Proposal for a Council Regulation extending the definitive anti-dumping measures imposed by Regulation (EC) No 1472/2006 on imports of certain footwear with uppers of leather originating in the People's Republic of China to imports of the same product consigned from the Macao SAR, whether declared as originating in the Macao SAR or not
Date: 2008-04-04
Institutions: European Commission
Subjects: China, Macao, anti-dumping measure, footwear industry, import, leather, originating product

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 4.4.2008 
COM(2008) 171 final 

Proposal for a 

COUNCIL REGULATION 

extending the definitive anti-dumping measures imposed by Regulation (EC) No 
1472/2006 on imports of certain footwear with uppers of leather originating in the 
People's Republic of China to imports of the same product consigned from the Macao 
SAR, whether declared as originating in the Macao SAR or not 

(presented by the Commission) 

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EXPLANATORY MEMORANDUM 

1. 

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’)  in  the  investigation  which 
considers  the  extension  of  the  definitive  anti-dumping  measures  imposed  by 
Regulation (EC) No 1472/2006 on imports of certain footwear with uppers of leather 
originating in the People's Republic of China to imports of the same product consigned 
from the Macao SAR. 

•  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  and  in  particular  Article  13 
thereof. 

•  Existing provisions in the area of the proposal 

Council  Regulation  (EC)  No  1472/2006  imposing  definitive  anti-dumping  duties 
ranging  from  9.7%  to  16.5%  on  imports  of  certain  footwear  with  uppers  of  leather 
originating in the People’s Republic of China. 

•  Consistency with 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  opportunity  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. 

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3. 

Legal elements of the proposal 

•  Summary of the proposed action 

Having  determined,  after  consulting  the  Advisory  Committee,  that  sufficient  prima 
facie evidence existed for the initiation of an investigation pursuant to Article 13 of the 
basic Regulation, the Commission published, in the Official Journal  of the European 
Union, a Regulation of Initiation1 (the ‘initiating Regulation’) on an ex-officio basis to 
investigate the alleged circumvention of the anti-dumping measures. The Commission, 
by  means  of  the  initiating  Regulation  and  Article  14(5)  of  the  basic  Regulation,  also 
instructed the customs authorities to register imports of certain footwear with uppers of 
leather consigned from the Macao SAR whether declared as originating in the Macao 
SAR or not, as from 7 September 2007. 

The  purpose  of  this  investigation  was  to  examine  whether  imports  of  the  product 
concerned are being circumvented by transhipment and/or assembly operations via the 
Macao SAR.  

The investigation showed that these imports were circumventing the measures in place 
and  it  is  therefore  proposed  that  the  Council  adopts  the  attached  proposal  for  a 
Regulation which should be published in the Official Journal of the European Union 
by 4 May 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.  

•  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 the 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. 

•  Choice of instruments 

Proposed instruments: regulation. 

1 

OJ L 234, 06.09.2007, p.3. 

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

4. 

Budgetary implication 

The proposal has no implication for the Community budget. 

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Proposal for a 

COUNCIL REGULATION 

extending  the  definitive  anti-dumping  measures  imposed  by  Regulation  (EC)  No 
1472/2006  on  imports  of  certain  footwear  with  uppers  of  leather  originating  in  the 
People's  Republic  of  China  to  imports  of the  same  product  consigned  from  the  Macao 
SAR, whether declared as originating in the Macao SAR or not 

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  Community  (2)  (the 
‘basic Regulation’), and in particular Article 13 thereof,  

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

Whereas: 

A. PROCEDURE 

1. 

(1) 

2. 

(2) 

(3) 

Existing measures and former investigations 

By  Regulation  (EC)  No  1472/2006  (3),  (the  ‘original  Regulation’),  the  Council 
imposed  definitive  anti-dumping  duties  ranging  from  9,7  to  16,5  %  on  imports  of 
footwear  with  uppers  of  leather  originating  in  the  People’s  Republic  of  China  (‘the 
original investigation’). 

Ex-Officio Initiation 

In  accordance  with  recital  (325)  of  the  original  Regulation,  the  Commission  carried 
out  monitoring  of  imports  in  order  to  identify  any  changes  in  the  pattern  of  trade 
which could indicate circumvention of the measures. 

The evidence at the disposal of the Commission indicated that since the imposition of 
the anti-dumping measures, there had been a change in the pattern of trade, based on 
transhipment and/or assembly practices, for which there was insufficient due cause or 
economic  justification  other  than  the  imposition  of  the  anti-dumping  measures.  In 
addition,  the  evidence  showed  that  the  remedial  effects  of  the  existing  anti-dumping 
measures on imports of certain footwear with uppers of leather originating in the PRC 

2 

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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 275,06.10.2006, p. 1. 

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(4) 

3. 

(5) 

were  being  undermined  both  in  terms  of  quantity  and  price.  Finally,  the  evidence 
indicated that the prices of certain footwear with uppers of leather consigned from the 
Macao  SAR  were  dumped  in  relation  to  the  normal  value  established  for  the  like 
product during the original investigation. 

