Proposal for a Council Regulation imposing a definitive anti-dumping duty on imports of cotton-type bed linen originating in Pakistan .
Date: 2004-02-16
Institutions: European Commission
Subjects: Pakistan, anti-dumping duty, cotton, dumping, import, originating product, textile product

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 16.2.2004 
COM(2004) 110 final 

Proposal for a 

COUNCIL REGULATION 

imposing a definitive anti-dumping duty on imports of cotton-type bed linen originating 
in Pakistan 

. 

(presented by the Commission) 

EN 

   EN 

 
 
 
  
EXPLANATORY MEMORANDUM 

On 18 December 2002, the Commission opened an anti-dumping investigation with regard to 
imports into the Community of cotton-type bed linen originating in Pakistan. 

During the on-spot verifications in Pakistan, the Commission has received an anonymous life 
threatening  letter  addressed  to  the  officials  carrying-out  the  verifications.  Being  addressed 
personally  to  the  officials,  the  Commission  has  considered  that  the  conditions  necessary  to 
carry  out  the  verifications  were  not  met  and  that  most  of  the  information  provided  was  not 
verifiable.  

Consequently,  the  Commission  had  no  other  option  but  to  interrupt  the  verifications  and  to 
make  a  determination  on  the  basis  of  facts  available,  in  line  with  Article  18  of  Council 
Regulation  (EC)  No  384/96.  In  this  respect,  resort  was  made  to  all  verified  information 
submitted  by  all  interested  parties.  Given  the  need  to  further  examine  certain  aspects  of 
dumping,  injury,  causality  and  Community  interest,  no  provisional  anti-dumping  measures 
were imposed. 

The  attached  proposal  for  a  Council  Regulation  is  based  on  the  definitive  findings  on 
dumping, injury, causation and Community interest. The investigation revealed the existence 
of injurious dumping. 

It is therefore proposed that the Council adopt the attached proposal for a Regulation which 
should be published in the Official Journal no later than 17 March 2004. 

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Proposal for a 

COUNCIL REGULATION 

imposing a definitive anti-dumping duty on imports of cotton-type bed linen originating 
in Pakistan 

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  19951  on  protection 
against  dumped  imports  from  countries  not  members  of  the  European  Community  (‘Basic 
Regulation’), and in particular Article 9 thereof, 

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

Whereas: 

1. 

Initiation 

A. PROCEDURE 

(1) 

(2) 

(3) 

On 18 December 2002 the Commission announced by a notice (‘notice of initiation’) 
published  in  the  Official  Journal  of  the  European  Communities  the  initiation  of  an 
anti-dumping proceeding with regard to imports into the Community of bed linen of 
cotton fibres, pure or mixed with man-made fibres or flax (flax not being the dominant 
fibre), bleached, dyed or printed (‘cotton-type bed linen’ or ‘bed linen’) originating in 
Pakistan2. 

The proceeding was initiated following a complaint lodged in November 2002 by the 
Committee of the Cotton and Allied Textile Industries of the European Communities 
(‘Eurocoton’  or  ‘the  complainant’)  on  behalf  of  producers  representing  a  major 
proportion of the total Community production of cotton-type bed linen. The complaint 
contained prima facie evidence of dumping of the said product and of material injury 
resulting therefrom, which was considered sufficient to justify the initiation of an anti-
dumping proceeding. 

The Commission officially advised the exporting producers and importers known to be 
concerned  as  well  as  their  associations,  the  representatives  of  the  exporting  country 
concerned, the complainant Community producers, known associations of producers, 
as  well  as  known  users,  of  the  initiation  of  the  proceeding.  Interested  parties  were 

1 
2 

OJ L 56, 6.3.1996, p. 1, as last amended by Regulation (EC) No 1972/2002 (OJ L 305, 7.11.2002, p. 1). 
OJ C 316, 18.12.2002, p. 6. 

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(4) 

(5) 

given the opportunity to make their views known in writing and to request a hearing 
within the time limits set in the notice of initiation. 

A  number  of  exporting  producers  in  the  country  concerned,  as  well  as  Community 
producers,  Community  users  and  importers  made  their  views  known  in  writing.  All 
parties  who  so  requested  within  the  above  time  limits  and  showed  that  there  were 
particular reasons why they should be heard were granted the opportunity to be heard. 

It was submitted that more than 45 days have lapsed between the lodging date and the 
initiation date. Pursuant to the Article 5(1) of the Basic Regulation, a complaint shall 
be deemed to have been lodged on the first working day following its delivery to the 
Commission by registered mail or the issuing of an acknowledgement of receipt by the 
Commission. The issuing of the acknowledgement of receipt took place on Thursday, 
31 October 2002. Considering that Friday, 1 November was a public holiday, the first 
working  day  following  the  issuing  of  the  acknowledgement  of  receipt  by  the 
Commission  was  Monday,  4  November  2002.  Therefore,  4  November  2002  must  be 
considered as the lodging date of the complaint.  

(6) 

The  notice  of  initiation  has  been  published  on  18  December  2002,  which  is  clearly 
within 45 days of the lodging of the complaint. Consequently, the notice of initiation 
was published within the deadline specified in Article 5(9) of the Basic Regulation. 

2. 

Sampling 

EXPORTERS/PRODUCERS 

(7) 

(8) 

(9) 

In  view  of  the  large  number  of  exporting  producers  involved  in  this  proceeding,  the 
Commission  decided  that  it  could  be  necessary  to  apply  sampling  techniques  in 
accordance with Article 17 of the Basic Regulation. 

In order to allow for the selection of a sample, exporting producers were requested to 
make  themselves  known  within  15  days  of  the  initiation  of  the  proceeding  and  to 
provide basic information for the selection of the sample. 

A total of 178 companies provided the requested information, but only 156 companies 
reported production and sales of the product concerned to the Community during the 
period  between  1  October  2001  and  30  September  2002  (“investigation  period”  or 
“IP”)  and  expressed  a  wish  to  participate  in  the  sample.  These  were  initially 
considered as co-operating companies.  

(10)  As none of these companies reported representative domestic sales of the like product, 
which could be used to determine normal value in accordance with Articles 2(1), 2(3) 
or  2(6)  of  the  Basic  Regulation,  the  Commission  invited  the  Pakistani  authorities  to 
contact  any  known  producers  of  bed  linen  with  domestic  sales  to  grant  them  an 
additional  opportunity  to  submit  information  on  those  sales  within  a  new  time  limit. 
However,  no  replies  showing  companies  with  representative  domestic  sales  were 
received. 

(11)  According  to  Article 17(1)  of  the  Basic  Regulation,  the  Commission  has  selected  a 
sample based on the largest representative volume of exports, which could reasonably 
be investigated within the time available, in consultation with the exporting producers, 
the  national  authorities  and  known  associations  of  producers/exporters.  The 

4 

 
 
  
 
Commission  initially  proposed  to  select  a  sample  of  five  companies  representing 
29,5 % of Pakistan’s exports to the Community and informed the Pakistani authorities 
and  the  associations  of  producers/exporters  accordingly.  The  national  authorities  of 
Pakistan,  the  legal  representative  of  some  of  the  companies  and  one  association  of 
exporters  proposed  to  replace  certain  of  the  companies  proposed  by  others,  arguing 
that  this  would  ensure  a  larger  coverage,  a  better  geographical  spread  and  include 
companies  selected  for  the  sample  in  a  previous  anti-dumping  proceeding.  The 
concerns of these parties were met to the extent that they were in line with the criteria 
of Article 17(1) of the Basic Regulation, i.e. the provision that a sample should cover 
the largest representative volume of production, sales or exports which can reasonably 
be investigated within the time available. In the light of this, the sample was extended 
by including the sixth biggest Pakistani exporter. 

(12)  The six selected companies, which represented more than 32% of Pakistan’s volume 
of  exports  of  bed  linen  to  the  Community  during  the  IP,  were  requested  to  submit  a 
reply to the anti-dumping questionnaire as determined by the notice of initiation. 

