Commission Regulation (EC) No 1964/2003 of 7 November 2003 imposing provisional safeguard measures against imports of certain prepared or preserved citrus fruits (namely mandarins, etc.)
Date: 2003-11-07
Institutions: European Commission
Subjects: citrus fruit, fruit product, import, protective clause, tariff quota

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COMMISSION REGULATION (EC) No 1964/2003

of 7 November 2003

imposing provisional safeguard measures against imports of certain prepared or preserved citrus
fruits (namely mandarins, etc.)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Community,

Having regard to Council Regulation (EC) No 3285/94 of 22 December 1994 on common rules for
imports and repealing Regulation (EC) No 518/94 (1), as last amended by Regulation (EC) No 2474/
2000 (2), and in particular Articles 6 and 8 thereof,

Having regard to Council Regulation (EC) No 519/94 of 7 March 1994 on common rules for imports from
certain third countries and repealing Regulations (EEC) No 1765/82, (EEC) No 1766/82 and (EEC) 3420/
83 (3), as last amended by Regulation (EC) No 427/2003 (4), and in particular Articles 5 and 6 thereof,

After consultations within the Advisory Committee established under Article 4 of Regulation (EC) No
3285/94 and of Regulation (EC) No 519/94 respectively,

Whereas:

1. PROCEDURE

Regulations (EC) No 3285/94 and (EC) No 519/94

(1)

(2)

(3)

(4)

(5)

(6)

On 20 June 2003, the Spanish Government informed the Commission that trends in imports of
prepared or preserved citrus fruits (namely mandarins, etc.) appeared to call for safeguard measures
under Regulations (EC) No 3285/94 and (EC) No 519/94; submitted information containing the
evidence available as determined on the basis of Article 10 of Regulation (EC) No 3285/94 and
Article 8 of Regulation (EC) No 519/94; and requested the Commission to take safeguard measures
under those instruments.

Spain provided evidence that imports into the European Community of the product concerned are
increasing rapidly both in absolute terms, and relative to Community production and consumption,
and, in particular, that imports have increased rapidly in recent years.

Spain alleged that the increase in the volume of imports of the product concerned has, among other
consequences, had a negative impact on the prices of like or directly competitive products in the
Community, and on the market share held and the quantities sold by the Community producers,
resulting in damage to the Community producers.

Spain further advised that, based on the information submitted by the Community producers, any
delay in the adoption of safeguard measures by the European Community would cause damage
which it would be difficult to repair, and urged their adoption as a matter of urgency.

The Commission informed all Member States of the situation and consulted with them on the terms
and conditions of imports, import trends and the evidence as to serious injury or threat thereof, and
the various aspects of the economic and commercial situation with regard to the Community
product in question.

On 11 July 2003, the Commission initiated an investigation relating to serious injury or threat
thereof to the Community producers of the product like or directly competing with the imported
product.

(1) OJ L 349, 31.12.1994, p. 53.
(2) OJ L 286, 11.11.2000, p. 1.
(3) OJ L 67, 10.3.1994, p. 89.
(4) OJ L 65, 8.3.2003, p. 1.

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(7)

(8)

The Commission officially advised the exporting producers and importers as well as their representa-
tive associations known to be concerned, the representatives of exporting countries and the Commu-
nity producers of the investigation. The Commission sent questionnaires to all these parties, to
representative associations of mandarin producers in the Community, and to those parties who
made themselves known within the time limits set in the notice of initiation. Pursuant to Article 5
of Council Regulation (EC) No 519/94 and Article 6 of Council Regulation (EC) No 3285/94 the
Commission also gave parties directly concerned the opportunity to make their views known in
writing and to request a hearing.

The Government of the People's Republic of China (PRC), certain exporting producers and their
representative associations, Community producers and importers and their representative associa-
tions, and associations representing mandarin producers in the Community, submitted comments in
writing. All interested parties who requested a hearing within the time limit set and who indicated
that they were likely to be affected by the result of the proceeding and that there were particular
reasons why they should be heard, were granted such a hearing. The oral and written comments
submitted by the parties were considered and taken into account in reaching the provisional find-
ings. The Commission sought and verified all the information which it deemed necessary for the
purpose of a provisional determination. Verification visits were carried out at the premises of six
Community producers and four importers as well as at the premises of their representative associa-
tions, and at the premises of a supplier of fresh produce to the Community producers.

2. LIST OF COOPERATING PARTIES

Producers

Industrias Videca, SA; Villanueva de Castellon, Valencia, Spain

La Joya Export SA; Burriana, Castellón, Spain

Agriconsa; Algemesi, Valencia, Spain

Conservas y Frutas, SA; Mula, Murcia, Spain

Halcon Foods SA; Campos del Rio, Murcia, Spain

Alcurnia Alimentación SL; Molina de Segura, Murcia, Spain

Marin Gimenez Hnos. SA; Caravaca, Murcia, Spain

Conservas Fernandez SA; La Copa-Bullas, Murcia, Spain.

Importers

Wydra International GmbH, Reinbek, Germany

EDEMA Zentral AG, Hamburg, Germany

Hüpeden and Co. GmbH, Hamburg, Germany

Wünsche International GmbH, Hamburg, Germany

E. Schröder KG (GmbH and Co.), Hamburg, Germany

Rewe Zentral AG, Cologne, Germany

Henry Lamotte GmbH, Bremen, Germany

MCM Foods BV, Rotterdam, Netherlands

WS China Import GmbH, Hamburg, Germany

Waren-Verein der Hamburger Borse e.V., Hamburg, Germany.

Exporters

Hu Nan Cereals, Oils Imp. & Exp. Group Co., Ltd, Changsha City, China

Huangyan Guangyi Foods Co., Ltd, Huangyan Zhejiang, China

Huangyan Mingqiang Foods Co., Ltd, Zhejiang, China

Jiangsu Cereals, Oils Import & Export Group Corp., Nanjing, China

Jiangxi Cereals, Oils & Foodstuffs Imp. & Exp. Corp., Nanchang City, Jianxi, China

Jinhua Iceman Foods Co., Ltd, Zhejiang, China

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Ningbo Huifeng Foods Co., Ltd, Fenghua City, Zhejiang, China

Ninghai Kaizi Co., Ltd, Ninghai, Zhejiang, China

Shandong Jiayuan Imp & Exp Co., Ltd, Qingdao, China

Shandong Jiufa Edible Fungus Co., Ltd, Nanchang City, Jianxi, China

Taizhou Hengsheng Canned Foods Co., Ltd, Linhai, Zhejiang, China

Taizhou Huangyan Hanfuming Foods Co., Ltd, Taizhou, Zhejiang, China

Xiamen International Trade Group Co., Ltd, Xiamen, China

Xiangshan Huayu Foodstuff Co., Ltd, Xiangshan Dancheng, Zhejiang, China

Xiangshan Longxin Foods Co., Ltd, Xiangshan County, Zhejiang, China

Zhejiang Cereals, Oils & Foodstuffs I/E Co., Ltd, Hangzhou, China

Zhejiang Huangyang Bai Le Foods Co., Ltd, Taizhou City, China

Zhejiang Linhai Jiayuan Foodstuff Co. Ltd, Linhai, Zhejiang, China

Zhejiang Long Wei Food Co., Ltd, Linhai, Zhejiang, China

Zhejiang Ninghai Dongda Food Co., Ltd, Ninghai County, China

Zhejiang Xin An Jiang Canned Food Co., Ltd, Qiandaohu Town, Zhejiang, China

Zhejiang Xinchang Best Foods Co., Ltd, XinChang, Zhejiang, China

Zhejiang Xinshiji Foods Co., Ltd, Zhejiang, China

Zhejiang Zhongda Newland Co., Ltd, Hangzhou, Zhejiang, China

Zhejiang Chun-an Foreign Trade Corp., Chun-An, Zhejiang, China.

Raw material suppliers

Narvill Cooperativa V., Vilavella, Castellón, Spain

Cooperativa Agrícola San Bernardo Coop. V., Carlet, Valencia, Spain

Cooperativa Agrícola Nuestra Señora de Loreto (CANSO), L'Alcudia, Valencia, Spain

Cooperativa Agrícola Betera Coop. V., Bétera, Valencia, Spain

Cooperativa Agrícola SCJ Coop. V. (Copal), Algemesi, Valencia, Spain

Cocalni Coop. V., Alquerias del Nino Perdido, Castellon, Spain.

3. THE EU MANDARIN MARKET

(9)

(10)

Mandarins are harvested in winter, with the harvesting and canning season starting about the begin-
ning of October and finishing around the end of January in the following year. The fresh produce is
destined to the fresh fruit market, for juicing or for canning. Practice in the mandarin canning
industry is to use the season (the period from 1 October in one year to 30 September in the
following year) as the basis for comparisons, and the Commission has adopted this practice in its
analysis. As all production for the season is completed by the end of January, the production data
provided for 2002/03 is complete and no extrapolation was necessary. However,
the other
economic data for the most recent season (2002/03), has been extrapolated based on the data avail-
able for the first nine months of that season.

In October 1996, by Council Regulation (EC) No 2202/96 the Council introduced a Community aid
scheme for producers of certain citrus fruits including mandarins, clementines, wilkings and similar
citrus hybrids. The aim of that scheme was to encourage producers to present their products for
processing rather than withdrawal whilst avoiding systematic recourse to processing as an alternative
outlet for fruit originally destined for the fresh market. Under the scheme, aid is granted to produ-
cers of citrus fruit which is supplied to the processing industry in order, amongst others, to support
producers, facilitate negotiations with the industry and promote the concentration of production
through producers' organisations. The scheme incorporates certain mechanisms to help encourage
producers to produce and supply the quantities which they have undertaken to supply whilst at the
same time discouraging excessive production.

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(11) A related scheme makes provision for aid to be given to producers to meet part of the cost of with-
drawal of fresh citrus fruit from the market. The principal objective of that scheme is to stabilise
prices on the Community market in fresh produce. In addition, it supports producers' incomes and
encourages the withdrawal of produce which is of lower quality from the market.

(12) However, as the Community producers situation had substantially deteriorated, it was clear that they

were not benefiting from the above schemes as intended.

