Council Regulation (EC) No 1472/2006 of 5 October 2006 imposing a definitive anti-dumping duty and collecting definitely the provisional duty imposed on imports of certain footwear with uppers of leather originating in the People's Republic of China and Vietnam
Date: 2006-10-05
Institutions: Council of the European Union
Subjects: China, Viet Nam, anti-dumping duty, footwear industry, import, leather, originating product

6.10.2006

EN

Official Journal of the European Union

L 275/1

I

(Acts whose publication is obligatory)

COUNCIL REGULATION (EC) No 1472/2006

of 5 October 2006

imposing a definitive anti-dumping duty and collecting definitely the provisional duty imposed on
imports of certain footwear with uppers of leather originating in the People's Republic of China and
Vietnam

THE COUNCIL OF THE EUROPEAN UNION,

2. SUBSEQUENT PROCEDURE

(3)

(4)

(5)

(6)

Having regard to the Treaty
Community,

establishing the European

Having regard to Council Regulation (EC) No 384/96 of 22
December 1995 on protection against dumped imports from
countries not members of the European Community (1)
(the
‘basic Regulation’), and in particular Article 9 thereof,

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

Whereas:

(1)

(2)

A. PROCEDURE

1. PROVISIONAL MEASURES

On 23 March 2006, the Commission imposed by Regu-
lation (EC) No 553/2006 (2) (‘the provisional Regulation’)
a provisional anti-dumping duty on the imports into the
Community of certain footwear with uppers of leather
originating in the People's Republic of China and
Vietnam (‘the countries concerned’ or
‘the exporting
countries’). This Regulation entered into force on 7
April 2006.

It is recalled that the investigation of dumping covered
the period from 1 April 2004 to 31 March 2005 (‘inves-
tigation period’ or ‘IP’) and that 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’).

(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 L 98, 6.4.2006, p. 3.

from the

Following the imposition of a provisional anti-dumping
duty on imports of certain footwear with uppers of
leather
all parties
received a disclosure of the facts and considerations on
which the provisional Regulation was based. All parties
were granted a period within which they could make
representations in relation to these disclosures.

concerned,

countries

Some interested parties submitted comments in writing.
Those parties who so requested were also granted an
opportunity
to be heard orally. The Commission
continued to seek and verify all information it deemed
necessary for its definitive findings.

the

and

services

further disclosed all

anti-dumping measures

The Commission's
the
essential facts and considerations on the basis of which
it was intended to recommend the imposition of defi-
nitive
definitive
collection of amounts secured by way of the provisional
duty. The interested parties were also granted a period
within which
representations
subsequent
to this disclosure. The oral and written
comments submitted by the parties were considered
been
and, where
modified
additional
disclosure was provided with regard to a change in the
envisaged form of measures.

findings have
an

could make

Furthermore,

appropriate,

accordingly.

they

the

Various interested parties reiterated their claim that by
not disclosing the name of the complainants, their right
of defence was not preserved. This issue was already
raised previously (see recital 8 of the provisional Regu-
lation). The matter was reviewed at definitive stage and
the following is to be noted: the production volume of
complainants, broken down by countries, was
the
disclosed to those interested parties that made claims
regarding standing. Therefore it is considered that their
right of defence was adequately preserved. This infor-
mation was
for
inspection to all interested parties.

subsequently

also made

available

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Official Journal of the European Union

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B. PRODUCT CONCERNED AND LIKE PRODUCT

although this was subject to further investigation and
consideration at the definitive stage.

1. PRODUCT CONCERNED

(7)

It is recalled that, as set out in recital 10 of the provi-
sional Regulation,
this
the product
proceeding, is footwear with uppers of leather or compo-
sition leather originating in the PRC and in Vietnam,
other than:

concerned by

(i)

— sports footwear within the meaning of subheading
note 1 to Chapter 64 of the combined nomenclature,
i.e.
footwear which is designed for a sporting
activity and has, or has provision for the attachment
of, spikes, sprigs, stops, clips, bars or the like, and (ii)
skating boots,
ski
footwear, snowboard boots, wrestling boots, boxing
boots and cycling shoes,

and cross-country

ski-boots

(10)

The interested parties were invited to comment on those
specific issues. Given the comments they provided with
respect to the above, and further requests for exclusion of
other specific types of footwear, those claims have been
analysed in detail below.

1.1. Special technology athletic footwear (‘STAF’)

(11)

It is recalled that STAF, as defined under recital 13 of the
provisional Regulation was excluded from the definition
of the product concerned.

— slippers and other indoor footwear (falling within CN
codes 6403 59 50, 6403 99 50 and ex 6405 10 00),

(12)

This exclusion was based on the fact that such type
footwear has different basic physical and technical
of
characteristics,
is sold via different sales channels, and
has a different end use and consumer perception.

codes:

a protective

— footwear with a protective toecap, i.e. footwear incor-
toecap with an impact
porating
least 100 joules (1)
(falling within
resistance of at
ex 6403 51 11,
ex 6403 30 00,
CN
ex 6403 51 91,
ex 6403 51 19,
ex 6403 51 15,
ex 6403 59 11,
ex 6403 51 99,
ex 6403 51 95,
ex 6403 59 39,
ex 6403 59 35,
ex 6403 59 31,
ex 6403 59 99,
ex 6403 59 95,
ex 6403 59 91,
ex 6403 91 16,
ex 6403 91 13,
ex 6403 91 11,
ex 6403 91 93,
ex 6403 91 91,
ex 6403 91 18,
ex 6403 99 11,
ex 6403 91 98,
ex 6403 91 96,
ex 6403 99 36,
ex 6403 99 33,
ex 6403 99 31,
ex 6403 99 38,
ex 6403 99 93,
ex 6403 99 91,
ex 6403 99 96, ex 6403 99 98 and ex 6405 10 00).

(13)

(14)

(8)

the elements set out

in
In addition, on the basis of
recitals 12 to 27 of the provisional Regulation,
it was
provisionally concluded that certain high tech sports
footwear,
i.e. Special Technology Athletic Footwear
(‘STAF’), should be excluded from this definition.

(9)

Furthermore,
it was decided to provisionally treat chil-
dren's shoes as forming part of the product concerned,

(15)

(1) The impact resistance shall be measured according to European

Norms EN345 or EN346.

the

sales

same

industry

footwear

contested

footwear has

The Community
the
exclusion of STAF from the product scope claiming
STAF
and
consumer perception as the product under investigation.
Furthermore, in case STAF footwear should nevertheless
be excluded from the product scope of the investigation,
it was stressed that the minimum STAF value of EUR 9
in the current TARIC definition should be brought to a
higher level, taking into account the devaluation of the
dollar vis-à-vis the Euro, which occurred over the years.

channels

regards

In reply to these submissions, it is first of all noted that
the Community industry did not contest that STAF have
different basic physical and technical characteristics.
sales channels, use, consumer
Secondly, as
perception and import trends, the Community footwear
industry
substantiated
arguments that could change the findings in recitals 15
to 18 of the provisional Regulation. Furthermore, the
claim for an increase of the EUR 9,00 threshold was
not further substantiated by any evidence.

did not

forward

any

put

Several importers requested to lower the minimum value
of STAF from EUR 9,00 to EUR 7,50 essentially due to
changed circumstances
reducing
production processes.

in terms of

cost

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(16)

These submissions have been analysed with care as well.
It is recalled that the EUR 9 threshold was established in
the TARIC nomenclature in 1994, when STAF was
introduced in the framework of the quota on footwear
i.e. 12 years ago. Furthermore,
originating from China,
the importers sufficiently substantiated with evidence that
led to both a
new production technologies have
significant
and a
reduction of waste in material and energy. Combined
with higher competition due to an increased offer of
STAF production, another price lowering factor,
this
has indeed impact on price levels as compared to the
situation 12 years ago, which cannot be disregarded. A
moderate reduction of the STAF threshold of EUR 1,5 is
those
considered reasonable and necessary to reflect
changes.

reduction per

STAF unit

cost

(17) Moreover, various exporters claimed that the STAF defi-
nition should be broadened by including all footwear
with uppers of leather and with Ethylene-Vinyl Acetate
(EVA) soles and/or direct moulding within its scope.

(18) However,

in reply to these submissions,

it should be
underlined that the use of the EVA moulding technique
as such did not clearly distinguish the end product from
the product concerned. Moreover, it was explained that
the moulding technique, as applied to EVA soles, could
also be used for footwear that were clearly not STAF.
In addition, no evidence was provided showing that
the distinction based on different physical and technical
characteristics, different sales channels, use and consumer
trends would not be
perception and different
appropriate. Finally, the definitions of EVA as proposed
by various importers were clearly in contradiction with
each other. Therefore, this proposal regarding the defi-
nition of STAF was rejected.

import

(19)

(20)

In conclusion, the exclusion of STAF from the definition
of the product concerned in the provisional Regulation is
confirmed. Furthermore, the minimum value for STAF
should be lowered from EUR 9,00 to EUR 7,50. In the
absence of further comments, the findings of the provi-
sional Regulation on STAF as set out in recitals 13 to 19
of the provisional Regulation are hereby confirmed. STAF
of not less than EUR 7,5 is therefore definitively excluded
from the proceeding.

1.2. Children footwear

Children's footwear, i.e. footwear with insoles of a length
of less than 24 cm, and with a sole and heel combined
having a height of 3 cm or less falling within the CN
6403 51 11,
codes:

ex 6403 30 00,

ex 6403 20 00,

6403 99 31,

6403 51 91, 6403 59 31, 6403 59 91, 6403 91 11,
6403 99 91
6403 91 91,
and
to provisional anti-
ex 6405 10 00 was not
dumping measures, because provisional
findings were
not such as to warrant such measures on Community
interest grounds.

subject

(21)

(22)

In recitals 28 to 31 of the provisional Regulation, no
definitive conclusion whether or not to include children's
shoes in the definition of the product concerned had
been drawn yet. Although some
arguments were
considered to possibly exclude children's footwear from
the product scope of the investigation, these arguments
did not allow a definitive conclusion at that stage of the
investigation. It was therefore decided to treat children
shoes as part of the product concerned pending further
investigation and consideration at the definitive stage.

Following disclosure of the provisional findings, certain
interested parties claimed that children's footwear should
be excluded from the product scope of the investigation.
These claims were based on the assumption that
in
particular style, design, sales channels and customer
service, as addressed in recitals 30 and 31 of the provi-
sional Regulation, clearly divided children's shoes from
other types of footwear falling within the scope of the
current investigation.

(23) However,

those claims were deemed insufficient

to
exclude children's footwear from the definition of the
product concerned because they were not substantiated
with sufficient evidence showing that in this investigation
a clear dividing line could be drawn between children's
footwear and other footwear types within the scope of
the investigation. In fact, to the contrary it was found
that the essential physical and technical characteristics of
children's footwear which were common to those of the
product concerned — a combination of leather uppers
with different types of soles to protect the feet — were
much more important than any differences (i.e. essen-
tially size). Furthermore, it appeared that styling, design,
sales channels and consumer service were not funda-
mentally different from other footwear types under inves-
tigation. Just the mere fact that children's footwear form
a distinctive product sub-group within the scope of the
product concerned does not warrant the exclusion from
the product scope. Indeed, it was found that there is no
clear dividing line between children's footwear and the
there is rather a large
that
product concerned, but
definition of
overlap
product
the
the
concerned, notably that
is a device to cover and
it
protect the feet of human beings essentially for walking
purposes.

regarding

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(24)

In its reaction to the disclosure of the provisional Regu-
lation, the Community industry claimed that children's
footwear should be part of the product concerned. In
there
particular, evidence was submitted proving that
children's
was
footwear in the Community.

an important

production

still

of

as

regards

their use
it was also found that

and consumer
Furthermore,
there is a large
perception,
footwear covered by the
overlap with other types of
product definition. Accordingly,
is considered that
‘hiking shoes’ should remain within the scope of the
investigation.

it

(25)

submission of

The
the Community industry only
confirms the definitive findings. It is therefore definitively
concluded that children footwear should be included in
the definition of the product concerned.

1.3. Other requests for exclusions

(26)

Several interested parties claimed that certain other types
of footwear within these CN codes were too different, in
particular in terms of use, to belong to the same category
of products. These claims are analysed below.

(ii) Footwear with mechano-therapeutic applications

(29) One importer requested the exclusion of certain footwear
with mechano-therapeutic applications. Although the
product currently falls within CN code 6403 99 93,
6403 99 96 and 6403 99 98,
it was claimed that this
type of footwear should be excluded from the scope of
the proceeding, because it has allegedly different physical
and chemical characteristics, different sales channels and
different consumer perception as a certified medical
product, authorised to be sold as medical devices for
mechano-therapeutic applications.

(i) ‘Hiking’, ‘climbing’ and other outdoor shoes

(30)

(27) Within the meaning of

shoes

‘climbing’ and other outdoor

the Combined nomenclature,
‘hiking’,
(‘hiking
shoes’) are not considered as a sporting activity and
therefore these shoe types fall outside the definition of
STAF footwear as defined in recital 13 of the provisional
Regulation. However, certain parties requested that this
product be excluded from the scope of the proceeding
because (i) the requirements for such hiking shoes are
allegedly very similar to STAF specifications, (ii) hiking
shoes can allegedly be clearly distinguished from other
footwear types in terms of sales channels and consumer
perception and (iii) paying more duties on hiking
footwear would have allegedly a detrimental effect on
this specific market.

specific characteristics,
type of

(28) No additional evidence concerning specific technicalities
and characteristics of hiking shoes was submitted to
change the conclusion of recital 34 of the provisional
Regulation which states that, although various types of
footwear, e.g. hiking footwear, may indeed have some
the basic
additional different
characteristics of also this
remain
it was found that ‘hiking’ shoes
identical. Furthermore,
are widely produced in the Community and that a clear
dividing line between the imported ‘hiking shoes’ and
Community production could not be drawn. This was
also confirmed by the decision to include the same
type of
regarding
in the product
Council Regulation (EC) No 2155/97 (1). Although
hiking shoes may sometimes have specific characteristics,
they share the same basic physical and technical charac-
teristics of other footwear covered by the product scope.

footwear

footwear

scope

(1) OJ L 298, 1.11.1997, p. 1.

It was found that
footwear should be
this type of
considered as part of the product concerned. Although
this product has a distinctive technology and application
which might be applied for medical purposes,
these
specific features do not clearly and structurally differ
from the product concerned. This is underlined by the
footwear is also purchased by
fact
consumers who purchase
convenience,
their
rather
reasons, which was
even acknowledged in the claim as submitted by the
importer.

than for specific medical

this type of

that

for

it

(31)

For the above reasons it is considered that the claim to
exclude footwear with mechano-therapeutic applications
should be rejected.

(iii) EVA beach sandals

(32)

EVA beach sandals (‘EBS’) are shoes the upper of which is
limited to a strip of leather material, this upper being
attached to both sides of a thick lightweight sole, made
of a combination of EVA and other materials. Certain
interested parties claimed that such a product should
be excluded from the scope of the present investigation
since they allegedly have very specific and distinctive
basic physical and technical characteristics that make
them easy to recognise as beach sandals and, hence,
have a different end use and consumer perception than
other types of footwear covered by the product defi-
nition. Furthermore,
it was alleged that the technology
applying to EBS had been completely moved out of
Europe.

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(33)

In this respect it was found that, while EBS indeed have
some specific characteristics, they share the same basic
physical and technical characteristics of other footwear
covered by the product scope. Furthermore, as regards
their use and consumer perception, it was also found that
there is a large overlap with other types of footwear
covered by the product definition, e.g.
thongs and
clogs. Moreover, sales channels, marketing, fashion etc.
were found to be the same as for other types of footwear
the
covered by the product definition.
Community industry submitted evidence showing there
is still a significant production of EBS in the EC. Conse-
quently,
it is considered that this claim for exclusion
should be rejected.

In addition,

(iv) Pigskin leather shoes

(34) One interested party claimed that footwear with pigskin
leather uppers should be excluded from the scope of the
investigation because of
and price
differences and an alleged lack of EC production with
such kind of uppers.

alleged quality

(38)

(39)

(35) However, a clear distinction between the imported
pigskin leather
footwear and Community production
could not be made, as both show the same basic
use.
physical
Furthermore, the sales channels proved to be generally
that
the same which was also reflected in the fact
consumers do not perceive pigskin leather
shoes
differently. The claim was therefore rejected.

characteristics

technical

and

and

competition with EC production of the product under
investigation. Therefore, this claim was rejected.