Having  determined,  after  consulting  the  Advisory  Committee,  that  sufficient  prima 
facie evidence existed for the initiation of an investigation pursuant to Article 13 of the 
basic Regulation, the Commission published, in the Official Journal of the European 
Union, a Regulation of Initiation 4(the ‘initiating Regulation’) on an ex-officio basis to 
investigate the alleged circumvention of the anti-dumping measures. The Commission, 
by means of the initiating Regulation and Article 14(5) of the basic Regulation, also 
instructed the customs authorities to register imports of certain footwear with uppers 
of  leather  consigned  from  the  Macao  SAR  whether  declared  as  originating  in  the 
Macao SAR or not, as from 7 September 2007. 

Investigation 

The Commission officially advised the authorities of the Macao SAR and the PRC and 
known manufacturers/exporters in the Macao SAR and the PRC, the importers in the 
Community known to be concerned and producers of certain footwear with uppers of 
leather  in  the  Community  of  the  initiation  of  the  investigation.  Questionnaires  were 
sent  to  the  exporters/manufacturers  in  the  Macao  SAR,  to  the  exporters/producers  in 
the  PRC,  to  the  importers  in  the  Community  which  were  known  to  the  Commission 
from  the  original  investigation  and  which  had  made  themselves  known  within  the 
deadlines  specified  in  Article  3  of  the  initiating  Regulation.  Interested  parties  were 
given the opportunity to make their views known in writing and to request a hearing 
within the time limit set in the initiating Regulation. 

(6) 

Eight  manufacturers/exporters  in  the  Macao  SAR  submitted  questionnaire  replies. 
Replies  to  questionnaires  were  also  submitted  by  16  unrelated  importers  in  the 
Community.  Other  importers  also  made  themselves  known  but  did  not  complete  a 
questionnaire response. 

(7) 

The following companies co-operated in the investigation and submitted replies to the 
questionnaires: 

Macanese manufacturers/exporters: 

–  Fabrica de Sapatos Paolina Limitada, Macao 

–  Feifer Footwear/Ultimate Footwear, Macao 

–  Fabrica de Sapatos Fairwear, Macao 

–  Hap Yun Shoes Factory, Macao 

–  Hong Wan, Macao 

–  K. Wah Shoes Factory Limited, Macao 

4 

OJ L 234, 06.09.2007, p. 3. 

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–  Fabrica de Sapatos Sunrise, Macao 

–  Vai Un Footwear Factory, Macao 

Importers in the Community: 

–  a+w shoes GmbH & Co. KG, Germany 

–  Aasics Europe B.V., The Netherlands 

–  Aldo UK Ltd, UK 

–  Caprice Schuhproduktion GmbH & Co. KG, Germany 

–  Eurohispana De Inversiones, S.A., Spain 

–  Firma Handlowa "C.A.M.", Poland 

–  Footex International B.V., The Netherlands 

–  Heson International B.V., The Netherlands 

–  Mexx Shoes B.V., The Netherlands 

–  Orion Italiana GmbH & Co. KG, Germany 

–  PWH Originals International B.V., The Netherlands 

–  Shoe.com GmbH & Co. KG, Germany 

–  Wendel GmbH & Co. KG, Germany 

–  Wolverine Europe Ltd., UK 

–  Wolverine Europe B.V., The Netherlands 

–  Wortman KG Internationale Schuproduktionen, Germany 

(8) 

In  addition,  27  producers/exporters  in  the  PRC  replied  to  mini  questionnaires 
regarding trade in footwear via Macao. 

(9) 

Verification visits were carried out at the premises of the following companies: 

–  Fabrica de Sapatos Paolina Limitada, Macao 

–  Feifer Footwear (Macau)/Ultimate Footwear (Macau), Macao 

–  Fabrica de Sapatos Fairwear (Macau) Limitada, Macao 

–  Hap Yun Shoes Factory, Macao 

–  Hong Wan Factory, Macao 

–  Fabrica de Sapatos K. Wah Limitada, Macao 

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–  Vai Un Footwear Factory, Macao 

(10)  By  visiting  7  companies,  over  90%  of  the  production  of  the  co-operating 

manufacturers was covered. 

(11)  Where  appropriate,  verification  visits  were  also  carried  out  to  traders  in  both  the 
Macao SAR and the Hong Kong SAR, which traded the product concerned for sale to 
the  Community  market.  Such  visits  were  limited  to  sales  of  the  product  concerned 
produced by the verified Macanese companies and the authorities of the Hong Kong 
SAR were informed of these visits. 

4. 

Product concerned and like product 

(12)  The  product  concerned  by  the  possible  circumvention  is  footwear  with  uppers  of 
leather or composition leather, excluding sports footwear, footwear involving special 
technology, slippers and other indoor footwear and footwear with a protective toecap 
('certain  footwear  with  uppers  of  leather')  originating  in  the  People's  Republic  of 
China, normally declared under CN codes 6403 20 00, ex 6403 51 05, 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 05, 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 05, 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 05, 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, ex 6403 99 96, ex 6403 99 98 and ex 6405 10 00 
(the 'product concerned').  