4. PRODUCT CONCERNED

(13)

(14)

(15)

(16)

(17)

The product in respect of which the Commission has been informed that trends in imports appear
to call for safeguard measures are certain prepared or preserved mandarins (including tangerines and
satsumas), clementines, wilkings and other similar citrus hybrids, not containing added spirit,
containing added sugar (the product concerned)

The product concerned is currently classified within CN codes 2008 30 55 and 2008 30 75. These
CN codes correspond to the product concerned in immediate packings of a net content exceeding
1 kg, and of net content not exceeding 1 kg, respectively.

The preliminary investigation shows that
the product concerned is obtained by peeling and
segmenting certain varieties of small citrus fruit (mainly satsumas) which are then packaged in a
medium of sugar syrup. Peeling and segmenting can either be carried out manually or by machine.

The product concerned is produced in various weights to meet the demands both of the consumer
market and of the catering and food industries. The vast majority of the consumer market is taken
by the 312 g net weight/(175 g drained) size, although the share of sales taken by the larger
850 g/(480 g) size is increasing. Larger packaging sizes, particularly those of 2,65 kg/(1 500 g)
and 3,1 kg/(1 700 g), are used by the catering and food industries, with the 2,65 kg format being
most popular.

Satsumas, clementines and other small citrus fruit are commonly known by the collective name
‘mandarin’. Most of these different varieties of fruit are suitable to be used as fresh produce or for
juicing or canning. They are similar, and indeed fresh mandarins (including tangerines and
satsumas), clementines, wilkings and similar citrus hybrids all fall under a single CN code at six digit
level (0805 20).

(18)

Certain exporting producers argued that not only canned mandarins, but all canned fruits, should be
treated as a single imported product concerned. In support of this proposition, they referred to:

(a) the physical properties, nature and quality of the products;

(b) the extent to which the products are capable of serving the same or similar end-uses;

(c) the extent

to which consumers perceive and treat

the products as alternative means of

performing particular functions in order to satisfy a particular want or demand;

(d) the international classification of the product for tariff purposes.

(19)

That argument is rejected. The Commission's analysis is that there is a difference between canned
mandarins and other canned fruit. The fresh fruit from which they are manufactured have different
CN codes at the six-digit level to that for fresh mandarins (including tangerines and satsumas), clem-
entines, wilkings and similar citrus hybrids. Whilst it is true that canned mandarins and other
canned fruit fall within HS code 2008, so too do products as diverse as peanut butter and prepared
or preserved ginger. The taste, texture and shape and colour of the products are different. They have
different levels of vitamins and minerals and fulfil different dietary requirements. The principal end-
uses of the products are also different. This finding is further confirmed by the fact that the produc-
tion process in relation to each product is different (depending on whether or not the fruit requires
to be dried, peeled, chopped, sliced or segmented).

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(20)

They further argued that prepared and preserved fruit and fresh fruit are one imported product
concerned. That argument also must be rejected. Prepared and preserved fruit fall under a different
tariff classification from fresh fruit at four-digit level. Fresh fruit is not processed, and has a limited
shelf-life. It is generally washed, peeled, de-stoned, sliced, chopped or otherwise processed by the
end-user. It is generally considered to have different characteristics such as taste, texture etc. to
prepared and preserved fruit as well as different end-uses.

(21)

The Commission's provisional determination is that
imported product falling under the relevant CN codes listed above.

the product concerned forms one single

5. LIKE OR DIRECTLY COMPETING PRODUCTS

(22)

(23)

The Commission has undertaken a preliminary examination of whether the product produced by
the Community producers (hereinafter referred to as ‘the like product’) is like the imported product
concerned.

The imported product concerned is produced in different qualities. Those with around 10 % or less
broken fruit segments are referred to as ‘fancy’. All others are referred to as ‘standard’. Some coop-
erating exporters and importers alleged that canned mandarins originating in PRC were of better
quality than those of EU origin because they were peeled by hand, claiming that imports from PRC
usually contained a lower percentage of broken segments. However, whilst the majority of imports
originate in PRC, there is conflicting evidence as to the quality/perceived quality of the product
concerned and the like product.

— One importer traded premium and also discount brands of the product concerned. The verifica-
tion showed that in 2002 he bought from Spain in relative terms even slightly larger premium
brand quantities than from PRC and no discount brand quantities while importing the latter
from PRC. The premium brand is bought and resold at higher prices which in all likelihood
should also reflect a better quality.

— In order to ensure the quality of their product and the highest standards of hygiene, the Commu-
nity producers have invested heavily in extensive modernisation programmes and their processes
are highly automated. Community producers pointed out that as a result of concerns as to the
rigour with which hygiene controls are applied to imported products during the canning
process, there is a consumer preference in some countries for canned mandarins produced by
the Community producers.

(24)

In considering whether alleged differences in quality exist, that would result in the imported product
not being like the domestically produced product, the Commission took into account, in particular,
the following findings of the preliminary investigation:

(a) the imported product and the Community product shared the same international classification
for tariff purposes at HS code level (six digits). Furthermore, they shared the same or similar
physical properties such as taste, size, shape and texture. There were some differences in terms
of quality but these were minimal and generally not perceived by consumers;

(b) the imported product and the Community product were sold via similar or identical sales chan-
nels, price information was readily available to buyers and the product concerned and the
product of the Community producers competed mainly on price;

(c) the imported product and the Community product both serve the same or similar end-uses, they

were, therefore, alternative or substitute products and were easily interchangeable;

(d) the imported product and the Community product were both perceived by consumers as alter-
natives to satisfy a particular want or demand, in this respect the differences identified by certain
exporters and importers were simply minor variation.

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Given that ‘likeness’ does not require to be completely identical products, these minor variations are
not sufficient to change the overall finding of likeness between the imported and domestic products.

(25)

In light of the foregoing, the Commission has reached the preliminary conclusion that the imported
product and the Community product are ‘like’.

6. DEFINITION OF THE COMMUNITY PRODUCERS

(26) All production of the product concerned in the Community was made in Spain. The eight producers
(canners) in the Community which cooperated fully in the provisional stage of the investigation are:

Industrias Videca, SA; Villanueva de Castellón, Valencia, Spain

La Joya Export SA; Burriana, Castellón, Spain

Agriconsa; Algemesi, Valencia, Spain

Conservas y Frutas SA; Mula, Murcia, Spain

Halcon Foods SA; Campos del Río, Murcia, Spain

Alcurnia Alimentación SL; Molina de Segura, Murcia, Spain

Marin Giménez Hnos. SA; Caravaca, Murcia, Spain

Conservas Fernandez SA; La Copa-Bullas, Murcia, Spain.

(27)

These companies are all members of associations integrated with the Spanish National Federation of
Associations of processed fruit and vegetables (FNACV). In the year 2002/03, total Community
production of the product concerned was 43 331 tonnes, of which the producers abovementioned
accounted for 35 331 tonnes, equivalent to over 80 % of the total Community production. They
represent a major proportion of total Community production within the meaning of Article 5(3)(c)
of Regulation (EC) No 3285/94 and Article 15(1) of Regulation (EC) No 519/94. They are accord-
ingly considered as the Community producers for the purposes of this proceeding.

(28)

Two further companies which previously produced canned mandarins in the Community went
bankrupt in April 2002 as imports reached their highest levels. They provided certain information
in the context of the investigation but were unable to provide the resources to cooperate fully within
the deadlines set.

7. UNFORESEEN DEVELOPMENTS

(29) After the conclusion of the Uruguay round, a series of events occurred which led to a sharp increase
in imports of the product concerned, particularly from PRC. This series of events (described below)
could not have been foreseen at the time of conclusion of the Uruguay round. It should be noted
that the analysis focuses exclusively on PRC, as more than 98 % of imports of the product concerned
into the EU are of Chinese origin.

(30) Until the mid-1990's, PRC's capacity for producing the product concerned was large enough to meet
domestic demand and exports to its main and most profitable export markets namely Japan and the
United States of America (West Coast). Chinese exports to the Community were at a low level and
were relatively stable.

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(31)

The table below provides estimates of worldwide consumption and of PRC's production capacity,
production, exports and domestic consumption for the canning seasons 1996/97 to 2002/03 on an
indexed basis where estimated worldwide consumption in 1998/99 is equal to 100.

Worldwide consumption

100

115

113

137

141

1998/99

1999/2000

2000/01

2001/02

2002/03

Chinese production capacity

Chinese production

Chinese domestic consumption

70

57

5

Chinese total exports (estimated)

48

96

82

9

65

113

139

148

86

12

70

109

124

16

96

20

104

Source: Eurostat and other publicly available information as well as information submitted in the investigation. The data is
indexed because the party providing the Chinese domestic production capacity, Chinese production, Chinese domestic
consumption and Chinese exports requested that this be treated as confidential. Pending a decision on this request and
for the purposes of the preliminary determination the Commission has indexed them. However, this is without prejudice
to the Commission's decision under Article 9 of Council Regulation (EC) No 3285/94.

(32)

(33)

In 1998/99, Chinese domestic consumption was 5, whilst production capacity was 70, with actual
production of 57 (greatly in excess of what was needed to supply domestic needs). By 2002/03,
Chinese domestic consumption had increased to 20, but Chinese production capacity had increased
to 148, with actual production of 124 (88 % of estimated worldwide consumption). Although
Chinese consumption has been increasing rapidly, it remains low in real terms. Whilst worldwide
consumption has been increasing, it has done so gradually (by around 7 % per annum). In these
circumstances, it was not foreseeable that Chinese production capacity would soar by 16 % per
annum and outstrip worldwide consumption by 2002/03, leaving no room for other producers. As
PRC's domestic consumption has increased to only 20, the increase in Chinese production capacity
and production clearly increased pressure on PRC to export very large quantities (and indeed,
exports more than doubled from 48 to 104 in the period considered). These figures can be given
some context by considering that Chinese exports in 2002/03 were more than two thirds total esti-
mated worldwide consumption in that year.

