Commission Regulation (EC) No 1259/2005 of 27 July 2005 imposing a provisional anti-dumping duty on imports of tartaric acid originating in the People’s Republic of China
Date: 2005-07-27
Institutions: European Commission
Subjects: China, anti-dumping duty, anti-dumping legislation, import, organic acid, originating product

30.7.2005

EN

Official Journal of the European Union

L 200/73

COMMISSION REGULATION (EC) No 1259/2005

of 27 July 2005
imposing a provisional anti-dumping duty on imports of tartaric acid originating in the People’s
Republic of China

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Community,

Having regard to Council Regulation (EC) No 384/96 of 22 December 1995 on protection against dumped
(‘the basic Regulation’) and in
imports from countries not members of the European Community (1)
particular Article 7 thereof,

After consulting the Advisory Committee,

Whereas:

1.1. Initiation

1. PROCEDURE

(1)

(2)

(3)

(4)

(5)

(6)

(7)

On 24 September 2004, the Commission received a complaint lodged pursuant to Article 5 of
Council Regulation (EC) No 384/96 on protection of dumped imports from countries non-members
of the European Communities (‘the basic Regulation’) by the following producers (‘the complainant’):
Legré-Mante SA, Industria Chimica Valenzana S.p.A, Distilleries Mazzari S.p.a., Alcoholera Vinicola
Europea S.A. and Comercial Quimica Sarasa s.l., representing a major proportion, in this case more
than 50 %, of the total Community production of tartaric acid.

This complaint contained evidence of dumping of tartaric acid from the People’s Republic of China
(‘PRC’) and of material
injury resulting there from, which was considered sufficient to justify the
opening of a proceeding.

On 30 October 2004, the proceeding was opened by the publication of a notice of initiation (2) in the
Official Journal of the European Union.

1.2. Parties concerned by the proceeding

The Commission officially advised the complainants, other Community producers, the exporting
producers, importers, suppliers and users as well as user associations known to be concerned, and
representatives of the PRC of the opening of the proceeding.
Interested parties were given an
opportunity to make their views known in writing and to request a hearing within the time-limit
set in the notice of initiation.

The complainant producers, other co-operating Community producers, exporting producers,
importers, suppliers, users and user associations made their views known. All
interested parties,
who so requested and showed that there were particular reasons why they should be heard, were
granted a hearing.

In order to allow exporting producers in the PRC to submit a claim for market economy treatment
(‘MET’) or individual treatment (‘IT’), if they so wished, the Commission sent claim forms to the
Chinese exporting producers known to be concerned. Claims for MET, or for IT in case the inves-
tigation establishes that they do not meet the conditions for MET, were received from three exporting
producers.

Questionnaires were sent to all parties known to be concerned and to all other companies that made
themselves known within the deadlines set out in the notice of initiation. Replies were received from
three exporting producers in the PRC, one producer in the analogue country, Argentina, seven
Community producers and two Community users.

(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 C 267, 30.10.2004, p. 4.

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(8)

The Commission sought and verified all the information deemed necessary for a provisional deter-
mination of dumping, resulting injury and Community interest and carried out verifications at the
premises of the following companies:

(a) Community producers

— Alcoholera Vinicola Europea ‘Alvinesa’ SA, Ciudad Real, Spain

— Comercial Quimica Sarasa ‘Tydsa’ SL, Girona, Spain

— Distillerie Bonollo Srl, Frosinone, Italy

— Distillerie Mazzari SpA, Ravenna, Italy

— Etablissements Legré-Mante SA, Marseille, France

— Industria Chimica Valenzana ‘I.C.V.’ SpA, Palermo, Italy

— Tartarica Treviso Srl, Faenza, Italy

(b) Exporting producers in the PRC

— Hangzou Bioking Biochemical Engineering Co., Ltd, Hangzou, PRC.

— Changmao Biochemical Engineering Co., Ltd, Changzou City, PRC.

— Ninghai Organic Chemical Factory, Ninghai, PRC.

(9)

In view of the need to establish a normal value for exporting producers in the PRC to which MET
might not be granted, a verification to establish normal value on the basis of data from an analogue
country, Argentina in this case, took place at the premises of the following company:

(c) Producers in the analogue country

— Tarcol S.A., Buenos Aires, Argentina.

1.3. Investigation period

(10)

The investigation of dumping and injury covered the period from 1 July 2003 to 30 June 2004
(‘investigation period’ or ‘IP’). With respect to the trends relevant for the injury assessment, the
Commission analysed data covering the period from 1 January 2001 to 30 June 2004 (‘period
considered’). The period used for the findings on undercutting, underselling and injury elimination
is the aforementioned IP.

2. PRODUCT CONCERNED AND LIKE PRODUCT

(11)

2.1. Product concerned
The product concerned is tartaric acid (‘TA’). The product is currently classifiable within CN code
2918 12 00. The product concerned is used mainly by wine producers, the food industry and
numerous other industries, either as an ingredient in the final product or as an additive to speed
up or slow chemical processes. The product can be obtained either from the by-products of wine
making or, via chemical synthesis, from petrochemical compounds. Based on the physical character-
istics, the production process and the substitutability of the different types of the product from the
perspective of the user, all TA is considered to constitute a single product for the purpose of the
proceeding.

