Proposal for a COUNCIL REGULATION (EU) No amending Regulation (EC) No 1631/2005 imposing a definitive anti-dumping duty on imports of trichloroisocyanuric acid originating, inter alia, in the People's Republic of China
Date: 2010-08-27
Institutions: European Commission
Subjects: China, acid, anti-dumping duty, anti-dumping legislation, chemical product, import, originating product

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EUROPEAN COMMISSION 

Brussels, 27.8.2010 
COM(2010) 442 final 

2010/0235 (NLE) 

Proposal for a 

COUNCIL REGULATION (EU) No 

amending Regulation (EC) No 1631/2005 imposing a definitive anti-dumping duty on 
imports of trichloroisocyanuric acid originating, inter alia, in the People's Republic of 
China  

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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)  1225/2009  of  30 
November 2009 on protection against dumped imports from countries not members of 
the  European  Community1
  ('the  basic  Regulation')  in  the  proceeding  concerning 
imports  of  certain  trichloroisocyanuric  acid  (TCCA)  originating  in  the  People's 
Republic of China 

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 
In October 2005, the Council, by Regulation (EC) No 1631/20052, imposed definitive 
anti-dumping measures on imports of trichloroisocyanuric acid ('TCCA') originating in 
the People's Republic of China ('PRC').  

Consistency with other policies and objectives of the Union 

Not applicable. 

2. 

RESULTS  OF  CONSULTATIONS  WITH  THE  INTERESTED  PARTIES  AND 
IMPACT ASSESSMENTS 

Consultation of interested parties 

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

Collection and use of expertise 

There was no need for external expertise. 

Impact assessment 

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

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

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OJ L 343, 22.12.2009, p. 51 
OJ L 261, 07.10.2005, p. 1 

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3. 

LEGAL ELEMENTS OF THE PROPOSAL 

Summary of the proposed action 

The  request  for  a  partial  interim  review  was  lodged  by  Heze  Huayi  Chemical  Co.,  Ltd 
(Heze) ('the applicant'), an exporting producer in the people's Republic of China.. 

Having  determined  that  sufficient  evidence  existed  for  the  initiation  of  the  review,  the 
Commission initiated the review on 2 July 2009. 

The  review investigation showed that the applicant fulfils the requirements to be granted 
market economy treatment ('MET'). The review investigation further found that there was a 
reduction in the applicant's  dumping margin, which can be explained by the reduction in 
the company cost structure. It was thus shown that the circumstances on the basis of which 
measures had been established with respect to the applicant have changed and that the new 
circumstances are of a lasting nature. Therefore, the individual margin of dumping must be 
amended for this company.  

The  review  does  not  affect  the  date  on  which  the  measures  initially  imposed  by  Council 
Regulation (EC) No 1631/2005 will expire. 

It is proposed that the Council adopts the attached proposal for a Regulation, which should 
be published in the Official Journal of the European Union on 1 October 2010 at the latest. 

Legal basis 

Council Regulation (EC) 1225/2009 of 30 November 2009 on protection against dumped 
imports from countries not members of the European Community3. 

Subsidiarity principle 

The proposal falls under the exclusive competence of the Union. 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  Union,  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: Council Regulation. 

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

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OJ L 343, 22.12.2009, p. 51 

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4. 

BUDGETARY IMPLICATION 

The proposal has no implication for the Union budget. 

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2010/0235 (NLE) 

Proposal for a 

COUNCIL REGULATION (EU) No 

amending Regulation (EC) No 1631/2005 imposing a definitive anti-dumping duty on 
imports of trichloroisocyanuric acid originating, inter alia, in the People's Republic of 
China  

THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty on the Functioning of the European Union,  

Having  regard  to  Council  Regulation  (EC)  1225/2009  of  30  November  2009  on  protection 
against dumped imports from countries not members of the European Community4
 ('the basic 
Regulation'), and in particular Article 11(3) thereof, 

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

Whereas: 

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OJ L 343, 22.12.2009, p. 51 

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A. PROCEDURE 

1. Measures in force 

(1) 

