Council Regulation (EC) No 235/2004 of 10 February 2004 amending Regulation (EC) No 2320/97 imposing definitive anti-dumping duties on imports of certain seamless pipes and tubes of iron or non-alloy steel originating in, inter alia, Romania in so far as it concerns imports into the European Community of products manufactured by Petrotub SA and Republica SA
Date: 2004-02-10
Institutions: Council of the European Union
Subjects: Romania, anti-dumping duty, import, originating product, piping, tube

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COUNCIL REGULATION (EC) No 235/2004

of 10 February 2004

amending Regulation (EC) No 2320/97 imposing definitive anti-dumping duties on imports of
certain seamless pipes and tubes of iron or non-alloy steel originating in, inter alia, Romania in so
far as it concerns imports into the European Community of products manufactured by Petrotub
SA and Republica SA

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Com-
munity, and in particular Articles 233 and 253 thereof,

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 Community (the basic
Regulation) (1), in particular Article 2(1) and (11) thereof,

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

Whereas:

(3)

(4)

A. PROCEDURE

(1)

(2)

On 9 January 2003, the Court of Justice of the European
Communities (ECJ) in its judgment in case C-76/00 P
(the Judgment) set aside the previous judgment of the
Court of First Instance of the European Communities of
15 December 1999 in joined cases T-33/98 and T-34/
98 (Petrotub and Republica v Council) (2). By its Judgment,
the ECJ effectively annulled Council Regulation (EC) No
2320/97 of 17 November 1997 imposing definitive
anti-dumping duties on imports of certain seamless
pipes and tubes of iron or non-alloy steel originating in
Hungary, Poland, Russia, the Czech Republic, Romania
and the Slovak Republic (3)
(definitive anti-dumping
Regulation or the contested Regulation), in so far as it
concerned imports into the Community manufactured
by Petrotub SA and Republica SA.

It is recognised by the Courts (4) that, in cases where a
proceeding consists of several administrative steps, the
annulment of one of these steps does not annul the
complete proceeding. The anti-dumping proceeding is
an example of such a multi-step proceeding. Conse-
quently, the annulment of parts of the definitive anti-
dumping Regulation does not imply the annulment of
the entire procedure prior to the adoption of the Regu-
lation in question. On the other hand, according to
Article 233 of the Treaty, the Community institutions

(1) 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).

(2) [1999] ECR II-3837.
(3) OJ L 322, 25.11.1997, p. 1. Regulation as amended by Regulation

(EC) No 190/2000 (OJ L 23, 28.1.2000, p. 1).

(4) IPS v Council [1998] ECR II-3939.

are obliged to comply with the Judgment of the Court of
Justice. Accordingly, the Community institutions, in so
complying with the Judgment, have the possibility to
remedy the aspects of the contested Regulation which
led to its annulment, while leaving unchanged the
uncontested parts which are not affected by the Judg-
ment (5).

Judgment,

a notice was published
Following the
concerning anti-dumping measures on imports of
certain seamless pipes and tubes of iron or non-alloy
in Romania (6),
steel originating
that
Petrotub SA and Republica SA were no longer subject to
the anti-dumping measures imposed by the definitive
anti-dumping Regulation.

announcing

This Regulation seeks to correct, with respect to Petrotub
SA and Republica SA, the aspects of the contested Regu-
lation found to be inconsistent with Community law in
the Judgment, and which thus led to the annulment of
the contested Regulation. All other findings made in the
contested Regulation, which were not contested within
the time limits for a challenge and thus were not consid-
ered by the Courts and did not lead to the annulment of
the contested Regulation, remain valid.

B. PRODUCTS UNDER CONSIDERATION

(5)

The categories of products under consideration are the
same as the ones considered in the definitive anti-
dumping Regulation i.e.:

(a) seamless pipes, of iron or non-alloy steel, of a kind
used for oil and gas pipelines, of an external
diameter not exceeding 406,4 mm; and

(b) seamless tubes of circular cross-section, of iron or
non-alloy steel, cold-drawn or cold-rolled, other than
precision tubes; and

(c) other tubes of circular cross-section, of iron or non-
alloy steel, other than threaded or threadable, of an
external diameter not exceeding 406,4 mm manu-
factured by Petrotub SA and Republica SA and
codes
currently
CN
ex 7304 10 10,
7304 31 99,
7304 39 91 and 7304 39 93. These CN codes are
given only for information.

within
ex 7304 10 30,

classifiable

(5) Case C-458/98 P IPS v Council [2000] ECR I-08147.
(6) OJ C 30, 8.2.2003, p. 14.

