Commission Regulation (EC) No 492/2008 of 3 June 2008 imposing a provisional anti-dumping duty on imports of monosodium glutamate originating in the People’s Republic of China
Date: 2008-06-03
Institutions: European Commission
Subjects: China, anti-dumping duty, anti-dumping legislation, food additive, import, originating product

L 144/14

EN

Official Journal of the European Union

4.6.2008

COMMISSION REGULATION (EC) No 492/2008

of 3 June 2008

imposing a provisional anti-dumping duty on imports of monosodium glutamate originating in the
People’s Republic of China

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Interested parties were given an opportunity to make
their views known in writing and to request a hearing
within the time limit set in the notice of initiation.

Having regard to the Treaty
Community,

establishing the European

Having regard to Council Regulation (EC) No 384/96 of
22 December 1995 on protection against dumped imports
from countries not members of the European Community (1)
(the basic Regulation), and in particular Article 7 thereof,

After consulting the Advisory Committee,

Whereas:

(1)

(2)

1. PROCEDURE

1.1. Initiation

the European Union (2),

On 5 September 2007, the Commission announced, by a
notice (notice of
initiation) published in the Official
the initiation of an
Journal of
anti-dumping proceeding with regard to imports into
the Community of monosodium glutamate (MSG) orig-
inating in the People’s Republic of China (PRC or country
concerned).

The proceeding was initiated as a result of a complaint
lodged on 23 July 2007 by Ajinomoto Foods Europe
SAS representing 100 % of
total Community
production of MSG. The complaint contained prima
facie evidence of dumping of the said product and of
injury
material
sole Community
the
resulting therefrom, which was considered
producer
sufficient to justify the initiation of a proceeding.

suffered by

the

(4)

(5)

(6)

(7)

exporting

associations

complainant,

The
supplier
known. All
showed that
should be heard, were granted a hearing.

importers,
views
interested parties, who so requested and
there were particular reasons why they

and users made

producers,

their

the apparent
the
in

In the notice of initiation, the Commission indicated that
large number of exporting
in view of
producers
the
importers
PRC and
Community, sampling may be applied in this investi-
gation. However,
than expected
in the PRC and
number of
importers in the Community which indicated their will-
ingness to cooperate, it was decided that sampling was
not necessary.

exporting producers

given the

lower

in

In order to allow exporting producers in the PRC to
submit a claim for market economy treatment (MET)
the
(IT),
or
individual
Commission sent
exporting
claim forms
producers known to be concerned and the authorities
of the PRC.

they so wished,

treatment

to the

if

The Commission sent questionnaires to all parties known
to be concerned and to all the other companies that
made themselves known within the deadlines set out in
the notice of initiation, namely to the sole Community
producer, 22 importers and 27 users of
the product
concerned as well as two raw materials suppliers.

1.2. Parties concerned by the proceeding

(3)

The Commission officially advised the complainant, the
suppliers and users
exporting producers,
importers,
the
known to be concerned, and representatives of
countries concerned of the initiation of the proceeding.

(8)

Replies were received from the complainant Community
producer, three unrelated importers, four users, and two
suppliers.

(1) OJ L 56, 6.3.1996, p. 1. Regulation as last amended by Regulation

(EC) No 2117/2005 (OJ L 340, 23.12.2005, p. 17).

(2) OJ C 206, 5.9.2007, p. 20.

(9) With regard to the country concerned by this investi-
from three
the Commission received replies

gation,
exporting producers in the PRC.

4.6.2008

EN

Official Journal of the European Union

L 144/15

(10)

The Commission sought and verified all the information
deemed necessary for a provisional determination of
dumping, resulting injury and Community interest. Veri-
fication visits were carried out at the premises of the
following companies:

(a) Producer located in the Community

— Ajinomoto Foods Europe SAS, Nesle, France and
its related trader Ajinomoto Foods Deutschland,
Hamburg, Germany.

(b) Community user

One user requested in terms of Article 19 of the
basic Regulation that their details are not published,
as to do so would have a significantly adverse effect
upon them. The request was found to be sufficiently
substantiated and therefore granted.

— Nestlé, Vevey, Switzerland,

— Unilever, Neuhausen, Switzerland.

— Jining Jusheng Gourmet Powder Food Co.,
Ltd.,
Jining, Shandog had to be abandoned
for the reasons explained in recitals 15 to 18;

3. Fujian Province Jianyang Wuyi MSG Co., Ltd.,

Jianyang, Fujian.

(e) Producer in the analogue country

— Ajinomoto
Thailand.

Co.,

(Thailand)

Ltd,

Bangkok,

1.3. Investigation period

(11)

The investigation of dumping and injury covered the
period from 1 July 2006 to 30 June 2007 (IP). The
examination of
for the assessment of
injury covered the period from April 2004 to the end
of the IP (period considered).

trends relevant

2. PRODUCT CONCERNED AND LIKE PRODUCT

(c)

Importers in the Community

2.1. Product concerned

— Omya Peralta GmbH, Hamburg, Germany,

— Helm AG, Hamburg, Germany,

— Standard Sp. z o.o., Lublin, Poland.

(12) MSG exported to the Community and originating in the
PRC (the product concerned) is a food additive and is
mainly used as a flavour enhancer in soups, broths, fish
and meat dishes and ready-made foods. It is also used in
the personal care cosmetics industry.
is normally
declared within CN code ex 2922 42 00.

It

(d) Exporting producers and related companies in the PRC

1. Meihua Group

— Hebei Meihua MSG Group Co., Ltd, Bazhou,

Hebei,

— Tongliao Meihua Bio-Tech Co., Ltd, Tongliao,

Neimenggu, Inner Mongolia,

— Tongliao Jianlong Hyperacidity Co.,
Tongliao, Neimenggu, Inner Mongolia,

Ltd,

— Langfang
Hebei;

Jianlong Hyperacidity,

Bazhou,

2. LingHua Group,

— Shandong

Linghua MSG

Incorporated
Company, Jining, Shandog. Verification visits
scheduled for other two companies of
the
group,

— Shangong Lingwei Seasoning Co., Ltd., Jining,

Shandog, and

(13) MSG is available in various packing sizes, ranging from
consumer packs of 0,5 gram to 1 000 kg bulk bags.
Smaller packing sizes are sold via retailers to private
consumers, while the larger sizes of 20 kg and more
are destined for industrial users.
In addition, different
purity grades exist. However, there are no differences in
the characteristics of monosodium glutamate packed in
the various sizes nor for different purity grades.

