Proposal for a COUNCIL REGULATION amending Regulation (EU) 349/2012 imposing a definitive anti-dumping duty on imports of tartaric acid originating in the People's Republic of China
Date: 2012-06-08
Institutions: European Commission
Subjects: China, anti-dumping duty, import (EU), organic acid, originating product

EUROPEAN COMMISSION 

Brussels, 8.6.2012  
COM(2012) 284 final 

2012/0148 (NLE) 

Proposal for a 

COUNCIL REGULATION 

amending Regulation (EU) 349/2012 imposing a definitive anti-dumping duty on imports 
of tartaric acid originating 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)  No  1225/2009  of  30 
November  2009  on  protection  against  dumped  imports  from  countries  not  members  of  the 
European Community1 (‘the basic Regulation’) in the interim review proceeding concerning 
the anti-dumping duty in force in respect of imports of tartaric acid originating in the People's 
Republic of China (‘PRC’). 

•  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 

A  definitive  anti-dumping  duty  on  imports  of  tartaric  acid  originating  in  the  PRC  was 
imposed  by  Council  Regulation  (EC)  No  130/20062.  This  duty  was  amended  by  Council 
Implementing Regulation (EU) No 332/20123 and extended for a further five years by Council 
Implementing Regulation (EU) No 349/20124. 

•  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. 

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OJ L 343, 22.12.2009, p. 51. 
OJ L 23, 27.1.2006, p. 1. 
OJ L 108, 20.4.2012, p. 1 
OJ L 110, 24.4.2012, p. 3 

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The  basic  Regulation  does  not  provide  for  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 29 July 2011 the Commission announced an interim review of the anti-dumping duty in 
force  in  respect  of  imports  of  tartaric  acid  originating  in  the  PRC  by  a  notice  ('notice  of 
initiation')  published  in  the  Official  Journal  of  the  European  Union.  This  was  following  a 
request  for  review  limited  to  dumping  and  limited  to  two  producers  of  tartaric  acid  in  the 
PRC,  namely  Ninghai  Organic  Chemical  Factory,  Ninghai  and  Changmao  Biochemical 
Engineering Co., Ltd., Changzhou. 

The investigation found the continued existence of dumping. 

Therefore,  it  is  suggested  that  the  Council  adopt  the  attached  proposal  for  a  Regulation  in 
order to amend the existing measures, which should be published in the Official Journal of the 
European Union by 28 July 2012 at the latest. 

•  Legal basis 

Council Regulation (EC) No 1225/2009 of 30 November 2009 on protection against dumped 
imports from countries not members of the European Community. 

•  Subsidiarity principle 

The proposal falls under the exclusive competence of the European 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  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: regulation. 

Other means would not be adequate for the following reason: 

The basic Regulation does not provide for alternative options. 

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4. 

BUDGETARY IMPLICATION 

The proposal has no implications for the Union budget. 

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2012/0148 (NLE) 

Proposal for a 

COUNCIL REGULATION 

amending Regulation (EU) 349/2012 imposing a definitive anti-dumping duty on imports of 
tartaric acid originating 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)  No  1225/2009  of  30  November  2009  on  protection 
against  dumped  imports  from  countries  not  members  of  the  European  Community5  (‘the  basic 
Regulation’), and in particular Articles 9 and 11(3), (5) and (6) thereof, 

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

Whereas: 

1. 

(1) 

2. 

(2) 

(3) 

A. 

PROCEDURE 

Measures in force 

In 2006, the Council imposed by Regulation (EC) No 130/20066 a definitive anti-dumping 
duty on imports of tartaric acid originating in the People's Republic of China (‘PRC’ or 'the 
country  concerned')  (‘the  original  anti-dumping  measures’).  This  Regulation  was  amended 
by Council Regulation (EC) No 150/2008.7 In 2012, the Council amended the measures by 
Implementing  Regulation  (EU)  No.  332/20128  and  extended  the  measures  in  force  for  a 
further five years by Implementing Regulation (EU) No. 349/20129.  