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(12)

(13)

2.2. Like product

The investigation showed that the basic physical characteristics of TA produced and sold by the
Community industry in the Community, TA produced and sold on the domestic Chinese market, and
TA imported into the Community from the PRC, as well as that produced and sold in Argentina, are
the same and that these products have largely the same use.

It was therefore provisionally concluded that the product concerned and the TA sold on the domestic
market of the PRC, the TA produced and sold in Argentina, as well as the TA produced and sold in
the Community by the Community industry have the same basic physical characteristics and uses and
are therefore considered to be alike within the meaning of Article 1(4) of the basic Regulation.

3.1. Market economy treatment (MET)

3. DUMPING

(14)

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

(15)

Briefly, and for ease of reference only, the MET criteria are set out in summarised form below:

1. Business decisions and costs are made in response to market conditions and without significant

State interference;

2. Accounting records are independently audited in line with international accounting standards and

applied for all purposes;

3. There are no significant distortions carried over from the former non-market economy system;

4. Legal certainty and stability is provided by bankruptcy and property laws;

5. Currency exchanges are carried out at the market rate.

(16)

In the present investigation, three exporting producers in the PRC made themselves known and
the basic Regulation. Each MET application was
requested MET pursuant
analysed, and on-spot
these co-operating
companies (see recital (7)). As a result it was found that the three producers fulfilled all of the
conditions for MET.

investigations were carried out at

to Article 2(7)(c) of

the premises of

(17) On this basis, the exporting producers in the PRC which obtained MET are the following:

1. Hangzou Bioking Biochemical Engineering Co., Ltd, Hangzou.

2. Changmao Biochemical Engineering Co., Ltd, Changzou City.

3. Ninghai Organic Chemical Factory, Ninghai.

3.2. Normal value

3.2.1. Determination of normal value for exporting producers granted MET

(18) As far as the determination of normal value is concerned, the Commission first established, for each
exporting producer concerned, whether its total domestic sales of TA were representative in
comparison with its total export sales to the Community. In accordance with Article 2(2) of the
basic Regulation, domestic sales were considered representative when the total domestic sales volume
of each exporting producer was at least 5 % of its total export sales volume to the Community.

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(19)

For the exporting producers having overall representative domestic sales, the Commission subse-
quently identified the types of TA sold domestically which were identical or directly comparable to
the types sold for export to the Community.

(20)

For each of those types, it was established whether domestic sales were sufficiently representative for
the purposes of Article 2(2) of the basic Regulation. Domestic sales of a particular type were
considered sufficiently representative when the total domestic sales volume of that type during the
IP represented 5 % or more of the total sales volume of the comparable type exported to the
Community.

(21) An examination was also made as to whether the domestic sales of each type of the product
concerned could be regarded as having been made in the ordinary course of trade, by establishing
the proportion of profitable sales to independent customers of the type in question.

(22)

In cases where the sales volume of a type of TA, sold at a net sales price equal to or above its cost of
production, represented more than 80 % of the total sales volume of that type, and where the
weighted average price of that type was equal to or above its cost of production, normal value
was based on the actual domestic price. This price was calculated as a weighted average of the prices
irrespective of whether these sales were
of all domestic sales of that type made during the IP,
profitable or not.

(23) Where the volume of profitable sales of a type of TA represented 80 % or less of the total sales
volume of that type, or where the weighted average price of that type was below its cost of
production, normal value was based on the actual domestic price, which was calculated as a
weighted average of profitable sales of that type only, provided that these sales represented 10 %
or more of the total sales volume of that type.

(24)

Finally, where the volume of profitable sales of any type of TA represented less than 10 % of the total
sales volume of that type, it was considered that this particular type was sold in insufficient quantities
for the domestic price to provide an appropriate basis for the establishment of the normal value.

(25) Wherever domestic prices of a particular type sold by an exporting producer could not be used,

constructed normal value was used.

(26)

Consequently, in accordance with Article 2(3) of the basic Regulation, normal value was constructed
by adding to each exporter’s manufacturing costs of the exported types a reasonable amount for
selling, general and administrative expenses (‘SG&A’) and a reasonable margin of profit. To this end,
the Commission examined whether the SG&A incurred and the profit realised by each of the
exporting producers concerned on the domestic market constituted reliable data.

(27) Actual domestic SG&A expenses were considered reliable when the total domestic sales volume of
the company concerned could be regarded as representative as compared to the volume of export
sales to the Community. The domestic profit margin was determined on the basis of domestic sales
of those types that were sold in the ordinary course of trade. For this purpose, the methodology set
out in recitals (21) to (23) was applied.

(28) All companies had overall representative sales and it was found that most types of the product
concerned, which were exported, were sold on the domestic market in the ordinary course of trade.
For those types where this was not the case, normal value was constructed using the methodology set
out in recital (26), using the SG&A and profit information for each company concerned.

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3.2.2. Determination of normal value for exporting producers not granted MET

(a) A n a l o g u e c o u n t r y

(29) According to Article 2(7) of the basic Regulation, normal value for companies to which MET could
not be granted, was established on the basis of the prices or constructed value in an analogue
country.