(13)  The  product  under  investigation  is  footwear  with  uppers  of  leather  or  composition 
leather, excluding sports footwear, footwear involving special technology, slippers and 
other  indoor  footwear  and  footwear  with  a  protective  toecap  consigned  from  the 
Macao  SAR  (the  'product  under  investigation'),  whether  declared  as  originating  in 
Macao  SAR  or  not,  normally  declared  under  the  same  CN  codes  as  the  product 
concerned. 

(14)  The investigation showed that footwear exported to the Community from the People’s 
Republic of China and those consigned from the Macao SAR to the Community have 
the same basic physical characteristics and have the same uses. They are therefore to 
be  considered  as  like  products  within  the  meaning  of  Article  1(4)  of  the  basic 
Regulation. 

5. 

Investigation period 

(15)  The  investigation  period  (the  ‘IP’)  covered  the  period  from  1  July  2006  to  30  June 
2007. Data was collected from 2004 up to the end of the IP to investigate the alleged 
change in the pattern of trade and the other aspects set out in Article 13 of the basic 
Regulation. 

6. 

Disclosure 

(16)  All  interested  parties  were  informed  of  the  essential  facts  and  considerations  on  the 

basis of which it was intended to recommend: 

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(i)  the  extension  of  the  definitive  anti-dumping  measures  imposed  by  Council  Regulation 
(EC) No 1472/2006 on imports of certain footwear with uppers of leather originating in the 
People's Republic of China to imports of the same product consigned from the Macao SAR; 

(ii) not to grant exemptions to the companies having requested them. In accordance with the 
provisions  of  the  basic  Regulation,  parties  were  granted  a  period  in  which  they  could  make 
representations subsequent to this disclosure. 

(17)  The oral and written comments submitted by the parties were considered and, where 

appropriate, the definitive findings have been modified accordingly. 

B. RESULTS OF THE INVESTIGATION 

1. General considerations 

(18)  As mentioned above, the analysis of a change in the pattern of trade covered the period 
from 2004 up to the end of the IP. Data was collected and analysed on the basis of the 
enlarged  Community  market  ('EU27')  as  at  the  date  of  the  initiating  Regulation. 
However, it should be noted that the original measures were imposed on the PRC on 
the  basis  of  calculations  based  on  the  Community  market  as  it  existed  at  that  time 
('EU25').  Bearing  this  in  mind,  the  import  levels  into  the  two  new  Member  States 
(Bulgaria and Romania) were analysed and it was clear that these accounted to only a 
very  small  percentage  of  total  EU27  imports  and  that  therefore  the  decision  as  to 
which EU market level (EU27 or EU25) should be used as a basis for analysis had no 
impact on the outcome of the conclusions reached.  

2. Degree of cooperation and determination of the import volume 

(19)  As  stated  above  in  recital  (6),  eight  exporters/manufacturers  in  the  Macao  SAR 
cooperated with the investigation by submitting questionnaire replies and all of these 
companies  exported  the  product  concerned  to  the  Community  during  the  IP  either 
directly  or  indirectly  via  traders.  Based  on  information  supplied  by  the  Macanese 
authorities,  it  was  clear  that  at  least  15  companies  were  manufacturing  footwear  in 
Macao at the initiation of the investigation. However, the largest manufacturer, which 
represented  around  50%  of  exports  to  the  Community,  did  not  co-operate  and 
therefore co-operation levels were determined to be below 50%. Furthermore, only 27 
exporting  producers 
for 
producer/exporters in the PRC. During the original investigation it was clear that the 
number  of  producers  in  the  PRC  was  many  hundreds.  None  of  the  27  respondents 
stated that they exported to the Community market via Macao. 

the  Commission's  mini  questionnaire 

replied 

to 

(20)  As it was clear that the co-operation level for both the Macao SAR and the PRC was 
not  high,  the  determination  of  the  import  volume  had  to  be  obtained  via  statistical 
sources.  This  data  was  cross-checked  and  confirmed  by  other  statistical  sources 
available  to  the  Commission.  This  approach  was  further  confirmed  by  other 
information  received  during  the  investigation  which  indicated  the  existence  of  a 
number of other non-cooperating exporters/manufacturers in the Macao SAR and the 
PRC which exported the product concerned to the Community during the IP.  

3. Methodology 

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(21) 

In  accordance  with  Article  13(1)  of  the  basic  Regulation,  the  assessment  of  the 
existence of circumvention was done by analysing whether there was a change in the 
pattern of trade between third countries and the Community, if this change stemmed 
from  a  practice,  process  or  work  for  which  there  was  insufficient  due  cause  or 
economic justification other than the imposition of the duty, if there was evidence of 
injury or that the remedial effects of the duty were being undermined in terms of the 
prices  and/or  quantities  of  the  like  product,  and  whether  there  was  evidence  of 
dumping in relation to the normal values previously established for the like product, if 
necessary in accordance with the provisions of Article 2 of the basic Regulation. 