It appears that the EU/US trade dispute over hormones in meat was also a factor in the increase in
Chinese exports to the EU. The list of products that the United States of America proposed to make
subject to retaliatory measures in relation to that dispute included the product concerned. This
appears to have been perceived by Chinese producers as providing an opportunity to substantially
increase their exports to the United States of America in replacement of the EU product, and
encouraged considerable expansion of Chinese canning capacity. However, the opportunity never
materialised, and PRC was faced with significant excess capacity for which it had to find alternative
outlets. The most attractive market appeared to be the EU, and PRC massively increased its exports
to the EU market.

(34) A change in consumer preferences can also be observed. Traditionally, there was a consumer
perception that canned mandarins are an expensive product, and there was a consumer preference
for small can sizes (312 grammes). The larger can sizes were only purchased by the catering trade
(e.g. bakeries which would use mandarins for decorating cakes). As from 2001/02 consumer prefer-
ences have changed and the larger can size (850 grammes) is increasingly purchased by consumers.
Indeed, since 2001 retail sales of the large can size have increased by around 10 % per annum. This
development may have assisted certain large importers/retailers to obtain very low prices from
Chinese exporters and import and resell large quantities of Chinese satsumas in 850 gramme cans at
very low prices. This change in consumer preference was unforeseen, and was one further unex-
pected factor which led to the sharp increase in Chinese imports, in particular between 2000/01
and 2001/02, and its continuing high level.

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(35)

(36)

Chinese monetary policy, in terms of which the yuan is pegged to the United States dollar at 8,28
yuan/USD, despite perceived differences in the relative values of the two currencies, has also encour-
aged exports. This has made it much more likely that the product concerned is exported rather than
being sold on the Chinese domestic market. Further, following the unexpected fall in the value of
the United States dollar against the euro since October 2000, the yuan lost around 26 % of its value
compared to the euro making the European market all the more attractive to Chinese exporters.

In conclusion, it is the Commission's preliminary analysis that the unforeseen development which
caused the increase in imports to the Community consists of a number of concurrent factors: the
unprecedented increase in Chinese production capacity (which exceeds 2002/2003 estimated world
consumption)
leading to high pressure to export; the possibility that United States retaliatory
measures in the hormones dispute would exclude the EU product from the United States, encoura-
ging an increase in PRC's capacity and consequently production; a change in consumer preferences
from 2001 onwards; and the exchange rate policy of the Chinese government coupled with the
unexpected fall of the United States dollar since October 2000. This combination of factors, clearly
unforeseeable at the end of the Uruguay Round, created the conditions for an unprecedented
increase in imports to the Community.

(37)

The developments described above, each of which has contributed to the very large increases in
exports to the Community from PRC, will be investigated further by the Commission at the defini-
tive stage of this proceeding.

8. INCREASED IMPORTS

8.1. Introduction

(38)

The Commission has undertaken a preliminary examination of whether the product concerned is
imported into the Community in such greatly increased quantities, absolute or relative to total
Community production, and/or on such terms or conditions as to cause, or threaten to cause,
serious injury to the Community producers. In this respect, the Commission has focused on imports
of the product concerned in the most recent period for which data is available in absolute terms and
relative to production. The table below shows the development of imports in absolute terms and
against total Community production for each of the years 1998/99 to 2002/03.

Table

EU imports from third countries

16 347

17 573

20 335

44 804

38 066 (*)

1998/99

1999/2000

2000/01

2001/02

2002/03

Total Community production

81 869

75 767

60 462

60 329

43 331 (**)

Imports/Production

20 %

23 %

34 %

74 %

88 %

(*) A simple mathematical extrapolation (n/9*12) based on the first nine months data (1.10.2002 to 30.6.2003)
(**) All Community production for the 2002/03 season took place in the six-month period to 31.3.2003.

(39)

The following table further demonstrates the increasing trend in imports by comparing the figures
for the first nine months of each season (i.e. October to June). The figures confirm that the imports
in the final period represent a large increase (around 100 %) over the figures for 2000/01 and
before.

Nine-month comparison
(October to June)

1998/99

1999/2000

2000/01

2001/02

2002/03

Volume in tonnes

12 156

12 425

14 535

30 640

28 474

Index — 1998/99 = 100

100

102

120

252

234

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8.2. Volume of imports

(40)

(41)

In the period between 1998/99 and 1999/2000, imports increased by around 7 %, from 16 347
tonnes to 17 573 tonnes. In the following year, the rate of increase grew to around 16 % with
imports increasing to 20 335 tonnes in 2000/01. There then followed a massive surge in imports
between 2000/01 and 2001/02. Imports increased by 120 % in a single year to 44 804 tonnes,
more than 2,5 times the level of imports in 1998/99.

Imports remained very high in the first nine months of 2002/03, but the above tables show that,
using a simple extrapolation, imports may fall to 38 066. While recent intelligence suggests that
imports will reach a higher figure than the above extrapolated figure, no reliable data is yet available
to confirm this.

(42)

The ratio of imports to total Community production increased from around 20 % in 1998/99 to
around 34 % in 2000/01 and to around 74 % in 2001/02. Imports are expected to further increase
to around 88 % of total Community production in the most recent canning season (2002/03).

(43)

It is the Commission's preliminary conclusion that the increases in imports relative to domestic
production can be considered recent, sudden, sharp and significant.

9. SERIOUS INJURY

9.1. Introduction

(44)

In order to make a provisional determination as to whether there is serious injury to the Community
producers of the like product, i.e. a significant overall impairment in the position of the Community
producers, the Commission has undertaken a preliminary evaluation of all relevant factors of an
objective and quantifiable nature having a bearing on the situation of the Community producers. In
particular, for the product concerned, the Commission has evaluated the development of production
capacity, production, capacity utilisation, employment, productivity, cash flow, return on capital
employed, captive use, stocks, consumption, sales, market share, price, undercutting and profitability
for the seasons 1998/99 to 2002/03.

(45) As explained at section 3 the information in this section relates to canning seasons with extrapola-

tions made where necessary for the period 2002/03.

9.2. Analysis of the Community producers

9.2.1. Consumption

Consumption (t)

80 065

74 056

65 676

80 960

71 564

1998/99

1999/2000

2000/01

2001/02

2002/03

(46)

(47)

Consumption of the product concerned in the Community was provisionally established on the basis
of the total sales made by the Community producers and other EU producers and total imports of
the product concerned into the Community as reported by Eurostat.

Between 1998/99 and 2000/01, consumption in the Community declined by 18 % from 80 065
tonnes to 65 676 tonnes. Between 2000/01 and 2001/02, it grew by 23 % to reach its highest level
for the period under examination (80 960 tonnes). The data extrapolated for the current season
(2002/03) indicate a 12 % decline in consumption in that period compared to 2001/02, with
consumption closer to its 1999/2000 level.

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9.2.2. Production capacity and capacity utilisation

Capacity (t)

126 760

129 260

129 260

129 260

129 260

1998/99

1999/2000

2000/01

2001/02

2002/03

Capacity utilisation

65 %

59 %

47 %

47 %

34 %

(48)

(49)

(50)

The Commission has undertaken a preliminary analysis of the Community producers production
capacity. For the sake of clarity, the capacity figures given are full season (1 October to 30
September in the following year) production capacities. It should be noted that the like product is
produced from November until January using production facilities some of which can be used for
processing other fruit and vegetables during the remaining part of the year. However,
from
November until January there are no other fruits or vegetables which are available for processing in
the regions concerned (Valencia and Murcia, Spain).

The preliminary investigation showed that overall estimated theoretical production capacity
remained more or less stable throughout the period of the investigation with only one increase
recorded. That increase (of 2 %) occurred between 1998/99 and 1999/2000.

Capacity utilisation fell between 1998/99 and 1999/2000 (from 65 % to 59 %). This fall is partially
explained by the 2 % increase in capacity in that year, but the greater part appears to be explained
by a fall in production of 7,5 % from 81 869 tonnes to 75 767 tonnes. Capacity utilisation fell by a
further 12 percentage points in 2000/01 (to 47 %). It remained stable in the following year but then
fell to 34 % (a fall of 13 percentage points) in the current season. This sharp fall in capacity utilisa-
tion appears to reflect the fall in production in the same period.

9.2.3. Total Community production

Production (t)

81 869

75 767

60 462

60 329

43 331

1998/99

1999/2000

2000/01

2001/02

2002/03

(51)

Total Community production fell between 1998/99 and 2001/02 from 81 869 tonnes to 60 329
tonnes. Thereafter, production fell by a further 28 % in the last season (2002/03) to its lowest level
in the period under examination.

9.2.4. Employment

1998/99

1999/2000

2000/01

2001/02

Extrapolated
2002/03

Employment (end of period)

2 502

2 441

2 462

2 419

2 343

(52)

Employment in relation to the product concerned fell in 1999/2000. It then recovered slightly in
2000/01 before falling further in 2001/02 and 2002/03. In addition to the fall in employment
recorded by the Community producers, there was also a reduction in employment in mandarin
canning in the Community during the five-year period as some producers involved in canning the
product concerned in the Community ceased this activity before the opening of the safeguard inves-
tigation. It is to be noted that a large majority of the workforce are seasonal workers. For this
reason, this table should be considered in conjunction with the following table on hours worked.

9.2.5. Hours worked and productivity

Hours worked

943 844

987 871

821 478

859 539

625 764

1998/99

1999/2000

2000/01

2001/02

2002/03

Productivity
tonne)

(hours worked/

15,9

16,8

15,6

16,8

17,7

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(53)

(54)

Employment as shown above at section 9.2.4 relates to full time workers. However, the real impact
on employment in the Community is more apparent from hours worked which also includes the
employment of seasonal workers. The number of hours worked also provides a more accurate basis
for measuring productivity than the number of employees.

In general, a steady decline in the number of hours worked can be observed, with a sharp fall in the
most recent period. Productivity has fallen slightly between 1998/99 and 2001/02 from 15,9 hours
worked per tonne produced to 16,8 hours worked, and further declined to 17,7 hours in the last
season (2002/03).