2.2. Like product

(14) No differences were

found between the product
concerned and the MSG produced by the Community
industry and sold on the Community market. The PRC
is an economy in transition and as mentioned in recitals
30 to 33 normal value had to be established on the basis
of
information obtained in a market economy third
country. According to the information available, MSG
produced and sold on the market economy third
the same basic physical and chemical
country, has
characteristics
as MSG produced in the PRC and
exported to the Community. It is therefore provisionally
concluded that all types of MSG are considered to be
alike within the meaning of Article 1(4) of the basic
Regulation.

L 144/16

EN

Official Journal of the European Union

4.6.2008

3. DUMPING

3.1. Application of Article 18 of the basic Regulation

4.

legal certainty and stability is provided by bankruptcy
and property laws;

(15)

(16)

(17)

In the case of one exporting producer it was found,
during the first day of the on-the-spot verification, that
it had submitted falsified information relating to its
export
and
misleading information in the sense of Article 18(1) of
the basic Regulation.

sales which were

considered as

false

In view of this finding, the verification was ceased and
the company was informed that pursuant to Article 18
it was envisaged to base the
of the basic Regulation,
findings
or
negative) on facts available and was given an opportunity
to comment.

(provisional

affirmative

definitive,

or

the

The company in its response did not contest the findings
falsification of
of
documents and did not raise any objection regarding
application of Article 18 of the basic Regulation.

investigation concerning the

5. currency exchanges are carried out at the market rate.

(20)

Three Chinese
requested MET
exporting producers
pursuant to Article 2(7)(b) of the basic Regulation and
replied to the MET claim form within the given deadlines.

(21)

For one Chinese exporting producer Article 18 of the
basic Regulation had to be applied (see recitals 15 to 18).

(22)

The verification established that
the remaining two
Chinese exporting producers did not meet all five MET
criteria.

(18) Under these circumstances, the information provided by
exporting producer was disregarded and facts

this
available were used.

(23)

3.2. Market economy treatment (MET)

(19)

in
Pursuant to Article 2(7)(b) of the basic Regulation,
anti-dumping investigations concerning imports originat-
ing in the PRC, normal value shall be determined in
accordance with paragraphs 1 to 6 of the said Article
for those exporting producers which were found to meet
the criteria laid down in Article 2(7)(c) of the basic Regu-
is shown that market economy
lation,
conditions prevail
the manufacture and
sale of
the like product. Briefly, and for ease of
reference only, these criteria are set out in a summarised
form below:

in respect of

i.e. where it

1. business decisions and costs are made in response to
market conditions, and without significant State inter-
ference;

The verification established that one Chinese exporting
producer (Meihua Group constituted of five companies)
could not show that it met criteria 2 and 3 mentioned
above. Firstly, Meihua Group failed to present audited
in line with IAS 27,
consolidated financial statements,
in its MET claim or during the verification visit. The
investigation showed that, as there were many trans-
actions within the Group, only audited consolidated
financial statements, whereby all
intra-Group balances,
income, and expenses are eliminated in
transactions,
full, would allow obtaining a clear picture about
the
Group. Meihua Group only provided audited conso-
lidated financial statements well after the verification
visit which did not allow the Commission to perform
any verification of the information contained in these
the
accounts nor
financial
it was
found that
the individual companies
were not in compliance with IAS 1 and IAS 18, as the
mother company was offsetting revenues and expenses
and that this offsetting was of material nature. In view of
these breaches of IAS and the fact that they were not
even mentioned in the audit reports, it is considered that
Meihua Group did not demonstrate that its records were
audited in line with the said standards (criterion 2).

to obtain a clear picture about

the Group. Moreover,

the accounts of

situation of

2. firms have one clear set of basic accounting records
which are independently audited,
in line with Inter-
national Accounting Standards (IAS) and applied for
all purposes;

3. there are no significant distortions carried over from

the former non-market economy system;

(24)

Secondly, on the basis of the individual accounts of the
companies of the Group verified during the verification
visit and on the basis of
the unverified information
mentioned above, significant distortions in the financial
the Group were
situation of
detected. Significant amounts of interest-free borrowings
were found to exist. This resulted in a significant amount
of negative working capital and in potential high
financial costs not reflected in the records of the indi-
vidual companies or the Group (criterion 3).

the companies and of

4.6.2008

EN

Official Journal of the European Union

L 144/17

(25)

(26)

(27)

any

significant

in amount,

The second company, Fujian Province Jianyang Wuyi
MSG Co., Ltd, could not show that it met criteria 1 to
3. Firstly,
its decisions were not made in response to
market signals and without significant State interference,
notably because the State was over-represented in its
Board and because the company had certain dubious,
yet
transactions with State-
owned enterprises (loan with the State with interest
twice above the market rate, advances to State-owned
(criterion 1).
enterprises without
justification)
Secondly,
it did not substantiate that it had one clear
set of basic accounting records which were prepared
and audited in compliance with IAS, because the
accounts were found not to be in compliance with IAS
1 and IAS 18 as the company was offsetting (i) accounts
payable with accounts receivable and (ii) revenues and
expenses. Both types of offsetting which were of
material nature reduced in this way the ability to
understand the transactions, other events and conditions
that have taken place in the activity of the company. As
these breaches of IAS were not mentioned in the audit
report, the company did not demonstrate that its records
were audited in line with the said standards (criterion 2).
Finally, distortions carried over from the non-market
economy system were observed in the form of
inap-
propriate asset and land-use right evaluations (criterion
3).

3.4. Normal value

3.4.1. Analogue country

(30) According to Article 2(7)(a) of the basic Regulation, in
in transition normal value for exporting
economies
producers not granted MET has to be established on
the basis of the price or constructed value in a market
economy third country (analogue country).

