Proposal for a Council Regulation terminating the partial interim review of the anti-dumping measures applicable to imports of hand pallet trucks and their essential parts originating in the People's Republic of China
Date: 2007-03-27
Institutions: European Commission
Subjects: China, anti-dumping duty, anti-dumping legislation, hoisting equipment, import

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 27.3.2007 
COM(2007) 137 final 

Proposal for a 

COUNCIL REGULATION 

terminating the partial interim review of the anti-dumping measures applicable to 
imports of hand pallet trucks and their essential parts originating in the People's 
Republic of China 

(presented by the Commission) 

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EXPLANATORY MEMORANDUM 

1)  CONTEXT OF THE PROPOSAL 

110 

•  Grounds for and objectives of the proposal 

This  proposal  concerns  the  application  of  Council  Regulation  (EC)  No  384/96  of  22 
December 1995 on protection against dumped imports from countries not members of 
the European Community, as last amended by Council Regulation (EC) No 2117/2005 
of 21 December 2005 ("the basic Regulation") in the proceeding concerning imports of 
hand pallet trucks and their essential parts originating in the People's Republic of China

120 

•  General context 

This proposal is made in the context of the implementation of the basic Regulation and 
is the result of an investigation which was carried out in line with the substantive and 
procedural requirements laid out in the basic Regulation. 

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•  Existing provisions in the area of the proposal 

There are no existing provisions in the area of the proposal. 

•  Consistency with the other policies and objectives of the Union 

Not applicable. 

2)  CONSULTATION OF INTERESTED PARTIES AND IMPACT ASSESSMENT 

•  Consultation of interested parties 

Interested  parties  concerned  by  the  proceeding  have  already  had  the  possibility  to 
defend their interests during the investigation, in line with the provisions of the basic 
Regulation. 

•  Collection and use of expertise 

There was no need for external expertise. 

•  Impact assessment 

This proposal is the result of the implementation of the basic Regulation. 

The  basic  Regulation  does  not  foresee  a  general  impact  assessment  but  contains  an 
exhaustive list of conditions that have to be assessed. 

3)  LEGAL ELEMENTS OF THE PROPOSAL 

305 

•  Summary of the proposed action 

On  31  May  2006,  the  Commission  initiated  on  its  own  initiative  a  partial  interim 
review  of  the  anti-dumping  measures  applicable  to  imports  of  hand  pallet  trucks  and 

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their essential parts originating in the People's Republic of China. 

The information at the Commission's disposal indicated that, following certain changes 
after  the  original  investigation  in  the  structure  of  one  Chinese  exporting  producer 
which was not granted market economy treatment (MET) in that investigation, namely 
Ningbo  Ruyi  Joint  Stock  Co.,  Ltd.  ('Ningbo  Ruyi'),  market  economy  conditions 
prevailed.  There  was  sufficient  prima  facie  evidence  suggesting  that  Ningbo  Ruyi 
fulfilled  the  criteria  of  Article  2(7)(c)  of  the  basic  Regulation.  In  this  context,  the 
circumstances  on  the  basis  of  which  the  existing  measures  were  established  were 
considered to have changed and these changes seemed to be of a lasting nature. 

Ningbo Ruyi's failure to disclose all its related companies makes it impossible to make 
a MET determination covering all its related companies. Furthermore, Ningbo Ruyi's 
failure to disclose all its related parties in its audited financial statements is a breach of 
International  Accounting  Standard  24  (Related  Party  Disclosures).  In  this  context,  it 
cannot  be  concluded  that  market  economy  conditions  prevail  for  Ningbo  Ruyi  and  a 
new dumping margin cannot be calculated. 

It is, therefore, proposed to terminate the review without amending the level of the duty 
applicable to Ningbo Ruyi. 

Member States were consulted and supported this proposal unanimously. 

It  is  proposed  that  the  Council  adopt  the  attached  proposal  for  a  Regulation  which 
should  be  published  in  the  Official  Journal  of  the  European  Union  not  later  than  30 
August 2007. 

