Proposal for a COUNCIL IMPLEMENTING REGULATION amending Implementing Regulation (EU) No 1138/2011 imposing a definitive anti-dumping duty and collecting definitively the provisional duty imposed on imports of certain fatty alcohols and their blends originating in India, Indonesia and Malaysia
Date: 2012-11-22
Institutions: European Commission
Subjects: India, Indonesia, Malaysia, anti-dumping duty, chemical alcohol, import (EU), originating product













EUR-Lex - 52012PC0690 - EN











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52012PC0690

Proposal for a COUNCIL IMPLEMENTING REGULATION amending Implementing Regulation (EU) No 1138/2011 imposing a definitive anti-dumping duty and collecting definitively the provisional duty imposed on imports of certain fatty alcohols and their blends originating in India, Indonesia and Malaysia /* COM/2012/0690 final - 2012/0325 (NLE) */









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 Community
('the basic Regulation') in the anti-dumping proceeding concerning imports of
certain fatty alcohols and their blends originating in India, Indonesia and
Malaysia.
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
Definitive measures were imposed by Council
Implementing Regulation (EC) No 1138/2011 (OJ L 293, 11.11.2011, p. 1).
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 contain
provisions 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
The attached proposal for a Council
Regulation is in the light of a recent judgment by the European Court of
Justice on an appeal by the Council which clarifies the interpretation of a
certain point of law. Following this it is considered prudent to re-calculate
the dumping margin calculation for one Indonesian company which had brought a
court case on the same point of law and the factual circumstances of which are
similar to those of the company in the former court case. 
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
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: regulation.
Other means would not be adequate for the
following reason:
Other means would not be adequate because
the basic Regulation does not provide for alternative options.
4.         BUDGETARY IMPLICATION 
The proposal has no implication for the
Union budget.
2012/0325 (NLE)
Proposal for a
COUNCIL IMPLEMENTING REGULATION 
amending Implementing Regulation (EU) No
1138/2011 imposing a definitive anti-dumping duty and collecting definitively
the provisional duty imposed on imports of certain fatty alcohols and their
blends originating in India, Indonesia and Malaysia
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 Community[1]
(‘the basic Regulation’) and in particular Article 9(4) thereof, 
Having regard to the proposal submitted by
the European Commission ('the Commission') after having consulted the Advisory
Committee,
Whereas:
(1)       In August 2010, the
Commission, by Notice of Initiation (NOI) published on 13 August 2010[2], initiated a proceeding
with regard to imports of certain fatty alcohols and their blends (‘FOH’)
originating in India, Indonesia and Malaysia (‘the countries concerned’). 
(2)       In May 2011, by Regulation
(EU) No 446/2011[3]
('the provisional Regulation'), the Commission imposed a provisional anti-dumping
duty on imports of FOH originating in India, Indonesia and Malaysia, and in
November 2011 a definitive anti-dumping duty was imposed on the same imports by
Council Implementing Regulation (EU) No 1138/2011[4] ('the definitive
Regulation').
(3)       On 21 January 2012, PT
Ecogreen Oleochemicals, an Indonesian exporting producer of FOH, Ecogreen
Oleochemicals (Singapore) Pte. Ltd and Ecogreen Oleochemicals GmbH (herein
jointly referred to as 'Ecogreen’) lodged an application (case T-28/12) before
the General Court for the annulment of the definitive Regulation as far as the
anti-dumping duty with regard to Ecogreen was concerned. Ecogreen contested the
adjustment made on the basis of Article 2(10)(i) of the basic Regulation to its
export price for the purpose of comparing that export price with the company's
normal value.
(4)       On 16 February 2012, the
Court of Justice rendered its judgment in joined cases C‑191/09 P and C‑200/09 P
Council of the European Union and European Commission v Interpipe Nikopolsky
Seamless Tubes Plant Niko Tube ZAT (Interpipe Niko Tube ZAT) and Interpipe
Nizhnedneprovsky Tube Rolling Plant VAT (Interpipe NTRP VAT). The Court of
Justice rejected the appeals and cross-appeals of the General Court's judgment
in case T-249/06 Interpipe Nikopolsky Seamless Tubes Plant Niko Tube ZAT
(Interpipe Niko Tube ZAT) and Interpipe Nizhnedneprovsky Tube Rolling Plant VAT
(Interpipe NTRP VAT) v. Council of the European Communities. The General Court
had annulled Article 1 of Regulation 954/2006 with regard to Interpipe NTRP VAT
inter alia on the grounds of a manifest error of assessment in making the
adjustment based on Article 2(10)(i) and with regard to Interpipe Niko Tube ZAT
on other grounds. 