(31)

In the notice of initiation Thailand was proposed as an
appropriate analogue country for the purpose of estab-
the PRC. The Commission
lishing normal value for
invited all
to comment on this
proposal.

interested parties

(32) Only

one

interested

submitted

comments
party
proposing as alternative analogue countries Brazil or
Indonesia.
known
companies in Brazil and Indonesia. However, no ques-
tionnaire replies or any meaningful comments were
received from producers in Brazil or Indonesia.

Commission

contacted

The

it was
Consequently,
exporting producer demonstrated that
conditions
Regulation.

concluded that no Chinese
fulfilled the
it
the basic

in Article 2(7)(c) of

set out

3.3. Individual treatment (IT)

if any,

to Article 2(7)(a) of

the basic Regulation, a
Pursuant
countrywide duty,
is established for countries
falling under that Article, except in those cases where
companies are able to demonstrate that they meet all
criteria set out in Article 9(5) of the basic Regulation
and are therefore granted individual treatment.

(33) Moreover, Thailand is worldwide one of the biggest MSG
producers with a competitive market and the major MSG
producer in Thailand fully co-operated. Thailand met the
criteria for an appropriate analogue country as there is
competition in the Thai market, the quantities sold on
the Thai market are sufficient and both the Chinese and
the Thai markets are comparable in terms of product
range and production process.

(34)

it was therefore provisionally
In view of
the above,
an appropriate
concluded that Thailand constitutes
analogue country in accordance with Article 2(7)(a) of
the basic Regulation.

3.4.2. Methodology applied for the determination of normal

value

(35)

(28)

The exporting producers which did not meet the MET
criteria had also claimed IT in the event that they were
not granted MET.

(29) On the basis of information available, it was found that
two Chinese
the
requirements for IT as set forth in Article 9(5) of the
basic Regulation.

producers meet

exporting

all

types,

to Article 2(7)(a) of

Pursuant
the basic Regulation,
normal value for the PRC was established on the basis
of verified information received from the co-operating
producer in the analogue country,
i.e. on the basis of
prices paid or payable on the domestic market of
Thailand for comparable product
since these
were found to be made in the ordinary course of trade.
Regarding the product types, it is noted that essentially
only one product
type was exported from the PRC
during the IP,
i.e. MSG with purity above or equal to
99 % and this was directly comparable with the product
sold by the analogue country producer on its domestic
market. The investigation showed certain differences in
the production process between the Thai and the Chinese
manufacturers, in that the latter use different equipment
energy. The
of
that

electricity

require

less

use

L 144/18

EN

Official Journal of the European Union

4.6.2008

Thai domestic selling prices were therefore adjusted
downwards
these
an amount which
differences.

reflects

by

3.5. Export Price

(36) All

customers

cooperating Chinese

in the Community or

exporting producers made
export sales to the Community either directly to inde-
pendent
through
unrelated companies located in the PRC and Taiwan.
the export prices were established on the
Therefore,
the prices actually paid or payable for the
basis of
product concerned in accordance with Article 2(8) of
the basic Regulation.

(37) With regard to all other Chinese

exporters,

the
Commission first established the level of cooperation. A
comparison was made between the total export quan-
tities indicated in the questionnaire replies of the two
cooperating exporting producers
and total dumped
imports from the PRC as derived from the Eurostat
import statistics. The percentage of cooperation found
was 74 %. On this basis, the level of cooperation was
deemed to be low. As a consequence, export prices were
provisionally established on the basis of the transactions
with the highest dumping margin made by one of the
two cooperating Chinese exporting producers that were
granted IT in accordance with Article 18(1) of the basic
Regulation.

export price as provided for in Article 2(11) and (12) of
the basic Regulation.

(41) On this basis, the provisional weighted average dumping
margins expressed as a percentage of the cif Community
frontier price, duty unpaid, are:

Company

Hebei Meihua MSG Group Co., Ltd, and Tongliao
Meihua Bio-Tech Co., Ltd

Provisional
dumping
margin

33,8 %

Fujian Province Jianyang Wuyi MSG Co., Ltd

36,5 %

3.7.2. For all other exporting producers

(42)

The countrywide dumping margin was calculated on the
basis of a comparison between the export price as set out
in recital (36) and the normal value as set out in recital
(35).

(43) On this basis, the country-wide level of dumping was
cif

provisionally
established
Community frontier price, duty unpaid.

39,7 % of

the

at

3.6. Comparison

(38)

The comparison between normal value and export price
was made on an ex-works basis.

(39)

For the purpose of ensuring a fair comparison between
the normal value and the export price, due allowance in
the form of adjustments was made for differences
affecting prices and price comparability in accordance
with Article 2(10) of the basic Regulation. For all inves-
tigated companies (cooperating exporting producers and
the producer in the analogue country) allowances for
costs, ocean freight
differences
and
in transport
insurance costs, handling,
loading and ancillary costs,
packing costs, credit costs and commissions have been
granted where applicable and justified.

4. INJURY

4.1. Definition of the Community industry

(44)

The sole cooperating Community producer accounted for
100 % of the Community production of MSG during the
IP. It is therefore deemed to constitute the Community
and
industry within the meaning of Article 4(1)
Article 5(4) of the basic Regulation.

(45) As the Community industry is thus constituted of only
one producer, all figures related to sensitive data had to
be indexed or given in a range for reasons of confiden-
tiality. Bracketed figures relate to negative figures.

3.7. Dumping margins

3.7.1. For the cooperating producers granted IT

(40)

For those companies granted IT, the weighted average
normal value was compared with the weighted average

(46)

Since the Community producer uses a fiscal year from 1
April to 31 March of the following year, all the data
below are presented for fiscal years (FY) rather than for
calendar years (e.g. FY2005 covers the period from
1 April 2004 to 31 March 2005). The data concerning
imports are presented on the same comparable basis.

4.6.2008

EN

Official Journal of the European Union

L 144/19

4.2. Community consumption

(47)

Community consumption was established on the basis of sales volumes of the Community industry
on the Community market plus imports from the PRC and other third countries, based on Eurostat.
Community consumption of MSG increased between FY2005 and FY2006 before continually
decreasing in FY2007 and the IP. Overall, consumption decreased by 4 % during the period
considered.

