Commission Regulation (EC) No 134/2006 of  26 January 2006  imposing a provisional anti-dumping duty on imports of lever arch mechanisms originating in the People's Republic of China
Date: 2006-01-26
Institutions: European Commission
Subjects: China, anti-dumping duty, anti-dumping legislation, import, office supplies, originating product

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COMMISSION REGULATION (EC) No 134/2006

of 26 January 2006

imposing a provisional anti-dumping duty on imports of lever arch mechanisms 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
imports from countries not members of the European Communities (1),
(the basic Regulation) and in
particular Article 7 thereof,

After consulting the Advisory Committee,

Whereas:

1. Initiation

A. PROCEDURE

(1)

(2)

(3)

(4)

(5)

On 28 April 2005, pursuant to Article 5 of the basic Regulation, the Commission announced by a
notice (notice of initiation) published in the Official Journal of the European Union (2), the initiation of
an anti-dumping proceeding with regard to imports into the Community of lever arch mechanisms
originating in the People’s Republic of China (‘PRC’).

The proceeding was initiated following a complaint lodged on 11 March 2005 by three Community
producers, namely Interkov spol s.r.o, MI.ME.CA s.r.l. and Niko — Metallurgical company, d.d.
Zelezniki (the complainant) representing a major proportion, in this case more than 50 %, of the
total Community production of lever arch mechanisms. In addition, the complaint was supported by
I.M.L, another Community producer. The complaint contained evidence of dumping of the product
concerned and of material injury resulting there from, which was considered sufficient to justify the
initiation of a proceeding.

2. Parties concerned by the proceeding

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

complainant producers, other

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

cooperating Community producers,

treatment

In order to allow exporting producers in the PRC to submit a claim for market economy treatment
the Commission sent market economy
(MET) or individual
they so wished,
treatment and individual
to the Chinese companies known to be
concerned. Four companies requested MET pursuant to Article 2(7) of the basic Regulation or
individual treatment should the investigation establish that they did not meet the conditions for
MET, and one company requested only IT.

treatment claim forms

(IT),

if

(1) OJ L 56, 6.3.1996, p. 1. Regulation as last amended by Regulation (EC) No 2117/2005 (OJ L 340, 23.12.2005,

p. 17).

(2) OJ C 103, 28.4.2005, p. 18.

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(6)

(7)

(8)

In the notice of initiation, the Commission indicated that sampling may be applied in this investi-
gation for the importers. Given the number of
importers which indicated their willingness to
cooperate, it was decided that sampling was required.

The Commission sent questionnaires 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 complaining Community producers,
five
exporting producers in the PRC, 12 suppliers of raw materials, two unrelated importers and eight
unrelated users in the Community.

two other Community producers,

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:

— Interkov spol s.r.o.

— MI.ME.CA s.r.l.

— Niko — Metallurgical company, d.d. Zelezniki

— IML Industria Meccanica Lombarda S.r.l.

— EJA international;

(b) Community users:

— Esselte Leitz GmbH & Co.;

(c) Exporting producers in the PRC:

— Dongguan Nanzha Leco Stationery

— Wah Hing Stationery Manufactory Limited

A further three exporting producers submitted MET claim forms and stated their willingness to
cooperate in the proceeding. However, they withdrew their cooperation before the verification of
the MET claim forms was carried out.

(9)

In light 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 took place at the premises of the following companies:

Producer in Iran:

— Metalise Co.

3. Investigation period

(10)

The investigation of dumping and injury covered the period from 1 January 2004 to 31 December
2004 (IP). The examination of trends relevant for the assessment of injury covered the period from
1 January 2001 to the end of the investigation period (period considered).

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4. Product concerned and like product

4.1. General

(11)

Lever arch mechanisms (LAM) are a metal product which can be one of the components of binders
for storing sheets and other documents. The specification of the product mainly depends on the
material used, the size of the mechanisms and the treatments of the steel.

4.2. Product concerned

(12)

The product concerned is lever arch mechanisms generally used for archiving sheets and other
documents in binders or files. They consists of arched sturdy metal elements (normally two) on a
back plate and having at least one opening trigger that permits inserting and filing of sheets and
other documents, originating in the PRC (the product concerned), normally falling within CN code
ex 8305 10 00.

(13) Despite differences in some factors such as, inter alia, the quality and thickness of the steel, the size of
the mechanisms and the surface treatment, the investigation has shown that all types of the product
concerned as defined in the preceding recital, have the same basic physical and technical character-
istics and are used for the same purposes. Therefore, and for the purpose of the present anti-dumping
proceeding, all types of the product concerned are regarded as one single product.

4.3. Like product

(14) No differences were found between the product concerned and the lever arch mechanisms produced
and sold on the domestic markets in the PRC and Iran, which served as an analogue country for
Indeed, these lever arch
establishing the normal value with respect to imports from the PRC.
mechanisms have the same basic physical and technical characteristics and uses compared with
that exported from the PRC to the Community.