(5)       Given that the factual
circumstances for Ecogreen are similar to those of Interpipe NTRP VAT in
respect of the adjustment made pursuant to Article 2(10)(i) of the basic
Regulation, in particular the following factors in combination: volume of
direct sales to third countries of less than 8% [1-5%] of all export sales; existence
of common ownership/control of the trader and the exporting producer; the
nature of functions of the trader and the exporting producer, it is considered
appropriate to re-calculate the dumping margin of Ecogreen without making an adjustment
pursuant to Article 2(10)(i) and to amend the definitive Regulation
accordingly.
B. NEW ASSESSMENT OF THE FINDINGS
BASED ON THE JUDGEMENT OF THE GENERAL COURT
(6)       On the basis of
eliminating the adjustment pursuant to Article 2(10)(i), the dumping margin
established for Ecogreen, expressed as a percentage of the CIF import price at
the Union frontier, duty unpaid, is less than 2% and is therefore considered de
mimimis in accordance with Article 9(3) of the basic Regulation. In the
light of this, the investigation should be terminated in respect of Ecogreen
without the imposition of measures. 
(7)       The dumping margin for all
companies in Indonesia, other than for the other exporting producer with an individual
margin, which was based on that of the cooperating Indonesian exporting
producer with the highest dumping margin, should be revised to take account of
the re-calculated dumping margin of Ecogreen.
C. DISCLOSURES
(8)       The interested parties
concerned were informed of the proposal to revise the rates of anti-dumping
duty in two disclosures, one sent on 13 June 2012 and a second
disclosure sent on 25 September. All parties were granted a period
within which they could make representations subsequent to each disclosure in
accordance with the provisions of the basic Regulation.
(9)       Comments on the disclosure
sent on 13 June were received from P.T. Musim Mas (PTMM), the second
exporting producer in Indonesia, from one producer in the Union, and from one
exporting producer in Malaysia. PTMM also asked for an opportunity to be heard
by the Commission services and was granted such a hearing.
(10)     PTMM, for which an
adjustment under Article 2(10)(i) had also been made, argued that the Court
judgment in joined cases C‑191/09 P and C‑200/09 P
should result in a recalculation of its dumping margin, similar to that made
for Ecogreen, without an adjustment being made pursuant to Article 2(10)(i)
since once a single economic entity made up of the exporting producer and the
trader is established, no adjustments under Article 2(10)(i) can be made. The
company also claimed that the burden of proving that an adjustment should be
made rests with the Institutions and they have not proved it in the case of
PTMM. It further alleged that its circumstances were identical to those of
Ecogreen, and any difference in treatment would therefore amount to
discrimination. 
(11)     As regards the comments
made by PTMM, it should be noted that it does not follow from the Court
judgment in joined cases C‑191/09 P and C‑200/09 P that
as soon as the existence of a single economic entity is established no
adjustment under Article 2(10)(i) of the basic Regulation can be made. The
adjustment under Article 2(10)(i) is considered to be justified in the
case of PTMM as has been explained in the definitive regulation, in
communication with the company and herein below. 
(12)     There are a number of
differences between the circumstances of the two Indonesian exporting
producers, in particular the following in combination: the level of direct
export sales made by the producer; the significance of the trader's activities
and functions concerning products sourced from non-related companies; the
existence of a contract between the trader and producer, which provided that
the trader was to receive a commission for the export sales. Given the
difference in the circumstances of the two companies the claim of
discrimination has to be rejected. 
(13)     It is noted that PTMM also
lodged an application (case T-26/12) before the General Court for the annulment
of the definitive Regulation as far as the anti-dumping duty with regard to
PTMM was concerned.
(14)     One exporting producer in
Malaysia argued that the recalculation of the margin for Ecogreen, without
making an adjustment pursuant to Article 2(10)(i), was not supported by the
judgment in joined cases C‑191/09 P and C‑200/09 P or
the facts therein. It pointed out that the General Court, in case T-249/06,
had found a manifest error of assessment in applying Article 2(10)(i) of the
basic Regulation in so far as the Council made an adjustment on the export
price charged by Sepco in the context of transactions concerning pipes
manufactured by Interpipe NTRP VAT, but not those manufactured by Interpipe
Niko Tube ZAT. Ecogreen's factual circumstances thus could not simultaneously be
similar to those of Interpipe NTRP VAT and of Interpipe Niko Tube ZAT due to a
difference in the situation of those two companies. 
(15)     This argument is accepted.