(22)  The practice, process or work referred to above includes, inter alia, the consignment 
of the product subject to measures via the Macao SAR and the assembly of parts by an 
assembly  operation  in  the  Macao  SAR.  For  this  purpose,  the  existence  of  assembly 
operations was determined in accordance with Article 13(2) of the basic Regulation. 

(23) 

In  this  regard,  it  is  noted  that  eight  manufacturing  companies  in  Macao  submitted 
questionnaire responses. The seven largest manufacturers were verified on spot and all 
eight responses were used as a basis for the calculation of the following aspects of the 
investigation mentioned at Article 13 of the basic Regulation: 

a) 

the value of the parts used in the assembly operations; 

b) 

the value added in terms of cost of manufacturing (COM); 

c) 

dumping using the normal value from the previous investigation; 

the  determination  of  when  the  companies  started  manufacturing,  or  whether 

d) 
operations substantially increased, since the imposition of measures; 

the  assessment  of  whether  the  imported  products  had,  in  terms  of  quantities 

e) 
and/or prices, undermined the remedial effects of the measures in force. 

(24)  As  regards  a)  and  b)  above,  cost  information  from  the  Macanese  manufacturers 
including  their  purchases  from  Chinese  suppliers  was  used.  As  none  of  the  Chinese 
suppliers  involved  received  MET  status  in  the  original  investigation,  the  question 
arose whether the cost information relating to the Chinese suppliers could be used. In 
the  original  investigation,  where  it  was  found  that  Chinese  costs  were  unreliable 
because  no  MET  status  was  granted,  costs  from  an  analogue  country  (Brazil)  were 
used as a replacement. In respect of this investigation, calculations were  made using 
both Chinese and analogue country data from the original investigation. 

(25)  Where  a  particular  company  did  not  supply  a  full  questionnaire  response,  findings 
relating to a) to e) above as necessary were based on facts available in accordance with 
Article  18  of  the  basic  Regulation.  Where  this  was  necessary,  the  relevant 
manufacturer/exporter was informed by means of, inter alia, a disclosure and given an 
opportunity to comment. 

(26)  Bearing  in  mind  that  the  statistical  evidence  collected  in  this  investigation  did  not 
differentiate  amongst  the  types  of  footwear  concerned,  the  tests  mentioned  at  recital 
(23)  above  were  assessed  on  the  basis  of  data  received  from  the  co-operating 
Macanese manufacturers/exporters. 

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(27)  To  assess  whether  the  imported  products  from  the  Macao  SAR  had,  in  terms  of 
quantities and/or prices, undermined the remedial effects of the measures in force, the 
sales quantities and prices of the eight co-operating manufacturers were compared to 
the  injury  elimination  level  established  for  Community  producers  in  the  original 
investigation. 

(28) 

(29) 

In  accordance  with  Article  13(1)  and  (2)  of  the  basic  Regulation,  it  was  examined 
whether  there  was  evidence  of  dumping  in  relation  to  the  normal  value  previously 
established for like or similar products. In this regard, export prices of the co-operating 
manufacturers in the Macao SAR during the IP were compared with the normal value 
established in the investigation leading to the imposition of the definitive measures for 
the like product. In the original investigation normal value was established on the basis 
of prices or constructed value in Brazil, which was found to be an appropriate market 
economy analogue country for the PRC. For the purpose of a fair comparison between 
the normal value and the export price, due allowance, in the form of adjustments, was 
made for differences which affect prices and price comparability. 

In  accordance  with  Article  2(11)  and  (12)  of  the  basic  Regulation,  dumping  was 
calculated  by  comparing  the  weighted  average  normal  value  as  established  in  the 
this 
original 
investigation’s  IP,  expressed  as  a  percentage  of  the  CIF  price  at  the  Community 
frontier, duty unpaid. 

the  weighted  average  export  prices  during 

investigation  and 

4. Change in the pattern of trade 

(30) 

Imports from China have reduced since the imposition of provisional measures in the 
original  investigation  by  Commission  Regulation  (EC)  No  553/20065.  By  contrast, 
imports from the Macao SAR have increased enormously. This change in trade pattern 
is  most  accurately  expressed  in  this  investigation  by  analysing  sales  volumes  in  the 
period  April  to  December  of  the  years  2005,  2006  and  2007  because  measures  were 
originally imposed in April 2006 and footwear is a product with seasonal variations.  

The PRC 

Period 

Volume exported to the EU 

April to December 2005 

around 142 million pairs 

April to December 2006 

around 66 million pairs 

April to December 2007 

around  70  million  pairs  (extrapolation  based 
on available data) 

The Macao SAR 

Period 

Volume exported to the EU 

April to December 2005 

around 0.5 million pairs 

5 

OJ L 98, 06.04.2006, p.3. 

