Proposal for a Council Regulation of amending Council 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 and repealing the anti-dumping duties imposed by Regulation (EC) No 1371/2005 on imports of grain oriented flat-rolled products of silicon-electrical steel originating in Russia
Date: 2008-04-24
Institutions: European Commission
Subjects: Russia, United States, anti-dumping duty, anti-dumping legislation, import, originating product, plate, steel

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 24.4.2008 
COM(2008) 212 final 

Proposal for a 

COUNCIL REGULATION 

of 

amending Council 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 and repealing the anti-dumping 
duties imposed by Regulation (EC) No 1371/2005 on imports of grain oriented flat-rolled 
products of silicon-electrical steel originating in Russia  

(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’). 

•  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 

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.  

Decision  2005/622/EC  accepting  undertakings  offered  in  connection  with  the  anti-
dumping  proceeding  concerning  imports  of  grain  oriented  flat-rolled  products  of 
silicon-electrical steel originating in the United States of America and Russia. 

Regulation  (EC)  No  41/2008  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. 

•  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  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.  

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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 

•  Summary of the proposed action 

On  23  February  2007,  the  Commission  initiated  a  partial  interim  review  of  the  anti-
dumping measures in force in respect of imports of grain oriented flat-rolled products 
of silicon-electrical steel originating in, inter alia, Russia. The review was limited to an 
investigation  of  the  need  for  the  continuation,  removal  or  amendment  of  the  existing 
measures  in  respect  of  two  Russian  exporters  that  had  merged  to  form  one  new 
corporate entity. 

The  attached  proposal  to  amend  Regulation  (EC)  No  1371/2005,  is  based  on  the 
definitive findings which showed that the level of dumping by the new merged entity 
was  de  minimis  and  that,  therefore,  the  anti-dumping  measures  on  imports  of  grain 
oriented  flat-rolled  products  of  silicon-electrical  steel  originating  in  Russia  should  be 
repealed  and  the  proceeding  terminated  in  accordance  with  Article  9(3)  of  the  basic 
Regulation. 

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. 

•  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. 

•  Choice of instruments 

Proposed instrument: Regulation. 

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Other means would not be adequate for the following reason: 

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 

of 

amending Council 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 and repealing the anti-dumping 
duties imposed by Regulation (EC) No 1371/2005 on imports of grain oriented flat-rolled 
products of silicon-electrical steel originating in 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 Community1 ('the basic 
Regulation'), and in particular Articles 9 and 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  1371/20052,  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/EC3,  the  Commission  accepted  price  undertakings  offered  by 
two co-operating exporting producers whose exports to the Community of GOES are 
subject to a company specific duty of 31,5% (AK Steel Corporation, USA) and 11,5% 
(Novolipetsk Iron and Steel Corporation ('NLMK'), Russia). The anti-dumping duties 
applicable  to  imports  from  all  other  companies,  except  Viz  Stal,  Russia,  which  is 
subject to a duty of 0%, are 37,8% for the USA and 11,5% for Russia. 

B. REQUEST FOR REVIEW 

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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 223, 27.8.2005, p.1. Regulation as last amended by Regulation (EC) No 41/2008 (OJ L 16, 
19.1.2008, p.1). 
OJ L 223, 27.8.2005, p. 42. 

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(3) 

(4) 

The  Commission  was  notified  in  early-2007  that  NLMK  had  acquired  100%  of  Viz 
Stal. Evidence was provided regarding the production, sales and distribution of GOES 
under the new corporate structure. As a consequence, the circumstances on the basis of 
which the measures were established appeared to have changed in a lasting way and 
the  dumping  margin  under  the  new  corporate  structure  appeared  to  be  significantly 
different as compared to the level of the measures in force. 