(15)

Likewise, no differences were found between the lever arch mechanisms produced by the Community
Industry and sold on the Community market and those imported from the PRC. They both share the
same physical and technical characteristics and uses.

(16)

Therefore, these products are provisionally considered to be alike within the meaning of Article 1(4)
of the basic Regulation.

1. Market economy treatment (MET)

B. DUMPING

(17)

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

— business decisions are made in response to market signals, without significant State interference,

and costs reflect market values,

— firms have one clear set of basic accounting records, which are independently audited in line with

international accounting standards and are applied for all purposes,

— there are no significant distortions carried over from the former non-market economy system,

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— bankruptcy and property laws guarantee stability and legal certainty,

— exchange rate conversions are carried out at market rates.

(18)

Four exporting producers in the PRC requested MET pursuant to Article 2(7)(b) of the basic Regu-
lation and replied to the MET claim form for exporting producers.

(19) However, three of these exporting producers withdrew their cooperation before the verification visit
took place. It was therefore not possible to verify whether these companies fulfilled the criteria set in
Article 2(7)(c) of the basic Regulation.

(20)

For the remaining exporting producer, the Commission sought and verified at the premises of the
company all information submitted in the MET application as deemed necessary.

(21)

The investigation revealed that the MET claim had to be rejected. The determinations for the
company against each of the five criteria as set out in Article 2(7)(c) of the basic Regulation
showed that the company did not meet the requirements of the above mentioned criteria two and
three. In addition no conclusion could be reached with regard to criterion one.

(22) With regards to criterion two it could not be concluded that the company had a clear set of basic
accounting record which were independently audited in line with international accounting standards
and applied for all purposes.

(23)

For criterion three the company failed to provide supporting documents and a comprehensive
explanation as to the privatisation of the company and the re-evaluation of the assets. In light of
this, the company did not demonstrate that there were no distortions carried over from the former
non-market economy system.

(24) No conclusion could be taken on criterion one due to remaining doubts on possible State inter-
ference with regard to the approval of labour contracts as well as the impossibility to determine
whether all costs reflect market values. However, in view of the conclusions for criteria two and
three, it is not necessary to take a decision in this respect.

(25)

The interested parties were given an opportunity to comment on the above findings.

2. Individual treatment (IT)

(26)

is established for
Further to Article 2(7)(a), of the basic Regulation a country-wide duty,
in those cases where
countries falling under Article 2(7)(a) of
companies are able to demonstrate, in accordance with Article 9(5) of the basic Regulation, that
their export prices and quantities as well as the conditions and terms of
the sales are freely
determined, that exchange rates are carried out at market rates, and that any State interference is
not such as to permit circumvention of measures if exporters are given different rates of duty.

the basic Regulation, except

if any,

(27)

The exporting producer to which MET could not be granted also claimed IT in the event it was not
granted MET. On the basis of the information available it was found that the company met all of the
requirements to be granted IT in accordance with Article 9(5) of the basic Regulation.

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(28) One additional exporting producer, not having claimed MET, requested only IT. This company had,
via related companies, sales to independent customers in the Community during the IP and coop-
erated in the investigation. The investigation showed that the company met all the requirements for
IT as set forth in Article 9(5) of the basic Regulation.

(29)

It was therefore concluded that IT should be granted to the following two exporting producers in the
PRC:

— Dongguan Nanzha Leco Stationery,

— Wah Hing Stationery Manufactory Limited.

3. Normal value

(30)

The exporting company which only requested IT failed to provide a comprehensive and fully
substantiated reply to the exporter questionnaire within extended deadlines. On that basis, a deter-
mination of the dumping margin was not possible and the company had to be regarded as a non-
cooperating party in the investigation.

3.1. Determination of normal value for all exporting producers not granted MET

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

(31) According to Article 2(7)(a) of the basic Regulation, normal value for the exporting producers not
granted MET has to be established on the basis of the prices or constructed value in an analogue
country.

(32)

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

(33) One user, one cooperating exporter and one non-cooperating producer objected to this proposal. The

main arguments against India as an analogue country were that:

— there are only few Indian producers and there is no competition on the domestic Indian market,

— India only produces for its domestic market and not for export,

— the production in India is with different specifications and the production process is therefore also

different,

— the Indian volume of production is minor compared to the Chinese production,

— the Indian production is not stable with regard to quantity and quality.

(34)

The interested parties, however, were not able to suggest a more appropriate alternative nor could
they provide any details or substantiate their allegation that India was not an appropriate analogue
country.

(35)

The Commission therefore sought cooperation from India but also from all other known potential
analogue countries such as: Turkey, South Africa, Iran and Thailand.

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(36)

It emerged however that from among those countries mentioned in the preceding recital, lever arch
mechanisms are currently only produced by very few producers in India and Iran. Moreover, it was
not possible to obtain full cooperation from India but the producer in Iran agreed to fully cooperate
with the Commission.