(13)  Requests  for  individual  examination  have  been  submitted  by  three  companies  not 
selected in the sample. In view of the size of the sample and the complexity of the case 
(such as the large number of product types), the Commission informed the companies 
concerned  that  a  final  decision  on  individual  examination  would  only  be  taken  after 
the verification visits of the companies selected in the sample had taken place and due 
regard  being  given  to  the  time  available.  For  the  reasons  explained  in  recital  (35) 
below,  the  necessary  conditions  to  carry-out  on-spot  investigations  in  Pakistan  were 
not  met  and,  therefore,  it  was  not  possible  to  accept  any  request  for  individual 
examination. 

COMMUNITY PRODUCERS 

(14) 

In view of the large number of Community producers supporting the complaint, and in 
conformity with Article 17 of the Basic Regulation, the Commission announced in the 
notice  of  initiation  of  the  proceeding  its  intention  to  select  a  sample  of  Community 
producers  based  on  the  largest  representative  volume  of  production  and  sales  of  the 
Community industry which could be reasonably investigated within the time available. 
For  these  purposes,  the  Commission  requested  companies  to  provide  information 
concerning production and sales for the product concerned. 

(15)  On the basis of the replies received, the Commission selected five companies in three 
Member  States.  In  the  selection,  the  production  and  sales  volume  were  considered 
aiming at covering the most representative market size. 

(16)  The Commission sent questionnaires to the sampled companies. Two out of these five 
companies  were  not  able  to  submit  a  complete  list  of  all  transactions  to  unrelated 
customers  during  the  investigation  period  and  were  therefore  considered  to  be  only 
partially co-operating. 

3. 

Investigation 

(17)  Questionnaire  replies  were  received  from  the  five  sampled  complainant  Community 
producers,  from  the  six  sampled  exporting  producers  in  Pakistan,  three  exporting 
producers  requesting  individual  examination  and  two  unrelated  importers  in  the 
Community. 

5 

 
 
  
 
(18)  The Commission sought and verified all the information it deemed necessary for the 
purpose  of  a  determination  of  dumping,  injury,  causality  and  Community  interest. 
Verification visits were carried out at the premises of the following companies: 

Community producers: 

– 

– 

– 

– 

– 

Bierbaum Unternehmensgruppe GmbH & Co.KG, Germany;  

Descamps S.A., France; 

Gabel Industria Tessile S.p.A., Italy; 

Vanderschooten S.A., France; 

Vincenzo Zucchi S.p.A., Italy 

Unrelated importers in the Community: 

– 

– 

Blanche Porte S.A., France; 

Richard Haworth, United Kingdom; 

Exporters/producers in Pakistan: 

– 

– 

Gul Ahmed Textile Mills Ltd, Karachi 

Al-Abid Silk Mills, Karachi (partial verification) 

(19)  The  investigation  period  for  dumping  and  injury  covered  the  period  from  1  October 
2001 to 30 September 2002. The examination of trends relevant for the assessment of 
injury covered the period from 1999 to the end of the IP (‘period considered’). 

(20)  Given  the  need  to  further  examine  certain  aspects  of  dumping,  injury,  causality  and 

Community interest, no provisional anti-dumping measures were imposed. 

B. PRODUCT CONCERNED AND LIKE PRODUCT 

1. 

Product concerned 

(21)  The  product  concerned  is  bed  linen  of  cotton  fibres,  pure  or  mixed  with  man-made 
fibres or flax (flax not being the dominant fibre), bleached, dyed or printed originating 
in Pakistan, currently classifiable within CN codes ex 6302 21 00 (Taric codes 6302 
21 00*81, 6302 21 00*89), ex 6302 22 90 (Taric code 6302 22 90*19), ex 6302 31 10 
(Taric code 6302 31 10*90), ex 6302 31 90 (Taric code 6302 31 90*90) and ex 6302 
32 90 (Taric code 6302 32 90*19). Bed linen includes bed sheets (fitted or flat), duvet 
covers and pillow covers, packaged for sale either separately or in sets.  

(22)  The fabrics made of cotton-type fibres used to produce bed linen are identified by two 
pairs  of  numbers.  The  first  one  indicates  the  count  (or  weight)  of  yarns  employed 
respectively  for  the  warp  and  for  the  weft.  The  second  one  indicates  the  number  of 
threads per centimetre or per inch respectively of the warp and of the weft.  

6 

 
 
  
 
(23)  The fabrics are bleached, dyed or printed. Then they are cut and stitched into different 
size  flat  sheets,  fitted  sheets,  duvet  covers  and  pillow  cases.  The  final  product  is 
packed for sale either separately or in sets. 

(24) 

It was claimed that bleached bed linen sold to institutions should be excluded from the 
scope  of  the  investigation  on  the  grounds  that  it  should  not  be  treated  as  a  product 
concerned.  It  was  submitted  that  bleached  bed  linen  (i)  is  technically  different  from 
printed and/or dyed bed linen; (ii) is not substitutable by Community production which 
is based on printed and/or dyed bed linen; and (iii) has different end users (hospitals 
and hotels). 

(25)  The investigation revealed that although there are different processes for finishing the 
fabrics  (bleaching,  dyeing,  printing),  products  of  all  finishes  are  substitutable  and 
compete on the Community market. Furthermore, it was found that there is production 
of bleached bed linen in the Community and that this type of the product concerned is 
not used exclusively by any particular category of users. 

(26)  Notwithstanding  the  different  possible  product  types  due  to  different  weaving 
construction,  finish  of  the  fabric,  presentation  and  size,  packing,  etc.,  all  of  them 
constitute one product for the purpose of this proceeding because they have the same 
physical characteristics and essentially the same use. 

2. 

Like product 

(27) 

It was examined whether cotton-type bed linen produced by the Community industry 
and  sold  on  the  Community  market,  as  well  as  cotton-type  bed  linen  produced  in 
Pakistan and sold on the Community market and on the domestic market were alike to 
the product concerned. 

(28)  The investigation revealed that although there are different processes in finishing the 
fabrics  (bleaching,  dying,  printing),  products  of  all  finishes  share  the  same  physical 
characteristics and essentially the same use. 

(29) 

It  was  therefore  concluded  that  although  there  were  in  some  instances  differences 
between  product  types  produced  in  the  Community  and  those  sold  for  export  to  the 
Community,  there  were  no  differences  in  the  basic  characteristics  and  uses  of  the 
different product types and qualities of bed linen of cotton-type fibres. Therefore, the 
product  manufactured  and  sold  in  the  domestic  market  of  Pakistan  and  the  one 
exported  to  the  Community  from  Pakistan  as  well  as  the  product  manufactured  and 
sold in the Community by the Community producers are considered as like products 
within the meaning of Article 1(4) of the Basic Regulation. 

C. DUMPING 

Pre-verification analysis of the information submitted by the sampled exporters  

(30)  All six companies selected to be part of the sample have replied to the questionnaire. 
The  pre-verification  analysis  of  the  replies  submitted  by  these  exporting  producers 
showed  that  all  of  the  selected  exporting  producers  reported  underestimated  costs 
which  resulted  in  unrealistic  and  abnormally  high  profits  for  sales  of  the  product 
concerned  to  the  Community.  By  comparing  the  export  prices  with  the  costs  of 
production reported by each company, profits on sales of the product concerned to the 

7 

 
 
  
 
Community ranged from more than 20 % to almost 40 % per company, expressed as a 
percentage of turnover, on average more than 30 %. These margins were furthermore 
in  sharp  contrast  with  the  average  negative  profit  margins  (-9,4 %  on  turnover) 
reported by the same companies for sales of the product concerned to other countries, 
and  they  were  also  in  contrast  to  the  1,6 %  profit  margin  on  turnover  reported  on 
average  for  exports  of  other  textile  products  including  very  similar  products 
(processed  fabric,  table  linen,  curtains)  with  similar  cost  structures,  sold  also  to  the 
same  type  of  clients,  or  even  to  the  same  clients.  It  should  also  be  noted  that  the 
audited accounts, for the IP or for a period covering most of the IP, of the companies 
concerned  which  are  producers  and  sellers  of  almost  exclusively  textile  products, 
showed on average an overall profit margin on turnover of approximately 5 %. 

(31)  Besides their  conspicuous  commercial unreasonableness, the reported profit rates for 
exports  of  the  product  concerned  to  the  Community  were  furthermore  strongly 
contradicted  by  all  other  information  available  on  profit  rates  for  the  product 
concerned  exported  from  Pakistan  to  the  Community,  including  information  made 
available by the sampled exporting producers themselves. 