9.2.6. Cash flow

Financial year

Cash flow (index)

1998

100

1999

95

2000

93

2001

196

2002

– 49

(55)

Cash flow could only be examined at the level of the cooperating companies which produced the
product concerned rather than in relation to only the product concerned itself. This indicator was
therefore seen as less meaningful than the other indicators shown above and is shown in terms of
the most recent financial years (the calendar year). Nevertheless, it can be seen that cashflow was
substantially reduced in the most recent period.

9.2.7. Return on capital employed (ROCE)

Financial year

ROCE

1998

15,1

1999

18,9

2000

9,3

2001

9,8

2002

8,1

(56)

ROCE could also only be examined on the level of the cooperating companies which produced the
product concerned rather than in relation to only the product concerned itself. This indicator was
therefore also seen as less meaningful than the other indicators. Nevertheless, it can be seen that
ROCE was substantially reduced in the most recent period.

9.2.8. Sales volume

1998/99

1999/2000

2000/01

2001/02

Extrapolated
2002/03

Sales volume in the Community
(t)

63 718

56 483

45 341

36 156

33 498

(57)

Sales in the Community of the like product by the Community producers fell from 63 718 tonnes
to 45 341 tonnes between 1998/99 and 2000/01, reflecting the fall
in consumption and the
increase in imports in that period. However, despite increased consumption in the following year,
sales continued to fall between 2000/01 and 2001/02 (by 20 %) reaching 36 156 tonnes, as imports
more than doubled to 44 804 tonnes. This reflects the increasing dominance of imports in the
market. In the most recent period, sales have continued to fall.

9.2.9. Market share

1998/99

1999/2000

2000/01

2001/02

Extrapolated
2002/03

Market share

79 %

76 %

69 %

44 %

47 %

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(58)

(59)

The Community producers market share fell from 79 % to 69 % between 1998/99 and 2000/01,
and then to 44 % in 2001/02. The fall in 2001/02 demonstrates the increasing market penetration
of imports in that period, which occurred despite the fact that Community producers lowered their
prices by 17 % between 2000/01 and 2001/02. Although this fall in prices was from a relatively
high level it occurred at a time when Chinese prices fell at a comparative rate and also from a high
level.

The combination of the fall in prices and loss of market share to imports occurred at the same time
as a significant fall in the profitability of the Community producers (discussed below). The Commu-
nity producers' market share subsequently slightly recovered to 47 % in the current season (2002/
03) but this is thought to relate to the impact of the opening of this investigation which reduced
import volumes slightly.

9.2.10. Price of the like product and undercutting

1998/99

1999/2000

2000/01

2001/02

2002/03

Unit prices of Community sales
(EUR/tonne)

826

790

925

827

790

Unit prices of Chinese exports
plus customs duty (EUR/tonne)

732

773

910

790

703

Undercutting (EUR/tonne)

94

17

15

37

87

Undercutting

11 %

2 %

2 %

4 %

11 %

(60)

The average price of the like product fell between 1998/99 and 1999/2000 but recovered in 2000/
01, increasing by 17 % before falling to EUR 827 per tonne in 2001/02 and further declining at
EUR 790 per tonne in 2002/03.

(61)

The difference in prices can be explained in terms of several factors. On one hand a cost element;
i.e. raw material, labour, capacity to share the fixed cost in an environment of decreasing production
and, on the other hand; a price competition element represented by the prices offered by the expor-
ters. It is significant that, during the 2000/01 season when there were rumours of a low overall crop
volume in PRC and the price of exports increased steadily, the Community producers were able to
adjust their prices in the same range. The following table gives the trends of the main cost elements:

Index of cost of canned mandarins

1998/99

1999/2000

2000/01

2001/02

2002/03

Raw material (fresh product)

100

100

122

96

67

Labour cost

100

106

99

106

112

Fixed costs

Total costs

100

100

96

99

112

122

142

109

106

104

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(62)

Furthermore, as regards the price of the fresh product destined to be processed, this is the result of
annual contracts between the canners and the farmers established at the beginning of the season.
For comparison we have shown the price obtained by the producers for mandarins sold as fresh
product and for canning (the latter excludes the effect of the CAP scheme referred to in recital 9):

Fresh market (EUR/tonne)

547

498

571

557

527

Canning

256

255

313

245

172

(63)

(64)

In order to reach a preliminary determination as to the level of undercutting, price information was
examined for comparable time periods, at the same level of trade and for sales to similar customers.
Based on a comparison of average ex-works prices charged by the Community producers and by
exporting producers to the Community importers (cif EU border including customs duty), domestic
prices were undercut throughout the five periods examined by between 2 and 11 %.

The Commission notes that, throughout the whole period of the investigation, the price of imports
was clearly below the price of the Community product. The table indicates that the sharp increase
in imports at low prices in 2001/02 forced the Community producers to reduce their prices, which
together with the reduction in sales volume in the Community (despite an increase in consumption)
lead to a sharp reduction in sales revenues and profitability, and the losses sustained by the Commu-
nity producers in that year.

9.2.11. Profitability

1998/99

1999/2000

2000/01

2001/02

1.10.2002/
31.3.2003

Net profit/loss on Community
sales

4,0 %

0,5 %

6,8 %

– 1,7 %

– 4,0 %

(65)

The profitability of the Community producers' sales in the Community varied significantly in the
five-year period under consideration. The lowest profitability was recorded in 2001/02 and in the
period to 31 March 2003, and the highest in 2000/01. In 2001/02, as imports increased to their
highest level in the four and a half-year period, the average price of imports fell to EUR 691 per
tonne and the average price of the Community product fell to EUR 827 per tonne. This is mirrored
in the undercutting of 15,9 % found for the period 1 October 2001 to 31 March 2003. This fall in
prices taken together with the fall in sales volume appears to have caused the Community producers
profitability to fall from 6,8 % to (- 1,7 %), and this trend has continued into a worse loss making
situation (- 4 %) in the current season.

(66) Underselling reflects the extent to which the price of the imported product is lower than the price
level which the Community producers could be expected to achieve in a non-injurious situation.
The level of underselling was provisionally calculated on the basis of the weighted average non-
injurious price per tonne of the Community product. This price was provisionally calculated by
taking the respective cost of production for the Community product to which was added a profit
margin of 6,83 %. This profit margin was considered reasonable as it refers to profits of the
Community producers in a normal trading situation unaffected by a sudden sharp rise in imports.
This non-injurious price was compared with the weighted average price per tonne of the imported
product concerned during the period October 2001 to March 2003. The difference between these
two prices was expressed as a percentage of the cif/Community border price of the imported
product, and resulted in underselling of around 22 %.

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9.2.12. Stocks

1998/99

1999/2000

2000/01

2001/02

Extrapolated
2002/03

Closing stock (t)

13 016

9 120

6 751

16 387

16 467

(67)

Stock levels fell between 1998/99 and 2000/01, but then increased significantly in 2001/02 and
remained high in 2002/03. The increase in stock between 2000/01 and 2001/02 coincided with a
fall in the Community producers' sales volume in the Community of 20 %, and appears to be chiefly
attributable to that fall in sales volume. For reasons of consistency, the figure for the period ended
30 September 2003 has been calculated based on expected sales in the second half of that season. It
is likely that stocks will be high at the end of the period (30 September 2003), representing 38 % of
the production (27 % in the previous season).

9.2.13. Conclusion

(68)

(69)

(70)

The data shows that whilst production capacity increased slightly, there is negative development for
capacity utilisation, production, employment, productivity, cash flow and ROCE. Overall, before the
background of consumption which declined for two years and then recovered to close to its
previous level before declining again, the data shows negative developments for sales, market share,
prices and profitability and an increase in stocks in the most recent periods.

In particular, the Commission notes that whilst, in 2001/02, as imports reached their highest level
for five years (44 804 tonnes), the Community producers' sales volume in the Community reached a
low level (36 156 tonnes) and the level of profitability fell to (- 1,7 %). This occurred against the
background of a concurrent increase in consumption in that year. Against such a background, whilst
imports could have been expected to increase in line with consumption and prices could have been
expected to firm, imports more than doubled and the price of both the imported product and that
produced by the Community producers fell.

This combination of factors appears to be reflected in the economic indicators pertaining to the
Community producers. The Community producers have lost market share, which reached its lowest
level for five years in 2001/02. Their capacity utilisation has fallen sharply in the period to 31
March 2003 as the Community producers have reduced production apparently in order to reduce
the high stock levels recorded at the end of 2001/02 and in 2002/03. Productivity and employment
have also fallen in both 2001/02 and in 2002/03. The overall effect of the fall in Community sales
volume and prices appears to be a reduction in the Community producers' sales revenue by 29 %
from EUR 41,9 million in 2000/01 to EUR 29,9 million in 2001/02. At the same time, the profit-
ability of the Community producers fell from 6,8 % to (- 1,7 %). The Community producers have
thereafter incurred losses (- 4,0 %) in the period to 31 March 2003.

(71)

Taking account of all of these factors the Commission has reached the preliminary conclusion that
the Community producers have suffered serious injury.

10. CAUSATION

(72)

In order to examine the existence of a causal link between increased imports and the serious injury,
and in order to ensure that injury caused by other factors is not attributed to increased imports, the
Commission has proceeded as follows:

— the injurious effects of factors considered to be causing injury have been distinguished from each

other,

— these injurious effects have been attributed to the factors which are causing them, and,

— after having attributed injury to all causal factors present, the Commission has determined

whether increased imports are a ‘genuine and substantial’ cause of serious injury.

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10.1. Analysis of causation factors

10.1.1. Effect of increased imports

(73)

(74)

The market for canned mandarins is transparent as regards sources of supply and customers. As
canned mandarins are essentially a commodity product, the product concerned and the like product
compete mainly on price.

In the period 2000/01 to 2001/02, the market share of imports grew from 31 % to 56 %, whilst the
market share of the Community producers fell from 69 % to 44 %. Over the same period, imports
have grown from 34 % to 74 % of Community production. Thus, it appears that imports have also
increased relative to production, at the expense of the Community producers.