310 

•  Legal basis 

Council  Regulation  (EC)  No  384/96  of  22  December  1995  on  protection  against 
dumped  imports  from  countries  not  members  of  the  European  Community,  as  last 
amended by Council Regulation (EC) No 2117/2005 of 21 December 2005. 

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•  Subsidiarity principle 

The proposal falls under the exclusive competence of the Community. The subsidiarity 
principle therefore does not apply. 

•  Proportionality principle 

The proposal complies with the proportionality principle for the following reason(s). 

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The form of action is described in the above-mentioned basic Regulation and leaves no 
scope for national decision. 

Indication  of  how  financial  and  administrative  burden  falling  upon  the  Community, 
national governments, regional and local authorities, economic operators and citizens is 
minimized and proportionate to the objective of the proposal is not applicable. 

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341 

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•  Choice of instruments 

Proposed instruments: regulation. 

Other means would not be adequate for the following reason(s). 

The above-mentioned basic regulation does not foresee alternative options. 

4)  BUDGETARY IMPLICATION 

409 

The proposal has no implication for the Community budget. 

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Proposal for a 

COUNCIL REGULATION 

terminating the partial interim review of the anti-dumping measures applicable to 
imports of hand pallet trucks and their essential parts originating in the People's 
Republic of China 

THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty establishing the European Community, 

Having  regard  to  Council  Regulation  (EC)  No  384/96  of  22  December  1995  on  protection 
against dumped imports from countries not members of the European Community1 ('the basic 
Regulation'), and in particular Article 11(3) thereof, 

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

Whereas: 

1. 

Measures in force 

A. PROCEDURE 

(1) 

Following  an  investigation  ('the  original  investigation'),  the  Council,  by  Regulation 
(EC)  No  1174/20052,  imposed  a  definitive  anti-dumping  duty  on  imports  of  hand 
pallet  trucks  and  their  essential  parts  originating  in  the  People's  Republic  of  China 
('PRC'). 

2. 

Ex officio initiation of a review 

(2) 

On  the  basis  of  information  at  the  Commission's  disposal  following  certain  changes 
after  the  original  investigation  in  the  structure  of  one  Chinese  exporting  producer 
which  was  not  granted  market  economy  treatment  in  that  investigation,  namely 
Ningbo Ruyi Joint Stock Co., Ltd. ('Ningbo Ruyi'), it appeared that market economy 
conditions  prevailed  for  this  company.  In  effect,  there  was  sufficient  prima  facie 
evidence  suggesting  that  Ningbo  Ruyi  fulfilled  the  criteria  of  Article  2(7)(c)  of  the 
basic Regulation. In this context, the circumstances on the basis of which the existing 
measures were established were considered to have changed and these changes seemed 
to be of a lasting nature. 

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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). 
OJ L 189, 21.7.2005, p. 1. 

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(3) 

Having determined, after consulting the Advisory Committee, that sufficient evidence 
existed  for  the  initiation  of  a  partial  interim  review  pursuant  to  Article  11(3)  of  the 
basic  Regulation,  the  Commission  published  a  notice  ('notice  of  initiation')3  and 
commenced  an  investigation  on  its  own  initiative,  limited  in  scope  to  determine 
whether  Ningbo  Ruyi  operates  under  market  economy  conditions  and,  if  so,  to 
determine whether its individual dumping margin and duty rate should be based on its 
own costs/domestic prices. 

3. 

Parties concerned by the investigation 

(4) 

(5) 

The Commission officially advised Ningbo Ruyi and its related importer Jungheinrich 
AG,  as  well  as  the  representatives  of  the  exporting  country  and  the  Community 
industry of the initiation of the review. Interested parties were given the opportunity to 
make their views known in writing and to request a hearing. 

The Commission also sent a claim form for market economy treatment ('MET') and a 
questionnaire  to  Ningbo  Ruyi  and  received  replies  within  the  deadlines  set  for  that 
purpose.  The  Commission  sought  all  the  information  it  deemed  necessary  for  the 
determination  of  MET  and  dumping,  analysed  the  information  provided  and  carried 
out verification visits at the premises of the related companies: 

– 

– 

– 

Ningbo Ruyi Joint Stock Co., Ltd, Ninghai; 

Ruyi Industries (Hong Kong) Co., Ltd. ('Ruyi Hong Kong'), Hangzhou; 

Jungheinrich  Lift  Trucks  (Shanghai)  Co.,  Ltd.  ('Jungheinrich  Shanghai'), 
Shanghai. 

