Proposal for a Council Regulation amending Regulation (EC) No 1371/2005 imposing a definitive anti-dumping duty on imports of grain oriented flat-rolled products of silicon-electrical steel originating in the United States of America and Russia
Date: 2007-12-17
Institutions: European Commission
Subjects: Russia, United States, anti-dumping duty, anti-dumping legislation, import, originating product, plate, steel

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 17.12.2007 
COM(2007) 818 final 

Proposal for a 

COUNCIL REGULATION  

amending Regulation (EC) No 1371/2005 imposing a definitive anti-dumping duty on 
imports of grain oriented flat-rolled products of silicon-electrical steel originating in the 
United States of America and Russia 

(presented by the Commission) 

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EXPLANATORY MEMORANDUM 

Context of the proposal 

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’)  to  imports  of  grain 
oriented  flat-rolled  products  of  silicon-electrical  steel  originating  in  the  United  States 
of America and Russia. 

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. 

Existing provisions in the area of the proposal 

By  Regulation  (EC)  No  1371/20051,  the  Council  imposed  a  definitive  anti-dumping 
duty  on  imports  of  grain  oriented  flat-rolled  products  of  silicon-electrical  steel 
("GOES")  originating  in  the  United  States  of  America  ("USA")  and  Russia  (the 
"definitive Regulation").  

By  Decision  2005/622/EC2,  the  Commission  accepted  price  undertakings  offered  by 
two  co-operating  exporting  producers  that  were  imposed  a  company  specific  duty  of 
31,5%  (AK  Steel  Corporation,  USA)  and  11,5 %  (Novolipetsk  Iron  and  Steel 
Corporation  (NLMK),  Russia)  respectively.  The  country-wide  anti-dumping  duties 
applicable to all other companies, except Viz Stal, Russia, subject to a duty of 0 %, are 
37,8% for USA and 11,5 % for Russia.  

Consistency with other policies and objectives of the Union 

Not applicable. 

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 

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2 

OJ L 223, 27.8.2005, p. 1. 
OJ L 223, 27.8.2005, p. 42. 

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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. 

Legal elements of the proposal 

Summary of the proposed action 

In October 2006, the Commission initiated an interim product scope review with regard to 
the imports of GOES originating in the United States of America and Russia. 

The  enclosed  proposal  for  a  Council  Regulation  contains  the  conclusions  regarding  the 
possible exemption of part of the original product definition from the measures that were 
imposed in August 2005.  

Given the finding of the investigation that thin GOES of a thickness of maximum 0,16 mm 
are  not  produced  in  the  Community,  have  distinct  physical  and  technical  characteristics 
and are destined for different end-uses, and that there exists no interchangeability between 
thin  GOES  and  regular  GOES,  it  is  proposed  that  the  scope  of  the  measures  should  be 
limited to GOES of a thickness of more than 0,16 mm. 

It is proposed that the Council adopts the attached proposal for a Regulation in view of its 
publication in the Official Journal of the European Union on 20 January 2008 at the latest. 

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.  

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 reasons. 

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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Choice of instruments 

Proposed instruments: Regulation. 

Other  means  would  not  be  adequate  because  the  basic  Regulation  does  not  foresee 
alternative options. 

Budgetary implication 

The proposal has no impact on expenditure but has a financial impact on revenue – the effect is 
as follows; 

(€ million to one decimal place) 

Budget line 

Revenue3 

12 month period, 
starting dd/mm/aaaa

[Year 2008] 

Article 120   Impact on own resources 

01/01/2008

0,2 million euro

detail in euro 

Situation following action 

2005 

2006 

2007 

[n+4] 

[n+5] 

Article 120  

32.662 

97.987

97.987  

3 

Regarding  traditional  own  resources  (agricultural  duties,  sugar  levies,  customs  duties)  the  amounts 
indicated must be net amounts, i.e. gross amounts after deduction of 25 % of collection costs 

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Proposal for a 

COUNCIL REGULATION  

amending Regulation (EC) No 1371/2005 imposing a definitive anti-dumping duty on 
imports of grain oriented flat-rolled products of silicon-electrical steel originating in the 
United States of America and Russia 

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 Community4 (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: 

A. MEASURES IN FORCE 

(1) 

(2) 

By  Regulation  (EC)  No  1371/20055,  the  Council  imposed  a  definitive  anti-dumping 
duty  on  imports  of  grain  oriented  flat-rolled  products  of  silicon-electrical  steel 
("GOES")  originating  in  the  United  States  of  America  ("USA")  and  Russia  (the 
"definitive Regulation").  