(30)

In the Notice of Initiation, the Commission indicated its intention to use Argentina as an appropriate
analogue country for the purpose of establishing normal value for the PRC and interested parties
were invited to comment on this.

(31) No exporting producers in the PRC not granted MET objected to this proposal. In addition, the
investigation revealed that Argentina is a competitive market for the product concerned with at least
two domestic producers, of different sizes, and with imports from third countries. The domestic
producers were found to produce TA similar to that from the PRC albeit with different production
methods. The Argentinean market was therefore deemed sufficiently representative for the purpose of
establishing normal value.

(32) All known exporting producers in Argentina were contacted, and one company agreed to co-operate.
A questionnaire was therefore sent to this producer and the data submitted in its reply was verified
on the spot.

(b) N o r m a l v a l u e

(33)

Pursuant to Article 2(7)(a) of the basic Regulation, normal value for the exporting producers not
granted MET was established on the basis of verified information received from the producer in the
analogue country, i.e. on the basis of prices paid or payable on the domestic market of Argentina, for
product types which were found to be made in the ordinary course of trade, in accordance with the
methodology set out in recital (23). Where necessary, those prices were adjusted so as to ensure a fair
comparison with those product
types exported to the Community by the Chinese producers
concerned.

(34) As a result, normal value was established as the weighted average domestic sales price to unrelated

customers by the co-operating producer in Argentina.

3.3. Export price

(35)

In all cases the product concerned was exported to independent customers in the Community. The
export price was therefore established in accordance with Article 2(8) of the basic Regulation, namely
on the basis of export prices actually paid or payable.

3.4. Comparison

(36)

The normal value and export prices were compared on an ex-works basis. 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 differences affecting prices and price comparability in accordance
with Article 2(10) of
the basic Regulation. Appropriate adjustments concerning transport and
insurance, credit, commission and bank charges were granted in all cases where they were found
to be reasonable, accurate and supported by verified evidence.

(37) Adjustments were also made for differences in VAT reimbursement, as it was found that a lower level
of VAT was reimbursed on export sales than that which is reimbursed for domestic sales.

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3.5. Dumping margin

3.5.1. For the co-operating exporting producers granted MET

(38)

For the three companies which were granted MET, the weighted average normal value of each type of
the product concerned exported to the Community was compared with the weighted average export
price of the corresponding type of the product concerned, as provided for under Article 2(11) of the
basic Regulation.

(39) On this basis, the provisional weighted average dumping margins expressed as a percentage of the

CIF Community frontier price duty unpaid are:

Company

Hangzou Bioking Biochemical Engineering Co., Ltd, Hangzou

Changmao Biochemical Engineering Co., Ltd, Changzou City

Ninghai Organic Chemical Factory, Ninghai.

Provisional
dumping margin

2,4 %

13,8 %

6,6 %

(40)

(41)

3.5.2. For all other exporting producers

In order to calculate the countrywide dumping margin applicable to all other exporters in the PRC,
the Commission first established the level of co-operation. A comparison was made between the total
imports of the product concerned originating in the PRC calculated on the basis of Eurostat and the
actual questionnaire replies received from exporters in the PRC. On this basis, it was established that
the level of co-operation was low, i.e. 63 % of the overall Chinese exports to the Community.

The dumping margin was consequently calculated by using export prices and volumes as obtained
from Eurostat having first deducted export prices and volumes reported by the co-operating exporters
to which MET was granted. The use of Eurostat as facts available pursuant to Article 18 of the basic
Regulation was necessary in the absence of more information on export prices for determining the
country-wide duty. The export prices obtained in this way were compared with the weighted average
normal value established for the analogue country for comparable product types.

(42) On this basis the countrywide level of dumping was provisionally established at 34,9 % of the CIF

Community frontier price.

4.1. Community production

4. INJURY

(43)

The investigation established in the framework of the sampling exercise that the like product is at
present manufactured by eight producers in the Community. However, one of them has not coop-
erated further with the investigation. Furthermore, during the period considered another four
Community producers are known to have ceased production, and have not been included in the
investigation.

(44) Hence, the volume of Community production for the purpose of Article 4(1) of the basic Regulation
has been provisionally calculated by adding the production of the seven cooperating Community
producers plus the volume of production of the other producers as estimated by the complainants.

4.2. Definition of the Community industry

(45)

The complaint was supported by seven Community producers who co-operated fully in the inves-
tigation. These producers are estimated to have produced over 95 % of the tartaric acid produced in
the Community. It is therefore considered that they constitute the Community industry within the
meaning of Articles 4(1) and 5(4) of the basic Regulation

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4.3. Community consumption

(46)

Consumption was estimated by adding the EC sales of the co-operating EC producers, the estimated
sales of the non-cooperating EC producers plus total imports. The sales of the non-cooperating EC
producers, including some companies who have ceased production, were based on the complaint, in
the absence of other sources of information. This shows that demand for the product concerned in
the Community increased by 15 % over the period considered.

Community consumption

20 930

21 016

21 717

24 048

Index 2001 = 100

100

100

104

115

2001

2002

2003

IP

4.4. Imports into the Community from the country concerned

4.4.1. Volume and Market share of imports concerned

(47)

The evolution of imports from the country concerned was analysed on the basis of Eurostat data,
since the volumes reported by the co-operating exporting producers represented substantially less
than those reported in Eurostat for the period considered.