(37)

The analysis of the reply showed that Iran has one producer and that this producer had domestic
sales. In addition, it was found that there were substantial imports of the Chinese products on the
Iranian market. It is clear therefore that the Iranian and Chinese products compete on the Iranian
market.

(38)

In view of the foregoing it is provisionally concluded that Iran is the most appropriate and reasonable
analogue country in accordance with Article 2(7) of the basic Regulation.

(b) D e t e r m i n a t i o n o f n o r m a l v a l u e i n t h e a n a l o g u e c o u n t r y

(39)

Pursuant to Article 2(7)(a) of the basic Regulation, the normal value for the exporting producers not
granted MET was established on the basis of information received from the producer in the analogue
country. The normal value was established on the basis of all prices paid or payable on the domestic
market of Iran for comparable product types as the transactions by the producer in Iran were found
to be made in the ordinary course of trade.

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

customers by the cooperating producer in Iran.

4. Export prices

(41)

For the export sales to the Community of the exporter granted IT which were made via related
companies outside the Community, the export price was established on the basis of resale prices to
independent customers in the Community.

(42)

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

5. Comparison

(43)

The normal value and export prices were compared on an ex-factory basis and at the same level of
trade. In order to ensure a fair comparison between normal value and export price, account was
taken, in accordance with Article 2(10) of the basic Regulation, of differences in factors which were
claimed and demonstrated to affect prices and price comparability.

(44) On this basis, allowances for differences in transport, insurance, handling, loading and ancillary costs,
credit, commissions and after sales costs (warranty/guarantee) could be granted to the extent that they
were sufficiently substantiated. Adjustments were also made where the export sales were made via a
related company located in a country other than the country concerned or the Community, pursuant
to Article 2(10)(i) of the basic Regulation.

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6. Dumping margin

6.1. For the cooperating exporting producer granted IT

(45)

For the company granted individual treatment, the weighted average normal value for each type
exported to the Community established for the analogue country was compared with the weighted
average export price of the corresponding type exported to the Community, as provided in Article
2(11) of the basic Regulation.

(46)

The provisional weighted average dumping margins expressed as a percentage of the cif Community
frontier price duty unpaid are:

— Dongguan Nanzha Leco Stationary 33,4 %.

6.2. For all other exporting producers

(47)

In order to calculate the countrywide duty applicable to all other exporters in the PRC,
the
Commission first established the level of cooperation. In this respect it is recalled that three of the
four companies originally applying for MET withdrew their cooperation, and, except for one further
company applying for IT only but which had to be regarded as non-cooperating, there was no
cooperation from other Chinese exporting producers.

(48) Given that there was no cooperation from exporters not granted either MET or IT, the calculation
was based on facts available. The countrywide dumping margin was consequently calculated based on
the most representative PCN, exported from the PRC by exporters not granted MET or IT. The export
price was then compared with the normal value established for the analogue country. To ensure that
this indeed was a fair comparison, the Commission additionally sought market information to
establish the import prices from other exporting producers. No information found during this
exercise showed that the calculations were not fair and reasonable.

(49) On this basis, the countrywide level of dumping was provisionally established at 48,1 % of the cif

Community frontier price.

(50)

This margin applies to all the producers to which no IT was granted.

1. Community production

C. INJURY

(51)

The investigation established that LAM were manufactured by the following producers in the
Community during the investigation period: the three complainant Community producers, two
other producers who supported the complaint and fully cooperated with the Commission during
the investigation and Esselte who was only producing LAM for its own use.

(52) Another company was producing and importing lever arch mechanisms exclusively for its own use
during the IP. However, it stopped production in the course of the IP. The company replied to the
questionnaire intended for Community producers and provided the data on its own production.

(53) One further producer who submitted a letter of support to the complaint was found not to have

produced the product concerned during the IP.

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(54)

(55)

The complainants alleged that some other companies were producing the product concerned during
the IP, however in limited quantities. These companies did not make themselves known nor did they
provide their production figures in the context of the investigation. These quantities will provisionally
not be included in the community production.

It was found that one of the cooperating producers who supported the complaint also imported the
product concerned from the PRC. Whilst the majority of the EC sales of that producer during the IP
were produced in the Community, it emerged that about 25 % of the Community sales volume was
purchased from the PRC. This represented around 39 % of its total production.

(56) Although this is a relatively important share of the company’s business it was found that these
imports were made as a matter of self-defence against low-priced dumped imports from the PRC.
Indeed, already in the beginning of the period considered when the producer realised that he could
not fully compete with low price dumped imports from the PRC, he decided to ship his old
machineries to China and form a joint venture with a Chinese producer. The verification of the
financial data submitted by that Community producer for the period considered showed that he was
selling Chinese LAM in order to recover some of the high losses incurred on the sales of own
produced products on the Community market. Importing Chinese LAM has certainly allowed the
company to survive until now.