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C. NEW ASSESSMENT OF THE FINDINGS BASED ON

(9)

THE JUDGMENT OF THE ECJ

1. Preliminary remark

In this Regulation, the aspects of the Judgment that are
addressed are the calculation of the dumping margin of
Petrotub SA and the determination of the normal value
of Republica SA.

Petrotub's dumping margin was, as described in recital
22 of the definitive anti-dumping Regulation, calculated
on the basis of a comparison of the weighted average
normal value established for Petrotub SA with the prices
of all its individual exports. This was considered neces-
sary in order to reflect the full degree of dumping being
practised and because a pattern of Petrotub's export
prices which differed significantly among different
purchasers, regions or time periods had been established.

it

time periods,

According to the Judgment, this method, which is set
out in the second sentence of Article 2(11) of the basic
Regulation, can only be used if, in addition to a finding
of an export pattern which differs significantly among
different purchasers,
is
regions or
explained why the two first methods specified in the
first sentence of Article 2(11)
(which are also called
‘symmetrical methods’) do not allow for these differences
in the pattern of export prices to be taken appropriately
into account and thus to reflect
the full degree of
in the definitive
dumping being practised. However,
anti-dumping Regulation the Council, duly having
mentioned in recital 22 that there was a pattern which
differed significantly among different purchasers, regions
or time periods, only concluded that the first of the two
symmetrical methods (the average-to-average method)
did not reflect the full degree of dumping being practised
in that context, without addressing the second symme-
trical method (the transaction-to-transaction method).
Thus, this Regulation reassesses and corrects the results
of the investigation leading to the imposition of the defi-
nitive anti-dumping duty on imports from Petrotub SA
by assessing the applicability of the second symmetrical
method in the light of the requirements contained in the
Judgment. This second symmetrical method foresees a
comparison of individual normal values and individual
export prices to the Community on a transaction-to-
transaction basis.

(6)

(7)

(8)

Since the information necessary, in order to remedy the
shortcomings found by the ECJ in the definitive anti-
dumping Regulation and which led to its annulment,
was available to the Commission at the time of adopting
the definitive anti-dumping Regulation and still
is so
now, no further investigation was necessary with respect
to Petrotub SA, Republica SA or other parties. The
required motivation can therefore be based on the
existing information, collected in the framework of the
investigation which led to the imposition of definitive
measures.

2. Dumping margin of Petrotub SA

(10) According to Article 2(11) of the basic Regulation the
second symmetrical method bases the calculation of the
dumping margin on a comparison of individual normal
values of the different types of the product concerned
with the corresponding individual export prices on a
transaction-to-transaction basis.

(11)

This method can only be applied if a number of condi-
tions are met. A transaction by transaction comparison
excludes by definition the use of averages (be it on the
domestic sales side or on the export sales side). To be
comparable, transactions can only be used if made on
the same day, on both the domestic and the export side.
Any deviation from this principle by using prices of
transactions not made on the same day would be arbi-
trary. Only domestic and export sales relating to the
same or a comparable product type can be used for a
transaction by transaction comparison, otherwise the
comparison cannot be valid. Domestic sales can only be
used if they are in the ordinary course of trade. Domestic
sales must be made in the ordinary course of trade in a
quantity amounting to at least 5 % of the volume of the
export transactions, in accordance with Article 2(2) of
the basic Regulation. The identification of sales not
made in the ordinary course of trade at the level of the
transaction was made in accordance with Article 2(2) of
the basic Regulation. Under the second symmetrical
method,
to
constructed normal values. Finally, it is considered that
this method can only be representative if a sufficiently
large volume of export transactions and domestic sales
transactions are covered.