(48)

In terms of volume and market share, the evolution of imports has been the following:

Import volumes PRC

Index 2001 = 100

Market shares PRC

2001

2002

1 769

1 266

2003

1 570

IP

2 763

100

72

89

156

8,5 %

6,0 %

7,2 %

11,5 %

(49) While consumption of tartaric acid increased by 15 % during the period considered, imports from the
country concerned rose by over 50 % during the same period. After a relatively high volume of
imports in 2001 due to the high prices and scarcity in the European market, imports from the PRC
returned to a lower level in 2002, but have more than doubled since then thanks to aggressively low
prices. Consequently, the market share of the PRC during the period considered increased from 6,0 %
to 11,5 % in less than two years.

4.4.2. Prices of imports and undercutting

(50)

The following table shows the development of average import prices from the PRC. Over the period
considered these prices fell by nearly 50 %.

Import prices from the PRC EUR/kg

Index 2001 = 100

2001

2002

2003

3,49

100

1,74

50

1,83

52

IP

1,78

51

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(51)

Concerning the selling price on the Community market of the product concerned during the IP, a
comparison was made between the prices of the Community industry and those of the exporting
producers in the PRC. The relevant sales prices of the Community industry were those to inde-
pendent customers, adjusted where necessary to an ex-works level, i.e. excluding freight costs in the
Community and after deduction of discounts and rebates. These prices were compared with the sales
prices charged by the Chinese exporting producers net of discounts and adjusted where necessary to
CIF Community frontier with an appropriate adjustment for the customs clearance costs and post-
importation costs.

(52)

The comparison showed that, during the IP, imports of the product concerned were sold in the
the Community industry’s prices, when expressed as a
Community at prices which undercut
percentage of the latter, by 22 %.

4.5. Situation of the Community industry

(53)

In accordance with Article 3(5) of the basic Regulation, the examination of the impact of the dumped
imports from the PRC on the Community industry included an analysis of all economic factors and
indices having a bearing on the state of the industry from 2001 to the IP.

(54)

The Community industry data below represent the aggregated information of the seven co-operating
Community producers. However, two of those companies started operations during the period
considered, in 2001 and 2003 respectively. It was considered that, given their particular situation,
the data for those companies might distort the overall trends, particularly with regard to costs,
profitability, cash flow,
investment and return on investment. Therefore, where appropriate, the
figures for those two companies were excluded from the corresponding aggregate indicators and
looked at separately in order to give a correct and representative picture.

4.5.1. Production, production capacity and capacity utilisation

(55)

The evolution of production, production capacity and capacity utilisation for the seven co-operating
companies was the following:

Production (tonnes)

Index 2001 = 100

2001

2002

2003

IP

25 341

23 576

25 602

27 324

100

93

101

108

Production capacity (tonnes)

31 350

33 000

36 000

35 205

Index 2001 = 100

Capacity utilisation

Index 2001 = 100

100

81 %

100

105

71 %

88

115

71 %

88

112

78 %

96

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(56)

Total production increased by 8 % between 2001 and the IP. It should be noted, however, that this
increase can be attributed exclusively to the two newcomer companies, while for the remaining five
companies, production decreased by 6 % in the same period.

(57)

Production capacity increased by 12 %, which is also due to the two newcomers. The figures do not,
however, reflect the reduction of several thousand tonnes caused by four Community producers
known to have ceased production during the period considered (see recital (43)). Although no precise
figures for those producers have been found by the investigation, it is estimated on the basis of the
complaint data that overall capacity in the Community remained broadly constant between 2001 and
the IP.

(58)

Capacity utilisation decreased over the period, from 81 % in 2001 to 78 % in the IP.

4.5.2. Stocks

(59)

The figures below represent the volume of stocks at the end of each period.

Stocks (tonnes)

Index 2001 = 100

2001

3 464

100

2002

2 743

2003

3 967

IP

4 087

79

115

118

(60)

Stocks increased by 18 % during the period considered. It should be noted that the IP figure partly
reflects a seasonal high in the stock levels during the summer. However, for at least one of the
companies investigated, there was an abnormally high level of stocks, which the company attributed
to its commercial decision not to sell at unprofitably low market prices.

4.5.3. Sales volume, market shares, growth and average unit prices in the Community

(61)

The figures below represent
Community.

the Community industry’s sales to independent customers in the

2001

2002

2003

IP

Sales volume in the EC market (tonnes)

16 148

16 848

18 294

20 034

Index 2001 = 100

100

104

113

124

Market share (five established companies)

71,0 %

66,9 %

66,3 %

60,9 %

Index 2001 = 100

100

94

93

86

Market share (all seven companies)

77,2 %

80,2 %

84,2 %

83,3 %

Index 2001 = 100

100

104

109

108

Average sales prices (EUR/tonne)

5 392

3 214

2 618

2 513

Index 2001 = 100

100

60

49

47

(62)

The Community industry’s sales volumes increased by 24 % and its market share by 8 % during the
period considered.

