Council Regulation (EC) No 977/2002 of 4 June 2002 imposing a definitive countervailing duty on imports of certain ring-binder mechanisms (RBMs) originating in Indonesia and terminating the anti-subsidy proceeding in respect of imports of certain RBMs originating in India
Date: 2002-06-04
Institutions: Council of the European Union
Subjects: India, Indonesia, anti-subsidy proceeding, book trade, import, monetary compensatory amount

8.6.2002

EN

Official Journal of the European Communities

L 150/17

COUNCIL REGULATION (EC) No 977/2002

of 4 June 2002

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

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)

(2)

(3)

(4)

On 18 May 2001, the Commission announced by a
notice (hereinafter referred to as ‘notice of initiation’)
published in the Official Journal of the European Communi-
ties (2) the initiation of an anti-subsidy proceeding with
regard to imports into the Community of certain ring
binder mechanisms (hereinafter referred to as ‘RBM’)
originating in India and Indonesia and commenced an
investigation.

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,
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 resulting therefrom, which was considered suffi-
cient to justify the initiation of a proceeding.

(the ‘complainants’),

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.

Prior to the initiation of the proceeding and in accord-
ance with Article 10(9) of Regulation (EC) No 2026/97
(hereinafter referred to as the ‘basic Regulation’), the
India and
Commission notified the Governments of
Indonesia that it had received a properly documented

(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.

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)

(6)

The Commission officially advised the Community
importers and users
producers, exporting producers,
known to be concerned,
the
exporting countries and the complainant of the initia-
tion of the proceeding. The parties concerned had the
opportunity to make their views known in writing and
to request a hearing within the time limit set out in the
notice of initiation.

the representatives of

The Commission sent questionnaires
to all parties
known to be concerned and to all other companies
which made themselves known within the deadlines set
out in the notice of initiation. Replies were received
India, one Community
from the Government of
producer, one exporting producer in India, as well as
from its related exporter outside the Community and
from two importers in the Community as well as from
one user related to the importers.

subsidisation,

The Commission sought and verified all the information
it deemed necessary for the purpose of a determination
of
injury, causation and Community
interest. Verification visits were carried out at the prem-
ises of
India and the following
companies:

the Government of

(a) Community producers

— Koloman Handler AG, Austria

(b) Exporting producers in India

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

vallore

(c) Related exporters outside the Community in Hong Kong

— ToCheungLee

(BVI)

Stationery Mfg. Co. Ltd.
company)

Limited/World Wide
(ultimate holding

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Official Journal of the European Communities

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(d) Unrelated importers

— Bensons
Kingdom

International

Systems

Ltd, United

— Bensons International Systems BV, The Nether-

lands

(e) User

— Esselte, United Kingdom

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

the assessment of

relevant

injury,

for

2. Provisional measures

Given the need to further examine certain aspects of
injury, causation and Community interest, in particular
in view of the ongoing restructuring of the complai-
nants, no provisional countervailing measures were
imposed on RBMs originating in India and Indonesia.

3. Subsequent procedure

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

(7)

(8)

(9)

(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 countervailing
duties. They were also granted a period within which
to this
they could make representations subsequent
disclosure. The oral and written comments submitted by
the parties were considered and, where appropriate, the
findings have been modified accordingly.

B. PRODUCT CONCERNED AND LIKE PRODUCT

1. Product concerned

(11)

The product concerned is certain ring-binder mecha-
nisms (‘the product concerned’). These are currently clas-
sifiable 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.

(12)

(13)

(14)

(15)

(16)

(17)

(18)

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.

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.

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

The Commission found that the RBMs produced and
sold on the domestic market in India and those exported
to the Community from India had the same basic phys-
ical and technical characteristics and uses.

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.

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 the RBMs produced by the complainant Community
producers and sold on the Community market are alike.

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 sold on the domestic market in India and Indonesia
were all like products within the meaning of Article 1(5)
of the basic Regulation.

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

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.