Indeed, Ecogreen's situation is similar to that of Interpipe NTRP VAT. This
finding justifies the need for taking the appropriate steps to re-calculate the
dumping margin for Ecogreen without the Article 2(10)(i) adjustment.
(16)     The exporting producer in Malaysia further argued that the situation of Ecogreen as described in the definitive
Regulation is not even similar to that of Interpipe NTRP VAT. Upon reassessing
the precise factual circumstances of Ecogreen, it is however considered that
these are sufficiently similar to that of Interpipe NTRP VAT as such control as
found by the General Court for Interpipe NTRP VAT when assessing whether the
company carrying out the sales activities is under the control of the exporting
producer or whether there is common control has been found for Ecogreen and
together with several other factors, as indicated in recital (4), leads to the
conclusion that the adjustment under Article 2(10)(i) of the basic Regulation should
not have been made. 
(17)     The same exporting producer
in Malaysia, as an alternative to its argument regarding the similarities between
the situation of Ecogreen and the case T-249/06, argued that the
disclosure sent on 13 June was insufficient and that additional
disclosure should be made of the essential facts and considerations on the
basis of which the recalculation for Ecogreen is justified. One producer in the
 Union also commented that both disclosures referred to in recital (8) were
insufficient, and argued that it was deprived of its rights of defence.
(18)     In this regard, it is
recalled that certain details relating to specific companies which are
confidential in nature cannot be disclosed to third parties. However, the
nature of the factual circumstances for Ecogreen which are similar to those of
Interpipe NTRP VAT, as indicated at recital (5), was disclosed to interested
parties on 13 June and on 25 September, who were granted
a period within which they could make representations subsequent to each
disclosure in accordance with the provisions of the basic Regulation.
(19)     In response to the second
disclosure sent on 25 September, parties mainly reiterated their
claims in their responses to the first disclosure of 13 June. 
(20)     PTMM has developed its
comments based on its main claim that the existence of a Single Economic Entity
(SEE) of PTMM and its trader excludes an adjustment under Article 2(10)(i) of
basic Regulation and the Institutions shift the SEE doctrine laid out by the
Courts to a functional approach where an analysis of the functions of the related
trader would be required.
(21)     It is noted that this issue
turns around a point of law that is a subject matter of a pending case.
(22)     Further PTMM claimed that
the arguments in recital (12) above are not convincing and do not suffice to
differentiate between the circumstances of Ecogreen and PTMM respectively.
(23)     In that regard it is sufficient
to note that it is settled case law that different treatment of companies that
are not in an identical situation does not amount to discrimination[5]. Against this background
each individual case was assessed on its individual merits against the findings
in judgments T-249/09 and joined cases C‑191/09 P and C‑200/09 P.
(24)     First argument: Level of
direct export sales made by the producer. PTMM submitted that it has no
marketing and sales division and claimed that all the sales carried out
directly by the producer in Indonesia (and not by the related trader) were only
done so as to comply with legal requirements. The functions of marketing and sales
were carried out by its trader in Singapore. For this reason, PTMM claimed that
this argument does not justify the adjustment under Article 2(10)(i) of the
basic Regulation nor the distinction drawn between PTMM on the one hand and Interpipe
NTRP VAT on the other.
(25)     Article 2(10) of the basic
Regulation stipulates that a fair comparison shall be made between the export
price and the normal value at the same level of trade with due account taken of
differences which affect price comparability. Where the normal value and the
export price as established are not on such a comparable basis due allowance,
in the form of adjustments shall be made in each case, on its merits, for
differences in factors which are claimed, and demonstrated, to affect prices
and price comparability. 
(26)     On this basis, and as
explained in recital (38) of the provisional Regulation, adjustments for inter
alia differences in commissions between export sales prices and domestic sales
prices during the original investigations were considered warranted due to the
differences in the sales channels between export sales to the European Union
and domestic sales.
(27)     The arguments put forward
by PTMM do not contradict the first argument, namely that the level of direct
export sales made by PTMM is higher than that of Interpipe NTRP and that this fact
distinguishes PTMM from Ecogreen. Indeed, given the level of direct export
sales, it can only be concluded that PTMM's export sales are performed not only
from its related trader in Singapore, but also from Indonesia. 
(28)     Second argument: Significance
of the trader's activities and functions concerning products sourced from
non-related companies. PTMM claimed that, whereas it did not deny that its
related trader was involved in a range of different palm oil-based products,
PTMM claimed that this argument was flawed, since it was based on activities
beyond the scope of original investigation.
