Proposal for a Council Regulation amending Regulation (EC) No 1339/2002 imposing a definitive anti-dumping duty and collecting definitively the provisional duty imposed on imports of sulphanilic acid originating in the People's Republic of China and India
Date: 2004-01-22
Institutions: European Commission
Subjects: China, India, anti-dumping duty, chemical product, customs duties, import, originating product

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 22.1.2004
COM(2004) 31 final

Proposal for a

COUNCIL REGULATION

amending Regulation (EC) No 1339/2002 imposing a definitive anti-dumping duty and
collecting definitively the provisional duty imposed on imports of sulphanilic acid
originating in the People’s Republic of China and India

(presented by the Commission)

EN

  EN

EXPLANATORY MEMORANDUM

On 26 June 2003 a reinvestigation pursuant to Article 12 of the basic Regulation was initiated
with regard to anti-dumping measures imposed by Council Regulation (EC) No 1339/2002 on
imports of sulphanilic acid originating in the People’s Republic of China and India.

The  attached  proposal  for  a  Council  Regulation  amending  the  above  Council  Regulation  is
based  on  the  findings  of  the  reinvestigation  that  absorption  of  the  above  anti-dumping
measures took place. Therefore a new dumping margin and a new duty have been calculated.

It is therefore proposed that the Council adopt the attached proposal for a Council Regulation,
which should be published as soon as possible in the Official Journal of the European Union.

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Proposal for a

COUNCIL REGULATION

amending Regulation (EC) No 1339/2002 imposing a definitive anti-dumping duty and
collecting definitively the provisional duty imposed on imports of sulphanilic acid
originating in the People’s Republic of China and India

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community,

Having  regard  to  Council  Regulation  (EC)  No  384/96  of  22  December  1995  on  protection
against dumped imports from countries not members of the European Community1 (the basic
Regulation), and in particular Article 12(3) thereof,

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

Whereas:

A.

PROCEDURE

1.

Original measures

(1)

(2)

(3)

1

2

In  July  2002,  the  Council  imposed  a  definitive  anti-dumping  duty  (the  original
measure) on imports of sulphanilic acid originating, inter alia, in the People’s Republic
of China by Regulation (EC) No 1339/20022. The country-wide duty rate applicable to
the net, free-at-Community frontier price, is 21 %.

2.

Request for an anti-absorption reinvestigation

On 12 May 2003, a request for a reinvestigation of the measure referred to in recital 1
was lodged pursuant to Article 12 of the basic Regulation. The request was submitted
by Sorochimie and Quimigal (the applicants), two producers representing 100 % of the
Community production of sulphanilic acid.

The  applicants  submitted  sufficient  information  showing  that  the  anti-dumping  duty
imposed on sulphanilic acid originating in the People’s Republic of China has not led
to sufficient movement in the prices in the Community. In fact, the evidence contained
in  the  request  showed  that  export  prices  and  prices  delivered  (duty  unpaid)  to  final
customers  in  the  Community  fell  significantly  following  the  imposition  of  the  anti-
dumping  measures,  suggesting  an  increase  in  dumping  which  impeded  the  intended
remedial effects of the anti-dumping measures in force.

OJ  L  56,  6.3.1996,  p.  1.  Regulation  as  last  amended  by  Regulation  (EC)  No  1972/2002  (OJ  L  305,
7.11.2002, p. 1).
OJ L 196, 25.7.2002, p. 11.

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(4)

(5)

(6)

(7)

(8)

(9)

3.

The anti-absorption reinvestigation

On  26  June  2003,  the  Commission  announced  by  a  notice  published  in  the  Official
Journal  of  the  European  Union3  the  initiation  of  a  reinvestigation,  pursuant  to
Article 12 of the basic Regulation, of the anti-dumping measures applicable to imports
of sulphanilic acid originating in the People’s Republic of China.

The  Commission  officially  advised  the  producers/exporters  known  to  be  concerned,
the representatives of the exporting country, importers and users of the initiation of the
reinvestigation.  Interested  parties  were  given  the  opportunity  to  make  their  views
known in writing and to request a hearing within the time limit set out in the notice of
initiation. The Commission sent questionnaires to all parties known to be concerned.

Two complete questionnaire replies were received from a Chinese exporter, Sinochem
Hebei import and export corporation (Sinochem), and from a user  importing directly
the  product  concerned  from  the  People’s  Republic  of  China,  3V  Sigma,  Italy
(3V Sigma). It has to be noted, that the investigation which led to the imposition of the
original  measures  (the  original  investigation)  established  that  sulphanilic  acid  is
imported into the Community directly by the final users of this product.