In  October  2005,  the  Council,  by  Regulation  (EC)  No  1631/20055  (the  'original 
Regulation'), 
imports  of 
trichloroisocyanuric  acid  ('TCCA')  originating  in  the  People's  Republic  of  China 
('PRC'). The duty rates ranged from 7,3% to 42,6%. 

anti-dumping  measures  on 

imposed  definitive 

2. Request for a review 

(2) 

(3) 

(4) 

– 

– 

In  2009,  the  Commission  received  a  request  for  a  partial  interim  review  pursuant  to 
Article 11(3) of the basic Regulation. The request, limited in scope to the examination 
of dumping, was lodged by a Chinese exporting producer Heze Huayi Chemical Co., 
Ltd ('Heze' or 'the applicant'). The rate of the definitive anti-dumping duty applicable 
to the applicant is 14,1%.  

In  its  request,  the  applicant  claimed  that  the  circumstances  on  the  basis  of  which 
measures were imposed have changed and that these changes are of a lasting nature. 
The  applicant  provided  prima  facie  evidence  that  the  continued  imposition  of  the 
measure at its current level is no longer necessary to offset dumping.  

In  particular,  the  request  was  based  on  the  claim  that  the  TCCA  unit  cost  of  the 
applicant have significantly decreased since the original investigation as: 

the  applicant  produces  the  main  raw  material  needed  to  produce  the  product  under 
investigation; and  

the applicant has increased its production capacity. 

3. Initiation of a review 

(5) 

Having determined, after consulting the Advisory Committee, that sufficient evidence 
existed  for  the  initiation  of  a  review,  the  Commission,  on  2  July  2009,  initiated  an 
investigation6 pursuant to Article 11(3) of the basic Regulation, limited in scope to the 
examination of dumping in respect of the applicant.  

4. Product concerned and like product 

(6) 

(7) 

The  product  concerned  by  the  current  review  is  the  same  as  that  described  in  the 
original Regulation, trichloroisocyanuric acid and preparations thereof, also referred to 
as ‘symclosene’ under the international non-proprietary name (INN), originating in the 
People’s  Republic  of  China  (‘the  product  concerned’),  currently  falling  within  CN 
codes ex 2933 69 80 and ex 3808 94 20.  

The product produced and sold on the Chinese domestic market and that exported to 
the Union, has the same basic physical, technical and chemical characteristics and uses 
and is therefore considered to be alike within the meaning of Article 1(4) of the basic 
Regulation. 

5. Parties concerned 

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OJ L 261, 07.10.2005, p. 1 

OJ C 150, 02.07.2009, p. 14 ('Notice of Initiation') 

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(8) 

(9) 

(10) 

The  Commission  officially  advised  the  applicant,  the  Union  industry,  as  well  as  the 
representatives  of  the  government  of  the  exporting  country,  of  the  initiation  of  the 
review. 

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 Notice of Initiation 

In  order  to  obtain  the  information  deemed  necessary  for  its  investigation,  the 
Commission sent a market economy treatment (MET) claim form and a questionnaire 
to  the  applicant  and  received  replies  within  the  deadlines  set  for  that  purpose.  The 
Commission  sought  and  verified  all  the  information  it  deemed  necessary  for  the 
determination of dumping, and a verification visit was carried out at the premises of 
the applicant. 

6. Investigation period 

(11)  The  investigation  of  dumping  covered  the  period  from  1  July  2008  to  30  June  2009 

('IP'). 

B. RESULTS OF THE INVESTIGATION 

1. Market economy treatment ('MET') 

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

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

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

there  are  no  significant  distortions  carried  over  from  former  non-market  economy 
system; 

bankruptcy and property laws guarantee stability and legal certainty; 

currency exchanges are carried out at market rate. 

(13)  The investigation found that the applicant met all five MET criteria. It was found that 
during  the  IP,  Heze  made  its  business  decisions  without  any  State  interference  or 
distortions  related  to  non-market  economy  conditions.  Heze  is  subject  to  Chinese 
bankruptcy  and  property  laws  without  any  derogation.  The  company  has  one  set  of 
independently audited accounting records and accounting system and its practice was 
found  to  be  in  line  with  internationally  accepted  general  accounting  principles  and 
IAS.  Costs  and  prices  were  found  to  reflect  market  values  and  exchange  rate 
conversions were carried out at market rates. 