(57)

It was also found that the core activity of this company is located in the Community and its
behaviour is clearly that of a Community producer. The cooperation of that company shows that
it has a similar behaviour and interests as the other complainants in the investigation. It is therefore
considered that
the
Community production.

that producer should be included in the definition of

the production of

(58) 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 five cooperating Community
producers which supported the complaint
to the production data available for one additional
producer.

2. Definition of Community industry

(59)

The production of the five Community producers that fully cooperated in the investigation and
supported the complaint was established at around 220 million units during the investigation
period. This represents over 90 % of
total Community production. These companies therefore
constitute the Community industry within the meaning of Articles 4(1) and 5(4) of the basic
Regulation.

(60)

It should be noted that even if the producer which imported Chinese LAM was excluded from
Community production and Community industry the remaining producers still constitute a major
proportion of the total Community production, as defined in Article 5(4) of the basic Regulation.

3. Community consumption

(61)

Consumption was established on the basis of the sales volume of the known producers to unrelated
customers in the Community plus imports from third countries. Sales by Community producers were
largely based on the questionnaire replies they submitted. The volume of imports, however, had to be
based on the complaint due to the low level of cooperation from Chinese exporting producers and to
the fact that Eurostat data was not specific enough. Indeed, the CN code for LAM also includes ring
binder mechanisms and is expressed only in tonnes, not in units.

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(62)

The following table shows that demand of the product concerned in the Community significantly
increased over the period considered:

Table 1

(1 000 pieces)

2001

2002

2003

2004 (IP)

Consumption

Index

301 440

301 990

337 300

399 670

100

100

112

132

(63)

The main increase occurred in the period from 2003 up to the end of the IP when consumption
increased by 18 % or by more than 62 million units. The Community industry increased its sales
volume by 8 % or by 14 million units. During the same period, imports from China increased by
29 % or by 48 million units.

4. Imports into the Community from the PRC

4.1. Volume, market share and average price of imports concerned

(a) I m p o r t v o l u m e a n d m a r k e t s h a r e

(64) As mentioned in recital 61, the volume of Chinese imports was based on the data contained in the
complaint. However, this data was cross-checked with Eurostat data and compared with the export
data verified at the premises of the largest exporter in China representing over 65 % of total Chinese
exports which cooperated in the investigation. Both sources confirmed that the trends in volume
were comparable to those contained in the complaint.

(65)

The evolution of imports from the country concerned, in volume and market share, has been the
following:

Table 2

Import volumes (1 000 pieces)

2001

2002

2003

IP

PRC

Index

135 000

130 000

166 000

214 000

100

96

123

159

Market shares of the imports

PRC

Index

2001

44,8 %

100

2002

43,1 %

96

2003

49,2 %

110

IP

53,6 %

120

(66) As shown in table 1 above, consumption of lever arch mechanisms in the Community increased by
32 %, or by 98 million units during the period considered. In the meantime, the imports from the
country concerned have risen by around 59 %, namely an increase by 79 million units. In conse-
quence, their market share has increased from 44,8 % to 53,6 % during the period considered. This
means a gain of 8,8 percentage points of market share. It is worth noting that the main increase in
imports and market share held by Chinese exporting producers occurred between 2003 and the IP
when dumped imports increased by 48 million units and market share by 4,4 percentage points.

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(b) P r i c e s o f

i m p o r t s a n d u n d e r c u t t i n g

Table 3

Import prices from the PRC

EUR/1 000 pieces

Index 2001 = 100

2001

120

100

2002

110

92

2003

96

80

IP

107

89

(67)

Table 3 shows how average import prices from the PRC developed over the period considered.
Import prices decreased from EUR 120 for 1 000 LAM in 2001 to EUR 107 during the IP. The
import price level was so low in 2003, coinciding with a 20 % increase in consumption, that it could
be increased by 11 % between 2003 and the IP. This price level remains however far below that of
the Community industry. Overall the price decrease of dumped imports was as high as 11 % during
the period considered.

(68) A comparison of selling prices on the Community market during the IP was made between the prices
of the Community industry and those of the Chinese exporting producers. This comparison was
made after deduction of rebates and discounts and adapting for any post importation costs. The
prices of the Community industry were adjusted to ex-works prices, and the prices of the imports
were cif Community frontier.

(69)

The comparison showed that during the IP Chinese LAM were imported in the Community at prices
which were significantly undercutting the Community industry’s prices. When expressed as a
percentage of the latter price, the undercutting margin was as high as 24,3 %. From this level of
undercutting and the price development of the Community industry as well as its profitability
situation, as explained below, it is clear that substantial price depression had already taken place
during the period considered.

5. Economic situation of the Community industry

(70)

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

(71)

The Community industry data below represent the aggregated information verified for the five
cooperating Community producers.