Three  other  importers/users  declared  that  they  would  not  reply  to  the  questionnaire
because  they  had  only  imported  very  marginal  quantities  of  the  product  concerned
during  the  investigation  period.  A  fourth  importer/user  submitted  some  information
but stopped co-operating in the course of the investigation.

The  investigation  period  of  this  reinvestigation  (new  IP)  ran  from  1st  April  2002  to
31st March 2003. The new IP was used to determine the current level of export prices
and  the  level  of  the  prices  delivered  to  the  final  customer  in  the  Community.  In
establishing  whether  the  prices  in  the  Community  had  moved  sufficiently,  the  price
levels charged during the new IP were compared to those charged during the original
investigation period (original IP) which had covered the period from 1st July 2000 to
30th June 2001.

Because  of  duly  justified  exceptional  circumstances  (i.e.  the  consequences  of  the
SARS epidemic in the People’s Republic of China), the co-operating parties requested
and were granted extensions to submit their replies. For this reason, the reinvestigation
slightly exceeded the normal period of six months provided for in Article 12(4) of the
basic Regulation.

B.

PRODUCT UNDER CONSIDERATION

(10)

The product concerned by the request and for which the reinvestigation was initiated is
the  same  as  in  the  original  investigation,  i.e.  sulphanilic  acid,  normally  classified
within CN code ex 2921 42 10 (TARIC  Code 2921  42 10*60). Sulphanilic acid  is a
chemical  product  used  as  raw  material  in  the  production  of  optical  brighteners,
concrete additives, food colorants and speciality dyes.

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OJ C 149, 26.6.2003, p. 14.

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C.

THE REINVESTIGATION

(11)

The  purpose  of  this  reinvestigation  is,  first,  to  establish  whether  or  not  there  was  a
sufficient  movement  in  prices  in  the  Community  of  sulphanilic  acid  originating  in
China  further  to  the  imposition  of  the  aforementioned  anti-dumping  measures.  As  a
second step, where it is concluded that absorption took place, the dumping margin is
recalculated.  In  accordance  with  Article  12  of  the  basic  Regulation,  importers/users
and exporters are provided with an opportunity to submit evidence that could justify a
lack  of  movement in prices  in the Community  following  the  imposition  of  measures
for reasons other than absorption of the anti-dumping duty.

1.

Movement of prices in the Community

1.1. General

(12) As  mentioned  above,  the  pattern  of  trade  for  sulphanilic  acid  originating  in  the
People’s Republic of China is characterised by the absence of intermediaries such as
traders importing the product in the Community for resale. Users in the Community,
which are generally large chemical companies, directly import the product concerned
from the People’s Republic of China, for their own internal consumption.

(13)

(14)

(15)

(16)

Therefore, in the absence of any resale price in the market, the Community price level
during  the  new  IP  of  the  product  concerned  originating  in  the  People’s  Republic  of
China  was determined  by  adding  to  the  CIF  price  in  EUR  at  the  Community  border
both the conventional and the anti-dumping duties payable. The CIF price in EUR at
the Community  border  was  established  on  the  basis  of  information  submitted  by  the
aforementioned  co-operating  Chinese  exporting  producer  and  importer/user  in  the
Community.  Together,  these  companies  reported  data  amounting  to  1 430  tonnes  of
sulphanilic  acid  during  the  new  IP,  a  level  exceeding  slightly  the  statistical
information available from Eurostat.

The movement of prices in the Community was assessed by comparing, for the same
delivery conditions, the average price, including duties, referred to in recital 13, of the
new  IP  with  that  determined  in  the  original  IP,  plus  the  duties.  The  comparison
showed that the average price in the Community of sulphanilic acid originating in the
People’s Republic of China had decreased by 18,1 %.

It  should  be  noted  that  the  average  conventional  duty  rate  applicable  to  imports  of
sulphanilic acid originating in the People’s Republic of China declined from 8,5 % to
7,4 % between the two IPs. Taking this effect out, the decrease in CIF prices in EUR
between the two IPs was 17,4 %.

1.2. Claims made by interested parties

1.2.1. Exchange rate variation

Several  interested  parties  noted  that  sulphanilic  acid  imported  from  the  People’s
Republic of China is invoiced in US dollars. They indicated that the decrease of export
prices and prices in the Community of sulphanilic acid would largely be the result of
the USD/EUR exchange rate variation observed between the original IP and the new
IP. The claim was verified and it was indeed found that the US dollar had depreciated
against  the  Euro  by  11,4 %  between  the  original  IP  and  the  new  IP.  Therefore,  the
claim was accepted. However, even when the comparison is carried out by taking into

5

 
account  the  effect  of  the  above-mentioned  depreciation  of  the  US  dollar  against  the
Euro,  a  decrease  in  the  level  of  prices  in  the  Community  by  9,3  %  is  still  observed
between the original IP and the new IP.