Table 1

FY2005

FY2006

FY2007

Community consumption (tonnes)

Index

100

107

98

IP

96

4.3. Imports into the Community from the PRC

4.3.1. Volume and market share

(48)

Import volumes from the PRC increased significantly from 4 701 tonnes in FY2005 to 34 613
tonnes in the IP, i.e. by 636 % over the period considered.

(49)

The corresponding market share was in the range of 3 % to 7 % in FY2005 and increased to in the
range of 38 % to 43 % over the period considered, despite the decrease in consumption.

Table 2

FY2005

4 701

100

FY2006

11 376

242

FY2007

34 254

729

IP

34 613

736

100

226

745

768

Imports from PRC (tonnes)

Index

Market share PRC

Index

Source: Imports quantities from Eurostat.

4.3.2. Unit selling price

(50) Average prices for imports from China fluctuated during the period considered and overall showed a

slight decrease of 2 %.

Table 3

FY2005

FY2006

FY2007

790

100

818

104

785

99

IP

773

98

Prices of imports from PRC
(EUR/tonne)

Index

Source: Import prices from Eurostat.

L 144/20

EN

Official Journal of the European Union

4.6.2008

4.3.3. Price undercutting

(51)

For the purposes of analysing price undercutting, the weighted average sales prices per product type
of the Community industry to unrelated customers on the Community market, adjusted to an ex-
works level, were compared to the corresponding weighted average prices of the imports concerned,
for the customs duties and post-
established on a cif basis with an appropriate adjustment
importation costs. The comparison was made after deduction of rebates and discounts.

(52)

Based on the above methodology, the difference between the prices, expressed as a percentage of the
Community industry's weighted average price (ex-works), i.e. the price undercutting margin, ranged
from 21 % to 24 %.

4.4. Economic situation of the Community industry

(53)

The trends of all economic factors mentioned in Article 3(5) of the basic Regulation were examined
to establish the economic situation of the Community industry during the period considered.

4.4.1. Production capacity, production and capacity utilisation

(54)

The production capacity increased by 5 % in FY2006 followed by a further increase of three
percentage points in FY2007 before remaining stable in the IP. The increases in the production
capacity resulted from new investments as explained in recital 60 below.

(55)

Production of MSG by the Community industry decreased continually to show an overall decrease of
6 % in the period considered. The production figures for FY2007 and the IP reflects the fact that the
Community industry had to stop the production for one month in 2006.

(56) As a result of the decrease in production volumes, the capacity utilisation decreased by 14 % over the

period considered.

Table 4

FY2005

FY2006

FY2007

IP

100

100

100

105

108

108

99

95

93

86

94

86

Production capacity

Index

Production

Index

Capacity utilisation

Index

Source: Questionnaire reply.

4.4.2. Sales volume, market share and average unit prices in the Community

(57)

Sales of MSG by the Community industry to independent customers on the Community market
increased slightly in FY2006 before showing a massive decrease in FY2007 of 25 percentage points.
Over the period considered, the decrease in sales was 24 %. This huge drop in sales volumes led to a
significant decrease in market share by a total of 12,5 percentage points over the period considered
(from 58,6 % market share in FY2005 to 46,1 % in the IP).

4.6.2008

EN

Official Journal of the European Union

L 144/21

(58) Average sales prices to unrelated customers in the Community market increased by 19 % over the
period considered. The increase was even sharper in the FY2007 (+ 23 %) but then a slight decrease
in prices took place in the last three months of the IP. The increase in prices was necessary to cover
the increase of costs of raw materials and other inputs. Despite the fact that the Community industry
managed to actually increase its efficiencies in the production of MSG, sales prices could not cover
the cost of production during the IP.

Table 5

FY2005

FY2006

FY2007

IP

76

79

76

77

123

119

Sales volumes

Index

Market share

Index

Average prices

Index

Source: Questionnaire reply.

4.4.3. Stocks

100

100

100

101

94

106

(59) During the period considered stocks increased by 52 %. This growth in inventories took place in the
second half of the period considered and coincided with the big decrease in sales starting as from
FY2007. At the end of the IP, the level of stocks remained at a high level.

Table 6

FY2005

FY2006

FY2007

IP

100

101

153

152

Stocks

Index

Source: Questionnaire reply.

4.4.4. Profitability, investments, return on investments, cash flow and ability to raise capital

(60)

The sales of the Community industry of the like product in the Community market were not
profitable during the period considered. At the beginning of this period this situation had to be
seen against the background of the acquisition of Orsan SA by Ajinomoto Foods Europe (AFE), and
the restructuring that took place at that time. Indeed, Orsan SA had been in a poor financial situation
up to 2003 and AFE proceeded to conduct an in-depth restructuring to reduce costs and improve
efficiency with specific investments in 2004 and 2005. These investments aimed at increasing the
production capacity, developing a new line of products and increasing energy efficiency. The Group
to which the Community industry now belongs also transferred know-how including new and better
performing bacteria strains for the fermentation process necessary for the production of MSG in the
Community.

(61) Although investments continued also in 2006 and 2007, the Community industry managed to
reduce its losses in particular during the IP due to the increased selling prices but also to better
efficiency in the raw material and energy use. However, further upward movement in prices was not
possible. Chinese exporters were more and more present and rapidly penetrated the Community
market. As a result, the Community industry still experienced significant losses on its sales on the
Community market during the IP.

L 144/22

EN

Official Journal of the European Union

4.6.2008

(62)

The return on investment from the production and sale of the like product was negative throughout
the period considered, reflecting the above mentioned negative trend in profitability.

(63) As with the other financial indicators, the cash flow generated by the MSG produced and sold in the

EU was negative throughout the period considered.

(64) Apart from the financial losses, there were no indications that the Community industry, being a part

of the Ajinomoto Group, encountered other problems to raise capital for its activities.

Table 7

FY2005

FY2006

FY2007

IP

(100)

(103)

100

(100)

211

(92)

(100)

(102)

(66)

65

(63)

(59)

(75)

51

(67)

(83)

Profitability

Index

Investments

Index

Return on investments

Index

Cash flow

Index

Source: Questionnaire reply.