Initiation of an interim review 

A  request  for  review  was  lodged  by  the  following  producers  in  the  Union:  Distillerie 
Bonollo SpA, Industria Chimica Valenzana SpA, Distillerie Mazzari SpA, Caviro Distillerie 
Srl and Comercial Quimica Sarasa s.l. ('the applicants'). 

The  review  request  was  limited  in  scope  to  the  examination  of  dumping  as  far  as  two 
Chinese  exporting  produces  were  concerned,  namely  Changmao  Biochemical  Engineering 
Co., Ltd, Changzhou, and Ninghai Organic Chemical Factory, Ninghai. The request alleged 
that the continued imposition of measures at the existing level, which was based on the level 

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OJ L 343, 22.12.2009, p. 51. 
OJ L 23, 27.1.2006, p. 1. 
OJ L 48, 22.2.2008, p. 1. 
OJ L 108, 20.4.2012, p.1 
OJ L 110, 24.4.2012, p.3 

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of  dumping  previously  established,  appeared  to  be  no  longer  sufficient  to  counteract 
dumping, given that both companies should be denied Market Economy Treatment ('MET'). 

(4) 

Having determined that the Commission had at its disposal sufficient prima facie evidence 
for  the  initiation  of  an  interim  review,  and  after  consulting  the  Advisory  Committee,  the 
Commission announced on 29 July 2011, in a notice published in the Official Journal of the 
European  Union10  ('the  notice  of  initiation'),  the  initiation  of  an  interim  review  limited  to 
dumping pursuant to Article 11(3) of the basic Regulation. 

3. 

Investigation  

3.1. 

Investigation period 

(5) 

The investigation concerning dumping covered the period from 1 July 2010 to 30 June 2011 
(‘the review investigation period’ or ‘RIP’). 

3.2. 

Parties concerned by this investigation 

(6) 

(7) 

The  Commission  officially  advised  the  two  exporting  producers  in  the  country  concerned 
and the authorities of the country concerned of the initiation of the interim 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. 

3.3. 

Questionnaire replies and verifications 

(8) 

(9) 

(10) 

The  Commission  sent  questionnaires  to  the  two  exporting  producers  named  in  the  request 
for review and to producers in the analogue country, Argentina. 

Questionnaire  replies  were  received  from  the  two  Chinese  exporting  producers,  and  also 
from the cooperating producer in the analogue country. 

In  order  to  allow  the  two  exporting  producers  in  the  PRC  to  submit  a  claim  for  market 
economy  treatment  (‘MET’)  or  individual  treatment  (‘IT’),  if  they  so  wished,  the 
Commission  sent  claim  forms  for  this  purpose.  Claims  for  MET,  or  for  IT  in  case  the 
investigation established that they do not meet the conditions for MET, were received from 
both of them. 

(11)  The  Commission  sought  and  verified  all  the  information  deemed  necessary  for  a 
determination  of  dumping  and  carried  out  verifications  at  the  premises  of  the  following 
companies: 

(a) 

Exporting producers in the PRC 

– 

– 

Ninghai Organic Chemical Factory, Ninghai 

Changmao Biochemical Engineering Co., Ltd., Changzhou 

(b) 

Exporting producers in the analogue country 

– 

TARCOL S.A., Buenos Aires 

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OJ C 223, 29.7.2011, p.16. 

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B. 

PRODUCT CONCERNED AND LIKE PRODUCT 

1. 

Product concerned 

(12)  The  product  concerned  by  this  review  is  the  same  as  the  one  in  the  original  investigation, 
namely tartaric acid, excluding D-(-)- tartaric acid with a negative optical rotation of at least 
12,0  degrees,  measured  in  a  water  solution  according  to  the  method  described  in  the 
European Pharmacopoeia, originating in the PRC, currently falling within CN code ex 2918 
12 00 (‘the product concerned’). 