(32) 

In their injury submission, the exporting producers stated that the low profitability of 
bed  linen  is  inherent  to  this  industry,  which  is  characterised  by  large  volumes  of 
production and very high competition. It was also specified that a profit margin of 2 % 
to 3 % should be considered as reasonable. Another exporting producer not selected in 
the  sample  submitted  that  a  normal  profit  margin  would  be  2%  to  5  %.  After 
disclosure,  all  exporting  producers  contested  that  such  statements  were  made  with 
regard  to  the  profitability  of  their  export sales  of  bed  linen  to  the  Community.  They 
stated that these statements related to profit margins considered acceptable for sales by 
the Community industry. In this respect, it is noted that these statements (i) were made 
during  a  hearing;  (ii)  referred  to  the  bed  linen  industry  in  general;  and  (iii)  were 
furthermore  confirmed  by  answers  to  specific  questions  on  profitability  of  bed  linen 
exports by Pakistani producers to the Community. Moreover, similar information was 
submitted by an independent agent acting for importers. It is furthermore a commonly 
known fact that the Community market of bed linen is indeed highly competitive and 
that as a result of the numerous players and the open market, profit margins reported 
by the Pakistani exporting producers could not be regarded as credible. 

(33)  All information available indicated that the reported profit figures were overestimated 
and given the fact that export prices were in line with Eurostat, there was a reasonable 
presumption that this was a consequence of an underestimation of the reported costs of 
production for the product concerned. This is all the more important in view of the fact 
that  in  the  absence  of  representative  sales  on  the  domestic  market,  it  was  clear  that 
normal value had to be constructed on the basis of costs of production.  

Disruption of on-spot verifications 

(34)  The  Commission  has  sought  to  verify  the  highly  implausible  figures  reported  in  the 
replies to the anti-dumping questionnaire submitted by the six companies selected in 
the sample, in line with Article 16 of the Basic Regulation. 

(35)  During  the  verification  of  the  second  company,  the  Commission  has  received  an 
anonymous life threatening letter addressed personally to the officials carrying out the 
verifications. With regard to the specific, personal nature of the life threatening letter 
received by the Commission officials, the Commission considered that the necessary 

8 

 
 
  
 
conditions  to  carry  out  the  verifications  were  not  met  and  that  these  circumstances 
significantly impeded the investigation. Consequently, the verification visits had to be 
interrupted. 

(36)  For these reasons, it was only possible to carry out a full verification at the premises of 
one exporting producer, while a partial verification was carried out at the premises of 
another exporting producer. The exports of these two companies represent more than 
50  %  of  the  total  CIF  export  value  to  the  Community  of  the  sampled  exporting 
producers. 

Results of the partial on-spot verifications 

(37)  The  verification  of  the  first  company  confirmed  that  misleading  information  was 
submitted  regarding  the  company’s  costs  and  pricing  policy.  Despite  submission  by 
the  company  that  detailed  cost  accounts  for  the  product  concerned  were  kept,  it  was 
alleged  on  spot  that  no  such  accounts  or  supporting  documentation  were  available. 
Thus,  no  substantiating  evidence,  as  normally  kept  in  the  companies’  records,  was 
provided  which  could  have  shown  that  the  reported  costs  of  the  product  concerned 
were indeed accurate and that such costs reasonably reflected the costs associated with 
the  production  and  sale  of  the  product  concerned.  Even  when  it  was  shown  to  the 
company  that,  on  the  basis  of  the  information  provided  by  the  company  itself,  such 
evidence should exist, access to this evidence was denied. Moreover, information on 
costs of the like product exported to other countries was requested but not provided.  

(38)  Evidence was also found that the company’s accounting records were not in line with 
the  Generally  Accepted  Accounting  Principles  (“GAAP”)  of  Pakistan,  in  particular 
regarding inventory valuation. Furthermore, the company acknowledged on spot, and 
in  line  with  other  information  available  (see  recital  (32)  above),  that  there  was 
considerable  competition  on  the  Community  market  amongst  different  exporting 
countries, which further indicated that the high profit figures reported for sales of the 
product concerned by this company were indeed unreasonable. 

(39)  With  regard  to  the  partial  verification  visit  carried  out  at  the  premises  of  the  second 
company, it was found that the pricing policy for sales of bed linen to the Community 
and to other markets did not differ significantly, and could not result in such strongly 
different profit margins, as reported by the company. The profit margins reported for 
sales of the product concerned to the Community were by far exceeding the margins 
used  in  internal  price  settings  and  negotiations  with  customers.  No  evidence  was 
provided  which  could  have  shown  that  sales  of  bed  linen  to  the  Community  would 
generate profits so substantially different from the profits generated by sales to third 
countries.  Moreover,  information  concerning  the  cost  of  production  and  stock 
valuation  of  the  product  concerned,  which  should  have  been  available,  could  not  be 
verified. 

(40) 

In  light  of  the  events  described  in  recital  (35)  above,  the  Commission  was  forced  to 
conclude that the information provided by the remaining sampled exporting producers 
could not be verified, as the verification visits had to be interrupted.  

(41)  Article 18(1) of the Basic Regulation stipulates that where it is found that an interested 
party  has  supplied  false  or  misleading  information,  the  information  shall  be 
disregarded and use  may  be  made  of  facts available.  The  verification  visits have not 
lifted the reasonable presumption that the information submitted by each of the other 

9 

 
 
  
 
companies selected in the sample was false. Information regarding costs and profits of 
the product concerned could therefore not be accepted as reported, in so far as it could 
not  be  verified  and  the  information  available  clearly  indicated  that  these  data  were 
false. It had therefore to be concluded that there was non-co-operation in the sense of 
Article 18(1) of the Basic Regulation by all companies selected in the sample. 

(42)  According  to  Article  17(4)  of  the  Basic  Regulation,  if  there  is  a  degree  of  non  co-
operation by some or all of the parties selected which is likely to materially affect the 
outcome  of  the  investigation,  a  new  sample  may  be  selected.  However,  it  should  be 
noted that the threat received by the Commission officials has not been removed and 
that  nothing  indicated  that  this  threat  was  restricted  to  the  verification  visits  of  the 
Commission  officials  to  the  sampled  companies.  It  was  therefore  impossible  for  the 
Commission to select a new sample and to carry out verification visits. Consequently, 
a  determination  had  to  be  made  on  the  basis  of  facts  available,  in  accordance  with 
Article 18 of the Basic Regulation.  

(43)  The exporting producers were informed of the finding that they had supplied false or 
misleading information, the reason for rejecting such false or misleading information 
and that best facts available would be used in accordance with Article 18 of the Basic 
Regulation. They were granted an opportunity to provide further explanations within 
the time limit specified, as determined by Article 18(4) of the Basic Regulation.  

(44)  According  to  Article  18(1)  of  the  Basic  Regulation,  false  or  misleading  information 
shall  be  disregarded  and  use  may  be  made  of  facts  available.  The  Commission 
examined  the  information  available  that  would  allow  to  calculate  the  margin  of 
dumping,  i.e.  the  complaint,  the  questionnaire  replies  by  the  sampled  exporting 
producers  and  three  other  exporting  producers  that  had  requested  individual 
examination in line with Article 17(3) of the Basic Regulation, information submitted 
by several interested parties and official import statistics from Eurostat. 

(45)  With regard the complaint lodged by the Community industry, which contained prima-
facie  evidence  of  a  dumping  margin  of  45,1  %,  it  was  found  that  the  data  used  to 
calculate  this  dumping  margin  was  less  representative  than  the  information  supplied 
by  the  exporting  producers,  in  particular  regarding  the  multiple  types  of  the  product 
concerned exported from Pakistan. 

(46)  The  replies  to  the  anti-dumping  questionnaire  by  the  three  companies  requesting 
individual  examination  were  also  examined  and  it  was  found  that  they  were 
significantly  deficient  and  incorrect  to  such  an  extent  that  this  would  cause  undue 
difficulty in arriving at a reasonably accurate finding. 

