits
that are normally not
available to companies located outside these zones,
notably an exemption from import duty on goods to
be used in the production of exported finished products.

(63) The exporting producer, in choosing not to cooperate,
did not provide any evidence that he did not use the
benefits available within such a zone. In order not to
it has been
reward non-cooperation, and given that
established that
indeed
the
located in an EPZ, the Council
is entitled to assume
that such benefits have been used.

exporting producer

is

(64) In accordance with findings in previous investigations, a
duty drawback scheme operating within such zones
constitutes a financial contribution by the Government,
since revenues otherwise due are forgone and a benefit is
conferred on the recipient.

(65) Such a drawback scheme constitutes a subsidy which is
contingent in law upon export performance within the
meaning of Article 3(4)(a) of the basic Regulation, since
it cannot be obtained without the company accepting an
export obligation, and is therefore deemed to be specific
and countervailable.

(61) The BKPM schemes are therefore not in line with Article
3(2)(b) of the basic Regulation, which stipulates that the

(1) Council Regulation (EC) No 978/2000 of 8 May 2000 (OJ L 113,

12.5.2000, p. 1).

(66) The fact that the exporting producer did not cooperate
made it impossible to determine whether imports under
this scheme would qualify for any exception as specified
in the Annexes to the basic Regulation, since it could
not be established that imported goods are indeed incor-
porated into the exported product and that no excess
remissions have occurred.

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(d) Conclusion on subsidies

of

subsidies which

(67) On the basis of facts available in accordance with Article
there is evidence of the
28 of the basic Regulation,
existence
are
countervailing
available to the non-cooperating exporting producer,
and a reasonable indication that such subsides have
been used. For the purpose of measures,
it will be
assumed, in accordance with the previous investigation,
that one part (50 %) are domestic subsidies and the other
part (50 %) constitute export subsidies, since only one of
the two schemes, the EPZ, was considered as an export
subsidy.

a

level

above

subsidies

(68) It is considered that the absence of cooperation is the
result of the use and benefit by this producer of the
the de
at
countervailable
minimis level for Indonesia. Accordingly, and in order
to avoid granting a bonus for non-cooperation,
in
view of the information contained in the complaint as
well as the findings of the previous investigation the
definitive subsidy margin expressed as a percentage of
the CIF import price at the Community frontier duty
unpaid
exporting
all
producers is as follows:

Indonesian

applicable

for

All exporters: 10,0 %.

D. INJURY

1. Preliminary remark

(69) Given that only one Indian exporting producer coop-
erated in the investigation and that
the Community
industry comprises only one company, specific data
relating to these companies have been indexed or put
in the form of a range in order to preserve the confi-
dentiality of
the data submitted in accordance with
Article (29) of the basic Regulation.

2. Community production

(70) It was

established that,

in addition to the

two
complainant Community producers' output, production
was also taking place in Italy and Spain. Although the
Italian company involved did not supply complete data
to the Commission, the information received confirmed
that, during the IP, it represented a share of around 10 %
of total Community production. As regards the Spanish
company, which did not supply complete data to the
it was found that in 2001 it produced
Commission,
negligible volumes of the product concerned, while it
imported major portion of its sales from one of the
countries concerned. It was concluded therefore that it
should be considered as an importer rather than a
producer.

(71) It was also found that a company located in the UK had
formerly been involved in the production of a certain
type of RBMs. This company confirmed in writing that
its production of the product concerned ceased some
years ago. No other producers in the Community are
known.

(72) Based on the above, the production of the complainants
and the other Community producer located in Italy
constitute the total Community production within the
meaning of Article 9(1) of the basic Regulation.

3. Definition of the Community industry

(a) Community industry

(73) Of the two complainant producers one did not reply to
the questionnaire (Krause) and was considered to be
non-cooperating. This producer, even though supporting
the complaint, was therefore not regarded as being part
the Community industry. Regarding the other
of
producer (Koloman),
it was found that this company
not only produced the like product in the Community
during the IP, but also produced parts of it in Hungary.
In addition to its Community production, Koloman
traded the Hungarian products in the Community and
also used parts produced in Hungary for its Community
production. Moreover, part of the production of the
cooperating Community producer was relocated at the
beginning of the year 2000 by means of transfer of
certain machinery from Austria to Hungary. However,
despite the foregoing, the core activity of this company
i.e. head office, ware-
remained in the Community,
housing,
significant
a
the product range, as well as significant
amount of
technical and marketing know-how. The imported sales
completed the product range of the like product and did
not therefore affect the Koloman's status as Community
producer. As to the production of parts in Hungary and
their subsequent incorporation into the finished product,
the investigation established that
these incorporated
parts represented only a minor proportion of the cost
of production of the finished products and thus, of the
added value. Consequently, the status of the producer as
Community producer is not affected by these imports.

sales office, production of

(74) The investigation confirmed that the sole cooperating
Community producer represented more than 25 % of
the Community production of RBMs, thus fulfilling the
requirements of Article 10(8) of the basic Regulation. It
was therefore deemed to constitute the Community
industry within the meaning of Article 9(1) of
the
same Regulation and will be hereinafter referred to as
‘the Community industry’.

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(b) Events occurring after the investigation period

(b) Market share of subsidised imports

(75) In November 2001,

i.e. after the end of the IP, the
cooperating Community producer Koloman went into
receivership and as a result of a liquidation procedure,
was taken over by an Austrian company, whose parent
company,
also acquired the
Hungarian affiliate of Koloman.

located in the UK,

(76) The acquirers

confirmed to the Commission their

on-going support of the complaint.