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(63)

the five established companies decreased significantly, by more than 10
The market share of
percentage points in the period considered. If the two companies who started production during
the period are added, the total market share increases by 6 %. However, as noted under recital (57),
these figures do not take into account the four Community producers who ceased production during
the same period. Although exact figures concerning the latter are not available, it is estimated by the
complainants that these producers could have represented a production of several thousand tonnes.
This implies that, if the producers which ceased production were taken into account, the overall
market share of the Community producers declined by at least 2,5 % between 2001 and the IP.

(64) Average sales prices to unrelated buyers in the Community market suffered a sharp decrease of more

than 50 % between 2001 and the IP.

(65)

It was pointed out by one importer that in the past, and over a longer period than the period
considered, the prices of tartaric acid had known similar fluctuations and that they peaked in
2000-2001. However, after examination, it was found that even by historical standards the price
levels in the IP were extremely low, once inflation was taken into account.

(66) Given the decline in market share, when taking into account Community producers which ceased
production, and the sharp drop of sales prices, it was found that the Community industry could not
participate in the growth of the market, resulting from the increase in Community consumption of
15 % during the period considered.

4.5.4. Profitability

(67)

The profitability shown below is expressed as a percentage of turnover, in terms of sales to inde-
pendent buyers on the Community market. The figures are also given for the five co-operating
companies which were already operating at the beginning of the period considered (‘the established
companies’). During this period the other two companies were in a transitory situation regarding
costs and revenues, which strongly impacts the evolution of overall profitability.

Profitability of sales (five established companies)

1,9 %

Profitability of sales (all seven companies)

1,8 %

– 3,5 %

– 9,7 %

– 3,6 %

0,5 %

– 6,7 %

– 5,9 %

2001

2002

2003

IP

(68)

For the five established companies, profitability decreased substantially between 2001 and 2003 due
to the strongly reduced prices, which coincided with increases of dumped imports from the PRC. The
trends for the total Community industry,
including the two producers established during the
period considered, are largely similar. After seeing profits fall dramatically in 2002, the industry
overall saw an improvement in 2003 when the producer established in 2001 was well-established
and the other new producer arrived on the market. However, in the IP the two new producers saw
their profits fall back into losses at a comparable rate to that of the five established companies.

i.e.

(69)

This decline in prices was, to a large extent, also reflected in the prices of the suppliers of raw
materials, given that the contracts for supply of raw material are often indexed to the price of tartaric
acid. However this reduction in costs of raw materials was not enough to prevent a decline in the
profitability of the Community industry, from 1,9 % to – 6,7 % over the period considered.

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4.5.5. Return on investments, cash flow, investments and ability to raise capital

(70)

The trends for the return on investments (net assets in this case), cash flow and investments are
shown in the following table. For the reasons evoked under recital (67), the figures are given for the
five co-operating producers active in 2001.

Return on net assets
companies)

(five established

4,2 %

2001

2002

– 4,4 %

2003

– 3,9 %

IP

– 7,0 %

Return on net assets (all seven companies)

3,4 %

– 11,7 %

0,5 %

– 6,3 %

flow (EUR)

Cash
companies)

(five

established

2 076 591

6 020 127

6 413 005

– 278 607

Cash flow (EUR) (all seven companies)

2 076 591

788 732

9 045 219

22 835

Investments
companies)

(EUR)

(five

established

5 285 432

7 078 796

8 794 719

7 255 251

Investments (EUR) (all seven companies)

14 394 918

7 390 503

9 282 258

8 944 785

The trend for return on net assets reflects to a large extent that on profitability of sales. The cash flow
deteriorated between 2001 and the IP, although there are some fluctuations due mainly to stock
variations. For the two new companies the cash flow experienced particularly strong fluctuations due
to the starting of operations which coincided with a rapidly changing market situation. For all the
companies, the falling return on investments and cash flow resulted from the fact that average sales
prices were falling more quickly than the average costs for products sold.

The Community industry has maintained a high level of investment throughout the period considered
and there was even an increase compared to 2001 for the five established companies. These
replacement of obsolete equipment and
investments were mostly related to modernisation,
technical upgrades required by environmental legislation. As for the fixed investments of the two
new companies, they are felt mostly in 2001 and the IP.

The Community industry’s ability to raise capital, either from external providers of finance or parent
companies, was not found to be seriously affected during the period considered. In most cases,
particularly those of the two new companies, this was because the companies belong to larger
groups, who take a longer term view of the business and believe that a recovery from the current
difficult situation in which the industry finds itself will be possible.

(71)

(72)

(73)

4.5.6. Employment, productivity and wages

(74)

The following table gives the evolution of employment, productivity and labour costs in the seven
Community producers investigated.

Number of employees

Productivity (tonne/employee)

2001

2002

2003

210

100

203

97

220

105

IP

217

103

Labour costs

29 717

34 297

31 822

34 323

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(75) As seen above, the number of employees in the seven Community producers investigated increased
between 2001 and the IP. This increase is due, as mentioned in paragraphs 5.1 and 5.3, to the fact
that these figures include two companies who started production during the period considered and
do not take into account the four Community producers who ceased production during the same
period. Even so, a decline in employment levels was beginning to be felt towards the end of the IP.

(76)

Productivity was relatively stable over the period, with a slight overall increase between 2001 and the
IP. Labour costs increased between 2001 and the IP, despite some fluctuations. These fluctuations
were due to temporary costs associated with restructuring in some of the companies.

