Proposal for a Council Regulation imposing a definitive anti-dumping duty and collecting definitively the provisional duty imposed on imports of para-cresol originating in the People's Republic of China
Date: 2003-08-18
Institutions: European Commission
Subjects: China, anti-dumping duty, chemical product, import, originating product

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 18.8.2003
COM(2003) 505 final

Proposal for a

COUNCIL REGULATION

imposing a definitive anti-dumping duty and collecting definitively the provisional duty
imposed on imports of para-cresol originating in the People's Republic of China

(presented by the Commission)

EXPLANATORY MEMORANDUM

On  27  June  2002,  the  Commission  opened  an  anti-dumping  investigation  with  regard  to
imports into the Community of para-cresol originating in the People's Republic of China.

The  investigation  revealed  the  existence  of  injurious  dumping  and  consequently  the
Commission, by Regulation (EC) No 510/2003, imposed provisional anti-dumping duties on
these imports.

The  attached  proposal  for  a  Council  Regulation  is  based  on  the  definitive  findings  on
dumping, injury, causation and Community interest which confirmed the provisional findings.

It is therefore proposed that the Council adopt the attached proposal for a Regulation which
should be published in the Official Journal of the European Union no later than 20 September
2003.

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Proposal for a

COUNCIL REGULATION

imposing a definitive anti-dumping duty and collecting definitively the provisional duty
imposed on imports of para-cresol originating in the People's Republic of China

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community,

Having  regard  to  Council  Regulation  (EC)  No  384/96  of  22  December  1995  on  protection
against dumped imports from countries not members of the European Community1 (“the basic
Regulation”), and in particular Article 9 thereof,

Having  regard  to  the  proposal  submitted  by  the  Commission  after  consulting  the  Advisory
Committee2,

Whereas:

(1) 

(2) 

(3) 

(4) 

(5) 

1

2

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A. PROVISIONAL MEASURES

The  Commission,  by  Regulation  (EC)  No  510/20033  (the  “provisional  Regulation”)
imposed a provisional anti-dumping duty on imports of para-cresol falling within CN
code ex 2907 12 00, originating in the People's Republic of China.

It  is  recalled  that  the  investigation  of  dumping  and  injury  covered  the  period  from
1 April  2001  to  31  March  2002  (‘investigation  period’  or  ‘IP’).  The  examination  of
trends  relevant  for  the  injury  analysis  covered  the  period  from  1  January  1998  to
31 March 2002 (‘period under consideration’).

B. SUBSEQUENT PROCEDURE

Following the imposition of a provisional anti-dumping duty on imports of para-cresol
originating  in  the  People’s  Republic  of  China,  some  interested  parties  submitted
comments in writing. The parties who so requested were also granted  an opportunity
to be heard orally.

The Commission continued to seek and verify all information it deemed necessary for
its definitive findings.

All  parties  were  informed  of  the  essential  facts  and  considerations  on  the  basis  of
which it was intended to recommend the imposition of definitive anti-dumping duties
and  the  definitive  collection  of  amounts  secured  by  way  of  provisional  duties.  They

OJ L 56, 6.3.1996, p. 1. as last amended by Regulation (EC) No 1972/2002 (OJ L 305, 7.11.2002, p. 1).
OJ C […] of […], p. […]
OJ L 75, 21.3.2003, p. 12.

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were also granted a period within which they could make representations subsequent
to this disclosure.

(6) 

The oral and written comments submitted by the parties were considered, and, where
appropriate, the findings have been modified accordingly.

C. PRODUCT CONCERNED AND LIKE PRODUCT

(7) 

In the absence of any comments, the product description and the definition of the like
product as set out in recitals 11 to 14 of the provisional Regulation are confirmed.

1.

(8) 

(9) 

(10) 

D. DUMPING

Normal value

In  the  absence  of  any  comments,  the  provisional  findings  concerning  the  market
economy  treatment  and  the  analogue country  as described in recitals  15  to  22  of  the
provisional Regulation are confirmed.