(29)     In order to assess whether
the functions of a trader are not those of an internal sales department but
comparable to those of an agent working on a commission basis within the
meaning of the judgement of the General Court in T-249/06, the trader's
activities have to be assessed against the economic reality. There are
similarities as regards the functions of the trader with regard to the
product concerned and the other products traded. This is confirmed by the fact
that, as discussed below in recitals (30) and (31), the relationship between
PTMM and its related trader, including the functions of the latter, for most if
not all products – including the product concerned - is governed by one single
contract without distinguishing among products. It should be noted that the
trader's overall activities were based to a significant extent on
supplies originating from unrelated companies. The trader's functions
are therefore similar to those of an agent working on a commission basis.
(30)     Third argument: The
existence of a contract between the trader and producer, which provided that
the trader was to receive a commission for the export sales. PTMM claimed that
this contract was a master agreement to regulate transfer prices between
related parties to comply with applicable Indonesian/Singapore tax guidelines
and internationally accepted guidelines on transfer pricing.
(31)     The fact that this
agreement can also be used for calculating arm's length prices in accordance
with applicable tax guidelines does not contradict the finding that pursuant to
the agreement the trader received a commission in the form of a fixed mark-up only
for its international and marketing sales activities. Indeed, the very name and
the modalities of the agreement justify the finding that the contract was
intended to govern the relationship between PTMM and
the trader and was not limited to the transfer pricing or tax issues.
The contract thus represents circumstancial evidence that the trader's
functions are similar to those of an agent working on a commission basis. 
(32)     In the light of the
arguments presented above the Institutions have met the standard of proof
required by the settled case law[6]:
they based its findings on direct or at least circumstancial evidence. As
regards PTMM and for reasons explained above, the adjustment made to the export
prices pursuant to Article 2(10)(i) of the basic Regulation is warranted and
the present level of anti-dumping duty should therefore be kept.
D. CONCLUSION
(33)     On the basis of the above
the duty rates applicable to Ecogreen and to all other companies in Indonesia (except P.T. Musim Mas) should be amended. The amended rates should apply
retroactively from the date of the entry into force of Implementing Regulation
(EU) No 1138/2011 including to any imports subject to provisional duties
between 12 May 2011 and 11 November 2011. Consequently, the definitive anti-dumping duty paid or entered in the accounts
pursuant to Article 1 of Implementing Regulation (EU) No 1138/2011 in its
initial version and the provisional antidumping duties definitively collected
pursuant to Article 2 of the same Regulation in its initial version in excess
of the duty rate specified in Article 1(2) of Implementing Regulation (EU) No
1138/2011 as amended by this Regulation should be repaid or remitted. Repayment or remission should be requested from national customs
authorities in accordance with applicable customs legislation,
HAS ADOPTED THIS REGULATION:
Article 1
The entry for Indonesia in the table in Article
1(2) of Council Implementing Regulation
(EU) No 1138/2011 is replaced by the following:
 "Country || Company || Definitive anti-dumping duty (EUR per tonne net) || TARIC Additional Code 
 Indonesia || P.T. Ecogreen Oleochemicals Batam, Kabil, Batam P.T. Musim Mas, Tanjung Mulia, Medan, Sumatera Utara ||   0,00   45,63 ||   B111   B112 
 All other companies || 45,63 || B999" 
Article 2
The amounts of duties paid or entered into
the accounts, pursuant to Article 1 of Council Implementing Regulation (EU) No
1138/2011 in its initial version and the amounts of provisional duties
definitively collected pursuant to Article 2 of the same Regulation in its
initial version, which exceed those established by Article 1 of this
Regulation, shall be repaid or remitted. Repayment or remission must be
requested from national customs authorities in accordance with applicable
customs legislation.
Article 3
This Regulation shall enter into force on
the day following that of its publication in the Official Journal of the
European Union. 
It shall apply from 12
November 2011.
This Regulation shall be binding
in its entirety and directly applicable in all Member States.
Done at Brussels, 
                                                                       For
the Council
                                                                       The
President
                                                                       […]
[1]               OJ L 343, 22.12.2009, p. 51.
[2]               OJ C 219, 13.8.2010, p. 12.
[3]               OJ L 122, 11.5.2011, p. 47.
[4]               OJ L 293, 11.11.2011, p. 1.
[5]               Case C-248/04, Koninklijke Cooperatie Cosun [2006] ECR
I-10211, para 72, and case C-303/05 Advocaten voor de Wereld [2007] ECR I-3633,
para 56. Case C-372/06 Asda Stores Ltd v Commissioners of Her Majesty’s Revenue
and Customs, [2007] ECR I-11223, point 62.
[6]               T 249/06, paragraphs 180 and 181.