Source: EURLEX
Language: en
Format: md

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| European flag | Official Journal  of the European Union | EN  Series L |

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|  | 2024/357 | 24.1.2024 |

COMMISSION IMPLEMENTING REGULATION (EU) 2024/357

of 23 January 2024

imposing a definitive anti-dumping duty on imports of certain open mesh fabrics of glass fibres originating in the People’s Republic of China as extended to imports consigned from India, Indonesia, Malaysia, Taiwan and Thailand following an expiry review pursuant to Article 11(2) of Regulation (EU) 2016/1036 of the European Parliament and the Council

THE EUROPEAN COMMISSION,

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

Having regard to Regulation (EU) 2016/1036 of the European Parliament and of the Council of 8 June 2016 on protection against dumped imports from countries not members of the European Union [(1)](#ntr1-L_202400357EN.000101-E0001) (‘the basic Regulation’), and in particular Article 11(2) thereof,

Whereas:

1.   PROCEDURE

1.1.   Previous investigations and measures in force

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| (1) | Following an anti-dumping investigation (‘the original investigation’), by Regulation (EU) No 791/2011 [(2)](#ntr2-L_202400357EN.000101-E0002), the Council imposed a definitive anti-dumping duty ranging between 48,4 % and 62,9 % on imports of certain open mesh fabrics of glass fibres (‘OMF’) originating in the People’s Republic of China (‘China’, ‘the PRC’ or ‘the country concerned’). |

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| (2) | In July 2012, following an anti-circumvention investigation pursuant to Article 13 of the basic Regulation, by Implementing Regulation (EU) No 672/2012 [(3)](#ntr3-L_202400357EN.000101-E0003), the Council extended the measures in force to imports of the product concerned consigned from Malaysia, whether declared as originating in Malaysia or not. |

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| (3) | In January 2013, following an anti-circumvention investigation pursuant to Article 13 of the basic Regulation, by Implementing Regulation (EU) No 21/2013 [(4)](#ntr4-L_202400357EN.000101-E0004), the Council extended the measures in force to imports of the product concerned consigned from Taiwan and Thailand, whether declared as originating in Taiwan and Thailand or not. |

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| (4) | In December 2013, following an anti-circumvention investigation pursuant to Article 13 of the basic Regulation, by Implementing Regulation (EU) No 1371/2013 [(5)](#ntr5-L_202400357EN.000101-E0005), the Council further extended the measures in force to imports of the product concerned consigned from India and Indonesia, whether declared as originating in India and Indonesia or not. |

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| (5) | In September 2014, following an anti-circumvention investigation pursuant to Article 13 of the basic Regulation, by Implementing Regulation (EU) No 976/2014 [(6)](#ntr6-L_202400357EN.000101-E0006), the Commission also extended the duties in force to certain slightly modified open mesh fabrics of glass fibres originating in the People’s Republic of China. |

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| (6) | In September 2015, following an investigation pursuant to Articles 11(3) and 13(4) of the basic Regulation, by Implementing Regulation (EU) 2015/1507 [(7)](#ntr7-L_202400357EN.000101-E0007), the Commission exempted two Indian producers from the extension of the duty in recital (4). |

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| (7) | In November 2017, by Regulation (EU) 2017/1993 [(8)](#ntr8-L_202400357EN.000101-E0008), the Commission prolonged for five years the original measures, as extended to the product concerned consigned from the countries mentioned in recitals (2) to (4), following an expiry review (the ‘first expiry review’) pursuant to Article 11(2) of the basic Regulation. These measures are ‘the measures in force’. |

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| (8) | In May 2018, following an investigation pursuant to Articles 11(4) and 13(4) of the basic Regulation, by Implementing Regulation (EU) 2018/788 [(9)](#ntr9-L_202400357EN.000101-E0009), the Commission exempted one more Indian producer from the extension of the duty in recital (4). |

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| (9) | Finally in December 2022 the Commission exempted a further Indian producer from the extended duty in recital (4). |

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| (10) | The anti-dumping duties currently in force are:   |  |  | | --- | --- | | — | ranging between 48,4 % and 62,9 % on imports from the three Chinese exporting producers sampled in the original investigation; |  |  |  | | --- | --- | | — | 57,7 % for the Chinese exporting producers not sampled in the original investigation; and |  |  |  | | --- | --- | | — | 62,9 % on imports from all other companies. | |

1.2.   Request for an expiry review

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| (11) | Following the publication of a notice of impending expiry [(10)](#ntr10-L_202400357EN.000101-E0010), the Commission received a request for a review pursuant to Article 11(2) of the basic Regulation. |

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| (12) | The request for review was submitted on 2 August 2022 by the association of the European technical textile producers Tech-Fab Europe (‘the applicant’) on behalf of the Union industry of OMF within the meaning of Article 5(4) of the basic Regulation. The request for review was based on the grounds that the expiry of the measures would be likely to result in continuation and/or recurrence of dumping and recurrence of injury to the Union industry. |

1.3.   Initiation of an expiry review

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| (13) | Having determined, after consulting the Committee established by Article 15(1) of the basic Regulation, that sufficient evidence existed for the initiation of an expiry review, on 4 November 2022 the Commission initiated an expiry review of the anti-dumping measures applicable to imports into the Union of OMF originating in the PRC on the basis of Article 11(2) of the basic Regulation. It published a Notice of Initiation in the Official Journal of the European Union [(11)](#ntr11-L_202400357EN.000101-E0011) (‘the Notice of Initiation’). |

1.4.   Review investigation period and period considered

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| (14) | The investigation of continuation or recurrence of dumping covered the period from 1 July 2021 to 30 June 2022 (‘review investigation period’). The examination of trends relevant for the assessment of the likelihood of a continuation or recurrence of injury covered the period from 1 January 2019 to the end of the review investigation period (‘the period considered’). |

1.5.   Interested parties

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| (15) | In the Notice of Initiation, interested parties were invited to contact the Commission in order to participate in the investigation. In addition, the Commission specifically informed the applicant, other known Union producers, the known exporting producers in the PRC, the PRC authorities, known importers, users, traders, as well as associations known to be concerned about the initiation of the expiry review and invited them to participate. |

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| (16) | Interested parties had an opportunity to comment on the initiation of the expiry review and to request a hearing with the Commission and/or the Hearing Officer in trade proceedings. None of the interested parties requested a hearing. |

1.6.   Sampling

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| (17) | In the Notice of Initiation, the Commission stated that it might sample interested parties in accordance with Article 17 of the basic Regulation. |

1.6.1.   Sampling of Union producers

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| (18) | In the Notice of Initiation, the Commission stated that it had provisionally selected a sample of Union producers. The Commission selected the sample based on the largest representative volume of production and sales. This sample consisted of three Union producers. The sampled Union producers accounted for 72 % of the estimated total Union production volume and 71 % of the total estimated sales volume. In accordance with Article 17(2) of the basic Regulation, the Commission invited interested parties to comment on the provisional sample. No comments were received and the sample was confirmed. |

1.6.2.   Sampling of importers

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| (19) | To decide whether sampling was necessary and, if so, to select a sample, the Commission asked unrelated importers to provide the information specified in the Notice of Initiation. Only one unrelated importer submitted the requested information. Consequently, the Commission decided that sampling was not necessary. |

1.6.3.   Sampling of producers in the PRC

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| (20) | To decide whether sampling was necessary and, if so, to select a sample, the Commission asked all known exporting producers in the PRC to provide the information specified in the Notice of Initiation. In addition, the Commission asked the Mission of the People’s Republic of China to the European Union to identify and/or contact other exporting producers, if any, that could be interested in participating in the investigation. |

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| (21) | No exporting producers from the PRC provided the requested information within the deadline and/or agreed to be included in the sample. Therefore, there was no cooperation from the Chinese producers and the findings with regard to the imports from the PRC were made on the basis of the facts available pursuant to Article 18 of the basic Regulation. The sources used are set out in recital (35). |

1.7.   Replies to the questionnaire

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| (22) | The Commission sent a questionnaire concerning the existence of significant distortions in the PRC within the meaning of Article 2(6a)(b) of the basic Regulation to the Government of the People’s Republic of China (‘GOC’). |

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| (23) | The Commission sent questionnaires to the sampled Union producers. The same questionnaires, as well as questionnaires for unrelated importers, users and Chinese exporters had also been made available online [(12)](#ntr12-L_202400357EN.000101-E0012) on the day of initiation. During the investigation, the Commission sent a questionnaire to the applicant requesting macroeconomic data of the Union industry. |

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| (24) | Questionnaire replies were received from the three sampled Union producers, one unrelated importer and the applicant. |

1.8.   Verification visits

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| (25) | The Commission sought and verified all the information deemed necessary for the determination of likelihood of continuation or recurrence of dumping and injury and of the Union interest. |

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| (26) | Verification visits pursuant to Article 16 of the basic Regulation were carried out at the premises of the following companies/association:  Union producers/association:   |  |  | | --- | --- | | — | Bico Industries SA, Piatra Neamt, Romania |  |  |  | | --- | --- | | — | Saint-Gobain Adfors CZ s.r.o., Litomysl, Czech Republic |  |  |  | | --- | --- | | — | Valmiera Stikla Skieddra AS, Valmiera, Latvia |  |  |  | | --- | --- | | — | Tech-Fab Europe (the applicant), Brussels, Belgium. | |

1.9.   Subsequent procedure

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| (27) | On 23 October 2023, the Commission disclosed the essential facts and considerations based on which it intended to maintain the anti-dumping duties in force. All parties were granted a period within which they could make comments on the disclosure. No parties made any comments. |

2.   PRODUCT UNDER REVIEW, PRODUCT CONCERNED AND LIKE PRODUCT

2.1.   Product under review

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| (28) | The product under review is certain open mesh fabrics of glass fibres, of a cell size of more than 1,8 mm both in length and in width and weighing more than 35 g/m2, excluding fibreglass discs, currently falling under CN codes ex 7019 63 00, ex 7019 64 00, ex 7019 65 00, ex 7019 66 00 and ex 7019 69 90 (TARIC codes 7019630019, 7019640019, 7019650018, 7019660018 and 7019699019). |

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| (29) | Open mesh fabrics of glass fibres can be found in different cell sizes and weight per square metre and are mostly used as reinforcement material in the construction sector (external thermal insulation, floor reinforcement, and wall repair). |

2.2.   Product concerned

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| (30) | The product concerned by this investigation is the product under review originating in the PRC. |