C. SUBSIDIES

1. India

(a) Introduction

(20) On the basis of

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

the Commission investigated the

— 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 question-
naire. 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) L e g a l b a s i s

(24) An instrument under the export and import policy
involving export
export
related incentives
processing zones (hereinafter ‘EPZ’)/export oriented units
(hereinafter ‘EOU’) scheme which was introduced in
1965. During the IP the scheme was regulated by

the

is

(25)

(26)

(ii) E l i g i b i l i t y

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) P r a c t i c a l

i m p l e m e n t a t i o n

Companies requesting EOU status or setting up in an
EPZ must apply to the relevant authorities. Such applica-
tion must include details for a period covering the next
five years, of, inter alia, planned production quantities,
import requirements and
projected value of exports,
indigenous requirements. If the authorities accept the
company's
and conditions
the
attached to the acceptance will 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.

application,

terms

(27)

EPZ/EOU units are entitled to the following benefits:

(i) exemption from import duties on all types of goods
(including capital goods, raw materials and consum-
ables) required for the manufacture, production,
processing or in connection therewith, provided
they are not prohibited items in the negative list of
imports;

(ii) exemption from excise duty on goods procured

from indigenous sources;

(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;

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(v) 100 % foreign equity ownership;

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

market.

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.

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.

company and which is considered to reflect the normal
depreciation of such assets in the industry concerned.
The amount so calculated which is attributable 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 invest-
igation period in India, i.e. 10 %, was considered appro-
priate. 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 %.

(iv) C o n c l u s i o n o n E P Z / E O U

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

In the present proceeding, the EOU scheme was used for
imports of capital goods, raw materials and consum-
ables, as well as for the procurement of goods on the
domestic market. Therefore, the Commission only exam-
ined the countervailability of these concessions.

regard,

the EOU/EPZ scheme involves

In this
the
granting of subsidies as the concessions granted under
the scheme constitute financial contributions by the
Government of India, since government revenues other-
wise due are forgone and a benefit is conferred on the
recipient.

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

contingent

subsidy is

This
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 there-
fore deemed to be specific and countervailable.

(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 established
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.

(v) C a l c u l a t i o n o f

t h e s u b s i d y a m o u n t

Exemption from excise duty on goods procured from
indigenous sources:

Suspension of
goods:

import duty on purchases of capital

(40)

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

The Indian exporting producer used the EOU scheme in
order to obtain a suspension of
the import duties
normally payable on capital goods.

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
a period of seven years, which reflects the depreciation
period for capital goods actually imported by the

(41) However,

the excise duty paid on purchases by a
non-EOU unit (i.e. any company operating without any
special status) is credited as drawback (under 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.

(28)

(29)

(30)

(31)

(32)

(33)

(34)

(35)

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Reimbursement of central sales tax paid on goods
procured locally:

taxable income, and is therefore deemed to be specific
and countervailable.

(42)

(43)

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.

In this respect,

The benefit was calculated on the basis of the amount of
central sales tax refundable for local purchases during
the investigation period.
it could be
established that the Indian exporting 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 %.

(c) Income tax exemption scheme (ITE)

(i) L e g a l b a s i s

(44)

The income tax exemption scheme is based on the
Income Tax Act 1961, which sets out the basis for the
collection of taxes as well as various exemptions/deduc-
tions which can be claimed. Among the 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.

(ii) E l i g i b i l i t y

(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 exemp-
tion under Section 80HHC can be claimed by any firm
which exports goods.

(v) C a l c u l a t i o n o f

t h e s u b s i d y a m o u n t

(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 deduc-
tion 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 %.

(d) Other subsidy schemes

(51)

The investigation has determined that
the exporting
the other investigated
producer did not use any of
schemes. It is therefore not necessary to assess their
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, the subsidy margin for India has to be consid-
ered negligible.

2. Indonesia

(a) Introduction

(iii) P r a c t i c a l

i m p l e m e n t a t i o n

(53)

(46)

The claim for deduction of export profits is submitted
alongside the usual annual

income tax declaration.

(iv) C o n c l u s i o n o n t h e I T E

(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
through export activities can be deducted from the

relevant

information. However,

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
the
requesting 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 Regula-
tion, with the consequence, in accordance with 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 verifica-
tion visit was carried out at
this
exporting producer.

the premises of

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(54)

(55)

(56)

(57)

(58)

(59)

(60)

(61)

Consequently, in accordance with Article 28 of the basic
Regulation, subsidisation and export price have to be
determined on the basis of facts available. The Commis-
sion considered it appropriate to base its findings on the
information submitted in the complaint as well as infor-
anti-subsidy
mation
proceeding concerning Indonesia (1). In accordance with
Article 28(5), this information was also checked, where
possible, against data from independent sources.

from a

available

previous

(b) BKPM Schemes

from the complaint

It appears
this exporting
producer availed itself of benefits available from the
Investment Coordinating Board (BKPM), which is a
government agency in charge of planning and promo-
tion of investment.

that

investments. Companies

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

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.