4. 

Review investigation period 

(6) 

The  investigation  of  dumping  covered  the  period  from  1st  April  2005  to  31st  March 
2006 ('review investigation period' or 'RIP'). 

B. PRODUCT CONCERNED AND LIKE PRODUCT 

1. 

Product concerned 

(7) 

The  definition  of  the  product  concerned  corresponds  to  the  one  that  was  used  in  the 
original  investigation  mentioned  under  recital  (1)  above.  The  product  concerned  is 
hand  pallet  trucks  ('HPT'),  not  self  propelled,  used  for  the  handling  of  materials 
normally  placed  on  pallets,  and  their  essential  parts,  i.e.  chassis  and  hydraulics, 
originating in the PRC, currently classifiable within CN codes ex 8427 90 00 and ex 
8431 20 00 (TARIC codes 8427 90 00 10 and 8431 20 00 10). 

2. 

Like product 

(8) 

The current review has shown that the HPT produced in the PRC by Ningbo Ruyi and 
sold on the Chinese market have the same basic physical characteristics and the same 

3 

OJ C 127, 31.5.2006, p. 2. 

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uses as those exported to the Community. Therefore, these products are considered to 
be a like product within the meaning of Article 1(4) of the basic Regulation. 

C. RESULTS OF THE INVESTIGATION 

(9) 

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

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– 

– 

– 

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

firms  have  one  clear  set of basic accounting records which are independently 
audited in line with international accounting standards ('IAS') and are applied 
for all purposes; 

no distortions carried over from the non-market economy system; 

bankruptcy and property laws guarantee stability and legal certainty; 

exchange rate conversions are carried out at market rates. 

(10)  Ningbo Ruyi requested MET pursuant to Article 2(7)(b) of the basic Regulation. It is 
the Community’s consistent practice to examine whether a group of related companies 
involved in the production and/or sale of the product concerned as a whole fulfils the 
conditions  for  MET.  According  to  Ningbo  Ruyi,  there  was  only  one  such  related 
company in the PRC – Jungheinrich Shanghai. Ningbo Ruyi replied to the MET claim 
form within the given deadline. 

(11) 

(12) 

In the course of the investigation, the Community industry claimed that there seemed 
to be various companies related to Ningbo Ruyi which were not duly disclosed by the 
company  in  the  information  submitted  to  the  Commission,  including  in  the  audited 
financial  statements.  According  to  the  Community  industry,  the  non-disclosure  of 
related  companies  in  financial  statements  is  a  breach  of  IAS  24  (Related  Party 
Disclosures) and it requested the Commission to verify this issue. 

It  was  found  during  the  verification  visits  that  there  were  related  companies  which 
were  not  disclosed  in  the  audited  financial  statements  (breach  of  IAS  24)  or  in  the 
replies  to  the  MET  claim  form  and  to  the  questionnaire.  In  this  respect,  it  is  worth 
noting that both the MET claim form and the questionnaire requested Ningbo Ruyi to 
describe  its  world-wide  corporate  structure  and  affiliations,  including  parent 
companies,  subsidiaries  or  other  related  companies,  whether  or  not  involved  in  the 
production  and/or  sale  of  the  product  concerned.  Furthermore,  Ningbo  Ruyi  was 
requested to submit a MET claim form for each subsidiary or other related company in 
the PRC which was a producer and/or exporter of HPT and to provide details about all 
other related companies. 

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(13)  According  to  Ningbo  Ruyi's  Auditor's  Report  and  Financial  Statements  for  the  year 
ended  31  December  2005  ('Report  2005')  and  the  replies  to  the  MET  form  and  the 
questionnaire, Ningbo Ruyi only had three related companies in the RIP: Jungheinrich 
AG,  Jungheinrich  Shanghai  and  Ruyi  Hong  Kong.  The  investigation,  however, 
showed  that  the  Chinese  shareholders  of  Ningbo  Ruyi  have  also  controlling 
shareholdings in Ningbo CFA Co., Ltd. ('Ningbo CFA') and Ningbo Free Trade Zone 
Ruyi International Trading Co., Ltd. ('NFTZ'). 