Market share

1998/99

1999/2000

2000/01

2001/02

2002/03

Imports

20 %

24 %

31 %

56 %

53 %

Sales
industry

of

the

Community

79 %

76 %

69 %

44 %

47 %

(75) As to prices, between 2000/01 and 2001/02, the average unit price of the imported product on the
Community market fell from EUR 792 to EUR 691 per tonne. The average unit price of the
Community product fell from EUR 925 to EUR 827 per tonne. The effect of the fall in the average
unit price of the like product alone on the Community producers' revenue from sales in the
Community would have been a reduction of 11 % (EUR 4,4 million) in 2001/02. Taking account of
the simultaneous fall in sales volume the actual fall in sales revenue in the Community was EUR 12
million. This reduction in sales revenues (together with increased costs) created a significant fall in
profitability and the Community producers showed a loss of 1,7 % in 2001/02.

(76)

For the foregoing reasons, it is the Commission's preliminary conclusion that there is a correlation
between the increase in imports at low prices and the serious injury suffered by the Community
producers, and that the increase in imports has had injurious effects in particular in terms of down-
ward pressure on prices and a reduction in the volume sold by the Community producers on the
Community market.

10.1.2. Effect of changes in consumption

(77)

(78)

The Commission has carried out a preliminary examination of the injurious effects of the fall in
consumption between 1998/99 and 2000/01. That fall has to be considered in the context of the
overall trend during the five-year period under investigation. Consumption decreased from 80 065
tonnes in 1998/99 to 74 056 tonnes in 1999/2000 and 65 676 tonnes in 2000/01, but then grew
by 15 284 tonnes to 80 960 tonnes in 2001/02, before falling back to 71 564 tonnes in the current
season (2002/03). The fall in consumption from 1998/99 to 2000/01 was due to a fall in EU sales
of the Community producers, because some producers had reduced or ceased production. This had
an immediate impact on the level of consumption because the market was only supplied from two
main sources (i.e. from Spain and PRC).

The Commission notes that whilst consumption fell to possibly its lowest level for the four and a
half-year period in 2000/01, that was also the year in which the Community producers achieved
their highest level of profitability (6,8 %). On the other hand consumption rose in 2001/02 to
80 960 tonnes (its highest level during the period) but the Community producers profitability fell to
(- 1,7 %) at the same time. Therefore, there is no clear correlation between consumption itself and
the profitability and general economic situation of the Community producers.

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(79)

In examining the effect of consumption on the profitability of the Community producers, account
has to be taken of the reaction of all market participants to the changes in consumption. In this
respect, it was found that while Community producers were forced to reduce their sales in the
Community by roughly 9 185 tonnes in 2001/02 compared to 2000/01, imports moved sharply in
the other direction (+ 24 469 tonnes).

(80) As regards price effects, variations in consumption of canned goods with a substantial shelf life
should not normally lead to substantial price effects if production is adjusted to the needs of the
market. In this respect, the Community producers appear to have reacted by reducing both produc-
tion and sales in line with the falls in consumption.

(81)

(82)

Bearing in mind that profits could still be made in a situation of falling consumption, as explained
at recital 78, it is reasonable to conclude that, in the absence of the sharp rise in imports at low
prices, the fall in consumption would not have led to a substantial fall in profits.

Consumption in 2001/02 was at its highest level since 1998/99, and at approximately the same
level as in that year. The Community producers' sales, however, decreased in 2001/02 compared to
1998/99 by 29 438 tonnes, a decrease of 43 %. At the same time, imports increased in 2001/02 by
28 457 tonnes compared to 1998/99. Imports therefore increased considerably despite consumption
being only slightly higher.

1998/99

1999/2000

2000/01

2001/02

2002/03

Consumption (t) actual develop-
ment

80 065

74 056

65 676

80 960

71 564

Market
share
held at 1998/99 level)

(simulation —

80 %

80 %

80 %

80 %

80%

EU sales volume simulation (*)

63 718

58 936

52 267

64 430

56 953

Actual EU sales volume

63 718

56 483

45 341

36 156

33 498

(*) Simulated as if the Community industry market share had been maintained at the 1998/99 level.

(83)

The above table shows that if the Community producers' market share had been maintained at its
1998/99 level, the Community producers would have been much more successful in terms of sales
volume. This shows that it was not the development of consumption that impacted on the Commu-
nity producers, but loss of market share to imports.

(84)

For the reasons given above, it is concluded that developments in consumption were not responsible
for any of the injury observed.

10.1.3. Effect of changes in export performance

(85)

The Commission also examined the effects of a fall in exports.

1998/99

1999/2000

2000/01

2001/02

Extrapolated
2002/03

Exports (in tonnes)

21 316

21 672

14 544

18 099

19 078

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(86)

Between 1998/99 and 2000/01, the volume of Community producers' exports of canned mandarins
fell from 21 316 tonnes to 14 544 tonnes as the Community producers lost market share to low
priced competition from PRC (particularly as a result of the US importers anticipating the applica-
tion of US countermeasures in the hormones dispute as discussed at recital: 33). Between 2000/01
and 2001/02, exports recovered to 18 099 tonnes and to 19 078 tonnes in the 2002/03 season.
Over the five-year period, exports decreased by around 2 300 tonnes, although the principal reduc-
tion occurred between 1999/2000 and 2000/01 (the year in which the Community producers were
most profitable). Since 2000/01, exports have actually increased. In particular, in the most recent
period, between 2000/01 and 2002/03 exports have increased largely because of the resolution of
the hormones trade dispute without retaliatory measures by the US against exports of the product
concerned from the Community. This increase in exports has not contributed to the injurious effects
suffered by the Community producers.

It should also be noted that in the calculation of profitability at section, only Community sales were
taken into account.

(87)

For the reasons given above, it is concluded that whilst there might be some link between the fall in
exports and the injurious effects observed in the earlier part of the four and a half-year period, there
is no such link in the latter part of the period.

10.1.4. Effect of any excess capacity

(88)

The Commission has further examined whether injurious effects may have resulted from excess
capacity amongst the Community producers. There was only a single small change in estimated
theoretical production capacity during the period of the investigation, when, in 1999/2000 produc-
tion capacity increased by 2 % to 129 260 tonnes.

Capacity tonnes

126 760

129 260

129 260

129 260

129 260

1998/99

1999/2000

2000/01

2001/02

2002/03

Production tonnes (actual)

81 869

75 767

60 462

60 329

43 331

Production
tion (*))

tonnes

(simula-

81 869

81 869

81 869

81 869

81 869

Capacity utilisation (actual)

65 %

59 %

47 %

47 %

34 %

Capacity
tion (*))

utilisation

(simula-

65 %

63 %

63 %

63 %

63 %

(*) Simulated as if the Community industry production had been maintained at the 1998/99 level.

(89)

(90)

The above table shows that if the Community industry production volume had been maintained at
its 1998/99 level, the Community industry would have also maintained a high utilisation rate.
However, since actual production and utilisation rates were much lower than those simulated it is
clear that it is the reduction in production rather than the small increase in capacity which has
caused the serious injury.

This increase in capacity contributed to a fall in capacity utilisation in 1999/2000 and subsequent
years as the anticipated need for additional capacity did not materialise. Given the very minor
increase in capacity, and that without it capacity utilisation would not have followed a substantially
different pattern, the Commission concludes that the very minor increase in capacity did not cause
any injurious effects to the industry.

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10.1.5. Effect of lack of supply

(91)

Some exporters argued that the reason behind the fall in production by the Community producers
was a lack of supply of raw material (namely fresh small citrus fruit) on the EU market. However,
based on its preliminary examination of the EU market in fresh small citrus fruit, it is the Commis-
sion's provisional determination that there was adequate supply to meet the demand from the
processing industry.

(92)

Table A shows actual production of fresh small citrus fruit (clementines, mandarins and satsumas) in
the years 1998 to 2002, whilst Table B shows forecast production together with withdrawals from
the market in each of the seasons 1998/99 to 2002/03.

Table A

Year

1998

1999

2000

2001

2002

Production

2 329 341

2 823 106

2 511 550

2 379 634

2 650 000

Table B

Season

1998/99

1999/2000

2000/01

2001/02

2002/03

Forecast production (*)

2 299 500

2 804 900

2 520 000

2 481 000

2 626 700

Withdrawals

43 313

99 958

74 195

43 341

14 329

Withdrawals as % of production

1,9 %

3,5 %

3,0 %

1,8 %

N/A

(*) Source: CLAM.

10.1.6. Demand for fresh small citrus fruits by the processing industry

(93)

The quantity of clementines, and satsumas used by the processing industry for the production of
canned mandarins from 1998/99 to 2002/03 is as shown in Table C.

Table C

Season

1998/99

1999/2000

2000/01

2001/02

2002/03

Satsumas

Clementines

110 000

105 000

95 000

95 000

65 000

10 000

5 000

0

0

0

(94) As tables A and C illustrate, the supply of small fresh citrus fruit on the EU market appears to be far
greater than the demand of the processing industry. Indeed, in each year under examination for
which statistics are currently available, supply appears to have outstripped demand both for fresh
produce and for use as raw material for processing and at least 1,8 % or production of small fresh
citrus fruit has been withdrawn from the market.

(95) Nevertheless, the processing industry is in competition with other purchasers of fresh satsumas and
clementines and its ability to compete hampered by the fall in prices achieved for the like product
as a result of the increase in imports of the product concerned at low prices in recent years. This
has two direct consequences. First, the Community producers are becoming less able to afford to
purchase the raw materials (fresh satsumas and clementines) at a price which allows them to achieve
a reasonable level of profitability. Second, because of the low prices offered by the Community
producers to growers for satsumas, which are principally used as raw material for canning, growers
are reorientating their production from satsumas towards clementines in an effort to increase the
profitability of their production. However, that process does not yet appear to be sufficiently far
advanced to have had an appreciable effect on the availability of supply to the Community
producers.

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(96)

It should be noted that by the end of 2001/02, the year in which imports increased to 44 804
tonnes and the Community producers EU sales fell to 36 156 tonnes, the Community producers
stocks had increased by 9 636 tonnes to 16 387 tonnes. This appears to demonstrate that the fall in
sales suffered by the Community producers was not caused by an inability to supply on their part.

(97)

Therefore, the Commission has reached the provisional determination that lack of supply did not
contribute to the injury suffered by the Community producers.