2.3.   Like product

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| (31) | As established in the original investigation as well as in the previous expiry reviews, the following products have the same basic physical, chemical and technical characteristics as well as the same basic uses:   |  |  | | --- | --- | | — | the product concerned when exported to the Union; |  |  |  | | --- | --- | | — | the product concerned produced and sold on the domestic market of the country concerned; and |  |  |  | | --- | --- | | — | the product under review produced and sold in the Union by the Union industry. | |

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| (32) | These products are therefore considered to be like products within the meaning of Article 1(4) of the basic Regulation. |

3.   LIKELIHOOD OF CONTINUATION OR RECURRENCE OF DUMPING

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| (33) | In accordance with Article 11(2) of the basic Regulation, the Commission examined whether the expiry of the measure in force would be likely to lead to a continuation or recurrence of dumping from the PRC. |

3.1.   Preliminary remarks

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| (34) | As mentioned in recital (21), no exporting producers from the PRC cooperated in the investigation. Therefore, on 16 December 2022, the Commission informed the authorities of the PRC that, due to the absence of cooperation, the Commission might apply Article 18 of the basic Regulation concerning the findings with regard to the PRC. No reply was received and therefore the Commission decided to apply Article 18. |

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| (35) | Consequently, in accordance with Article 18 of the basic Regulation, the findings in relation to the likelihood of continuation or recurrence of dumping were based on facts available, in particular: information provided in the request for review, information obtained from cooperating parties during the review investigation, namely the applicant and the sampled Union producers, import data and Global Trade Atlas [(13)](#ntr13-L_202400357EN.000101-E0013) (‘GTA’) statistics. |

3.2.   Procedure for the determination of the normal value under Article 2(6a) of the basic Regulation for the imports of OMF originating in the PRC

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| (36) | Given that sufficient evidence had been available at the initiation of the investigation tending to show, with regard to the PRC, the existence of significant distortions within the meaning of point (b) of Article 2(6a) of the basic Regulation, the Commission initiated the investigation on the basis of Article 2(6a) of the basic Regulation. |

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| (37) | In order to obtain information it deemed necessary for its investigation with regard to the alleged significant distortions, the Commission sent a questionnaire to the GOC. In addition, in point 5.3.2 of the Notice of Initiation, the Commission invited all interested parties to make their views known, submit information and provide supporting evidence regarding the application of Article 2(6a) of the basic Regulation within 37 days of the date of publication of the Notice of Initiation in the Official Journal of the European Union. |

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| (38) | No questionnaire reply was received from the GOC and no submission on the application of Article 2(6a) of the basic Regulation was received within the deadline. |

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| (39) | Subsequently, the Commission informed the GOC that it would use facts available within the meaning of Article 18 of the basic Regulation for the determination of the existence of significant distortions in the PRC. No comments were raised by the GOC in this regard. |

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| (40) | In point 5.3.2 of the Notice of Initiation, the Commission also specified that, in view of the evidence available, it might need to select an appropriate representative country pursuant to Article 2(6a)(a) of the basic Regulation for the purpose of determining the normal value based on undistorted prices or benchmarks. According to the information available to the Commission, Russia and India were identified as the possible representative countries for the PRC. |

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| (41) | The Commission further stated that it would examine possibly appropriate countries in accordance with the criteria set out in the first indent of Article 2(6a) of the basic Regulation. |

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| (42) | On 10 February 2023, the Commission issued a Note for the file on the sources for the determination of the normal value (‘Note on sources’). By the Note on sources, the Commission informed interested parties that it intended to use India as representative country and outlined the relevant sources it intended to use for the determination of the normal value. |

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| (43) | It also informed interested parties that it would establish selling, general and administrative costs (‘SG&A’) and profits based on available information for two companies, namely Montex Glass Fibre Industries Private Limited and Pyrotek India Private Limited, producers of the product under review in India. |

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| (44) | The Commission received one comment from the Union industry supporting the Commission’s decision to use India as representative country. |

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| (45) | According to Article 2(1) of the basic Regulation, ‘the normal value shall normally be based on the prices paid or payable, in the ordinary course of trade, by independent customers in the exporting country’. |

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| (46) | However, according to Article 2(6a)(a) of the basic Regulation, ‘in case it is determined […] that it is not appropriate to use domestic prices and costs in the exporting country due to the existence in that country of significant distortions within the meaning of point (b), the normal value shall be constructed exclusively on the basis of costs of production and sale reflecting undistorted prices or benchmarks’, and ‘shall include an undistorted and reasonable amount of administrative, selling and general costs and for profits’ (‘administrative, selling and general costs’ is referred hereinafter as ‘SG&A’). |

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| (47) | As further explained below, the Commission concluded in the present investigation that, based on the evidence available, and in view of the lack of cooperation of the GOC and the exporting producers or producers, the application of Article 2(6a) of the basic Regulation was appropriate. |

3.3.   Existence of significant distortions

3.3.1.   Introduction

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| (48) | Article 2(6a)(b) of the basic Regulation stipulates that ‘significant distortions are those distortions which occur when reported prices or costs, including the costs of raw materials and energy, are not the result of free market forces as they are affected by substantial government intervention. In assessing the existence of significant distortions regard shall be had to the potential impact of one or more of the following elements:   |  |  | | --- | --- | | — | the market in question being served to a significant extent by enterprises which operate under the ownership, control or policy supervision or guidance of the authorities of the exporting country; |  |  |  | | --- | --- | | — | state presence in firms allowing the state to interfere with respect to prices or costs; |  |  |  | | --- | --- | | — | public policies or measures discriminating in favour of domestic suppliers or otherwise influencing free market forces; |  |  |  | | --- | --- | | — | the lack, discriminatory application or inadequate enforcement of bankruptcy, corporate or property laws; |  |  |  | | --- | --- | | — | wage costs being distorted; |  |  |  | | --- | --- | | — | access to finance granted by institutions which implement public policy objectives or otherwise not acting independently of the state’. | |

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| (49) | As the list in Article 2(6a)(b) of the basic Regulation is non-cumulative, not all the elements need to be given regard to for a finding of significant distortions. Moreover, the same factual circumstances may be used to demonstrate the existence of one or more of the elements of the list. However, any conclusion on significant distortions within the meaning of Article 2(6a)(a) must be made on the basis of all the evidence at hand. |

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| (50) | The overall assessment on the existence of distortions may also take into account the general context and situation in the exporting country, in particular where the fundamental elements of the exporting country’s economic and administrative set-up provide the government with substantial powers to intervene in the economy in such a way that prices and costs are not the result of the free development of market forces. |

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| (51) | Article 2(6a)(c) of the basic Regulation provides that ‘[w]here the Commission has well-founded indications of the possible existence of significant distortions as referred to in point (b) in a certain country or a certain sector in that country, and where appropriate for the effective application of this Regulation, the Commission shall produce, make public and regularly update a report describing the market circumstances referred to in point (b) in that country or sector’. |

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| (52) | Pursuant to this provision, the Commission has issued a country report concerning the PRC (‘the Report’) [(14)](#ntr14-L_202400357EN.000101-E0014), showing the existence of substantial government intervention at many levels of the economy, including specific distortions in many key factors of production (such as land, energy, capital, raw materials and labour) as well as in specific sectors (such as steel and chemicals). Interested parties were invited to rebut, comment, or supplement the evidence contained in the investigation file at the time of initiation. The Report was placed in the investigation file at the initiation stage. The request/complaint also contained some relevant evidence complementing the Report. |

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| (53) | The applicant alleged in its request that the Chinese OMF sector is distorted within the meaning of Article 2(6a)(b) of the basic Regulation. Among others, the request alleged that the OMF market is served to a significant extent by enterprises which operate under the ownership, control or policy supervision or guidance of the authorities of the PRC. Moreover, the request explained that the main raw materials used in OMF production are glass fibre rovings and yarns. |

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| (54) | The request referred also to the Report and the distortions identified therein with respect to the chemical sector. Moreover, the request pointed, with reference to the Report, to existing distortions with respect to energy costs, in particular natural gas, and electricity. The request further noted the State interference with respect to the labour market, the land-use rights, as well as the fact that OMF producers benefitted from easy access to financial lending by Chinese (State-owned) banks. |

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| (55) | As indicated in recital (38), the GOC did not comment or provide evidence supporting or rebutting the existing evidence on the case file, including the Report and the additional evidence provided by the applicant, on the existence of significant distortions and/or on the appropriateness of the application of Article 2(6a) of the basic Regulation. |

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| (56) | No comments were received from interested parties, including exporting producers, on the existence of significant distortions and/or on the appropriateness of the application of Article 2(6a) of the basic Regulation. |

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| (57) | The Commission examined whether it was appropriate or not to use domestic prices and costs in the PRC, due to the existence of significant distortions within the meaning of point (b) of Article 2(6a) of the basic Regulation. |

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| (58) | The Commission did so on the basis of the evidence available on the file, including the evidence contained in the Report, which relies on publicly available sources. That analysis covered the examination of the substantial government interventions in the PRC’s economy in general, but also the specific market situation in the relevant sector including the product under review. The Commission further supplemented these evidentiary elements with its own research on the various criteria relevant to confirm the existence of significant distortions in the PRC. |

3.3.2.   Significant distortions affecting the domestic prices and costs in the PRC

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| (59) | The Chinese economic system is based on the concept of a ‘socialist market economy’. That concept is enshrined in the Chinese Constitution and determines the economic governance of the PRC. The core principle is the ‘socialist public ownership of the means of production, namely, ownership by the whole people and collective ownership by the working people’. The State-owned economy is the ‘leading force of the national economy’, and the State has the mandate ‘to ensure its consolidation and growth’ [(15)](#ntr15-L_202400357EN.000101-E0015). |

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| (60) | Consequently, the overall setup of the Chinese economy not only allows for substantial government interventions into the economy, but such interventions are expressly mandated. The notion of supremacy of public ownership over the private one permeates the entire legal system and is emphasized as a general principle in all central pieces of legislation. |

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| (61) | The Chinese property law is a prime example: it refers to the primary stage of socialism and entrusts the State with upholding the basic economic system under which the public ownership plays a dominant role. Other forms of ownership are tolerated, with the law permitting them to develop side by side with the State ownership [(16)](#ntr16-L_202400357EN.000101-E0016). |

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| (62) | In addition, under Chinese law, the socialist market economy is developed under the leadership of the Chinese Communist Party (‘CCP’). The structures of the Chinese State and of the CCP are intertwined at every level (legal, institutional, personal), forming a superstructure in which the roles of CCP and the State are indistinguishable. |