(14)  There  are  also  other  companies  owned  by  relatives  of  the  Chinese  shareholders  of 
Ningbo  Ruyi:  CFA  Tools  Co.,  Ltd.  ('CFA  Tools'),  a  company  incorporated  in  Hong 
Kong, and Zhejiang Tianyou Import & Export Co., Ltd. ('Tianyou'). 

(15)  All the above-mentioned companies not disclosed by Ningbo Ruyi are thus related to 
Ningbo  Ruyi  for  the  purposes  of  the  current  review.  Three  of  them  were  traders  of 
HPT  in  the  RIP  and  all  have  a  business  licence  allowing  them  to  trade  HPT.  They 
seem  to  have  exported  mainly  to  countries  outside  the  Community.  At  least  three 
quarters of the sales volumes reported by Ningbo Ruyi as domestic sales were in fact 
export  sales  channelled  through  non-disclosed  domestic  related  customers  and 
unrelated customers. 

(16)  Finally,  the  nature  of  the  transactions  between  Ningbo  Ruyi  and  Ningbo  Jinmao 
Import  &  Export  Co.,  Ltd.  ('Ningbo  Jinmao'),  which  was  reported  as  a  related 
company in the original investigation (Ningbo Ruyi sold its shareholding in November 
2003),  is  an  indication  that  the  two  companies  still  have  close  links  in  the  HPT 
business. Ningbo Jinmao bought more than half of the HPT reported by Ningbo Ruyi 
as  domestic  sales  in  the  RIP  and  then  resold  a  significant  quantity  to  NFTZ,  which 
exported them. NFTZ did not buy any HPT directly from Ningbo Ruyi. The fact that 
Ningbo Jinmao is one of Ningbo Ruyi's main customers and sells a large quantity of 
its purchases to NFTZ shows that Ningbo Ruyi knew or should have known that most 
sales to Ningbo Jinmao could not be domestic sales as NFTZ, a related company, was 
exporting the products bought by Ningbo Jinmao. 

(17)  Some  time  after  the  on-the-spot  verification  visit,  Ningbo  Ruyi  submitted  some  new 
information  concerning  the  MET  status  of  certain  of  these  non-disclosed  related 
companies arguing that a MET determination for the whole group could still be made. 
This was on  the  grounds that the non-disclosure was  not intentional and because the 
involvement of these related parties with sales of the product under investigation was 
not  significant.  For  the  same  reasons,  Ningbo  Ruyi's  partner,  Jungheinrich  AG,  also 
argued that this new information should be considered and MET granted. 

(18)  Whether  or  not  there  was  any  intent  to  impede  the  investigation  by  the  timely  non-
disclosure of related parties, the fact is that questionnaire responses were substantially 
incomplete to a degree which made it impossible to verify the existence or otherwise 
of market economy conditions for the Ningbo Ruyi group during the verification visits 
which were carried out in the PRC. With no verification visits possible at the premises 
of  the  non-disclosed  related  parties,  the  extent  to  which  the  Ningbo  Ruyi  group  was 
involved with HPT can only remain a matter of conjecture. 

(19) 

In any event, Ningbo Ruyi's failure to disclose in its financial statements all its related 
parties  is  a  breach  of  IAS  24.  The  objective  of  IAS  24  is  to  ensure  that  an  entity's 
financial  statements  contain  the  disclosures  necessary  to  draw  attention  to  the 

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possibility that its financial position and profit or loss may have been affected by the 
existence  of  related  parties  and  by  transactions  and  outstanding  balances  with  such 
parties.  In  the  framework  of  an  anti-dumping  investigation,  such  disclosure  is 
necessary to allow the institutions to examine whether a group of related companies as 
a whole fulfils the conditions for MET. 