(vi) Non STAF sports footwear

Certain interested parties claimed that all types of sports
footwear, thus not only STAF and sports footwear within
the meaning of subheading note 1 to Chapter 64 of the
Combined Nomenclature, should be excluded from the
proceeding. These allegations are based on the same
claims made for the exclusion of STAF and the alleged
shortage of certain non-STAF footwear on the EC market
footwear not be excluded. The
should these types of
latter
substantiated with concrete
evidence. Therefore, no new compelling information
was submitted to change the conclusion in recital 27
of the provisional Regulation regarding the remaining
types of non-STAF footwear. The claim was therefore
rejected.

claim was not

1.4. Conclusion

Consequently, the provisional conclusions, modified as
set out under B. 1.1. above, are therefore definitively
confirmed. For the purposes of this proceeding and in
is
accordance with consistent Community practice,
the product
therefore considered that all
concerned should be regarded as forming one single
product.

types of

it

(v) Patented technology footwear

(36) One interested party claimed that certain patented tech-
nology footwear should be excluded from the scope of
the investigation, i.e. a technology consisting of a special
shock absorbing heel, a cushioning mid-sole and a
special technology that increased the flexibility of this
type of footwear.

this type of

(37) However, when comparing this footwear type with the
product concerned, a clear dividing line could not be
drawn with regard to the basic physical and technical
characteristics and uses of
footwear and
the product concerned. While it is acknowledged that a
patented technology may
to increasing
comfort it does not by itself substantially change the
characteristics of being footwear
for ordinary usage.
Moreover, the fact that certain technology is patented
is as such not a reason to justify its exclusion from the
product scope. Hence, even though it is acknowledged
that this product may have special features, it remains in

contribute

2. LIKE PRODUCT

(40)

Since no comments were received regarding the like
product, the contents and provisional conclusions are
hereby confirmed.

(41)

concerned and all

In view of the above, it is definitively concluded that, in
accordance with Article 1(4) of the basic Regulation, the
product
corresponding types of
footwear with uppers of leather produced and sold in
the in the analogue country Brazil, as well as those
produced and sold by the Community industry on the
Community market are alike.

C. SAMPLING

1. SAMPLING FOR EXPORTING PRODUCERS IN THE PRC

AND VIETNAM

(42)

Some parties argued that the samples were not represen-
tative given the exclusion of STAF and children's shoes.

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(43) As mentioned in recital 61 of the provisional Regulation,
the exclusion of the STAF products did not influence
the sample. As
significantly the representativeness of
regard children's shoes,
in
is irrelevant
the argument
view of the decision to keep these types of shoes in
the scope of the investigation.

have been sought with the authorities of Hong Kong and
Taiwan, given that Chinese producers are largely owned
by shareholders in these countries. Therefore, parties in
these
the
proceeding.

countries were

concerned by

allegedly

(44)

it was established that

Comments were made with regard to the sample
percentages as established in the context of provisional
measures. These comments were taken into account.
Including children's shoes,
the
companies selected in the samples accounted respectively
for more than 12 % and more than 15 % of the export
quantities to the Community of the Chinese and Viet-
namese cooperating exporting producers of the product
concerned. Consequently, the sample is clearly represen-
tative. Reference is also made to the arguments set out in
recital 56 below.

(49)

This argument had to be rejected. It is the consistent
practice of the Community to seek agreement with the
the exporting country and/or the asso-
authorities of
in anti-dumping proceedings
ciations of producers
in accordance
where sampling techniques are applied,
with Article 17(2) of the basic Regulation. Moreover, in
the present case the State authorities of the countries
concerned were in close contact with the associations
of producers of
the countries. Exporting countries in
the current proceedings are the PRC and Vietnam.
Therefore,
these authorities on the
sample compositions was indeed sought and obtained.

the agreement of

(45)

It was also claimed that the selection of the samples was
inconsistent with the WTO Anti-dumping Agreement
(‘ADA’), since certain major exporters were chosen at
the companies with smaller or non
the expense of
existent EC sales, but relatively large domestic sales.

(46) As already explained in recital 60 of

the provisional
Regulation, the methodology applied intended to ensure
the highest possible representativeness of
the samples
and to include within the largest representative volume
of exports that could reasonably be investigated within
the time available, some companies with representative
domestic sales. This should allow a calculation of normal
value on this basis in case some sampled exporting
Economy
producers would
(‘MET’). The samples were not selected in
Treatment
contradiction with the WTO rules nor with Article 17
of the basic Regulation according to which the sample
must be either a statistically valid one or must include
the largest representative volume of production, sales or
exports which can reasonably be investigated within the
time available. Therefore,
the above mentioned rules
allow the use of sales, domestic and/or for export, as a
selection criterion.

for Market

qualify

(47) Moreover, it is recalled that as explained in recitals 57
and 58 of the provisional Regulation, the authorities of
the countries concerned gave their full agreement to the
samples chosen.

(50) One non-sampled Vietnamese exporting producer re-
iterated its comments that since it had duly completed
an anti-dumping questionnaire it should have benefited
from individual examination. Nevertheless, the fact that a
non-sampled party submits
an anti-dumping ques-
tionnaire reply does not automatically lead to individual
Indeed, as it has been explained under
examination.
recital 64 of the provisional Regulation, in view of the
unprecedented size of
the Commission
individual examination of additional
concluded that
exporting
unduly
have
burdensome and would have prevented completion of
the investigation in good time.

producers would

the samples

been

(51)

Finally, parties claimed that the selection of representative
domestic sales in the sample is inappropriate since none
of the exporters qualified for MET. This argument was
however deemed irrelevant since the decision on MET is
taken subsequently to the selection of the sample.

(52)

The claim was therefore rejected and in the absence of
any further comments on this issue, it is concluded that
the samples were representative.

(48)

Some interested parties also claimed that agreement on
the composition of the sample for the PRC should rather

(53)

Various interested parties claimed a breach of the Article
17 of the basic Regulation, alleging that the sample of
Community producers is not representative. This claim is

2. SAMPLING FOR COMMUNITY PRODUCERS

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based on the fact that only ten companies were selected
in the sample, and that those companies merely represent
the
10 % of
the overall production volume of
complainants, and only a minor proportion of
the
overall Community production — i.e. less than 5 % —
given that the complainants in this case represent slightly
more than 40 % of the overall Community production.
Moreover it is claimed that certain trends observed for
the sampled Community producers are not similar to
those observed for the overall complainants, and that
the sample would thus not be representative.

not have had a significant impact on the proportion of
the sample as compared to the overall Community
production. In this context it is further noted, contrary
to the allegation made by some parties, that there is no
legal obligation to include small and medium sized enter-
prises as defined by the relevant EC law in the sample as
follows from the wording of Article 17(1) of the basic
Regulation.

(54) An association of importers also claimed that the sample
of Community producers is not statistically valid, and
of
that
Community producers were subject to verification visits.

consequently

proportion

negligible

a

(58) As explained above, the choice of the sample should be
either
statistically valid or based on representative
volume. Since this second method was chosen in this
case, the claim that the sample is not statistically valid
was rejected. Likewise, the fact that allegedly some trends
observed for the sampled Community producers were
overall
similar
not
complainants
of
Community producers were subject to verification visits
do not constitute legally valid arguments to put
the
validity of the sample into question.

the
proportion

those
that

to
and

observed

small

for

a

(55)

In this respect, it is recalled that Article 17 of the basic
Regulation sets out that investigations may be limited to
samples which are either statistically valid, or which
constitute
of
production, sales, or exports which can be reasonably
investigated.

representative

volume

largest

the

(59)

For the reasons explained above, the claims made by the
various parties were rejected and the legal validity of the
sample is hereby confirmed since the sample is represen-
tative and was selected in full compliance with Article 17
of the basic Regulation.

(56)

It is clear from the wording of this provision that there is
no quantitative indication or
to what
constitutes the level of the representative volume. The
only indication is that such volume should be limited
to what can reasonably be investigated within the time
available.

threshold as

(60)

(57) Due to the specific circumstances of the case, i.e. given
that the Community industry is highly fragmented, it is
unavoidable that the companies in the sample cover a
relatively small portion of
the overall Community
production. As explained in recital 65 of the provisional
Regulation the Commission selected a sample based
primarily on the size in terms of production volume,
but also took into account the geographical location of
producers in order to ensure that the sample be repre-
sentative in that
respect. The number of companies
selected in the sample had however to be limited to
what could be reasonably investigated within the time
available, i.e. 10 companies in this case. Given the high
degree of fragmentation of the industry, and given that
the larger producers were selected in the sample, further
increasing the number of companies would in any event

D. DUMPING

1. MARKET ECONOMY TREATMENT (‘MET’)

1.1. General remark

to be

considered not

Certain interested parties claimed that the Commission
failed to disclose on an individual basis for each of the
non-sampled Chinese and Vietnamese exporters, why
entitled to MET.
they are
According to their claim, which they reiterated upon
the Commission is obliged to
definitive disclosure,
to
make
individual
submitted MET
an
exporter is sampled or not. They considered that the
methodology
non-sampled
companies from their right to an individual assessment
and constitutes a violation of Article 2(7)(b) and 2(7)(c)
of the basic Regulation.

regard
irrespectively whether

determinations with
claims

deprives

applied

the

(61) However, it is considered that the existing provision on
sampling (Article 17 of
fully
encompasses the situation of companies claiming MET.
Indeed, whether it be in market economy countries or in
economies in transition, exporters are by the nature of
the sampling exercise denied individual assessment and

the basic Regulation),

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to

to

apply

includes

the high number of
a high number of

the conclusions reached for the sample are extended to
them. Article 17 of
the basic Regulation sets out a
general method to deal with situations where an indi-
vidual examination is no longer possible due to the
high number of companies involved i.e. the use of a
representative sample. There is no reason why the
sampling method could not equally be applied to the
companies
situation where
involved
companies
requesting MET/IT. Like in any other sampling case, a
weighted average of all sampled companies is established,
regardless of the methodology applied for the dumping
calculation in respect of each company as a result of the
MET/IT assessment. MET/IT should thus not prevent the
application of normal sampling techniques. The key
rationale of sampling is to balance administrative neces-
sities to allow a case assessment in due time and within
the margin of mandatory deadlines, with an indivi-
it
dualised analysis to the best extent possible. Finally,
is recalled that the number of requests for MET in this
case was so substantial that an individual examination of
the requests — as sometimes done in other cases — was
administratively impossible. Therefore, it was considered
all non-sampled
equally
reasonable
companies the weighted average margin resulting from
all the companies in the sample with no distinction being
made between companies obtaining MET/IT or not. It has
also been alleged that the dumping calculation was insuf-
ficiently reliable because sampling of MET claims had
been used. This claim has to be rejected. First of all,
there was no sampling of MET claims but sampling of
exporting producers.
the provisions on
Secondly,
sampling are designed to ensure a sufficiently reliable
determination as to whether or not there is dumping
in a case of a large number of exporting producers.
Thirdly,
in cases where exporting producers have also
submitted MET claims there is no reason to conclude
sampling
that
technique would lead to an insufficiently reliable deter-
mination. Indeed,
it runs counter the very concept of
sampling to argue that because of the fact that (non-
sampled) exporters should be classified as either MET
or non-MET, a sample of such a population would per
se be unrepresentative. As in any other anti-dumping
investigation,
the individual situation of exporters is
never identical. Important differences can exist between
producers and sampling can nevertheless be applied.
Fourthly, the classification of a company as being non-
MET means only that the normal value cannot be esta-
blished on the basis of the company's own data but that
a viable alternative has to be used. However, to resort to
viable alternatives has also to be done in other important
areas of the dumping determination, see e.g. Article 2(1)
and Article 2(6) of
the
representativity of the sample is further underlined by
the
exporting
countries themselves have proposed the vast majority
of
In other
words, they themselves have considered these samples
as
their exporting
producers.

the companies chosen in the sample.

the basic Regulation. Fifthly,

representative for

governments of

the totality of

the use of

routinely

applied

that

fact

the

the

the

MET assessments in previous cases where the number of
In such cases,
exporting producers was high.
e.g.
‘polyester apparel
filaments’
(Council Regulation (EC)
No 1487/2005 of 12 September 2005) (1),
individual
the
MET assessments had been made although for
purpose of the dumping assessment sampling techniques
in accordance with Article 17 of the basic Regulation had
been used.

(63)

(64)

(65)

In that regard, however, it is recalled that in the above
mentioned case an individual examination of the MET
requests was found to be still feasible, while this was
not the case in this investigation. Moreover, it is noted
that in the above mentioned case, in accordance with the
rules on sampling, companies not selected in the sample
but awarded MET were given the weighted average
margin of companies with MET in the sample, i.e. they
were not granted any individual margin but they were
granted a weighted average margin found for companies
with MET.

In previous cases where sampling was used and MET was
claimed by cooperating exporters, the numbers involved
were such as to allow for an individual examination for
each claim. In view of the unprecedented number of MET
requests received it was not possible to assess each claim
individually. Other exporters, outside and inside the
sample, re-iterated that they should have been granted
MET. To support their claims, some of them submitted
their Articles of Associations (AoA) in order to demon-
strate that their case was not different from Golden Step,
the only company that was awarded MET.

In this respect it is noted that the sampling provisions of
Article 17 of the basic Regulation were applied in this
proceeding. Subsequent
submissions of non-sampled
exporting producers were not examined as, in accordance
with Article 17(3) of the basic Regulation, this would
have been unduly burdensome
and would have
prevented completion of the investigation in good time.
As regards subsequent claims of sampled companies
these are dealt in the relevant paragraphs below dealing
with specific points relating to each of the two countries
concerned by this proceeding.

(66)

the exporting producers argued that

Some of
the
Commission did not make an assessment on MET
within three months after the proceeding was initiated,
as provided by Article 2(7)(c) last subparagraph of the
basic Regulation.

(62)

Some exporting producers from the PRC and Vietnam
still argued that the Commission did make individual

(1) OJ L 240, 16.9.2005, p. 1.

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L 275/9

the

(67) Although the MET assessment was made later than three
months after
exporting
initiation of
producers in the sample were provided with separate
disclosures on their MET status and given full right of
defence. Certainly, parties are not negatively affected by
any MET determination made before the imposition of
provisional measures.

case,

the

It should firstly be noted that

the MET
proceedings.
analysis is made case by case on the basis of the facts
submitted and no such alleged contradiction to other
facts
recent MET analyses with a comparable set of
the
exists. On the contrary,
exporting producer submitted in due time a changed
version of
sales
its AoA which did not
restrictions and it demonstrated that
it was de facto
not subject to such sales restrictions.

in the case referred to,

include

(68)

(69)

Some of the exporting producers which already requested
individual examination reiterated their request. However,
for the reason explained in recital 64 of the provisional
Regulation, no individual
exporting
producers in the PRC nor Vietnam could be granted.

examination of

Consequently, as explained in recitals 53 to 63 of the
provisional Regulation, in view of the large number of
exporting producers in the PRC and in Vietnam which
cooperated, a representative sample was used to establish
the duty to be applied to the cooperating exporters not
selected in the sample like in all anti-dumping cases.

1.2. MET determination regarding exporting

producers in the PRC

(70)

Following the imposition of provisional measures, the 12
Chinese exporting producers selected in the sample and
they should have been
verified on-spot claimed that
granted MET and reiterated the arguments they had
previously submitted.

It

also claimed upon provisional disclosure
to the examination of

(71) One out of these 12 companies, namely Golden Step
(‘GS’)
a
substantial change further
its
is recalled that
MET claim and provided evidence.
GS's MET claim was rejected because it failed to meet
criterion 1 of Article 2(7)(c) of the basic Regulation. In
particular, the rejection was based on the existence of an
export obligation that entailed that GS was not free to
determine its sales quantities without significant State
interference. However, upon disclosure of
the MET
findings, GS submitted, within the binding deadlines to
provide disclosure comments, evidence demonstrating
that it is de facto and de jure not subject to an export
sales obligation.

(74) Other parties claimed that

the rejection of MET to
Chinese shoe exporters was not
in compliance with
WTO rules, notably because exports from China are no
longer subject to a state monopoly, as required by the
second supplementary provision to Article VI paragraph
1 of Annex 1 to GATT 1994 as a condition for
contracting parties to deviate from determining normal
value on the basis of normal value data stemming from
the export countries.

the PRC,

among other
a

(75) When the above mentioned supplementary note was
countries, was
introduced,
indeed considered to have
state monopoly on
exports. Since then consideration has been given to the
economic reforms in China which have led to a different
in trade defence proceedings.
treatment of China
Presently, Section 15 of China's Accession Protocol to
the WTO makes specific provisions as to how Chinese
exports should be treated in trade defence proceedings.
The provisions laid down therein indeed allow WTO
members to use ‘a methodology that is not based on a
strict comparison with domestic prices or costs in China
… if the producers under investigation cannot clearly
show that market economy conditions prevail
in the
industry producing the like product with regard to manu-
facture, production and sale of that product’.

(76)

In the case of the other 11 companies part of the sample,
it is noted that no new reasons were submitted in due
time that would have been apt to alter the decision to
reject MET to them.

(72) Duly considering the changed circumstances in case of
GS and the fact that the rejection of MET had only been
based on GS failing criterion 1, it was decided to review
the original decision and to award MET to GS.