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 mate-
rials.

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

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.

The BKPM schemes are therefore not in line with Article
3(2)(b) of the basic Regulation, which stipulates that the
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 Regulation
since they explicitly limit access to the subsidy to certain

(1) Council Regulation (EC) No 978/2000 (OJ L 113, 12.5.2000,

p. 1).

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.

(62)

(63)

(64)

(65)

(66)

(c) Indonesian bonded zones — Cakung EPZ

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 avail-
able to companies located outside these zones, notably
an exemption from import duty on goods to be used in
the production of exported finished products.

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 the exporting producer is indeed located
in an EPZ, the Council is entitled to assume that such
benefits have been used.

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.

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.

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.

(d) Conclusion on subsidies

(67) On the basis of facts available in accordance with Article
28 of the basic Regulation, there is evidence of the
existence of countervailing subsidies which are available
to the non-cooperating exporting producer, and a
reasonable indication that such subsides have been used.
For the purpose of measures,
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.

it will be assumed,

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(68)

It is considered that the absence of cooperation is the
result of the use and benefit by this producer of the
countervailable subsidies at a level above the de 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
applicable for all Indonesian exporting producers is as
follows:

all exporters: 10,0 %.

D. INJURY

1. Preliminary remark

(69) Given that only one Indian exporting producer cooper-
ated 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 confiden-
tiality of the data submitted in accordance with Article
29 of the basic Regulation.

(70)

(71)

(72)

2. Community production

It was established that, in addition to the two complai-
nant 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
Commission,
it was found that in 2001 it produced
negligible volumes of the product concerned, while it
imported a 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.

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

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.

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
remained in the Community,
i.e. head office, ware-
housing, sales office, production of a significant amount
of the product range, as well as significant 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 subse-
quent
the
incorporation into the finished product,
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.

(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’.

(b) Events occurring after the investigation period

(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

3. Definition of the Community industry

(77)

(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

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
cooperating
exporting producer and Eurostat import data. Account
was taken of the fact that CN code 8305 10 00 also
covers products not
this
proceeding. However, with regard to Indonesia, given

information provided by the

included in the scope of

IP,

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i.e. Eurostat data.

the lack of cooperation of Indonesian exporters, best
facts available were used,
In this
respect, based on the complaint as best evidence avail-
able, all
imports under the abovementioned CN code
were considered to constitute the product concerned.
The non-cooperating Indonesian exporter claimed that
its exports to the Community market were around 15 %
lower than the import volumes used. However,
this
claim could not be 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. In more detail, it remained
relatively stable between 1998 and 1999 and then
steadily increased until the end of the IP when it was
found to be around 348 million units.

4. Imports from the country concerned

It is recalled that the proceeding against India is termi-
nated. Therefore, only imports from Indonesia are being
analysed as
remaining country
concerned.

from the

imports

(a) Volume of subsidised imports

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.

(78)

(79)

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

the
from Indonesia were

additional

5. Situation of the Community industry

(a) Production

(84)

The Community industry's production followed a down-
ward 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.

(86) On this basis,

the capacity utilisation rate remained

stable over the period considered.

(c) Stocks

(b) Market share of subsidised imports

(87)

The Community industry's end-of-year stocks decreased
by 12 % between 1998 and the IP.

(80)

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

(d) Sales in the Community

(c) Prices of subsidised imports

(i) P r i c e e v o l u t i o n

(81)

The weighted average import prices of imports origin-
ating in Indonesia decreased by − 5 % between 1998
and the IP, i.e. from ECU 105 per thousand units to
EUR 99 per thousand units. The decrease was particu-
larly marked between 1998 and 1999 when prices fell
by 3 % and between 2000 and the IP when they fell by
2 %.

(88) Despite an increase in Community consumption, the
sales volume of the Community industry fell signifi-
cantly 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 four percentage points between 1998 and
the IP, thus following the same trend as the volume sold.

(ii) U n d e r c u t t i n g

(f) Prices

(82) Given the lack of cooperation from Indonesian expor-
ters, the price comparison was made on the basis of
Eurostat data duly adjusted for customs duties and post
importation costs and compared, at the same level of
trade, to Community producers' ex-works 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 %), i.e. when the import prices of the country
concerned significantly decreased, as explained in recital
81.