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| (63) | Following an amendment of the Chinese Constitution in March 2018, the leading role of the CCP was given an even greater prominence by being reaffirmed in the text of Article 1 of the Constitution. |

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| (64) | Following the already existing first sentence of the provision: ‘[t]he socialist system is the fundamental system of the People’s Republic of China’ a new second sentence was inserted which reads: ‘The leadership of the Communist Party of China is the defining feature of socialism with Chinese characteristics’ [(17)](#ntr17-L_202400357EN.000101-E0017) . This illustrates the unquestioned and ever-growing control of the CCP over the economic system of the PRC. |

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| (65) | This leadership and control are inherent to the Chinese system and go well beyond the situation customary in other countries where the governments exercise general macroeconomic control within the boundaries of which free market forces are at play. |

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| (66) | The Chinese State engages in an interventionist economic policy in pursuance of goals which coincide with the political agenda set by the CCP rather than reflecting the prevailing economic conditions in a free market [(18)](#ntr18-L_202400357EN.000101-E0018). The interventionist economic tools deployed by the Chinese authorities are manifold, including the system of industrial planning, the financial system, as well as the level of the regulatory environment. |

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| (67) | First, on the level of overall administrative control, the direction of the Chinese economy is governed by a complex system of industrial planning which affects all economic activities within the country. |

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| (68) | The totality of these plans covers a comprehensive and complex matrix of sectors and crosscutting policies and is present on all levels of government. Plans at provincial level are detailed while national plans set broader targets. Plans also specify the means in order to support the relevant industries/sectors as well as the timeframes in which the objectives need to be achieved. |

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| (69) | Some plans still contain explicit output targets. Under the plans, individual industrial sectors and/or projects are being singled out as (positive or negative) priorities in line with the government priorities and specific development goals are attributed to them (industrial upgrade, international expansion, etc.). The economic operators, private and State-owned alike, must effectively adjust their business activities according to the realities imposed by the planning system. |

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| (70) | This is not only because of the binding nature of the plans but also because the relevant Chinese authorities at all levels of government adhere to the system of plans and use their vested powers accordingly, thereby inducing the economic operators to comply with the priorities set out in the plans (see also Section 3.3.5 below) [(19)](#ntr19-L_202400357EN.000101-E0019). |

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| (71) | Second, on the level of allocation of financial resources, the financial system of the PRC is dominated by the State-owned commercial banks. Those banks, when setting up and implementing their lending policy need to align themselves with the government’s industrial policy objectives rather than primarily assessing the economic merits of a given project (see also Section 3.3.8 below) [(20)](#ntr20-L_202400357EN.000101-E0020). The same applies to the other components of the Chinese financial system, such as the stock markets, bond markets, private equity markets etc. |

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| (72) | Also these parts of the financial sector other than the banking sector are institutionally and operationally set up in a manner not geared towards maximizing the efficient functioning of the financial markets but towards ensuring control and allowing intervention by the State and the CCP [(21)](#ntr21-L_202400357EN.000101-E0021). |

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| (73) | Third, on the level of regulatory environment, the interventions by the State into the economy take a number of forms. For instance, the public procurement rules are regularly used in pursuit of policy goals other than economic efficiency, thereby undermining market-based principles in the area. The applicable legislation specifically provides that public procurement shall be conducted in order to facilitate the achievement of goals designed by State policies. However, the nature of these goals remains undefined, thereby leaving broad margin of appreciation to the decision-making bodies [(22)](#ntr22-L_202400357EN.000101-E0022). |

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| (74) | Similarly, in the area of investment, the GOC maintains significant control and influence over destination and magnitude of both State and private investment. Investment screening as well as various incentives, restrictions, and prohibitions related to investment are used by authorities as an important tool for supporting industrial policy goals, such as maintaining State control over key sectors or bolstering domestic industry [(23)](#ntr23-L_202400357EN.000101-E0023). |

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| --- | --- |
| (75) | In sum, the Chinese economic model is based on certain basic axioms, which provide for and encourage manifold government interventions. Such substantial government interventions are at odds with the free play of market forces, resulting in distorting the effective allocation of resources in line with market principles [(24)](#ntr24-L_202400357EN.000101-E0024). |

3.3.3.   Significant distortions according to Article 2(6a)(b), first indent of the basic Regulation: the market in question being served to a significant extent by enterprises which operate under the ownership, control or policy supervision or guidance of the authorities of the exporting country

|  |  |
| --- | --- |
| (76) | In the PRC, enterprises operating under the ownership, control and/or policy supervision or guidance by the State represent an essential part of the economy. |

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| --- | --- |
| (77) | In the OMF sector, the degree of state ownership is significant as several Chinese OMF producers are State-owned enterprises (‘SOEs’). For instance, Shaanxi Huatek New Material is an SOE held by a provincial SOE Shaanxi Yanchang Petroleum (Group) Co., Ltd. and two other State-owned entities Shaanxi Technology Progress Investment Co., Ltd., Shaanxi Provincial State-owned Assets Management Co., Ltd [(25)](#ntr25-L_202400357EN.000101-E0025). The Chairman of the Board of Shaanxi is Secretary of the Party Committee [(26)](#ntr26-L_202400357EN.000101-E0026). |

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| --- | --- |
| (78) | Another OMF producer, China National Building Material Group (‘CNBM’) is also a SOE [(27)](#ntr27-L_202400357EN.000101-E0027). The Chairman of the Board and the General Manager of the company are respectively Secretary and Deputy Secretary of the Party Committee [(28)](#ntr28-L_202400357EN.000101-E0028). The governmental interference in CNBM is also evidenced by an article published on CNBM’s website in 2020 [(29)](#ntr29-L_202400357EN.000101-E0029), reporting on a meeting between the Secretary of the Municipal Party Committee, and the Vice President of CNBM: ‘The Tengzhou Municipal Party Committee and Municipal Government attach great importance to the cooperation with China National Building Materials Group and Sinoma Science and Technology Corporation, and the two sides have always maintained a profound friendship and good cooperative relationship’. […] In the next step, Tengzhou will combine the preparation of the “14th FYP” to formulate industrial plans around key areas such as new energy and new materials, as well as demonstration bases for the hydrogen energy industry, to ensure that the plans are in line with the development plans of China National Building Materials Group and Sinoma Science and Technology Enterprises’. |

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| --- | --- |
| (79) | Jiangsu Jiuding New Material, another OMF producer, is a private enterprise, held by Jiuding Group, ultimately held by Shenzhen Zhengwei Group (called AMER GROUP in English, a private group held by a natural person). [(30)](#ntr30-L_202400357EN.000101-E0030) However, the State authorities’ interference in the company is evidenced by the fact that the Chairman, the General Manager and the Deputy Director are CCP members [(31)](#ntr31-L_202400357EN.000101-E0031). |

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| --- | --- |
| (80) | Furthermore, the company is considered a National High-Tech Enterprise [(32)](#ntr32-L_202400357EN.000101-E0032). In order to qualify as a National High-Tech enterprise [(33)](#ntr33-L_202400357EN.000101-E0033), the company must be active in a sector supported by the State. |

|  |  |
| --- | --- |
| (81) | Consequently, even privately owned producers in the OMF sector are prevented from operating under market conditions. Indeed, both public and privately owned enterprises in the sector are subject to policy supervision and guidance as also set out in Section 3.3.5 below. |

3.3.4.   Significant distortions according to Article 2(6a)(b), second indent of the basic Regulation: State presence in firms allowing the state to interfere with respect to prices or costs

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| --- | --- |
| (82) | Apart from exercising control over the economy by means of ownership of SOEs and other tools, the GOC is in position to interfere with prices and costs through State presence in firms. While the right to appoint and to remove key management personnel in SOEs by the relevant State authorities, as provided for in the Chinese legislation, can be considered to reflect the corresponding ownership rights [(34)](#ntr34-L_202400357EN.000101-E0034), CCP cells in enterprises, State-owned and private alike, represent another important channel through which the State can interfere with business decisions. |

|  |  |
| --- | --- |
| (83) | According to the PRC’s company law, a CCP organisation is to be established in every company (with at least three CCP members as specified in the CCP Constitution [(35)](#ntr35-L_202400357EN.000101-E0035)) and the company shall provide the necessary conditions for the activities of the party organisation. |

|  |  |
| --- | --- |
| (84) | In the past, this requirement appears not to have always been followed or strictly enforced. However, since at least 2016 the CCP has been reinforcing its claims to control business decisions in companies as a matter of political principle [(36)](#ntr36-L_202400357EN.000101-E0036), including exercising pressure on private companies to put ‘patriotism’ first and to follow party discipline [(37)](#ntr37-L_202400357EN.000101-E0037). In 2017, it was reported that party cells existed in 70 % of some 1,86 million privately owned companies, with growing pressure for the CCP organisations to have a final say over the business decisions within their respective companies [(38)](#ntr38-L_202400357EN.000101-E0038). These rules are of general application throughout the Chinese economy, across all sectors, including to the producers of OMF and the suppliers of their inputs. |

|  |  |
| --- | --- |
| (85) | In addition, on 15 September 2020 a document titled ‘General Office of CCP Central Committee’s Guidelines on stepping up the United Front work in the private sector for the new era ’  (‘the Guidelines’) [(39)](#ntr39-L_202400357EN.000101-E0039) was released, which further expanded the role of the party committees in private enterprises. |

|  |  |
| --- | --- |
| (86) | Section II.4 of the Guidelines state: ‘[w]e must raise the Party’s overall capacity to lead private-sector United Front work and effectively step up the work in this area’; and Section III.6 states: ‘[w]e must further step up Party building in private enterprises and enable the Party cells to play their role effectively as a fortress and enable Party members to play their parts as vanguards and pioneers’. The Guidelines thus emphasise and seeks to increase the role of the CCP in companies and other private sector entities [(40)](#ntr40-L_202400357EN.000101-E0040). |

|  |  |
| --- | --- |
| (87) | As explained in recitals (77) to (81), the investigation has confirmed the overlaps between managerial positions in companies producing the product under review and CCP membership/Party functions. |

|  |  |
| --- | --- |
| (88) | The State’s presence and intervention in the financial markets (see also Section 3.3.8 below) as well as in the provision of raw materials and inputs further have an additional distorting effect on the market [(41)](#ntr41-L_202400357EN.000101-E0041). Thus, the State presence in firms, in the OMF and other sectors (such as the financial and input sectors) allow the GOC to interfere with respect to prices and costs. |