Having  determined  that  there  was  sufficient  prima  facie  evidence  that  the  individual 
duties  in  force  for  NLMK  and  Viz  Stal  were  no  longer  appropriate,  and  after 
consulting  the  Advisory  Committee,  the  Commission  initiated  ex  officio,  by  a  notice 
('notice  of  initiation')  published  in  the  Official  Journal  of  the  European  Union,  a 
partial interim review in accordance with Article 11(3) of the basic Regulation4. The 
investigation  was  limited  to  the  examination  of  the  level  of  dumping  for  the  two 
Russian  exporting  producers  NLMK  and  Viz  Stal  in  order  to  calculate  one  single 
measure  for  the  new  joint  company.  As  stated  in  the  notice  of  initiation,  this 
examination would be made on the basis of data collected during the investigation that 
led to the imposition of the existing measures. 

C. PRODUCT UNDER REVIEW 

(5) 

(6) 

(7) 

The  product  under  review  is  grain  oriented  flat-rolled  products  of  silicon-electrical 
steel, of a thickness of more than 0,16 mm, currently classifiable within CN codes ex 
7225 11 00 (of a width of 600 mm or more) and ex 7226 11 00 (of a width of less than 
600 mm).  

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 
the 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.  

E. RESULTS OF THE INVESTIGATION 

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OJ C 39, 23.2.2007, p. 26 

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1. Determination of dumping 

(10)  As  stated  above,  the  calculation  of  the  dumping  margin  for  the  merged  entity  was 
based on the data collected during the investigation period of the investigation that led 
to the imposition of the existing measures ('the original investigation period'). On this 
basis, a weighted average of the dumping margins established for NLMK and Viz Stal 
results in a dumping margin of 0.7% for the new merged entity.  

2. Lasting nature of changed circumstances 

(11) 

In  accordance  with  Article  11(3)  of  the  basic  Regulation,  it  was  also  examined 
whether the changed circumstances could reasonably be said to be of a lasting nature. 
In  this  regard,  the  new  company,  OJSC  Novolipetsk  Steel,  co-operated  in  the 
investigation  and  provided  relevant  information.  With  regard  to  the  product  flow  of 
this  company's  exports  to  the  Community,  co-operation  was  also  obtained  from  the 
following unrelated companies: 

- Tuscany Intertrade UK, Edinburgh, United Kingdom 

- Moorfield Commodities Company, Lugano, Switzerland 

On-spot investigations were made at the premises of both of these companies. 

(12)  Formerly,  NLMK  exported  to  the  Community  via  its  related  company  Stinol  AG 
(Switzerland).  However,  it  was  found  that,  since  the  beginning  of  2006,  all  sales  by 
NLMK to the Community were made via the independent traders Tuscany Intertrade 
UK  and  Moorfield  Commodities  Company.  Stinol  AG  has  become  a  dormant 
company since the end of 2005. 

(13)  Viz Stal was formerly part of the Duferco group and exported via Duferco subsidiaries 
such as Duferco SA Switzerland and Duferco Commerciale Italy. Since May 2006, all 
of  Viz  Stal's  sales  to  the  Community  have  been  made  via  the  independent  trader 
Moorfield Commodities Company.  

(14) 

(15) 

It  was  also  verified  that,  since  its  establishment,  the  new  entity,  OJSC  Novolipetsk 
Steel, for its imports into the Community, has only sold via these two traders thereby 
continuing  to  use  the  same  sales  channels  for  sales  of  GOES  to  the  Community 
market.  

In  regard  to  import  prices  from  the  two  former  companies,  NLMK  and  Viz  Stal, 
following the acceptance of a price undertaking in August 2005, NLMK submitted all 
relevant  monitoring  information,  as  required  by  the  terms  of  the  undertaking,  to  the 
Commission  on  a  quarterly  basis.  Following  the  takeover  by  NLMK,  Viz  Stal 
voluntarily  reported  its  sales  since  August  2006  under  the  framework  of  the 
undertaking. It was verified that the current price undertaking for the former NLMK 
was respected by both the former NLMK and Viz Stal companies. 

(16) 

It was found, in fact, that the prices at which Viz Stal, whose products are subject to 
0% anti-dumping duty, sold GOES on the Community market since August 2006 were 
higher  than  those  at  which  the  company  had  sold  during  the  original  investigation 
period.  It  was  also  noted  that  Viz  Stal  accounted  for  the  bulk  of  sales  of  both 

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companies  during  the  original  investigation  period,  and  continued  to  export 
significantly greater quantities of GOES to the EC than NLMK. 