(77)

(73)

Some producers concerned by the MET rejection argued
that the reference to sales restrictions in AoA did not
anti-dumping
lead to the MET rejection in other

it

is

in particular noted that

the
In this context
submission of changed AoA, no longer containing sales
restrictions, of two sampled Chinese exporting producers
only subsequent to definitive disclosure was made too
late to be taken into consideration, since at that time
insufficient time remained for verification in accordance
with Article 16(1) of the basic Regulation. In any event,
however, the companies concerned failed to meet the
MET standard not
restrictions
(criterion 1).

just because of

sales

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(78)

(79)

(80)

(81)

The other comments of these companies were already
addressed in recitals 69 to 77 of the provisional Regu-
and conclusion
lation. Consequently,
contained therein are hereby
confirmed and the
decision to reject MET to the 11 companies is main-
tained.

findings

the

1.3. MET determination regarding exporting

producers in Vietnam

Following the imposition of provisional measures, seven
of the Vietnamese exporting producers selected in the
sample claimed that
they should have been granted
MET and reiterated the arguments they had previously
submitted without providing sufficient new evidences.
These comments were already addressed in recitals 78
to 90 of the provisional Regulation. Consequently, the
findings set out in the aforesaid recitals of the provisional
Regulation are hereby confirmed and the decision to
reject MET to the eight companies is maintained.

Two sampled Vietnamese exporting producers claimed
that
they should have been granted MET since the
reasons used in order to grant MET to GS applied to
them. According to their understanding they were not
granted MET because of (i) the sales restrictions in the
business license (‘BL’) and the AoA and (ii) the existence
of a contract between a related firm and a 100 % State-
owned firm. The companies submitted that such circum-
stances applied also to the Chinese exporting producer
GS and therefore the determination with regard to them
should have been identical to that of GS.

It should be noted that, according to the explanations
given in recitals 78 to 90 of the provisional Regulation,
the two Vietnamese firms were not granted MET because
they did not fulfil criteria 1, 2 and 3 of Article 2(7)(c) of
the basic Regulation. In this respect it is noted that these
two firms hold investment licenses which imposed quan-
titative sales restrictions. These restrictions were not
removed either during the IP or thereafter. Furthermore,
as it is explained under recital 89 of the provisional
Regulation, the two companies did not provide an MET
claim form for one of their related producers in Vietnam.
It was therefore not possible to establish that the group
as a whole fulfils all the conditions for MET. The fact that
this related firm had a processing contract agreement
with a State-owned company was not used in the MET
in a
determination since the Commission was not
position to conclude on a non-submitted MET claim
form. It is therefore concluded that the actual situation
referring to these two Vietnamese exporting producers
has no similarity with GS. Hence the arguments put
forward had to be rejected.

2.

INDIVIDUAL TREATMENT (‘IT’)

2.1. IT regarding exporting producers in the PRC

(82)

the Chinese exporting producers

Following the imposition of provisional measures, some
of
selected in the
sample claimed that they should have been granted IT
and reiterated the
they had previously
arguments
submitted, without providing any new evidence in due
time. In this context it is in particular noted that the
submission of changed AoA, no longer containing sales
restrictions, of two sampled Chinese exporting producers
was only made subsequent to definitive disclosure. This
was too late to be duly verified in accordance with
Article 16(1) of the basic Regulation.

(83)

Consequently, for reasons already stated in recital 94 of
the provisional Regulation,
these claims had to be
rejected.

to grant

(84) Other Chinese exporting producers claimed that

the
IT to Chinese exporting producers
refusal
constituted a violation of Section 15 of
the China-
WTO Accession Protocol and respectively of Article
6(10) of the ADA.

(85)

This had to be rejected. First of all the ADA is not
directly applicable in the Community. Secondly, Article
6(10) ADA only sets out the general rule of exporters
being allotted individual margins. However, where non-
market economy conditions apply, derogations from the
general rule are equally provided by WTO law, e.g. by
the
second supplementary provision to Article VI
paragraph 1 of Annex 1 to GATT 1994. The situation
of Chinese exporters is indeed more specifically addressed
by the China-WTO Accession Protocol. However, no
to exporting
obligation to allot
producers can be derived from Section 15 of
that
Protocol.

individual margins

(86)

For the same considerations, parties claimed that Article
9(5) of the basic Regulation, setting out the rules on
individual treatment is in conflict with WTO Law.

(87)

This had to be rejected, not only because WTO rules are
not directly applicable in the Community but also
because they do not preclude the two step methodology
of (i) MET and (ii) IT.

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(88)

Four Chinese exporters reiterated their claims on indi-
vidual examination, as referred to in recital 7 of the
provisional Regulation.
It was argued that where a
sample of 12 Chinese companies could be investigated
it should be practicable to investigate four more.

(89) However, for the reasons already stated in recital 64 of

the provisional Regulation, these claims were rejected.

the

(90) Another exporting producer came forward to request IT
imposition of provisional measures. That
after
producer had started operation after the end of
the
original IP. For the same reason as aforementioned, an
individual assessment of the merits of this company's
claim could not be made. Moreover, it was also found
that its AoA contained an export obligation. In addition,
it benefited from tax incentives dependent on its exports
exceeding a certain proportion of its total sales. In these
circumstances, it would not have been possible, in any
event, to grant IT to this company.

that the Commission Decision to reject IT was not suffi-
ciently substantiated. However, this company is a 100 %
State-owned company and consequently the majority of
shares do not belong to private persons but to the State
which also nominates the management. In addition, this
company was found to be related to a company which
did not fulfil the requirements for MET nor IT. Given that
if different duty rates were to be applied to these two
related companies there would be a risk of circumvention
of measures and given the consistent practice to examine
whether a group of related companies as a whole fulfils
the conditions for MET or IT, it could therefore not be
established that
the
conditions for IT.

the group as a whole fulfils all

(94) Under these circumstances,

the conclusions drawn in
recital 97 of the provisional Regulation are confirmed.

(95)

The two last companies did not provide any new
evidence.

2.2. IT regarding exporting producers in Vietnam

(91)

Following the imposition of provisional measures, six of
the Vietnamese exporting producers
selected in the
sample claimed that they should have been granted IT.

(96)

Consequently, for the same reason as those explained in
the recital 97 of
it was
considered that the decision to reject IT to the eight
Vietnamese companies should be maintained.

the provisional Regulation,

(92)

investment

The companies which were not granted IT on the basis
of Article 9(5)(a) of the basic Regulation, merely rei-
terated their claim that their export quantities are freely
determined. It is recalled that their export sales quantities
were fixed in the companies investment
licenses and
could therefore not be considered as freely determined
by the companies since any deviation from the ratio
license would require
stipulated in their
beforehand a modification of this latter which would
need to be approved by the authorities. Although these
exporters claimed that the ratio is freely determined by
the company on the basis of economic considerations, it
is considered that there is no reason for an export ratio
to be
thereby
explicitly forbidding a company from selling part of its
production on the domestic market.
In such circum-
stances, the company concerned is no longer free to
decide whether at any time it prefers to sell more on
the domestic market than the quantity allowed by its
license, since it is subject to a preliminary agreement
from the authorities.

stipulated in an investment

license

(93) One of the companies which was not granted IT on the
basis of Article 9(5)(c) of the basic Regulation claimed

(97) As regards IT claims by exporting producers not part of
the sample, reference is made to the relevant paragraph
above.

3. NORMAL VALUE

3.1. Determination of

the normal value for the

exporting producer granted MET

(98)

The normal value determination for the sole exporting
producer granted MET should be based on the data it
submitted on domestic sales and cost of production.
These data were verified at
the
company concerned.

the premises of

(99) As far as the determination of normal value is concerned,
the Commission first established,
the exporting
producer in question made no domestic sales during
the investigation period. Therefore, normal value could
not be established on the basis of the relevant exporting
producer's domestic prices, as provided by Article 2(1),
subparagraph 1, of the basic Regulation. Accordingly,
another method had to be applied.

that

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(100) To that end, it was checked whether the prices of other
sellers or producers in the PRC could be used pursuant to
Article 2(1), subparagraph 2, of the basic Regulation.
However, no other exporting producer in the PRC had
been awarded MET. Therefore, the use of domestic prices
of such exporting producers was not possible.

(101) Given that no domestic prices could be used to establish
normal value, a constructed normal value had to be
calculated based on the costs of
in
question. Consequently, in accordance with Article 2(3)
of the basic Regulation, normal value was constructed by
adding to the manufacturing costs of the exported shoe
model, adjusted where necessary, a reasonable amount
for selling, general and administrative (‘SG&A’) expenses
and a reasonable margin of profit.

the producer

chosen Brazil. It is recalled that other factors such as the
competition on the Brazilian market, the difference in the
costs of production structures including the access to raw
materials and the know-how of the Brazilian producers
were analysed in the recitals 109 to 123 of the provi-
sional Regulation and led to the same conclusion. Inci-
dentally, the choice of Brazil was found to be even more
appropriate given the decision to exclude STAF from the
product scope, since contrary to the other countries
proposed by the above mentioned parties, the Brazilian
companies hardly produce STAF. As regards other factors
invoked by interested parties, such as the socio-economic
and cultural developments or the labour costs, they were
not deemed relevant for determining whether Brazil is an
in terms of
appropriate analogue country. Moreover,
economic development Brazil is not very different from
other proposed analogue countries such as Thailand and
Indonesia. The choice of Brazil was therefore not deemed
unreasonable.

(102) Since the exporting producer with MET did not perform
any domestic sales and since no other Chinese exporting
producer had been awarded MET, SG&A and profit had
to be determined on the basis of any other reasonable
method pursuant to Article 2(6)(c) of the basic Regu-
lation.

(107) Moreover, although the sole fact that the domestic sales
of the analogue country were below the minimum level
of 5 % does not necessarily signify that
that country
would be inappropriate, a figure of less than 2 % for
domestic sales in the case of the Thai and the Indonesian
companies that were proposed by some parties, never-
theless amounts to an indication that those markets are
less representative than that of Brazil.

(103) Consequently, the Commission used SG&A and profit
rates from Chinese exporting producers that recently
obtained MET in other investigations and which had
trade as
domestic sales
stipulated by Article 2(2) of the basic Regulation.

in the ordinary course of

(104) The SG&A and profit average rates found in these inves-
tigations were compounded on the cost of manufacturing
incurred by the exporting producer in question with
regard to the exported models.

3.2. Determination of the normal value established

in the analogue country

(105) Some parties argued that it was not appropriate to have
chosen Brazil as analogue country allegedly as the sole or
main reason on the basis of the representativeness of the
domestic sales, in this country compared to alternatively
suggested analogue countries.

(106) First, it should be stressed that the representativeness of
the sole reason for having

the domestic sales is not

(108)

In addition, the level of the domestic sales, although not
the sole reason for having chosen Brazil, was however
particularly relevant in this specific case given the large
number of different types of shoes which are produced in
the countries concerned and which need to be compared
to the footwear produced in the analogue country that
most closely resembles the footwear produced in the
countries concerned.

It

by

used

control

(‘PCN’)

(109) Some parties claimed that the use of closely comparable
product
ther
numbers
its preliminary determination
Commission to make
would not provide an accurate and fair comparison of
export prices with normal values.
is noted that
obviously not all PCNs sold by the exporting countries
could be matched in Brazil. In these circumstances, to
to the most closely resembling PCNs for the
resort
purpose of making a fair comparison is deemed the
most reasonable approach. In addition, adjustments (e.g.
leather quality) were made to address
children's shoes,
shoes
material differences
exported by the exporting countries and the closely
resembling types sold in Brazil. These features were
either not envisaged by the PCN scheme at the early
time of its creation or were not fully embodied in the
available data submitted by interested parties.

in features between the

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(110)

(111)

It was

It is further recalled that all sales of leather footwear by
the cooperating Brazilian producers are higher than the
total sales of producers willing to cooperate from the
India
proposed other analogue countries of Indonesia,
the
and Thailand.
range of
the products manufactured by the Brazilian
companies was likely to be larger than those manu-
factured in the other countries considered. Consequently,
the likelihood of finding Brazilian shoe types comparable
with Chinese/Vietnamese shoe types was deemed to be
more likely.

therefore considered that

the

and

company

the two Indonesian
Indeed the six Thai companies,
companies
respectively
Indian
reported total sales (i.e. domestic and exports) of less
less than 5 % of the exports
than 8 million pairs (i.e.
concerned) while the eight Brazilian companies which
cooperated reported total
than 40
million pairs, from which more than 18 million pairs
for the sole three companies whose data were used.
it is obvious that the like-
Under these circumstances,
finding models produced by the Brazilian
lihood of
companies comparable to the models
sold by the
countries concerned is higher
than with the Thai,
Indian or Indonesian companies.

sales of more

(112) One party argued that

the range of

the countries concerned. However,

the Brazilian
the
production is not as wide and diversified as
in
production of
it can be reasonably assumed that
view of the above,
the Brazilian companies which
the product range of
provided the necessary information and whose sales
(domestic and export) were found to be 6 to 13 times
larger than those reported by the Indian, Indonesian or
Thai companies, is wide and diversified.

it

the

Similarly,

comparison.

an appropriate

Brazil is more suitable because fewer adjustments will be
required than for other potential analogue countries.
is obviously not possible at an early
Furthermore,
investigation to know exactly which
stage of
to
adjustments will eventually be required in order
make
such
adjustments would probably also have been necessary,
had another country been chosen as an analogue
country. However, given the insufficient
representa-
the other countries
tiveness of
proposed and given also the likely thin range of their
production,
their
normal value would have to be constructed and that
more adjustments would have been necessary to make
Thai, Indonesian or Indian models comparable to those
produced in the countries concerned than it was the case
with the Brazilian domestic sales prices.

it can reasonably be assumed that

the domestic sales of

(115) As regards the economic development and the income
per capita, while they are normally deemed irrelevant, it
is recalled as mentioned in recital 115 of the provisional
Regulation that on the basis of the World Bank's main
criteria for classifying economies is gross national income
per capita, Brazil is classified in the same category as the
PRC, Thailand and Indonesia. Moreover, neither labour
costs concerning the sampled exporting producers in the
PRC nor in Vietnam were as such, compared to the
conditions of the sampled producers in Brazil, that this
could have warranted an adjustment. It is also noted that
in costs between the analogue
nominal differences
country and the exporting country concerned are not
as such relevant.
Indeed, as costs and prices are in
general not considered as a viable basis for determining
normal value in countries falling under Article 2(7) of the
basic Regulation, such comparison in fact defeats the
purpose of resorting to the methods set out in Article
2(7)(a) of the basic Regulation.

(113)

Interested parties also referred to an alleged contradiction
between recital 108 of the provisional Regulation which
stated that ‘Brazil appeared to be the most reasonable
choice in view of the representativeness of its domestic
sales which permitted to avoid construction of
the
normal value and possible numerous adjustments’ and
the provisional Regulation which
recital 123 of
concluded that
the
leather used by the companies selected in the sample
and the Brazilian producers ‘is not a reason to reject
Brazil as a suitable analogue country as an adjustment
for a difference in physical characteristics can be made to
take into account any difference in the quality of the
leather’.

the difference in the quality of

(116) Some parties argued that Brazil

is not an appropriate
analogue country due to the alleged subsidies given to
in the northern territories.
the footwear producers
According to these parties,
these subsidies aimed at
attracting footwear production to the northern part of
Brazil thus affecting the competitiveness of the market.

(117) First,

it should be noted that this allegation was not

supported by any evidence.

(114) However, there is no contradiction since recital 108 of
the provisional Regulation only states that the choice of

(118)

In addition, the companies used for the determination of
the normal value were not located in the Northern terri-
tories but
in the South and could therefore not be
affected by these alleged subsidies.

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(119) Finally, should these State interventions exist as described
by the exporters, that mechanism would only prevent
other companies from setting up a factory in the same
area but not to sell their product in certain parts of the
Brazilian market. The shoe market is certainly neither a
local nor a regional market but rather a national and
even worldwide market. Therefore,
that a
company may receive subsidies to set up a factory in a
remote area does not prevent competition especially on a
market of 7 000 producers. Even though costs might
eventually be affected by the alleged state subsidies,
these should in all
likelihood only have a downward
effect on sales prices which would tend to reduce
normal value and thus any dumping margins.

the fact

the provisional Regulation,

was calculated. Furthermore, as explained under recital
135 of
this weighted
average dumping margin applies to cooperating non-
sampled companies in accordance with Article 9(6) of
In addition, as cooperation was
the basic Regulation.
high the same dumping margin was applied to all
other Chinese exporting producers as well.

3.4. Comparison

(126) Some parties claimed that not all details relevant

to
the comparison of export prices had been
conduct
disclosed.
the adjustments made to the
In particular,
normal values determined on the basis of Brazilian data
had not been quantified according to these parties.

(120)

that

In addition, in view of the reasons provided for in recital
109 of the provisional Regulation and particularly the
fact
in
Brazil, the competition on the Brazilian market was not
deemed inappropriate to reject Brazil as an analogue
country.

there are more than 7 000 producers

(121) On the basis of the above and since the claim was not

further substantiated, the claim was therefore rejected.

(122)

It was therefore concluded that Brazil was an appropriate
analogue country for the purpose of establishing the
normal value as already concluded in recital 124 of the
provisional Regulation.

3.3. Export price

(123)

In the absence of any comments by interested parties the
methodology set out in recitals 128 to 130 of the provi-
sional Regulation is hereby confirmed.