(47)  Consequently,  it  was  considered  that,  on  balance,  despite  containing  some  false 
information,  the  replies  of  the  exporting  producers  initially  collected  in  order  to 
constitute  a  sample  could,  to  a  certain  extent,  be  used  as  the  best  facts  available. 
Obviously, this had to be corrected where contradicted by the findings of the on-spot 
verifications  and  the  information  provided  by  these  parties  in  their  further 
submissions. 

(48) 

It should be noted that Article 18 of the Basic Regulation provides that the result of the 
application  of  facts  available  may  be  less  favourable  to  the  party  than  if  it  had  co-
operated. However, given the fact that the dumping margin determined would apply to 

10 

 
 
  
 
all Pakistani exporting producers of the product concerned, the Commission has taken 
utmost care to eliminate the punitive element for non co-operation.  

Need to calculate a global dumping margin 

(49)  The information submitted by interested parties, and used to correct the reported costs 
for  each  of  the  six  initially  sampled  companies,  contained  references  to  an  average 
profit margin on exports of the product concerned of 2 % to 5 %. This range was also 
confirmed  by  the  exporting  producers  themselves,  and  was  considered  reasonable  as 
described in recital (32). It was considered, however, that this profit margin, although 
valid  on  average  for  all  the  exporting  producers,  would  not  necessarily  reflect  the 
profit  margin  of  each  of  the  companies  individually.  In  the  light  of  the  fact  that  the 
information  available  allowed  the  Commission  only  to  calculate  an  average  profit 
margin on exports of the product concerned it was considered appropriate to calculate 
one overall dumping margin applicable to all the exporting producers.  

(50)  The exporting producers claimed that an individual dumping margin should have been 
established for each company individually. It was stated that the calculations showed 
that the Commission was able to calculate an individual dumping margin.  

(51)  The  need  to  calculate  a  global  dumping  margin  is  the  result  of  the  following 
considerations:  The  profit  margins  on  export  sales  submitted  by  the  exporting 
producers in their replies to the questionnaires could not be used and had therefore to 
be  corrected.  This  correction  was  done  by  using  for  all  exporting  producers  a  profit 
margin on export sales of 3,5 % (the issue is explained in full in recital (56)). This also 
meant  that  the  allocations  of  cost  of  manufacturing  of  the  product  concerned  as 
presented in the questionnaire replies were not correct and therefore had to be adjusted 
accordingly pursuant to Article 18 of the Basic Regulation. Thus, the wrong reporting 
of the profit on export sales had important knock on effects on the cost allocations for 
each exporting producer. More importantly, the fact that an average profit margin had 
to be used as facts available for all exporting producers was a major reason for arriving 
at  the  conclusion  that  it  would  be  inappropriate  to  specify  individual  duty  rates  for 
each  individual  exporting  producer.  Indeed,  the  very  nature  of  an  average  profit 
margin  entails  that  the  corresponding  individual  profit  margins  will  to  some  degree 
vary. In this case, the variation was important as the range of possible profit margins 
quoted differed from 2 % to 5 %. In other words, while the Institutions are reasonably 
satisfied that the average profit margin used is appropriate, this average profit margin 
is  -  given  the  important  knock-on  effects  for  the  other  elements  of  the  constructed 
normal value and thus for the dumping calculations in general - clearly not a basis in 
order  to  specify  an  individual  duty  rate.  This  is  so  because  it  would  lead  to 
unjustifiably high dumping margins for some exporting producers and to unjustifiably 
low dumping margins for some other exporting producers as compared to a situation 
where  the  real  individual  profit  figures,  i.e.  those  established  in  the  case  of  full 
cooperation, had been used. Thus, the fact that an average profit figure for export sales 
of the product concerned had to be used linked intrinsically the determinations of each 
separate producer.  

(52)  The exporting producers claimed that the fact that they have received disclosure with 
individual  calculations  and  individual  dumping  amounts  shows  that  the  Institutions 
could  also  have  specified  individual  duty  rates  for  them.  However,  the  issue  that  an 
individual  duty  rate  is  not  appropriate  for  the  reasons  outlined  above  should  not  be 
confused  with  the  information  which  was  provided  to  each  individual  exporting 

11 

 
 
  
 
producer in the framework of disclosure. Indeed, in order to ensure transparency and 
to  enable  each  individual  exporting  producer  to  cross-check  the  calculations  of  the 
Commission,  they  all  received  the  full  calculation  which  reflected  the  above-
mentioned profit margin of 3,5%. But this does not put into question the reasons for a 
country wide dumping margin/duty rate as outlined in the preceding paragraph. 

Normal value 

(53)  As  the  companies  selected  in  the  sample  had  no  domestic  sales  of  the  like  product 
representing at least 5 % of export sales of the product concerned to the Community, 
as  required  by  Article  2(2)  of  the  Basic  Regulation,  the  domestic  sales  of  the  like 
product by the companies concerned could not be used as a valid basis to determine 
normal value. 

(54) 

In the absence of representative domestic sales made by other producers, normal value 
had  to  be  constructed  in  accordance  with  Article  2(3)  of  the  Basic  Regulation,  by 
adding  to  the  manufacturing  cost  of  the  exported  types  of  the  product  concerned  a 
reasonable  amount  for  selling,  general  and  administrative  costs  (“SG&A”)  and  for 
profit, determined according to Article 2(6) of the Basic Regulation. 

(55)  As concluded in recital (41) above, it was found that the reported costs of production 
and,  as  a  consequence,  the  reported  profit  margins  for  exports  of  the  product 
concerned were false. 

(56)  Of the reported costs of production, only the costs of manufacturing were corrected, as 
the  reported  SG&A  expenses  were  found  to  be  in  line  with  the  companies’  audited 
accounts.  The  profit  on  exports  of  the  product  concerned  for  each  company  initially 
selected  for  the  sample  was  corrected  to  3.5  %  of  turnover,  an  average  of  the  profit 
margins submitted to be the normal profit margin for these sales. The amount of profit 
reduction on exports of the product concerned was allocated on the basis of turnover to 
export sales of other products and to domestic sales, in order to keep the overall profit 
in line with the companies’ audited accounts. 

(57) 

It  was  argued  by  the  exporting  producers  and  by  two  associations  that  it  was 
unreasonable to consider such profit as a reasonable profit for Pakistani exports to the 
Community market, while at the same time considering a profit margin of 6,5% as an 
appropriate minimum for the Community industry. 

(58)  As stated in recital (105),  the investigation  revealed  that  exports  from  Pakistan  were 
strong  on  the  low  price  segment,  while  Community  industry  sales  covered  mainly 
branded  products.  It  was  therefore  considered  that  on  the  basis  of  these  factors  such 
difference in profitability was not unreasonable.  

(59)  A number of corrections had to be introduced to the cost allocation methods which the 
companies  had  elaborated  exclusively  for  the  purpose  of  the  present  investigation, 
including  the  allocation  of  duty  drawback  and  packing  expenses,  on  the  basis  of  the 
findings of the on spot verifications and the analysis of the replies. 

(60)  For  the  company  which  was  fully  verified,  a  correction  to  the  reported  profit  on 
domestic sales was also necessary in order to bring it into line with GAAP applied in 
Pakistan. 

12 

 
 
  
 
(61)  Since no actual data for SG&A and profit pertaining to production and sales of the like 
product  were  available  for  any  of  the  exporting  producers  under  investigation  or  for 
any other known exporters or producers, and since no such information was available 
for  the  same  general  category  of  products,  there  was  no  other  option  but  to  use  any 
other  reasonable  method  according  to  Article  2(6)(c)  of  the  Basic  Regulation  to 
establish an amount for SG&A and for profits. 

(62) 

In order to determine an amount for SG&A expenses and for profit, the average of the 
amounts  reported  by  all  six  companies  originally  selected  in  the  sample  for  SG&A 
expenses and for profit on domestic sales to unrelated customers, after the corrections 
as  explained  in  recital  (56)  and  (60),  were  used.  These  data  were  considered  an 
appropriate basis since they related to domestic sales to unrelated customers of textile 
products (including yarn, grey fabric, processed fabrics and apparel) and they were the 
only data available for domestic sales in Pakistan. No information is available which 
would  allow  to  conclude  that  the  profit  so  determined  exceeds  the  profit  normally 
realised  by  other  exporters  or  producers  on  sales  of  products  of  the  same  general 
category in the domestic market of Pakistan, as required by Article 2(6)(c) of the Basic 
Regulation.  