(13)  The  product  concerned  is  used  in  wine,  in  beverage  and  food  additives,  as  a  retardant  in 
plaster  and  in  numerous  other  products.  It  can  be  obtained  either  from  the  by-products  of 
wine  making,  as  is  the  case  with  production  in  the  Union  or,  via  chemical  synthesis  from 
petrochemical compounds, as is the case with production in the PRC. Only L+ tartaric acid 
is  manufactured  from  the  by-products  of  wine  making.  Synthetic  production  allows  the 
manufacture  of  both  L+  and  DL  tartaric  acid.  Both  types  are  product  concerned  and  have 
overlapping uses. 

2. 

Like product  

(14)  As in the previous investigation, it was considered that the tartaric acid produced in the PRC 
and exported to the EU, the tartaric acid produced and sold on the domestic market of the 
analogue country (Argentina) and the tartaric acid manufactured and sold in the EU by the 
Union  producers  have  the  same  basic  physical  and  chemical  characteristics,  and  the  same 
basic uses. They were therefore considered to be like products within the meaning of Article 
1(4) of the basic Regulation. 

1. 

Market Economy Treatment ('MET') 

C. 

DUMPING 

(15)  Both  companies  named  in  the  request  for  review  claimed  Market  Economy  Treatment 
('MET'). 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 the said Article for those producers which were found to meet the 
criteria laid down in Article 2(7)(c) of the basic Regulation. 

(16)  Briefly,  and  for  ease  of  reference  only,  the  MET  criteria  are  set  out  in  summarised  form 

below: 

(1) 

(2) 

(3) 

(4) 

(5) 

Business decisions and costs are made in response to market conditions and without 
significant State interference;  

Accounting records are independently audited in line with international accounting 
standards and applied for all purposes; 

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

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

Currency exchanges are carried out at the market rate. 

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(17)  Both  producers  in  the  PRC  requested  MET  pursuant  to  Article  2(7)(c)  of  the  basic 
Regulation.  Each  MET  application  was  analysed,  and  on-spot  investigations  were  carried 
out at the premises of these co-operating companies. 

(18)  For both companies, MET was denied under Criterion 1 of Article 2(7)(c) based on evidence 
that the price of the basic raw material, benzene, was distorted. A comparison of domestic 
prices in China, using the purchase prices of one cooperating producer as a source, against 
prices  in  other  market  economy  countries  showed  a  price  difference  of  between  19%  and 
51% during the investigation period. The PRC imposes an import tariff on benzene of 40% 
(although this was not in fact in force during the RIP) and also does not refund any of the 
17% VAT levied on its export. Distortions were also found in the price of the intermediate 
raw  material,  maleic  anhydride,  purchased  by  the  other  cooperating  producer  using  their 
purchases as a source. 

(19)  MET was also denied to one company under Criteria 2 and 3 due to evidence of depressed 
land  use  right  prices  and  also  overvaluation  of  the  company's  assets  for  the  purpose  of 
guaranteeing a loan from a State-owned bank. 

(20)  Both companies disputed the findings of the Commission after they were disclosed to them. 
However  neither  company  could  explain  the  low  price  of  benzene  on  the  Chinese  market. 
The  company  referred  to  in  recital  (19)  above  provided  some  documents  to  dispute  our 
findings  regarding  the  land  use  right  prices  and  the  valuation  of  their  assets.  However  as 
these  documents  were  requested  during  the  inspection  and  were  not  provided,  it  was 
therefore decided that this information could not be verified or relied upon. 

(21)  MET is therefore denied to both companies. 

(22)  However  both  companies  meet  the  requirements  set  out  in  Article  9(5)  of  the  basic 
Regulation  and  are  therefore  entitled  to  an  individual  anti-dumping  duty  using  their  own 
export prices. 

2. 

Analogue country 

(23)  Pursuant to Article 2(7)(a) of the basic Regulation normal value was determined on the basis 
of  the  price  or  constructed  value  in  an  appropriate  market  economy  third  country  ('the 
analogue country'), or the price from the analogue country to other countries, including the 
Union, or, where those are not possible, on any other reasonable basis, including the price 
actually  paid  or  payable  in  the  Union  for  the  like  product,  duly  adjusted  if  necessary  to 
include a reasonable profit margin. 