4.5.7. Magnitude of the actual margin of dumping

(77)

The dumping margins are specified above in the dumping section. These margins are clearly above de
minimis. Furthermore, given the volume and the price of the dumped imports, the impact of the
actual margin of dumping cannot be considered to be negligible.

4.5.8. Conclusion on injury

(78)

It is recalled that import volumes from the PRC have increased considerably, both in volume terms
and market share. Furthermore, the average unit price of those imports decreased by almost 50 %,
which is reflected in the price undercutting found in the investigation.

(79) While sales volumes and market share in the Community increased for the seven companies inves-
tigated, they remained relatively stable if the two newcomer companies are not included. On the
other hand,
the Community industry suffered average price decreases of 51 % in the period
considered. Notwithstanding the decline in the prices of raw materials and the efforts made to
increase productivity, profit levels became strongly negative in the IP.

(80)

indicators regarding capacity utilisation, stock levels,

The deteriorating situation of the Community industry in the period considered is also confirmed by
the negative development of
return on
investment and cash-flow. It has also to be noted that four Community producers went out of
business in recent years. While two new producers have also commenced trading since 2001, these
producers have been established on the basis of business plans that were taking account of the
growing consumption in the Community. However, it was found that, in terms of the trends in
prices, profitability, and return on investments the situation of these companies is comparable to that
of the other Community producers.

(81)

The above negative developments occurred at a time of
investments and expanding EC consumption.

fairly stable productivity,

increased

(82)

Bearing in mind all indicators it is concluded that the Community industry suffered material injury
during the IP within the meaning of Article 3 of the basic Regulation.

5.1. Preliminary remark

5. CAUSATION

(83)

link between the dumped imports from the PRC and the material

In accordance with Article 3(6) and (7) of the basic Regulation, it was examined whether there was a
causal
injury suffered by the
Community industry. 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.

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5.2. Impact of the imports from the PRC

(84)

Volumes of
imports from the PRC increased by 56 % and their market share increased by 3
percentage points during the period considered. In addition, the prices of imports from the PRC
fell by around 50 % and substantial price undercutting took place. The Community industry was
forced to react to these imports by lowering its prices in parallel by 53 %, in order to maintain its
sales volume. The reduction in the costs of raw materials was not enough to prevent a decline in the
profitability of the Community industry of around 8 % to a negative figure of around – 6 %. This
profitability was well below that expected for this type of industry but, most of all, being negative,is
no longer sustainable.

(85)

It is therefore provisionally concluded that the pressure exerted by the dumped imports, which
significantly increased their volume and market share from 2001 onwards, and which were made
at sharply decreasing, dumped prices, played a determining role in the price decreases and price
depression for the Community industry and, as a consequence, its negative profitability and ensuing
deteriorating financial situation.

5.3. Impact of imports from third countries

(86) Apart from the PRC, the two next largest suppliers of tartaric acid to the Community market were

Argentina and Chile.

Market share of Argentina

Argentina unit selling price (EUR/tonne)

Market share of Chile

Chile unit selling price (EUR/tonne)

Market share of other countries

2001

1,9 %

5,33

0,5 %

6,21

0,1 %

Other countries unit selling price (EUR/tonne)

10,82

2002

1,8 %

2,75

0,4 %

3,24

0,7 %

2,91

2003

0,1 %

2,47

1,1 %

3,39

1,4 %

4,78

IP

0,8 %

2,09

0,9 %

3,55

0,2 %

5,36

(87)

These figures show that all suppliers other than the PRC accounted together for only 2,5 % of
Community consumption and that their market share declined between 2001 and the IP. Their
average prices were also higher than those of the PRC, although Argentinean prices dropped to a
rather low level in the IP. The pressure of Chinese imports on the market is certain to have played a
role in the drop in the prices of these exporting countries.

(88)

In view of the above,
it is considered that the evolution of imports originating in other third
countries such as Argentina and Chile were not sufficiently important to have contributed to the
injury suffered by the Community industry.

(89)

5.4. Impact of the regulatory framework
Some interested parties have pointed out that the industry’s profitability is affected by the EC
regulatory framework, which establishes a minimum purchasing price for the main raw materials
as well as a selling price for alcohol, as part of the Common Agricultural Policy in this sector. While
the regulatory parameters may influence the situation of the industry as a whole, they have remained
stable throughout the period and cannot account for the deterioration in the industry’s situation.

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5.5. Impact of exports by the Community industry

(90) During the IP around 25 % of Community industry production volume was exported outside the

Community. The volume of exports increased slightly over the period considered.

(91)

It was found that the profitability of these exports was somewhat higher than that of sales on the
Community market, despite the fact that they had also suffered from declining prices and compe-
tition from Chinese exports to third country markets.

(92)

In view of the above it is considered that the evolution of export performance cannot have been a
substantial cause of the injury suffered by the Community industry.

5.6. Impact of sales by other Community producers

(93)

Sales by other Community producers, including those who went out of business during the period
considered, have decreased sharply between 2001 and the IP. Accordingly, those sales cannot have
been responsible for the injury suffered by the Community industry.