Export price 

(63)  The  appropriateness  of  the  export  prices  as  reported  by  the  exporting  producers  was 
examined. All the information available, including the partial verification carried out 
in Pakistan, verifications of importers and Eurostat statistics indicated that these were 
accurately reported. 

(64)  All  companies  made  their  export  sales  to  the  Community  directly  to  independent 
importers. In accordance with Article 2(8) of the Basic Regulation, their export prices 
were therefore established on the basis of the prices actually paid or payable by these 
independent importers. 

(65)  As requested by the companies concerned, export sales made from outdated stocks and 
sales  delivered  by  air  mail  were  excluded  from  the  dumping  calculations,  as  these 
sales were allegedly not made in the ordinary course of trade. These sales represented 
a negligible proportion of all export sales reported. 

Comparison 

(66)  For the purpose of ensuring a fair comparison between the normal value and the export 
price,  due  allowance  in  the  form  of  adjustments  was  made  for  import  charges  and 
indirect  taxes,  discounts  and  rebates,  transport,  insurance,  handling,  loading  and 
ancillary costs, packing, credit, commissions and currency conversions, affecting price 
comparability in accordance with Article 2(10) of the Basic Regulation. 

(67)  All companies have claimed an adjustment for duty drawback under Article 2(10)(b) 
of the Basic Regulation. However, the amounts refunded by the Pakistani government 
exceeded  by  far  the  amounts  of  import  charges  or  indirect  taxes  paid  on  materials 
incorporated  in  the  product  concerned.  Consequently,  the  Commission  accepted  the 
adjustment  in  so  far  as  the  amounts  claimed were actually borne by the like product 
and  by  materials  physically  incorporated  therein,  when  intended  for  consumption  in 
the  exporting  country,  and  refunded  in  respect  of  the  product  exported  to  the 
Community. 

13 

 
 
  
 
(68)  The exporting producers argued that the duty drawback allowance should be granted 
for the full amount refunded by the Government of Pakistan independently of whether 
duties  had  been  paid  by  the  exporting  producers  or  by  their  local  suppliers  of 
materials.  However,  no  evidence  was  available  that  the  materials  bought  from  local 
suppliers  did  bear  any  import  charges  or  indirect  taxes.  The  argument  was  therefore 
rejected.  

Dumping margin 

(69)  According  to  Article  2(11)  of  the  Basic  Regulation,  the  amount  of  dumping  was 
established  on  the  basis  of  the  comparison  of  the  weighted  average  normal  value  of 
each product type with the weighted average export price of the same product type. 

(70)  On this basis, the overall average dumping margin applicable to all Pakistani exporting 
producers  is  13,1  %,  expressed  as  a  percentage  of  the  CIF  net  free-at-Community-
frontier price, before duty. 

D. COMMUNITY INDUSTRY 

(71)  Within the Community, the product concerned is manufactured by: 

– 

– 

Producers  on  behalf  of  which  the  complaint  was  lodged;  all  producers  which 
were  selected  in  the  sample  (‘the  sampled  Community  producers’)  were  also 
complainants; 

Other  Community  producers  which  were  not  complainants  and  did  not  co-
operate. 

(72)  The Commission has assessed whether all the above companies could be considered as 
Community producers within the meaning of Article 4(1) of the Basic Regulation. The 
output of all the above companies constitutes the Community production. 

(73)  The Community industry is composed of 29 Community producers which co-operated 
with the Commission, among which are also the five sampled Community producers. 
These  producers  account  for  45  %  of  the  Community  production  of  cotton-type  bed 
linen.  They  are  therefore  deemed  to  constitute  ‘the  Community  industry’  within  the 
meaning of Articles 4(1) and 5(4) of the Basic Regulation. 

1. 

Preliminary remarks 

E. INJURY 

(74) 

In  view  of  the  fact  that  sampling  had  been  used  with  regard  to  the  Community 
industry,  injury  has  been  assessed  on  the  one  hand  on  the  basis  of  information 
collected  at  the  level  of  the  entire  Community  industry,  for  trends  concerning 
production,  productivity,  sales,  market  share,  employment  and  growth.  On  the  other 
hand,  information  collected  at  the  level  of  the  sampled  Community  producers  was 
analysed,  as  regards  trends  concerning  prices  and  profitability,  cash  flow,  ability  to 
raise  capital  and  investments,  stocks,  capacity  and  utilisation  of  capacity,  return  on 
investment and wages. 

14 

 
 
  
 
2. 

Community consumption 

(75)  Community  consumption  was  established  on  the  basis  of  production  volumes  of  the 
Community producers according to Eurocoton minus exports based on Eurostat data, 
plus  imports  from  Pakistan  and  the  other  third  countries,  also  based  on  Eurostat. 
Between  1999  and  the  IP,  the  apparent  Community  consumption  increased  steadily 
from 173 651 tonnes to 199 881 tonnes, i.e. by 15 %. 

3. 

Imports from the country concerned 

(a) Volume and market share 

(76) 

Imports  of  cotton-type  bed  linen  from  Pakistan  into  the  Community  increased  in 
volume from 36 000 tonnes in 1999 to 49 300 tonnes in the IP, i.e. by 37 % over the 
period considered. After a drop to 31 800 tonnes in 2000 imports bounced back to 35 
500 tonnes in 2001. Between 2001 and the investigation period they rose sharply by 
almost 14 000 tonnes; i.e. by more than one third. 

(77)  The  corresponding  market  share  decreased  from  20,7  %  in  1999  to  17,2  %  in  2000. 

Subsequently, it rose to 18,9 % in 2001 and 24,7 % during the IP. 

(b) Prices 

(78)  Average prices from Pakistan increased from 5,95 EUR/kg in 1999 to 6,81 EUR/kg in 
2000. In the following years they were reduced gradually to 6,34 EUR/kg in 2001 and 
to 5,93 EUR/kg during the IP. 

(c) Price undercutting 

(79)  For the purposes of analysing price undercutting, the weighted average sales prices per 
product  type  of  the  Community  industry  to  unrelated  customers  on  the  Community 
market  were  compared  to  the  corresponding  weighted  average  export  prices  of  the 
imports  concerned.  The  comparison  was  made  after  deduction  of  rebates  and 
discounts. The prices of the Community industry were adjusted to an ex-works basis. 
The  prices  of  the  imports  concerned  were  on  a  CIF  basis  with  an  appropriate 
adjustment for the customs duties and post importation costs. 

(80)  This  comparison  showed  that  during  the  IP  the  products  concerned  originating  in 
Pakistan  were  sold  in  the  Community  at  prices  which  undercut  the  Community 
industry's prices by more than 50 %, when expressed as a percentage of the latter. 

4. 

Situation of the Community industry 

(81) 

(82) 

In accordance with Article 3(5) of the Basic Regulation, the Commission examined all 
relevant economic factors and indices having a bearing on the state of the Community 
industry. 

It was analysed whether the Community industry is still in the process of recovering 
from the effects of past subsidisation or dumping, but no evidence was found that this 
should be the case. 

(83) 

It was submitted that the Community industry did not suffer material injury as it was 
protected  by  the  presence  of  quotas.  It  is  indeed  true  that  during  the  IP  there  were 

15 

 
 
  
 
quotas  in  force.  Under  international  law,  these  quotas  have  their  legal  basis  in  the 
WTO Agreement on Textiles and Clothing. They will be phased out by 31 December 
2004. The quantities which can be imported under the quotas correspond to substantial 
shares of the Community market. Indeed, on the basis of consumption figures in the IP 
the annual 2002 quota corresponds in the case of Pakistan to a market share of around 
25 %. It should also be noted that the determination of the level of these textile quotas 
is the result of straightforward negotiations which are outside the analytical framework 
foreseen  under  the  Basic  Regulation.  Whilst it cannot be excluded that quotas might 
have an effect on the situation of the Community industry, the mere presence of quotas 
does not prevent the Community industry to suffer injury. The analysis of the figures 
in the present case shows that the Community industry suffered material injury during 
the IP despite the presence of the quotas. The submission is therefore rejected. 