compared

cannot

export

prices

be

Secondly,
in the definitive anti-dumping Regulation,
sales made by Republica SA using debt compensation
were considered as having been made in the ordinary
course of trade. In paragraph 86 of its Judgment, the ECJ
held that this conclusion was not accompanied by an
appropriate statement of reasons, as the mere statement
in recital 19 of the definitive anti-dumping Regulation,
that it had been found that ‘sales made using compensa-
tion were indeed made in the ordinary course of trade’
did not contain any explanatory element of such a kind
as to enlighten the parties concerned about the reasons
which led the Council to come to its conclusions. This
Regulation therefore now provides the necessary state-
ment of reasons, in accordance with Article 253 of the
Treaty.

In other words,

(12) On this basis it was examined whether the transaction-
to-transaction calculation could be applied. It was found
that the volume of export transactions, which could be
compared, amounted to 66,6 %. However, only 9,5 % of
the volume of domestic sales, which were made in the
ordinary course of trade, could be used to determine
normal value.
the overwhelming
majority of domestic sales would not have been taken
into consideration in the dumping calculation. This low
use of transaction data is therefore not a sufficiently
representative basis with regard to the determination of
normal value, which is the benchmark for any dumping
analysis of export transactions. On this basis the transac-
tion-to-transaction method was not upheld as an appro-
priate method to calculate the dumping margin in this
case.

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(13)

Therefore, given that the use of the second symmetrical
method would not have provided representative results,
this method would also not have enabled to take into
account
the significant differences in the pattern of
export prices. Consequently, the third method, namely
the comparison of weighted average normal values to
individual export prices (asymmetrical method), had to
be applied, as in the presence of a pattern of export
prices, it was found that neither the first nor the second
symmetrical method would have enabled these differ-
ences to be taken into account.

3. Normal value of Republica SA

(14) As explained in recital 8, the ECJ found that the Council
did not satisfy the requirements of the obligation to state
reasons when in recital 19,
the
contested Regulation,
it merely stated that sales made
using compensation were made in the ordinary course
of trade. This reasoning is therefore now set out below.

fifth paragraph of

(15) During the investigation, which led to the imposition of
definitive anti-dumping duties, Republica SA claimed
that a substantial volume of its domestic sales was made
on the basis of debt compensatory arrangements. It was
alleged that sales prices of the product concerned deliv-
ered on the basis of such a compensatory arrangement
could not be negotiated, because Republica SA was
forced to take suppliers in the compensatory circuit with
the result
that sales prices to those suppliers were
considerably lower than normal prices and therefore not
comparable to normal market prices. Republica SA
argued that sales on the basis of compensatory arrange-
ments should therefore have been disregarded from the
domestic sales for the calculation of normal value, as
they could not be considered to have been made in the
ordinary course of business.

(16)

It should be underlined that the payment by compensa-
tory agreement as described in recital 15 of this Regu-
lation should be distinguished from the existence of
compensatory arrangements in the sense of Article 2(1)
of the basic Regulation. Whereas payment by compensa-
tory arrangement, as described by Republica SA in its
submission and in recital 15 of this Regulation, was
found to be effectively a settlement of bills where recei-
vables and payables were compensated without affecting
the price conditions of the goods delivered, a compensa-
tory arrangement, within the meaning of Article 2(1) of
the basic Regulation, refers to an agreement, where
goods and/or services are swapped between supplier and
client and where the invoiced price is based on the
difference of the value of such goods and/or services,
thus not reflecting the real value of the goods delivered.

ard cash payment terms, were found in fact to have
been settled by means of compensation in a compensa-
tory agreement. The form of compensation that took
place was made by the netting of
receivables and
payables for the same amounts between Republica SA
and its client acting, as the case may be, at the same
time as supplier of some other goods or services. Some-
times one or more third parties were involved, e.g. in
the case where Republica SA sells to a client which uses
the receivable it has on a third party to settle its debt
towards Republica SA. This type of settlement of trans-
actions by compensatory agreement
is common in
economies with low liquidity and the investigation
showed that
influence the original price
setting of the transactions. Moreover, it was found that
when Republica SA insisted on cash payments from its
clients (e.g. when it needed cash in order to pay its
personnel), sales prices were actually set lower than in
the case of payment under a compensatory agreement,
in order to reward the client for this cash payment. It
was concluded that Republica's payment by compensa-
tion did not fall under the concept of compensatory
agreement as described in Article 2(1) of the basic Regu-
lation, as it was found that the compensatory agree-
ments to which Republica SA was a party did not influ-
ence the sales prices quoted.

