Council Regulation (EC) No 1652/2006 of 7 November 2006 terminating the new exporter review of Regulation (EC) No 428/2005 imposing definitive anti-dumping duties on imports of synthetic staple fibres of polyesters originating, inter alia , in the People's Republic of China
Date: 2006-11-07
Institutions: Council of the European Union
Subjects: China, anti-dumping duty, anti-dumping legislation, import, man-made fibre, originating product

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Official Journal of the European Union

10.11.2006

COUNCIL REGULATION (EC) No 1652/2006

of 7 November 2006

terminating the new exporter review of Regulation (EC) No 428/2005 imposing definitive
anti-dumping duties on imports of synthetic staple fibres of polyesters originating, inter alia, in
the People's Republic of China

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty
Community,

establishing the European

Having regard to Council Regulation (EC) No 384/96 of 22
December 1995 on protection against dumped imports from
the European Community (1)
countries not members of
the
‘basic Regulation’), and in particular Article 11(4) thereof,

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

Whereas:

(1)

(2)

(3)

1. MEASURES IN FORCE

The measures currently in force on imports into the
Community of polyester staple fibres (‘PSF’) originating
in the People's Republic of China (‘PRC’) are definitive
anti-dumping duties imposed by Council Regulation (EC)
No 428/2005 (2).

2. CURRENT INVESTIGATION

2.1. Request for a review

After the imposition of definitive anti-dumping duties on
imports of PSF originating in the PRC, the Commission
received a request to initiate a ‘new exporter’ review of
Regulation (EC) No 428/2005, pursuant to Article 11(4)
of the basic Regulation, from the Chinese company Huvis
Sichuan (the applicant).

it had not exported the
The applicant claimed that
concerned to the Community during the
product
period of
investigation on which the anti-dumping
measures were based, i.e. the period from 1 January to

(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 71, 17.3.2005, p. 1. Regulation as amended by Regulation (EC)

No 1333/2005 (OJ L 211, 13.8.2005, p. 1).

investigation period)
the exporting
to the anti-
it claimed
it had started to export PSF to the Community

31 December 2003 (the original
it was not related to any of
and that
producers of PSF in the PRC subject
dumping measures in force. Furthermore,
that
after the end of the original investigation period.

2.2. Initiation of a ‘new exporter’ review

The Commission examined the prima facie evidence
submitted by the applicant and considered it sufficient
to justify the initiation of a review in accordance with
Article 11(4) of the basic Regulation. After consultation
of the Advisory Committee and after the Community
industry concerned had been given the opportunity to
comment, the Commission initiated, by Regulation (EC)
No 342/2006 (3), a review of Regulation (EC) No
and
428/2005 with
commenced its investigation.

applicant

regard

the

to

Pursuant to Article 2 of Regulation (EC) No 342/2006,
an anti-dumping duty of 49,7 % imposed by Regulation
(EC) No 428/2005 on imports of PSF produced, inter alia,
by the applicant was repealed. Simultaneously, pursuant
to Article 14(5) of the basic Regulation, customs autho-
rities were directed to take appropriate steps to register
the imports of PSF produced by the applicant.

2.3. Product concerned

The product concerned by the current review is the same
as that in the investigation that led to the imposition of
the measures in force on imports of PSF originating in,
inter alia, the PRC (original
i.e. synthetic
staple fibres of polyesters, not carded, combed or
otherwise processed for
spinning originating in the
People’s Republic of China, currently classifiable within
CN code 5503 20 00.

investigation),

2.4. Parties concerned

the applicant and the representatives of

The Commission officially advised the Community
the
industry,
exporting country of
review.
Interested parties were given the opportunity to make
their views known in writing and to be heard.

initiation of

the

the

(4)

(5)

(6)

(7)

(3) OJ L 55, 25.2.2006, p. 14.

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Official Journal of the European Union

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(8)

The Commission services also sent a market economy
treatment (MET) claim form and a questionnaire to the
applicant and received the replies within the deadlines set
for that purpose.

2.5. Investigation period

(9)

The investigation of dumping covered the period from 1
October 2004 to 31 December 2005 (the investigation
period or IP).

3. RESULTS OF THE INVESTIGATION

3.1.