4.4.5. Employment, productivity and wages

(65)

Employment in the Community industry decreased by 9 % in the period considered. Wages initially
increased by 6 % in FY2006 compared to FY2005. However,
in FY2007 and in the IP, wages
dropped back to the level in FY2005.

(66)

Productivity increased by 3 % in FY2006, followed by a slight decrease in FY 2007. In the IP
productivity increased again to the same level as FY2006.

Table 8

FY2005

FY2006

FY2007

100

100

100

95

106

103

92

100

101

IP

91

100

103

Employment

Index

Wages

Index

Productivity

Index

Source: Questionnaire reply.

4.4.6. Growth

(67) While Community consumption decreased by 4 % over the period considered, the sales volume of
the Community industry decreased by 24 %. This led to the loss of market share by the Community
industry during the period considered of 12,5 percentage points.

4.6.2008

EN

Official Journal of the European Union

L 144/23

4.4.7. Magnitude of the actual margin of dumping and recovery from past dumping

(68)

The dumping margins for exporters in the PRC are specified above in the dumping section and are
significantly above de minimis. Furthermore, given the volumes and the prices of the dumped imports,
the impact of the actual margin of dumping cannot be considered to be negligible.

(69)

There is no indication that the Community industry is recovering from the effects of past dumping. It
is noted that imports of MSG have not been subject to measures since 2003.

4.5. Conclusion on injury

(70) Most injury indicators pertaining to the Community industry developed negatively during the period
considered. Production and capacity utilisation fell by 6 % and 14 %, respectively. While consumption
on the Community market decreased by 4 %, the sales volumes of the Community industry fell
significantly more, i.e. by 24 %, leading to a loss in market share of 12,5 percentage points. Other
injury indicators such as stocks and employment, also developed negatively during the period
considered.

(71)

The investigation showed that low priced Chinese imports were undercutting Community industry
prices by up to 24 % during the IP. The selling prices of the Community industry increased during
the period considered by 19 %, due to cost increases, but the consequence of this was a decrease in
sales volumes and a drop in market share. Hence, the other financial injury indicators, including
return on investments, cash flow and profitability also developed negatively during the period
considered.

(72)

In the light of the foregoing, it can be concluded that the Community industry suffered material
injury within the meaning of Article 3(5) of the basic Regulation.

5.1. Introduction

5. CAUSALITY

(73)

In accordance with Article 3(6) and Article 3(7) of the basic Regulation, the Commission has
examined whether the dumped imports of MSG originating in the PRC have caused injury to the
Community industry to a degree that enables it to be classified as material. Known factors other than
the dumped imports, which could at the same time be injuring the Community industry, were also
examined to ensure that possible injury caused by these other factors was not attributed to the
dumped imports.

5.2. Effect of the dumped imports

(74) Over the period considered, low priced dumped imports from the PRC in terms of volume increased
more than seven times, which resulted in an increase of Community market share by Chinese MSG
from in the range of 3 % to 7 % in FY2005 to in the range of 38 % to 43 % in the IP. At the same
time, Chinese exporters were the only players on the market who decreased their selling prices.
Available information indicates that both the Community producer and exporters from other third
countries increased their prices following growing costs of production (mainly increases in prices of
raw material and energy).

(75)

This increase in imports from the PRC coincided with the deterioration of the situation of the
Community industry. In FY2006 the import volumes from the PRC increased by 142 % while the
Community sales volume increased by 1 %. In FY2007 the import volume from the PRC increased by
a further 201 % and sales prices decreased by 4 % while the Community sales volume decreased by
25 percentage points. As a result, the Community industry suffered a decrease in its sales volumes on
the Community market and a resulting loss of market share of 12,5 percentage points during the IP.
Price suppression by the dumped Chinese imports did not allow the Community industry to raise its
sales prices to the level which would eliminate the losses and further improve its financial situation.

L 144/24

EN

Official Journal of the European Union

4.6.2008

(76)

Based on the above, it is provisionally concluded that the low priced dumped imports from the PRC
which significantly undercut the prices of the Community industry during the IP, and which also
significantly increased in volume, have had a determining role in the injury suffered by the
Community industry, which is reflected in its poor financial situation and in the deterioration of
other injury indicators during the IP, as well as in loss of market share.

5.3. Effect of other factors

5.3.1. Imports from other third countries

(77)

The imports from third countries not concerned by this investigation decreased by 65 % in the period
considered resulting in a market share drop from in the range of 35 % to 40 % in FY2005 to in the
range of 10 % to 15 % in the IP. The prices of these imports increased by 20 % during the period
considered which follows the trend of the Community industry's price development.

(78)

The trends in import volumes and prices from other third countries between FY2005 and IP were as
follows:

Other third country

Total imports (tonnes)

Index

Source: Eurostat.

Table 9

FY2005

31 910

100

FY2006

30 926

97

FY2007

13 080

41

IP

11 225

35

Other third countries

FY2005

FY2006

FY2007

Average price all imports
(EUR/tonne)

Index

Source: Eurostat.

789

100

831

105

976

124

IP

945

120

(79) On the basis of the above, it was provisionally concluded
that imports from other third countries did not break the
causal link between the dumping found and the material
injury caused by the dumped imports from the PRC to
the Community industry.

5.3.3. Export performance and productivity of the Community

industry

(81)

Contrary to the claims of
some interested parties
according to which the poor export performance of the
Community industry might be the cause of the injury
suffered, it should be noted that export sales increased
by more than 50 % during the period considered. The
claim has therefore to be rejected.

5.3.2. Development of demand

(80) As to the development of demand,

cannot

decrease

explain the

the Community
consumption of MSG decreased between FY2005 and
IP. This decrease, however, was not significant (– 4 %)
and
in Community
industry sales volume on the Community market which
fell by 24 %. It has to be emphasised that, during the
the Community industry lost 12,5
period considered,
percentage points of its market share and these sales
were replaced by dumped imports originating in the
injury suffered by the
PRC. Therefore,
Community
a
attributed
contraction in demand on the Community market.

the material
cannot

industry

be

to

(82) As to the productivity factor it should be noted that,
during the period considered, the Community industry
was able to reduce its fixed costs and labour costs and
increased productivity per employee.