(c) Community consumption

the

fact

taken of

(77) The apparent Community consumption was established
on the basis of the sales volumes of the Community
industry on the Community market, the sales of the
other Community producers on the Community
market as reported in the complaint, duly adjusted as
concerns the IP,
information provided by the coop-
erating exporting producer and Eurostat import data.
Account was
that CN code
8305 10 00 also covers products not included in the
this proceeding. However, with regard to
scope of
Indonesia, given the lack of cooperation of Indonesian
exporters, best facts available were used,
i.e. Eurostat
data. In this respect, based on the complaint as best
evidence
above-
mentioned CN code were considered to constitute the
product concerned. The non-cooperating Indonesian
its exports to the Community
exporter claimed that
market were around 15 % lower
than the import
this claim could not be
volumes used. However,
verified and the difference was such that it could be
explained by the ratio used to convert Eurostat statistics,
which are in tonnes, to units. On this basis, Community
consumption increased by 5 % between 1998 and the IP.
it remained relatively stable between
In more detail,
1998 and 1999 and then steadily increased until the
end of the IP when it was found to be around 348
million units.

imports under

available,

the

all

4. Imports from the country concerned

(78) It

is

recalled that

the proceeding against

India is
terminated. Therefore, only imports from Indonesia are
being analysed as imports from the remaining country
concerned.

(80) The market shares held by Indonesian imports were
found to be between 8 % and 13 % having decreased
by around 2 percentage points since 1998.

(c) Prices of subsidised imports

(i) Price evolution

(81) The weighted average import prices of imports orig-
inating in Indonesia decreased by – 5 % between 1998
i.e. from ECU 105 per thousand units to
and the IP,
decrease was
thousand units. The
EUR 99 per
particularly marked between 1998 and 1999 when
prices fell by 3 % and between 2000 and the IP when
they fell by 2 %.

(ii) Undercutting

(82) Given the

lack of

cooperation from Indonesian
exporters, the price comparison was made on the basis
of Eurostat data duly adjusted for customs duties and
post
the same
level of trade, to Community producers' ex-works prices.

importation costs and compared, at

(83) On that basis, the price undercutting was reviewed and
amended when necessary on the basis of information
verification visits.
provided
found to undercut
Imports
Community industry prices between 30 % and 40 %. It
should also be noted that there was price suppression
since the Community industry was not profitable.

during
the
from Indonesia were

additional

5. Situation of the Community industry

(a) Production

(84) The Community industry's production followed a
downward trend over the period, decreasing by 25 %
between 1998 and the IP. A significant decrease took
place between 1998 and 1999 (– 15 %). A further
significant decrease occurred also between 1999 and
2000 and subsequently production volume remained
stable until the end of the IP.

(b) Capacity and capacity utilisation rates

(85) The production capacity followed the same trend as the
production and decreased by 26 % between 1998 and
the IP.

(a) Volume of subsidised imports

(79) Even if

imports volume originating in Indonesia
decreased between 1998 and 2000 and then slightly
rose again between 2000 and the IP,
it should be
noted that while imports from the country concerned
only started in 1997, they were already significant in
1998 and were at a level of 32 million pieces in the IP.

(86) On this basis,

the capacity utilisation rate remained

stable over the period considered.

(c) Stocks

(87) The Community industry's end-of-year stocks decreased

by 12 % between 1998 and the IP.

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(d) Sales in the Community

(88) Despite an increase in Community consumption, the
sales volume of the Community industry fell significantly
between 1998 and the IP, by 25 %. A decrease occurred
between 1998 and 1999 (– 10 %), and an even more
pronounced one between 1999 and 2000 (– 15 %).

(e) Market share

(89) The market share of the Community industry decreased
by more than 4 percentage points between 1998 and
the IP, thus following the same trend as the volume sold.

(f) Prices

(90) The average net sales price of the Community industry
decreased by 4 % between 1998 and the IP. Such a
decrease was particularly marked between 1998 and
1999 (– 6 %),
the
country concerned significantly decreased, as explained
in recital (81).

i.e. when the import prices of

(g) Profitability

(91) The weighted average profitability of the Community
industry deteriorated by 10 percentage points between
1998 and the IP and became a loss as from 2000. As a
result of this unfavorable development and as mentioned
in recital (75), the Community industry had to go into
receivership.

(h) Cash flow and ability to raise capital

(92) The development of the cash flow generated by the
Community industry in relation to sales of RBMs is
very similar to that of the profitability, i.e. a significant
decrease between 1998 and the IP.

(93) The

investigation established that

the Community
industry's ability to raise capital became more difficult
at
this time owing to its financial situation and in
particular to its deteriorated profitability.

(i) Employment, wages, and productivity

(94) Employment of the Community industry related to the
production of RBMs decreased by 30 % between 1998
and the IP. The total amount of wages as a whole
followed a similar trend,
falling by 27 % during the
same period, thus leading to an increase of the average
wage by 5 % between 1998 and the IP. Productivity of
the Community industry's workforce, measured as
production volume per person employed increased by
8 % between 1998 and the IP.

(j) Investment and return on investment

(95) The level of

investments decreased by 39 % between
1998 and the IP. The decrease was particularly marked

between 1999 and 2000. The investigation showed that
most of this capital expenditure was related to replacing
or maintaining existing facilities.