(a) Data relating to the Community industry as a whole 

Production, employment and productivity 

(84)  The  production  volume  of  the  Community  industry  increased  slightly  between  1999 

and the IP, from 37 700 tonnes to 39 500 tonnes, i.e. by 5 %. 

(85)  Employment  remained  basically  stable  around  5  500  employees.  Therefore, 
productivity  increased  from  6,8  tonnes/employee  in  1999  to  7,2  tonnes/employee 
during the IP, i.e. by 6 % over the period considered.  

Sales volume and market share 

(86)  Over the period considered, the sales volume of the Community industry rose by 4 %, 
from 36 200 tonnes in 1999 to 37 800 tonnes during the IP. It had increased to 38 300 
tonnes  in  2001,  but  decreased  in  the  IP.  The  turnover  generated  by  these  sales 
increased  from  410  Mio  EUR  in  1999  to  441  Mio  EUR  in  2001,  but  subsequently 
decreased by 5 percentage points to 420 Mio EUR during the IP. 

(87)  Despite the fact that consumption in the Community market increased by 15 % during 
the same period, the Community industry’s market share declined from 20,8 % to 18,9 
% during the IP. The market share fluctuated around 20 % between 1999 and 2001 and 
decreased by 1,5 percentage points between 2001 and the IP. 

Growth 

(88)  While  Community  consumption  grew  by  15  %  between  1999  and  the  IP,  the  sales 
volume of the Community industry rose by only 4 %. On the other hand, the volume 
of total imports rose by 35 % over the same period, with the most significant increase 
from 120 000 tonnes in 2001 to 139 000 tonnes during the IP. While the market share 
of  all  imports  increased  by  more  than  10  percentage  points,  the  market  share  of  the 
Community industry dropped from 20,8 % to 18,9 %. This means that the Community 
industry  could  not  participate  adequately  in  the  growth  of  the  market  between  1999 
and the IP. 

16 

 
 
  
 
(b) Data relating to the sampled Community producers 

Stocks, capacity and capacity utilisation 

(89)  As  far  as  stocks  are  concerned,  they  fluctuate  considerably  because  most  of  the 
production  is  made  in  response  to  orders  thus  reducing  the  possibility  to  produce 
purely  for  stocks.  Whilst  an  increase  in  stocks  was  observed  at  the  sampled 
Community  producers,  it  is  considered  that  in  this  case  stocks  were  not  a  relevant 
indicator of injury due to the industry specific high fluctuations of stocks.  

(90)  The  production  capacity  was  difficult  to  establish  in  nearly  all  sampled  Community 
producers  because  the  production  process  of  the  like  product  is  individualised 
requiring  different  combinations  of  machinery  usage.  Therefore,  it  is  impossible  to 
draw  an  overall  conclusion  from  the  capacity  of  individual  machines  concerning  the 
production  capacity.  In  addition,  part  of  the  production  process  is  sub-contracted  in 
some of the sampled Community producers.  

(91)  However,  for  those  products  that  go  through  a  printing  process,  the  printing 
department  was  considered  to  be  the  factor  determining  the  capacity  relating  to 
production of the printed bed linen in all sampled Community producers. It was found 
that the capacity utilisation in the printing department decreased steadily from 90 % to 
82 %. 

Prices 

(92)  Average prices per kg of the sampled Community producers increased gradually from 
13,3 EUR to 14,2 EUR over the period considered. This should be seen in the light of 
the  fact  that  this  average  price  covers  both  high  value  and  low  value  items  of  the 
product concerned and that the Community industry has been forced to shift to more 
sales  of  higher  value  niche  products  as  their  sales  in  the  high  volume,  mass  market 
were taken over by imports from low price countries. On the other hand, average sales 
prices per kg of the Community industry overall went up marginally from 11,3 EUR in 
1999 to 11,5 EUR in 2001, but dropped subsequently to 11,1 EUR during the IP. 

Investments and ability to raise capital 

(93)  Between 1999 and 2001, investments were reduced significantly from 7 Mio EUR to 
2,5  Mio  EUR.  Between  2001  and  the  IP,  investments  remained  rather  stable  and 
accounted during the IP for only 41 % of the amount invested in 1999. 

(94)  There was no claim from the Community industry nor indication that the Community 

industry encountered problems to raise capital for its activity. 

(95) 

It  was  submitted  that  the  decrease  in  investments  does  not  point  to  injury  as  the 
Community  industry  did  not  claim  to  encounter  problems  in  raising  capital.  This 
argument  had  to  be  rejected  as  the  decline  in  new  investments  is  not  linked  to 
difficulties  in  raising  capital,  but  it  was  caused  by  the  loss  in  market  share  of  the 
Community industry and by the fierce price pressure in the Community market. 

17 

 
 
  
 
Profitability, return on investment and cash flow 

(96)  Over  the  period  considered,  the  profitability  of  the  sampled  Community  producers 
dropped significantly from 7,7 % in 1999 to 4,4 % in the IP, i.e. by 42 %. The return 
on investment followed the same trend, falling from 10,5 % in 1999 to 5,9 % during 
the IP, a reduction by 44 %. 

(97) 

It was submitted by the Pakistani exporting producers that the decline in profitability 
in the five sampled producers corresponds to the increase in wages. As outlined below, 
the  average  labour  costs  of  the  sampled  companies  have  decreased  in  real  terms  by 
around  3.6%.  In  addition,  wages  are  only  one  out  of  several  cost  items  in  the 
manufacturing  process  and  therefore,  an  increase  in  wages  does  not  constitute 
automatically  a  decrease  in  the  profitability  of  a  company.  Therefore,  this  argument 
had to be rejected. 

(98)  The cash flow generated by the like product diminished considerably from 16,8 Mio 
EUR in 1999 to 11,3 Mio EUR during the IP. The most significant reduction occurred 
in 2000, when the cash flow decreased by 27 %. Between 2000 and the IP, it fell by 
another  5  %.  As  the  cash  flow  was  influenced  by  stock  variations,  cash  flow  is  an 
indicator with a limited relevance. Nevertheless, is should be noted that the negative 
development  of  cash  flow  over  the  period  considered  is  in  line  with  other  economic 
indicators, confirming the negative evolution of the Community industry, and should 
not be qualified as insignificant. 

Wages 

(99)  Labour costs increased by 3,3 % over the period considered, from 35,2 Mio EUR in 
1999 to 36,3 Mio EUR during the IP. As the number of employees remained basically 
stable, average labour costs also increased from 29 100 EUR (rounded figures) to 30 
300  EUR,  i.e.  by  4,2%.  These  increases  are  nominal  increases  and  are  considerably 
below the increase in consumer prices of more than 7,8 % over the period considered, 
which means that real wages have decreased by 3,6%. 

Magnitude of the amount of dumping 

(100)  Given  the  volume  and  the  price  of  the  dumped  imports,  the  impact  of  the  actual 
margin of dumping, which is also significant, cannot be considered negligible. 

5. 

Conclusion on injury 

the  Community 

(101)  The examination of the above-mentioned factors shows that between 1999 and the IP, 
industry  deteriorated.  The  profitability  fell 
the  situation  of 
significantly  over  the  period  considered  and  the  Community  industry’s  market  share 
decreased  by  9,1  %.  For  the  sampled  Community  producers,  investments  were 
significantly  reduced,  profitability,  return  on  investment  as  well  as  cash  flow 
decreased  considerably.  Employment  remained  basically  stable.  Some  indicators 
showed a positive trend: over the period considered, turnover and sales volumes of the 
Community industry increased slightly. Productivity and wages increased marginally. 
As  regards  average  sales  prices  of  the  sampled  producers,  they  showed  an  upward 
trend over the period considered, which is, however, partly a result of a shift to more 
sales of higher value niche products. However, it should be noted that during the same 
period the Community consumption grew by 15 % whilst the Community industry’s 

18 

 
 
  
 
market share declined by 9,1 %. Moreover, the average sales prices of the Community 
industry decreased over the period considered. 

(102)  In the light of the foregoing, it is concluded that the Community industry has suffered 

material injury within the meaning of Article 3(6) of the Basic Regulation. 