(83)

In view of the above, neither the export performance nor
any alleged decrease in productivity of the Community
industry has contributed to the deterioration of
its
situation in the IP.

4.6.2008

EN

Official Journal of the European Union

L 144/25

(84)

(85)

(86)

(87)

(88)

(89)

5.3.4. Currency fluctuations

the de-
Some interested parties have claimed that
preciation of
the euro has favoured
the USD against
imports of MSG into the European Community. It was
import trans-
indeed found that
actions from the PRC into the European Community
are invoiced in USD.

the vast majority of

in the exchange rate between the euro v USD in the
period considered.

(90)

In light of the above, it was provisionally concluded that
the appreciation of the euro compared to the USD is not
a factor sufficient to break the causal link between the
dumped imports and the material injury suffered by the
Community industry.

is recalled that

It
the investigation has to establish
whether the dumped imports (in terms of prices and
volume) have caused material injury to the Community
injury was due to
industry or whether such material
other factors. In this respect, Article 3(6) of the basic
Regulation states that it is necessary to show that the
price level of
It
therefore merely refers to a difference between price
levels, and there is thus no requirement to analyse the
factors affecting the level of those prices.

the dumped imports cause injury.

In practice, the effect of the dumped imports on the
Community industry's prices is essentially examined by
establishing price undercutting, price depression and
price suppression. For this purpose, the dumped export
prices and the Community industry's sales prices are
compared, and export prices used for the injury calcu-
lations may need in certain cases to be converted into
another currency in order to have a comparable basis.
Consequently, the use of exchange rates in this context
only ensures that the price difference is established on a
comparable basis. From this, it becomes obvious that the
exchange rate cannot in principle be another factor of
injury.

also confirmed by the wording of
The
is
above
Article 3(7) of
the basic Regulation, which refers to
known factors other than dumped imports. The list of
the other known factors in this Article does not make
reference to any factor affecting the price level of the
dumped imports. To summarise,
the imports are
dumped, and even if they benefited from a favourable
development of exchange rates, it is not considered that
the development of such exchange rate could be another
factor causing injury.

if

Thus, the analysis of the factors affecting the level of the
prices of the dumped imports, such as the exchange rate
fluctuations, cannot be conclusive and such analysis
would go beyond the requirements of the basic Regu-
lation.

(91)

(92)

(93)

(94)

5.3.5. Imports by the Community industry

have

parties

interested

Some
the
Community industry imported MSG from its non-
Chinese
the
Community which has had an impact on its sales
volumes of MSG produced in the Community.

factories

claimed

outside

located

related

that

on

the Community market

The investigation showed that after the acquisition of
the Community industry reorganised its sales
Orsan,
the
structure/channels in the Community. Almost all
MSG sold
the
by
Community industry in the IP was produced by the
sole Community producer. Sales of MSG on the
Community market originating from exporters related
to the Community industry in countries outside the
Community were constantly and significantly reduced
over the period considered.

the product concerned to the Community.

Some interested parties also argued that the Community
the Ajinomoto
industry itself or other companies of
that
Group are related to Chinese MSG producers
export
It
has been claimed that exports to the Community by
these related companies have caused the injury suffered
by the Community industry. It has also been claimed that
it is the Ajinomoto Group itself which is responsible for
the price policies of these Chinese exporters.

The investigation showed that in the case of one Chinese
company allegedly related to the Ajinomoto Group, this
relationship ceased to exist before the IP. Moreover, the
export sales of this company to the Community in the
years preceding the IP were found to be negligible. In the
case of two other Chinese MSG producers related to the
sole Community producer, it was established that their
exports to the Community in the IP were insignificant. In
this regard, the fact that the Ajinomoto Group may have
been responsible for the price policies of these companies
was not considered relevant.

In any event, and without prejudice to the above, even
based on the exchange rate prevailing at the beginning of
FY2005, imports from the PRC significantly undercut the
prices of the Community industry. Thus, this significant
undercutting margin cannot be explained by the change

(95)

it was provisionally concluded that

the
Therefore,
imports of
the Community industry from related
parties outside the Community have not contributed to
the material injury suffered by them.

L 144/26

EN

Official Journal of the European Union

4.6.2008

(96)

5.3.6. New sugar regime

allegation made by

The
certain interested parties
concerning the negative impact of the new Communities'
sugar regime (and the increase of sugar prices resulting
therefrom) on the production costs of the Community
industry was not confirmed. The investigation has shown
that the Community industry benefited from long-term
agreements signed well before the implementation of the
their sugar purchase
new regime which ensured that
price was low throughout most of the period considered.
In the second part of the IP, following the implemen-
tation of the new sugar regime, the sugar purchase price
increased slightly but this impact was partially counter-
balanced by the development of more efficient fermen-
tation technology. The fermentation yield increased in
the IP and is high compared to that achieved on
average by Chinese producers. This means that per
tonne of MSG,
requires
substantially less sugar compared to the needs of the
Chinese producers.

the Community producer

5.3.7. Difference in basic raw materials

advantage

(97) MSG in the Community is produced from sugar molasses
while in China it is produced from corn or rice starch.
Some interested parties claimed that the evolution of
these raw materials might have given a
prices of
comparative
to the Chinese producers.
However, a comparison of the costs of raw materials
needed to produce the same quantity of MSG indicates
that there is a comparative advantage for producing MSG
from molasses. On the basis of available information,
there are indications that
this comparative advantage
has even been strengthened during the IP by the steep
increase of corn prices, both internationally and on the
Chinese market. However, due to the dumping of
Chinese products, this comparative advantage failed to
generate gains of market share for MSG produced from
molasses by the Community industry.