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L 150/25

(91)

(92)

(93)

(94)

(95)

(96)

(g) Profitability

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

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

The investigation established that the Community indus-
try'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

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 produc-
tion volume per person employed,
increased by 8 %
between 1998 and the IP.

(j) Investment and return on investment

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.

The return on investment, expressed as the relation
between the net profits of the Community industry and
the net book value of its investments, followed 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
the demand on the
from the
Community market.

the sales volume of

increase of

slight

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 prices
improved, leading to a limitation of losses. For instance,
it was assessed that around 60 % of the decrease in the
production was 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 seven
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.

(99)

the core activity of

the
It has been argued that
Community industry is no longer in the Community
since the relocation to Hungary allegedly entailed a 60 %
decline in its Community production and an 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
its
production, but only a decrease of 15 % of
Community production and 20 % of
its Community
produced sales. Therefore,
the conclusion stated in
recital 73 regarding the core activity of the Community
industry is confirmed.

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
development. As from the year 1998, most injury indi-
cators,
i.e. production, sales volumes, prices, market
share, profitability, return on investment, cash flow and
employment, developed negatively.
the
decrease in the sales prices of the Community industry
had a negative effect on its profitability.

In particular

1998,

after

6. Relocation of part of the production

(98)

In order to verify 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 also
examined whether the relocation of part of the produc-
tion mentioned in recital 73 (by means of transfer of

(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 %. In addition, there was
price suppression.

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(104) The situation of the Community industry is thus found
to have deteriorated to such an extent
is
concluded that the Community industry has suffered
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 origin-
ating 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.

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 two percentage points during
the same period. However, they remained significant and
always held a market share which ranged between 8 %
and 13 % between 1998 and the IP. These imports also
the Community
significantly undercut
industry. The market share of the Community industry
decreased by more than four percentage points. At the
same time, average prices of the Community went down
by 4 %. The actual decline in prices was in fact even
higher as outlined in recital 98.

the prices of

(108) During the same period, between 1998 and the IP, the
situation of the Community industry deteriorated as illu-
strated by the decrease of sales volume and market
share, the price decrease and the substantial deteriora-
tion 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 Indo-
nesian 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 production
was five or six times higher than the volume of Indone-
sian imports.

(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
80, between 1998 and the IP, 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 74 and that its level of production is far below
that which has been alleged by the Indonesian company.

(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

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

contributed to the

(113) The import volume from other third countries increased
by 17 % between 1998 and the IP while their market
share increased by more than five 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 of the anti-dumping measures increased signifi-
cantly although reaching the
the
Hungarian prices only in the IP.

same

level

as

(i) I n d i a

(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 range of
2 % to 30 % lower
Indian imports
between 1998 and the IP. In addition, it 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

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Indonesian imports for a comparable
than prices of
volume of RBMs. Since then,
Indian import prices
decreased steadily but have always been above Indone-
sian prices and were still found to be more than 5 %
higher than Indonesian prices during the IP. It is there-
fore concluded that, although Indian imports have had a
negative impact on the situation of
the Community
industry, the negative impact of the subsidised imports
from Indonesia taken in isolation was nonetheless
substantial.
Indonesia was an influential and
important player in the Community. Their volume of
exports to the Community was lower than that of Indian
exports but still substantial. Indonesian exports undercut
the Community industry's prices even more than Indian
exports. It is also noted that the aforementioned analysis
was seriously impeded by the fact that Indonesia did not
cooperate and, therefore, no information was available
in terms of product types and market segments repre-
sented by exports from Indonesia.

Indeed,

(ii) T h e P e o p l e ' s R e p u b l i c o f C h i n a

(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 absorp-
tion of the duty on imports from the PRC have under-
mined 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 soon as 1998. In addition, it should be noted
that while imports from Indonesia only began in 1997,
they had already reached around the same level as the
imports
imports from the PRC by 1998. Since then,
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) H u n g a r y

(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
producer.

in Hungary represents

the

(119) During the period considered, imports of RBMs origin-
ating in Hungary increased in volume. As to their prices
charged by the Community industry on the Community
market for its products imported from Hungary, while
these decreased during the period considered,
they
remained the highest amongst the import prices from
the other third countries and were undercut by imports
from Indonesia.

(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
from Hungary did not materially contribute to the dete-
rioration of the situation of the Community industry.