(127) Having duly considered all

a

to make

comments

received by
interested parties and duly revised the files,
it was
correction to the
found appropriate
adjustments made on leather costs, as addressed in
recital 132 of the provisional Regulation. It was found
that the producers in the exporting countries, particularly
those in China, were selling leather footwear of higher
quality than Brazilian producers did on their domestic
market. The difference in the quality of shoes was essen-
tially due to a higher quality of the leather used. The
quality difference was also mirrored in the purchase
price of the leather used: the leather of the footwear
exported from China and Vietnam was more expensive
than that used in Brazil to manufacture domestically-sold
shoes. For this purpose, the value of leather inputs of
analogue country producers were compared to the
corresponding values of leather inputs used by Chinese
and Vietnamese producers that were part of the sample.
It was found that most of the leather used by Chinese
and Vietnamese producers had been imported from
market
an average
including world market prices was used to determine
the adjustment. The relevant calculation was made sepa-
rately for
two exporting countries. The value
difference of leather inputs was multiplied by the share
of leather in the total cost of production. The subsequent
adjustments upwards to the normal value amounted to
21,6 % (PRC) and 16,4 % (Vietnam).

countries. Therefore,

economy

the

(124) Some parties argued that the findings should not have
been based on export prices of companies in the samples
when calculating the country-wide dumping margin.
Findings should have rather been based on the country
wide export volume (e.g. Eurostat data).

(128) Some parties argued that it was not appropriate to make
adjustments on the leather quality where it was found
that the cost of production in the export countries was
distorted due to the fact that all but one of the exporters
in those countries had not been granted MET.

(125) This had to be rejected. It is recalled that the sampling
provisions stipulated under Article 17 of the basic Regu-
lation were
applied in this particular proceeding.
Therefore only export prices of the sampled companies
were used. For sampled companies that did not meet the
MET/IT criteria one weighted average dumping margin

(129) This had to be rejected. It is true that MET was rejected
also because state influence was found that impacted on
costs/prices. However, as noted above, it was found that
leather had been imported from market
economy
countries.

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(130) Some parties argued that

the Commission did not
disclose the exact figures on which basis the adjustment
was calculated and why the leather adjustment had to be
revised after the provisional determination.

price differences between children's and adult's shoes sold
by the Community industry. The adjustment amounts to
33,2 % on the normal value.

above.

the revision on the leather adjustment

(131) However,
is
Commission
Furthermore,
explained
disclosed to all companies concerned by this proceeding
the necessary details underlying the essential facts and
considerations on the basis of which it is intended to
recommend the imposition of definitive measures.

the

(132) Some interested parties claimed that no research and
development
should have been
adjustment
applied on the normal value, because similar amounts
of R&D were incurred by the Chinese and Vietnamese
producers.

(‘R&D’)

(133) However, it was found that R&D costs incurred by the
sampled producers from the countries concerned related
only to production R&D, whereas the Brazilian R&D
covered design and samples of new footwear models,
i.e. such type of R&D is different and therefore it is
considered necessary to keep this adjustment.

(134) One other party also claimed that an adjustment should
be made to take into account that the profit made with
(‘OEM’)
sales
generates less profit than other sales.

equipment manufacturers

to original

(135) However,

this allegation was not

supported by the
findings of the investigation in the Brazilian companies
where such difference did not exist. Moreover, any
difference between sales to OEM and own brand sales,
is already taken into account in the adjustment made to
the R&D cost difference. The claim was
allow for
therefore rejected.

(136)

It is further noted that an adjustment with regard to
the Brazilian
children's shoes was necessary. None of
producers manufactured children's
It can be
observed, e.g. by Eurostat import data, that children's
shoes are in general cheaper than adults' shoes. This
can be ascribed to the smaller size of children's shoes
raw material
and consequently smaller quantity of
required
an
adjustment was applied on the basis of the proportional

production. Consequently,

shoes.

their

for

(137) Some parties claimed that this adjustment has not been
adequately explained. Furthermore, it was stated that the
only factor justifying the price difference is the difference
in sizes and subsequently the amount of raw materials
used. Such an assumption was erroneous according to
those parties.
the
respect
adjustment made with regard to children's shoes was
fully disclosed to the parties and is set out above.
adjustment
Furthermore, parties
erroneous
alternative
method that could be used and ensure comparison of
export prices and normal values on a fair basis.

regarded this
any better

failed to provide

is noted that

In this

that

it

(138)

further comments the findings in
In the absence of
recitals 131 to 133 of the provisional Regulation are
hereby confirmed.

(139) Some parties argued that the PCN scheme did not allow
for a fair comparison. In particular, parties claimed that
the PCN scheme used was too broad and not based on
product-specific physical characteristics. According to
those parties this allegedly constituted a violation of
Article 2(4) of
It was further argued that
general adjustments (on the leather quality) did not
provide sufficient compensation for this alleged flaw.

the ADA.

(140) These arguments had to be rejected. Indeed Article 2(4)
of the ADA, as well as Article 2(10) of the basic Regu-
lation, mandates a fair comparison. However,
these
provisions do not provide any details with regard to
It is recalled that it is the long-
the design of PCNs.
standing practice of the EC to facilitate the comparability
between the product concerned and the like product by
using PCNs which subdivide the product
into type-
s/models according to certain features or technical speci-
In the present case five such elements have
fications.
footwear,
been taken into consideration,
type of consumer,
the
outer sole and lining. These elements sufficiently reflect
the essential characteristics of
the product concerned.
it is noted that no legal obligation is set
Furthermore,
neither by the basic Regulation nor by the ADA to make
use of any PCNs in anti-dumping investigations. In the
present case,
in line with the principle of a fair
comparison, one and the same PCN scheme has been
consistently used to classify models of
the product
concerned manufactured and sold by producers in the
Community,
the export countries and the analogue
country, for the sake of comparing Community prices,
export prices and normal values on a fair basis.

i.e. style of
footwear, material of

type of

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(141) Furthermore, it was found that indeed the leather quality
issue, which was not covered by the PCN scheme affected
the prices and price comparability of
the product
concerned. Leather usually makes up for 50 % or more
of a leather shoe's total cost of production. Depending
on the type, quality and quantity of leather used, the
leather cost may vary to a significant degree but the
cost differences were found to be reflected accordingly
in sales prices. For the purposes of comparing normal
value with the export prices and for the undercutting/un-
derselling calculations, an appropriate adjustment
for
differences in the physical characteristics was made in
line with Article 2(10)(a) of the basic Regulation.

(142) Other parties observed huge price differences within
certain PCNs, which in their view indicated a flaw in
the PCN scheme.

(143) The price differences could be due to various circum-
stances like market fluctuations, specific price pressure
in case of oversupply etc. and willingness to dump etc.
In any event, what matters with regard to the application
of the PCN scheme is that is consistently applied for all
parties concerned by the case. Price differences can be
due to a number of factors, such as fashion trends and
market psychology, which do not necessarily put into
question the comparability of products within the same
PCN. More importantly, the parties failed to identify any
better and yet practical methodology to facilitate the
comparability. As already noted any price differences
due to different leather qualities have been taken into
account by making appropriate adjustments. The claim
had therefore to be rejected.

(144) Other parties argued that since it was decided to exclude
STAF from the scope of
the product concerned this
footwear type should have been identified separately by
the PCN scheme.

applied

vis-à-vis

(145) When in the present case the need arose to exclude STAF
from the product concerned scope, a reasonable and
consistent methodology was
all
exporting producers to exclude their respective STAF
sales from the scope of the investigation. The intention
the product
to exclude STAF from the
concerned was communicated to all parties concerned
long before
took place.
the provisional disclosure
Neither after that communication nor upon disclosure
of the provisional findings has any exporting producer
submitted revised data which would have allowed a
better identification of its STAF sales in its transaction
listings. Under
the PCN metho-
dology used in order to exclude STAF sales is deemed
reasonable and appropriate.

these circumstances,

scope of

3.5. Dumping margins

3.5.1. General methodology

a

for

gives

(146) Some interested parties claimed that not distinguishing
between cooperating companies and non-cooperating
companies
non-cooperation.
bonus
However, as explained in recital 139 of the provisional
Regulation, the level of cooperation was high and conse-
it was
consistent with standard practice,
quently,
considered appropriate to set the dumping margin for
any non-cooperating exporting producers at the level of
the weighted average dumping margin established for
cooperating exporting producers in the sample in the
countries concerned.
In the absence of comments the
general methodology used to establish the dumping
margins as described in recitals 134 to 143 of the provi-
sional Regulation is hereby confirmed.

3.5.2. Dumping margins

(a) P e o p l e ' s R e p u b l i c o f C h i n a

— the dumping margin for GS is 9,7 %, expressed as a
percentage of the CIF import price at the Community
border;

— the

definitive

dumping margin,
expressed as a percentage of the CIF import price
at the Community border is 28,9 %.

country wide

(b) V i e t n a m

— the

definitive

dumping margin,
expressed as a percentage of the CIF import price
at the Community border is 70,1 %.

country wide

E. INJURY

1. GENERAL

(147) As at the provisional stage, and in view of the above
definitive conclusions concerning the product scope, all
figures related to STAF have been excluded from the data
certain
analysed below.
exporting producers,
it is hereby confirmed that such
exclusion has been equally applied to both the imports
from the countries concerned and those from the other
third countries as well as to the data relating to the
Community industry.

request of

Following

the

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(148) However, given the above definitive conclusion that chil-
dren's footwear should be included in the scope of the
product concerned, the definitive analysis of injury has
been made for the totality of the product concerned, i.e.
including children's shoes.

(154)

2. COMMUNITY PRODUCTION

of

the

the

it should be noted that pursuant
basic Regulation,

to
In this respect,
Article 4(1)
term
Community industry shall be interpreted as referring to
Community producers whose collective output of the like
products constitutes a major proportion as defined in
Article 5(4) of the basic Regulation. Article 5(4) further
gives a definition of this major proportion, i.e. that those
Community
the
complaint should account
less than 25 % of
the total Community production and more than 50 %
of the total production of the like product produced by
that portion of Community producers expressing either
support for or opposition to the investigation.

expressly
for not

supporting

producers

footwear

(149) An association of importers reiterated its claim that if the
complainants, who they allege merely assemble in the
Community
from non-
Community sources, are considered being Community
producers, then the importers that maintained design,
branding, R&D, management and retail activities in the
Community should also be
considered Community
producers.

components

(150) This claim was already addressed in the recital 148 of the
provisional Regulation where it was concluded that only
the companies active in the production/manufacturing in
the Community qualify as Community producers. The
products traded by the importers are, amongst others,
produced in China and Vietnam and do not qualify for
to import duties, and those
EC origin, are subject
operators
cannot be
considered Community producers.

in the Community therefore

(151)

In the absence of new information, those conclusions are
hereby confirmed, and it is definitively concluded that
the producers mentioned in recital 146 of the provisional
Regulation constitute the total Community production
within the meaning of Article 4(1) of the basic Regu-
lation.

3. DEFINITION OF THE COMMUNITY INDUSTRY

(152) The definition of Community industry was questioned by
importers and an asso-
various exporting producers,
ciation of
the non-
importers on the grounds that
sampled companies did not cooperate during the inves-
tigation, e.g. by providing a reply to the sampling ques-
tionnaire and that
therefore the legal requirement on
standing of the complaint was not fulfilled throughout
the investigation. For those reasons, they alleged that the
the
814 complainants
Community industry.

legally constitute

could not

(153) Reference was also made to various Council Regulations
whereby complainant producers who failed to cooperate
properly were excluded from the definition of
the
Community industry.

(155)

(156)

the

specific

case,
represented more

complainant Community
In this
the
producers
Community production, and according to the above
legal requirements,
they are deemed to constitute the
Community industry. In addition no producer opposed
the complaint.

40 % of

than

It is correct that it is the Institutions usual practice that
the complainant Community producers who failed to
cooperate satisfactorily during the investigation will
normally be
the
aforementioned
Community industry,
the
the time when
thresholds should also be fulfilled at
measures are adopted.

excluded from the definition of

and that

(157) However,

the 814 Community
in this case, none of
to cooperate satisfactorily
producers was
found not
with the investigation. As a matter of
fact and as
clearly outlined in the notice of initiation, questionnaires
were only sent to the sampled Community producers,
and replies were received from all of them. Therefore if
the non-sampled complainant producers did not submit
any reply to the questionnaire for sampled producers, it
they were not
is simply explained by the fact
requested to do so.

that

(158)

It follows from the very nature of sampling that full
injury questionnaires are only sent
to the sampled
complainant Community producers and, according to
the provisions of Article 6(2) of the basic Regulation,
only parties receiving a questionnaire should provide a
reply. The claims made by the various interested parties
were rejected on the basis of the above elements, and the
the provisional
conclusions set out
Regulation
complainant
Community producers are deemed to constitute the
Community industry within the meaning of Article 4(1)
and Article 5(4) of the basic Regulation, and they are
hereinafter referred to as the ‘Community industry’.

in recital 152 of

confirmed:

814

the

is

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4. COMMUNITY CONSUMPTION

(159) One exporter questioned the level of the Community consumption, on the basis that it appears to be
lower in Europe than in developing countries. This claim was however not further substantiated, and
In the absence of other claims, the methodology used for the calculation of the
thus rejected.
Community consumption is hereby confirmed.

(160) The apparent Community consumption including children's footwear developed as follows:

2001

2002

2003

2004

IP

Consumption (000 pairs)

718 186

646 843

669 686

699 604

714 158

Index: 2001 = 100

100

90

93

97

99

Source: Eurostat, information contained in the complaint.

(161) This development is comparable to the consumption established at provisional stage, i.e. excluding

children's footwear.

5.

IMPORTS FROM THE COUNTRIES CONCERNED

5.1. Cumulative assessment of the effects of the dumped imports concerned

(162) The table below shows the import volumes, market shares and average unit prices of both countries

concerned individually, including children's footwear:

Import volume and market shares

2001

2002

2003

2004

IP

PRC (000 pairs)

15 571

14 616

25 810

30 662

63 044

Index: 2001 = 100

market shares

100

2,2 %

94

2,3 %

166

3,9 %

197

4,4 %

405

8,8 %

Vietnam (000 pairs)

51 414

59 898

83 334

103 177

102 604

Index: 2001 = 100

market shares

100

7,2 %

117

9,3 %

162

201

200

12,4 %

14,7 %

14,4 %

Average prices

PRC EUR/pair

Index: 2001 = 100

Vietnam EUR/pair

Index: 2001 = 100

2001

11,6

100

11,9

100

2002

11,3

97

11,2

94

2003

2004

8,6

74

9,9

83

7,3

63

9,3

78

IP

7,2

62

9,2

78

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(163) Certain interested parties claimed that the cumulative assessment is not warranted. This allegation is
based on the fact that trends in import volume and prices differ between China and Vietnam. In
addition it was claimed that Vietnam is one of the world's poorest countries, benefiting from the
Generalised System of Preference (‘GSP’), and that it should therefore not be cumulated with China
for the injury assessment.

(164) The first claim was already made previously and duly addressed in the provisional Regulation. More
specifically, concerning import trends in terms of volume and prices, the table in recital 160 of the
provisional Regulation clearly indicated that those trends followed similar patterns. It is also noted
that the inclusion of children's footwear does not alter those trends. In any event, and in addition to
those import trends, the provisional Regulation set out in detail the various reasons why the
the conditions of competition between
cumulative assessment
imported and the like Community product. This is for example because imported products are
alike in terms of their basic characteristics,
interchangeable from the consumer's point of view
and distributed via the same distribution channels.

is appropriate in the light of

(165) As concerns Vietnam, there is no provision in the basic Regulation stipulating that one of the
countries simultaneously subject to anti-dumping investigations should not be cumulated because
of its overall economic situation. More specifically, such an interpretation would also not be in line
with the object and purpose of the provisions on cumulation which focus on whether the imports
from the various sources compete with each other and the like Community product. In other words,
the characteristics of the traded products matter but not the situation of the country from which the
imports originate. The situation of the exporting country has to be addressed in conformity with the
provisions of Article 15 of the ADA and the basic Regulation but not in the context of cumulation.
Therefore, this claim was rejected.

(166) An association of importers also claimed that the cumulation is not warranted on the grounds that
the product mix of the two countries concerned is different. In this respect, it is considered that even
though certain differences in product mix may exist between both countries, there is still a significant
overlap, and thus it is considered that overall the product concerned originating in China and in
Vietnam do overall compete against each other. Reference is also made to the above conclusions that
all types of the product concerned should be considered as one single product for the purpose of this
proceeding, and that all types of leather footwear produced and sold by the Community industry are
alike to those exported from the countries concerned to the Community. This argument was
therefore rejected.

(167) On the basis of the provisional findings set out in recitals 156 to 162 of the provisional Regulation
and the above, it is hereby definitively concluded that all conditions of cumulation set out in Article
3(4) of the basic Regulation are met and that accordingly the effect of the dumped imports origi-
nating in the countries concerned should be assessed jointly for the purpose of the injury analysis.

5.2. Volume, market share and price development of the dumped imports concerned

(a) Volume and prices

(168) The table below shows the development of the import volume and market shares of the product

concerned originating in the countries concerned, including children's footwear.