By  Decision  2005/622/EC6,  the  Commission  accepted  price  undertakings  offered  by 
two co-operating exporting  producers that were imposed a company specific duty of 
31,5%  (AK  Steel  Corporation,  USA)  and  11,5%  (Novolipetsk  Iron  and  Steel 
Corporation  (NLMK),  Russia)  respectively.  The  country-wide  anti-dumping  duties 
applicable to all other companies, except Viz Stal, Russia, subject to a duty of 0%, are 
37,8% for USA and 11,5% for Russia. 

B. PRESENT INVESTIGATION 

(3) 

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The  information  at  the  Commission's  disposal  indicated  that  certain  GOES  which 
typically  have  a  thickness  of  up  to  0,1  mm  and  due,  inter  alia,  to  their  high 
electromagnetic efficiency, low weight and low heat development associated with their 
use  possess  properties  which  are  not  present  in  other  types  of  GOES.  As  a  result  of 
these characteristics, the use of these products is also considered different and found 

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 223, 27.8.2005, p. 1. 
OJ L 223, 27.8.2005, p. 42. 

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typically  in  the  aircraft  and  medical  engineering  industries.  Therefore,  it  was 
considered  appropriate  to  review  the  case  as  far  as  the  scope  of  the  product  is 
concerned. 

(4) 

Having determined, after consulting the Advisory Committee, that sufficient evidence 
existed to justify the initiation of a partial interim review, the Commission, by a notice 
published  in  the  Official  Journal  of  the  European  Union,  initiated  a  partial  interim 
reviewin  accordance  with  Article  11(3)  of  the  basic  Regulation7.  The  investigation 
was limited in scope to the definition of the product subject to the measures in force in 
order to assess the need for amendment of the product scope. 

C. PRODUCT UNDER REVIEW 

(5) 

(6) 

(7) 

The  product  under  review  is  grain  oriented  flat-rolled  products  of  silicon-electrical 
steel,  currently  classifiable  within  CN  codes  7225  11  00  (of  a  width  of  600  mm  or 
more) and 7226 11 00 (of a width of less than 600 mm). These codes are given only 
for information. 

GOES  are  produced  from  hot-rolled  coils  of  silicon  alloyed  steel  of  different 
thicknesses  of  which  the  particular  grain  structure  is  uniformly  directed  in  order  to 
allow  for  magnetic  conductivity  with  a  high  degree  of  efficiency.  Inefficiency  with 
regard to this magnetic conductivity is called 'core loss', which is the prime indicator 
of the quality of the product.  

The market is typically divided into high conductivity or high permeability grades and 
regular grades. The high permeability grades allow achieving lower core losses for any 
given thickness of the sheets. Such characteristics are especially relevant for industrial 
producers of electrical power transformers.  

D. INVESTIGATION 

(8) 

(9) 

The Commission advised the Community producers of GOES, all known Community 
importers and users as well as all known exporting producers in the USA and Russia 
of the initiation of the review. 

The Commission requested information from all the above mentioned parties and from 
those other parties who made themselves known within the time limit set in the notice 
of initiation of the investigation. The Commission also gave the interested parties the 
opportunity to make their views known in writing and to request a hearing.  

(10)  The  following  companies  co-operated  in  the  investigation  and  provided  relevant 

information to the Commission. 

Community producers 

- ThyssenKrupp Electrical Steel GmbH, Gelsenkirchen, Germany 

- Orb Electrical Steels Limited - Cogent Power Limited, Newport, United Kingdom 

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OJ C 254, 20.10.2006, p. 10. 

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GOES-producers in the USA 

- AK Steel Corporation, Butler, Pennsylvania 

- Allegheny Technologies Incorporated, Pittsburgh, Pennsylvania 

GOES-producers in Russia 

- Novolipetski Iron & Steel Corporation (NLMK), Lipetsk 

- VIZ Stal, Ekaterinburg 

Thin GOES-producer in the USA 

- Arnold Magnetic Technologies, Marengo, Illinois 

Thin GOES-importers in the Community 

- Gebruder Waasner GmbH, Forchheim, Germany 

Thin GOES-users in the Community 

- Gebruder Waasner GmbH, Forchheim, Germany 

- Sangl GmbH, Erlangen, Germany 

- Vacuumschmelze GmbH, Hanau, Germany 

E. RESULTS OF THE INVESTIGATION 

1. Different identity of "ordinary" versus "thin" GOES producers 

(11)  None  of  the  producers  of  GOES,  which  were  investigated  in  the  framework  of  the 
procedure  leading  to  the  imposition  of  the  measures  in  force,  produce  GOES  of  the 
thickness as targeted by the current product scope investigation.  