10.1.7. Other factors

(98) No other causation factors were identified by the Commission services or raised by interested parties

during the provisional investigation.

10.2. Attribution of injurious effects

(99)

The serious injury suffered by the Community producers took the form mainly of reduced sales
volume, reduced unit prices and worsening profitability and financial losses. The Commission did
not identify any other factors which could have contributed to the injury apart from the increase in
imports.

(100) The Commission noted that, having ensured the effects of other factors are not attributed to
increased imports, that there is a genuine and substantial causal link between the decline in the
Community producers' sales volumes, sales prices and profitability and the increase in imports,
which not only increased at a much faster rate than the increase in consumption between 2000/01
and 2001/02, but increased whilst consumption fell from 1998/99 to 2000/01.

10.3. Conclusion

(101) After having determined that no injurious effects resulted from the other known factors, the
Commission has reached the preliminary conclusion that there is a genuine and substantial link
between increased imports and serious injury to the Community producers.

11. CRITICAL SITUATION

(102) The Commission has made a preliminary determination that critical circumstances exist in which
delay would cause damage to the Community producers which it would be difficult to repair. As
indicated above, the Commission has reached the preliminary conclusion that the Community
producers are suffering serious injury. In particular, they have already suffered a decline, notably in
production, sales volume, unit prices and profitability as a result of increased imports of the product
concerned.

(103)

In relation to the like or directly competing product, production has fallen by 28 % between 2000/
01 and 2002/03. Sales in the Community have fallen by 26 % in the same period (1), and the
Community producers' market share has also declined. Profitability declined sharply in this period,
and in many cases sales are being made at a loss.

(104) Available information relating to the performance of the Community producers in the third quarter
of 2002/03 indicates that production, sales and profitability continue to decline. The Community
producers are clearly already in a weak position. The increase in imports has lead to oversupply on
the Community market; falls in sales volumes and prices, losses, and serious injury. This situation is
made worse by the apparent fall in consumption in the most recent period, compared to 2001/02.

(1) This percentage is based on the assumption that sales in the full year 2002/03 will be double those for the six-month

period to 31 March 2003.

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(105) Therefore, it can be anticipated that without the application of import restrictions to the EU market,
imports of the products concerned into the Community will continue at a high level, and the
Community producers will continue to sustain losses and be forced into bankruptcy. This process
has already begun. Two Spanish firms previously involved in the production of canned mandarins
went bankrupt in April 2002, and it is highly likely that others will follow.

(106)

In consequence, temporary or permanent closure of production facilities will be difficult to avoid.
These closures are likely to affect production not only of the like product, but also of other products
produced using the same facilities. The social impact in the regions concerned (principally Valencia
and Murcia), would be substantial. The negative impact would also extend to those activities which
are dependent on the Community producers affected by the measure.

(107) The very high level of imports to the EU market together with the extremely negative consequences
of a continuation of imports at this level demand immediate measures by Community producers to
increase sales revenues and stem anticipated losses, including closing production facilities and laying
off employees. The damage caused to the Community producers by taking such action would be
difficult to repair. If such action is to be avoided, provisional safeguard measures must be taken.

(108) Finally it is clear from the Chinese Ministry of Agriculture reports that a large-scale programme to
improve the productivity of the land producing fresh citrus fruit is currently under way. This is
expected to be achieved using improvements in technology and by replacing low volume and low
it is expected that further improvements in
quality trees with improved varieties.
productivity will be achieved simply as a result of past tree-planting programmes which have not
yet reached full maturity.

In addition,

11.1. Conclusion

(109) Therefore, bearing in mind the poor economic situation of the Community producers and the conti-
nuing and increasing threat posed by the Chinese exporting producers the Commission considers
that there exists a critical situation in which any delay in the adoption of provisional safeguard
measures would cause damage which it would be difficult to repair. The bankruptcy of two produ-
cers already confirms that a critical situation exists. The Commission, therefore, concludes that
provisional safeguard measures should be adopted without delay.

12. COMMUNITY INTEREST

12.1. Preliminary remarks

(110) The purpose of safeguard measures is to remedy serious injury which has occurred as a result of
unforeseen developments and prevent a further deterioration of the situation of the Community
producers of the product concerned. In addition to unforeseen developments, increased imports,
serious injury, causation and critical circumstances, the Commission has examined whether any
compelling economic reasons exist which could lead to the conclusion that it is not in the Commu-
nity interest to impose provisional measures. For this purpose, the impact of possible provisional
measures on all parties involved in the proceedings and the likely consequences of taking or not
taking provisional measures, were considered on the basis of the evidence available.

12.2. Interest of the Community producers

(111) The Community producers have invested heavily and have the most highly mechanised and auto-
mated production systems in the world. They are viable and competitive in normal market condi-
tions. During the period examined, the Community producers have suffered a significant fall in
production and sales as a result of which they are currently unable to operate profitably. The
Community producers' position would clearly be put in jeopardy should a continuation of the
current high level of imports at low prices not be prevented by the imposition of provisional safe-
guard measures. The continuation of the current level of imports may lead to a number of them
withdrawing from production of canned mandarins or ceasing their activities entirely.

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12.3. Interests of producers of fresh small citrus fruit in the Community

(112)

It is in the interests of fresh fruit producers supplying raw material to the Community producers to
have strong and predictable demand for their product at a price at which they are able to make a
reasonable profit. In the absence of these conditions, many of the fresh fruit producers will be
unable to remain in business in the medium to long term. It appears that one effect of the high level
of low priced imports of the product concerned is to drive down the price of the raw material (small
fresh citrus fruit, especially satsumas) on the EU market. Therefore, it is in the interests of the fresh
fruit producers for measures to be taken to reduce the volume of low priced imports of the product
concerned to the EU.

12.4. Interest of users and importers in the Community

(113)

In order to evaluate the impact on importers and users of taking or not taking measures, the
Commission sent questionnaires to the known importers and users of the product concerned on the
Community market. Nine responses were received from importers, but none was received from
users other than those related to importers. On the spot investigations took place at the premises of
four importers of the product concerned.

(114) The importers argued that it was better to maintain different supply sources and that, if measures
were taken, those measures should not be in the form of a minimum price system or allocation of a
quota on a first-come-first-served basis as to do so would further disrupt the market. In particular, a
first-come-first-served basis would encourage imports in the early part of the year until the quota
was utilised when demand would then turn to domestic supply. In addition, they stressed the need
for traders in the principal European markets and consumers to continue to have access to good
quality product at low prices.

(115)

In this respect, it should be noted that the provisional measures proposed consist of a tariff quota
which reflects a level higher than the traditional level of imports. Therefore, disadvantages likely to
be suffered by users and importers, if any, are not considered such as to outweigh the benefits
expected to accrue to the Community producers as a consequence of the proposed provisional
measures, which are considered the minimum necessary to prevent further deterioration in the situa-
tion of the Community producers.

12.5. Interest of consumers in the Community

(116) As the product concerned is a consumer product, the Commission informed various consumer orga-
nisations of the opening of an investigation. No responses were received from consumer organisa-
tions and the impact on consumers is therefore considered to be minimal.

13. GENERAL CONSIDERATION

(117) Moreover, by reason of the increased imports of the product concerned (as described in recitals 38
to 110) the Community market in the product concerned, being one of the products listed in Article
1(2) of Council Regulation (EC) No 2201/96 of 28 October 1996 on the common organisation of
the markets in processed fruit and vegetable products (1), as last amended by Regulation (EC) No
2699/2000 (2), is affected by serious disturbance likely to jeopardise the achievement of the objec-
tives set out in Article 33 of the Treaty (as described in recitals 45 et seq.). The conditions set under
Article 22 of Regulation (EC) No 2201/96, if applicable, are therefore fulfilled.

(1) OJ L 297, 21.11.1996, p. 29.
(2) OJ L 311, 12.12.2000, p. 9.

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14. FINAL CONSIDERATIONS

(118) The preliminary analysis of the findings of the investigation confirms the existence of a critical situa-
tion and the need for provisional safeguard measures in order to prevent further injury to the
Community producers which it would be difficult to remedy.

14.1. Form and level of provisional safeguard measures

(119)

(120)

(121)

In order to keep the Community market open and ensure the availability of supply to meet demand
it is appropriate to establish a system of tariff quotas, in excess of which an additional duty is
required to be paid, so that even imports in excess of the tariff quotas can still enter the Community,
albeit upon payment of an additional duty. That additional duty should be set at a level such as to
provide adequate relief to the Community producers and has been calculated on the basis of a target
price at which the Community producers would achieve a profit of 6,8 % on turnover less the
average import price in the period 2001/02 to 2002/03 at the same level of trade adjusted to CIF
Community border customs duty included. This profit level has been based on an assessment of
actual profits achieved in the period 1998/99 to 2001/02. The level of underselling has been calcu-
lated at 22 %. In terms of a fixed duty, the duty payable should therefore be EUR 155 per tonne.

In order to maintain access to the Community market, the tariff quota should be based on the
volume of imports during a recent period. The most recent three-year period for which import
statistics are available is the years 1999/2000 to 2001/02. The tariff quotas should therefore be
based on the average volume imported in these years (27 570 tonnes). It is considered that this
volume is such as to allow the Community producers to continue to adjust whilst avoiding a further
deterioration in their situation. However, bearing in mind the duration of the provisional measures
explained below (154 days) and the necessity to exclude developing countries whose exports to the
Community market do not exceed 3 % of EU imports of the product concerned, the overall amount
of the tariff quotas should be 11 632 tonnes.

In order to preserve traditional trade flows whilst ensuring that the Community market remains
open to new supplying countries, the amount of the tariff quotas should be divided amongst those
countries having a substantial
interest in supplying the product concerned to the Community
market, and a part should be reserved to those countries which do not currently have such a
substantial interest. After consultation with PRC, the only country having such a substantial interest,
the Commission considers it appropriate to assign a specific tariff quota to PRC based on the
proportions of the total quantity of the product supplied by that country during the three-year
period 1999/2000 to 2001/02. The vast majority of the imports in this period originated in PRC
and therefore a country specific tariff quota should apply to PRC and one to all other countries.

