Council Regulation (EC) No 779/2005 of 23 May 2005 terminating the partial interim review of the anti-dumping measures applicable to imports of silicon carbide originating in Ukraine
Date: 2005-05-23
Institutions: Council of the European Union
Subjects: Ukraine, anti-dumping duty, anti-dumping legislation, originating product, semi-metal

L 131/18

EN

Official Journal of the European Union

25.5.2005

COUNCIL REGULATION (EC) No 779/2005

of 23 May 2005

terminating the partial interim review of the anti-dumping measures applicable to imports of silicon
carbide originating in Ukraine

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty
Community,

establishing the European

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 (1)
(‘basic Regulation’), and in particular Article 11(3) thereof,

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

Whereas:

A. PROCEDURE

1. Measures in force

(1)

following

1100/2000 (3),

(‘the measures’). By Regulation

By Regulation (EC) No 821/94 (2), following an expiry
review, the Council
imposed a definitive anti-dumping
duty on imports of silicon carbide originating inter alia
(EC)
in Ukraine
No
review,
an
expiry
Industry Council
requested by the European Chemical
(‘CEFIC’) the Council maintained the measures at their
level. By Regulation (EC) No 991/2004 (4) the
original
Council amended Regulation (EC) No 1100/2000 as a
consequence of the enlargement of the European Union
by the accession of 10 new Member States on 1 May
2004 (the ‘EU 10’) in order to provide, in the event of an
undertaking being accepted by the Commission, for the
possibility to exempt imports to the Community made
under the terms of such undertaking from the anti-
(EC)
dumping
imposed
No 1100/2000. By Decisions 2004/498/EC (5)
and
2004/782/EC (6), the Commission accepted the under-
takings offered by the Ukrainian exporting producer
Open Joint Stock Company ‘Zaporozhsky Abrasivny
Combinat’ (‘ZAC’).

Regulation

duties

by

(1) OJ L 56, 6.3.1996, p. 1. Regulation as last amended by Regulation

(EC) No 461/2004 (OJ L 77, 13.3.2004, p. 12).

(2) OJ L 94, 13.4.1994, p. 21. Regulation as amended by Regulation

(EC) No 1786/97 (OJ L 254, 17.9.1997, p. 6).

(3) OJ L 125, 26.5.2000, p. 3.
(4) OJ L 182, 19.5.2004, p. 18.
(5) OJ L 183, 20.5.2004, p. 88.
(6) OJ L 344, 20.11.2004, p. 37.

(2)

(3)

(4)

(5)

(6)

(7)

(8)

The actual rate of the duty applicable to the net, free-at-
Community-frontier price, before duty,
is 24 % for
imports of silicon carbide originating in Ukraine.

2. Current investigation

The Commission received a request lodged by ZAC (‘the
applicant’) for a partial interim review pursuant to Article
11(3) of the basic Regulation.

that

The request was based on the prima facie evidence,
provided by the applicant,
the circumstances on
the basis of which measures were established have
changed and that these changes are of lasting nature.
inter alia, that the circumstances
The applicant alleged,
(‘MES’) had
with regard to market economy status
changed significantly. In particular, the applicant argued
that it now fulfilled the requirements to be granted MES
the basic Regulation.
pursuant
Furthermore, the applicant provided evidence showing
that a comparison of normal value based on its own
cost/domestic prices and its export prices to the USA
as a third country market comparable to the EU,
would lead to a reduction of dumping significantly
below the level of
the current measure. Accordingly,
the applicant alleged that the continued imposition of
the measure
level was no longer
current
necessary to offset dumping.

to Article 2(7)(b) of

its

at

after

The Commission,
the Advisory
consulting
initiated on 7 January 2004 by notice
Committee,
published in the Official Journal of the European Union (7)
a partial interim review limited in scope to the exami-
nation of dumping and MES as far as ZAC is concerned.

The Commission sent a questionnaire and a claim form
for MES pursuant to Article 2(7) of the basic Regulation
to the applicant.

The Commission sought and verified all the information
it deemed necessary for the determination of dumping
and MES. A verification visit was carried out at
the
premises of the applicant.

The investigation of dumping covered the period from
1 January 2003 to 31 December 2003 (hereinafter
referred to as ‘investigation period’ or ‘IP’).

(7) OJ C 3, 7.1.2004, p. 4.