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Imports (000 pairs)

66 986

74 514

109 144

133 840

165 648

2001

2002

2003

2004

IP

Index: 2001 = 100

Market share

Source: Eurostat

100

9,3 %

111

163

200

247

11,5 %

16,3 %

19,1 %

23,2 %

(169) The trends and absolute figures are comparable to those analysed at provisional stage: the import
volume more than doubled, and the market share significantly expanded from 9,3 % in 2001 to
23,2 % during the IP. It should be noted that there is a significant overlap between 2004 and IP
(April 2004 to March 2005), and therefore the above table shows that there was an acceleration of
imports during the first quarter of 2005. As can be seen from the above table, this is particularly due
to the development of the Chinese imports.

(170)

Import prices, including children's footwear, decreased by almost 30 % during the period considered,
similarly to what was established at provisional stage.

EUR/pair

Index: 2001 = 100

Source: Eurostat

2001

11,8

100

2002

11,2

95

2003

2004

9,6

81

8,8

74

IP

8,5

72

(171) Certain importers claimed that the decrease of the import
prices is explained by changes in the product-mix. This
substantiated and was also not
was however not
confirmed
claim was
the
therefore rejected.

investigation. This

by

increasing trends, that not all product types covered by
this investigation were subject to quota, and finally that
the total
imports took place as of 1
January 2005, and therefore the IP (April 2004 to
March 2005) was only partially affected.

liberalisation of

(b) Comments by the interested parties

(172) Certain interested claimed a breach of Article 3(2) of the
basic Regulation on the grounds that the Commission
did not carry out an objective examination of
the
volume and the prices of the dumped imports. They
justified their allegation on the grounds that external
factors such as the lifting of the import quota, devel-
opment of exchange rate, alleged changes in product
mix and fashion development have not been taken into
consideration when examining import trends.

(174) More generally, Article 3(3) of

the basic Regulation
provides that the analysis of injury specifically includes
the question whether there has been a significant increase
of dumped imports,
there has been
significant price undercutting, or whether the effect of
the dumped imports is otherwise to depress prices to a
significant degree or to prevent price increases which
otherwise would have occurred.

and whether

It is acknowledged that

(173) Specifically concerning the lifting of the quota, this claim
was already addressed in recital 165 of the provisional
the lifting of the
Regulation.
quota had exacerbated the import trends to a certain
extent. This should however also be seen in the light
of
two countries
concerned was directly concerned by this quantitative
limitation and that imports from Vietnam also followed

that only one of

fact

the

the

(175) On this basis, it would appear that the sedes materiae of
the aforementioned claims is in the context of causation.
Moreover, there is no explicit legal requirement in Article
3(3) of the basic Regulation that positive evidence should
be given as the reasons why the volume of dumped
imports
prices
decreased. The claim that external
factors should be
taken into account in the examination of the dumped
imports was therefore rejected.

corresponding

increased,

and

the

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5.3. Undercutting

(176) Various comments were received with respect

to the
undercutting calculations. Those claims were analysed
in detail, and the necessary amendments to the calcu-
lations have been applied where justified and supported
by factual evidence.

estimated on the basis of the only substantiated data
that was made available during the investigation.

(182) On the basis of

the above the revised undercutting
margins
a
country,
percentage of the Community industry's prices, are as
follows:

and expressed as

found, by

(177)

It is recalled that at the provisional stage adjustments to
the import price were made which reflected the estimated
costs
that are incurred in the Community by the
importers, such as design, selection of raw material etc.,
and which would otherwise not be reflected in the
import
this
adjustment. An estimated adjustment of 15 % was
applied at the provisional stage.

importers

requested

Various

price.

(178) The association representing the Community industry
however contested such adjustment, and more speci-
fically the level of the adjustment applied. While they
conceded that certain costs are indeed incurred at the
level of the importers, the association contested the fact
that all importers indeed incur such costs. Moreover, they
claimed that the level of the adjustment might be justified
in the case of STAF importers (incurring high R&D
expenses) but, given that such footwear was excluded
from the proceeding, the level of the adjustment should
be revised downwards.

(183)

(184)

(179) This

claim has been carefully examined,

and the
following conclusions were drawn. Firstly as concerns
in itself,
the adjustment
it was requested by many
importers
in principle, not opposed by the
and,
Community industry.

respect. The other

(180) As to the level of the adjustment, it should be noted that
although many importers did indeed request
such
adjustment, only one importer, which was also subject
to a verification visit, submitted detailed information in
that
the product
concerned could not support the claim that their level
of R&D costs reached the level of the adjustment applied
at a provisional stage.
It should be noted that some
importers subject to a verification visit mostly traded
STAF. As STAF is now definitively excluded from the
product
figures were ultimately not
their
relevant for the purpose of the adjustment.

importers of

scope,

Country

PRC

Vietnam

Price Undercutting

On weighted average 13,5 %

On weighted average 15,9 %

6. PECULIARITIES OF THE FOOTWEAR SECTOR IN THE

COMMUNITY

in the Community. Various

In the provisional Regulation, certain information was
given with respect to the peculiarities of the footwear
sector
interested parties
claimed that such data should not be taken into consi-
deration because they are either not reliable, or that they
do not
the
Community industry, thus have no legal basis.

exclusively refer

situation of

to the

In this respect, it should be clarified that the information
in recitals 169 to 173 of the provisional Regulation was
provided only for indicative purposes, in order to provide
the Community footwear
a better understanding of
sector.
the findings
concerning
in relation to the
Community industry as defined above and that no
further reference to this information will be made in
the injury analysis.

It should be noted however that

are made

injury

7. SITUATION OF THE COMMUNITY INDUSTRY

7.1. Preliminary remarks

(185) As already mentioned above, the injury analysis at the
related to children's
includes data

stage

definitive
footwear.

(181) At the definitive stage,

in the absence of substantiated
claims by the vast majority of the importers (irrespective
of whether or not subject to a verification visit), the level
the adjustment has been revised downwards, and
of

(186) As mentioned in the recital 175 of the provisional Regu-
lation, and following the usual practice, the injury indi-
cators have been established either at macro-economic
level
the whole Community
for
industry) or at micro-economic levels (based on data of
the sampled companies). For the sake of coherence,
injury indicators are established exclusively at one of
those two levels, but not at both.

(based on data

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7.2. Macro-economic indictors

Production, production capacity and capacity utilisation

2001

2002

2003

2004

IP

Production (000 pairs)

266 931

218 498

206 246

189 341

175 764

Index: 2001 = 100

100

82

77

71

66

Source: information established during the investigation.

(187) The production volume of the overall Community industry went down from 267 million pairs in
2001 to 176 million pairs during the investigation period. This represents a decrease of more than
30 %.

(188) Although a factory is theoretically designed to achieve a certain production level, this level will
strongly depend on the number of workers hired by this factory.
Indeed, as explained above,
most of the footwear manufacturing process is labour intensive. Under those circumstances, for a
stable number of companies, the best way to measure capacity is to examine the level of employment
of
those companies. Reference is therefore made to the table concerning the development of
employment below.

(189) As employment (and hence capacity) decreased broadly in line with production, capacity utilisation

remained by and large unchanged throughout the period.

Sales volume and market share

2001

2002

2003

2004

IP

Sales (000 pairs)

190 134

150 389

145 087

133 127

126 555

Index: 2001 = 100

100

79

76

70

67

Market shares

26,5 %

23,2 %

21,7 %

19,0 %

17,7 %

Source: information established during the investigation.

(190) Because production takes place on order, the sales volume of the Community industry followed a
decreasing trend similar to the production. The number of pairs sold on the Community market
dropped by more than 60 million between 2001 and the IP, i.e. by 33 %.

(191)

In terms of market shares, this corresponds to a loss of almost 9 percentage points. The Community
industry market shares dropped from 26,5 % in 2001 to 17,7 % during the IP.

Employment

2001

2002

2003

2004

IP

Total employees

84 736

69 361

66 425

61 640

57 047

Index: 2001 = 100

100

82

78

73

67

Source: information established during the investigation.

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(192) Employment dramatically decreased during the overall period considered. More than 27 000 jobs
were lost within the Community industry, representing a decrease of 33 % in the IP as compared to
the 2001 level.

Productivity

Productivity

Index 2001 = 100

2001

3 150

100

2002

3 150

100

2003

3 105

99

2004

3 072

98

IP

3 081

98

Source: information established during the investigation.

(193) Productivity was established by dividing the production volume with the Community industry's
workforce, as reported in the above tables. On this basis, the Community industry's productivity
remained relatively stable during the period considered.

Growth, magnitude of dumping margin

(194)

In the absence of any new and substantiated information or argument in this particular respect,
recitals 183 and 184 of the provisional Regulation are hereby confirmed.

Recovery from the effects of past dumping or subsidisation

(195)

It is recalled that anti-dumping measures against imports of certain footwear with uppers of leather
or plastics originating in PRC,
Indonesia and Thailand were imposed in February 1998. Those
measures had an overlapping scope with the products subject to the present investigation. Further
to the publication of a notice of impending expiry of those measures, no request for a review was
received, and the measures accordingly lapsed in March 2003. In the provisional Regulation, it was
considered that in the absence of a review request, the Community industry had, at that time,
recovered from the effects of past dumping.

(196) This was however refuted by the Community industry, on the grounds that the absence of a review
request was not motivated by any recovery of the injurious effects of dumping, but rather by the fact
that the measures in place were not sufficiently effective. It claimed that, contrary to what was set out
in the provisional Regulation, the economic situation of the Community industry could not satis-
factorily recover because the measures in place at that time were not sufficiently efficient to remove
injury. In addition the imports from the countries concerned by this proceeding became significant in
the period 2001 to 2003.

(197) However, the Community industry did not sufficiently substantiate that it sustained material injury
during the period 2001 to 2003 and any alleged ineffectiveness of the earlier measures could have
been addressed by an interim review, which was not requested.

(198) This claim was thus rejected, and the provisional conclusion that the industry recovered from the
effects of past dumping is therefore confirmed at this definitive stage, i.e. until 2003 the Community
industry did not yet sustain material injury. However, it should be noted that as of 2004 it did.

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7.3. Micro-economic indicators

Stocks

000 pairs

Index: 2001 = 100

Source: verified questionnaire replies.

2001

2 188

100

2002

2 488

114

2003

2 603

119

2004

2 784

127

IP

2 503

114

industry for

the determination of

(199) As already mentioned, stocks are deemed to have little bearing on the state of the Community
footwear
In theory,
therefore, stocks are not held, and only result from processed orders that have not yet been
delivered and/or invoiced. On that basis, the stock level first increase between 2001 and 2004,
i.e. by 27 %, and then decreased at the end of the IP. This decrease during the IP is also to be
seen in the context of the seasonality of the sector. Indeed, it is expected that the level of stock is
higher in December than at the end of the first quarter of the year, i.e. in this case the end of the IP.

injury since production is to order.

Sales prices

EUR/pair

Index: 2001 = 100

Source: verified questionnaire replies.

2001

19,7

100

2002

19,3

98

2003

18,5

94

2004

18,6

95

IP

18,2

92,5

(200) The average unit sales price continuously declined during the period considered. Overall, the decrease
was of 7,5 %. The Community industry price depression may seem limited, especially as compared to
the decrease of 30 % dumped import prices over the period considered. It should however be seen in
the context that footwear is produced on order, and therefore new orders are normally accepted only
if the corresponding price level allows for, at least, a break even. In this respect, reference is made to
the table below showing that, during the IP, the Community industry could not further lower its
prices without incurring losses.

Cash flow, profitability and return on investments

2001

2002

Cash-flow (EUR 000)

13 943

10 756

Index: 2001 = 100

% Profit on net turnover

Return on investments

Source: verified questionnaire replies.

100

1,6 %

6,1 %

77

1,8 %

7,3 %

2003

8 575

61

0,2 %

1,0 %

2004

IP

10 038

4 722

72

1,8 %

8,2 %

34

0,5 %

2,3 %

(201) The above return indicators confirm the picture described in recital 190 of the provisional Regulation
and show a clear weakening of the financial situation of the companies during the period considered.
the overall deterioration was especially marked during the IP and indicates
It
significant adverse developments during the first quarter 2005,
i.e. the last quarter of the IP. In
fact, the already low level of profitability at the beginning of the period considered further decreased
dramatically.

is recalled that

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(202)

In the absence of any new substantiated information or argument in this particular respect, recitals
191 to 193 of the provisional Regulation are hereby confirmed.

(203) The overall

level of profit remained at a low level during the overall period considered and
emphasises the financial vulnerability of
the level of profit
achieved during the period considered, and especially during the investigation period is far below
the normal level of profit that the industry could achieve under normal circumstances.

those SMEs. As detailed below,

Ability to raise capital

(204) The investigation showed that capital requirements of several Community producers have been
adversely affected by their difficult financial situation. This is stressed by the development of their
individual
level of profit and especially the deterioration of their cash flow. As explained above,
relatively small and medium sized companies are not always in a position to provide sufficient bank
guarantees and may have difficulties to face the significant financial expenses that would result from a
precarious financial situation.

Investments

'000 EUR

Index: 2001 = 100

Source: verified questionnaire replies.

2001

8 836

100

2002

11 184

127

2003

6 522

74

2004

4 403

50

IP

4 028

46

(205) The trend for investments as established in recital 194 of the provisional Regulation is confirmed by
the trends as shown in the above table. The investments consented by the companies decreased by
more than 50 % between 2001 and the IP. The decrease in investments is to be seen in relation with
the deterioration of the financial situation of the Community producers in the sample.

Wages

Average
person (EUR)

salaries

2001

2002

2003

2004

IP

and wages per

14 602

15 933

18 021

17 610

17 822

Index: 2001 = 100

100

109

123

121

122

Source: verified questionnaire replies.

(206) The trends of the provisional Regulation in recital 196 with regard to wages are confirmed by the

table above. In the absence of any new information those trends are confirmed.

7.4. Claims of the interested parties

(207) Several exporting producers claimed that the profit margin of the Community industry was a crucial
indicator for the injurious situation of the Community injury. In particular, it was alleged that, as the
profit margin used at provisional stage for the purposes of establishing the injury elimination level
(i.e. 2 % — see recital 284 of the provisional Regulation) was in line with that achieved by some
individual companies in the sample, this showed that they were not injured with regard to this
indicator.

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(208) This is no longer relevant since, after further analysis, as set out in recital 292, the profit margin was
adjusted to 6 %, thereby reflecting more appropriately an achievable profit margin for Community
footwear producers in the absence of
the
Community industry clearly decreased over the period considered and in any event, profitability
fell as low as 0,5 % in the IP. Moreover, the injury analysis is carried out at the level of the
Community industry, or a sample thereof, and thus not individually at the level of the companies
included in the definition of the Community industry.

injurious dumping. On this basis, profitability of

(209) Various interested parties argued that the indicators used for the injury analysis were not reliable or
not appropriate. They alleged that the economic indicators were not verified and not reliable since —
in the alleged absence of cooperation — they would not refer to a valid Community industry. As
concerned the micro-economic indicators, and given the limited size of the sample, they were
claimed not to be representative. Finally, reference was made to the different
trends observed
between injury indicators established at macro- and micro-economic level.

(210) Firstly, as concerns the fact that the macro-economic indicators were not verified, it is recalled that
according to the basic Regulation, verification visits are left to the appreciation of the Commission,
and thus there is no legal obligation to always carry out verification visits. Indeed Article 16 of the
basic Regulation only sets out that the Commission shall, where it considers it appropriate, carry out
verification visits. This claim was therefore rejected. In addition these factors were cross-checked,
where possible, with the overall information provided by the relevant national Community footwear
associations.

(211) Secondly, given the above conclusion concerning the definition of the Community industry and the
representativity of the sample, the claims related to those elements were also rejected. In addition, as
already outlined above, for the sake of coherence only one set of injury indicators is established for
the purpose of the definitive conclusions, either macro- or micro-economic indicators. It is finally
noted that even if those trends established at provisional stage both at a micro and macro level did
not always show precisely the same development, they nevertheless did not show significantly
diverging trends either.

(212) Finally, interested parties also claimed that not all injury factors show injury, and more specifically
that at an individual level, no injury can be established for the companies selected in the sample. The
first claims have to be rejected on the grounds that, according to the basic Regulation, none of the
injury indicators can necessarily give a decisive guidance. As to the fact that the individual situation
of certain producers did not point to injury, it is stressed that this is not relevant since, according to
Article 3(1) of the basic Regulation, the injury analysis is carried out at the level of the Community
industry, or a sample thereof, and thus not at the level of the individual companies included in the
definition of the Community industry.

8. CONCLUSION ON INJURY

(213)

It follows from the above that the provisional conclusion that the Community industry has suffered
material injury within the meaning of Article 3(5) of the basic Regulation is hereby confirmed.

(214) More specifically, it is confirmed that at the level of the macro-economic indicators, i.e. at the level of
the overall Community industry, the injury mainly materialised in terms of decrease of sales volume
and market shares. Since footwear is manufactured on order, this also had a direct negative impact
on the production level and employment in the Community.