3.3.5.   Significant distortions according to Article 2(6a)(b), third indent of the basic Regulation: public policies or measures discriminating in favour of domestic suppliers or otherwise influencing free market forces

|  |  |
| --- | --- |
| (89) | The direction of the Chinese economy is to a significant degree determined by an elaborate system of planning which sets out priorities and prescribes the goals the central and local governments must focus on. Relevant plans exist on all levels of government and cover virtually all economic sectors. The objectives set by the planning instruments are of binding nature and the authorities at each administrative level monitor the implementation of the plans by the corresponding lower level of government. |

|  |  |
| --- | --- |
| (90) | Overall, the system of planning in the PRC results in resources being driven to sectors designated as strategic or otherwise politically important by the government, rather than being allocated in line with market forces [(42)](#ntr42-L_202400357EN.000101-E0042). |

|  |  |
| --- | --- |
| (91) | This central Government’s strategy is also applicable to OMF, which is an important reinforcement material in the construction sector. Several national and regional, general and sector-specific plans encourage government authorities at all levels and State-owned financial institutions to foster the Chinese OMF industry. |

|  |  |
| --- | --- |
| (92) | The 2022 Guiding Opinions on the High-quality Development of Chemical Fiber Industry (‘the Guiding Opinions’) issued by Ministry of Industry and Information Technology (MIIT) and the National Development and Reform Commission (NDRC) [(43)](#ntr43-L_202400357EN.000101-E0043), according to which ‘[t]he chemical fiber industry is an essential pillar of the stable development and continuous innovation of the textile industry chain, an internationally competitive advantage industry, and an important part of the new material industry’. Art. I.2 of the Guiding Opinions explicitly articulates the GOC’s intention to determine the geographical and corporate structure of the sector, as well as essential production parameters [(44)](#ntr44-L_202400357EN.000101-E0044). |

|  |  |
| --- | --- |
| (93) | The 13th FYP for National Economic and Social Development [(45)](#ntr45-L_202400357EN.000101-E0045) of the PRC (the ‘13th FYP’), which covers the period 2016–2020, as well as the 14th FYP for National Economic and Social Development and 2035 perspectives [(46)](#ntr46-L_202400357EN.000101-E0046), which covers the period 2021–2025, emphasise the importance of the building and construction industry. |

|  |  |
| --- | --- |
| (94) | The GOC also supports and controls the Chinese OMF industry through the 13th FYP Building Materials Industry Development Plan [(47)](#ntr47-L_202400357EN.000101-E0047). The plan called for optimizing China’s industrial structure by, inter alia, expanding emerging industries such as glass-based materials and high-performance fibres to which OMF belong. |

|  |  |
| --- | --- |
| (95) | Glass fibre is also mentioned in the 14th FYP on developing the raw materials industry [(48)](#ntr48-L_202400357EN.000101-E0048) under Section III.3, Table 1 refers to Key orientations concerning technological innovation and includes building materials:  ‘ Promote mining as well as the industrialisation of deep processing technologies such as the continuous smart yarn-drawing with chemical pool kilns in fields such as […] special glass fiber, basalt fiber and other high-performance fibers’. |

|  |  |
| --- | --- |
| (96) | OMF is also included in the 2019 Guiding catalogue for industry structural adjustment [(49)](#ntr49-L_202400357EN.000101-E0049). One of the encouraged industries relates to building materials: ‘Technology development and production of ultra-fine, high-strength and high-modulus, alkali-resistant, low-dielectric, high-silica, degradable, and special-shaped cross-section glass fibers and glass fiber products; basalt fiber pool kiln drawing technology; silicon carbide fiber, composite fibers […]’. |

|  |  |
| --- | --- |
| (97) | Moreover, glass fibre textile for construction use is covered by the 2022 MIIT Guiding Opinion on the high-quality development of textile used in the industry [(50)](#ntr50-L_202400357EN.000101-E0050). Under Section III.7, Textiles for construction: ‘Research and promote carbon fiber building reinforcement materials. Develop […] glass fiber reinforced base fabrics to improve the performance of building waterproof materials’. Furthermore, under Section IV.1-2 Chapter 4 Policy measures, it includes:  Increase policy support. Support enterprises to build innovative platforms such as national key laboratories, encourage scientific research institutes, universities, and enterprises to strengthen cooperation, and promote technology research and development and the transformation of results. […]. Give full play to the role of the national industry-finance cooperation platform and guide financial institutions to provide support for technological innovation of enterprises.  Create a good development environment. Encourage industry organizations, industrial parks, scientific research institutes, leading enterprises, etc. to build public service platforms. Support all localities in combination with regional characteristics, increase support for the resources required for the development of the industrial textile industry, and form a group of demonstration bases with distinctive regional characteristics. Strengthen bidding supervision, adhere to the principle of high quality and high price, and standardize orderly competition in the industry. |

|  |  |
| --- | --- |
| (98) | Glass fibre is also covered by the 2023 NDRC MIIT Work Plan for the steady growth of the building materials industry [(51)](#ntr51-L_202400357EN.000101-E0051). Under Section III.1.1 it says: ‘Focusing on cement, flat glass, building sanitary ceramics, glass fiber and other industries, release energy-saving and carbon-reducing technology catalogues and application guidelines every year, promote success analysis pilot projects, summarize transformation plans, support the construction of a number of demonstration projects, and support building materials enterprises. […] Promote in-depth management of glass, ceramics, glass fiber and other industries, and promote coordinated control of pollution and carbon reduction’. |

|  |  |
| --- | --- |
| (99) | Section III.4.10 of the Work Plan foresees the following: ‘Strengthen industrial cooperation with countries and regions along the “Belt and Road” and other countries and regions, give full play to the advantages of complete sets of technologies, equipment, standards, and engineering services in industries such as cement and glass, and promote green and low-carbon cooperation in the international building materials industry. Support backbone enterprises to focus on cement, glass, ceramics, glass fiber, gypsum products, etc., jointly establish R & D institutions and green industrial parks and improve the resilience and security level of the global industrial chain supply chain’. |

|  |  |
| --- | --- |
| (100) | The implementation of the Work Plan is the focus of Section IV.11: ‘Further Strengthen organization: Continue to ensure the State Council implements comprehensive and efficient packages of economic policies and follow-up measures. Relevant departments shall guide key local areas to implement policy measures to stabilize the growth of the building materials industry, promote more precise policies, and further increase the policies’ impact. All local areas shall take into account local realities, give full play to the role of the coordination mechanism for industrial growth stabilization, strengthen organizational leadership, strengthen policy support and implementation, and promote their local building materials industry’. |

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| --- | --- |
| (101) | Furthermore, Section IV.13 the Work Plan provides for operational monitoring: ‘Strengthen the monitoring and early warning of the economic operational situation of the building materials industry, improve the coordination mechanism of government departments, industry associations, and key enterprises, timely identify, assess, and respond to emerging, recurring and potential problems that affect the smooth operation of the industry, and prevent operational risks. Stabilize market expectations. Strengthen the monitoring and guidance of the prices of bulk commodities such as fuel and raw materials and the prices of production factors, strengthen the research and assessment of supply and demand trends, and establish a long-term cooperation mechanism between upstream and downstream industries. Strengthen the price monitoring of key building materials, publish the prosperity index of the building materials industry, guide the dynamic balance of supply and demand, and build a stable and orderly market environment’. |

|  |  |
| --- | --- |
| (102) | This central Government’s strategy is confirmed in numerous planning documents focused on the chemical fibre industry issued at provincial level. In particular, Shandong, Zhejiang, Jiangxi, Shaanxi and Shanxi provinces provide good examples. |

|  |  |
| --- | --- |
| (103) | Under Section IV.4. of Shandong’s 14 FYP on the development of the construction materials industry [(52)](#ntr52-L_202400357EN.000101-E0052):  ‘Make the industry cluster better and stronger. Focus on the construction of composite material product industrial parks in Weihai, Tai’an, Dezhou, and Weifang, and support the construction of composite material industrial parks in Yiyuan. Optimize and strengthen Tai’an Taishan and Linyi Yishui glass fiber industrial clusters, Dezhou Wucheng County and Weifang Anqiu glass fiber reinforced plastic industrial clusters, use parks as a platform to encourage the introduction of a number of high-tech projects to achieve differentiated industrial development and scale improvement.  Develop high-performance glass fiber and its products. Encourage the development of high-performance glass fibers and glass fiber products such as ultra-fine, high-strength and high-modulus, alkali-resistant, low-dielectric, low-expansion, high-silica, degradable, and special-shaped cross-sections. Focusing on the needs of electronic information, aerospace, new energy, large-scale farms, agricultural greenhouses, and other fields, develop and promote glass fiber reinforced thermoplastic and thermosetting composite material products, and glass fiber composite grids for infrastructure projects’. |

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| --- | --- |
| (104) | Section VI.2 of Shandong’s 14 FYP is about policy measures and establishes: ‘Increase fiscal and taxation support, promote the implementation of national fiscal and taxation policies such as super deduction of R & D expenses for enterprises, value-added tax on building materials products for comprehensive utilization of resources, and deduction of income tax. Improve financial support policies, encourage various financial institutions to provide credit support for qualified building materials projects, increase financing support for mergers and acquisitions, brand cultivation, R & D center construction, and international marketing network construction, and actively develop financial leasing and supply chain finance services and expand the financing scale for high-growth small and medium-sized building materials enterprises’. |

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| --- | --- |
| (105) | Zhejiang has also implemented plans to develop the glass fibre industry. The Zhejiang’s 14 FYP on developing the new materials industry [(53)](#ntr53-L_202400357EN.000101-E0053) includes a specific reference to the high-performance fibre: ‘Jiaxing Tongxiang new material industry cluster. Mainly relying on the Tongxiang Economic Development Zone, focusing on high-performance fiber and composite materials, high-performance power battery materials, cutting-edge new materials and other subdivided fields, create high-performance glass fiber and composite material industry chains, high-performance power battery materials and downstream product industry chains, to realize value chain promotion’. |