5.1. Production, production capacity and capacity utilisation

(72)

The evolution of production, production capacity and capacity utilisation is the following:

Table 4

Indices 2001 = 100

2001

2002

2003

IP

Production (1 000 units)

225 065

222 036

221 472

219 990

Index production (2001=100)

100

99

98

98

Production capacity (units)

454 423

439 504

488 387

490 172

Index production capacity

Capacity utilisation %

Index capacity utilisation

100

50 %

100

97

51 %

102

107

45 %

92

108

45 %

91

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(73) Despite the existence of an increased demand the Community industry’s production slightly decreased
by 2 % during the period considered. In view of the good market prospective and the increasing
consumption, investments to increase production capacity of the Community industry were made.
However, capacity utilisation decreased by 9 %, also because of a slight decrease of production.

5.2. Stocks

(74)

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

Table 5

Stocks (1 000 pieces)

Index 2001 = 100

2001

11 750

100

2002

8 242

70

2003

15 201

129

IP

15 236

130

(75)

The investigation showed that stocks held by the Community industry was not a relevant indicator
for the assessment of the economic situation of the Community industry. Indeed, the Community
industry is mainly producing on order and the level of stock represented a limited share of
production and around three to four weeks’ deliveries during the period considered.

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

(76)

The figures below represent the Community industry’s sales volume to independent customers on the
Community market.

Table 6

Indices 2001 = 100

2001

2002

2003

IP

Sales volume (1 000 pieces)

166 440

171 990

171 300

185 670

Market share

Average sales prices
(EUR/1 000 pieces)

Index

100

55,1 %

100

152

100

Index

Index

103

56,6 %

103

142

93

103

50,7 %

92

137

90

112

46,4 %

84

132

87

(77)

The investigation revealed that the Community industry could somewhat benefit from the increase of
consumption by raising its sales by 12 % during the period considered, or by around 19 million
units.

(78) Nevertheless, the Community industry’s market share declined from 55,1 % in 2001 to 46,4 % at the
end of the IP. This represents a loss of 8,7 percentage points of market share. The main decrease in
market share was observed between 2003 and the IP when the Community industry lost 4,4
percentage points.

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(79)

It is therefore clear that the Community industry did not fully benefit from the market growth.

(80)

The above table indicates that Community industry suffered from significantly dropping average sales
prices (by 13 %), as more low-priced dumped imports were penetrating the Community market.

5.4. Profitability

(81)

The profitability margins shown below are established by expressing the financial result achieved by
the Community industry as a percentage of the turnover achieved on the Community market.

Profitability on Community sales (RoT)

Profitability on EC sales

— trend

Table 7

2001

– 13 %

2002

– 17 %

– 4 %

2003

– 19 %

– 6 %

IP

– 26 %

– 13 %

(82)

Profitability was negative throughout the period considered. However, the extent of losses worsened
considerably mainly due to the reduced level of prices. Even though the Community Industry
optimised its production in order to compete with the Chinese imports and adjusted all
the
technical parameters possible of the product concerned, the loss continuously increased during the
period considered. The result achieved during the IP cannot be sustained even in the short term.

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

(83)

The trends for the return on investments, cash flow and investments are shown in the following
table.

Indices 2001 = 100

Return on Investments
(total company)

Cash flow
(total company in EUR)

Investments
(product concerned in EUR)

Table 8

2001

– 18 %

2002

– 22 %

2003

– 17 %

IP

– 55 %

1 737 465

720 972

– 259 997

– 2 757 046

Index

100

176

45

73

1 839 277

2 453 440

2 353 561

2 601 880

Index

100

133

128

141

(84) As suggested in recitals 78 and 82, the decreasing trend followed by the Community industry’s sales
prices significantly affected its profitability. Accordingly this also had a negative impact on the injury
indicators linked to the profitability. It can be noted that the above negative trend observed for return
on investments and cash flow reflect to a large extent those on profitability shown in table 6 above.

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(85) As already explained in recital 73, the Community industry increased its investments on the product
concerned because the market conditions were very good during the period considered. The
Community industry’s investments mainly consisted in replacements in plant and machinery rather
than investments in new production facilities.

(86)

The Community industry pointed out that it had increased difficulties in raising capital. The above
findings, and in particular the 26 % negative profitability, indeed clearly suggest that the Community
industry’s ability to raise capital, either from external providers of finance or parent companies, is
heavily hampered by its catastrophic financial situation.

5.6. Employment, productivity and wages

Table 9

Indices 2001 = 100

Number of employees

Index

Productivity
(1 000 units/employee)

2001

792

100

284

Index

100

2002

773

98

287

101

2003

746

94

297

104

IP

713

90

309

109

Wages (average per employee,
per annum in euro)

15 619,65

15 747,02

15 338,60

15 545,16

Index

100

101

98

100

(87)

The Community industry decreased its number of employees from 2001 to the IP. Productivity could
be improved over the period considered due to an increased level of investment coupled with the
decrease in the number of employees.