(96) The return on investment, expressed as the relation
the Community industry
between the net profits of
and the net book value of
followed
its investments,
very closely the profitability trend and became negative
in 2000.

(k) Growth

(97) While Community consumption increased by 5 %
between 1998 and the IP,
the
Community industry decreased by around 25 % and
the volume of imports concerned remained significant.
The Community industry was therefore unable to benefit
from the
the demand on the
Community market.

the sales volume of

increase of

slight

6. Relocation of part of the production

the

relocation of part of
(73)

(98) In order to verify that the deterioration of situation of
the Community industry was not due to a change in the
it was also
pattern of
the Community production,
the
examined whether
production mentioned in recital
(by means of
transfer of machinery from Austria to Hungary), which
took place at the beginning of the year 2000, had an
effect on the situation of the Community industry. It
happened that while the decreasing trend of certain
injury indicators was aggravated by this relocation (i.e.
production, production capacity and sales volume), the
trend of the capacity utilisation and of the average sales
leading to a limitation of losses. For
prices improved,
instance,
the
decrease in the production is linked to the relocation,
and around 80 % of the sales volume decrease, while
without this relocation, the price decrease would have
been three times higher and the profitability would have
lost 7 additional percentage points. Given the above, it
was concluded that the deterioration of the situation of
the Community industry was not due to a change in the
pattern of the Community production.

it was assessed that around 60 % of

(99) It has been argued that

the core activity of

the
Community industry is no longer in the Community
since the relocation to Hungary allegedly entailed a
60 % decline in its Community production, and a
80 % decline in its Community produced sales.

(100) As already explained in recital (98), the relocation did
not entail such a decrease in the Community industry's
production, but only a decrease of 15 % of
its
its Community
Community production and 20 % of
the conclusion stated in
produced sales. Therefore,
recitals
the
Community industry is confirmed.

activity of

regarding

core

(73)

the

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7. Conclusion on injury

(101) A deterioration of

the situation of

the Community
industry (after having taken account of the relocation
as outlined in recital (98)) has been found by reference
to the period considered.

in

these

countries

(102) While the anti-dumping measures on imports of RBMs
originating in the People's Republic of China (‘the PRC’)
and Malaysia led to a substantial decrease of imports
originating
the
Community industry could not fully benefit from this
injury
development. As from the year 1998, most
indicators,
volumes, prices,
production,
market share, profitability, return on investment, cash
flow and employment developed negatively. In particular
the decrease in the sales prices of
the Community
industry had a negative effect on its profitability.

1998,

sales

after

i.e.

(103) Moreover, while sales of

the Community industry
decreased between 1998 and the IP, imports originating
in Indonesia were substantial. The investigation has
shown that during the IP the Indonesian imports were
made at prices undercutting those of the Community
industry between 30 % and 40 %.
there
was price suppression.

In addition,

(104) The situation of the Community industry is thus found
is
the Community industry has suffered

to have deteriorated to such an extent
concluded that
material injury.

that

it

(105) It is recalled that after the IP, the poor financial situation

led the Community industry to go into receivership.

E. CAUSATION

1. Introduction

(106) In accordance with Article 8(6) and (7) of the basic
Regulation, it was examined whether the imports orig-
inating in Indonesia in view of their volume and their
effect on prices in RBM Community market, have caused
injury to the Community industry to a degree that
enables it to be classified as material. Known factors
other than the subsidised imports, which could at the
same time be injuring the Community industry, were
also examined to ensure that possible injury caused by
these other factors was not attributed to the subsidised
imports from Indonesia.

the prices of

and 13 % between 1998 and the IP. These imports also
significantly undercut
the Community
industry. The market share of the Community industry
decreased by more than 4 percentage points. At the
the Community went
same time, average prices of
down by 4 %. The actual decline in prices was in fact
even higher as outlined in recital (98).

(108) During the same period, between 1998 and the IP, the
situation of
the Community industry deteriorated as
illustrated by the decrease of sales volume and market
share,
the price decrease and the substantial deterio-
ration of its profitability, which turned to losses. Thus,
the Community industry could not significantly benefit
from the imposition of the abovementioned measures
against the PRC and Malaysia.

(109) It has been argued by an Indonesian exporter that
Indonesian exports could not have caused injury since
they decreased between 1999 and 2000 and held a de
minimis market share. The same company alleged that
imports from Indonesia could not have any real impact
on the Community industry since the Community
than the
production was
volume of Indonesian imports.

six times higher

five or

(80), between 1998 and the IP,

(110) It is however recalled that although Indonesian imports
decreased between 1998 and 2000,
they slightly
increased between 2000 and the IP without reaching
the level of 1998. In addition, as already explained in
recital
Indonesian
imports held a market share situated between 8 % and
13 % which is substantial and clearly above de minimis.
Finally, it is also recalled that the Community industry is
clearly defined in recital
its level of
production is far below that which has been alleged
by the Indonesian company.

(74) and that

(111) It can therefore be concluded that the subsidised imports
originating in Indonesia have undermined the effects of
the anti-dumping measures adopted in 1997 against the
PRC and Malaysia and amended in 2000 as regards the
PRC, and that they have been a substantive cause of the
negative developments as summarised in the preceding
paragraphs.