(iv) T h a i l a n d

(123) Given that, as already mentioned in Regulation (EC) No
2100/2000 (1),
‘some of the goods of Chinese origin
were declared to national customs authorities as being of
Thai origin and thus avoided payment of
the anti-
dumping duties normally due’,
it was also considered
appropriate to evaluate the impact of imports consigned
from Thailand.

(124)

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

In addition,

(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
that
the volumes imported from Thailand are still
substantially below the volumes imported from Indo-
nesia,
it was concluded that these imports could not
have had a significant impact as compared to the effect
of the subsidised imports from Indonesia.

(1) OJ L 250, 5.10.2000, p. 1.

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(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 imports from Indonesia, the volumes imported from
Indonesia were more than 30 % higher than imports
from Thailand. Therefore,
the conclusion drawn in
recital 125 is confirmed.

(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.

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

IP. Nevertheless,

(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. In
this respect, it is underlined that the subsidised imports
must have significantly worsened the price pressure
exerted by the users in the Community, thus causing
injury to the Community industry.

(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.

imports from Indonesia, which held
concluded that
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
considered, particularly as concerns sales price and prof-
itability. It appears therefore that 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.

(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 develop-
ment 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.

(136) However, this assertion was found to be in contradiction
with the statement made by the non-cooperating Indo-
nesian 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.

(137) This

latter producer alleged that

these 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 allega-
tion made by the Indonesian authorities,
is also
it
is made on a
recalled that
Community basis and not on a regional basis.

injury analysis

the

4. Conclusion on causation

(131)

it

In this respect,
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.

(138)

(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 subsi-
dised and lower than the average unit price of all other
imports of RBMs between 1998 and the IP, it is to be

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,

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(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.

importers replied to the questionnaire. Another user
made a submission without replying to the question-
naire.

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

Community interest analysis.

(140)

that

the deterioration of

to analyse the situation of

In this respect, it should be recalled that the scope of an
expiry review is
the
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 fact
the Community
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. It is also recalled that the Chinese
market share was at a very low level during the last two
years of the period considered.

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

F. COMMUNITY INTEREST

1. Preliminary remark

(142)

(143)

it

It was examined whether compelling reasons existed that
could lead to the conclusion that
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
also the consequences of not
taking measures were
considered on the basis of all evidence submitted.

is not

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

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
established 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
of
the production of RBMs in the Community and
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 negli-
gible volumes of
the product concerned, while it
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 signifi-
cant production left.

(146)

the

should be

recalled that

It
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), led, inter alia, to a 28 % decrease of their work-
force between 1992 and October 1995. As shown under
recital 94, a further reduction of the Community indus-
try's workforce of 30 % occurred between 1998 and the
IP.

(147)

the material

injury suffered by the
In view of
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.

(b) Financial situation of the Community industry

(148) The financial situation of the Community industry devel-
oped so negatively during the period considered that
after the IP the Community industry went into receiver-
ship, as mentioned in recital 75. It should be noted that
the Community industry's loss-making situation resulted
from its difficulty to compete with the low-priced subsi-
dised imports. However, the fact that the cooperating
Community producer has been 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.

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

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(c) Possible effects of the imposition/non-imposition of meas-

ures on the Community industry

imposition of countervailing duty should enable the
Community industry to enjoy a profitable situation once
again.

(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
expected that
the increase in production and sales
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

(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
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.

(151) Moreover, given that the Community industry does not
only produce the product concerned but also other
products accounting for about one third of 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 lines
with a consequent wider negative effect on employment
and investment.

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.

(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

(d) Possible relocation of the Community industry production

(a) Users

(152)

It was examined whether any measures could be consid-
ered as not being in the interest of the Community given
the relocation of part of
the Community industry
production to a third country. The possibility of any
further relocation was also examined.

(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.

(157)

It has been alleged both by the cooperating unrelated
importers and user (ring-binder producer) that the impo-
sition of countervailing measures would have a serious
adverse impact on the financial situation of the users.

(158)

In this respect, the likely effect on users' cost of produc-
tion of the countervailing measures imposed on Indo-
nesia was assessed. In this respect an estimation was
undertaken of what would be the impact of the meas-
ures 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,
is an entirely hypothetical
scenario since no user cooperated which only sourced
the product concerned from Indonesia.

this

(154) As to the risk of any additional relocation, the Commis-
sion received satisfactory confirmation that such reloca-
tion is not foreseen by the Community industry.
In
addition, there is no reason to consider that such a move
is likely since the restructuring effort combined with the

(159)

In view of the above findings, it was concluded that the
impact of countervailing duties on users would be negli-
gible. In more general terms, given the lack of coopera-
tion from other users, it is likely that the cost impact on
all other users would be similarly negligible.