(88)

Total wages and related costs paid by the Community industry remained stable during the period
considered. Whilst in that period the number of employees decreased by 10 % it even decreased in
relative terms due to inflation.

5.7. Magnitude of the actual margin of dumping

(89)

The dumping margins are specified above in the dumping section. These margins established 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.

5.8. Effects of past dumping or subsidisation

(90)

The Community industry is not recovering from the effects of past dumping or subsidisation since no
such previous investigations have been made.

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5.9. Conclusion on injury

(91) Already at the beginning of the period considered, the PRC had half of the LAM Community market.
The PRC strengthened this already strong position considerably. It is recalled that import volumes
from the PRC have increased considerably, both in volume terms (+ 79 million units) and market
share (+ 8,8 percentage points) during the period considered. Furthermore, the average unit price of
those imports decreased by 11 %, which is reflected in the price undercutting found in the investi-
gation.

(92) While the sales volumes of the Community industry increased, that industry did hardly benefit from
the significant growth of the Community market (+ 32 % or + 98 million units) during the IP. They
lost significant market share and suffered from an average price decrease by 13 %. This led to a
doubling of losses, reduced cash flow and return on investment, decreasing production and utilisation
of the production capacity, stagnating wages and the obligation to decrease the employment during
the period considered. Notwithstanding the effort deployed to become more competitive the financial
situation of the Community industry significantly worsened during the IP.

(93)

It has also to be noted that some Community producers stopped production or went out of business
in recent years.

(94)

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.

1. Preliminary remark

D. CAUSATION

(95)

In accordance with Articles 3(6) and 3(7) of the basic Regulation, it was also examined whether there
is a causal link between the dumped imports from the PRC and the material 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 according to Article 3(7) of the basic
Regulation to ensure that the possible injury caused by these other factors was not attributed to the
dumped imports.

2. Effect of the imports from the PRC

(96)

It is recalled that import volumes from the PRC increased by around 43 % as did its market share by
8,8 percentage points during the period considered. In addition, as explained in recital 67, the import
prices from the PRC fell by 11 % and Chinese import prices undercut those of the Community
industry by 24 %. Moreover, there Community industry’s prices were depressed.

(97) During the period considered, there was also a coincidence in time between the further surge of low-
priced dumped imports and the significant worsening of an already bad situation of the Community
industry. This is best illustrated by comparing the economic results achieved by both Chinese
exporters and the Community industry between 2003 and the IP. In that period the volume of
LAM imported from China increased by 48 million units while significant price undercutting was
found to exist. As a result the Chinese exporting producers were able to gain 4,4 percentage points of
market share. During the same period the sales volume of the Community industry only increased by
14 million units thus resulting in a loss of market share of 4,3 percentage points in a rapidly
increasing market. Simultaneously, the Community industry had to decrease average sales price by
around 4 %. The dramatic worsening in its financial situation during this period is for instance
evidenced by an increase of its losses by 7 percentage points. It should be noted that the imports
from China was already at a high level at the beginning of the period considered and that the
community industry was therefore in a vulnerable situation from the beginning of this period.

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(98) As shown by the increasing market share in Table 2, Chinese exporters practicing dumping became
the major players on the Community market supplanting the Community industry during the IP.

3. Effects of imports from third countries

(99) As explained in recital 36, there are not many companies in the world producing and exporting
LAM. In the context of the choice of an analogue country, some producers were identified in India
and in Iran but the information available suggest that only limited quantities of LAM, if any, were
exported by the known producers in these countries. The core market of these producers was clearly
their domestic market.

(100)

It is therefore very unlikely that imports originating in other third countries, such as India could have
contributed to the injury suffered by the Community industry. The information available is extremely
limited so that it is not even possible to make a reliable estimate of this limited quantity, if any, of
imports from other third countries.

(101)

It is therefore considered that the imports of LAM originating in other third countries could not have
affected the economic situation of the Community industry.

4. Effects of Chinese imports made by the Community industry

(102) As explained in recital 55,

it was found that one of the cooperating producers included in the
definition of the Community industry imported the product concerned from the PRC during the
period considered. The vast majority of the EC sales of that producer during the IP were produced in
the Community — about 25 % of the sales volume was purchased from the PRC.

(103) The investigation showed that the said producer imported LAM from China which were produced by
a Chinese exporter with whom he had a commercial agreement. It was also found that the resale
price at which he was selling the imported LAM was comparable to the price he was selling LAM of
its own production.