Further  to  the  disclosure  of  provisional  findings  one  exporting  producer,  Nanjing
Jingmei Chemical Co, Ltd, submitted that the cost of the raw  material  of  the refined
product  concerned  was  counted  twice  in  their  response.  This  claim  was  considered
justified and the cost of production was reduced accordingly.

In  addition,  it  was  claimed  that  the  allocation  of  the  cost  of  production  of  an
intermediate product should be altered, as a proportion of this product was not used to
produce the product concerned. In fact, the costs reported were in accordance with the
internal  documents  collected  on  spot.  However,  there  was  no  evidence  which
suggested that this intermediate product was used for the production of other products
and therefore the whole cost of production of the intermediate product was attributed
to  the  cost  of  production  of  the  product  concerned.  Therefore,  this  claim  had  to  be
rejected.

(11)  Despite the reduction in the cost of production referred to in recital 9, less than 10% of
the domestic sales of the like product during the IP of this company were profitable, as
already  indicated  in  the  provisional  Regulation.  Therefore,  normal  value  had  to  be
constructed  in  accordance  with  Article  2(3)  of  the  basic  Regulation.  The  exporting
producer considered that the profit margin established at the provisional stage was not
appropriate because it included export sales to countries outside the Community. This
argument was accepted as the profit margin used in a constructed normal value under
the  first  sentence  of  Article 2(6),  Article  2(6)(a)  and  Article  2(6)(b)  of  the  basic
Regulation has to be calculated on the basis of domestic sales only. An adjustment has
consequently  been  made  to  rectify  this.  A  further  review  revealed  that  the  general
category  of  products  was  loss-making  on  the  domestic  market.  In  accordance  with
Article  2(6)(c),  a  reasonable  profit  margin  was  therefore  established  based  on  the
weighted average profit margin of the producer in the analogue country and the other
co-operating exporting producer. It has to be recalled that an exporting producer in the
analogue  country  (in the United States of America)  was  investigated  as  the  People’s
Republic of China is not considered a market-economy country.

(12)  The  other  exporting  producer,  Shandong  Reipu  Chemicals  Co,  Ltd,  claimed  that  the
cost  of  production  of  two  other  products  should  be  deducted  from  the  total  cost  of
production  as  they  result  from  the  same  production  process  and  are  sold  separately.

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The  exporting  producer  could  not  substantiate  this  claim  by  documented  evidence.
Indeed  the  documents  collected  on  spot  indicated  that  the  direct  costs  were  already
allocated  to  the  different  products  which  were  in  line  with  the  initial  questionnaire
response. Therefore, the claim had to be rejected.

(13) 

In the absence of any comments, the provisional findings concerning the determination
of  normal  value  in  the  analogue  country  as  described  in  recitals  26  to  27  of  the
provisional Regulation are confirmed.

2.

Export price

(14) 

In the absence of any comments, the provisional findings concerning the determination
of the export price as described in recitals 28 to 29 of the provisional Regulation are
confirmed.

3.

Comparison

(15)  For  the  purposes  of  ensuring  a  fair  comparison  between  the  normal  value  and  the
export price at an ex-works level due allowance in the form of adjustments was made
for  differences  that  were  claimed  and  demonstrated  to  affect  prices  and  price
comparability in accordance with Article 2(10) of the basic Regulation. In addition to
the adjustments already taken into account at provisional stage, following a further in-
depth analysis, an adjustment for differences in indirect taxes not refunded in respect
of  exports  was  made  in  accordance  with  Article 2(10)b  of  the  basic  Regulation.
Furthermore, some smaller adjustments were made with respect to payment terms and
transport, insurance and handling costs.

4.

Dumping margins

(16) 

In  the  absence  of  any  comments  concerning  the  residual  dumping  margin,  the
methodology described in recital 31 of the provisional Regulation is hereby confirmed.