(14)  Based on the above facts and considerations, the applicant could be granted MET . 

2. Normal value 

(15)  For  the  determination  of  normal  value  it  was  first  established  whether  Heze’s  total 
volume  of  domestic  sales  of  the  like  product  was  representative  in  comparison  with  its 
total volume of export sales to the Union. In accordance with Article 2(2) of the basic 

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Regulation, domestic sales are considered representative when the total domestic sales 
volume is at least 5 % of the total volume of corresponding export sales to the Union. 
The  Commission  established  that  TCCA  was  sold  domestically  by  the  applicant  in 
overall representative volumes. 

(16)  Subsequently,  those  types  of  the  like  product  sold  on  the  domestic  market  by  the 
applicant that were identical and directly comparable to the types sold for export to the 
Union, were identified.  

(17)  For  each  type  sold  by  Heze  on  the  domestic  market  and  found  to  be  directly 
comparable  with  the  type  sold  for  export  to  the  Union,  it  was  established  whether 
domestic sales were sold in representative volume for the purposes of Article 2(2) of 
the basic Regulation. Domestic sales of a particular type were considered sufficiently 
representative  when  the  total  domestic  sales  volume  of  that  type  during  the  IP 
represented 5% or more of the total sales volume of the comparable type exported to 
the Union. 

(18) 

It  was  also  examined  whether  the  domestic  sales  of  each  type  could  be  regarded  as 
having been made in the ordinary course of trade, pursuant to Article 2(4) of the basic 
Regulation.  This  was  done  by  establishing  the  proportion  of  profitable  sales  to 
independent  customers  on  the  domestic  market  of  each  exported  type  of  the  product 
concerned during the IP. 

(19)  Where the sales volume of a product type, sold at a net sales price equal to or above 
the calculated cost of production, represented more than 80% of the total sales volume 
of that type, and where the weighted average price of that type was equal to or above 
the unit cost of production, normal value was based on the actual domestic price. This 
price was calculated as a weighted average of the prices of all domestic sales of that 
type made during the IP, irrespective of whether these sales were profitable or not. 

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(20)  Where the volume of profitable sales of a product type represented 80% or less of the 
total sales volume of that type, or where the weighted average price of that type was 
below  the  unit  cost  of  production,  normal  value  was  based  on  the  actual  domestic 
price,  which  was  calculated  as  the  weighted  average  price  of  only  the  profitable 
domestic sales of the type in question made during the IP. 

(21)  Wherever domestic prices of a particular product type sold by Heze could not be used 
in order to establish the normal value, another method had to be applied. In this regard, 
the Commission used constructed normal value. In accordance with Article 2(3) of the 
basic Regulation, normal value was constructed by adding to the manufacturing costs 
of  the  exported  types  a  reasonable  amount  for  selling,  general  and  administrative 
expenses (‘SG&A’) and a reasonable margin of profit. Pursuant to Article 2(6) of the 
basic Regulation, the amounts for SG&A and profit margin were based on the average 
SG&A  and  profit  margin  of  Heze  sales  in  the  ordinary  course  of  trade  of  the  like 
product.  

(22) 

In  line  with  the  methodology  used  in  the  original  investigation  the  cost  of 
manufacturing  was  calculated  for  two  types  of  products.  Taking  into  account  the 
information  provided  by  the  applicant,  one  cost  of  manufacturing  was  calculated  for 
granular and tablets and a second one for powder. 

3. Export price 

(23)  As  the  product  concerned  was  exported  directly  to  independent  customers  in  the 
Union,  the  export  price  was  established  in  accordance  with  Article  2(8)  of  the  basic 
Regulation, i.e. on the basis of export prices actually paid or payable for the product 
when sold for export to the Union. 