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April to December 2006 

around 8.0 million pairs 

April to December 2007 

around 8.5 million pairs (extrapolation based 
on available data) 

Source  -  statistical  data  (Taric)  available  to  the  Commission  covering  only  the  product 
concerned (figures rounded for reasons of confidentiality) 

(31) 

It  is  clear  from  the  above  figures  that imports  from  the  PRC  fell  substantially  in  the 
last nine months of 2007 and 2006 as compared to 2005. In contrast, imports from the 
Macao  SAR  increased  substantially  over  the  same  time  periods.  These  findings 
support the allegation that goods have been consigned from China via the Macao SAR 
to the Community.  

(32)  The  Commission  carried  out  cross-checking  of  this  data  to  other  available  statistical 

sources which revealed similar trends. 

(33)  The Commission also used Macanese import and export statistics for shoe parts which 

showed that: 

Period 

Volume imported to the Macao SAR from the 
PRC 

April to December 2005 

around 30 tonnes 

April to December 2006 

around 900 tonnes 

April to December 2007 

around  800  tonnes  (extrapolation  based  on 
available data) 

In  contrast,  the  volume  of  exports  of  such  shoe  parts  during  the  above  3  periods  was 
negligible. 

Source – Macao Economic Services Database 

(34)  The  above  findings  show  that  the  importation  of  shoe  parts  increased  by  a  massive 
amount  after  the  imposition  of  the  provisional  measures  in  April  2006  and  provides 
evidence that a large assembly operation was being set up in the Macao SAR after the 
imposition of those measures. 

(35)  The  Commission  also  used  Macanese  import  and  export  statistics  for  finished 

footwear which showed that: 

Period 

Volume imported to the Macao SAR from the 
PRC 

April to December 2005 

April to December 2006 

0.04 million pairs 

4.5 million pairs 

April to December 2007 

5.1  million  pairs  (extrapolation  based  on 

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Period 

April to December 2005 

April to December 2006 

April to December 2007 

available data) 

Volume  exported  to  the  EU  from  the  Macao 
SAR 

0.3 million pairs 

10.8 million pairs 

8.2  million  pairs  (extrapolation  based  on 
available data) 

Source – Macao Economic Services Database 

(36)  The above findings show that the importation of footwear from the PRC to the Macao 
SAR  and  the  exportation  of  the  same  footwear  from  the  Macao  SAR  to  the  EU 
increased  by  a  massive  amount  after  the  imposition  of  the  provisional  measures  in 
April  2006.  This  provides  evidence  that  large-scale  transhipment  operations  were 
performed via the Macao SAR after the imposition of those measures. 

(37)  The overall decrease of Chinese exports to the Community and the parallel increase of 
exports  from  the  Macao  SAR  after  the  imposition  of  the  provisional  measures 
constitute a change in the pattern of trade between the above mentioned countries. 

5. Circumvention via Assembly Operations 

(38) 

In  addition  to  the  evidence  used  above  at  recital  (37),  circumvention  via  assembly 
operations  was  assessed  using  data  supplied  by  the  co-operating  Macanese 
exporters/producers. 

5.1.The Value of Parts Test (Article 13.2 (b)) 

(39)  For  all  eight  co-operating  Macanese  exporters  the  vast  majority  of  the  raw  materials 
were  supplied  from  Chinese  suppliers.  These  raw  materials  were  not  simply  leather, 
plastics  etc.  but  complete  uppers,  outsoles,  insoles,  laces,  shoe-boxes  and  other 
accessories. In some cases, even glue was sourced from these Chinese suppliers. This 
was  evidenced  by  copies  of  raw  materials  invoices  seen  on  spot  together  with  a 
physical inspection of the production lines and stocks of raw materials.  

(40)  None  of  the  Chinese  companies  which  supplied  the  eight  Macanese  manufacturers 
received  MET  status  in  the  original  investigation  and  the  question  therefore  arose 
whether  the  purchase  data  from  the  Chinese  suppliers  could  be  used.  In  the  original 
investigation, where it was found that Chinese costs were unreliable because no MET 
status  was  granted,  costs  from  an  analogue  country  (Brazil)  were  used  as  a 
replacement.  In  respect  of  this  investigation,  calculations  were  made  using  both 
Chinese and analogue country data.  

(41)  As  regards  the  calculation  using  the  cost  data  of  the  Macanese  manufacturers, 
including the actual purchase costs from their Chinese suppliers, a limited amount of 
very minor materials were sourced locally in Macao but these did not amount to more 
than 2% of the total value of the assembled parts. 

EN 

   EN 

 
 
(42)  As  regards  the  calculation  using  the  analogue  country  data  in  Brazil,  a  very  similar 
result was obtained although, as the Brazilian raw material costs were slightly higher 
than the actual Chinese data, the percentage of total raw material costs sourced in the 
Macao SAR was even lower. 

(43) 

It was therefore concluded that more than 60% of the total value of the raw materials 
of the assembled product were sourced from the PRC. 