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L 150/31

(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 following the imposition of anti-dumping meas-
ures on RBMs originating in the PRC and Malaysia,
countervailing measures on imports originating in Indo-
nesia, by increasing the prices of one of the items of its
cost of production, could entail a further move of its
ring-binder production outside of the Community and/
or closure of
the relevant plants. This would risk
affecting its whole activity, i.e. also the manufacturing of
other products, whose plants would be delocalised as
well, with significant job losses in the Community.

it

is fundamental

(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 the binder market is business to business oriented and
that
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
the main criteria
customers of ring-binder producer take into account in
their choice are price, quality and service, as well as
speedy delivery. In addition, as already explained in reci-
tals 157 to 158, the financial impact of the counter-
vailing measures on the downstream industry was found
to be negligible. Finally, the fact 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.

that

(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.

Community and the imposition of anti-dumping duties
on imports from the PRC and Malaysia. Moreover, as
already shown in recital 159, countervailing duties have
a negligible impact on the users' cost of production.

(164)

It was found that the relocation described above should
rather be seen as the consequence of
the external-
oriented strategy of this user which acquired a number
of companies during the last years. This strategy eventu-
ally led to a consolidation and a restructuring of the
different entities of the group, certain amongst 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.

(165) Before the above background, and in view of the negli-
gible impact the level of the duties imposed is likely to
have on the user concerned, it appears unlikely that the
countervailing measures against
Indonesia would, as
such, entail a further move of its ring-binder production
outside of the Community.

(166) As regards the closure of plants and the risk of further
closures linked to the imposition of countervailing
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 164, 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.

(b) Consumers

(163) As regards the specific situation of the cooperating user,
the investigation showed that, although this user relo-
cated part of
its production outside the 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 the cooperating
importers which in turn, as from 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 outside the

(167)

It should be mentioned that the product concerned is
not sold at retail level and that no consumers' associa-
tion made themselves known and participated to this
investigation.

(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,

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8.6.2002

(169)

suffer be passed on in full until

In addition, the investigation showed that the cooper-
ating user sells its products mainly to distributors. In the
worst scenario, should the cost increase that the users
might
the final
consumer,
this would entail a price increase of a
maximum of 4 % for the final consumer. However, this
is unlikely to occur since general experience 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.

(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.

the sole user that cooperated purchased
one hand,
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 signifi-
cantly dependent on imports.

its RBMs

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
investigation has shown that the imposition of anti-
dumping measures on imports from the PRC and
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.

(c) Impact on competition

5. Conclusion on Community interest

(171)

It was also examined whether the imposition of counter-
vailing measures on imports from Indonesia could lead
to a situation where the Community industry could
benefit
from dominant position on the Community
market, in particular in view of the anti-dumping meas-
ures imposed in 1997 on imports from the PRC and
Malaysia and in view of
the
Community industry.

the restructuring 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
competition of
industry on the
the Community
Community market. Finally, it is recalled that the impo-
sition 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.

(175) Given the above reasons, it is concluded that there are
no compelling reasons against the imposition of coun-
tervailing duties.

G. DEFINITIVE MEASURES

1. Injury elimination level

(176)

(177)

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.

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
Community producers' cost of production together with
a reasonable profit margin should be calculated.

considered that a price

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

(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
users that
the Community industry would cease its
production of the product concerned. Indeed, on the

(179) Given the lack of cooperation, it was considered that the
injury elimination level should, cover the difference
between this calculated price and the cif prices adjusted
as explained in recital 82.

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

imports from Indonesia.

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L 150/33

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
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

1.
A definitive countervailing duty is hereby imposed on
imports of certain ring-binder mechanisms, falling within CN
code
ex 8305 10 00 (TARIC codes 8305 10 00 10 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.

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

Indonesia

Definitive duty
(%)

10,0

Unless otherwise specified,
3.
concerning customs duties shall apply.

the provisions

in force

The proceeding concerning imports of certain ring-binder

4.
mechanisms originating in India is hereby be terminated.

Article 2

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

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

Done at Luxembourg, 4 June 2002.

For the Council

The President

R. DE RATO Y FIGAREDO