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| --- | --- |
| (106) | Jiangxi 14 FYP on the high-quality development of new materials [(54)](#ntr54-L_202400357EN.000101-E0054) also mentions the glass fibre industry: ‘High-performance fibers and composite materials. Focus on the development of low-cost, high-performance glass fibers and products to meet the development needs of electronic information and other industries. Relying on the two industrial clusters (bases) in the north and the south and key glass fiber enterprises, a Jiangxi high-performance fiber and composite material industry research and development and testing platform will be established. Focus on the development of high-strength, high-toughness, easy-to-form glass fiber, alkali-free glass fiber, high-modulus high-strength glass fiber, high-performance composite fiber, high-purity plant cellulose fiber (antibacterial fiber for masks, medical fiber, etc.)’. |

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| --- | --- |
| (107) | Shaanxi 14 FYP on developing the new materials industry [(55)](#ntr55-L_202400357EN.000101-E0055) also foresees support to the glass fibre industry: ‘Actively promote the healthy development of the non-organic non-metallic composite material industry. Promote the development of carbon-based composite materials towards industrialization and civil use fields, promote the technological level of carbon fiber, glass fiber […]’. |

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| --- | --- |
| (108) | Similarly, Section IV.5 of Shanxi 14 FYP on new materials [(56)](#ntr56-L_202400357EN.000101-E0056) mentions the glass fibre industry: ‘Focusing on the demand for materials in the sectors of marine engineering, high-speed trains, wind power generation, automobile lightweight, pressure vessels, public engineering, building reinforcement, and high-voltage power transmission, fully integrate upstream and downstream industrial resources, aim at the research and development and promotion of high-end fiber composite materials, and accelerate and foster construction projects concerning of high-performance carbon fiber, continuous basalt fiber, high-performance glass fiber, high-end textile fiber and its composite reinforcement materials, etc., to create a complete industrial chain of high-performance fiber covering basic raw materials-composite materials – and product components. By 2025, the operating income of the fiber new material industry shall reach CNY 10 billion, creating a leading high-performance fiber and composite material industry cluster at international level’. |

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| (109) | In sum, the GOC has measures in place to induce operators to comply with the public policy objectives of supporting encouraged industries, including the production the main raw materials used in the manufacturing of OMF. Such measures impede market forces from operating freely. |

3.3.6.   Significant distortions according to Article 2(6a)(b), fourth indent of the basic Regulation: the lack, discriminatory application or inadequate enforcement of bankruptcy, corporate or property laws

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| --- | --- |
| (110) | According to the information on file, the Chinese bankruptcy system delivers inadequately on its own main objectives such as to fairly settle claims and debts and to safeguard the lawful rights and interests of creditors and debtors. This appears to be rooted in the fact that while the Chinese bankruptcy law formally rests on principles that are similar to those applied in corresponding laws in countries other than the PRC, the Chinese system is characterised by systematic under-enforcement. |

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| --- | --- |
| (111) | The number of bankruptcies remains notoriously low in relation to the size of the country’s economy, not least because the insolvency proceedings suffer from a number of shortcomings, which effectively function as a disincentive for bankruptcy filings. Moreover, the role of the State in the insolvency proceedings remains strong and active, often having direct influence on the outcome of the proceedings [(57)](#ntr57-L_202400357EN.000101-E0057). |

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| (112) | In addition, the shortcomings of the system of property rights are particularly obvious in relation to ownership of land and land-use rights in the PRC [(58)](#ntr58-L_202400357EN.000101-E0058). All land is owned by the State (collectively owned rural land and State-owned urban land) and its allocation remains solely dependent on the State. |

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| (113) | There are legal provisions that aim at allocating land use rights in a transparent manner and at market prices, for instance by introducing bidding procedures. However, these provisions are regularly not respected, with certain buyers obtaining their land for free or below market rates [(59)](#ntr59-L_202400357EN.000101-E0059). Moreover, authorities often pursue specific political goals including the implementation of the economic plans when allocating land [(60)](#ntr60-L_202400357EN.000101-E0060). |

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| (114) | Much like other sectors in the Chinese economy, the producers of OMF are subject to the ordinary rules on Chinese bankruptcy, corporate, and property laws. That has the effect that these companies, too, are subject to the top-down distortions arising from the discriminatory application or inadequate enforcement of bankruptcy and property laws. Those considerations appear to be fully applicable also in the chemical fibres sector. The present investigation revealed nothing that would call those findings into question. |

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| (115) | In light of the above, the Commission concluded that there was discriminatory application or inadequate enforcement of bankruptcy and property laws in the chemical fibres sector, including with respect to the product under review. |

3.3.7.   Significant distortions according to Article 2(6a)(b), fifth indent of the basic Regulation: wage costs being distorted

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| (116) | A system of market-based wages cannot fully develop in the PRC as workers and employers are impeded in their rights to collective organisation. The PRC has not ratified a number of essential conventions of the International Labour Organisation (‘ILO’), in particular those on freedom of association and on collective bargaining [(61)](#ntr61-L_202400357EN.000101-E0061). Under national law, only one trade union organisation is active. However, this organisation lacks independence from the State authorities and its engagement in collective bargaining and protection of workers’ rights remains rudimentary [(62)](#ntr62-L_202400357EN.000101-E0062). |

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| (117) | Moreover, the mobility of the Chinese workforce is restricted by the household registration system, which limits access to the full range of social security and other benefits to local residents of a given administrative area. This typically results in workers who are not in possession of the local residence registration finding themselves in a vulnerable employment position and receiving lower income than the holders of the residence registration [(63)](#ntr63-L_202400357EN.000101-E0063). Those findings lead to the distortion of wage costs in the PRC. |

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| (118) | No evidence was submitted to the effect that the chemical fibres sector, including the producers of OMF, would not be subject to the Chinese labour law system described. The chemical fibres sector is thus affected by the distortions of wage costs both directly (when making the product concerned or the main raw material for its production) as well as indirectly (when having access to capital or inputs from companies subject to the same labour system in the PRC). |

3.3.8.   Significant distortions according to Article 2(6a)(b), sixth indent of the basic Regulation: access to finance granted by institutions which implement public policy objectives or otherwise not acting independently of the State

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| (119) | Access to capital for corporate actors in the PRC is subject to various distortions. |

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| (120) | Firstly, the Chinese financial system is characterised by the strong position of State-owned banks [(64)](#ntr64-L_202400357EN.000101-E0064), which, when granting access to finance, take into consideration criteria other than the economic viability of a project. Similarly, to non-financial SOEs, the banks remain connected to the State not only through ownership but also via personal relations (the top executives of large State-owned financial institutions are ultimately appointed by the CCP) [(65)](#ntr65-L_202400357EN.000101-E0065) and, again just like non-financial SOEs, the banks regularly implement public policies designed by the GOC. |

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| (121) | In doing so, the banks comply with an explicit legal obligation to conduct their business in accordance with the needs of the national economic and social development and under the guidance of the industrial policies of the State [(66)](#ntr66-L_202400357EN.000101-E0066). This is compounded by additional existing rules, which direct finances into sectors designated by the government as encouraged or otherwise important [(67)](#ntr67-L_202400357EN.000101-E0067). |

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| (122) | While it is acknowledged that various legal provisions refer to the need to respect normal banking behaviour and prudential rules such as the need to examine the creditworthiness of the borrower, the overwhelming evidence, including findings made in trade defence investigations, suggests that these provisions play only a secondary role in the application of the various legal instruments. |

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| (123) | For example, the GOC has clarified that even private commercial banking decisions must be overseen by the CCP and remain in line with national policies. One of the State’s three overarching goals in relation to banking governance is now to strengthen the Party’s leadership in the banking and insurance sector, including in relation to operational and management issues [(68)](#ntr68-L_202400357EN.000101-E0068). Also, the performance evaluation criteria of commercial banks have now to, notably, take into account how entities ‘serve the national development objectives and the real economy’, and in particular how they ‘serve strategic and emerging industries’ [(69)](#ntr69-L_202400357EN.000101-E0069) . |

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| --- | --- |
| (124) | Moreover, the China High-Tech Export Products Catalogue [(70)](#ntr70-L_202400357EN.000101-E0070), issued by the Ministry of Science and Technology, the Ministry of Foreign Trade and the General Administration of customs lists 1900 high-tech products in eight categories, which are targeted for preferential export policies by the GOC. One of the categories is the ‘New Materials’ category, of which OMF form part. In addition, the China High-Tech Products Catalogue, issued by the Ministry of Science and Technology, the Ministry of Finance and State Administration of Taxation, includes ‘new materials’ in its 11 priority areas. |

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| (125) | Furthermore, according to the Law of the PRC on Science and Technology Progress, high-tech enterprises established in High-tech Development Zones can benefit from a list of preferential policies, which include an Enterprise Income Tax (‘EIT’) rate of 15 %, instead of the normal rate of 25 % and, if the output value of export products reaches 70 % of the total value for that year, the EIT rate is further reduced to 10 %. Newly established high-tech enterprises are exempt from EIT tax for the first two years from the date production begins and from construction tax. |

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| --- | --- |
| (126) | For new technology development and production and operation houses, R & D land is tax-free, equipment used by high-tech enterprises for high-tech production and development is subject to accelerated depreciation, and export products produced by high-tech enterprises are exempt from export tariffs except those restricted by the State or concerning specific products. |

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| (127) | Jiangxi Luobian Glass Fibre, which is one of China’s biggest OMF producers, has a national high-tech enterprise certification and is therefore eligible for the corresponding subsidies and preferential policies for high-tech enterprises. |

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| --- | --- |
| (128) | Furthermore, bond and credit ratings are often distorted for a variety of reasons including the fact that the risk assessment is influenced by the firm’s strategic importance to the GOC and the strength of any implicit guarantee by the government. Estimates strongly suggest that Chinese credit ratings systematically correspond to lower international ratings [(71)](#ntr71-L_202400357EN.000101-E0071). |

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| (129) | This is compounded by additional existing rules, which direct finances into sectors designated by the government as encouraged or otherwise important [(72)](#ntr72-L_202400357EN.000101-E0072). This results in a bias in favour of lending to SOEs, large well-connected private firms and firms in key industrial sectors, which implies that the availability and cost of capital is not equal for all players on the market. |

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| --- | --- |
| (130) | Secondly, borrowing costs have been kept artificially low to stimulate investment growth. This has led to the excessive use of capital investment with ever lower returns on investment. This is illustrated by the growth in corporate leverage in the State sector despite a sharp fall in profitability, which suggests that the mechanisms at work in the banking system do not follow normal commercial responses. |