5.2. The Value Added Test of the Cost of Manufacturing ('COM') (Article 13.2 (b)) 

(44)  This  test  was  assessed  using  data  supplied  by  the  eight  co-operating  Macanese 
manufacturers.  For  all  the  companies  it  was  clear  that  the  vast  majority  of  the  value 
added  in  the  COM  was  carried  out  in  the  PRC  rather  than  in  the  Macao  SAR.  The 
sourcing from the PRC was in all cases of the parts which were so far advanced that 
the  assembly  in  Macao  related  to  machinery  and  labour  for  glueing  and  finishing  of 
the footwear.  

(45)  For each company a calculation was performed to assess the value added in terms of 
COM  in  Macao.  Such  data  was  obtained  from  the  accounting  records  held  by  each 
company. However, some companies operated only on the basis of processing fees and 
were unaware of the value of the processing carried out in the PRC by their suppliers. 
In such cases, it was possible to estimate this value using information relating to raw 
materials  obtained  from  the  PRC  and  the  export  price  of  the  goods  from  Macao 
excluding  profit  and  SGA  costs.  This  test  was  carried  out  through  examination  of 
copies of raw materials invoices, accounting records of other COM items seen on spot, 
export invoices together with a physical inspection of the production lines and stocks 
of raw materials.  

(46)  None  of  the  Chinese  companies  which  supplied  the  eight  Macanese  manufacturers 
received  MET  status  inthe  original  investigation  and  therefore  the  question  arose 
whether  the  purchases  from  the  Chinese  suppliers  could  be  used.  In  the  original 
investigation, where it was found that Chinese costs were unreliable because no MET 
status  was  granted,  costs  from  an  analogue  country  (Brazil)  were  used  as  a 
replacement.  In  respect  of  this  investigation,  calculations  were  made  using  both 
Chinese and analogue country data. 

(47)  As  regards  the  calculation  using  the  cost  data  of  the  Macanese  manufacturers, 
including the actual purchase costs from their Chinese suppliers, calculations showed 
that the COM of the assembly operations in Macao amounted to between 6 and 18% 
depending  on  the  company  and  the  weighted  average  was  9.5%.  As  regards  the 
calculation  using  the  analogue  country  data  in  Brazil,  a  very  similar  result  was 
obtained  although  as  the  Brazilian  COM  costs  were  slightly  higher  than  the  actual 
Chinese  data,  the  percentage  of  COM  costs  sourced  in  the  Macao  SAR  was  even 
lower. 

(48)  One  co-operating  importer  argued  that  the  Macanese  manufacturers  were  not 
breaching  the  test  concerning  25%  value  added  of  the  manufacturing  cost.  They 
claimed  that,  as  the  Macanese  manufacturers  had  Certificates  of  Origin  for  their 
footwear  exports,  they  were  not  circumventing  the  measures  in  place.  However, 
whether the Macanese manufacturers offer Certificates of Origin with their exports is 

EN 

   EN 

 
 
not  at  issue.  Compliance  with  the  rules  of  origin  does  not  exclude  the  possibility  of 
circumvention. 

(49) 

It  was  concluded  based  on  recitals  (44)  to  (48)  that  the  value  added  to  the  parts 
brought in, during the assembly operation, did not exceed 25% of the value of the cost 
of manufacturing. 

5.3. Increase in Production since the Opening of the Original Investigation (Article 13(2) 

(a)) 

(50)  The original investigation relating to this product was initiated on 7 July 2005. It was 
therefore necessary to establish if production increased since that date. This test was 
assessed  using  purchase  invoices  of  raw  materials,  production  records  and  sales 
invoices of finished goods of the eight co-operating Macanese exporters.  

(51)  For  three  companies,  it  was  clear  that  the  footwear  production  at  the  company  had 

been set up since July 2005.  

(52)  For  all  remaining  companies,  a  substantial  increase  in  production  was  established 
when  comparing  2005  production  volumes  to  those  of  the  IP.  These  increases 
averaged over 100%. It was therefore concluded that there was a substantial increase 
in production since the original case was opened in July 2005. 

(53)  The  legal  representatives  for  several  co-operating  importers  claimed  that  their 
customers (retailers) preferred footwear made in Macao than those made in the PRC 
because  they  were  made  to  higher  production  standards  and  used  a  better  quality  of 
raw materials. They also claimed that intellectual property theft was a concern in the 
PRC.  The  importers  claim  that  this  is  one  reason  why  they  source  from  the  Macao 
SAR.  However,  none  of  these  claims  has  been  substantiated  by  the  co-operating 
manufacturers  in  the  Macao  SAR.  Indeed,  none  of  the  co-operators  had  major 
production  facilities  and  simply  assembled  parts  sourced  from  the  PRC.  The 
investigation  further  showed  that  in  terms  of  raw  material  quality  and  production 
standards, the footwear sourced in the Macao SAR was identical to that sourced in the 
PRC. In respect of intellectual property rights, this allegation was also unsubstantiated 
and could not explain why concerns over this issue had led to such a sudden increase 
in production in the Macao SAR as explained above. The investigation concluded that 
the  reason  for  such  an  increase  in  production  was  the  imposition  of  anti-dumping 
measures on footwear from the PRC. 