4. Comparison 

(24)  The  average  normal  value  and  the  average  export  price  for  each  type  of  the  product 
concerned were compared on an ex-works basis and at the same level of trade. In order 
to ensure a fair comparison between normal value and export price, account was taken, 
in  accordance  with  Article  2(10)  of  the  basic  Regulation,  of  differences  in  factors 
which  were  claimed  and  demonstrated  to  affect  prices  and  price  comparability.  For 
this  purpose,  adjustments  for  transport  costs  ocean  freight  and  insurance  costs, 
handling,  credit  costs,  and  bank  charges  were  made  where  applicable  and  justified. 
Furthermore,  it  was  found  that  VAT  was  partially  refunded  when  the  product 
concerned  was  sold  for  export  to  the  Union.  Consequently,  the  VAT  payable  on 
domestic  sales  was  adjusted  accordingly  pursuant  to  Article  2(10)(b)  of  the  basic 
Regulation. 

(25)  With  regard  to  the  packing  cost  allowance,  the  applicant  claimed  an  allowance  in 
respect of packing expenses for sales in both the Chinese and the Union markets. The 
verification showed that those costs were equally included in the cost of production of 
the  product  regardless  of  whether  it  was  to  be  sold:  domestically  or  for  export. 
Therefore,  the  allowance  claimed  was  not  accepted  either  in  the  domestic  or  in  the 
export market. 

5. Dumping Margin 

(26)  As  provided  for  under  Article  2(11)  of  the  basic  Regulation,  the  weighted  average 
normal  value  by  type  was  compared  with  the  weighted  average  export  price  of  the 
corresponding type of the product concerned. This comparison showed the existence 
of dumping.  

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(27)  The  dumping  margin  of  Heze  expressed  as  a  percentage  of  the  net,  free-at-Union-

frontier price was found to be 3,2%. 

C. LASTING NATURE OF CHANGED CIRCUMSTANCES  

(28) 

In  accordance  with  Article  11(3)  of  the  basic  Regulation,  it  was  also  examined 
whether  the  changed  circumstances  which  were  found  to  exist  could  reasonably  be 
considered to be of a lasting nature. 

(29)  The applicant provided full cooperation in this interim  review  and the  data collected 
and  verified  allowed  establishing  a  dumping  margin  based  on  its  individual  export 
prices  to  the  Union.  The  result  of  this  calculation  indicates  that  the  continued 
application of the measure at its current level is no longer justified. 

(30)  Evidence  obtained  and  verified  during  the  investigation  showed  a  reduction  in  the 
level of dumping explained by the reduction of the company cost structure. The main 
factors  to  trigger  the  reduction  in  the  applicant's  cost  structure  are  the  in-house 
production  of  the  main  raw  material  and  the  expansion  in  the  applicant's  production 
capacity.  

(31) 

(32) 

It  was  also  found  that  since  the  original  investigation  Heze's  export  prices  to  all 
markets  increased.  In  particular,  export  prices  to  the  Union  are  in  line  with  the 
company's  export  prices  to  other  third  countries.  Evidence  collected  on  spot  showed 
that the company has many Union customers with similar price levels. The consistent 
market  behaviour  of  the  applicant  shows  that  the  changes  in  circumstances  are  of  a 
lasting nature  

In the light of the above, it is therefore considered that the circumstances that led to the 
initiation  of  this  review  are  unlikely  to  change  in  the  foreseeable  future  in  a  manner 
that would affect the findings of the current review. Therefore it is concluded that the 
changes are considered to be of a lasting nature and that the application of the measure 
at its current level is no longer justified. 

D. ANTI-DUMPING MEASURES 

(33) 

In  the  light  of  the  results  of  this  review  investigation,  it  is  considered  appropriate  to 
amend  the  anti-dumping  duty  applicable  to  imports  of  the  product  concerned  from 
Heze to 3.2 %. 

HAS ADOPTED THIS REGULATION: 

The  entry  concerning  Heze  Huayi  Chemical  Co.  Limited,  in  the  table  in  Article  1(2)  of 
Regulation (EC) No 1631/2005 shall be replaced by the following: 

Article 1 

Country 

Company 

PRC 

Heze Huayi Chemical Co. 
Limited 

Anti-dumping 
duty rate 

TARIC 
additional 
code 

3,2% 

A629 

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Article 2 

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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