(17)  The definitive dumping margins, expressed as a percentage of the CIF import price at

the Community border, are:

Nanjing Jingmei Chemical Co., Ltd.,
Nanjing:

Shandong Reipu Chemicals Co., Ltd.,
Qihe County:

Country-wide dumping margin:

10.8%

12.3%

40.7%

1.

Community industry

E. INJURY

(18) 

In the absence of any comments, the provisional findings concerning the determination
of  the  Community  industry  as  described  in  recitals  34  to  37  of  the  provisional
Regulation are confirmed.

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2.

Community market

(19)  One exporting producer stated that in the provisional Regulation there was no separate
data or analysis for captive sales, only for the free market activities and for the entire
activity including captive sales.

(20)  However, his issue was dealt with in  recitals 40 to 43 of the  provisional Regulation,
where it was  explained that para-cresol  destined for  captive use was found not to be
directly affected by imports and that for this reason attention was focussed on the free
market.  Some  economic  indicators  related  to  the  Community  industry  were  indeed
analysed and evaluated referring to the situation prevailing on the  free market,  while
others could reasonably be examined by referring to the whole activity. In the absence
of any new information, the provisional findings concerning the relevant Community
market  as  described  in  recitals  38  to  43  of  the  provisional  Regulation  are  therefore
confirmed.

3.

Community consumption

(21) 

In the absence of any comments, the provisional findings concerning the Community
consumption  as  described  in  recitals  44  to  46  of  the  provisional  Regulation  are
confirmed.

4.

Imports from the country concerned

(22) 

In  the  absence  of  any  comments  under  these  headings,  the  provisional  findings  as
described in recitals 47 to 51 of the provisional Regulation are confirmed.

5.

Situation of the Community industry

(23)  One  exporting  producer,  as  well  as  a  user,  questioned  the  fact  that  the  cost  of  raw
materials,  in  particular  of  caustic  soda,  had  increased  in  2001.  This  element  was
checked by the Commission and it was confirmed by different sources of information
that the cost of caustic soda had indeed increased considerably from the year 2000 to
the year 2001. Most of this increase took place in the fourth quarter of 2000 and in the
first  half  of  2001.  The  findings  stated  in  recitals  60  and  61  of  the  provisional
Regulation can therefore be confirmed.

(24) 

In the absence of any other comments, the facts and figures as set out in recitals 52 to
65 of the provisional Regulation are confirmed. Since there was no indication of past
dumping, this was not considered a relevant factor in the analysis.

6.

Conclusion on injury

(25)  A deterioration in the situation of the Community industry during the period 2001 and
the  IP  has  been  found,  in  particular  in  terms  of  reduced  production,  capacity
utilisation,  sales,  market  share,  profitability,  return  on  investment  and  cash  flow.  In
addition,  significant  price  undercutting  as  well  as  a  serious  deterioration  in
profitability and return on investment occurred.

(26) 

In the absence of any comments on the findings, the conclusions reached as set out in
recitals 66 to 70 of the provisional Regulation are confirmed.

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F. CAUSATION

(27)  One exporting producer submitted that the Community industry's activities could have
been negatively affected by the considerable investments, in particular those made to
comply  with  environmental  obligations.  However,  it  was  found  that  this  argument
could not call into question the causal link as established in the provisional Regulation
for  the  following  reason.  While  it  is  correct  that  significant  investments  took  place
during  the  period  under  consideration  to  comply  with  new  Safety,  Health  &
Environment legislation requirements, the major investments in the environment took
place in the first part of the period under consideration, when the Community industry
was still profitable, and even then made up only a minor part of the total investments
in the production  line for the  product  concerned.  It  should  also  be  kept  in  mind  that
such  investments  are  depreciated  over  a  number  of  years  and  that  the  allocation  of
investment  costs  remained  stable  over  the  period  under  consideration.  These
investments can therefore only have had a minor impact and  cannot have broken the
causal link between the dumping and the material injury suffered by the Community
industry.