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Official Journal of the European Union

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(9)

3. Parties concerned by the investigation

the

advised

officially

The Commission
exporting
producer, the representatives of the exporting country
and the Community producers of the initiation of the
review. Interested parties were given the opportunity to
make their views known in writing, to submit infor-
mation and to provide supporting evidence and to
request a hearing within the time limit set out in the
interested parties who so
notice of
requested and showed that
there were reasons why
they should be heard were granted a hearing.

initiation. All

(10)

In this regard, the following interested parties made their
views known:

(13)

need for the continued imposition of measures at their
current level. In carrying out a partial interim review the
Commission may, inter alia, consider whether the circum-
stances with regard to dumping have changed signifi-
cantly. The Commission investigated all claims put
forward by the applicant and the circumstances which
could have changed significantly since the imposition of
the measures: MES individual treatment (‘IT’), the choice
of an analogue country and the export prices of the
applicant.

2. Market Economy Status (MES)

The applicant requested MES pursuant to Article 2(7)(b)
of the basic Regulation and submitted the claim form for
market economy status within the deadline set out in the
notice of initiation.

(a) Community producers Association:

— European Chemical Industry Council (CEFIC)

(b) Community producer:

— Best-Business, Kunštát na Moravě, Czech Republic

(c) Exporting producer:

— Zaporozhsky Abrasivny Combinat, Zaporozhye,

Ukraine

(d) Producers in analogue countries:

— Volzhsky Abrasive, Volshsky, Volgograd Region,

Russia

— Saint-Gobain Materiais Cerâmicos Ltda, Barba-

cena, Brazil.

(14)

Pursuant to Article 2(7)(b) of the basic Regulation,
in
anti-dumping investigations concerning imports origi-
nating in Ukraine, normal value shall be determined in
accordance with paragraphs 1 to 6 of the said Article for
those producers which were found to meet all
five
criteria laid down in Article 2(7)(c) of the basic Regu-
lation.

(15)

The investigation revealed that not all criteria were met
by the applicant:

MES CRITERIA

Article
2(7)(c)
indent 1

Article
2(7)(c)
indent 2

Article
2(7)(c)
indent 3

Article
2(7)(c)
indent 4

Article
2(7)(c)
indent 5

Not met

Not met

Not met

Met

Met

Source: verified MES claim form reply of the applicant

B. PRODUCT CONCERNED

(16)

(11)

The product concerned by this proceeding is silicon
carbide, falling within CN code 2849 20 00 (hereinafter
referred to as ‘silicon carbide’ or the ‘product concerned’).
No evidence was found suggesting that circumstances
with regard to the product concerned had significantly
changed since the imposition of the measures.

C. RESULT OF THE INVESTIGATION

1. Preliminary remark

(12)

In accordance with Article 11(3) of the basic Regulation,
the purpose of this type of review is to determine the

The investigation showed that ZAC was in the process of
privatization supervised by the Ukrainian State. In the
framework of the privatisation, ZAC's majority share-
holder and private investor concluded a contract with a
state organisation. Until the end of the IP, ZAC had
several obligations imposed by the contract, in particular
concerning its workforce and activities. The fulfilment of
these obligations was subject to yearly State inspections
and failure to fulfil
to
sanctions. It was found that the conditions imposed in
the contract go beyond what a private investor under
economy conditions would accept.
normal market
Therefore,
it is concluded that the company decisions
of ZAC regarding labour, output and sales were not
made in response to market signals reflecting supply
and demand. Rather
the decisions were taken with
significant State interference in this regard.

these obligations was subject

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Official Journal of the European Union

25.5.2005

(17)

(18)

Further it was also found that the accounts and the audit
of the accounts were not reliable.
Indeed, ZAC could
modify key data in the accounting program (dates and
values for a closed accounting period) and it has not
been possible to track certain financial operations in
the accounts of ZAC. These serious drawbacks were
not
is
audit
that ZAC does not have one clear set of
concluded,
basic
independently
audited in line with international accounting standards
and which are applied for all purposes.

records which are

report. Therefore

reported in the

accounting

it

4. Analogue country

(23) According to Article 2(7) of the basic Regulation, for
non-market-economy countries and, to the extent that
MES could not be granted, for countries in transition,
normal value shall be determined on the basis of the
price or constructed value in an analogue country. The
applicant claimed that the analogue country used in the
investigation, Brazil, was not appropriate and
original
interim review, Russia should be
that
chosen as
the only appropriate
if not
analogue country for establishing normal value for
Ukraine.

in the current

the most,

Finally it was found, that by placing defence objects of
military nature belonging to the State on the balance
sheet and by depreciation of these objects, the patri-
monial state, production costs and financial situation of
ZAC are subject to significant distortions carried over
from the former non-market economy system. Also,
the production costs are distorted through the acceptance
by ZAC of an interest free loan granted by an investor
during the process of privatization.