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| --- | --- |
| (131) | Third, although nominal interest rate liberalization was achieved in October 2015, price signals are still not the result of free market forces but are influenced by government-induced distortions. The share of lending at or below the benchmark rate still represented at least one-third of all lending as of the end of 2018 [(73)](#ntr73-L_202400357EN.000101-E0073). Official media in the PRC have recently reported that the CCP called for ‘guiding the loan market interest rate downwards’ [(74)](#ntr74-L_202400357EN.000101-E0074). Artificially low interest rates result in under-pricing, and consequently, the excessive utilization of capital. |

|  |  |
| --- | --- |
| (132) | Overall credit growth in the PRC indicates a worsening efficiency of capital allocation without any signs of credit tightening that would be expected in an undistorted market environment. As a result, non-performing loans have increased rapidly, with the GOC a number of times opting to either avoid defaults, thus creating so called ‘zombie’ companies, or to transfer the ownership of the debt (e.g. via mergers or debt-to-equity swaps), without necessarily removing the overall debt problem or addressing its root causes. |

|  |  |
| --- | --- |
| (133) | In essence, despite the steps that have been taken to liberalize the market, the corporate credit system in the PRC is affected by significant distortions resulting from the continuing pervasive role of the state in the capital markets. Therefore, the substantial government intervention in the financial system leads to the market conditions being severely affected at all levels. |

3.3.9.   Systemic nature of the distortions described

|  |  |
| --- | --- |
| (134) | The distortions described in the Report are characteristic for the Chinese economy. The evidence available shows that the facts and features of the Chinese system as described above in Sections 3.3.2 to 3.3.5 as well as in Part I of the Report apply throughout the country and across the sectors of the economy. The same holds true for the description of the factors of production as set out above in Sections 3.3.6 to 3.3.8 and in Part II of the Report. |

|  |  |
| --- | --- |
| (135) | A broad range of inputs is needed to produce OMF. When the producers of OMF purchase/contract these inputs, the prices they pay (and which are recorded as their costs) are clearly exposed to the same systemic distortions mentioned before. For instance, suppliers of inputs employ labour that is subject to the distortions. They may borrow money that is subject to the distortions on the financial sector/capital allocation. In addition, they are subject to the planning system that applies across all levels of government and sectors. |

|  |  |
| --- | --- |
| (136) | As a consequence, not only the domestic sales prices of OMF are not appropriate for use within the meaning of Article 2(6a)(a) of the basic Regulation, but all the input costs (including raw materials, energy, land, financing, labour, etc.) are also affected because their price formation is affected by substantial government intervention, as described in Parts I and II of the Report. |

|  |  |
| --- | --- |
| (137) | Indeed, the government interventions described in relation to the allocation of capital, land, labour, energy and raw materials are present throughout the PRC. This means, for instance, that an input that in itself was produced in the PRC by combining a range of factors of production is exposed to significant distortions. The same applies for the input to the input and so forth. |

|  |  |
| --- | --- |
| (138) | No evidence or argument to the contrary has been adduced by the GOC or the exporting producers in the present investigation. |

3.3.10.   Conclusion

|  |  |
| --- | --- |
| (139) | The analysis set out in Sections 3.3.2 to 3.3.8, which includes an examination of all the available evidence relating to the PRC’s intervention in its economy in general as well as in the chemical fibres sector (including the product concerned) showed that prices or costs of the product concerned, including the costs of raw materials, energy and labour, are not the result of free market forces because they are affected by substantial government intervention within the meaning of Article 2(6a)(b) of the basic Regulation as shown by the actual or potential impact of one or more of the relevant elements listed therein. |

|  |  |
| --- | --- |
| (140) | On that basis, and in the absence of any cooperation from the GOC, the Commission concluded that it is not appropriate to use domestic prices and costs to establish normal value in this case. |

|  |  |
| --- | --- |
| (141) | Consequently, the Commission proceeded to construct the normal value exclusively on the basis of costs of production and sale reflecting undistorted prices or benchmarks, that is, in this case, on the basis of corresponding costs of production and sale in an appropriate representative country, in accordance with Article 2(6a)(a) of the basic Regulation, as discussed in the following Section. |

3.4.   Representative country

|  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (142) | The choice of the representative country was based on the following criteria pursuant to Article 2(6a) of the basic Regulation:   |  |  | | --- | --- | | — | A level of economic development similar to the PRC. For this purpose, the Commission used countries with a gross national income per capita similar to the PRC on the basis of the database of the World Bank [(75)](#ntr75-L_202400357EN.000101-E0075); |  |  |  | | --- | --- | | — | Production of the product under review in that country [(76)](#ntr76-L_202400357EN.000101-E0076); |  |  |  | | --- | --- | | — | Availability of relevant public data in the representative country; |  |  |  | | --- | --- | | — | Where there is more than one possible representative country, preference should be given, where appropriate, to the country with an adequate level of social and environmental protection. | |

|  |  |
| --- | --- |
| (143) | As explained in recital (42), the Commission issued the Note on sources for the determination of the normal value on 10 February 2023. The note described the facts and evidence underlying the relevant criteria, and informed interested parties of its intention to use India as an appropriate representative country if the existence of significant distortions pursuant to Article 2(6a) of the basic Regulation was confirmed. In line with the criteria listed under Article 2(6a) of the basic Regulation, the Commission identified India in the Note on sources as a country with a similar level of economic development as the PRC. India is classified by the World Bank as ‘lower-middle income’ country on a gross national income basis. Furthermore, India was identified as a country where the product under review is being produced and where relevant data was readily available. |

|  |  |
| --- | --- |
| (144) | Although India is not an ‘upper-middle income’ country like the PRC, the alternative representative country proposed in the request for review was the Russian Federation. However, given that the Russian Federation stopped publishing detailed import and export data as from April 2022, the Commission did not consider that the Russian Federation would constitute a suitable representative country. |

|  |  |
| --- | --- |
| (145) | The request for review noted that there were other countries in the upper-middle income bracket where OMF was produced. Import statistics into the Union show that there is production of OMF in reasonable quantities in three upper-middle income countries, namely Serbia, North Macedonia and Moldova. |

|  |  |
| --- | --- |
| (146) | Based on information in the request for review, ‘public data for all cost factors, including import statistics and financial statements’, however, would not be available with regard to these countries. The Commission therefore did not consider, in the Note on sources, another upper-middle income country as a suitable representative country. |

|  |  |
| --- | --- |
| (147) | Furthermore, the Commission analysed import statistics reported in Global Trade Atlas (‘GTA’) concerning the main raw materials into all three countries mentioned in recital (145) above. The main raw materials are set out in Table 1 below and are glass fibre rovings, glass fibre yarn, styrene-butadiene rubber and adhesive. |

|  |  |
| --- | --- |
| (148) | The Commission’s analysis with regard to these countries, which led to the conclusion that none of them could be considered as a suitable representative country, is set out below: |

3.4.1.   Serbia

|  |  |
| --- | --- |
| (149) | For Serbia, the Commission was able to find publicly available financial information for the one known producer, DOO Masterplast yu Subotica [(77)](#ntr77-L_202400357EN.000101-E0077). That producer was profitable in 2022. |

|  |  |
| --- | --- |
| (150) | However, 96 % of glass fibre rovings imports and 70 % of glass fibre yarns imports into Serbia were of Chinese origin in 2022, and imports of glass fibre yarns were, in addition, not in significant quantities to be a reasonable benchmark. Serbia could therefore not be considered as a suitable representative country. |

3.4.2.   Moldova

|  |  |
| --- | --- |
| (151) | For Moldova, the Commission was able to find publicly available financial information for the one known producer, Djofra-M Srl [(78)](#ntr78-L_202400357EN.000101-E0078) which was profitable in 2022. |

|  |  |
| --- | --- |
| (152) | In the case of Moldova, however, 86 % of glass fibre yarns imports and 90 % of glass fibre rovings imports into the country were of Chinese or Belarussian origin in 2022. Moldova could therefore not be considered a suitable representative country as its raw material import prices were predominantly from China or a non-WTO member country. |

3.4.3.   North Macedonia

|  |  |
| --- | --- |
| (153) | For North Macedonia, the Commission was unable to find financial information for the one known producer, Technical Textiles DOO [(79)](#ntr79-L_202400357EN.000101-E0079). The Commission also noted that the vast majority of imports of the main raw materials into North Macedonia were of Chinese origin. |

|  |  |
| --- | --- |
| (154) | North Macedonia could therefore neither be considered a suitable representative country. |

3.4.4.   Conclusion

|  |  |
| --- | --- |
| (155) | The Commission considered that India could be an appropriate representative country because of the nature of this expiry review proceeding, where the Commission would not propose a new level of dumping margin but only examine whether dumping continued or is likely to recur based on an estimation of the level of dumping based on current export prices to the Union or to third countries. |

|  |  |
| --- | --- |
| (156) | In low-middle income countries, such as India, factors of production are likely to be cheaper than in countries with a higher level of economic development, such as the PRC. |

|  |  |
| --- | --- |
| (157) | This is likely to result in a normal value and therefore a dumping margin that is understated. |

|  |  |
| --- | --- |
| (158) | However, since the current investigation is an expiry review where the question is whether dumping is likely to continue or recur irrespective of the actual level, the Commission considered that India could exceptionally be considered an appropriate source for the undistorted costs and prices although the ensuing calculation of normal value would likely be underestimated. |

|  |  |
| --- | --- |
| (159) | In this respect, the Commission noted that the normal value established on the basis of this very conservative approach already showed significant dumping. |

|  |  |
| --- | --- |
| (160) | In this context, India was found to be an appropriate representative country. |

|  |  |
| --- | --- |
| (161) | Finally, given the absence of cooperation and having established that India was an appropriate representative country, there was no need to carry out an assessment of the level of social and environmental protection in accordance with the last sentence of Article 2(6a)(a) first indent of the basic Regulation. |

|  |  |
| --- | --- |
| (162) | In the absence of cooperation, as proposed in the expiry review request and given that India met the criteria laid down in Article 2(6a)(a), first indent of the basic Regulation, the Commission selected it as the appropriate representative country. |