(28)  The same exporting producer submitted that the decrease of captive sales might have
contributed to the injury suffered by the Community industry since the sales prices to
captive users had increased at a higher degree than those for sales on the free market.
This  issue  has  been  further  investigated.  As  already  indicated  in  the  provisional
Regulation, sales had been made at roughly the same prices to captive users as those
charged on the free market and this has been confirmed by further analysis. Therefore,
only the negative development of the volume of captive sales could have contributed
to  the  material  injury  suffered  by  the  Community  industry.  Indeed,  the  volume  of
captive  sales  went  down  by  around  10%  during  the  period  under  consideration.
However,  in  view  of  the  relatively  small  amount  of  production  destined  for  captive
sales, it was considered that the development of captive use did not in any significant
way  contribute  to  the  material  injury  suffered  by  the  Community  industry.  The
conclusion in the provisional Regulation can therefore be maintained.

(29) 

In the  absence  of  any  other  comments  on  causation,  the  findings  and  the  conclusion
reached as set out in recitals 71 to 85 of the provisional Regulation are confirmed.

G. COMMUNITY INTEREST

(30)  One  important  user  claimed  that  a  shortage  of  supply  of  para-cresol  has  become
apparent in the market since the  imposition of the provisional anti-dumping measure
and that deliveries by the Community industry have become irregular. This issue was
investigated  by  the  Commission.  It  was  confirmed  that  the  Community  industry  had
recently encountered some difficulties to satisfy all demand for the product concerned.
However, it should be recalled that in recent years the market had been supplied by the
Community  producer,  as  well  as  imports  from  China,  Japan  and  the  USA.  The
imposition of a provisional anti-dumping duty could have made Chinese imports more
expensive, but should not have excluded them from the market in view of the fact that
the individual duties were well below the level of undercutting found. It was therefore
concluded, supported by evidence to this effect, that the shortage of supply has most
likely  been  due  to  temporary  circumstances,  such  as  technical  and  management
problems, both in the Community and in China, and that there is no reason to conclude
that this shortage has been  caused by the anti-dumping duties or that this shortage is

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likely to persist. This conclusion is supported by the fact that the Community industry
has increased its production capacity in the year 2002 and should now be able to meet
almost the entire demand in the EC by itself.

(31) 

In the absence of any other new information submitted on the Community interest, the
findings and the conclusion reached as set out in recitals 86 to 102 of the provisional
Regulation are confirmed.

H. DEFINITIVE ANTI-DUMPING MEASURES

1.

Injury elimination level

(32)  Based  on  the  methodology  explained  in  recitals  103  to  107  of  the  provisional
Regulation  an  injury  elimination  level  has  been  calculated  for  the  purposes  of
establishing the level of measures to be definitively imposed.

(33) 

In  the  absence  of  any  comments,  the  methodology  used  for  establishing  the  injury
elimination level as described in  recitals  103  to  107  of  the  provisional  Regulation  is
confirmed.

2.

Form and level of the duties

(34) 

In  the  light  of  the  foregoing  and  in  accordance  with  Article  9(4)  of  the  basic
Regulation,  a  definitive  anti-dumping  duty  should  be  imposed  in  respect  of  the
People's Republic of China. This duty should be imposed at the level of the dumping
margins  found,  since  the  injury  margin  was  found  to  be  higher  than  the  dumping
margin.