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(215) Furthermore, it is also confirmed that at the level of the micro-economic elements the situation is
largely injurious. For instance, the sampled companies have reached the lowest possible level of profit
during 2003, which, however can be partially explained by their relatively pronounced prior
investment practice (effect of depreciation on profitability). However, their level of profit decreased
subsequently even despite a significant decrease in investment and, in fact, during the IP was at the
lowest level over the period considered with the exception of 2003, i.e. far from any acceptable level
and in the absence of other explanatory factors,
like heavy prior investment, clearly materially
injurious. Similarly, the cash flow followed a dangerously declining trend and reached the lowest
level during the IP, at a level, which can only be considered as materially injurious. The sampled
companies, during the IP, were no longer in a position to decrease their price levels further without
incurring losses. In the case of relatively small and medium sized companies,
losses cannot be
sustained for a significant period without being forced to close down. Overall, although prior to
2004 the situation of the Community industry may only be qualified as injurious, the Community
industry since 2004 clearly sustained material injury.

1. EFFECTS OF THE DUMPED IMPORTS

F. CAUSATION

(216) The Community industry's market share and that of the countries concerned, including children's

footwear, developed as follows:

Countries concerned

Community industry

2001

9,3 %

26,5 %

2002

2003

2004

IP

11,5 %

23,2 %

16,3 %

21,7 %

19,1 %

19,0 %

23,2 %

17,7 %

(217) Certain interested parties challenged the Commission's conclusion that there was a sufficient coin-
cidence in time between the market share increase of the dumped imports, and the decrease of the
Community industry's market share. They pointed out that when Chinese and Vietnamese imports
obtained their greatest increases in market shares, the Community industry experienced smaller
decreases in market share, and vice-versa. It is also claimed that the market share of the complainants
has not been taken over by countries concerned, namely by looking at the development of the other
third countries market shares development.

(218) An association of importers further claimed that dumped imports from the countries concerned did
not cause any injury to the Community industry given that imported footwear is not competing with
Community produced footwear.

(219) With respect to the coincidence in time, it is considered that in the causation analysis, a perfect
correlation between the development of the dumped imports and the situation of the Community
industry is not required. Indeed, it is established and legally recognised practice that, as in the present
case, a simple coincidence of increasing dumped imports in significant quantities, which undercut
prices of the Community industry, and an increasingly precarious situation of the Community
industry is a clear indicator of causation. In the present case, and as clearly established in recitals
203 to 209 of the provisional Regulation, such coincidence in time undeniably occurred. Moreover,
the coincidence concerning the shift in market share from 2003 to 2004 is even nearly symmetrical.
In addition, the fact that increase of market share of the dumped imports was occasionally over the
period considered higher than the loss of market share of the Community industry simply points to
the fact that the increase of dumped imports not only happened at the expense of the Community
industry but also at the expense of other players in the Community market.

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(220) The claim that imported footwear did not compete with Community produced footwear was also
rejected on the basis of the above conclusion concerning the definition of the product concerned and
the like produce, i.e. that the footwear imported from the countries concerned competes at all levels,
i.e. all ranges and all types, with the footwear produced and sold by the Community industry, and
identical. Moreover, the investigation has clearly shown that
that their sales channels are overall
Community producers and exporters compete for sales on the Community market.

(221)

In the absence of further comments, the conclusions of recital 209 of the provisional Regulation are
hereby confirmed: the dumped imports played a determining role in the material injury suffered by
the Community industry.

2. EFFECTS OF OTHER FACTORS

2.1. Comments by the interested parties

(222) Following the imposition of the provisional measures, various interested parties claimed that the
material injury suffered was caused by other factors. Those parties referred to claims that were already
made at an earlier stage, and duly addressed in the provisional Regulation. More specifically, those
claims referred to the export performance of the Community industry, the imports from the other
third countries, the effect of the lifting of the quota on Chinese exports, the effect of the exchange
lack of
rate fluctuations, the relocation of the Community producers, and the alleged structural
competitiveness of
the Community industry. No new elements were however provided, and
therefore the main conclusions set out in the provisional Regulation are clarified/expanded, where
necessary, below.

2.2. Export performance of the Community industry

(223) Certain interested parties reiterated their claims that the poor economic situation of the Community

footwear industry was due to a deterioration of its export performance.

(224)

In this respect, it is noted that any alleged deterioration of the export performance, if any, does not
have any impact on most of the indicators analysed above, such as sales volume, market shares and
depression of prices, since those factors have been established at the level of sales in the Community.
Production figures were provided on an overall basis since no distinction between goods destined for
the Community market and outside the Community can be made. Since footwear is produced to
order, any decrease of sales will necessarily translate into a similar decline in production, and given
that the vast majority of the production is intended to be sold on the Community market, the
provisional conclusion that the major part of the decrease in production is related to injury suffered
on the Community market is confirmed.

(225) As a matter of fact, during the period considered, the decrease in sales volume on the Community
market (– 34 %) corresponds to the decrease of production during the same period (– 33 %).

(226) The claim was therefore rejected, and it is definitively concluded that the export performance of the

Community industry did not cause any material injury.

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2.3. Imports from other third countries

(227) The imports from third countries, including children's footwear developed as follows:

Market shares

2001

2002

2003

2004

IP

Variance 01/IP
(% points)

Romania

India

Indonesia

Brazil

Macao

Thailand

5,7 %

3,6 %

2,7 %

1,2 %

1,2 %

1,0 %

7,1 %

4,5 %

2,4 %

1,4 %

1,7 %

1,0 %

7,5 %

4,9 %

2,0 %

1,7 %

2,2 %

1,2 %

7,0 %

5,9 %

2,0 %

2,2 %

3,2 %

1,3 %

6,9 %

5,7 %

2,0 %

2,5 %

2,4 %

1,3 %

Other countries

9,0 %

10,7 %

10,9 %

12,5 %

11,5 %

+ 1,2

+ 2,1

– 0,7

+ 1,3

+ 1,2

+ 0,3

+ 2,5

Average prices (EUR/pair)

2001

2002

Romania

India

Indonesia

Brazil

Macao

Thailand

Other countries

13,8

11,3

11,2

16,8

12,9

14,4

14,8

14,6

11,3

10,4

15,7

11,5

12,9

14,3

2003

14,8

10,3

9,8

13,5

10,6

11,8

13,6

2004

15,0

10,2

8,6

13,0

10,2

11,4

12,4

IP

Variance 2001/IP

14,9

10,2

8,7

12,6

10,5

11,2

12,7

+ 8 %

– 10 %

– 23 %

– 25 %

– 18 %

– 22 %

– 14 %

(228)

It should be noted that none of the countries included (in
in the row
total more than 150 various countries)
other
table
above
concerning
accounted
overall
the
for more
Community imports during the IP.

countries
than

the
in
2 % of

that

(229) Therefore it can be confirmed that individually, none of
the countries listed above significantly increased their
market shares during the period considered,
the
absolute level of their market share remained far below
that of the countries concerned, and they also developed
differently. As to prices, they should be seen in the light
of the above evolution of import volume, and also with
the fact
they decreased to a lesser extent as
compared to the prices of the countries concerned, but
especially their absolute price level during the overall
period considered remained, with one exception, on
average far above the price level of the dumped imports.

that

(230) For the above reasons, it is definitively concluded that the
imports from other third countries did not materially
affect the situation of the Community industry.

2.4. Exchange rate fluctuations

(231) Various exporting producers and importers reiterated
their claims that the injury suffered by the Community
industry was caused by the appreciation of
the euro
against the USD which led to significant import price
decreases.

(232) No new elements were given, and it is therefore referred
to recitals 220 to 225 of the provisional Regulation. It is
also to be noted that, even if one were to accept that
exchange rate fluctuations had an effect on import prices,
the volume alone of the imports concerned were of such
a magnitude
injury to the
Community industry.

to cause material

as

2.5. Lifting of the quota

(233) No new elements have been put forward in that respect.
It should however be noted that given the acceleration of
the imports during the last quarter of the IP, this may
indeed have exacerbated the injurious effects of those
dumped imports.

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2.6. Complainants have failed to modernise, are

highly fragmented and have high labour costs

(234) No new elements have been put forward in that respect.
It should also be noted that the dumping margins are
comparatively high (i.e. even higher than the under-
cutting margins). In other words, the dumped exports
concerned compete with the Community industry not
on the level of natural advantages, but on the basis of
a practice which is actionable under international trade
rules. On a non-dumped level, prices of
the imports
concerned would have been much higher and the
Community industry would have been in a much
stronger competitive situation vis-à-vis these imports.

It

in the Community, those imports can not be deemed
to have negatively affected most of the injury indicators
such as production, sales, profitability etc. for the reasons
explained above.
is true, as pointed out by some
interested parties, that this may have led to a decrease
of employment in the Community, but this should also
be seen as an act of self defence by companies facing
vastly increasing imports at dumped prices on the
Community market,
thus related to the existence of
dumping rather than any self-inflicted injury.

2.7. EC footwear industries re-location of

production

3. CONCLUSION ON CAUSATION

(239) The claims of

the interested parties were therefore
rejected, and the findings and conclusions of the provi-
sional Regulation confirmed.

(235) Various exporting producers and an association of
importers claimed that the effect of the re-location of
the Community
EC producers on the situation of
industry had not been sufficiently addressed in the provi-
sional Regulation.

(240)

figures

include data

that have delocalised production.

(236) They criticised in particular the figures provided in the
recital 171 of the provisional Regulation, related to the
overall Community footwear sector, on the grounds that
related to Community
those
producers
In this
respect,
reference is made to the above paragraph
confirming that the recitals 169 to 173 of the provi-
sional Regulation were given for information only, thus
not
the definitive
legally relevant
is therefore also confirmed
It
conclusions on injury.
that
their
that
those producers
production outside the Community are not included in
the definition of Community industry, and therefore the
extent to which those companies would have also caused
injury to the Community industry is analysed together
with the impact of
third
countries.

in the context of

the imports

from other

delocalised

fully

(237) As concerns the case of those companies that partly
i.e. by also purchasing
delocalised their production,
footwear from non-Community sources,
is recalled
it
that the injury analysis has been made exclusively with
respect to data pertaining to their own production in the
to which such
the
Community. Therefore,
purchases may as well have caused them any injury
should also be seen in the light of the analysis of the
imports from other third countries.

extent

(238) Finally,

or
commenced imports of parts of footwear (e.g. uppers)

companies who

increased

those

for

It is therefore definitively concluded that the dumped
imports originating in the countries concerned have
caused material
injury to the Community industry
within the meaning of Article 3(6) of the basic Regu-
lation, and that given the analysis which has properly
distinguished and separated the effects of all the known
factors on the situation of the Community industry from
the injurious effects of the dumped imports, these other
factors as such did not reverse the fact that the material
injury assessed must be attributed to the dumped
imports.

G. COMMUNITY INTEREST

(241)

It has been analysed whether in light of the comments
and/or additional elements provided by the interested
parties following the imposition of the provisional Regu-
lation, the provisional conclusion that the Community
interest called for intervention to prevent the injurious
dumping should be modified.

1.

INTEREST OF THE COMMUNITY INDUSTRY

that

the production of

(242) Certain importers and exporting producers argued that
the imposition of measures would not be in the interest
of the Community industry. This is mainly based on the
claims
complainants
complement the imports from the countries concerned,
that
the imposition of anti-dumping measures would
cause a major displacement of imports from countries
concerned to other third countries, and that finally the
injury suffered by the Community industry was not be
caused by dumping and that the complainants have lost
market shares over many years allegedly due to factors
other than dumping.

the

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(243)

It should firstly be noted that the provisional Regulation
and the above analysis clearly established the existence of
dumping causing injury to the Community industry,
which qualifies as of 2004 as material injury sustained
due to dumping practices from the countries concerned.
It is therefore in principle expected that the removal of
the material injury caused by dumping is in the interest
of the Community industry.

publication of the imposition of provisional measures.
The provisional
leather
conclusion that
footwear prices would only be marginally affected by
the imposition of definitive measures was therefore not
challenged by any association representing the interest of
the consumers.

consumer

(244) The allegation that the production of the complainants
merely complements the imports was rejected given the
above conclusions that the product concerned competes
like product produced and sold in the
with the
the Community industry
Community. The fact
that
lodged a complaint against
the product
imports of
concerned also suggests that competition take place
between Community manufactured products and those
imported from the countries concerned.

(245) The claim concerning any displacement of the imports
was already made earlier, and reference is made to the
recital 241 of the provisional Regulation where it was
concluded that the fact that importers may shift to other
supplier countries is certainly not a valid reason for not
taking actions against materially injurious dumping, and
that it is in any event impossible to anticipate the extent
to which such a shift would take place, nor
the
they are
conditions of
dumped or not.

those imports,

i.e. whether

(249) Certain exporting producers claimed that they did not
agree with the findings concerning the limited impact
of measures on consumers, and that
those measures
would result in a major increase in household costs.

(250)

Importers also argued that consumer prices would
increase as a result of definitive measures, and that this
price increase may even reach the percentage of any ad
valorem duty. This claim is based on the allegation that
importers usually apply their mark-up to the landed
import price, including any duties, and thus they would
therefore apply a margin also on the anti-dumping
duties, amongst other elements. On the other hand,
they
certain importers have however
would not be in a position to pass on any duties to
consumers, on the grounds that
is the consumers
that set the level of prices, and that consumers would
therefore not purchase certain footwear
it would
exceed a given price.

claimed that

it

if

is clear that

(246) As regards the last claim, reference is made to the
the
causation analysis above where the impact of
factors other
In any
the production
it
event
thus
industry,
volume of
decline
the
accelerated by
share, was
emergence of the dumped imports. This obviously has
to be the case in the situation of a stable Community
consumption.

than dumping was examined.
the decrease of
the Community footwear

in market

(247)

In the absence of further substantiated comments, the
provisional findings are confirmed, and it is definitively
concluded that the imposition of anti-dumping measures
would allow the Community industry to recover from
the effects of materially injurious dumping found.

2.

INTEREST OF THE OTHER ECONOMIC OPERATORS

2.1. Interest of the consumers

(248) As at

the provisional stage, no representations were
received from consumers' organisations following the

(251) First of all, exporting producers do not have standing on
Community interest under current rules. Their points
the
have nevertheless been analysed for
sake of
those parties
It should be underlined that
argument.
that did not agree with the Commission's
findings
concerning the impact of the measures on consumers,
did however not submit any specific data or information
that could support
Instead, as reported
their claims.
they even provided contradictory statements
above,
claiming that duties would be either fully passed on to
consumers (and even more by applying mark-ups also on
the duty) or that it would not be possible at all to pass
on any effect of duties. Their claims were therefore not
considered sufficient to alter the provisional findings.

(252)

significantly

of measures would

In addition certain exporting producers claimed that the
imposition
limit
consumers' choice. This is based on the allegation that
certain types of leather footwear are only produced in
that anti-dumping duties would
China and Vietnam,
allegedly result
to produce certain
types of footwear and that the Community producers
would not have the capacity to supply the Community
market with those types.

in a decision not

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6.10.2006

(253) These allegations of a reduced choice of footwear were
already made earlier and addressed in the recital 246 of
the provisional Regulation.
In addition, the claim that
certain types of footwear would no longer be produced
the Community producers would not have
and that
enough capacity to substitute the alleged shortages is a
simple allegation that was not supported by any objective
facts or evidence, and was therefore rejected.

(254) Finally, the exclusion of children's footwear was recon-
sidered given the arguments given by the Community
industry.

(255) Even though this exclusion was generally welcomed by
exporting producers and importers,
in the absence of
reaction from any consumer organisation, no further
evidence or confirmation was received showing that the
imposing measures on children's
effect of
footwear
would be different
it would have on
than the effect
adult footwear.

(256) The Community industry, on the other side, challenged
the exclusion of children's shoes from the scope of provi-
sional anti-dumping measures and referred to the fact
that there has been production of children's footwear
injurious dumping has
in the Community and that
been established for children's footwear.

i.e.

types of

(257) The definitive findings with regard to the status of chil-
dren's
shoes in the present proceeding lead to the
following conclusion. Firstly, further analysis that lead
to the definitive findings demonstrated that children's
footwear should be included in the definition of
the
product concerned,
the product
that all
concerned should be regarded as forming one single
therefore in principle anti-dumping
product, and that
measures should apply to the totality of the product
concerned. Secondly,
to provisionally
exclude children's shoes from the scope of measures on
the grounds of Community interest as set out in recitals
i.e. notably
250 to 252 of the provisional Regulation,
more frequent replacement of children's shoes and, thus,
a higher financial impact of anti-dumping measures on
the financial situation of an average European family,
it was established that
were reassessed. In this respect,
on average children's shoes import prices are according
to Eurostat statistics in general substantially lower than
adults' shoes import prices (more than 33 %). Conse-
the impact of an ad valorem anti-dumping
quently,
shoes would be proportionally
duty on children's

the arguments

substantiated

In this context,

the provisional Regulation it

lower. In addition, the definitive findings lead overall to
lower definitive duty levels than the measures at provi-
sional stage. This, again, results in a lower financial
in
impact of measures. Moreover, as already set out
is not
recital 249 of
considered likely that consumers would bear the full
any measures. No interested party has
brunt of
evidence which could
provided
any
support a different view.
is duly
noted that consumers' organisations did not comment
at all, which suggests that the impact of measures —
regardless whether
it concerns children's or adults'
footwear — are effectively not a real concern for the
interests of
the
above analysis, it is evident that the definitive exclusion
of
could not be
warranted. As a result there is no compelling evidence
to prove, when addressing the imposition of definitive
measures which remove materially injury caused by
dumping practices,
that consumer's interests outweigh
the interests of the Community industry.

their constituency. Taking account of

from measures

children's

shoes

it

(258) For those reasons,

the claim was accepted and it

is
hereby confirmed that, given the above, the imposition
of definitive measures on the product
concerned,
including children's footwear, would not be against the
overall interest of consumers.