(24)  As  in  the  original  investigation,  Argentina  was  proposed  in  the  notice  of  initiation  as  an 
appropriate  analogue  country  for  the  purposes  of  establishing  normal  value  pursuant  to 
Article 2(7)(a) of the basic Regulation. Following the publication of the notice of initiation, 
one company in India and one company in Australia were identified as alternative possible 
producers  in  a  market  economy  third  country.  However  neither  of  the  two  companies 
responded to the questionnaire sent to them. 

(25)  One producer of tartaric acid in Argentina cooperated with the investigation by replying to a 
questionnaire. The investigation showed that Argentina had a competitive market for tartaric 
acid with two competing local producers and imports from third countries. The production 
volume  in  Argentina  constitutes  more  than  20%  of  the  volume  of  Chinese  exports  of  the 
product  concerned  to  the  EU.  The  Argentinean  market  was  therefore  deemed  sufficiently 
representative for the determination of normal value for the PRC. 

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(26) 

It  is  therefore  concluded,  as  in  the  previous  investigation,  that  Argentina  constitutes  an 
appropriate analogue country in accordance with Article 2(7)(a) of the basic Regulation. 

3. 

Normal Value 

(27)  Normal value was established on the basis of the information received from the cooperating 
producer  in  the  analogue  country.  Although  the  analogue  country  producer  had  domestic 
sales  of  the  product  concerned,  given  the  difference  in  the  production  method  between 
Argentina and the PRC which has a significant impact on prices and costs, it was decided to 
construct normal value, rather than use these domestic sales prices. The cost of raw material 
in Argentina was replaced by an average market price for benzene and an adjustment made 
to SG&A in Argentina to better reflect the domestic market in China. 

(28)  Normal  value  for  L+  Tartaric  Acid  (which  is  manufactured  by  the  Argentinian  producer) 
was  therefore  constructed  from  the  cost  of  production  in  Argentina  of  L+  Tartaric  Acid, 
taking into account the difference in production method between Argentina and the PRC.  

(29)  Given  that  the  Argentinian  producer  did  not  manufacture  DL  tartaric  acid,  a  normal  value 

was also constructed using the difference in price found between the two product types.  

4. 

Export price 

(30)  Export  prices  were  determined  based  on  the  actual  price  paid  or  payable  by  the  first 

independent customer in the Union for both Chinese exporting producers. 

5. 

Comparison 

(31)  For  the  purposes  of  ensuring  a  fair  comparison  between  the  normal  value  and  the  export 
price in accordance with Article 2(10) of the basic Regulation, due allowance in the form of 
adjustments was made with regard to certain differences in transport, insurance and indirect 
taxation, where these were proved to affect prices and price comparability. 

6. 

Dumping margins 

(32)  For both companies the weighted average normal value for each product was compared with 
the weighted average export price for the same product type, as provided for under Article 
2(11) of the basic Regulation.  

(33)  On this basis, the weighted average dumping margins expressed as a percentage of the CIF 

Union frontier price duty unpaid are: 

Company 

Dumping margin 

Changmao Biochemical Engineering Co., Ltd, Changzhou 

Ninghai Organic Chemical Factory, Ninghai. 

13.1%

8.3%

7. 

Lasting nature of changed circumstances 

(34)  The request for review alleged that the two Chinese exporting producers should no longer be 
granted MET and that this change was of a lasting nature. Given the reasons for denial of 

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MET  it  can  be  considered  that  the  conclusions  of  this  review  are  of  a  lasting  nature. 
Evidence shows that the distortion in the price of benzene in China was in existence prior to 
the RIP and there is no evidence to show that the Chinese government has, or will, remove 
such distortions. 

(35)  For the company-specific reasons set out in recital (19) these are also of a lasting nature, as 
they affect the company's costs and decisions over a significant period of time. They were 
not events that would have affected the original investigation in which MET was granted to 
this company. 

D. 

AMENDMENT OF THE ANTIDUMPING MEASURES IN FORCE 

(36) 

In light of the above, it is considered that the present anti-dumping review should amend the 
level of the existing measures in force on imports of tartaric acid from the People's Republic 
of China. 