(35)  On the basis of the above, the definitive duties are as follows:

Nanjing Jingmei Chemical Co., Ltd.,
Nanjing:

Shandong Reipu Chemicals Co., Ltd.,
Qihe County:

Country-wide dumping margin:

10.8%

12.3%

40.7%

(36)  The  individual  company  anti-dumping  duty  rates  specified  in  this  Regulation  were
established  on  the  basis  of  the  findings  of  the  present  investigation.  Therefore,  they
reflect  the  situation  found  during  that  investigation  with  respect  to  these  companies.
These  duty  rates  (as  opposed  to  the  country-wide  duty  applicable  to  'all  other
companies')  are  thus  exclusively  applicable  to  imports  of  products  originating  in  the
country  concerned  and  produced  by  the  companies  and  thus  by  the  specific  legal
entities mentioned. Imported products produced by any other company not specifically
mentioned in the operative part of this Regulation with its name and address, including
entities  related  to  those  specifically  mentioned,  cannot  benefit  from  these  rates  and
shall be subject to the duty rate applicable to 'all other companies'.

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(37)  Any claim requesting the application of these individual company anti-dumping duty
rates (e.g. following a change in the name of the entity or following the setting up of
new  production  or  sales  entities)  should  be  addressed  to  the  Commission4  forthwith
with all relevant information, in particular any modification in the company's activities
linked  to  production,  domestic  and  export  sales  associated  with,  for  example,  that
name  change  or  that  change  in  the  production  and  sales  entities.  If  appropriate,  the
Regulation  will  then  be  amended  accordingly  by  updating  the  list  of  companies
benefiting from individual duty rates.

3.

Collection of provisional duties

(38) 

In view of the magnitude of the dumping margins found and in the light of the level of
the  injury  caused  to  the  Community  industry,  it  is  considered  necessary  that  the
amounts  secured  by  way  of  the  provisional  anti-dumping  duty,  imposed  by  the
provisional  Regulation,  i.e.  Regulation  (EC)  No  510/2003,  should  be  definitively
collected at the rate of the duty definitively imposed. Where the definitive duties are
higher  than  the  provisional  duties,  only  the  amounts  secured  at  the  level  of  the
provisional duties should be definitively collected.

(39)  Any claim requesting the application of these individual company anti-dumping duty
rates (e.g. following a change in the name of the entity or following the setting up of
new  production  or  sales  entities)  should  be  addressed  to  the  Commission5  forthwith
with all relevant information, in particular any modification in the company's activities
linked to production, domestic and export sales associated with e.g. that name change
or that change in the production and sales entities. If appropriate, the Regulation will
then  be  amended  accordingly  by  updating  the  list  of  companies  benefiting  from
individual duty rates,

HAS ADOPTED THIS REGULATION:

1.

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5

Article 1

A definitive anti-dumping duty is  hereby  imposed  on  imports of  para-cresol with  a
minimum para-isomer purity of 97%, calculated on a net dry basis, falling within CN
code  ex  2907 12 00  (TARIC  code  2907 12 00 91),  originating  in  the  People’s
Republic of China.

European Commission, Directorate-General for Trade, Direction B, office J-79 5/16
B-1049 Brussels/Belgium
European Commission, Directorate-General for Trade,Direction B, office J-79 5/16
B-1049 Brussels/Belgium

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2.

The  rate  of  the  definitive  anti-dumping  duty  applicable  to  the  net,  free-at-
Community-frontier  price,  before  duty,  shall  be  as  follows  for  the  products
manufactured by:

Manufacturer

Rate of duty
%

Taric
additional code

Nanjing Jingmei Chemical Co., Ltd., Jingqiao
Town, Lishui County, Nanjing 211224,
People’s Republic of China

Shandong Reipu Chemicals Co., Ltd.,
Chenming West Road, Qihe County,
Shandong, People’s Republic of China

10.8%

A 434

12.3%

A 435

All other companies

40.7%

A 999

3.

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

Article 2

Amounts secured by way of provisional anti-dumping duties pursuant to Regulation (EC) No
510/2003  on  imports  of  para-cresol  falling  within  CN  code  ex  2907 12 00  (TARIC  code
2907 12 00 91), originating in the People’s Republic of China shall be definitively collected.
Where the definitive duties are higher than the provisional duties, only the amounts secured at
the level of the provisional duties should be definitively collected.

Article 3

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

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

Done at Brussels,

For the Council
The President

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