5.7. Conclusion on causation

(94)

It must be underlined that the injury in this case was primarily in the form of price depression
causing reduced profitability. This coincided with the rapidly increasing imports at dumped prices
from the PRC which undercut substantially the Community industry prices. There is no indication
that the above-mentioned other factors could have been a significant cause of the material injury
suffered by the Community industry. No further other factors have been found in the course of the
investigation that could have caused material injury.

(95)

Based on the above analysis of the effects of all known factors on the situation of the Community
industry, it is provisionally concluded that there is a causal link between the dumped imports from
the PRC and the material injury suffered by the Community industry.

6.1. General considerations

6. COMMUNITY INTEREST

(96)

It has been examined whether compelling reasons exist that could lead to the conclusion that it
would not be in the Community interest to impose anti-dumping duties against imports from the
country concerned. The Commission sent questionnaires to importers, traders and industrial users.
Partial replies to the questionnaire were received from two users. Other users did not submit a reply
to the questionnaire but made their views known in writing.

(97) On the basis of the information received from the co-operating parties, the following conclusions

were reached.

6.2. Interest of the Community industry

(98)

It is recalled that the Community industry consisted of seven producers employing over 200 people
in the production and sale of the product concerned. It is also recalled that the economic indicators
of the Community industry showed deteriorating financial results during the period considered,
leading to the closure of four Community producers in recent years.

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(99)

If measures are not imposed it is likely that following the price pressure from the dumped imports,
the financial situation of the Community industry will continue to deteriorate and more Community
producers will be forced to cease production, with adverse consequences for the broader wine-
making sector (see below). If however measures are imposed,
it can be expected that prices and
profitability will reach a more sustainable level, and that the economic viability of the European
industry will be ensured.

(100)

It is therefore clear that anti-dumping measures would be in the interests of the Community industry.

6.3. Interest of suppliers

(101) Two suppliers of raw materials wrote to the Commission in support of the proceeding. Some of the
complainants also have related companies in the wine industry, and took the opportunity of
expressing the interest of those companies during the investigation.

(102) All these parties stressed the economic importance of the tartaric acid industry from the point of

view of the Community wine-makers.

(103) First, the wine industry needs a reliable source of tartaric acid of guaranteed quality.

(104) Second, by using such by-products as wine marc and wine lees, the tartaric acid industry is a
significant source of income for the wine sector. It is recalled that this sector is covered by the
Common Agricultural Policy and is currently experiencing serious economic difficulties.

(105) Third, should there be no viable tartaric acid industry in the Community, the wine sector would be
forced to incur extra costs in order to dispose of those by-products in the face of ever more stringent
environmental regulations.

(106)

It is therefore concluded that the imposition of anti-dumping measures would be in the interests of
Community suppliers.

6.4. Interest of users

(107) Questionnaires were initially sent to all the parties named as users in the complaint. Information
obtained during the investigation has allowed the Commission to identify the most important
industrial sectors which use tartaric acid. As a result, additional questionnaires were sent to a
number of food, drink and gypsum producers, as well as to the pharmaceutical industries’ federation.

(108) One gypsum and one food industry company reacted by stating that tartaric acid was too unim-

portant a cost for them to reply to the questionnaire.

(109) One gypsum company co-operated by submitting a reply to the questionnaire. Another gypsum
company submitted a partial reply. From these data, it may be concluded that the product concerned
the gypsum products produced by the co-operating
represents less than 2 % of
companies.
the proposed anti-dumping duties would have
relatively little influence on the costs and competitive position of those user industries. Given that
this is a major gypsum group, the information can be considered fairly representative for the whole
sector. It should also be noted that building materials are produced mainly for local or national
markets, and are not exposed to global competition thereby allowing companies in the building
sector to pass on any cost increases to their customers.

It may therefore be concluded that

the costs of

(110) Comments were also received from two food industry companies who manufacture emulsifiers for
the baking industry. These companies opposed the investigation and indicated that tartaric acid was
an important cost in their products. However, these companies did not submit a reply to the
questionnaire so their claims could not be verified on the basis of quantified data.

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(111)

In the comments received, the user industries emphasised the instability of the natural tartaric acid
market and recurrent shortages in the European market in the past. Security of supply, more than the
costs of tartaric acid appear to be the primary concern for those industries.

(112)

In view of the above it is not likely that anti-dumping measures would lead to a shortage of supply
or to a non-competitive situation of the user industries. The proposed measures would merely
contribute to restoring European market prices to a level closer to the long-term trend and
it was found
preventing further companies going out of business. As regards the cost increase,
that it would only be marginal and would not affect the competitiveness of the user industries
materially. It is therefore provisionally considered that users’ interests are not such as to prohibit
the imposition of measures.

6.5. Conclusion on Community interest

(113) The imposition of measures on imports of tartaric acid originating in the PRC would clearly be in the
interests of the Community industry. As regards both the importers/traders and the user industries,
any impact on prices of tartaric acid is expected to be only marginal. In contrast, the losses suffered
by the Community industry and the supplier industries, and the risks of further closures are clearly of
greater magnitude.