‘New exporter’ qualification

(10)

The investigation revealed that the applicant started its
i.e. after the
production operations in October 2004,
original
the
product concerned during that period. It was therefore
concluded that the applicant fulfilled the requirement of
the first sentence of Article 11(4) of the basic Regulation.

investigation period and did not export

time. Considering

(11) However, it was also found that the applicant was related
to a partly State-owned Chinese producer which was
producing the product concerned during the original
investigation period, but which did not cooperate at
related Chinese
that
producer was subject
to the definitive anti-dumping
duty in force,
it was found that the criterion of the
second sentence of Article 11(4) of the basic Regulation,
which sets out that a new exporter or producer should
show that it is not related to any of the exporters or
producers in the exporting country which are subject to
the anti-dumping measures on the product,
is not
fulfilled.

that

the

(12)

(13)

investigation period.

The applicant argued that the related producer did not
export the product concerned to the Community during
this
the original
argument, the applicant provided the related producer's
audited accounts for the period between 2002 and 2004
which, according to the applicant, contained no indi-
cation of any export sales having been made during
the original IP.

In support of

The evidence submitted by the applicant did, however,
not show that the related producer did indeed not export
the product concerned during the original investigation
period. In fact, the audited accounts merely indicated that
there were no exports of commodity products, without
defining the exact meaning of commodity products, i.e.
concerned was
in particular whether
considered as a ‘commodity product’. In this regard,
it
is noted that the related producer is also manufacturing
products other than the product concerned. In addition,
it should be noted that, apart from submitting its audited

the product

sales made to domestic customers,

accounts, the related producer did not cooperate during
the current investigation and that therefore, the infor-
mation submitted by this
company could not be
verified. Thus, no evidence was available showing that
for example
all
traders, during the original IP were indeed destined for
in reality intended for
the domestic market, and not
export to the Community. Consequently,
it could not
be determined whether or not export sales had taken
place during the original IP.

(14) After disclosure, the applicant claimed that clarifications
concerning the audited accounts
should have been
requested earlier and in any case prior to disclosure. In
this regard, it is noted that the Chinese related producer
was requested to provide the information, made aware of
the deficiency and asked to cooperate in the present
proceeding, which it refused to do. Therefore, findings
with regard to this company were based on facts
available in accordance with Article 18 of the basic Regu-
lation. Under
for
further information after the deadlines applicable was
considered inappropriate and discriminatory with regard
to the normal practice of the Community institutions in
relation to non-cooperating parties.
is noted that
findings were in any case disclosed to the applicant
who was given ample opportunity to comment on
these findings.

these circumstances, any requests

It

(15)

(16)

In any event, the argument that the related producer did
to the Community is irrelevant,
or did not export
(13) and as
because as mentioned above in recital
the related
outlined in recitals
producer did not
review and,
therefore, the Commission could not establish whether
the economic group composed of the applicant and the
to be
related producer did fulfil
economy
as
considered
conditions.

the requirements
under market

(18)
cooperate

to (31) below,

operating

in this

3.2. Market Economy Treatment (MET)

Pursuant to Article 2(7)(b) of the basic Regulation,
in
anti-dumping investigations concerning imports origi-
nating in the PRC, normal value shall be determined in
accordance with paragraphs 1 to 6 of the said Article for
those producers which were found to meet the criteria
laid down in Article 2(7)(c) of the basic Regulation, i.e.
is shown that market economy conditions
where it
prevail
in respect of the manufacture and sale of the
like product. These criteria are set out in a summarised
form below:

— business decisions are made in response to market
signals, without significant State interference, and
costs reflect market values,

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— firms have one clear set of basic accounting records
which are independently audited in line with interna-
tional accounting standards (IAS) and are applied for
all purposes,

— no distortions carried over from the former non-

market economy system,

— bankruptcy and property laws guarantee stability and

legal certainty,

— exchange rate conversions are carried out at market

rates.

(17)

The applicant requested MET pursuant to Article 2(7)(b)
of the basic Regulation and was invited to complete a
MET claim form.

(22)

(23)

(18) As mentioned above in recital

the applicant was

the investigation
related to another
revealed that
the product concerned located in China.
producer of
Although invited to do so, the related producer did not
fill in a separate MET claim form.

(11),

(19)

a group of

to examine whether

It has to be noted that it is the Commission's consistent
practice
related
companies, as a whole, fulfils the conditions for MET.
This is deemed to be necessary to avoid that sales of a
group of companies are channelled via one of the related
companies in the group, should measures be imposed.
Therefore,
in cases where a subsidiary or any other
related company is a producer and/or a seller of the
product concerned, all such related companies have to
provide a MET claim form in order that an examination
can be made as to whether they also meet the criteria in
Article 2(7)(c) of
the basic Regulation. Consequently,
failure in that respect leads to the result that it cannot
be established that the group, as a whole, fulfils all the
conditions for MET.