(24)

The arguments put forward by the applicant in favour of
Russia were the facts that allegedly (i) Russia’s access to
raw materials, energy resources and other major inputs,
the technology used in production and the scale of
production are comparable to Ukraine (ii) Russia's
domestic sales are representative, as the total domestic
sales volume exceed 5 % of the total export sales volume
the competitive situation in Russia is
of Ukraine (iii)
comparable to Ukraine.

(19) On this basis it was concluded that not all criteria set out
in Article 2(7)(c) of the basic Regulation were met and
that market economy conditions do not prevail for the
applicant.

(25)

(20)

(21)

(22)

applicant
and the
The Commission informed the
Community industry in detail of
the abovementioned
determinations and granted them the possibility to
comment. The Community industry supported the
Commission’s determinations. The comments submitted
by the applicant were not such as to warrant any change
in the MES determination.

3. Individual treatment (IT)

the basic Regulation, a
Further to Article 2(7)(a) of
country-wide duty is established for countries falling
under Article 2(7),
cases where
companies are able to demonstrate on the basis of
properly substantiated claims, that all criteria laid down
in Article 9(5) of the basic Regulation are met.

in those

except

The applicant also claimed IT leading to the estab-
lishment of a specific individual anti-dumping duty in
the event it was not granted MES. However, the investi-
gation did not point
towards the existence of other
the product concerned in Ukraine but
producers of
showed that the applicant is the only known producer
of the product concerned in Ukraine. In such a case it is
considered that the question of IT does not arise because
the
individual dumping margin would be
identical to the country-wide dumping margin.

specific

The Commission considered the proposal of
the
applicant. It was considered first of all that exports of
the product concerned originating in Russia were found
to be dumped in the original
investigation. Such a
situation alone implies already an anomaly in the rela-
tionship between normal value and export price and puts
into question the suitability of Russia as an analogue
and
country.
this
the
following the explicit
request of
Commission services
invited the Russian exporting
producer to cooperate in this proceeding. However, the
Russian company has not cooperated.

observation
the applicant,

Notwithstanding

(26)

For these reasons it was found that Russia could not be
chosen as an appropriate analogue country for estab-
lishing normal value for Ukraine. Furthermore, no
evidence was found suggesting that circumstances with
regard to the analogue country in the original
investi-
gation had changed in favour of the applicant.

5. Export price

(27) According to Article 2(8) of the basic Regulation, the
export price shall be the price actually paid or payable
for the product when sold for export from the exporting
country to the Community. In cases where there is no
export price,
the export price may be constructed
according to Article 2(9) of the basic Regulation on the
basis of the price at which the imported products are first
resold to an independent buyer, or, if the products are
not resold to an independent buyer, or are not resold in
the condition in which they were imported, on any
reasonable basis.

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(28)

(29)

The applicant claimed a change of circumstances with
regard to its export prices and argued that
in the
absence of representative exports to the Community,
export prices to a substitute non-EU market comparable
to the Community should be used as a reasonable basis
to establish a dumping margin. To this end, the applicant
proposed the USA or EU10 as a reference country.

The Commission considered the proposals of
the
in very exceptional circumstances
applicant, as indeed,
it could be envisaged to use export prices to third
countries as a basis for comparison with normal value.
However, in this case it was found that the export quan-
tities of the applicant to the USA during the IP were not
even representative, so that the question whether it was
appropriate to use the export prices to the USA did not
arise. Hence the claim to base the dumping calculation
on export prices to the USA was rejected. Furthermore,
no evidence was found suggesting that the isolated use of
export prices to EU10 would be in favour of
the
applicant. Finally, it is confirmed that no representative
sales were
IP to the
found to exist during the
Community.

significantly

the choice of an analogue country and the export
forward by the applicant
prices of
the applicant put
were rejected. On this basis,
it is considered that the
circumstances with regard to dumping have not
situation
changed
prevailing during the investigation period used in the
the
investigation which led to the
measures. Therefore,
the partial
interim review of the anti-dumping measures applicable
to imports into the Community of silicon carbide origi-
nating
terminated without
should be
amending or repealing the measures in force,

is concluded that

imposition of

in Ukraine

compared

the

to

it

HAS ADOPTED THIS REGULATION:

Article 1

The partial

1.
interim review of the anti-dumping duty on
imports of silicon carbide originating in Ukraine is hereby
terminated.

The definitive anti-dumping duty imposed by Regulation

2.
(EC) No 1100/2000 shall be maintained.

6. Conclusion

(30) Given the above, MES could not be granted to the
IT does not arise in this
In addition, all other examined claims regarding

applicant. The question of
case.

Article 2

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, 23 May 2005.

For the Council
The President

J. ASSELBORN