(98)

(99)

it was provisionally concluded that

the
Therefore,
difference in raw materials used by the Community
industry
the Chinese
exporting producers did not contribute to the material
injury suffered by the Community industry.

compared to that used by

5.4. Conclusion on causation

The above analysis has demonstrated that there was a
substantial increase in volume and market share of the
dumped imports originating in the PRC between FY2005
and the IP, together with a high level of price under-
cutting during the IP. This increase in market share of
the low priced imports from the PRC coincided with a
significant drop in market share of
the Community
industry, which, together with the downward pressure
losses of
on prices, resulted,

in substantial

inter alia,

the Community industry during the period considered.
On the other hand,
the other
factors which could have
injured the Community
industry revealed that none of these could have had a
significant negative impact.

the examination of

(100) Based on the above analysis, which has properly distin-
guished and separated the effects of all known factors on
the Community industry from the
the situation of
it
injurious effects of
is pro-
from the
visionally
injury to the
countries concerned have caused material
Community industry within the meaning of Article 3(6)
of the basic Regulation.

the dumped imports,
imports
the

concluded

that

6. COMMUNITY INTEREST

6.1. Preliminary remark

(101)

In accordance with Article 21 of the basic Regulation, the
Commission examined whether, despite the conclusion
on injurious dumping, compelling reasons existed for
concluding that it is not in the Community interest to
adopt measures in this particular case. The determination
of the Community interest was based on an appreciation
i.e. those of the
of all the various interests involved,
Community industry,
the
the raw material suppliers,
importers and the users of the product concerned.

6.2. Community industry

6.2.1. Nature and structure of the Community industry

(102) The Community industry is composed of one sole
producer located in France. The company is owned by
the Ajinomoto Group which is involved, among other
activities, in the production and sale of MSG worldwide.
The Community industry bought its raw materials from
Community suppliers,
thus having an impact on the
employment levels of raw material suppliers.

6.2.2. Effects of the imposition or non-imposition of measures

on the Community industry

(103) The Community industry has made efforts since FY2005
to invest in an in-depth restructuring to reduce costs and,
as a result, can be considered to be viable. However, due
to the dumped imports, injury has occurred which has
taken the form of a significant decrease in the volume of
sales and an insufficient increase in the sales price, which
in turn resulted in significant
losses for the
Community industry. It is expected that, following the
imposition of anti-dumping duties, the volume of MSG
sold by the industry would increase and, to a certain
extent, its prices on the Community market would also
increase. This would enable the Community industry to
reach an acceptable level of profitability.

financial

4.6.2008

EN

Official Journal of the European Union

L 144/27

(104)

It is considered that the imposition of measures would
restore fair competition on the market.
It should be
noted that
the Community industry's losses are the
result of its difficulty in competing with the dumped,
low priced imports originating in the PRC. The impo-
sition of anti-dumping measures is likely to put
the
Community industry in the position to regain at least
part of its lost market share with a consequent positive
impact on profitability.

(109)

In these circumstances,
that, on the basis of
effect of the anti-dumping measures,
likely not have a material impact on importers.

it was provisionally concluded
the
the information provided,
if any, will most

6.4. Users

If measures are not

(105) As mentioned above, the Community industry suffered
material injury caused by dumped imports originating in
the PRC.
imposed, a further de-
terioration in the situation of the Community industry
is probable, thus undermining the positive effects of the
investments made in recent years. The price-depressive
effect of the dumped imports would continue to foil
in
all
efforts made by the Community industry,
particular,
taking
measures would put at risk the long-term presence of
the Community industry.

to regain a profitable

level. Not

(106)

In conclusion,
it is expected that measures would be
effective in giving the Community industry the oppor-
tunity to recover from the injurious dumping found
during the investigation.

6.3. Importers

(107) A total of three importers cooperated in the investigation
and all were against
the imposition of anti-dumping
measures. These importers accounted for around 46 %
of the total imports from the PRC into the Community
and around 19 % of the Community consumption of
MSG during the IP.

(108) On the basis of the provisional

findings,

it has been
concluded that the impact of the introduction of anti-
dumping measures would be negligible for two of the
cooperating importers. For the remaining cooperating
the preliminary indications are that MSG
importer,
accounts
its
in the range of 7 % to 12 % of
for
turnover. This company employs less than five people
their business. The
directly in the MSG part of
company's profit on sales of MSG is low. In view of
that, the impact of the imposition of any anti-dumping
duty should not be negligible. However, the expected
effect of the imposition of measures will be to raise
prices of MSG (from all sources) on the Community
market. This importer should therefore be in a position
to pass on all or almost all of the increase resulting from
the
anti-dumping measures, without
having any significant effect on its overall profit.

imposition of

(110) A total of four user companies accounting for 18 % of
imports of MSG from the PRC cooperated in the inves-
tigation. These
food
processing industry and the personal care cosmetics
industry.

companies

in the

active

are

(111) Two of the cooperating users are involved in the food
these two companies
In total,
processing industry.
accounted for approximately 17 % of imports of MSG
from the PRC in the IP. It has to be noted that both
companies also source significant quantities from the
Community industry as well as from other sources. It
has also to be noted that MSG-related activities only
account for a small part of the overall business of both
companies. For one of the companies which had a very
small quantity of imports of MSG from the PRC in the
IP, the impact of the imposition of any measures will be
negligible. For the other company, the impact of the
possible imposition of measures will be investigated
further.

(112) As regards the two other cooperating users, it was found
that they accounted for only about 1 % of imports from
China in the IP. In these circumstances, it was considered
that the imposition of anti-dumping measures would not
have a significant effect on the financial situation of these
companies.

(113)

In these circumstances,
that, on the basis of
effect of the anti-dumping measures,
likely not have a material impact on users.

it was provisionally concluded
the
the information provided,
if any, will most

6.5. Suppliers of raw materials

(114) Two suppliers replied to the questionnaire and supported
the imposition of anti-dumping measures. One of them
is a supplier of raw material, namely sugar molasses, to
the Community industry. The sugar molasses which is
supplied by this company to the Community industry
company's
accounts
to be
turnover.
imposed, there is a risk, as stated above, that the long-
term presence of the Community industry will be put in
there would be a clear
doubt. Should this happen,
negative
raw material
impact on the
suppliers to the Community industry.

for approximately 5 % of
If anti-dumping measures are not

situation of

the

L 144/28

EN

Official Journal of the European Union

4.6.2008

(115) As to the second supplier, this will be further investigated
after the imposition of any provisional measures.

order to prevent
Community industry by the dumped imports.

further injury being caused to the

(116)

If measures are not imposed, the sales of the Community
industry will continue to fall with the result that their
demand for raw materials will also decrease. This will
most likely negatively affect the profitability of the raw
material suppliers.