In addition,

it was argued that

terms’.
the related
company refused to submit any confidential information
feared
for the purpose of
would result in improving the market position of
its
competitor, i.e. the applicant.

this investigation, which it

treatment of

It is noted that in accordance with Article 19 of the basic
Regulation, the related producer could have requested
confidential
information required to be
submitted to allay any concerns about disclosure of
it
confidential business data to competitors. However,
chose not to submit the required information without
having made any request
treatment.
Therefore, the applicant's argument had to be rejected.

for confidential

the

that

in contrast

related producer

The applicant also argued that
its business decisions
cannot be influenced by the related producer. Besides
the fact that this argument has not been substantiated
by any evidence, it is also irrelevant since, as explained
above, MET treatment should in any event be refused to
the applicant if its related company does not complete
the MET form and
the MET conditions.
fulfils
Furthermore, even if the substance of the claim were to
be examined, it is noted that the facts available in the
present case indicated,
to the applicant's
the related producer, having one member
claim,
the applicant, had an
on the board of directors of
influence in the decision making of
the applicant.
Indeed,
can block company
decisions concerning amendments to the articles of asso-
the joint venture, changes of
ciation, dissolution of
registered capital or merger or split of
the company
with other organizations, which require unanimity.
Furthermore, the purpose of the joint venture between
the applicant and the related producer was, as laid down
by chapter 5 of the joint venture agreement, to achieve ‘a
competitive position in quality and price for the world
market’, to ‘produce and sell polyester staple fibre’ and to
‘import and export products and raw materials
in
connection with polyester staple fibre’ which indicates
that both companies would indeed cooperate and at
least adjust their decisions in order to maximise their
world market position. The applicant's argument had
therefore to be rejected.

(20)

The Commission informed the applicant forthwith that
in the absence of a reply by the related producer, it could
not examine whether
that company operates under
market economy conditions.

(21)

The applicant argued that both companies are compe-
titors on the domestic market and are not on ‘good

(24)

Subsequent to disclosure, the applicant reiterated that the
related Chinese producer had only minor or peripheral
influence on its business decisions, as its consent is only
required for decisions regarding the company's existence
i.e. decisions linked to the related Chinese
as such,
producer
are
investments, while business decisions
made in line with the global strategy of its main share-
holder, where the Chinese producer had no influence.
Furthermore,
the related Chinese producer would not
be involved in the company's management.

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(25)

The applicant further argued that the decision to reject
the applicant's claim for MET on the mere grounds of the
non-cooperation of the related Chinese producer would
be unjustified because this relationship only constituted a
technical requirement without any practical relevance for
the applicant. It was also argued that the company was
not related to any of the Chinese exporting producers of
PSF subject to the anti-dumping measures in force, since
the related company did not export to the Community
investigation period, and could
during the original
therefore not have cooperated in the original
investi-
gation and request an individual duty.

the said recital. Likewise,

(26) As outlined above under recital (23), the possibility that
the related Chinese company could exert
significant
influence on the business operations of the applicant
could not be considered as minor or peripheral. On
the contrary, such influence relates to crucial aspects as
described under
since the
related Chinese company did not cooperate in this inves-
tigation,
it was not possible for the Commission to
determine whether this company did not export to the
Community during the original
investigation period, as
claimed. The comments provided by the applicant
contained no basis on which the conclusions made
under recital
In any event, the
fact that the related company could not have asked for
MET or IT during the original
investigation does not
invalidate the fact that it is subject to the measures in
force, i.e. the residual duty.

(13) could be revised.

(27)

(28)

Finally, on a more general basis, it was submitted that the
main elements on the basis of which it was decided to
reject the applicant's request for MET (i.e. the relationship
to the Chinese related producer) were already known to
the Commission before the investigation was initiated.

In this regard, it is noted that the main reason to reject
the applicant's claim for MET as set out in recitals (13),
(23) above and (31) below, was not the existence of the
related Chinese producer as such but its non-cooperation
and, as a consequence, the impossibility to determine,
amongst others,
in how far the State had indeed an
influence on the applicant's business decisions and
whether the related producer did not export during the
original IP as claimed.

(29)

The claims of the applicant were therefore rejected.

(30)

In addition, no determination could be made with regard
to possible distortions carried over from the former non-
market economy system. Indeed, the partly State-owned
related producer contributed the land use rights to the
In the absence of co-
applicant's
operation from the
it was not
possible to conclude that no such distortions existed.

registered capital.

related producer,

(31)

In view of the above, and in the absence of a duly
substantiated MET claim form from the applicant's
related producer, the Commission could not conclude
whether the group of companies, i.e. the applicant and
its related producer, fulfil the MET criteria.