(104) On this basis, it is not considered that such imports have contributed to the material injury suffered
by the Community industry. While it is true that these imports represent clearly more than a
negligible volume (namely around 6 %, of total Community industry’s sales during the IP), the
following should be noted. Firstly, the resale prices corresponded to the selling prices of its own
produced merchandise. Moreover, the sales of this trade product completed its own product range.
Secondly, as already explained in recitals 55 and 56, these imports have partly allowed the said
producer to reduce some of the high losses incurred from selling its own produced products on the
Community market. Importing Chinese LAM has certainly allowed the company to survive until now.
Thus, completion of its product range by importing Chinese merchandise was a sort of self-defence
in order to cope with Chinese dumped imports. This producer also clearly supports the current
proceeding.

(105)

It is therefore very unlikely that the imports made by the said producer contributed to the injury
found.

5. Effects of the export performance by the Community industry

(106)

It was also examined whether or not the export of LAM made by the Community industry may have
been a cause of the injury it suffered during the period considered.

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(107) As suggested by Table 10, the core market of the Community industry has always been the
Community market. Exports outside the EU represented between 7,4 % and 16,2 % of total sales
of the Community industry during the period considered.

Table 10

2001

32 419

2002

23 114

2003

18 303

IP

14 551

Exports
(1 000 units)

Index 2001 = 100

100

71

56

45

(108) Exports of the Community industry decreased by around 18 million units throughout the period
considered. This decrease has to be seen in the light of the significant growth of the Community
market which took place in that period. It should be borne in mind that during that period Chinese
exports were also gaining market share in other worldwide markets, as evidenced by the analysis of
the information gathered for the choice of the analogue country.

(109)

In addition, the investigation showed that Community industry production was rather stable and only
decreased by 2 % during the period considered. The Community industry was able to control and
even reduce its costs.

(110) Based on the information currently available, it is therefore considered that even if the decrease in
exports sales volume may have contributed to the injury suffered by the Community industry it
losses
cannot justify the significant price decrease on the Community market and the financial
incurred by the Community industry during the IP.

6. Conclusion on causation

(111)

It must be underlined that the injury in this case primarily materialised in the form of price
depression causing a further increase in losses. 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 abovementioned 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.

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 clear coincidence in time and thus a causal link
injury suffered by the Community
between the dumped imports from the PRC and the material
industry pursuant to Article 3(6) of the basic Regulation.

1.1. General considerations

E. COMMUNITY INTEREST

(112)

In accordance with Article 21 of the basic Regulation, it has been examined whether compelling
reasons exist that could lead to the conclusion that it would be against the Community interest to
impose anti-dumping duties against imports from the country concerned. The Commission services
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.

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(113) On the basis of the information received from the cooperating parties, the following conclusions

were reached.

1.2. Interest of the Community industry

(114)

It is recalled that the Community industry consisted of five producers employing over 700 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 some producers in the Community to give up production in the Community in recent years.
However, the Community industry is viable and not ready to give up this segment of sales as the
actions taken to cope with the surge in dumped imports have shown. As an example, the investi-
gation showed that the Community industry managed to improve its production process and shorten
delivery time during the period considered.

(115)

If measures are not imposed it is likely that the price pressure from the dumped imports will increase,
the financial situation of the Community industry will continue to deteriorate further and more
Community producers will be forced to cease production, with adverse consequences for the broader
sector already suffering from imports made at dumped prices.

(116)

If measures are imposed, it can be expected that the Community industry’s production and sales
volume will rise within a very short period, thus allowing the Community industry to spread its fixed
it is noted that the Community industry’s capacity
costs over a higher output. In this context,
utilisation is very low and that the Community industry could indeed significantly increase its
output. This would also allow the Community industry to regain the market share it lost during
the period considered and make economies of scale. It is likely that the financial situation of the
Community industry will reach a more sustainable level once the determination of prices is no longer
distorted by dumped imports.

(117)

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

1.3. Interest of suppliers

(118) 12 suppliers of raw materials to Community producers wrote to the Commission concerning the
present proceeding. These parties support the imposition of AD measures. It is considered that these
suppliers are representative of the steel suppliers industry in this proceeding.

(119)

It is clear that the supplier industry risks seeing one sales segment disappearing in the short term in
case no measures are taken against low-priced dumped imports. The high losses incurred by the
Community industry cannot be sustained any longer.

(120) The suppliers were also advocating the imposition of measures as it should lead to more security in
the market starting with the supply of raw material to the delivery of LAM to the user’s industry.
They stressed the economic importance of the Community LAM industry from the point of view of
the community users. However it is noted that these arguments are made on behalf of users, see
below.

(121) On the basis of the foregoing, it is therefore concluded that the imposition of anti-dumping measures

would not be against the interest of Community suppliers.

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1.4. Interest of users and importers

(122) Replies from eight users and two importers located in the Community market were received. Users
are usually importers as well, in the sense that they import LAM and produce Lever Arch Files (LAF),
the downstream product. The total business of these parties is significant but LAM only represents
10 % of the overall activity.