1. 

Introduction 

F. CAUSATION 

(103)  In  accordance  with  Article  3(6)  and  (7)  of  the  Basic  Regulation,  it  was  examined 
whether  the  dumped  imports  originating  in  Pakistan  have  caused  injury  to  the 
Community  industry  to  a  degree  that  enables  it  to  be  classified  as  material.  Known 
factors other than the dumped imports, which could at the same time have injured the 
Community industry, were also examined to ensure that the possible injury caused by 
these other factors was not attributed to the dumped imports. 

2. 

Effect of the dumped imports 

(104)  Imports  of  cotton-type  bed  linen  from  Pakistan  into  the  Community  increased  in 
volume from 36 000 tonnes in 1999 to 49 300 tonnes in the IP, i.e. by 37 %. After a 
slight decrease between 1999 and 2000, imports recovered in 2001 and rose by 13 900 
tonnes  between  2001  and  the  IP.  The  corresponding  market  share  fell  initially  from 
20,7 % in 1999 to 17,2 % in 2000. Subsequently, it went up considerably amounting to 
24,7 % during the IP. 

(105)  In the analysis of the effect of the dumped imports, it was found that price is the main 
element of competition. Indeed, it is the buyers who determine themselves the quality 
and design of the product which they intend to order. It appears from the analysis of 
the selling-buying process in this case that the importers and traders, before passing an 
order to an exporting producer in Pakistan, specify all the characteristics of the product 
(design,  colour,  quality,  sizes…)  to  be  delivered,  and  thus  compare  the  different 
producers’ offers mainly on the basis of price as all other differentiating elements are 
predetermined  in  the  call  for  offers,  or  subsequently  result  from  the  importer’s  own 
efforts in respect of similar goods (e.g. branding). With respect to prices, it was found 
that the prices of dumped imports were considerably below those of the Community 
industry as well as below those of other third country exporters. Moreover, it was also 
found  that  the  Community  industry  had  to  withdraw  largely  from  the  low  priced 
market  segments,  where  imports  from  Pakistan  are  strong,  this  also  underlining  the 
causal  link  between  the  dumped  imports  and  injury  suffered  by  the  Community 
industry. 

(106)  Average  prices  of  imports  from  Pakistan  exerted  a  pressure  on  the  Community 
industry and forced it on the one hand to decrease prices and on the other hand to shift 
to more sales of higher value niche products. 

(107)  Given  the  impact  of  the  imports  from  Pakistan  in  the  Community  market,  both  in 
terms of volume and in terms of prices, these imports exerted a significant downward 
pressure on the Community industry in terms of its sales volumes and prices. The lack 
of sales volume in the low priced market segments for the Community industry could 
not be compensated by sales  of  high profit  niche products, this resulting  in  reducing 
notably  market  share,  investments,  profitability  and  return  on  investment  of  the 

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Community industry. It was also found that there was a coincidence in time between 
these imports and the injury suffered by the Community industry. 

3. 

Effects of other factors 

(a) Subsidised imports originating in India 

(108)  In  the  parallel  anti-subsidy  investigation,  it  was  established  that  subsidised  imports 
originating  in  India  caused  material  injury  to  the  Community  industry.  Although 
subsidised imports originating in India are, therefore, considered as having contributed 
to  the  injury  suffered  by  the  Community  industry,  it  should  be  noted  that,  given  the 
substantial and increasing volumes and low prices of imports originating in Pakistan, it 
cannot be denied that dumped imports from Pakistan equally caused material injury by 
themselves. 

(b) Imports originating in third countries other than India and Pakistan 

(109)  Imports originating in third countries other than India and Pakistan increased from 51 
400 tonnes in 1999 to 75 300 tonnes during the IP. Their market share increased from 
29,6  %  in  1999  to  37,7  %.  The  largest  part  of  imports  in  that  group  of  countries 
originated  in  Turkey.  Given  the  corporate  links  between  Turkish  and  Community 
companies,  there  is  a  certain  market  integration  in  the  form  of  inter-company  trade 
between Turkish exporting producers and Community operators that suggests that the 
decision to import from that country is not only linked to the price. This is confirmed 
by  the  average  prices  of  imports  of  bed  linen  originating  in  Turkey  during  the  IP, 
which were higher by almost 45 % to those of India and by 34 % to those of Pakistan. 
It  is  therefore  unlikely  that  imports  originating  in  Turkey  broke  the  causal  link 
between the dumped imports from Pakistan and the injury suffered by the Community 
industry.  

(110)  The market shares of the remaining countries (e.g. Romania, Bangladesh and Egypt) 
individually  are  significantly  lower  and  do  not  exceed  3,9  %,  and  it  is  thus  unlikely 
that any material injury is to be attributed to the imports from those countries.  

(111)  The  average  price  of  imports  originating  in  countries  other  than  India  and  Pakistan 
increased from 7,18 EUR/kg in 1999 to 7,47 EUR/kg in 2001 and decreased slightly to 
7,40 EUR/kg during the IP. Nevertheless, during the IP, these prices were around 25 
% higher than the prices of imports from Pakistan. Consequently, imports from other 
third countries did not exert a price pressure on the Community industry to the extent 
that imports from Pakistan did. Also the market share of any individual country in that 
group was below 4 %. It is therefore concluded that imports from other third countries 
did not break the causal link between the dumped imports from Pakistan and the injury 
suffered by the Community industry. 

(c) Contraction of demand 

(112)  It was claimed that the demand for bed linen produced by the Community industry has 
diminished in volume terms as the Community industry focused on the upper end of 
the market, where less sales volume is made. However, as pointed out above, the total 
EU  consumption  of  bed  linen  did  not  decrease,  but  rather  increased  over  the  period 
considered.  Most  of  the  Community  producers  have  different  product  lines  for 
different market segments. The up-market brands generate high margins but are only 

20 

 
 
  
 
sold in very small quantities. In order to maximise the capacity utilisation and to cover 
the  fixed  costs  of  production,  the  Community  industry  would  need  sales  of  lower 
priced market segment in big volumes as well. There is no indication that demand has 
decreased  in  that  market  segment.  This  segment  is  on  the  other  hand  increasingly 
taken  over  by  low  priced  imports,  which  cause  injury  to  the  Community  industry. 
Given the overall increase in consumption, which is not limited to a particular market 
segment,  the  demand  situation  in  the  Community  can  therefore  not  be  seen  to  break 
the causal link between the dumped imports from Pakistan and the injury suffered by 
the Community industry. 

(d) Imports by the Community industry 

(113)  It  was  submitted  that  the  Community  industry  imported  cotton-type  bed  linen  from 
Pakistan  and  thereby  contributed  to  the  injury  suffered.  However,  only  one  of  the 
sampled Community producers actually imported bed linen from Pakistan during the 
IP and the sales of these imports generated only a small part of total turnover by this 
producer (around 2 %). Therefore, imports by the Community industry of the product 
concerned from Pakistan cannot be seen to break the causal link between the dumped 
imports from Pakistan and the material injury suffered by the Community industry as a 
whole. 

(e) Export performance by the Community industry 

(114)  Exports of the sampled Community producers represented only around 0,5 % of their 
total sales. Given the negligible part of exports in total activity, this factor cannot have 
contributed to the injury suffered.  

(f) Productivity of the Community industry  

(115)  The  development  in  productivity  has  been  identified  in  the  injury  part  of  this 
document.  Since  productivity  increased  from  6,8  tonnes/employee  in  1999  to  7,2 
tonnes/employee in the IP, i.e. by around 6 %, this factor cannot have contributed to 
the injury suffered. 

4. 

Conclusion  

(116)  The  substantial  increase  in  volume  and  market  share  of  the  imports  originating  in 
Pakistan, especially between 2001 and the IP, as well as the considerable decrease in 
their sales prices and the level of price undercutting found during the IP coincided in 
time with the material injury suffered by the Community industry. 