(20)  The breach of IAS 24 shows that the audit of Ningbo Ruyi's financial statements was 
not carried out in accordance with IAS and casts doubts on the reliability of Ningbo 
Ruyi's  accounts.  This  would  lead  to  the  failure  of  Ningbo  Ruyi  to  meet  the  second 
criterion laid down in Article 2(7)(c) of the basic Regulation. 

(21)  Although  the  provisions  of  Article  18  of  the  basic  Regulation  concerning  non-
cooperation could apply in this review, it is noted that the Commission initiated  this 
review on its own initiative because it had prima facie evidence that market economy 
conditions  prevailed  for  Ningbo  Ruyi,  something  that  Ningbo  Ruyi  subsequently 
failed  to  demonstrate.  Consequently,  it  is  considered  that  there  is  no  need  to  invoke 
Article 18 of the basic Regulation, but suffices to terminate the review and maintain 
the existing measure in force. 

D. TERMINATION OF THE REVIEW 

(22) 

In the light of the results of the investigation, the review should be terminated without 
amending the level of the duty applicable to Ningbo Ruyi, which should be maintained 
at  the  level  of  the  definitive  anti-dumping  duty  rate  established  in  the  original 
investigation, i.e. 28,5%. 

E. DISCLOSURE 

(23) 

Interested parties were informed of the essential facts and considerations on the basis 
of which it was intended to terminate the present review and to maintain the existing 
anti-dumping  duty  on  imports  of  HPT  produced  by  Ningbo  Ruyi.  All  parties  were 
given  an  opportunity  to  comment.  The  comments  received  were  not  of  a  nature  to 
change the conclusions. 

(24)  Following  disclosure,  the  Community  industry  claimed  that  the  non-cooperation 
provisions  of  the  basic  Regulation  (Article  18)  should  be  applied  and  Ningbo  Ruyi 
should  be  penalised  with  the  46,7%  residual  duty  as  a  non-cooperating  exporting 
producer. 

(25) 

Jungheinrich  AG  and  Ningbo  Ruyi  considered  that  Ningbo  Ruyi's  failure  to  disclose 
all  its  related  companies  was  minor  and  unintentional  and  had  no  impact  on  Ningbo 
Ruyi's financial situation. Therefore, Ningbo Ruyi should be granted MET or at least a 
revised lower individual duty rate. 

(26)  The failure to disclose all related companies, in particular since three out of the four 
non-disclosed related companies were involved in HPT business and the other one has 
a business licence that allows it to trade HPT, cannot be considered minor because it 
did not allow a determination of whether it has been shown that all MET criteria are 
met  (and  not  only  the  second  criterion  concerning  accounting)  for  all  companies,  in 
line  with  the  Community's  standard  practice.  Furthermore,  whether  the  failure  to 
disclose  all  these  related  companies  was  unintentional  is  irrelevant.  The  uncontested 

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fact is that these related companies were not even disclosed in the financial statements 
of Ningbo Ruyi and this by itself showed that at least the second criterion of Article 
2(7)(c) of the basic Regulation was not met. Consequently, the claim that the failure to 
disclose  these  related  companies  was  minor,  unintentional  and  without  any  impact 
cannot be accepted. 

(27)  Finally,  as  set  out  in  recital  (3)  above,  this  review  is  limited  in  scope  to  determine 
whether  Ningbo  Ruyi  operates  under  market  economy  conditions  and,  only  if  MET 
had been granted to Ningbo Ruyi, would a new dumping margin be calculated. Thus, 
since MET is not granted, no new dumping margin, higher or lower than the existing 
one, can be established for Ningbo Ruyi through this review. 

(28)  This  review  should  therefore  be  terminated  without  any  amendment  to  Regulation 

(EC) No 1174/2005, 

HAS ADOPTED THIS REGULATION: 

Sole Article 

The partial interim review of the anti-dumping measures applicable to imports of hand pallet 
trucks  and  their  essential  parts  originating  in  the  People's  Republic  of  China,  initiated 
pursuant  to  Article  11(3)  of  Regulation  (EC)  No  384/96,  is  hereby  terminated  without 
amending the anti-dumping measures in force. 

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

Done at Brussels, […] 

For the Council 
The President 
[…] 

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