3.5.   Sources used to establish undistorted costs

|  |  |
| --- | --- |
| (163) | In the Note on sources, the Commission listed the factors of production such as materials, energy and labour used in the production of the product under review by the exporting producers. |

|  |  |
| --- | --- |
| (164) | The Commission also stated in the Note on sources that, in order to construct the normal value in accordance with Article 2(6a)(a) of the basic Regulation, it would use GTA to establish the undistorted cost of the factors of production, notably the main raw materials. |

|  |  |
| --- | --- |
| (165) | In addition, the Commission stated that it would use data from the Maharashtra State Electricity Distribution Company Ltd., the Ministry of Petroleum & Natural Gas and the Ministry of Labour and Employment of the Government of India for establishing undistorted costs of electricity, gas and labour respectively. |

|  |  |
| --- | --- |
| (166) | The Commission informed interested parties that, it would also include a value for manufacturing overhead costs in order to cover costs not included in the factors of production referred to above. The Commission established the ratio of manufacturing overheads to manufacturing costs based on the information provided in the request for review. |

|  |  |
| --- | --- |
| (167) | Finally, the Commission stated that to establish SG&A and profit, it would use the financial data from two Indian producers of the product under review as set out in recital (43) above. |

3.6.   Undistorted costs and benchmarks

3.6.1.   Factors of production

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (168) | Considering all the information based on the request for review and subsequent information submitted by the applicant and verified on spot and in the absence of cooperation by Chinese exporting producers or any comments on the Note on sources, the following factors of production and their sources have been identified in order to determine the normal value in accordance with Article 2(6a)(a) of the basic Regulation:  Table 1  Factors of production of certain open mesh fabrics of glass fibres   |  |  |  |  |  | | --- | --- | --- | --- | --- | | Factors of Production | Commodity Codes | Source of data | Unit of measurement | Undistorted value (CNY) | | Raw Materials | | | | | | Rovings | 7019 12 00 | GTA[(80)](#ntr80-L_202400357EN.000101-E0080) | Kilogram (kg) | 7,08 | | Yarn and slivers | 7019 19 00 | GTA | kg | 13,94 | | Styrene-butadiene rubber | 4002 11 00 | GTA | kg | 9,38 | | Adhesive | 3506 91 10 | GTA | kg | 16,99 | | Energy | | | | | | Electricity | N/A | Maharashtra Electricity Regulatory Commission[(81)](#ntr81-L_202400357EN.000101-E0081) | Kilowatt-hour (kWh) | 0,73 | | Natural gas | N/A | Petroleum Planning & Analysis Cell  Ministry of Petroleum & Natural Gas, Government of India[(82)](#ntr82-L_202400357EN.000101-E0082) |  | 0,08 | | Labour | | | | | | Labour | N/A | Labour Bureau  Ministry of Labour and Employment, Government of India[(83)](#ntr83-L_202400357EN.000101-E0083) | Full-time equivalent (‘FTE’) | 0,08 | |

3.6.2.   Raw materials

|  |  |
| --- | --- |
| (169) | In order to establish the undistorted price of the main raw materials as delivered at the factory gate of a representative country producer, the Commission used as a basis the weighted average import price to the representative country as reported by GTA, to which import duties and transport costs were added. An import price in the representative country was determined as a weighted average of unit prices of imports from all third countries excluding the PRC and countries which are not members of the WTO, listed in Annex 1 of Regulation (EU) 2015/755 of the European Parliament and the Council [(84)](#ntr84-L_202400357EN.000101-E0084). |

|  |  |
| --- | --- |
| (170) | The Commission decided to exclude imports from the PRC into the representative country as it concluded that it is not appropriate to use domestic prices and costs in the PRC due to the existence of significant distortions in accordance with Article 2(6a)(b) of the basic Regulation. |

|  |  |
| --- | --- |
| (171) | Given that there is no evidence showing that the same distortions do not equally affect products intended for export, the Commission considered that the same distortions affected export prices. After excluding imports from the PRC into the representative country, the volume of imports from other third countries remained representative. |

|  |  |
| --- | --- |
| (172) | Following the analysis of the data on the raw materials used for the production of OMF of a representative Union producer and given the absence of cooperation from the Chinese exporting producers, the Commission decided to distinguish the construction of the normal value for the two categories of OMF: OMF in rolls and OMF in tapes. |

|  |  |
| --- | --- |
| (173) | For this reason, in addition to the factors of production listed in the Note to the file of 10 February 2023, the Commission added to the list of raw materials the adhesive (commodity code 3506 91 10) which was used for the construction of the normal value for OMF in the form of tapes. |

|  |  |
| --- | --- |
| (174) | The Commission calculated the share of consumables on the total manufacturing costs in the review investigation period. To establish an undistorted value of such cost components and given the absence of cooperation from the exporting producers, the Commission used facts available in accordance with Article 18 of the basic Regulation and based its findings on the data provided by the applicant. |

|  |  |
| --- | --- |
| (175) | The share of consumables was specific for each category of OMF products and represented 4,9 % and 5,1 % of the total cost of manufacturing for OMF in rolls and in tapes respectively. These percentages were then applied to the undistorted value of the cost of manufacturing to determine the undistorted value of consumables. |

|  |  |
| --- | --- |
| (176) | Normally, domestic transport prices should also be added to the raw materials import prices. However, considering the non-cooperation as well as the nature of this expiry review investigation, which is focused on finding whether dumping continued during the review investigation period or could reoccur, rather than finding its exact magnitude, the Commission decided that adjustments for domestic transport were unnecessary. Such adjustments would only result in increasing the normal value and hence confirming the existence of dumping by a higher amount. |

3.6.3.   Labour

|  |  |
| --- | --- |
| (177) | To establish the benchmark for labour costs in the representative country, the Commission used the latest available data from the Labour Bureau of the Ministry of Labour and Employment published by the Indian Government. The average wage in for the glass industry in the region of Maharashtra for 2016 was 329,85 INR/day. The average wage for 2016 was subsequently indexed to the last available wage index indicator, namely the second half of 2020 to 1 566,79 INR/day. It resulted in an average hourly labour cost per FTE of 3,53 EUR/h which corresponded to 0,08 CNY per square metre [(85)](#ntr85-L_202400357EN.000101-E0085). |

3.6.4.   Electricity

|  |  |
| --- | --- |
| (178) | To establish the price of electricity, the Commission used the latest available data on industrial electricity prices as charged by one of the largest electricity suppliers in India, namely Maharashtra State Electricity Distribution Company Ltd, as reported by the Maharashtra Electricity Regulatory Commission [(86)](#ntr86-L_202400357EN.000101-E0086). |

|  |  |
| --- | --- |
| (179) | According to the information available, the average industrial tariff for years 2021–2022 was 8,49 INR/kWh and the average industrial tariff for years 2022–2023 was 8,54 INR/kWh. Because the review investigation period covers 6 months of 2021 and 6 months of 2022, the weighted average industrial tariff for the RIP was 8,51 INR/kWh, which corresponds to 0,73 CNY/kWh [(87)](#ntr87-L_202400357EN.000101-E0087). |

3.6.5.   Natural gas

|  |  |
| --- | --- |
| (180) | To establish the price of natural gas supplied to industrial users, the Commission used the price of natural gas in India for the review investigation period as published by the Petroleum Planning & Analysis Cell of the Ministry of Petroleum & Natural Gas of the Government of India. |

|  |  |
| --- | --- |
| (181) | The unit price of natural gas in India was taken from the ‘Domestic Natural Gas Price’ reports and was reported as 1,8 USD/MMBtu [(88)](#ntr88-L_202400357EN.000101-E0088) for the period April 2021– September 2021, 2,9 USD/MMBtu for the period October 2021–March 2022 and 6,1 USD/MMBtu for the period of April 2022–September 2022. |

|  |  |
| --- | --- |
| (182) | This was converted to an average unit cost of 0,08 CNY/kWh for the review investigation period [(89)](#ntr89-L_202400357EN.000101-E0089). |

3.6.6.   Manufacturing overhead costs, SG&A, and profits

|  |  |
| --- | --- |
| (183) | According to Article 2(6a)(a) of the basic Regulation, ‘the constructed normal value shall include an undistorted and reasonable amount for administrative, selling and general costs and for profits’. In addition, a value for manufacturing overhead costs needs to be established to cover costs not included in the factors of production referred to above. |

|  |  |
| --- | --- |
| (184) | To establish an undistorted value of the manufacturing overheads and given the absence of cooperation from the producers in the PRC, the Commission used facts available in accordance with Article 18 of the basic Regulation. Therefore, based on the data provided by the applicant, the Commission established the ratio of manufacturing overheads to the total manufacturing costs. Manufacturing overheads included the cost of plant overheads, warehouse overheads, depreciation, maintenance, supply and services (such as land filling, cleaning services and outsourcing). |

|  |  |
| --- | --- |
| (185) | The share of manufacturing overheads represented around 7 % and 11 % of the total cost of manufacturing for OMF in rolls and in tapes respectively. These percentages were then applied to the undistorted value of the total cost of manufacturing to obtain the undistorted value of manufacturing overheads, depending on the category of OMF produced. |

|  |  |
| --- | --- |
| (186) | For establishing an undistorted and reasonable amount for SG&A and profit, the Commission relied on the most recent available financial data of two producers in India that had been identified in the Note to the file on the relevant sources as active and profitable producers of OMF during the review investigation period. |

|  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- |
| (187) | The financial data of the two companies were consolidated and the Commission calculated an average share of SG&A and profit applicable to the calculation of the constructed normal value. Financial data for the following companies were used, as publicly available on the database Orbis Bureau van Dijk [(90)](#ntr90-L_202400357EN.000101-E0090):   |  |  | | --- | --- | | — | Montex Glass Fibre Industries Private Limited (financial year end 31 March 2022); |  |  |  | | --- | --- | | — | Pyrotek India Private Limited (financial year end 31 March 2022). | |