3. Effect of other factors

(a) Imports from other third countries

2. Effect of the subsidised imports

(107) The volume of the subsidised imports decreased by 14 %
between 1998 and the IP, and its corresponding share of
the Community market by 2 percentage points during
the same period. However, they remained significant and
always held a market share which ranged between 8 %

(112) Consideration was given to whether factors, other than
the subsidised imports from Indonesia, might have led to
or contributed to the injury suffered by the Community
industry and especially whether imports from countries
other
than Indonesia may have contributed to this
situation.

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(113) The import volume from other third countries increased
by 17 % between 1998 and the IP while their market
share increased by more than 5 percentage points during
the same period. This increase is to a large extent due to
the increase in imports originating in India, Hungary and
Thailand, whereas in the meantime, imports originating
in the PRC and Malaysia significantly decreased owing to
the anti-dumping measures imposed in 1997.

(114) The average unit price of imports from third countries
decreased by 16 % between 1998 and the IP. Prices from
almost all third countries decreased during this period
except prices of imports from the PRC, which due to the
effect
increased
significantly although reaching the same level as the
Hungarian prices only in the IP.

anti-dumping measures

the

of

(i) India

In addition,

(115) It was firstly examined whether imports originating in
India might have contributed to the injury suffered by
the Community industry. However, although imports
from India increased significantly between 1998 and
the IP, they were found to be undercut by the imports
from Indonesia whose prices were found to be in a
Indian
range of 2 % to 30 % lower than prices of
it
imports between 1998 and the IP.
should be noted that when Indian imports started in
1998, prices of Indian imports were found to be more
than 40 % higher than prices of Indonesian imports for
a comparable volume of RBMs. Since then,
Indian
imports prices decreased steadily but have always been
above Indonesian prices and were still found to be more
than 5 % higher than Indonesian prices during the IP. It
is therefore concluded that, although Indian imports
have had a negative impact on the situation of
the
the
impact of
Community industry,
subsidised imports from Indonesia taken in isolation
was nonetheless substantial. Indeed, Indonesia was an
influential and important player
in the Community.
Their volume of exports to the Community was lower
than that of
substantial.
Indian exports but
Indonesian exports undercut the Community industry's
prices even more than Indian exports. It is also noted
that the aforementioned analysis was seriously impeded
Indonesia did not cooperate and,
by the fact
therefore, no information was available in terms of
product types, market segments represented by exports
from Indonesia.

the negative

that

still

(ii) The People's Republic of China

(116) Consideration was also given to whether the absorption
of
the anti-dumping measures imposed in 1997 on
imports from the PRC might have led to or contributed
to the injury suffered by the Community industry. In this
respect, it is noteworthy that although the absorption of

In addition,

the duty on imports from the PRC have undermined the
effect of the measures imposed in 1997 with regard to
the sales prices, those measures still led to a significant
reduction of the volumes imported from the PRC as
it should be noted that
soon as 1998.
while imports from Indonesia only began in 1997,
they had already reached around the same level as the
imports from the PRC by 1998. Since then,
imports
from the PRC dramatically decreased while Indonesian
imports decreased by a much lesser extent until the IP
when these latter imports were still more than three
times higher than imports from the PRC. Therefore,
given that the import volumes from the PRC were far
below the import volumes from Indonesia during the IP,
it was concluded that these imports did not have as
serious an impact on the Community industry as
compared to the effect of the subsidised imports from
Indonesia.

(iii) Hungary

(117) In order to determine whether imports from Hungary, in
isolation, caused injury to the Community industry, the
level of imports and prices on the Community market
were examined.

(118) The analysis as regards Hungarian imports between
1998 and the IP was based on data provided in the
questionnaire reply of the Community producer, whose
plant
sole Hungarian
represents
producer.

in Hungary

the

(119) During the period considered,

imports of RBMs orig-
inating in Hungary increased in volume. As to their
prices charged by the Community industry on the
Community market
its products imported from
Hungary, while these decreased during the period
considered,
the
import prices from the other third countries and were
undercut by imports from Indonesia.

they remained the highest amongst

for

(120) The Hungarian production of RBMs of the Community
industry was analysed and compared to the Austrian
production.
there was very little
overlap between the models produced in Austria and
Hungary.

It was found that

(121) Given this small percentage of models manufactured
both in Austria and in Hungary, it was concluded that
the Hungarian products completed the product range of
the Community industry enabling it to offer a wider
choice of models to customers and that they did not
affect negatively the
the Community
industry.

situation of

(122) On the basis of the above, it was concluded that imports
to

from Hungary
deteriorate the situation of the Community industry.

did not materially

contribute

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(iv) Thailand

(123) Given that, as already mentioned in Council Regulation
(EC) No 2100/2000,
the goods of Chinese
‘some of
origin were declared to national customs authorities as
being of Thai origin and thus avoided payment of the
anti-dumping
also
considered appropriate
impact of
imports consigned from Thailand.

duties normally

to evaluate

it was

due’,

the

(124) In this

respect,

imports

from Thailand significantly
increased during the period considered since they
started in 1998 with around 1 million units and rose
to more than 23 million units in the IP. In addition, it
was established on the basis of Eurostat data, that sales
prices of Thai imports were generally below the prices of
Indonesian imports.