(121)

In order to establish the level of duty, account has been
taken of the level of the dumping margins found and of
the amount of duty necessary to eliminate the injury
suffered by the Community industry.

6.6. Competition and trade distorting effects

(117) Some interested parties alleged that

the Ajinomoto
Group could have a dominant position not only on
the Community market but also on the world market.
These interested parties claimed that, apart from Chinese
competitors, the Ajinomoto Group in fact monopolises
MSG production worldwide. However,
should be
emphasised that, on the basis of information provided
by one of the interested parties that made this claim,
MSG
non-Chinese
production still accounts
for over 500 000 tonnes
(which is more than total production of MSG by the
Ajinomoto Group).

non-Ajinomoto-related

and

it

(118) With respect to the Community market, if anti-dumping
measures are imposed, the Chinese exporting producers
concerned, given their strong market positions, will likely
continue to sell their products, albeit at non-dumped
prices. It is also likely that there will still be a sufficient
number of major
competitors on the Community
including the producers in Indonesia, South
market,
should be
It
and Taiwan.
Korea, Vietnam, Brazil
emphasised that,
the period
the beginning of
imports from these sources accounted for
considered,
31,4 % of
the Community market and it decreased
substantially due to the dumped import from the PRC.
Therefore, it is likely that users will continue to have the
If, however, no
choice of different suppliers of MSG.
measures were
the
future of
the
to be
Community industry would be at stake. Its disappearance
would severely reduce competition on the Community
market.

imposed,

at

6.7. Conclusion on Community interest

(119) Given the above, it is provisionally concluded that there
are no compelling reasons against the imposition of anti-
dumping duties in the present case.

7. PROPOSAL FOR PROVISIONAL ANTI-DUMPING
MEASURES

7.1. Injury elimination level

(120)

In view of
the conclusions reached with regard to
dumping, injury, causation and Community interest, pro-
visional anti-dumping measures should be imposed in

(122) As the Community industry suffered financial

losses
during the whole of the period considered, the profit
that could be achieved in the absence of dumped
imports was based on profit margins of
the like
product which were achieved in the period considered
by MSG producers in countries where Chinese dumped
imports were not present (namely Taiwan and Thailand).
On this basis, it was found that a profit margin of 5 % of
turnover could be regarded as an appropriate minimum
which the Community industry could have expected to
injurious dumping. The
obtain in the
necessary price increase was then determined on the
basis of a comparison of the weighted average import
price, as established for the price undercutting calcu-
lations, with the non-injurious price of products sold
by the Community industry on the Community market.
The non-injurious price has been obtained by adjusting
the sales price of the Community industry by the actual
loss made during the IP and by adding the above
mentioned profit margin. Any difference resulting from
this comparison was then expressed as a percentage of
the total cif import value.

absence of

7.2. Provisional measures

(123)

it is considered that,

in
In the light of the foregoing,
the basic Regulation,
accordance with Article 7(2) of
provisional anti-dumping duties should be imposed in
respect of imports originating in the PRC at the level
of the lower of the dumping and the injury margins,
in accordance with the lesser duty rule.

(124) The

the

duty

rates

company

individual

findings of

the present

anti-dumping

(as opposed to the

rates
specified in this Regulation were established on the
basis of
investigation.
Therefore, they reflect the situation found during that
to these companies. These
investigation with respect
duty
countrywide duty
applicable to all other companies) are thus exclusively
applicable to imports of products originating in the
country concerned and produced by the companies and
thus by the specific legal entities mentioned. Imported
products produced by any other company not specifically
mentioned in the operative part of this Regulation with
its name and address, including entities related to those
specifically mentioned, cannot benefit from these rates
and shall be subject to the duty rate applicable to ‘all
other companies’.

4.6.2008

EN

Official Journal of the European Union

L 144/29

(125) The proposed anti-dumping duties are the following:

Company

Injury elimination
margin

Dumping margin

Anti-dumping duty
rate

Hebei Meihua MSG Group Co., Ltd, and Tongliao
Meihua Bio-Tech Co., Ltd

Fujian Province Jianyang Wuyi MSG Co., Ltd

All other companies

54,8 %

33,8 %

33,8 %

60,4 %

63,7 %

36,5 %

39,7 %

36,5 %

39,7 %

8. DISCLOSURE

(126) The above provisional findings will be disclosed to all interested parties which will be invited to make
their views known in writing and request a hearing. Their comments will be analysed and taken into
consideration where warranted before any definitive determinations are made. The provisional
findings may have to be reconsidered for the purposes of any definitive findings,

HAS ADOPTED THIS REGULATION:

Article 1

1.
A provisional anti-dumping duty is hereby imposed on imports of monosodium glutamate falling
within CN code ex 2922 42 00 (TARIC code 2922 42 00 10) and originating in the People’s Republic of
China.

The rate of the provisional anti-dumping duty applicable to the net, free-at-Community-frontier price,

2.
before duty, of the products manufactured by the companies below shall be:

Company

AD duty rate (%)

TARIC additional
code

Hebei Meihua MSG Group Co., Ltd and Tongliao Meihua Bio-Tech Co., Ltd.

Fujian Province Jianyang Wuyi MSG Co., Ltd

All other companies

33,8

36,5

39,7

A883

A884

A999

The release for free circulation in the Community of the product referred to in paragraph 1 shall be

3.
subject to the provision of a security, equivalent to the amount of the provisional duty.

4.

Unless otherwise specified, the provisions in force concerning customs duties shall apply.

Article 2

1. Without prejudice to Article 20 of Council Regulation (EC) No 384/96, interested parties may request
disclosure of the essential facts and considerations on the basis of which this Regulation was adopted, make
their views known in writing and apply to be heard orally by the Commission within one month of the date
of entry into force of this Regulation.

Pursuant to Article 21(4) of Council Regulation (EC) No 384/96, the parties concerned may comment

2.
on the application of this Regulation within one month of the date of its entry into force.

L 144/30

EN

Official Journal of the European Union

4.6.2008

Article 1 of this Regulation shall apply for a period of six months.

Article 3

This Regulation shall enter into force on the day following 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, 3 June 2008.

For the Commission

Peter MANDELSON
Member of the Commission