(37)  All parties were informed of the essential facts and considerations on the basis of which it 
was intended to recommend that the existing measures be amended. They were also granted 
a period within which they could make representations subsequent to this disclosure.  

(38)  One  Chinese  company  replied  to  the  disclosure  again  disputing  the  findings  regarding  the 
denial  of  Market  Economy  Treatment  on  the  grounds  of  price  distortion  of  the  main  raw 
material.  However  they  provided  no  new  evidence  to  support  their  assertions  and  their 
arguments  were  therefore  rejected.  They  also  requested  further  information  on  the 
adjustments referred to in recital (27) but this had to be rejected as it would be impossible to 
do so without disclosing the production methods and costs of the sole producer in Argentina. 

(39)  The  Union  Industry  responded  to  the  disclosure  by  contesting  the  use  of  a  constructed 
normal  value  rather  than  domestic  sales  prices  in  the  analogue  country,  and  also  the 
adjustments  referred  to  above  to  the  constructed  normal  value  to  take  account  of  the 
difference in raw materials and production process between Argentina and China. 

(40)  As  regards  the  use  of  a  constructed  normal  value  rather  than  prices  from  Argentina,  this 
cannot be considered a change of methodology under Article 11(9) of the basic Regulation. 
In  the  original  investigation  both  Chinese  companies  were  granted  MET  and  therefore 
normal value was taken from their own domestic prices. Now that MET has been denied to 
both companies the same methodology could no longer be used. 

(41)  The Union Industry further claimed that the Commission should have used the methodology 
set out in the original investigation to calculate the residual duty for China to calculate the 
individual  margins  for  the  two  exporters  concerned  by  this  review.  This  argument  was 
rejected  as  the  residual  duty  was  calculated  for  companies  that  did  not  cooperate  with  the 
original investigation. It is therefore not comparable to calculating an individual duty for a 
cooperating exporter that has been denied Market Economy Treatment. 

(42)  As regards the adjustments made to the normal value referred to above, these were necessary 
to  ensure  a  fair  comparison  between  the  export  price  of  a  synthetically  produced  tartaric 
acid,  and  a  normal  value  based  on  a  natural  production  process.  Attempting  the  same 
calculation  using  domestic  sales  prices  in  Argentina  and  then  adjusting  the  normal  value 
and/or export price under Article 2(10) of the basic Regulation would not have provided for 
a fair comparison. These arguments were therefore rejected. 

E. 

UNDERTAKINGS 

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(43)  One exporting producer in the PRC offered a price undertaking in accordance with Article 
8(1)  of  the  basic  Regulation.  The  product  concerned  is  not  suitable  for  a  fixed  price 
undertaking due to the volatility of the export price. In order to overcome this problem, the 
exporting producer offered an indexation clause, but without specifying how this indexation 
would  be  calculated.  They  also  offered  an  indexation  based  on  the  distorted  domestic 
benzene price in China, which could not be accepted. 

(44)  Moreover, this exporting producer produces different types of other chemical products and 
may  sell  these  products  to  common  customers  in  the  European  Union  via  related  trading 
companies.  This  would  create  a  serious  risk  of  cross  compensation  and  would  make 
effective monitoring extremely difficult.  

(45)  Furthermore,  there  are  different  types  of  the  product  concerned  which  are  not  easily 
distinguishable and have a considerable difference in price. The different MIPs proposed by 
the exporting producer would therefore render monitoring impracticable. On the basis of the 
above it was concluded that the undertaking offers cannot be accepted, 

HAS ADOPTED THIS REGULATION: 

Article 1 

The Table in Article 1(2) of Council Implementing Regulation (EU) No 349/2012 shall be amended 
to read as follows: 

Company 

Anti-dumping duty 

TARIC additional code 

Changmao Biochemical 
Engineering Co., Ltd, 
Changzhou 

Ninghai Organic Chemical 
Factory, Ninghai 

All other companies (except 
Hangzhou Bioking 
Biochemical Engineering Co. 
Ltd, Hangzhou – TARIC 
additional code A687). 

13.1% 

8.3% 

34.9% 

A688 

A689 

A999 

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

Article 2 

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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