(259)

2.2. Interest of the distributors/retailers

It is recalled that at provisional stage, only a limited
number of representations were received from distribu-
tors/retailers or organisations of distributors/retailers: one
submission was received from a consortium of retailers
from one Member State, and questionnaire replies were
received from three importers who also have their own
distribution network, including two supermarket chains.
Only one of
those four parties submitted comments
following the imposition of provisional measures, and
no additional individual distributor or retailer submitted
any comment.

(260) An association of

importer that did cooperate in the
investigation since the beginning of the procedure chal-
lenged the conclusion that only a limited number of
representations were received, on the grounds that this
association represents companies that are also distri-
butors and retailers in addition to their function of
It also claimed that at
importers.
its
members,
located in two different Member States have
supplied detailed information to the Commission.

two of

least

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Official Journal of the European Union

L 275/33

(261) The Commission

is

this

that

recognises

to import

association
represents companies that sometimes also have their
own distribution network, and the conclusion regarding
the number of representations should indeed be nuanced
the primary function of
in that respect. Nevertheless,
footwear. Essentially,
those companies
however, no precise and verifiable data, other
than
provided by the three above mentioned companies, was
provided by distributors and retailers to the Commission,
in order to assess their economic situation and to what
extent
financially affected by any
measures. And it is mainly only on the basis of such
information that
the Commission is in a position to
carry out a detailed analysis.

they would be

negatively affected by any measures. It should however
be recalled that the Community interest analysis is made
on an overall basis, i.e. based on the average situation of
the parties
in the Community concerned by the
proceeding, and it can therefore never be excluded that
some individual parties will be indeed be affected
differently than the majority. In this respect, reference
is made to the recital 275 of the provisional Regulation,
where it was recognised that measures may indeed have a
possible negative effect on the financial situation of
certain importers.

(262) As concerns the alleged cooperation of its two members,
is should be clarified that one of them failed to provide a
questionnaire reply within the deadlines, and could
therefore not be used.

In this respect,

(266) Finally, the association claimed that the Commission is
mistaken in its understanding of the differences between
inde-
retail channels.
pendent retailers are supplied not only by wholesalers
in the Community, but also sometimes import them-
selves.
in the, Commission
sample were all brand retailers and that therefore the
Commission's analysis was not appropriate.

It claimed that

it claimed that

retailers

(263)

In its submission, the association provided figures and
examples showing what would be the impact of
the
measures on importers that also have retail activities.
Those figures were however made available far beyond
the granted deadlines to provide such data, and seems to
refer to only one company — the name of which is not
mentioned — which did apparently not cooperate to the
investigation. Those figures, that could therefore not be
validated, could therefore not be considered.

(267)

(264) The association further claims that due to their financial
situation, importers with retail activities will not be in a
position to pass on, even partially, any price increase to
some retailers, especially those
consumers, and that
concerned,
countries
exclusively sourcing from the
would not survive the imposition of measures.

situation of

In the absence of detailed information concerning the
the
financial
retailers and distributors,
Commission carried out an overall analysis of
the
this analysis was merely to
sector. The purpose of
identify the main distribution channels, the structure of
those distributors and retailers, in order to examine how
they would be affected by measures.
It can not be
excluded that the specific situation of individual distri-
butors is not exactly reflected in this overall analysis. For
information,
it is also noted that the description and
conclusions drawn within the framework of this investi-
gation also correspond to the findings of the Commis-
on
anti-dumping
sion's
footwear (1), and no indications were given that
the
situation of
the footwear distribution sector changed
since then.

investigation

previous

least, partially any cost

(265) The argument that companies would not be in a position
to pass on, at
increase to
consumers clearly conflicts with the claims made by
including the submission made by the
various parties,
association of
that consumer prices will
importers,
increase as a result of the imposition of anti-dumping
measures. Based on the information gathered during the
investigation, and as confirmed by those contradictory
statements, it is very likely that, on average, any impact
of measures on the import price would at
least be
partially passed on to consumers. It can naturally not
be excluded that certain retailers directly and exclusively
importing from the countries concerned would indeed be

(268) More specifically, the provisional Regulation stated in its
recital 260 that independent retailers are usually supplied
by wholesalers in the Community. From this,
it was
therefore not excluded that
those retailers also have
other sources of supply. As concerns the allegation on
brand retailers, the Commission did not make use of any
sample, but instead analysed all the information that was
made available by cooperating parties. In this respect, it
should be noted that reference was made in the provi-
sional Regulation to the absence of cooperation by
retail chains with a brand
branded retail chain,
i.e.
name, which is different
from retailers of branded
footwear, of which indeed one cooperated.

(1) OJ L 60, 28.2.1998, recitals 124 to 134.

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Official Journal of the European Union

6.10.2006

of

(269) No further claims was made that would alter

the
conclusions
The
conclusion that the impact of the definitive measures
on the importers and distributors is likely to remain
limited, as set out in recital 264 of the provisional Regu-
lation, is therefore confirmed.

Regulation.

provisional

the

(274)

In this respect it should be noted that no sampling was
applied, that cooperation from importers was significant
and that therefore the Commission was in a position to
draw its conclusion on a very detailed factual basis.

2.3. Interest of the unrelated importers in the

Community

(270) The comments received by the various interested parties
have been carefully analysed to the extent they were duly
substantiated, and have been addressed below.

(275)

It is conceded that product-mix and sales channels are
indeed relevant for the categorisation of importers.
In
this respect those elements were also duly taken into
consideration in the analysis. As a matter of fact, the
Commission differentiated between companies active in
the high end of the market and the importers active in
the lower end of the market, and indeed considered that
those two categories of importers have different product
mix and sales channels.

(271) Certain importers claimed that given their profit margin,
which is less than the level of the anti-dumping duty,
they would be unable to survive anti-dumping duties,
unless they are able to share that additional burden
with wholesalers and retailers. It is further claimed that
this would not be possible because wholesalers and
retailers would not accept any price increase, but rather
switch to suppliers that can deliver without anti-dumping
duties.

(276) Furthermore, none of the comments given by the asso-
ciation of importers was such as to alter the conclusions
that in the case of the importers active on the higher end
the market any ad valorem duty has a moderate
of
impact as compared to the much higher selling price
(thus profit), and that
for those active on the lower
end of the market the ad valorem duty would result
only in a moderate absolute price increase and that
given the level of their average margin of profit they
would not be significantly affected by measures.

i.e.

the turnover,

the import price,

(272) The fact that the profit margin is lower than the level of
the anti-dumping duty is not relevant. Indeed, while the
level of the anti-dumping measures is expressed as a
the profit margin is
percentage of
expressed as a percentage of
the
selling price. In view of the significant margins applied
between purchase and resales, it is evident that the two
percentages simply cannot be compared. Concerning the
claim that wholesalers and retailers would not accept any
price increase, it is again stressed that this is conflicting
with the claim by many importers that price increases
will be passed on fully to the consumers, thus also distri-
butors, and could therefore not be accepted.
In any
is indeed true that wholesalers and retailers
event,
than can deliver
may indeed switch to suppliers
without anti-dumping duties, including the Community
industry that would thus benefit from measures.

it

It

(277) The conclusions set out in the recitals 265 to 275 of the
is
provisional Regulation are therefore confirmed.
therefore definitively confirmed that the imposition of
is unlikely to have a significant negative
measures
impact on the
in the
the
Community in general, but also that such imposition
may nevertheless have some negative effects on the
importers. On
financial situation of certain individual
balance, however,
are not
expected to have a significant
impact on the overall
financial situation of the importers.

those negative

situation of

importers

effects

the
it does not reflect

(273) An association of importers contested the Commission's
importers,
two
of
description
submitting that
the market reality
and that it is the product-mix, sales channels that are
relevant for differentiating importers. It further claimed
that it is the net margin, and not the mark-up that is
relevant when assessing the effect of measures.

categories

of

2.4. Other considerations

(278)

It has also been argued that measures were not in the
Community interest because Vietnam is a developing
country which needs to export shoes, because duties
on imports
good
economic relations with this country with a potentially
large market, and because workers in Vietnam and the
PRC could suffer from such measures.

PRC might

from the

imperil

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Official Journal of the European Union

L 275/35

(279)

it

list

can be
considerations

the basic Regulation. While this

In accordance with Article 21(1) of the basic Regulation
and in line with consistent practice of the Institutions
since the current basic Regulation entered into force,
this type of arguments are not part of the Community
interest analysis. The Community interest analysis is an
economic analysis focussing on the economic impact of
taking/not taking anti-dumping measures on operators
within the Community. It is not a tool by which anti-
instrumentalised for
dumping investigations
to foreign
relating
general political
policy, development policy etc. This is also confirmed
by the list of parties which have standing under Article
21 of
is not
exhaustive (in some investigations, suppliers of the raw
materials for the product concerned have also made
comments and these comments have been taken into
account),
follows clearly from the types of parties
mentioned that only the economic effects on parties
within the Community are at stake in this test. At the
same time, the Community interest test is not a cost/-
benefit analysis in the strict sense. While the various
interests are put
they are not weighed
against each other
in a mathematical equation, not
least because of obvious methodological difficulties in
quantifying each factor with a reasonable margin of
security within the time available, and because there is
not just one generally accepted model for a cost-benefit
analysis. This is also the reason why Article 21(1) of the
the need to restore
basic Regulation stipulates
effective competition shall be given special consideration
and that measures may not be applied, on the basis of
information submitted, where it can clearly be concluded
that it is not in the Community interest to apply such
the law accepts that anti-
measures.
dumping measures have certain negative effects on
those parties which are typically not in favour of such
measures. Measures would only be considered as not in
if they had dispropor-
the interest of the Community,
tionate effects on the aforementioned parties.

In other words,

in balance,

that

(280) At the beginning of the investigation and also at provi-
sional stage, the Commission invited all parties to submit
information as to the possible effects of taking/not taking
measures on them. As explained in detail at the provi-
sional stage, but also in this Regulation, no information
has been received which points to such disproportionate
effects. There is nothing in the file, which could even
remotely
the
economic impact of duties is such that every euro
which European producers may gain as a result of the
duties will equally result in a loss of EUR 8 for consumer
and user industries as claimed by one Member State.

allegation made

confirm the

that

(281) As far as the argument of

taking measures against
developing countries is concerned, it is the Community's
constant practice to take such actions indiscriminately
against developing and developed countries, whenever
that anti-
warranted. With regard to the argument
good
dumping measures might put

into danger

economic relations with the PRC, it should be considered
that if this argument was pushed to its logical conse-
quence, the Community's anti-dumping actions would
be dependent on whether or not
the third country
concerned threatens with some negative consequences
in the event of
taking measures. Moreover, such an
approach would be an invitation to the third country
to raise the prospect of some negative consequences.
Finally, both considerations are not compatible with
the notion of a rules-based instrument and a quasi-
judicial investigation.

(282)

It was also argued that one Member State was dependent
on footwear
imports. However, nothing in the file
suggests that these imports can only be sourced from
the two countries concerned. There are ample sources
of supply within the Community and in third countries
not concerned. Imports can also continue to be sourced
from the PRC and Vietnam and the effect of the duties is
not such as to foreclose the market.

(283)

In sum, neither the current law nor the results of the
investigation justify not to take anti-dumping action on
any of the grounds mentioned at the beginning of this
section.

3. CONCLUSION ON COMMUNITY INTEREST

(284) The above analysis has taken into account, and addressed
where necessary, the comments submitted by the various
interested parties. Those did however not alter
the
conclusions drawn at provisional stage.

(285)

It is therefore definitively confirmed that:

— it is in the interest of the Community industry to
impose measures, since those measures are expected
to, at
imports at
dumped prices which proved to have a significant
negative
situation the
Community industry,

least, restrain the high level of

impact on the

financial

— consumers will not be affected by the effect of anti-
if at all, only to a very

dumping measures or,
marginal extent,

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Official Journal of the European Union

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— the distributors and retailers may see their purchase
prices of
the product concerned increase, but as
compared to their overall costs and situation, they
will probably not be
affected by
measures,

significantly

the
absence of dumped imports taking into account
existence of a quota regime covering imports from PRC
until the end of 2004.

1.1. Underselling

— on average,

importers would be in a position to
accommodate the imposition of measures, although
depending on their
some may
indeed face certain adverse effects, especially those
exclusively supplied by footwear from the countries
concerned,

specific situation,

— other interests, even if they were to be taken into
account, are not as such that they would override
the interest of taking anti-dumping measures.

(286) Therefore, and on balance, it is considered that imposing
measures,
i.e. removing materially injurious dumping,
would allow the Community industry to maintain its
activity and bring an end to the successive closures and
job losses it faced in the last years, and that the adverse
effects that
the measures may have on certain other
economic operators in the Community are not dispro-
portionate as compared to those beneficial effects for the
Community industry.

(289) At provisional stage it was considered that a profit
margin of 2 % of
turnover could be regarded as an
appropriate level that the Community industry could be
expected to obtain in the absence of materially injurious
dumping, on the grounds that this corresponds to the
highest
level of profit achieved by the Community
industry during the period under examination. This was
however strongly contested by the Community industry
the
on the grounds that
Community industry during the whole period considered
did not reflect the level of profit that it could achieve in
the absence of materially injurious dumping, because
industry
prices were
level of
reached that
profit
the necessary
investments in order to remain competitive. Lastly, the
Community industry claimed that the 2 % used was far
below the profit margin achieved by importers, and that
using a profit
level of 10 % would be the absolute
minimum.

already depressed when the
level of profit, and with that

industry could not make

the economic situation of

the

(290) This claim was carefully analysed, and the issue of the
determination of profit level to be used for the injury
calculation was re-examined.

H. DEFINITIVE ANTI-DUMPING MEASURES

(287)

In view of
the conclusions reached with regard to
dumping, resulting injury and Community interest, defi-
nitive measures on imports of the product concerned
originating in the PRC and in Vietnam should be
imposed.

(291) Firstly, it should be noted that the level of profit achieved
by the importers is not a proper benchmark because of
the different nature of those operators, and can therefore
not be used as a reference.

1.

INJURY ELIMINATION LEVEL

(288) The level of the definitive anti-dumping measures should
be sufficient
injury to the
to eliminate the material
Community industry caused by the dumped imports,
without exceeding the dumping margins found. When
calculating the amount of duty necessary to remove the
effects of
it was
considered
allow the
Community industry to cover its costs and obtain a
profit before tax that could be reasonably achieved
in the
under normal conditions of competition,

the materially injurious dumping,
that

any measures

should

i.e.

(292) Secondly, with regard to a reasonably achievable profit
margin, upon disclosure, substantiated comments were
submitted by the Community industry that a profit
margin not just of 2 % but of 6 % on turnover should
be regarded as an appropriate level that the Community
industry could be expected to obtain in the absence of
the
materially
Community
that with
industry provided evidence
regard to footwear not subject to materially injurious
dumping it indeed achieved such higher margins. Conse-
quently, the applicable profit margin was reconsidered
and adjusted to a 6 % level on turnover.

injurious dumping.

In this

respect

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Official Journal of the European Union

L 275/37

(293) Some interested parties claimed that it is the Commis-
sion's consistent practice to calculate an injury margin
only when the Community industry is making losses,
or otherwise the level of injury should be limited to
rejected
the undercutting. This claim was however
because the injury margin is regularly established for
the purpose of applying the lesser-duty-rule while the
undercutting margin is established pursuant to Article
3(3) of the basic Regulation. In this context, the injury
margin is relevant if the dumped imports have depressed
prices, and this can be the case even if the industry is still
profitable.

(294) Finally,

like in the case of

the undercutting margin,
various comments were received with respect
to the
injury margin calculations. Those claims were analysed
in detail, and where clerical mistakes were identified or
certain adjustments
supported by factual
could be
evidence, the necessary amendments to the calculations
have been applied.

(298)

(299)

(295) The necessary price increase was then determined on the
basis of a comparison, at the same level of trade, of the
weighted average import price, as established for the
price undercutting calculations, with the non-injurious
price of products sold by the Community industry on
the Community market. The non-injurious price has been
obtained by adjusting the sales price of each company
composing the Community industry to a break-even
above-mentioned profit
the
point
margin. Any difference resulting from this comparison
was then expressed as a percentage of
the total CIF
import value. This resulted in underselling margins of
23 % and 29,5 % for PRC and Vietnam respectively.

and by

adding

1.2. Particularities of the present proceeding

(296) However, as mentioned above, the present proceeding is
characterised by distinct and exceptional features, which
need to be adequately reflected in the anti-dumping
to
it
measures.
recall that until January 2005 a substantial part of the
product
quantitative
restrictions.

is notably important

concerned was

In this respect

subject

to

(297) This background calls for a closer consideration of the
adequate level of definitive anti-dumping measures to
the present case. As a
address the particularities of
result
for definitive
refined methodology
measures had to be considered, notably with a view to
the impact of the quantities imported throughout the

a more

period considered upon the situation of the Community
industry.

the existence of

In this respect
the quota covering
imports from PRC had a dampening effect and to that
extent prevented any material injury being caused to the
Community industry as compared to the situation during
the IP. This is clearly shown in the injury and causality
analysis, notably in recitals 187 seq. and 216 seq. Indeed,
in the case at hand it can be observed that the increase in
the volume element of dumped imports had a parti-
cularly decisive injurious effect on the Community
the
industry after
In fact,
economic indicators concerning the situation of
the
Community industry in particular deteriorated in the
indications of
first quarter of 2005 although clear
material
injury can already be found for the last three
quarters of 2004 making up the rest of the IP.

the lapse of

the quota.