(54)  Another importer claimed that the existence of manufacturing facilities in the Macao 
SAR prior to the imposition of measures in the PRC shows that there is an economic 
justification for the imports from the Macao SAR. However, the investigation showed 
that prior to the imposition of measures concerning imports from the PRC, the level of 
manufacturing activity in the Macao SAR was very low. Indeed, as the above findings 
show,  there  was  a  massive  increase  in  footwear  manufacturing  activity  since  the 
measures  were  imposed.  This  was  caused  by  new  companies  being  formed  and  pre-
existing companies increasing and/or restarting production.  

6. Circumvention via Transhipment 

EN 

   EN 

 
 
(55)  As none of the 27 Chinese exporters which co-operated in the investigation declared 
that they performed shoe business via Macao, the Commission analysed statistical data 
in order to examine whether transhipment via Macao occurred. 

(56)  The change in the pattern of trade described above at recitals (30) to (37) supports the 
allegation  of  circumvention  via  transhipment.  In  particular,  the  trade  in  finished 
footwear set out in recital (35) shows that the product concerned, which was exported 
to  the  Community  market  from  the  PRC,  was  being  consigned  through  the  Macao 
SAR.  

(57)  Bearing  in  mind  that  the  population  of  the  Macao  SAR  numbered  only  around  0.5 
million persons during the IP, it cannot be claimed that the 4.5 million pairs of shoes 
imported  from  the  PRC  in  2006  could  be  consumed  in  Macao.  On  the  contrary,  the 
export statistics show that a large proportion of such footwear was re-exported to the 
Community  market.  The  volume  exported  in  the  IP  from  Macao  to  the  Community 
was in fact higher than 4.5 million pairs (around 10 million pairs). This increase can 
be explained by the conversion of shoe parts into finished footwear. 

(58)  The  investigation  did  not  uncover  any  justification  other  than  the  imposition  of  the 

measures for such practices. 

(59) 

In  conclusion,  the  investigation  has  shown  that  large-scale  transhipment  operations 
were performed via the Macao SAR after the imposition of the anti-dumping measures 
on footwear originating in the PRC. 

7. Dumping Test (Article 13(1)) 

(60) 

In accordance with Article 2(11) and (12) of the basic Regulation, a comparison of the 
weighted  average  normal  value  as  established  in  the  original  investigation  and  the 
weighted  average  of  export  prices  during  this  investigation’s  IP,  expressed  as  a 
percentage of the CIF price at the Community frontier duty unpaid, showed dumping 
of the imports of the product concerned consigned from the Macao SAR.  

(61)  The methodology for this test is described at recitals (21) to (29). The dumping margin 
for the co-operating companies ranged from 8% - 57%. In the absence of cooperation 
for  transhipping  operations,  a  calculation  of  dumping  was  performed  on  the  basis  of 
available statistical sources, confirming significant dumping levels. 

(62)  One  co-operating  importer  claimed  that  imports  from  Macao  were  not  dumped  and 
contested  the  methodology  of  using  normal  value  from  the  original  investigation. 
However, it must be pointed out that the methodology employed is the one set out in 
Article 13(1) of the basic Regulation.  

8. Undermining of the remedial effect of the anti-dumping duty (Article 13(1)) 

(63)  The  trade  flow  analysis  at  recitals  (30)  to  (37)  shows  a  change  in  the  pattern  of 
Community  imports,  which  occurred  since  the  original  investigation  was  opened.  It 
was  therefore  examined  whether  this  change  in  the  pattern  of  trade  undermined  the 
remedial effects of the anti-dumping measures imposed in the original investigation. 

(64) 

In terms of quantities, recital (35) above shows an increase in footwear exports to the 
Community  market  of  around  10  million  pairs  in  the  period  of  April  to  December 

EN 

   EN 

 
 
2006 and 2007 as compared to the same period in 2005. In the original investigation 
the  Community  market  was  established  at  714  million  pairs  which  mean  that  the 
imports account for around 1.5% of consumption. Furthermore, as CIF import prices 
averaged over 10 Euros per pair, the imports from the Macao SAR totalled over 100 
million  Euros.  The  imports  from  the  Macao  SAR  must  therefore  be  deemed  to  be 
material and significant. 

(65)  With regard to dumped prices of the product consigned from the Macao SAR, it was 
found that they were, on average, well below the injury elimination level established 
for Community producers in the original investigation. 

(66)  Therefore,  it  was  concluded  that  the  imports  from  the  Macao  SAR  of  the  product 
concerned  undermined  the  remedial  effects  of  the  duty  in  terms  of  prices  and 
quantities. 