(12)  Neither  ThyssenKrupp  Electrical  Steel  GmbH,  nor  Orb  Electrical  Steels  Limited 
(Cogent) produce thin GOES and the same situation applies to the US producers, i.e. 
AK  Steel  Corporation  and  Allegheny  Technologies  Incorporated,  and  the  Russian 
producers  VIZ  Stal  and  NLMK.  Consequently,  none  of  these  producers  had  a  direct 
interest  and  none  of  them  objected  to  a  possible  exclusion  of  thin  GOES  from  the 
scope of the measures. 

(13)  The production of thin GOES requires a process of re-rolling, which is performed by 
specialised  companies  of  which  only  two  are  known  to  the  Commission  in  the 
countries concerned: the US producer Arnold Magnetic Technologies and the Russian 
producer Ileko  (Asha), of which only the former  company  co-operated.  As  indicated 
above in recitals (10) and (11), there is no such production known in the Community.  

2. Product differentiation  

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(14)  AK  Steel  Corporation  produced  thin  GOES  until  1971,  as  so-called  T-grades.  The 
production  process  started  from  fully  finished  GOES  grades  (both  regular  and  high 
permeability), from which the mill coating was removed and where the sheets were re-
rolled,  re-annealed  and  re-coated.  Specific  end-uses  were  found  in  the  aircraft 
industry, transformers and a wide variety of electro-technical applications, for which 
size and the weight of the material is of a decisive importance. It was found that such 
thin GOES are not interchangeable with other GOES.  

(15) 

(16) 

It  was  also  examined  whether  such  T-grades  consisted  of  a  product  which  could  be 
distinguished  from  "ordinary"  GOES  on  the  basis  of  technical  characteristics.  It  was 
found that the re-rolling production process (consisting of a cold mechanical stretching 
and  flattening  process),  with  re-annealing  and  re-coating,  fundamentally  alters  the 
technical  specifications  of  the  product,  an  observation  that  is  corroborated  by  the 
disappearance of the original manufacturers' product guarantee.  

It was also found that the physical characteristic of thickness is not limited to 0,10 mm 
which  was  the  maximal  thickness  mentioned  in  the  notice  of  initiation.  Most 
commercially occurring thicknesses are 0,1016 mm and 0,1524 mm which in the USA 
are commonly referred to as 4 "mil" and 6 "mil". One "mil" stands for a thousand of an 
inch or 0,0254 mm.  

(17)  The product definition of thin GOES therefore has to be specified as GOES which are 

re-rolled to a thickness of maximum 0,16 mm, re-annealed and re-coated. 

F. RETROACTIVE APPLICATION 

(18) 

In  view  of  the  above  findings  that  thin  GOES  have  different  basic  physical  and 
technical characteristics and end-uses than other GOES, it is considered appropriate to 
exempt imports of GOES of a thickness of maximum 0,16 mm from the anti-dumping 
measures in force.  

(19)  Consequently,  for  goods  not  covered  by  Article  1(1)  of  Regulation  (EC)  No 
1371/2005 as amended by this Regulation, the definitive anti-dumping duties paid or 
entered  in  the  accounts pursuant  to Article  1(1)  of Regulation  (EC) No  1371/2005  in 
its initial version should be repaid or remitted. 

(20)  Repayment  or  remission  must  be  requested  from  national  customs  authorities  in 

accordance with applicable customs legislation. 

(21)  Since the present review investigation is limited to the clarification of the product and 
since  it  was  not  intended  this  product  type  be  covered  by  the  original  measures,  in 
order to prevent any consequent prejudice to importers of the product, it is considered 
appropriate  that  the  findings  be  applied  from  the  date  of  the  entry  into  force  of  the 
definitive  Regulation.  Moreover,  in  particular  in  view  of  the  relatively  recent  entry 
into  force  of  the  original  Regulation  and  of  the  expected  limited  number  of  requests 
for  refunds,  there  is  no  overriding  reason  not  to  provide  for  such  retro-active 
application. 

(22)  This  review  does  not  affect  the  date  on  which  Regulation  (EC)  No  1371/2005  will 

expire pursuant to Article 11(2) of the basic Regulation. 

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HAS ADOPTED THIS REGULATION: 

Article 1 

Article 1(1) of Regulation (EC) No 1371/2005 shall be replaced by the following: 

"A  definitive  anti-dumping  duty  is  hereby  imposed  on  imports  of  grain  oriented  flat-rolled 
products  of  silicon-electrical  steel  of  a  thickness  of  more  than  0,16  mm,  originating  in  the 
United States of America and Russia, falling within CN codes ex 7225 11 00 (products of a 
width of 600 mm or more) (TARIC code 7225 11 00 10) and ex 7226 11 00 (products of a 
width of less than 600 mm) (TARIC codes 7226 11 00 11 and 7226 11 00 91." 

Article 2 

This  Regulation  shall  enter  into  force  on  the  day  following  that  of  its  publication  in  the 
Official Journal of the European Union. It shall apply from 28 August 2005. 

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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