it did not

(18)

It can therefore be concluded that the argument raised
by Republica SA in respect of sales settled by means of
compensation and the influence on domestic sales prices
does not reflect reality and therefore also that sales made
by Republica SA under compensatory arrangements
were made in the ordinary course of trade.

4. Conclusion

(19)

The use of
the second symmetrical method for the
determination of the dumping margin of Petrotub SA is
not warranted because the volume of domestic sales,
which could be used to determine normal value, is not
sufficiently representative to make the comparison under
this method. Therefore, this method cannot take into
account significant differences in the pattern of export
prices,
i.e. cannot reflect the full degree of dumping.
Accordingly, as neither the first nor the second symme-
trical method would, albeit for different reasons, reflect
the full degree of dumping being practised, the third
method provided for in Article 2(11) of the basic Regu-
lation had to be applied. Consequently, its application
and the results of its application as detailed in recitals 22
and 23 of the contested Regulation are confirmed.

(17) During the on-site investigation at Republica's premises
it was found that certain domestic sales, which were
wrongly reported as having been made subject to stand-

(20)

For the reasons outlined in recitals 16 and 17 sales
made by Republica SA using debt compensation were
found to be made in the ordinary course of trade.

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(21) As a consequence, the dumping margins determined in
the framework of Regulation (EC) No 2320/97 are
hereby confirmed.

HAS ADOPTED THIS REGULATION:

D. DISCLOSURE

(22)

The parties were informed of the essential
facts and
considerations on the basis of which it was intended to
recommend the re-imposition of a definitive anti-
dumping duty. They were also granted a period within
which they could make representations subsequent to
this disclosure.

(23)

The oral and written arguments submitted by the parties
were considered and, where appropriate, were taken into
account.

E. UNDERTAKINGS

(24)

(25)

(26)

Two Romanian exporting producers have offered price
undertakings in accordance with Article 8(1) of the basic
Regulation. The price undertakings offered contain the
same stipulations as the one that ceased to be valid on 9
January 2003 as a consequence of the ECJ Judgment.
The Commission considers that the undertakings offered
are acceptable and sufficient to shield the Community
Industry from the injurious effect of dumping.

The companies will also provide the Commission with
regular
and detailed information concerning their
exports to the Community, meaning that the undertak-
ings can be monitored effectively by the Commission.

In order to ensure the effective respect and monitoring
of the undertakings, when the request for release for free
circulation pursuant to the undertaking is presented to
the relevant customs authority, exemption from the duty
should be conditional upon presentation of a valid,
original production certificate containing the informa-
tion listed in the Annex to this Regulation. This produc-
tion certificate must be presented within three months
of
issue and the quantities presented to
customs for import into the Community free of anti-
dumping duty shall not exceed those stipulated on the
certificate. Where no such production certificate is
presented, when it does not correspond to the product
concerned or when the quantities stipulated on the certi-
ficate are exceeded,
the appropriate amount of anti-
dumping duty should instead be payable.

its date of

(27)

In the event of suspected breach, actual breach or with-
drawal of the undertaking by either party to it, an anti-
dumping duty may be imposed, pursuant to Article 8(9)
and (10) of the basic Regulation,

Article 1

1.
The conclusions of Regulation (EC) No 2320/97 with
regard to the Romanian exporting producers Petrotub SA and
Republica SA are hereby confirmed. Definitive anti-dumping
duties are hereby imposed on the following imports originating
in Romania and manufactured by Petrotub SA and Republica
SA:

(a) seamless pipes, of iron or non-alloy steel, of a kind used for
oil and gas pipelines, of an external diameter not exceeding
406,4 mm (currently
codes
falling
ex 7304 10 10 and ex 7304 10 30 — TARIC codes
7304 10 10 10 and 7304 10 30 10);

within

CN

(b) seamless tubes of circular cross-section, of iron or non-
alloy steel, cold-drawn or cold-rolled, other than precision
tubes (currently falling within CN code 7304 31 99);

(c) other tubes of circular cross-section, of iron or non-alloy
steel, other than threaded or threadable, of an external
diameter not exceeding 406,4 mm (currently falling within
CN codes 7304 39 91 and 7304 39 93).