3.3. Individual Treatment (IT)

(32)

(33)

(34)

(35)

(36)

if any,

Further to Article 2(7) of the basic Regulation, a country-
is established for countries falling
wide duty,
under
cases where
that
companies are able to demonstrate that they meet all
criteria for individual treatment set out in Article 9(5)
of the basic Regulation.

in those

article,

except

The applicant, as well as requesting MET, also claimed IT
in the event of not being granted MET. As described in
(11), a partly State-owned producer of PSF is
recital
related to the applicant. Since the related producer did
not
the
Commission services could not conclude whether State
circumvention.
interference was
IT could not be
Therefore,
granted to the applicant.

such as
it was concluded that

cooperate with the present

investigation,

to permit

The applicant submitted that in the current case, circum-
since both
vention would not be likely to occur
companies would be on competitive
and
terms,
therefore the related producer would never intend to
channel any of its production through the applicant for
export to the Community.

the related producer is difficult

It should be noted that since both companies are related
the behaviour of
to
predict. Furthermore, and as mentioned above in recital
(23), the joint venture between the two companies had as
an objective to maximise both companies' world market
position. The risk of circumvention resulting from one
company benefiting from a lower dumping margin than
the other company was therefore considered imminent.
The applicant did not submit any information which
showed that such risk of circumvention could be suffi-
ciently excluded.

that possible

The applicant contested the decision to reject its IT claim,
submitting
circumvention should be
addressed through the initiation of an investigation in
accordance with Article 13 of the basic Regulation, and
that nothing in Article 2(7)(c) of the basic Regulation
places the companies located in China any burden with
respect
they would not
circumvent any anti-dumping measures.

to the demonstration that

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(37)

In this regard, it is noted that the second paragraph of
Article 9(5) of
the basic Regulation is clear on the
conditions applicable for the establishment of an indi-
vidual duty when Article 2(7)(a) applies, which is
applicable in the present case since it could not be
concluded that
fulfilled the criteria of
Article 2(7)(c). In particular, Article 9(5)(e) of the basic
Regulation sets out that the State interference should not
be such as to permit circumvention. As outlined already
above in recital (35), in the absence of cooperation from
one of
it was impossible to
conclude that the conditions for IT were fulfilled.

the related companies,

the applicant

(38)

It was therefore concluded that IT should not be granted
to the applicant.

made subject to registration pursuant to Article 3 of
Regulation (EC) No 342/2006.

6. DISCLOSURE

(42) All parties concerned were informed of the essential facts
and considerations leading to the above conclusions and
were invited to comment in accordance with Article 20
of the basic Regulation. Comments of the parties were
taken into consideration when appropriate.

(43)

This review does not affect
the date on which the
measures imposed by Regulation (EC) No 428/2005, as
amended by Regulation (EC) No 1333/2005, will expire
pursuant to Article 11(2) of the basic Regulation,

4. CONCLUSION

HAS ADOPTED THIS REGULATION:

(39)

The purpose of the present review was to determine the
individual margin of dumping of the applicant, which
was allegedly different from the current residual margin
applicable to imports of the product concerned from the
PRC. The request was mainly based on the allegation that
the applicant fulfilled the criteria for MET.

(40) As the investigation concludes that,

establish that

IT,
applicant's

in the absence of
the applicant
cooperation from its related producer,
the Commission
was granted neither MET nor
could not
individual
the
dumping margin was indeed different from the residual
dumping margin established in the original investigation.
Therefore, the request made by the applicant should be
rejected and the new exporter review terminated. The
residual anti-dumping duty found during the original
investigation,
i.e. 49,7 % should consequently be main-
tained.

5. RETROACTIVE LEVYING OF THE ANTI-DUMPING
DUTY

Article 1

The new exporter review initiated by Regulation (EC) No

1.
342/2006 is hereby terminated.

2.
The anti-dumping duty applicable according to Article 1
of Regulation (EC) No 428/2005 to ‘all other companies’ in the
People's Republic of China is hereby levied with effect from 26
February 2006 on imports of
synthetic staple fibres of
polyesters which have been registered pursuant to Article 3 of
Regulation (EC) No 342/2006.

The customs authorities are hereby directed to cease the
3.
registration of imports of the product concerned originating in
the People's Republic of China, produced by Huvis Sichuan and
sold for export to the Community.

Unless otherwise

4.
concerning customs duties shall apply.

specified,

the provisions

in force

Article 2

(41)

In the light of the above findings, the anti-dumping duty
applicable to the applicant shall be levied retroactively on
the product concerned, which have been
imports of

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

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

Done at Brussels, 7 November 2006.

For the Council
The President

E. HEINÄLUOMA