(117)  In  the  parallel  anti-subsidy  investigation,  it  was  established  that  subsidised  imports 
originating  in  India  contributed  to  the  injury  suffered  by  the  Community  industry. 
However,  the  effect  of  these  imports  was  not  such  as  to  reverse  the  conclusion  of 
causation  as  regards  the  dumped  imports  originating  in  Pakistan.  The  remaining 
possible other injury causes, i.e. imports from countries other than India and Pakistan, 
the demand situation, imports made by the Community industry as well as the export 
and  productivity  performance  were  analysed,  but  found  not  to  break  the  causal  link 
between the Pakistani imports and the injury suffered by the Community industry. 

(118)  Based  on  the  above  analysis  which  has  properly  distinguished  and  separated  the 
effects  of  all  known  factors  on  the  situation  of  the  Community  industry  from  the 

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injurious effects of the dumped imports, it is concluded that the imports from Pakistan 
have caused material injury to the Community within the meaning of Article 3(6) of 
the Basic Regulation. 

G. COMMUNITY INTEREST 

1. 

General remarks 

(119)  In  accordance  with  Article  21  of  the  Basic  Regulation,  it  was  examined  whether, 
despite  the  conclusion  on  injurious  dumping,  compelling  reasons  existed  that  could 
lead to the conclusion that it is not in the Community interest to adopt measures in this 
particular  case.  The  impact  of  possible  measures  on  all  parties  involved  in  this 
proceeding and also the consequences of not taking measures were considered. 

2. 

Community industry 

(120)  The Community industry suffered material injury. It proved to be a viable industry that 
was  able  to  compete  at  fair  market  conditions.  The  injurious  situation  of  the 
Community  industry  resulted  from  its  difficulty  to  compete  with  the  low-priced, 
dumped  imports.  The  pressure  of  the  dumped  imports  has  also  forced  a  number  of 
Community producers to cease production of cotton-type bed linen. 

(121)  It  is  considered  that  the  imposition  of  measures  will  restore  fair  competition  on  the 
market.  The  Community  industry  should  then  be  able  to  increase  the  volume  and 
prices  of  its  sales,  thereby  generating  the  necessary  profit  level  to  justify  continued 
investment in its production facilities. 

(122)  Should measures not be imposed, the deterioration of the situation of the Community 
industry would continue. It would not be able to invest in new production capacity and 
to compete effectively with imports from third countries. Some companies would have 
to cease production and lay off their employees. 

(123)  It is therefore concluded that the imposition of anti-dumping measures is in the interest 

of the Community industry. 

3. 

Importers and users 

(124)  Questionnaires were sent to 17 importers and two associations of importers. Only two 
questionnaire replies were received from unrelated importers in the Community. 

(125)  For both importers the sales of the product concerned constituted less than 5 % of the 
total  turnover.  The  total  profitability  of  the  importers  was  between  2  %  and  10  %. 
Taking  into  account  that  only  a  small  share  of  the  turnover  of  the  two  importers  is 
generated  by  sales  of  the  product  concerned  imported  from  Pakistan  and  that  many 
countries are not concerned by either anti-dumping duties or countervailing duties, the 
impact of the imposition of anti-dumping duties on these importers can be considered 
as minor. 

(126)  Questionnaires were sent to six users and one users’ association. No information from 
users was received, but some arguments were raised in a submission by Ikea and by 
the Foreign Trade Association. 

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(127)  It was submitted that the Community industry is not in a position to satisfy the whole 
demand  for  bed  linen  in  the  Community.  It  has  to  be  recalled  that  measures  are  not 
intended to prevent imports into the Community but to ensure that they are not made 
at  injurious  dumped  prices.  Imports  from  various  origins  will  continue  to  satisfy  a 
significant  part  of  the  Community  demand.  As many countries are  not concerned  by 
anti-dumping duties or countervailing duties, no shortage of supply is expected. 

(128)  It was claimed that cheap imports of bed linen are necessary for the final consumer as 
well  as  “institutional”  users  such  as  hotels,  hospitals  etc.  as  products  of  the  cheaper 
end  of  the  range  are  not  produced  by  the  Community  producers.  The  investigation 
showed  that  the  five  sampled  Community  producers  still  produce  these  products. 
There was no technical reason why the production of these products in the Community 
could not be increased. The fact that many other countries are not concerned by anti-
dumping duties or countervailing duties means that alternative sources of supply will 
still be available. 

4. 

Conclusion on Community interest 

(129)  On the basis of the above, it is concluded that there are no compelling reasons on the 
grounds of Community interest why anti-dumping duties should not be imposed in the 
present case. 

H. ANTI-DUMPING MEASURES 

1. 

Definitive measures 

(130)  In order to prevent further injury being caused by the dumped imports, it is considered 

appropriate to adopt anti-dumping measures. 

(131)  For  the  purpose  of  determining  the  level  of  these  duties,  account  was  taken  of  the 
dumping  margins  found  and  the  amount  of  duty  necessary  to  eliminate  the  injury 
sustained by the Community industry. 

(132)  Taking into account the level of profitability obtained by the Community industry in 
the years 1999 and 2000, it was found that a profit margin of 6,5 % of turnover could 
be  regarded  as  an  appropriate  minimum  which  the  Community  industry  could  have 
expected to obtain in the absence of injurious dumping. The necessary price increase 
was  then  determined  on  the  basis  of  a  comparison  of  the  weighted  average  import 
price,  as  established  for  the  price  undercutting  calculations,  with  the  non-injurious 
price  of  products  sold  by  the  Community  industry  on  the  Community  market.  The 
non-injurious price has been obtained by adjusting the sales price of the Community 
industry  by  the  actual  loss/profit  made  during  the  IP  and  by  adding  the  above 
mentioned  profit  margin.  Any  difference  resulting  from  this  comparison  was  then 
expressed as a percentage of the total CIF import value. 

(133)  It was submitted by the Pakistani exporting producers that the profit margin of 6,5 % 
of  turnover  was  higher  than  appropriate  minimum  profit  established  in  other 
investigations  concerning  the  same  product.  This  argument  had  to  be  rejected  as  the 
appropriate  minimum  profit  which  the  Community  industry  could  have  expected  to 
obtain  in  the  absence  of  injurious  dumping  is  established  anew  on  the  basis  of  the 
specific circumstances of each proceeding, taking into account the market conditions 
and the past performance of the Community industry in that proceeding. In this case, it 

23 

 
 
  
 
was found that a profit margin of 6,5 % could be regarded as an appropriate minimum, 
calculated  as  an  average  of  the  level  of  profitability  obtained  by  the  Community 
industry in the years 1999 and 2000. 

(134)  As  the  injury  elimination  level  was  higher  than  the  dumping  margin  established,  the 

definitive measures should be based on the latter. 

2. 

Undertaking 

(135)  The Pakistani exporting producers have presented a proposal for a price undertaking. 
However,  there  were  more  than  170  exporters  involved  in  this  proceeding  and  bed 
linen is characterised by hundreds of different product types, with some characteristics 
not easily discernible upon importation. This makes it virtually impossible to establish 
meaningful minimum prices for each product type which could be properly monitored 
by the Commission. The large number of exporters would also render the monitoring 
of a price undertaking impracticable.  

(136)  It was also found that the proposed categories of the product concerned in respect of 
which  an  undertaking  was  offered  were  inappropriate  since  there  would  be  a 
significant price variation within each of them. Furthermore, the proposed prices did 
not eliminate the injurious dumping. 

(137)  Under  these  circumstances,  it  was  considered  that  a  price  undertaking  was 

impracticable and could not be accepted. 

HAS ADOPTED THIS REGULATION: 

Article 1 

1. 

2. 

3. 

A definitive anti-dumping duty is hereby imposed on imports of bed linen of cotton 
fibres,  pure  or  mixed  with  man-made  fibres  or  flax  (flax  not  being  the  dominant 
fibre), bleached, dyed or printed originating in Pakistan currently classifiable within 
CN codes ex 6302 21 00 (Taric codes 6302 21 00*81 and 6302 21 00*89), ex 6302 
22 90 (Taric code 6302 22 90*19), ex 6302 31 10 (Taric code 6302 31 10*90), ex 
6302  31  90  (Taric  code  6302  31  90*90)  and  ex  6302  32  90  (Taric  code  6302  32 
90*19). 

The rate of duty applicable to the net free-at-Community-frontier price, before duty, 
for products produced by all companies shall be 13.1 %. 

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

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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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