2.
The rate of definitive anti-dumping duties applicable to
the net free-at-Community-frontier prices before duty, shall be
as follows:

Country

Manufacturer

Rate of duty

TARIC additional
code

Romania

Petrotub SA

9,8 %

Republica SA

9,8 %

Unless otherwise

3.
concerning customs duties shall apply.

specified,

the provisions

8468

8469

in force

Article 2

Imports shall be exempt from the anti-dumping duties
1.
imposed by Article 1 provided that they are produced and sold
for export to the Community by the companies listed in para-
graph 4 which have offered undertakings accepted by the
Commission and provided that the conditions of paragraphs 2,
3 and 4 are met.

2. When the declaration for release for free circulation is
presented, exemption from the duty shall be conditional upon
presentation to the competent Member States' customs services
of a valid, original production certificate issued by one of the
companies listed in paragraph 4. The production certificate
shall conform to the requirements for such certificates set out
in the undertaking accepted by the Commission, the main
elements of which are listed in the Annex.

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The production certificate referred to in paragraph 2
3.
must be presented within three months of its date of issue. The
quantities presented to the Member States' customs services for
import into the Community free of the anti-dumping duty shall
not exceed those stipulated on the certificate. When the quanti-
ties stipulated on the certificate are exceeded, the excess shall
be subject to the duty, and be declared under the relevant
TARIC additional code of Article 1(2).

Imports accompanied by a production certificate shall be

4.
declared under the following TARIC additional code:

Article 3

Member States' reports to the Commission pursuant to Article
14(6) of Regulation (EC) No 384/96, shall
indicate for each
release for free circulation, the year and month of import, the
CN, TARIC and TARIC additional codes, the type of measure,
the country of origin, the quantity, the value, the anti-dumping
duty, the Member State of import and, where appropriate, the
serial number of the production certificate.

Country

Manufacturer

TARIC additional code

Article 4

Romania

Petrotub SA

Republica SA

8514

8515

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

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

Done at Brussels, 10 February 2004.

For the Council

The President

C. McCREEVY

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MAIN ELEMENTS OF THE PRODUCTION CERTIFICATE (1) REFERRED TO IN ARTICLE 2(2)

ANNEX

(a) The number of the certificate

(b) Identification showing whether the certificate is an original

(c) The date of expiry of the certificate

(d) The following text:

‘Production certificate issued by (name of the Company) pursuant to Article 2(2) of Council Regulation (EC) No
2320/97 for the export to the European Community within TARIC additional code … of certain seamless steel pipes
and tubes.’

(e) The name and full address of the Company, and possible identification number such as national registration number

for incorporated companies

(f) The name and full address of the customer of the Company in the Community importing the goods or the name

and full address of the unrelated trader outside of the Community exporting the goods

(g) The number of the Company invoice to which the production certificate relates

(h) The exact description of the goods, including:

— a product description sufficient to identify the products, which will be identical to the product description on the

invoice

— CN code

— quantity (in metric tonnes)

(i) The name of the official of the Company responsible for the issue of the certificate and the following signed declara-

tion:

‘I, the undersigned, certify that the sale for export to the European Community of the goods covered by this certifi-
cate is being made within the scope and under the terms of the undertaking by (name of the Company), and within
the permitted volume for anti-dumping duty-free imports into the Community set out in the undertaking accepted
by the Commission pursuant to Decision 97/790/EC. I declare that the information provided in this certificate is
complete and correct.’

(j) Space for use by the competent authorities of the Community.

(1) Under the undertaking offered and accepted by the Commission, each box on the certificate will be in four languages, the language of

the country of the producer, English, French and German.