(17)  Since  the  existing  measures  were  imposed  in  August  2005,  Community  and  world 
market  prices  have  increased  significantly.  With  continuing  high  world  demand  for 
steel products, it is not expected that market prices for GOES will fall in the short- to 
medium-term. In light of this fact, as well as the fact that Viz Stal (which continued in 
2006  to  account  for  significantly  greater  sales  quantities  of  GOES  to  the  EC  than 
NLMK  and  was  found  not  to  be  dumping  during  the  original  investigation)  has 
increased its prices since August 2006, it is considered that the findings in recital (10) 
above are of a lasting nature. 

F. CONCLUSION 

(18) 

It was found in the original investigation that NLMK and Viz Stal accounted for the 
entirety  of  known  imports  of  GOES  into  the  Community  from  Russia5.  It  was  also 
found that OJSC Novolipetsk Steel continues to account for all exports of GOES from 
Russia to the Community. In light of this, as well as the fact that the dumping margin 
for  OJSC  Novolipetsk  Steel  is  at  a  de  minimis  level,  it  is  concluded  that  the  anti-
dumping  measures  on  imports  of  GOES  from  Russia  should  be  repealed  and  the 
proceeding terminated in accordance with Article 9(3) of the basic Regulation. 

(19) 

In light of this conclusion, the Commission decided by Decision 2008/XXXX/EC6 that 
the undertaking accepted from NLMK by Commission Decision 2005/622/EC should 
be repealed. 

G. DISCLOSURE 

(20) 

Interested parties were informed of the essential facts and considerations on the basis 
of which it was intended to repeal the measures on imports of GOES from Russia and 
to  terminate  the  proceeding.  All  parties  were  given  an  opportunity  to  comment.  The 
comments received were not of a nature to change the conclusions. 

(21)  Following  disclosure,  the  Community  industry  claimed  that  it  has  not  been 
substantiated that, as mentioned in recital (17) above, market prices for GOES will not 
fall in the short- to medium-term and, as a result, the termination of the proceeding is 
not warranted. In support of its claim that the proceeding should not be terminated, the 
Community  industry  states  that  during  the  next  two  years,  world  capacities  for 
production of GOES will be expanded by more than 40% and will significantly exceed 
demand. The bulk of these capacity increases will happen in the People's Republic of 
China. In these circumstances, the Community industry considers that Russia will be 
pushed  away  from  the  Chinese  market  and  will  re-direct  its  exports  to  the  European 
Union  ('EU').  In  light  of  the  above,  the  Community  industry  considers  that  the 
termination  of  the  proceeding  is  not  based  on  changed  circumstances  of  a  lasting 
nature. 

(22) 

It is noted, however, that the current investigation has examined the dumping margin 
for the new merged entity. This has been found to be at a de minimis level as described 

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See Recital (61) of Regulation (EC) No 1371/2005. 
OJ L………….. 

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in  recitals  (10)  and  (18)  above.  As  stated  in  recital  (11)  above,  an  examination  has 
been made as to whether or not this dumping margin, as well as the new structure of 
the  company,  can  be  considered  to  be  of  a  lasting  nature.  The  investigation  has 
confirmed  the  lasting  nature  of  these  changed  circumstances.  The  fact  that  Russian 
exporters  might  export  additional  quantities  to  the  EU  in  the  coming  years  does  not 
alter the conclusion regarding the lasting nature of these changed circumstances, 

HAS ADOPTED THIS REGULATION: 

Article 1 

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

‘1.  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, 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 

The anti-dumping duties on imports of grain oriented flat-rolled products of silicon-electrical 
steel of a thickness of more than 0,16 mm, originating in 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) imposed by Regulation (EC) No 1371/2005 are hereby repealed and the proceeding 
with respect to imports originating in Russia is hereby terminated. 

Article 3 

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,  

For the Council 
The President 

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