In line with the lesser duty rule as set out in Article 9(4)
of the basic Regulation, due to the particularities of the
case at hand, notably the existence of the quota until the
end of 2004, special consideration and attention was
therefore given to the quantitative element of injurious
is considered that only imports above a
dumping.
certain volume threshold prior to the lapsing of
the
the injury
quota can cause material
threshold determined on the basis of the results of the
IP has to reflect the fact that certain import quantities did
not cause such material injury.

injury so that

It

(300) Consequently, the non-materially injurious import quan-
tities had to adequately be reflected in the injury
elimination levels.

(301)

In this respect based on Eurostat data the value of total
import volumes for the year 2003 from the countries
concerned was considered as not yet materially injurious
and formed the basis for a proportional adaptation of the
injury elimination levels established above. In a second
step this total non-materially injurious value amount
(‘NIV’) was allocated to the PRC and Vietnam on the
basis of the comparative imports ratio of the product
concerned from the countries concerned during the IP.
these two non-materially injurious
In a further step,
amounts were set
into proportion to the year 2005
imports for the respective country concerned as the
first and most recent full year available which was not
to quantitative restrictions with regard to the
subject
product concerned. Finally,
in these proportions the
duty levels established for the IP were reduced. This
resulted in injury thresholds of 16,5 % and 10 % for
the PRC and Vietnam respectively.

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(302) On the basis of

the same methodology the injury
threshold for Golden Step remained well above the estab-
lished dumping margin of 9,7 % for
this particular
company, so that in this case in line with the lesser
duty rule as set out in Article 9(4) of the basic Regulation
the dumping margin shall set the duty level.

discretion to adopt an injury elimination calculation to
the specificities of a particular case, provided the circum-
stances warrant this.

(303) Upon additional definitive disclosure several

interested
parties commented upon the course of action outlined
above. Some interested parties declared a preference for a
delayed duty system (‘DDS’), which would have left
certain annual volume amounts of imports out of the
scope of measures.

(304) However, it should be noted that for administrative and
legal reasons it was deemed inappropriate to implement
such DDS.

(305) Others put the opinion forward that the present case
would not warrant a deviation from the standard ad
valorem approach based on dumping and underselling
margins only.

(306)

It is recalled, as set out above, that in particular the fact
that the product concerned originating in the PRC was
subject to a quota until 2004 necessitated a special meth-
odology in this particular case to duly take account for
non-materially
this
submission had to be rejected as well.

Therefore,

injurious

imports.

(307) Other interested parties, in particular both from the PRC
and from Vietnam, questioned the methodology to
it was argued
identify and to allocate the NIV. Firstly,
that the basic Regulation generally does not provide for
such approach. Secondly,
an
adjustment of underselling margins based on an NIV
would be inappropriate because the NIV is allegedly a
volume based element, whereas underselling margins
are the result of price-comparisons,
i.e. only value
based. Thirdly,
it was put forward that the economic
impact of the NIV should not have been assessed on
instead on the
the basis of imports during 2005 but,
basis of the IP.

claimed that

it was

(308)

In reply to these submissions it is recalled that the basic
Regulation does not set out any specific methodology to
establish injury elimination levels. Consequently, no legal
provision restricts the analysis to establishing only under-
selling margins. Instead the legal framework provides for

(309) Secondly, it is recalled that the NIV data are value based
as they are derived from the 2003 import value amount.
Consequently such data can clearly be used to adjust
underselling margins. A volume element was only
applied in the context of the allocation of the NIV to
the PRC and to Vietnam by using the respective volume
ratio during the IP. Rationale behind this allocation key
was to (i) properly reflect the situation during the IP and
(ii) to even out distortions due to differences in average
per unit values of Chinese and Vietnamese imports.
Finally, with regard to the economic impact assessment
of the allocated NIV's it was considered to be necessary
to refer to the most recent full annual period of imports
not subject to a quota regime, i.e. 2005, because the very
reason to apply the NIV adjustment essentially to account
for the quota peculiarity over the period considered.
information
While
subsequent to the IP should not be taken into consid-
eration, Article 6(1) of the basic Regulation provides for
exceptions as in the case at hand.

admitted that

rule

as

is

it

a

(310)

It should further be noted that Vietnam could not be
disregarded in the adjustment exercise because the
Chinese quota regime indirectly had an impact on
imports originating in Vietnam as well and overall lead
to the result
from the countries
the imports
concerned until 2003 were considered to be not mate-
rially injurious.

that

(311) Some interested parties submitted that

this approach
would discriminate against Chinese exporters.
In this
respect concerns were raised with regard to the result
of the methodology, i.e. that despite a higher underselling
margin for Vietnam (29,5 %) as compared to the PRC
(23 %) this approach leads to overall lower injury elim-
ination levels for Vietnam (10 %) as compared to the
PRC (16,5 %).

(312) However, the methodology only takes different import
trends from the PRC and Vietnam to the EC into due
account. The respective Vietnamese import share of the
the period considered was
product concerned over
of non-materially
higher. Consequently,
injurious
this
imports was
inevitably results in a larger impact of this adjustment
methodology on the Vietnamese underselling margin.
Because the methodology only duly reflects
factual
differences it is not unjustified discriminatory.

its
larger as well. However,

share

6.10.2006

EN

Official Journal of the European Union

L 275/39

(313) Eventually, several interested parties argued that the time
to submit
additional definitive
disclosure would have been to short and not in line
with Article 20(5) of the basic Regulation.

comments on the

nation with an ad valorem duty, i.e. duties should apply
only to imports below a certain minimum price. This
preference has been reiterated by the Chinese authorities
and several other interested parties upon the additional
definitive disclosure concerning the form of measures.

(314)

In this respect it is noted that (i) due consideration being
given to the urgency of the matter and (ii) given that the
additional definitive disclosure
concerned only one
specific and limited aspect of the case at hand it was
considered to be necessary,
in line with the provisions
of the basic Regulation to set a five days deadline instead
of the generally applicable ten days disclosure deadline.
However, in this context it should further be noted that
where a substantiated request for an extension of this
deadline was made by interested parties it was granted.

2. UNDERTAKING

(315) Some parties, exporting producers as well as importers
came forward with price undertaking requests. In such
committed the
cases,
to sell below such
respective exporting producer not
price level that would have eliminated injurious dumping.

an undertaking would have

(316)

In the case of importers, these requests were deemed
irrelevant because dumping is caused by exporters for
which reason the exporter is responsible and in the
actual position to eliminate such dumping by appropriate
pricing.

the favour of more expensive shoes.

(320) Such proposals had to be rejected because a combined
duty would have led to an unjustified burden on cheap
shoes against
It
would practically be impossible to identify adequate
price categories for a product as diverse as the one
under investigation to avoid such unjustified burden.
Furthermore,
a
minimum price duty is difficult to monitor and may
easily lead to circumvention. Therefore, a minimum
price solution was considered to be impractical and
inadequate.

shown that

experience

past

has

(321) A number of

is noted that

In this respect,

that
cause
status of

importers and non-sampled Vietnamese
exporting producers claimed that the proposed course
of action gives no consideration to Vietnam's developing
country status.
the
it
the measures are to objectively address
purpose of
injury. The
unfair
dumping practices
country
any
economic or development
concerned by a certain proceeding is not
taken into
account under Articles 2 and 3 of the basic Regulation
as a relevant element when determining dumping and
injury. Adjustments under other factors non-specified in
the basic Regulation can only be made if it is demon-
strated that
they affect price comparability. Since the
latter was not substantiated by interested parties the
aforesaid argument on Vietnam's developing country
status had to be rejected.

(317)

In the case of exporting producers, the requests had to be
rejected because they were made by parties that did not
obtain market economy treatment.
for a
product like shoes which is continuously changing due
it would be practically impossible to set a
to fashion,
that equally eliminates
non-discriminatory price level
injurious dumping for
entirely
different models.

a huge variety of

In addition,

(322)

(318) Following

the

definitive

disclosure

document one
sampled Vietnamese exporting producer came forward
with a price undertaking request. Nevertheless,
this
request had to be rejected for the reasons explained
above.

3. DEFINITIVE DUTIES

In the light of the foregoing, and in accordance with
is considered
the basic Regulation,
Article 9(4) of
it
be
anti-dumping measures
definitive
that
imposed on imports originating in PRC and Vietnam at
the level of
the dumping and injury
in accordance with the lesser duty rule as
margins,
refined by the methodology set out above.
In this
respect for the country wide duty levels the injury elim-
ination levels set the ceiling for the anti-dumping duty.

the lowest of

should

(319) Other parties expressed a preference for a general
minimum price respectively a minimum-price in combi-

(323) However, with regard to Golden Step the duty level was
established on the basis of its dumping margin, which
was lower than the injury elimination level.

L 275/40

EN

Official Journal of the European Union

6.10.2006

(324) On the basis of the above, the proposed definitive duties

are as follows:

Country

Company

PRC

Golden Step

All other companies

Vietnam

All companies

Anti-dumping
duty

9,7 %

16,5 %

10 %

(325)

is minimised,

In order to ensure that any risk of false declarations or
circumvention of
a
the measures
strengthened administrative import surveillance system
on the basis of Article 308(d) of Commission Regulation
(EC) No 2454/93 (1), will allow earlier information on
relevant
found
showing that these import trends change significantly
this will be urgently investigated by the Commission.
In this context it should be clarified that the surveillance
of STAF now will cover such footwear above and below
a EUR 7,5 value threshold instead of
the original
threshold of EUR 9,

trends. Should evidence be

import

(326) Without ignoring that injurious dumping has been esta-
blished and that Community interest calls for the impo-
sition of measures,
the present proceeding is charac-
terised by distinct and exceptional features as referred
to in recitals 296 and 297 above, which should also
be adequately reflected in the duration of
the anti-
dumping measures.
the only recently
In the light of
lapsed import quota for a considerable part of footwear
originating in the PRC, the investigation showed that the
market for footwear with uppers of leather is still in a
phase of re-orientation as explained in more detail above
in recital 296 et seq., the Council therefore considers it
prudent that, in these exceptional market circumstances,
the duration of the measures should be limited. Conse-
quently, instead of five years as is the rule pursuant to
the Council
Article 11(2) of
considers it appropriate and reasonable to limit
the
duration of the measures to 2 years. Measures should
thus expire 2 years after
It
should be noted that Article 11 of the basic Regulation
will apply mutatis mutandis,

their entry into force.

the basic Regulation,

HAS ADOPTED THIS REGULATION:

Article 1

leather, excluding sports footwear, footwear involving special
technology, slippers and other indoor footwear and footwear
with a protective toecap, originating in the People's Republic of
China and Vietnam and falling within CN codes: 6403 20 00,
ex 6403 30 00, ex 6403 51 11, ex 6403 51 15, ex 6403 51 19,
ex 6403 51 91, ex 6403 51 95, ex 6403 51 99, ex 6403 59 11,
ex 6403 59 31, ex 6403 59 35, ex 6403 59 39, ex 6403 59 91,
ex 6403 59 95, ex 6403 59 99, ex 6403 91 11, ex 6403 91 13,
ex 6403 91 16, ex 6403 91 18, ex 6403 91 91, ex 6403 91 93,
ex 6403 91 96, ex 6403 91 98, ex 6403 99 11, ex 6403 99 31,
ex 6403 99 33, ex 6403 99 36, ex 6403 99 38, ex 6403 99 91,
ex 6403 99 93,
and
ex 6405 10 00 (2)
6403 30 00 39,
6403 51 15 90,
6403 30 00 89,
6403 51 95 90,
6403 51 19 90,
6403 59 31 90,
6403 51 99 90,
6403 59 91 90,
6403 59 35 90,
6403 91 11 99,
6403 59 95 90,
6403 91 18 99,
6403 91 13 99,
6403 91 96 99,
6403 91 91 99,
6403 99 31 90,
6403 91 98 99,
6403 99 38 90,
6403 99 33 90,
6403 99 93 99,
6403 99 91 99,
6403 99 98 29,
6403 99 96 29,
6403 99 98 99 and 6405 10 00 80).

ex 6403 99 96,
(TARIC
6403 51 11 90,
6403 51 91 90,
6403 59 11 90,
6403 59 39 90,
6403 59 99 90,
6403 91 16 99,
6403 91 93 99,
6403 99 11 90,
6403 99 36 90,
6403 99 93 29,
6403 99 96 99,

ex 6403 99 98

codes

For the purpose of this Regulation, the following defi-

2.
nitions shall apply:

‘sports footwear’ shall mean footwear within the meaning of
subheading note 1 to Chapter 64 of Annex I of Commission
Regulation (EC) No 1719/2005 (3);

to absorb the

technology’ shall mean footwear
‘footwear involving special
having a CIF price per pair of not less than EUR 7,5, for use
in sporting activities, with a single- or multi-layer moulded sole,
not injected, manufactured from synthetic materials specially
designed
lateral
movements and with technical features such as hermetic pads
containing gas or fluid, mechanical components which absorb
or neutralise impact, or materials such as low-density polymers
and falling within CN codes ex 6403 91 11, ex 6403 91 13,
ex 6403 91 16,
ex 6403 91 91,
ex 6403 91 18,
ex 6403 91 98,
ex 6403 91 96,
ex 6403 91 93,
ex 6403 99 91, ex 6403 99 93, ex 6403 99 96, ex 6403 99 98;

vertical or

impact of

1.
imports of

A definitive anti-dumping duty is hereby imposed on
leather or composition

footwear with uppers of

(1) Commission Regulation (EEC) No 2454/93 of 2 July 1993 laying
down provisions for the implementation of Council Regulation
(EEC) No 2913/92 establishing the Community Customs Code
(OJ L 253, 11.10.1993, p. 1). Regulation as last amended by Regu-
lation (EC) No 402/2006 (OJ L 70, 9.3.2006, p. 35).

(2) As defined in Commission Regulation (EC) No 1719/2005 of 27
October 2005 amending Annex I to Council Regulation (EEC) No
2658/87 on the tariff and statistical nomenclature and on the
(OJ L 286, 28.10.2005, p. 1). The
Common Customs Tariff
product
the product
coverage
description in Article 1(1) and the product description of the corre-
sponding CN codes taken together.

is determined in combining

(3) OJ L 286, 28.10.2005, p. 1.

6.10.2006

EN

Official Journal of the European Union

L 275/41

and

100

joules (1)

falling within

‘footwear with a protective toecap’ shall mean footwear incor-
porating a protective toecap with an impact resistance of at
CN codes:
least
ex 6403 51 11,
ex 6403 51 15,
ex 6403 30 00,
ex 6403 51 91,
ex 6403 51 95,
ex 6403 51 19,
ex 6403 59 11,
ex 6403 59 31,
ex 6403 51 99,
ex 6403 59 39,
ex 6403 59 91,
ex 6403 59 35,
ex 6403 59 99,
ex 6403 91 11,
ex 6403 59 95,
ex 6403 91 16,
ex 6403 91 18,
ex 6403 91 13,
ex 6403 91 93,
ex 6403 91 96,
ex 6403 91 91,
ex 6403 99 31,
ex 6403 99 11,
ex 6403 91 98,
ex 6403 99 33,
ex 6403 99 38,
ex 6403 99 36,
ex 6403 99 91, ex 6403 99 93, ex 6403 99 96, ex 6403 99 98
and ex 6405 10 00;

Country

Company

Anti-dumping
duty

TARIC Addi-
tional code

PRC

Golden Step

9,7 %

All other companies

16,5 %

Vietnam

All companies

10 %

Unless otherwise

4.
concerning customs duties shall apply.

specified,

the provisions

A775

A999

—

in force

‘slippers and other indoor footwear’ shall mean such footwear
falling within CN code ex 6405 10 10.

Article 2

The amounts secured by way of the provisional anti-dumping
duty pursuant to Commission Regulation (EC) No 553/2006 of
27 March 2006 shall be definitively collected at the rate defini-
tively imposed by the present Regulation. The amounts secured
in excess of the definitive rate of anti-dumping duties shall be
released.

The rate of the definitive anti-dumping duty applicable,
3.
before duty,
free-at-Community-frontier price of
the products described in paragraph 1 and manufactured by
the companies below shall be as follows:

to the net

Article 3

This Regulation shall enter into force on the day following its
publication in the Official Journal of the European Union. It shall
be in force for a period of 2 years.

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

Done at Luxembourg, 5 October 2006.

For the Council
The President

K. RAJAMÄKI

(1) The impact resistance shall be measured according to European

Norms EN345 or EN346.