1.2.2. Transportation costs

(17) A co-operating party alleged that the decrease in transport costs between the People’s
Republic of China and the Community could explain part of the possible decrease in
prices  of  the  product  concerned.  This  claim  was  verified  on  the  basis  of  the  actual
transport costs reported by the co-operating parties themselves. When comparing these
transport  costs  with  the  ones  determined  in  the  framework  of  the  original
investigation,  it  appears  that  transport  costs  have  marginally  increased,  and  not
decreased, between the two IPs. Therefore, the claim was rejected.

1.2.3. Raw material price

(18) Co-operating  parties  claimed  that  any  possible  decrease  in  the  prices  of  sulphanilic
acid would be the consequence of a corresponding decline between the original IP and
the new IP in the price of aniline, a key raw material representing some 60 % of the
cost  of  production  of  sulphanilic  acid.  It  was  alleged  that  the  price  of  aniline  would
have decreased by some 5 % over the above-mentioned period.

(19)

(20)

(21)

This type of claim refers to costs of production, and can only be taken into account in
the context of a re-examination of normal value. However, pursuant to Article 12(5) of
the basic Regulation, alleged changes in normal value shall only be taken into account
where  complete  information  on  revised  normal  values  is  made  available  to  the
Commission. This was not the case. For this reason alone, the claim could already be
rejected. However, in order to establish a complete picture of all the elements possibly
at  stake,  the  above-mentioned  allegation  was  nevertheless  examined.  To  this  end,
exhaustive  information  on  aniline  prices  during  the  new  IP  was  obtained  from  the
same source that had been used in order to determine the normal value in the original
investigation, i.e. a co-operating company in the analogue country, namely India. On
this basis, it was found that aniline prices had increased, not decreased, by around 6 %
between the two IPs. Therefore, even if the claim had been correctly presented in the
context  of  a  request  for  a  revision  of  normal  value  pursuant  to  Article  12(5)  of  the
basic Regulation, it would have been considered to be unfounded.

1.3. Conclusion

It was therefore concluded that absorption of the anti-dumping duty had taken place,
as the decrease observed in the prices in the Community of sulphanilic acid originating
in  the  People’s  Republic  of  China  could  not  be  fully  justified  even  after  taking  into
consideration the above described claim concerning exchange rate fluctuations.

2.

Reassessment of the export prices

Since it was established that absorption had taken place and that the lack of movement
in the prices in the Community was due to a fall in the export prices it was considered
appropriate to use the export prices of the new IP, for the purpose of recalculating the
appropriate dumping margins in accordance with the last sentence of Article 12(2) of
the basic Regulation.

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3.

Normal value

(22) Article  12(5)  of  the  basic  Regulation  provides  for  the  possibility  of  taking  alleged
changes in normal value into account, where complete information is made available
to  the  Commission  within  given  time  limits.  As  indicated  under  recital  (19),  no
interested  party  formally  requested  a  revision  of  the  normal  value.  Therefore,  the
normal value as established in the original investigation was used in recalculating the
dumping margins.

4.

Recalculation of the dumping margin taking account of the export prices

observed during the new IP

(23) As  required  under  Article  12  of  the  basic  Regulation,  the  country-wide  dumping
margin for the People’s Republic of China was recalculated by comparing the average
FOB price established in the current investigation with the average FOB normal value
as  established  in  the  original  investigation.  The  difference  was  then  expressed  as  a
percentage of the CIF value determined in the reinvestigation.

(24)

The  recalculated  dumping  margin  was  found  to  have  increased  to  33,7 %,  in
comparison with 21 % as established in the course of the original investigation.

5.

New level of the measure

(25)

The original measures were based on the dumping margin. A new injury  margin has
been calculated as a difference between the new export price determined as explained
under  recital  (21)  and  the  non-injurious  Community  price  computed  in  the  original
investigation, expressed as a percentage of the same denominator as used in the above
dumping determination. The lowest of the two margins is still the dumping margin. In
application of the lesser duty rule, the revised, country-wide duty applicable to imports
in  the  Community  of  sulphanilic  acid  originating  in  the  People’s  Republic  of  China
should correspond to the level of the revised dumping margin, i.e. 33,7 %,

HAS ADOPTED THIS REGULATION:

Article 1

Article 1(2) of Regulation (EC) No 1339/2002 shall be replaced by the following:

‘2.  The  rate  of  definitive  anti-dumping  duty  applicable,  before  duty,  to  the  net  free-at-
Community frontier price of the products described in paragraph 1, shall be as follows:

Country

Definitive duty (%)

The People’s Republic of China

India

33,7

18,3’

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

Article 2

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

Done at Brussels,

For the Council
The President

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