(122) On the basis outlined the amount of the quota assigned to PRC would be 11 389 tonnes for a
period of 154 days, whilst the amount assigned to all other countries for that period would be 243
tonnes. It is considered that if this were done, the quota assigned to all other countries would be too
small to allow competition or to allow newcomers to enter the market. It is desirable that countries
other than PRC should also have the opportunity to export the product concerned to the Commu-
nity. The quota assigned to all other countries should therefore be increased to 3 % of Community
consumption (or 906 tonnes for 154 days), giving an overall total volume of 12 295 tonnes the
tariff quotas for a period of 154 days.

(123)

In conformity with Community legislation and the international obligations of the Community, the
provisional safeguard measures should not apply to any product originating in a developing country
as long as its share of imports of that product into the Community does not exceed 3 %.

(124) The provisional determination made by the Commission shows that the only developing country
which does not meet the requirements to benefit from the abovementioned derogation is PRC. The
developing countries to which the provisional measures do not apply should therefore be specified
and this is done in the Annex.

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14.2. Administration of the tariff quotas

(125) Certain importers and their associations have requested that a system be introduced which would
allow traditional importers who traditionally import the product concerned from PRC to have guar-
anteed quantities based on their traditional level of imports from PRC. Other importers argued that
any system of quotas should operate on a first come first served basis in order to avoid an unneces-
sary administrative burden and to maintain competition.

(126)

In order to obtain the information necessary to establish the appropriate method for managing the
quotas, the Commission published a notice on 2 October 2003 inviting importers who have
imported or wish to import the product concerned to provide certain detailed information on their
past imports and anticipated future imports (1). On the basis of the information provided in response
to that notice, in each of the canning seasons 1999/2000, 2000/01 and 2001/02, the vast majority
of imports of the product concerned (more than 90 %) were imported by a small number of impor-
ters who imported an average of 500 tonnes or more per canning season (hereafter referred to as
‘traditional importers’). The remainder was imported by importers other than traditional importers
(hereafter referred to as ‘other importers’).

(127) The Commission has examined this request taking account of the following considerations:

— in the critical circumstances which exist and given that the canning season has already started, it
is considered that provisional measures should be put in place with the least possible delay,

— without a system of guaranteed licences, the price of the imported product from PRC is likely to
rise dramatically in the early part of the tariff quota period as importers seek to ensure that their
imports are not subject to safeguard duty, and might subsequently collapse when importers
reach or exceed the level of imports necessary to fulfil their orders (so-called ‘windfall effects’).
The windfall effects of the allocation of the tariff quotas on a first-come-first-served basis risk
harming Community producers as demand will be focused on imports from PRC in the early
part of the canning season and will only transfer to the Community producers' product after the
tariff quota is exhausted. This risks reducing the Community producers' sales in the early part of
the canning season, and they would also suffer from the uncertainty created by severe price fluc-
tuations. Were this to occur, it would jeopardise achievement of the aim pursued in establishing
the provisional measures,

— it is in the interests of existing importers who normally import substantial quantities of the
product concerned from PRC, that provision is made to ensure that traditional trade flows are
preserved and that they continue to be able to import a certain quantity of the product
concerned from PRC free of additional duty. It is also in the interests of new importers that they
have some opportunity to import the product concerned from PRC free of additional duty,

— it is in the interests of retailers and consumers that there should continue to be an adequate
supply of the product concerned on the Community market and that the market price should be
stabilised,

— the form of the provisional measures should be such as to achieve their objective whilst mini-
mising unnecessary market disruption in the form of severe price fluctuations and negative
effects on the Community producers, as well as ensuring least administrative burdens on impor-
ters.

(128) Having taken account of these considerations, the Commission considers that it would not be appro-
priate to administer the tariff rate quota on a first-come-first-served basis. Rather, those economic
operators who have traditionally imported a substantial quantity of the product concerned to the
Community (so called ‘traditional importers’) should have the opportunity to apply for a licence to
import a quantity of the product concerned free of additional duty, based on their traditional level
of imports from PRC. At the same time, other importers who wish to import the product concerned
into the Community from PRC, but who do not meet this criteria (so called ‘other importers’),
should have the opportunity to apply for a licence to import a quantity of the product concerned
free of additional duty.

(1) OJ C 236, 2.10.2003, p. 30.

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(129)

In order that the opportunity to import the product concerned free of additional duty can be fairly
and equitably distributed, a system of licences should be established whereby the right to import the
product concerned free of duty is subject to presentation of an import licence. The detailed rules for
that system should be complimentary to, or derogate from, those laid down by Commission Regula-
tion (EC) 1291/2000 of 9 June 2000 laying down common detailed rules for the application of the
system of import and export licences and advance fixing certificates for agricultural products (1), as
last amended by Regulation (EC) No 325/2003 (2).

(130)

In order that the system can operate effectively, the right to apply for a licence should be restricted
to operators, natural or legal persons,
individuals or groups who have recent experience of
importing into the Community. Measures are also needed to keep to a minimum speculative applica-
tions for import licences which may result in the tariff quotas not being fully utilised. Therefore, in
order to qualify to apply for a licence, importers should have recently imported into the Community
a reasonable minimum quantity of similar products. Given the nature and value of the product
concerned, it is considered reasonable that in order to qualify to apply for a licence, importers must
have imported at least 50 tonnes of processed fruit and vegetable products as referred to in Article
1(2) of Regulation (EC) No 2201/96 in one or more of the canning seasons 1999/2000, 2000/01
and 2001/02. Further, provision should be made to require the payment of a security in respect of
each tonne of the product concerned for which an application for a licence to import is made. That
security should be at a level sufficiently high to discourage speculative applications but not so high
as to discourage those engaged in genuine commercial activity in relation to processed fruit and
vegetable products. It is considered that a security equal to around 20 % of the value of the imported
product concerned is reasonable in this context.

(131)

It is considered that, notwithstanding the high percentage of the product concerned imported by
traditional importers in recent canning seasons, in order to keep the market open and maintain
competition a minimum of 15 % of the tariff quota for goods originating in PRC should be made
available to ‘other importers’. Therefore, traditional trade flows of imports from PRC can best be
maintained by assigning only 85 % of the tariff quota for goods originating in PRC as individual
tariff quotas to the traditional importers, with the remaining 15 % being reserved to ‘other impor-
ters’.

(132) Therefore, licences for 85 % of the tariff quota for imports of the product concerned originating in
PRC should be made available upon application and subject to objective criteria, to traditional
importers. Licences for the remaining 15 % of the tariff quota should be made available upon appli-
cation and subject to objective criteria to ‘other importers’. Such criteria are necessary to ensure that
each traditional importer has the opportunity to preserve his position vis-à-vis other traditional
importers, that no single importer is able to control the market and that competition between
importers is preserved. In this respect, the most appropriate objective criteria for traditional impor-
ters is the maximum quantity (net weight) of the product concerned imported per canning season
by the traditional importer in the canning seasons 1999/2000, 2000/01 and 2001/02. The most
appropriate objective criteria for other importers are a limit of 20 % of the tariff quota available to
other importers for goods of Chinese origin (id est 3 % of the tariff quota for goods of Chinese
origin).

(133) As regards imports of the product concerned originating in countries other than PRC, as traditional
importers do not import substantial quantities of the product concerned from countries other than
PRC, and as the tariff quota to be established is substantially higher than imports in previous
canning seasons, it is considered that the whole of the tariff quota should be available to all impor-
ters on the same basis, and that (for the reasons above mentioned) the most appropriate objective
criteria for limiting applications for import licences is a limit of 20 % of the tariff quota available for
goods of that origin.

(1) OJ L 152, 24.6.2000, p. 1.
(2) OJ L 47, 21.2.2003, p. 21.

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(134) The eligibility of imported goods from developing countries to be excluded from the tariff quotas is
dependent on the origin of the goods. The eligibility of imported goods for the tariff quota assigned
to imports originating in PRC, and for the tariff quota for imports originating in all other countries,
is also dependent on the origin of the goods. The criteria for determining origin currently in force
in the Community should therefore be applied, and in order to ensure that the tariff quotas are
administered efficiently, presentation of a certificate of origin at the Community frontier should be
required for imports of the product concerned except where imports of the product concerned are
covered by a proof of origin issued or made out in accordance with the relevant rules established in
order to qualify for preferential tariff measures.

14.3. Duration

(135) The provisional measures should not last more than 154 days. The measures should enter into force
on 9 November 2003 and should run for a period of 154 days unless definitive measures are
imposed or the investigation is terminated without measures before that time,

HAS ADOPTED THIS REGULATION:

Article 1

System of tariff quotas

1.
A system of tariff quotas is hereby opened for the period from the date of entry into force of this
Regulation until 10 April 2004 in relation to imports into the Community of certain prepared or preserved
mandarins (including tangerines and satsumas), clementines, wilkings and other similar citrus hybrids, not
containing added spirit, containing added sugar, currently classifiable within CN codes 2008 30 55 and
2008 30 75 (hereinafter ‘canned mandarins’). The volume of the tariff quotas shall be 11 389 tonnes for
canned mandarins originating in the People's Republic of China (PRC), and 906 tonnes for canned
mandarins originating in all other countries.

The conventional rate of duty provided in Council Regulation (EC) No 2658/87 (1), or any preferen-
2.
tial rate of duty, shall continue to apply to canned mandarins imported under the quotas referred to in
paragraph 1.

3.
Imports of those canned mandarins which are made without presentation of a licence relating to the
country from which those canned mandarins originate shall be subject to an additional duty of EUR 155
per tonne.

Article 2

Definitions

For the purposes of this Regulation:

(a) ‘canning season’ means: a period of 12 months from 1 October in one year to 30 September in the

next year;

(b) ‘importer’ means an operator, natural or legal person, individual or group having imported into the
Community, in one or more of the canning seasons 1999/2000 to 2001/02, at least 50 tonnes per
canning season of processed fruit and vegetable products as referred in Article 1(2) of Regulation (EC)
No 2201/96, irrespective of the origin of those imports;

(c) ‘traditional importer’ means an importer who has imported an average of 500 tonnes or more of
canned mandarins per canning season into the Community in the canning seasons 1999/2000, 2000/
01 and 2001/02, irrespective of the origin of those imports;

(1) OJ L 256, 7.9.1987, p.1. Regulation as last amended by Commission Regulation (EC) No 2176/2002 (OJ L 331,

7.12.2002, p. 3).