(125) However, although Thai prices were found to be around
20 % lower than the prices of the Indonesian imports, it
is recalled these latter are more than one third higher
than import volumes from Thailand. Therefore, given
imported from Thailand are still
that
substantially
from
volumes
it was concluded that these imports could
Indonesia,
not have had a significant impact as compared to the
effect of the subsidised imports from Indonesia.

the volumes

below the

imported

(126) The analysis in respect of Thailand has been questioned
by an Indonesian exporter, which did not cooperate. In
this respect,
it argued that the level of imports from
Indonesia is comparably lower and that prices are
higher when compared to Thai imports. It is however
recalled that although Thai prices were lower than the
prices of
the volumes
imported from Indonesia were more than 30 % higher
than imports from Thailand. Therefore, the conclusion
drawn in recital (125) is confirmed.

the imports from Indonesia,

(b) Further factors

(127) It was also examined whether factors other than the
abovementioned might have contributed to the injury
suffered by the Community industry.

Community industry to be profitable in 1998 at a
time when imports from Indonesia were significant.

(129) One user argued that

the injury was caused by the
strong competition in the office supplies industry. This
competition allegedly led the users/distributors of the
product concerned to exert a price pressure on the
Community industry thus leading to a price decrease.
the subsidised
In this respect,
imports must have significantly worsened the price
pressure exerted by the users in the Community, thus
causing injury to the Community industry.

is underlined that

it

(130) Moreover, it was examined whether the price depression
could be attributable to the normal course of the RBM
business, since prices from almost all sources of supply
decreased between 1998 and the IP.

(131) In this respect,

it

the general price
is recalled that
decrease should be seen in the light of continued
unfair practices,
firstly from the PRC and Malaysia,
secondly from Indonesia, which have influenced the
Community market.

(132) In addition, as mentioned in recital

(128),

the RBM
market
is extremely price sensitive. Therefore, given
that prices of the Indonesian imports were found to be
subsidised and lower than the average unit price of all
other imports of RBMs between 1998 and the IP, it is to
be concluded that imports from Indonesia, which held
between 8 and 13 % of the Community market during
the IP, have had a price depressive impact on this
market.

(133) Finally, it was analysed if the price behaviour of Krause,
the non-cooperating Community producer, could have
contributed to the injury suffered by the Community
industry. The additional examination of data referring
to Krause showed that this Community producer itself
suffered a deterioration of its situation during the period
sales price and
considered, particularly as concerns
profitability.
it has not
contributed to the injury suffered by the Community
industry, and that,
it has been equally negatively
affected by the imports from Indonesia, being forced
to decrease its prices, like the Community industry.

therefore

appears

that

It

(128) It has been contended by the cooperating importers that
RBM business is extremely price sensitive and therefore
producers must sell large volumes to be competitive. It
was also argued by the same parties that the Community
industry relies only on the Community market, instead
of the world market, which would allow it to be more
cost efficient. On this matter, it is recalled that the ratio
of sales of the Community industry inside and outside of
the Community did not significantly change between
1998 and the
even though the
Community industry was strongly oriented towards the
sales permitted the
its export
Community market,

IP. Nevertheless,

(134) For all the reasons explained above,

it was concluded
that the price depression on the Community market
should not be seen as representing a normal devel-
opment of
trade, but rather as the consequence of
unfair commercial practices of Indonesia.

(135) It was contended by the Indonesian authorities that the
Indonesian exports were limited to supplying an Italian
producer of ring binders to complement
its product
range.

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(136) However, this assertion was found to be in contradiction
with the
statement made by the non-cooperating
Indonesian exporter who argued that the sole market
where the Indonesian producer has significant market
share is the United Kingdom. This is also confirmed
by Eurostat.

injurious effects of the subsidised imports, it is hereby
concluded that these other factors as such do not reverse
the fact that the material injury found must be attributed
to the subsidised imports.

(137) This

these

latter producer alleged that

Indonesian
exports could not cause injury since its main market is
the UK where the Community industry does not have
any significant activities. However, in addition to the fact
that this assumption is in contradiction with the alle-
gation made by the Indonesian authorities,
it is also
recalled that
is made on a
injury
Community basis and not on a regional basis.

analysis

the

4. Conclusion on causation

(138) In view of the above, it is concluded that the material
injury suffered by the Community industry, which is
characterised by a negative development of production,
sales volumes, prices, market share, profitability, return
on investment, cash flow and employment duly adjusted
to take account of the relocation to Hungary, was caused
by the
the
combined effect on the Community industry's situation
of imports from India, Thailand and the PRC as well as
the partial relocation of Community production was
only limited.

subsidised imports

concerned.

Indeed,

F. COMMUNITY INTEREST

1. Preliminary remark

(142) It was examined whether, compelling reasons existed
that could lead to the conclusion that it is not in the
Community interest to adopt measures in this particular
case. For this purpose, and in accordance with Article
31(1) of the basic Regulation, the impact of possible
measures on all parties involved in this proceeding and
taking measures were
also the consequences of not
considered on the basis of all evidence submitted.

(143) In order to assess the likely impact of the imposition or
non-imposition of measures, information was requested
from all interested parties. Questionnaires were sent to
the two complainant Community producers, two other
companies known as producers in the Community, nine
unrelated importers, 49 users and one users' association.
One complainant Community producer (Koloman), two
unrelated importers as well as one user related to those
importers replied to the questionnaire. Another user
made a submission without
replying to the ques-
tionnaire.

(139) It was also contended by an Indonesian exporter which
did not cooperate, that there is a contradiction between
the conclusion stated in recital (138) and the fact that
there is sufficient evidence to open an expiry review on
the PRC.