(123) Users and importers generally oppose the imposition of AD measures, as the product concerned
represents a high share of the cost of the downstream product, namely around 20 % of total costs of
the downstream product. These users and importers can be considered representative for the industry
since they represent more than 50 % of this. They allege that if anti-dumping measures would be
imposed, they would be in a disadvantaged position with their customers (mainly chain stores and
big distributors). They allege that there is an over-production capacity in the LAF sector. Hence, they
are not in a strong position to negotiate with those customers and they fear that LAF will be
imported from China once measures on LAM are imposed. However their claims were not substan-
tiated with evidence.

(124) User companies usually have purchase agreements with Chinese producers to import LAM in the
the Chinese products have reached a very good quality
Community market. Users claim that
compared to those produced in the Community following a long period of development with
their Chinese partners. Therefore, they allege that they improved the availability of the material
and competition on the market. They also claim that there would be a risk of shortage of supply
if measures were imposed.

(125) The cooperating importers raise similar concerns. Only one user supports the imposition of the

measures but claims that measures on LAF should also be imposed.

(126)

In view of the large production capacity available in the Community (see Table 4) and since addi-
tional investments in production capacity could easily be made by Community producers to meet the
demand in a market not distorted by dumping practices, the claim concerning possible shortages due
to lack of capacity of the Community industry does not seem to be realistic and is certainly not
substantiated. It is considered that this would not reduce effective competition on the Community
market.

(127)

It is also considered that the imposition of measures should not affect the overall competitiveness of
the user industries materially. The investigation has shown that some producers of LAM are also
producing the downstream products and that there are still a large proportion of users which are
mainly purchasing their LAM from non-dumped sources. All users would have the possibility to
revert to non-dumped sources of supply.

(128) As regards possible cost increases, it cannot be excluded that this would take place immediately after
the imposition of AD measures. Such cost increase would in particular affect companies which are
mainly purchasing low-priced dumped products from China. In the worst case scenario, considering
the current market share of the Community industry, the proposed measures may lead to an average
cost increase of 2,5 % of the cost of the downstream product on average. It should be noted though
that the product concerned is only a minor part of the activities of the down stream industry and
that in addition profitability of the product concerned is indeed very good. However, the Commission
does not consider that this scenario will take place and a more realistic scenario, as explained in
recitals 116 and 120, is that the imposition of AD measures should lead to an increase of effective
competition on the Community market and to the recovery of the market share and economic
situation of the Community industry. This should in the short term avoid any undue price increase
on the Community market.

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(129)

In any event any potential cost increase should also be seen in the light of the interest of the user
companies which are mainly purchasing their LAM from the Community industry.

(130) On balance, it is therefore provisionally considered that any negative impact on the cost of certain

users is not such as to prevent the imposition of measures.

1.5. Conclusion on Community interest

(131) The imposition of measures on imports of LAM 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 LAM is not expected to unduly affect their competitiveness and competition
on the Community market. In contrast, the losses suffered by the Community industry and the
supplier industries, and the risks of further production closings are clearly of great magnitude.

(132)

In view of the above,
impose anti-dumping measures on imports of LAM originating in the PRC.

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

F. PROVISIONAL ANTI-DUMPING MEASURES

1. Injury elimination level

(133)

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.

(134) 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 measure 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, namely in the absence of dumped imports, on the sales of the like product in the
Community. The pre-tax profit margin used for this calculation was 5 % of turnover. This margin is
in line with what was achieved in the general category in the absence of dumped imports and is
therefore provisionally considered to be a reasonable margin. 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 abovementioned profit margin of 5 % to the cost of production.

(135) 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.

(136) Any difference resulting from this comparison was then expressed as a percentage of the average
import cif value. In all cases it was found that the injury margins were higher than the dumping
margins found.

2. Provisional measures

(137)

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.

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(138) 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
Imported products produced by any other company not specifically
legal entities mentioned.
mentioned in the operative part of this document with its name and address,
including entities
related to those specifically mentioned, cannot benefit from these rates and shall be subject to the
duty rate applicable to ‘all other companies’.

(139) 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.

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

Dongguan Nanzha Leco Stationery

All other companies

33,3 %

48,1 %.

G. FINAL PROVISION

(141)

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 document are provisional and may
have to be reconsidered for the purpose of any definitive measures,

HAS ADOPTED THIS REGULATION:

Article 1

A provisional anti-dumping duty is hereby imposed on imports of

lever arch mechanisms for
1.
archiving sheets and other documents in binders and files and falling within CN code ex 8305 10 00,
(TARIC code 8305 10 00 50) originating in the People’s Republic of China. These lever arch mechanisms
consist of arched sturdy metal elements (normally two) on a back plate and having at least one opening
trigger that permits inserting and filing of sheets and other documents.

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

Dongguan Nanzha Leco Stationery

All other companies

33,3 %

48,1 %

A729

A999

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

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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 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.

Article 3

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

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, 26 January 2006.

For the Commission

Peter MANDELSON
Member of the Commission