C. CONCLUSIONS 

(67)  The present investigation was characterised by a high level of non-cooperation in the 
PRC, whereas co-operation in the Macao SAR, whilst not high, was deemed adequate 
to provide a representative basis for the assessment of trade consigned from the Macao 
SAR  by  means  of  assemblers.  As  regards  the  allegations  of  transhipment  via  the 
Macao  SAR  (without  assembly),  no  companies  cooperated  with  the  investigation 
leaving the Commission to rely, inter alia, on statistical information.  

(68)  The  investigation  showed  that  there  is  clear  circumvention  of  the  measures  on  the 
product  concerned  from  the  PRC  within  the  meaning  of  Article  13(1)  and  (2)  of  the 
basic Regulation via the Macao SAR. In view of the above, the existing anti-dumping 
measures imposed on imports of the product concerned originating in the PRC should 
be extended to the same product consigned from the Macao SAR, whether declared as 
originating in the Macao SAR or not. 

(69)  The measures to be extended should be those established in Article 1(3) of the original 

Regulation for ‘all other companies’. 

(70) 

In  accordance  with  Article  14(5)  of  the  basic  Regulation,  which  provides  that  any 
extended  measures  should  apply  to  imports  which  entered  the  Community  under 
registration imposed by the initiating Regulation, duties should be collected on those 
registered imports of the product concerned consigned from the Macao SAR. 

D. REQUESTS FOR EXEMPTION 

(71)  None of the eight companies in the Macao SAR which submitted a questionnaire reply 
requested an exemption in accordance with Article 13(4) of the basic Regulation. 

(72)  However,  it  should  be  noted  that  all  of  the  eight  companies  carried  out  very  similar 
limited assembly functions and sourced all of their main raw materials in the PRC. As 
all  these  companies  consequently  failed  each  of  the  circumvention  tests  outlined  in 
Article  13  (1)  and  (2)  of  the  basic  Regulation,  no  such  exemptions  would  therefore 
have been granted even if they had been requested. 

EN 

   EN 

 
 
HAS ADOPTED THIS REGULATION: 

Article 1 

1.  The  definitive  anti-dumping  duty  applicable  to  "all  other  companies"  imposed  by 
Regulation  (EC)  No  1472/2006  on  imports  of  certain  footwear  with  uppers  of  leather  or 
composition  leather  as  defined  in  Article  1  of  Council  Regulation  (EC)  No  1472/2006 
originating  in  the  People’s  Republic  of  China,  is  hereby  extended  to  certain  footwear  with 
uppers of leather or composition leather as defined  in Article 1 of Council Regulation (EC) 
No 1472/2006 falling within CN codes : 

Ex 6403 20 00, ex 6403 51 05, 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 05, 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 05, 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 05, 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, ex 6403 99 96, ex 6403 99 98 and ex 6405 10 
00 

consigned  from  the  Macao  SAR  whether  declared  as  originating  in  the  Macao  SAR  or  not. 
The TARIC codes for imports consigned from the Macao SAR are listed in the Annex of this 
Regulation. 

2. The duties extended by paragraph 1 of this Article shall be collected on imports registered 
in  accordance  with  Article  2  of  Commission  Regulation  (EC)  No  1028/2007  and  Articles 
13(3) and 14(5) of Council Regulation (EC) No 384/96. 

3. The provisions in force concerning customs duties shall apply. 

Customs authorities are hereby directed to discontinue the registration of imports established 
in accordance with Article 2 of Commission Regulation (EC) No 1028/2007. 

Article 2 

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

Article 3 

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

Done at Brussels, […] 

For the Council 
The President 
[…] 

EN 

   EN 

 
 
 
 
 
ANNEX  

TARIC codes for footwear with uppers of leather or composition leather as defined in Article 
1  of  Council  Regulation  (EC)  1472/2006,  consigned  from  Macao,  whether  originating  in 
Macao or not 

CN code 

TARIC code
Consigned 
from Macao 

6403 20 00 

6403 51 05 

6403 51 05 

6403 59 05 

6403 59 05 

6403 91 05 

6403 91 05 

6403 99 05 

6403 99 05 

6403 51 11 

6403 51 15 

6403 51 19 

6403 51 91 

6403 51 95 

6403 51 99 

6403 59 11 

6403 59 31 

6403 59 35 

6403 59 39 

6403 59 91 

6403 59 95 

20 

15 

95 

15 

95 

15 

95 

15 

95 

91 

91 

91 

91 

91 

91 

91 

91 

91 

91 

91 

91 

EN 

   EN 

 
 
6403 59 99 

6403 91 11 

6403 91 13 

6403 91 16 

6403 91 18 

6403 91 91 

6403 91 93 

6403 91 96 

6403 91 98 

6403 99 11 

6403 99 31 

6403 99 33 

6403 99 36 

6403 99 38 

6403 99 91 

6403 99 93 

6403 99 93 

6403 99 96 

6403 99 96 

6403 99 98 

6403 99 98 

6405 10 00 

91 

95 

95 

95 

95 

95 

95 

95 

95 

91 

91 

91 

91 

91 

95 

25 

95 

25 

95 

25 

95 

81 

EN 

   EN