(144) These replies and submissions formed the basis for the

Community interest analysis.

the

situation of

(140) In this respect, it should be recalled that the scope of an
expiry review is
the
to analyse
Community market in the perspective of the likelihood
of continuation or recurrence of dumping and injury
should the measures in force be removed. Consequently,
the Community
the deterioration of
the fact
industry has been attributed during this investigation
period to Indonesia, does not affect the analysis of the
future behaviour in the Community market of Chinese
exporters and its likely effect on the situation of the
Community industry.
the
is
Chinese market share was at a very low level during
the last two years of the period considered.

also recalled that

that

It

(141) Given the analysis, which has properly distinguished and
separated the effects of all the known factors on the
from the
situation of

the Community

industry

2. Interest of the Community industry

(a) Preliminary remark

(145) Several producers of RBMs in the Community stopped
manufacturing the product concerned within the last few
years. As to the companies left, the investigation estab-
lished that, as mentioned in recital
(71), a company
located in the UK also stopped its production some
years ago. As to the company located in Italy, it was
found that it did not represent a significant proportion
the production of RBMs in the Community and
of
imported a significant part of
its sales. As to the
Spanish company it found that it should be considered
as an importer rather than a producer since it produced
negligible volumes of
the product concerned, while
imported more than 90 % of its sales from Indonesia.
It is concluded, therefore, that the two complainants are
the only Community producers of RBMs with a
significant production left.

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(146) It

the

should be

recalled that

two complainant
Community producers were heavily injured already in
the past by imports of RBMs originating in the PRC
and Malaysia which, as described in Regulation (EC)
No 119/97 (1),
to a 28 % decrease of
their workforce between 1992 and October 1995. As
shown under recital
the
Community industry's workforce of 30 % occurred
between 1998 and the IP.

(94), a further reduction of

inter alia,

led,

(147) In view of

injury

suffered by

the material

the
Community industry,
it is concluded that, should the
Community industry not recover from the unfair subsi-
disation practices, it is likely that the production in the
Community will cease completely and that the users will
be significantly dependant on imports.

market share. In both scenarios, the financial situation of
the Community industry is likely to worsen. As a further
consequence, it is likely that the Community production
would, within a short period of time, definitively cease.

accounting

(151) Moreover, given that the Community industry does not
only produce the product concerned but also other
products
its
turnover, it is very likely that the closure of production
lines manufacturing RBMs would affect the viability of
the whole factory and lead to closure of all production
effect on
lines with a consequent wider negative
employment and investment.

about one

third of

for

(b) Financial situation of the Community industry

(148) The financial

situation of

the Community industry
developed so negatively during the period considered,
into
that after the IP the Community industry went
receivership, as mentioned in recital (75). It should be
noted that
loss-making
the Community industry's
situation resulted from its difficulty to compete with
the low-priced subsidised imports. However,
the fact
the cooperating Community producer has been
that
taken over, shows that the production of RBMs in the
Community is in the process of being restructured and
that a strong effort is being made to keep this industry
viable and to render it profitable.

(d) Possible relocation of the Community industry production

(152) It was examined whether any measures could be
the
considered as not being
Community given the
the
Community industry production to a third country.
The possibility of any further
relocation was also
examined.

interest of
relocation of part of

in the

(153) First of all, as explained in recital (98), it is recalled that
the relocation, which took place in 2000, permitted the
Community industry to limit its losses. In this respect, it
was a strategic decision taken to thwart the effect of the
subsidised practices.
it is likely that this
In addition,
relocation, by improving the financial situation of the
Community industry, had the indirect effect to make it
more attractive for the new investor that recently took it
over.

(c) Possible

of
measures on the Community industry

effects

the

imposition/non-imposition of

(149) Following the imposition of measures, the restoration of
fair market conditions would enable the Community
industry to recover lost market share and, by increasing
capacity utilisation, to decrease unit production costs
and to increase profitability. Furthermore, the measures
are expected to have a positive effect on the level of the
Community industry's prices.
is
the increase in production and sales
expected that
volume, on the one hand, and the further decrease in
unit costs, on the other hand, eventually combined with
a moderate price increase, will allow the Community
industry to improve its financial situation.

In conclusion,

it

(154) As

to the

relocation,

risk of any additional

the
Commission received satisfactory confirmation that
foreseen by the Community
such relocation is not
industry.
there is no reason to consider
that such a move is likely since the restructuring effort
combined with the imposition of countervailing duty
should enable the Community industry to enjoy a prof-
itable situation once again.

In addition,

(150) To the contrary, should countervailing measures not be
imposed, it is likely that the Community industry would
have to further lower its prices and/or continue to lose

(1) OJ L 22, 24.1.1997, p. 1.

3. Interest of importers

(155) Certain importers, which however did not purchase
RBMs from Indonesia, submitted that switching sources
of supply could involve additional costs or transitional
problems. More particularly, the importers underlined
that owing to the anti-dumping measures imposed in
1997, they had already been forced to change their
source of supply.

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24.9.2002

(156) However, it is recalled that the purpose of countervailing
measures is not to force importers or users to change
their source of supply but to restore fair competition on
the Community market. In addition, these importers also
recognised that a number of other third countries could
easily produce RBMs and they foresaw no difficulties in
sourcing from a country not covered by countervailing
measures. Moreover, they could also trade Community
producers' products. Therefore any problems resulting
from a possible switching of supply are likely to be
temporary and unlikely to offset the positive effect on
the Community industry of countervailing measures
against injurious subsidies.