(114)

In view of the above,
impose anti-dumping duties on imports of tartaric acid originating in the PRC.

it is provisionally concluded that there are no compelling reasons not to

7.1. Injury elimination level

7. ANTI-DUMPING MEASURES

(115)

In view of the conclusions reached with regard to dumping, resulting injury and Community interest,
provisional measures should be imposed in order to prevent further injury being caused to the
Community industry by the dumped imports.

i.e.

in the absence of dumped imports, on the sales of

(116) The measures should be imposed at a level sufficient to eliminate the injury caused by these imports
without exceeding the dumping margin found. When calculating the amount of duty necessary to
remove the effects of the injurious dumping, it was considered that any measures should allow the
Community industry to cover its costs of production and to obtain overall a profit before tax that
could be reasonably achieved by an industry of this type in the sector under normal conditions of
competition,
in the
Community. The pre-tax profit margin used for this calculation was 8 % of turnover based on
profit levels obtained prior to the existence of dumped imports. On this basis, a non-injurious
price was calculated for the Community industry of the like product. The non-injurious price was
obtained by adding the above-mentioned profit margin of 8 % to the cost of production. One
product type exported from the PRC in the IP was not produced and sold by the Community
industry during the IP. In calculating the level sufficient to eliminate the injury caused by these
imports without exceeding the dumping margin found, account was taken of the relationship in price
between this type and other types exported by Chinese exporters.

the like product

(117) The necessary price increase was then determined on the basis of a comparison of the weighted
average import price with the weighted average non-injurious price of the like product sold by the
Community industry on the Community market.

(118) Any difference resulting from this comparison was then expressed as a percentage of the average

import CIF value.

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7.2. Provisional measures

(119)

In light of the foregoing, it is considered that a provisional anti-dumping duty should be imposed at
the level of the dumping margin found, but should not, in accordance with Article 7(2) of the basic
Regulation, be higher than the injury margin calculated above.

(120) The individual company anti-dumping duty rates specified in this Regulation were established on the
basis of the findings of the present investigation. Therefore, they reflect the situation found during
that investigation with respect to these companies. These duty rates (as opposed to the countrywide
duty applicable to ‘all other companies’) are thus exclusively applicable to imports of products
originating in the country concerned and produced by the companies and thus by the specific
legal entities mentioned.
Imported products produced by any other company not specifically
including entities
mentioned in the operative part of this document with its name and address,
related to those specifically mentioned, cannot benefit from these rates and shall be subject to the
duty rate applicable to ‘all other companies’.

(121) Any claim requesting the application of these individual company anti-dumping duty rates (e.g.
following a change in the name of the entity or following the setting up of new production or
sales entities) should be addressed to the Commission (1) forthwith with all relevant information, in
particular any modification in the company's activities linked to production, domestic and export
sales associated with, for example, that name change or that change in the production and sales
entities. The Commission, if appropriate, will, after consultation of the Advisory Committee, amend
the Regulation accordingly by updating the list of companies benefiting from individual duty rates.

(122) On the basis of the above, the provisional duty rates are:

Hangzou Bioking Biochemical Engineering Co., Ltd, Hangzou

Changmao Biochemical Engineering Co., Ltd, Changzou City

Ninghai Organic Chemical Factory, Ninghai.

All other companies

2,4 %

13,8 %

6,6 %

34,9 %

8. FINAL PROVISION

(123)

In the interest of sound administration, a period should be fixed within which the interested parties
which made themselves known within the time-limit specified in the notice of initiation may make
their views known in writing and request a hearing. Furthermore, it should be stated that the findings
concerning the imposition of duties made for the purposes of this Regulation are provisional and
may have to be reconsidered for the purpose of any definitive duty.

HAS ADOPTED THIS REGULATION:

Article 1

A provisional anti-dumping duty is hereby imposed on imports of tartaric acid, falling within CN code

1.
2918 12 00, originating in the People’s Republic of China.

(1) European Commission, Directorate-General for Trade, Direction B, B-1049 Brussels, Belgium.

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The rate of the provisional anti-dumping duty applicable, before duty, to the net free-at-Community-

2.
frontier price shall be:

Company

Anti-Dumping Duty

TARIC Additional Code

Hangzou Bioking Biochemical Engineering Co., Ltd,
Hangzou, People’s Republic of China.

Changmao Biochemical Engineering Co., Ltd, Changzou
City, People’s Republic of China.

Ninghai Organic Chemical Factory, Ninghai, People’s
Republic of China.

All other companies

2,4 %

13,8 %

6,6 %

34,9 %

A687

A688

A689

A999

The release for free circulation in the Community of the product referred to in paragraph 1 shall be

3.
subject to the provision of a security, equivalent to the amount of the provisional duty.

4.

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

Article 2

Without prejudice to Article 20 of Council Regulation (EC) No 384/96,
interested parties may request
disclosure of the essential facts and considerations on the basis of which this Regulation was adopted, make
their views known in writing and apply to be heard orally by the Commission within one month of the date
of entry into force of this Regulation.

Pursuant to Article 21(4) of Regulation (EC) No 384/96, the parties concerned may comment on the
application of this Regulation within one month of the date of its entry into force.

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

Article 3

Article 1 of this Regulation shall apply for a period of six months.

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

Done at Brussels, 27 July 2005.

For the Commission

Peter MANDELSON
Member of the Commission