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(d) ‘reference quantity’ means the maximum quantity of canned mandarins imported per canning season

by a traditional importer during one of the canning seasons 1999/2000, 2000/01 and 2001/02;

(e) ‘other importers’ means importers who are not traditional importers;

(f) ‘origin’ refers to the country from which an import originates, being either PRC on the one hand, or a

country other than PRC on the other.

Article 3

System of import licences

1.
All imports under the quotas referred to in Article 1(1) shall be subject to the presentation of an
import licence (hereinafter the ‘licence’) issued in accordance with Regulation (EC) No 1291/2000, subject
to the provisions of this Regulation.

Article 8(4) of Regulation (EC) No 1291/2000 shall not apply to the licences. Box 19 of licences shall

2.
be marked ‘0’.

In derogation from Article 9 of Regulation (EC) No 1291/2000, the rights accruing from licences

3.
shall not be transferable.

The amount of the security referred to in Article 15(2) of Regulation (EC) No 1291/2000 shall be

4.
EUR 150 per tonne net.

Article 4

Validity of licences

Box 8 of licence applications and licences shall indicate the country of origin of the product. The
1.
word ‘yes’ in box 8 shall be marked with a cross. Licences shall be valid only for the products originating
in the country indicated in that box.

Licences shall be valid only for the period for which they have been issued. Box 24 thereof shall

2.
contain the following entry ‘licence valid only until 10 April 2004’.

Article 5

Licence applications

1.

Only importers may lodge licence applications.

Applications shall be lodged with the competent national authorities. In support of their applications,
importers shall provide information verifying to the satisfaction of the competent national authorities
compliance with Article 2(b) and (c).

Licence applications may be lodged during seven working days from the date of entry into force of

2.
this Regulation.

3.
Licence applications lodged by traditional importers shall cover a quantity no greater than the refer-
ence quantity for the traditional importer concerned in relation to imports of canned mandarins originating
in PRC, and no more than 20 % of the tariff quota specified in relation to imports of canned mandarins
originating in all other countries.

4.
Licence applications lodged by other importers shall cover a quantity no greater than 3 % of the tariff
quota specified in Article 1(1) in relation to imports of canned mandarins originating in PRC, and no more
than 20 % of the tariff quota specified in relation to imports of canned mandarins originating in all other
countries.

Box 20 of licence applications shall indicate ‘traditional importer’ or ‘other importer’ as appropriate,

5.
and ‘request under Regulation (EC) No 1964/2003’.

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Article 6

Allocation of the tariff quotas

1.

For imports of Chinese origin, the tariff quota defined in Article 1(1) shall be allocated as follows:

(a) 85 % to traditional importers;

(b) 15 % to other importers.

If these quantities are not fully exhausted by one category of importers, the remainder may be allocated to
the other category.

For imports other than of Chinese origin, the quota defined in Article 1(1) shall be available to tradi-

2.
tional importers and other importers.

Article 7

Member States communications to the Commission

The Member States shall notify the Commission whether import licence applications have been

1.
lodged and the quantities covered by the licence applications.

The information referred to in paragraph 1 shall be notified by no later than 12.00 (Brussels time) on

2.
the ninth working day from the day of entry into force of this Regulation.

3.
The communication referred to in paragraph 1 shall be effected by electronic means on the form sent
for that purpose by the Commission to the Member States. The information contained therein shall be
broken down by type of importer and by origin within the meaning of Article 2.

Article 8

Issue of licences

1.
On the basis of the information notified by the Member States pursuant to Article 7, the Commission
shall decide, by means of a regulation, for each origin and each type of importer within the meaning of
Article 2, and taking into account paragraph 2, the proportion in which the licences are to be issued by no
later than the 24th working day from the date of entry into force of this Regulation. Where, on the basis
of the information notified by the Member States pursuant to Article 7, the Commission finds that licence
applications exceed the quantities established in accordance with Articles 1 and 6, it shall fix a single
percentage reduction to be applied to the licence applications in question.

Licences shall be issued by the competent national authorities on the third working day following the

2.
entry into force of the regulation foreseen in paragraph 1.

3. Where, pursuant to paragraph 1, the quantity for which a licence is issued is less than the quantity
requested, the licence application may be withdrawn within three working days of the entry into force of
the measures adopted pursuant that paragraph. In the event of such a withdrawal, the security shall be
released immediately.

Article 9

Developing countries

Imports of canned mandarins originating in one of the developing countries specified in the Annex shall
not be subject, or allocated, to the tariff quotas.

Article 10

General provisions

The origin of the canned mandarins to which this Regulation applies shall be determined in accor-

1.
dance with the provisions in force in the Community.

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Subject to paragraph 3, any release into free circulation in the Community of canned mandarins

2.
originating in a third country shall be subject to:

(a) presentation of a certificate of origin issued by the competent national authorities of that country

meeting the conditions laid down in Article 47 of Regulation (EEC) No 2454/93; and

(b) the condition that the product has been transported directly, within the meaning of Article 11, from

that country to the Community.

The certificate of origin referred to in paragraph 2(a) shall not be required for imports of canned
3.
mandarins covered by a proof of origin issued or made out in accordance with the relevant rules estab-
lished in order to qualify for preferential tariff measures.

Proof of origin shall be accepted only if the canned mandarins meet the criteria for determining

4.
origin set out in the provisions in force in the Community.

Article 11

Direct transport

1.

The following shall be considered as transported direct to the Community from a third country:

(a) products transported without passing through the territory of any third country;

(b) products transported through one or more third countries other than the country of origin, with or
without trans-shipment or temporary warehousing in those countries, provided that such passage is
justified for geographical reasons or exclusively on account of transport requirements and provided that
the products:

(i) have remained under the supervision of the customs authorities of the country or countries of

transit or warehousing;

(ii) have not entered into commerce or been released for consumption there; and

(iii) have not undergone operations there other than unloading and reloading.

Proof that the conditions referred to in paragraph 1(b) have been satisfied shall be submitted to the
2.
Community authorities. That proof may be provided, in particular, in the form of one of the following
documents:

(a) a single transport document issued in the country of origin covering passage through the country or

countries of transit;

(b) a certificate issued by the customs authorities of the country or countries of transit containing:

(i) a precise description of the goods;

(ii) the dates of their unloading and reloading or their lading or unlading, identifying the vessels used.

Article 12

Imports in the process of shipment to the Community

This Regulation shall not apply to products in the process of shipment to the Community within the

1.
meaning of paragraph 2.

2.

Products shall be deemed to be in the process of shipment to the Community if they:

— left the country of origin before the date this Regulation begins to apply, and

— are shipped from the place of loading in the country of origin to the place of unloading in the Commu-
nity under cover of a valid transport document issued before the date this Regulation begins to apply.

The parties concerned shall provide, to the satisfaction of the customs authorities, proof that the

3.
conditions laid down in paragraph 2 have been met.

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However, the authorities may regard the products as having left the country of origin before the date this
Regulation begins to apply if one of the following documents is provided:

— in the case of transport by sea, the bill of lading showing that loading took place before that date,

— in the case of transport by rail, the consignment note that was accepted by the railway authorities in

the country of origin before that date,

— in the case of transport by road, the CMR contract for the carriage of goods or any other transport

document issued in the country of origin before that date,

— in the case of transport by air, the air consignment note showing that the airline took the products over

before that date.

The Member States and the Commission shall cooperate closely to ensure compliance with this Regulation.

Article 13

This Regulation shall enter into force on the day following that of its publication in the Official Journal of
the European Union and apply until 10 April 2004.

Article 14

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

Done at Brussels, 7 November 2003.

For the Commission

Pascal LAMY

Member of the Commission

ANNEX

List of developing countries — excluded from the measures as they export less than 3 % of imports to the
Community

United Arab Emirates, Afghanistan, Antigua and Barbuda, Angola, Argentina, Barbados, Bangladesh, Burkina Faso,
Bahrain, Burundi, Benin, Brunei, Bolivia, Brazil, Bahamas, Bhutan, Botswana, Belize, Democratic Republic of Congo,
Central African Republic, Congo, Côte d'Ivoire, Chile, Cameroon, Colombia, Costa Rica, Cuba, Cape Verde, Djibouti,
Dominica, Dominican Republic, Algeria, Ecuador, Egypt, Eritrea, Ethiopia, Fiji, Federated States of Micronesia, Gabon,
Grenada, Ghana, Gambia, Guinea, Equatorial Guinea, Guatemala, Guinea-Bissau, Guyana, Honduras, Haiti, Indonesia,
India, Iraq, Iran (Islamic Republic of), Jamaica, Jordan, Kenya, Cambodia, Kiribati, Comoros, St Kitts and Nevis, Kuwait,
Lao People's Democratic Republic, Lebanon, St Lucia, Sri Lanka, Liberia, Lesotho, Libyan Arab Jamahiriya, Morocco,
Madagascar, Marshall Islands, Mali, Myanmar, Mongolia, Mauritania, Mauritius, Maldives, Malawi, Mexico, Malaysia,
Mozambique, Namibia, Niger, Nigeria, Nicaragua, Nepal, Nauru, Oman, Panama, Peru, Papua New Guinea, Philippines,
Pakistan, Palau, Paraguay, Qatar, Rwanda, Saudi Arabia, Solomon Islands, Seychelles, Sudan, Sierra Leone, Senegal,
Somalia, Suriname, São Tomé and Príncipe, El Salvador, Syrian Arab Republic, Swaziland, Chad, Togo, Thailand, Tunisia,
Tonga, East Timor, Trinidad and Tobago, Tuvalu, Tanzania (United Republic of), Chinese Taipei, Uganda, Uruguay, St
Vincent and Northern Grenadines, Venezuela, Vietnam, Vanuatu, Samoa, Yemen, South Africa, Zambia and Zimbabwe.