4. Interest of users and consumers

(a) Users

(157) It has been alleged both by the cooperating unrelated
importers and user
the
imposition of countervailing measures would have a
serious adverse impact on the financial situation of the
users.

(ring binder producer)

that

(158) In this

respect,

the likely effect on users' cost of
production of the countervailing measures imposed on
Indonesia was assessed. In this respect an estimation was
undertaken of what would be the impact of
the
measures proposed against Indonesia on a user having
as sole source of supply imports from Indonesia (worst
case scenario). On this basis the impact of the measures
proposed against Indonesia would be evaluated as an
increase in the cost of production of around 1,3 %. As
already explained, this is an entirely hypthetical scenario
since no user cooperated which only sourced the
product concerned from Indonesia.

(159) In view of the above findings, it was concluded that the
impact of countervailing duties on users would be
negligible.
terms, given the lack of
cooperation from other users, it is likely that the cost
impact on all other users would be similarly negligible.

In more general

the

following

imposition of

(160) The cooperating user claimed that, as happened in the
past three years, when it had to relocate part of its
production outside the Community and to close three
plants
anti-dumping
in the PRC and
measures on RBMs originating
Malaysia, countervailing measures on imports orig-
inating in Indonesia, by increasing the prices of one of
the items of its cost of production, could entail a further
the
move of
Community and/or closure of the relevant plants. This
would risk to affect its whole activity, i.e. also the manu-
facturing of other products, whose plants would be delo-
calised as well, with significant
in the
Community.

its ring binder production outside of

job losses

the binder market

(161) As a general remark, it should be noted that the risk of
relocation of
the downstream industry owing to the
countervailing measures is tempered by the fact that
part of
is business-to-business
oriented and that it is fundamental that users are close
to their customers, have a flexible production ready to
meet the demand and a sound knowledge of the market.
The investigation showed in fact that the main criteria
customers of ring binders producers take into account in
their choice are price, quality and service, as well as
In addition, as already explained in
speedy delivery.
recitals (157)
the
countervailing measures on the downstream industry
was found negligible. Finally,
that only one
binder producer fully cooperated with the investigation,
tends to confirm the conclusion that countervailing
measures will not have a decisive impact on users.

the financial

impact of

to (158),

the fact

(162) In addition, certain interested parties pointed out that
the relocation of several users that have occurred in
the past years was due to the high cost of production
in the Community. This confirms that any relocation
should be seen in the wider context of the overall cost
structure in which, as already explained, countervailing
measures represent a negligible portion.

its

part

production

(163) As regards the specific situation of the cooperating user,
although this user
investigation showed that,
the
outside
the
relocated
of
Community between 1998 and the IP,
i.e. after the
imposition of anti-dumping measures against the PRC
and Malaysia, this user in fact changed its source of
supply after the imposition of anti-dumping measures
against the PRC and Malaysia, purchasing RBMs from
from
the cooperating importers which in turn, as
1998, started to import from India to the detriment of
the PRC. It seems therefore difficult to establish a link
between the move of the ring binder production of that
user out-side the Community and the imposition of anti-
dumping duties on imports from the PRC and Malaysia.
Moreover, as already shown in recital
(159) counter-
vailing duties have a negligible impact on the users'
cost of production.

(164) It was found that the relocation described above should
the external-
rather be seen as the consequence of
oriented strategy of this user which acquired a number
of companies during the last years. This
strategy
eventually led to a consolidation and a restructuring of
the group, certain amongst
the different entities of
which have been closed. The relocation of some plants
outside the Community should be seen as part of this
strategy, which aims to strengthen the position of that
user over the Community market and to develop its
presence in Eastern Europe.

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Official Journal of the European Communities

C 227 E/307

(165) Before the above background, and in view of

the
the duties imposed is
negligible impact
it appears
likely to have on the user concerned,
unlikely
against
Indonesia would, as such, entail a further move of its
ring binder production outside of the Community.

countervailing measures

the level of

that

the

(166) As regards the closure of plants and the risk of further
linked to the imposition of countervailing
closures
measures against Indonesia, it was found that the coop-
erating user closed three plants in the past three years,
when measures on the PRC and Malaysia were in force.
In view of the negligible impact the measures would
have on the cost of production and on the financial
situation of the user in question, as explained under
recital
it is unlikely that the measures on the
PRC and Malaysia led, on their own, to the closure of
these plants and that the countervailing measures on
imports from Indonesia would cause a closure of other
plants.

(164),

(b) Consumers

(167) It should be mentioned that the product concerned is
not
and that no consumers'
level
association made themselves known and participated to
this investigation.

sold at

retail

(168) The cooperating user also argued that countervailing
measures would increase the price paid by the final
customer of ring binders,
in
view of the above explanation regarding the impact on
ring binder producers, any increase in the final sales
price to consumers of ring binders is likely not to be
significant.

i.e. consumers. However,

(169) In addition,

the coop-
the investigation showed that
erating user sells its products mainly to distributors. In
the worst scenario, should the cost increase that the
users might suffer be passed on in full until the final
consumer,
this would entail a price increase of a
maximum of 4 % for the final consumer. However,
since general experience
this
shows that each step in the distribution chain is likely
to support part of its costs increase in order to stay
competitive on its market.

is unlikely to occur

to a situation where the Community industry could
from dominant position on the Community
benefit
market,
the anti-dumping
in particular
measures imposed in 1997 on imports from the PRC
and Malaysia and in view of the restructuring of the
Community industry.

in view of

(172) First of all, it is recalled that the Community industry
held, during the IP, a market share which only ranged
between 10 % and 15 %. The
two complainant
Community producers taken together would have held,
during the IP, a market share ranging between 32 % and
37 %. Even in the event of including Koloman's imports
in the market share held by both complainants together,
this market share would have ranged from 47 % to 52 %
of the Community market in the IP. In addition, it is
recalled that, although the Commission initiated a review
of the measures against the PRC, this review does not
concern imports from Malaysia. Also RBMs can still be
imported from India. Therefore it
is considered very
unlikely that the imposition of countervailing measures
against Indonesia would lead to any negative effect on
industry on the
the Community
competition of
Community market. Finally,
the
recalled that
is
imposition of anti-dumping measures on imports from
the PRC and Malaysia likewise did not lead to any kind
of dominance for the Community industry, even if no
other sources of supply but these two countries existed
at the time.

it

(173) On the other hand, as already explained in recital (150),
it is likely that without measures to correct the effects of
subsidised imports, Community production will, within
a short period of time, no longer be viable and therefore
cease. It would certainly not be in the interest of the
the Community industry would cease its
users that
Indeed, on the
production of the product concerned.
that cooperated purchased
one hand,
the sole user
between 20 % and 50 % of
from the
Community industry between 1998 and the IP. On the
other hand, should the Community industry definitely
cease
the production of RBMs, users would be
significantly dependent on imports.

its RBMs

(170) On the basis of the above, the impact on users of RBMs
and consumers of ring binders was considered not to
constitute a compelling reason against the imposition of
countervailing measures, as the possible negative effect is
unlikely to offset the positive effect on the Community
industry of countervailing measures against
injurious
subsidies.

(d) Impact on competition

(171) It was also examined whether the imposition of counter-
vailing measures on imports from Indonesia could lead

this country recently expired. Moreover,

(174) Should measures be imposed, several alternative sources
of supply still exist. RBMs are being or can be purchased
from the Community industry, the other Community
producers, India and Hong Kong. In addition, imports
from Malaysia are likely to recommence since measures
against
the
the imposition of anti-
investigation has shown that
from the PRC and
dumping measures on imports
Malaysia did not entail any shortage of
the product
concerned. Finally, it is recalled that the impact of the
measures on users was found to be negligible, and that
the product concerned will therefore quite likely still be
imported from Indonesia.

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5. Conclusion on Community interest

(175) Given the above reasons, it is concluded that there are
imposition of

against

the

no compelling reasons
countervailing duties.

G. DEFINITIVE MEASURES

1. Injury elimination level

(176) In view of the conclusions reached with regard to subsi-
disation,
injury, causation and Community interest,
definitive countervailing measures should be imposed
at a level sufficient to eliminate the injury caused to
the Community industry by the subsidised imports.

(177) In accordance with Article 15(1) of the basic Regulation,
the Commission examined what level of duty would be
adequate to remove the injury to the Community
it
industry caused by subsidisation. For that purpose,
was
level based on the
a price
Community producers' cost of production together
with a reasonable profit margin should be calculated.

considered that

(178) Here,

it was found that a profit margin of 5 % of
turnover could be regarded as a reasonable minimum,
taking into account the need for long-term investment,
and, more
the
Community industry could have been expected to
obtain in the absence of injurious subsidisation.

amount which

particularly,

the

(179) Given the lack of cooperation, it was considered that the
the difference
cif prices

injury elimination level should, cover
between this
adjusted as explained in recital (82).

calculated price

and the

(180) The injury elimination levels found was 42,30 % for

imports from Indonesia.

was lower than the injury margin. The following rate of
duty therefore applies:

Indonesia (all companies): 10,0 %.

(182) In order to meet the deadline set out in Article 11(9) of
the basic Regulation, the present Regulation should enter
into force on the day of its publication,

HAS ADOPTED THIS REGULATION:

Article 1

codes

(Taric

ex 8305 10 00

1.
A definitive countervailing duty is hereby imposed on
imports of certain ring binder mechanisms, falling within CN
code
and
8305 10 00 20) and originating in Indonesia. For the purpose
of this Regulation, ring binder mechanisms shall consist of two
rectangular steel sheets or wires with at least four half rings
made of steel wire fixed on it and which are kept together by a
steel cover. They can be opened either by pulling the half rings
or with a small steel-made trigger mechanism fixed to the ring
binder mechanism.

8305 10 00 10

2.
The rate of the definitive countervailing duty applicable
to the net, free-at-Community-frontier price, before duty, shall
be as follows for products originating in:

Country

Definitive duty (%)

Indonesia

10,0

Unless otherwise

3.
concerning customs duties shall apply.

specified,

the provisions

in force

The proceeding concerning imports of certain ring binder

4.
mechanisms originating in India is hereby be terminated.

Article 2

2. Definitive countervailing measures

(181) In light of the foregoing and in accordance with Article
15(1) of the basic Regulation, the countervailing duty
rate should correspond to the subsidy margin, which

This Regulation shall enter into force on the day of its publi-
cation in the Official Journal of the European Communities.

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