3.7.   Calculation of the normal value

|  |  |
| --- | --- |
| (188) | On the basis of the above, the Commission constructed the normal value per product type (namely OMF in rolls and OMF in tapes as explained in recital (172) on an ex-works basis in accordance with Article 2(6a)(a) of the basic Regulation. |

|  |  |
| --- | --- |
| (189) | According to the information in the expiry review request, subsequently verified based on the data of one of the Union producers that cooperated in the investigation and that provided specific information for that purpose, OMF in rolls and in tapes are both produced using roving, yarn and styrene-butadiene rubber. OMF in tapes also has an adhesive coating. |

|  |  |
| --- | --- |
| (190) | Therefore, the undistorted value for the adhesive coating was used, together with all other raw materials, to construct normal value for OMF in tapes, while it was not used to construct normal value for OMF in rolls. The methodology, explained in the following recitals, is the same in both cases. |

|  |  |
| --- | --- |
| (191) | First, the Commission established the undistorted manufacturing costs. In the absence of cooperation by the exporting producers, the Commission relied on the information [(91)](#ntr91-L_202400357EN.000101-E0091) provided by the applicant in the review request and one sampled exporting producer, which was verified on-spot, on the consumption of each factor (raw materials, labour and electricity) for the production of the product under review. |

|  |  |
| --- | --- |
| (192) | The Commission multiplied the consumption volumes by the undistorted costs per unit observed in India, as described in Section 3.6.2. A number of factors of production that represented a negligible share of total raw material costs in the review investigation period were expressed as a percentage of the main raw materials as explained in recital (166). The Commission applied that percentage to the undistorted cost of the main raw materials to arrive at an undistorted value. |

|  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- |
| (193) | Once the undistorted manufacturing cost was established, the Commission added the manufacturing overheads, SG&A and profit as established in recitals (183) to the undistorted costs of manufacturing:   |  |  | | --- | --- | | — | Manufacturing overheads, as established in recital (185), |  |  |  | | --- | --- | | — | SG&A, which accounted for 43 % of turnover, and |  |  |  | | --- | --- | | — | Profits, which amounted to 16 % of turnover, were applied to the total undistorted costs of manufacturing. | |

|  |  |
| --- | --- |
| (194) | On that basis, the Commission constructed the normal value per product type, as explained in recital (189), on an ex-works basis in accordance with Article 2(6a)(a) of the basic Regulation. |

3.8.   Export price

|  |  |
| --- | --- |
| (195) | In the absence of cooperation by the Chinese exporting producers, the export price was determined based on Eurostat import data, at a cost, insurance and freight (‘CIF’) level. This CIF price was reduced by the sea freight and domestic transport cost in China, to arrive at the export price at ex-works level. The amounts deduced were based on the information contained in the expiry review request. |

3.9.   Comparison and dumping margin

|  |  |
| --- | --- |
| (196) | In the absence of cooperation by Chinese exporting producers, the Commission had no information on the product types exported. The Commission therefore compared the normal values established in accordance with Article 2(6a)(a) of the basic Regulation, for OMF in rolls and OMF in tapes, with the export price on an ex-works basis as established above. |

|  |  |
| --- | --- |
| (197) | On that basis, the dumping margin for imports from China, expressed as a percentage of the CIF Union frontier price, duty unpaid, resulted in an average of 169 %. |

|  |  |
| --- | --- |
| (198) | However, the quantity of imports from China was small and only represented 0,76 % market share of the Union market. The Commission therefore concluded that a dumping margin established on the basis of such quantities is indicative, but that it did not provide a sufficient basis for a finding of continuation of dumping and the Commission therefore also investigated the likelihood of recurrence of dumping. |

3.10.   Likelihood of recurrence of dumping

|  |  |
| --- | --- |
| (199) | The Commission investigated, in accordance with Article 11(2) of the basic Regulation, the likelihood of recurrence of dumping should the measures be allowed to lapse. |

|  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- |
| (200) | The following additional elements were analysed:   |  |  | | --- | --- | | (a) | the likely dumping levels in the Union market shall the measures be allowed to lapse; |  |  |  | | --- | --- | | (b) | the production capacity and spare capacity in the PRC; and |  |  |  | | --- | --- | | (c) | the attractiveness of the Union market. | |

3.10.1.   Likely dumping levels in the Union market shall the measures be allowed to lapse

|  |  |
| --- | --- |
| (201) | To determine the likely level of export prices to the Union should the measures be allowed to lapse, and given the absence of cooperation of Chinese producers, the Commission based the export price on facts available, in accordance with Article 18 of the basic Regulation. |

|  |  |
| --- | --- |
| (202) | The Commission analysed Chinese export prices of OMF to its main three export markets as reported in GTA. These exports together represented around 50 % of Chinese export sales volumes in the review investigation period. The export markets in question were India, Russia and Türkiye. Subsequently, the Commission compared these export prices with the normal values established as described in Section 3.7. |

|  |  |
| --- | --- |
| (203) | The comparison showed that the normal value established by the Commission was at least one and a half times higher than the average export prices from China to each of these three markets, as reported in GTA. |

|  |  |
| --- | --- |
| (204) | There was no information on the case file suggesting that, should the measures be allowed to lapse, prices to the Union would be any different. |

|  |  |
| --- | --- |
| (205) | The Commission therefore considered that, should the measures be allowed to lapse, exports from China to the Union would likely be at dumped prices. |

3.10.2.   Production capacity and spare capacity in the PRC

|  |  |
| --- | --- |
| (206) | In the absence of cooperation from the Chinese producers/exporting producers or other available information on the production and spare capacity in the PRC, the Commission has relied on the evidence provided in the request for review and the applicant’s submission when assessing the spare capacity in China. |

|  |  |
| --- | --- |
| (207) | According to the request and above submission, the Chinese OMF producers have significant spare capacities. In 2021, the estimated OMF production capacities in Chine were approximately 2,8 billion square meters while the domestic OMF consumption was estimated at only approximately 1,2 billion square meters. With exports amounting to 1,5 billion square meters, Chinese producers had a spare capacity of around 450 million square meters [(92)](#ntr92-L_202400357EN.000101-E0092). That figure equals to almost half of the size of the Union market. |

3.10.3.   Attractiveness of the Union market

|  |  |
| --- | --- |
| (208) | The request states that the Chinese export market currently relies on small shipments to low volume markets, which is expensive and requires high levels of organisation, logistics and shipping costs. |

|  |  |
| --- | --- |
| (209) | It would therefore be much more attractive for the Chinese exporting producers to instead concentrate on exporting in large quantities to the European market, which was their strategy up to the moment that provisional measures were imposed. By that time, the Union had become China’s largest export market. |

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| --- | --- |
| (210) | Moreover, the Commission compared Chinese export prices to its main export markets (see recitals (202) to (203)) with the average price prevailing in the Union market. Prices to these export markets were made at price up to 21 % below prices on the Union market. This comparison clearly shows that prices in the Union market are higher than in other export markets. The Union therefore remains an attractive market for Chinese exporting producers, and the price incentive to restart large exports is significant. |

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| --- | --- |
| (211) | The Commission also noted the regular findings of circumvention from China via other countries since the measures were first imposed, showing the desire of the Chinese exporting producers to supply the Union market without payment of duty. |

3.10.4.   Conclusion on the likelihood of recurrence of dumping

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| --- | --- |
| (212) | In view of the above, the Commission concluded that there is a strong likelihood that dumping would recur if the current measures were allowed to lapse. In particular, the level of the normal value established in the PRC as compared to the level of Chinese export prices to third country markets and the Union, the attractiveness of the Union market and the availability of significant production capacity in the PRC all point to a strong likelihood of recurrence of dumping in case the current measures would be allowed to lapse. |

4.   INJURY

4.1.   Definition of the Union industry and Union production

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| --- | --- |
| (213) | The like product was manufactured by 18 producers in the Union during the period considered. They constitute the ‘Union industry’ within the meaning of Article 4(1) of the basic Regulation. |

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| --- | --- |
| (214) | The total Union production during the review investigation period was established at around 918,7 million m2. The Commission established the figure on the basis of the questionnaires replies from the three sampled union producers and the macro-indicator questionnaire reply submitted by the applicant. |

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| --- | --- |
| (215) | As indicated in recital (18), sampling was applied for the determination of possible continuation or recurrence of injury suffered by the Union industry. The three Union producers selected in the sample represented 72 % of the total Union production of the like product. |

4.2.   Union consumption

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| --- | --- |
| (216) | The Commission established the Union consumption on the basis of: (a) the applicant’s data concerning Union industry’s sales of the like product, partially cross-checked with the sales volumes reported by sampled Union producers; and (b) imports of the product under review from all third countries as reported in Eurostat and Surveillance [(93)](#ntr93-L_202400357EN.000101-E0093). |

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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (217) | Union consumption developed as follows:  Table 2  Union consumption (m2)   |  |  |  |  |  | | --- | --- | --- | --- | --- | |  | 2019 | 2020 | 2021 | RIP | | Total Union consumption | 843 708 606 | 865 438 401 | 1 013 312 192 | 957 318 764 | | Index (2019 = 100) | 100 | 103 | 120 | 113 | | |  |  | | --- | --- | | Source: | Eurostat, Surveillance, Applicant, sampled Union producers. | | | | | | |

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| --- | --- |
| (218) | The review showed that Union consumption has increased by 13 % during the period considered. Its drop between the peak year of 2021 and the review investigation period resulted from decrease in imports both from China and from third countries. |

4.3.   Imports from the country concerned

4.3.1.   Volume and market share of the imports from the country concerned

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| --- | --- |
| (219) | The Commission established the volume of imports from China on the basis of Eurostat and Surveillance statistics, as duly explained in recital (216) above. Their market share was established by comparing imports to the Union consumption as set out in Table 2. |

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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (220) | Imports into the Union from the country concerned developed as follows:  Table 3  Import volume and market share   |  |  |  |  |  | | --- | --- | --- | --- | --- | |  | 2019 | 2020 | 2021 | RIP | | Volume of imports from the PRC (m2) | 9 413 576 | 11 108 317 | 9 794 287 | 7 261 812 | | Index (2019 = 100) | 100 | 118 | 104 | 77 | | Market share of imports from the PRC (%) | 1,12 | 1,28 | 0,97 | 0,76 | | Index (2019 = 100) | 100 | 115 | 87 | 68 | | |  |  | | --- | --- | | Source: | Eurostat, Surveillance. | | | | | | |

|  |  |
| --- | --- |
| (221) | The volume of imports from China was low over the whole period considered. Chinese market share was around 1 % in the years 2019–2021 and in the review investigation period it decreased to 0,76 %. |

4.3.2.   Prices of the imports from the country concerned

|  |  |
| --- | --- |
| (222) | The Commission established the average prices of imports from China on the basis of Eurostat and Surveillance statistics. |

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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (223) | The weighted average price of imports from the country concerned developed as follows:  Table 4  Import price (EUR/m2)   |  |  |  |  |  | | --- | --- | --- | --- | --- | |  | 2019 | 2020 | 2021 | RIP | | China | 0,18 | 0,16 | 0,24 | 0,34 | | Index (2019 = 100) | 100 | 89 | 133 | 189 | | |  |  | | --- | --- | | Source: | Eurostat, Surveillance. | | | | | | |

|  |  |
| --- | --- |
| (224) | Prices from the country concerned almost doubled over the period considered. However, these trends need to be considered in a context of the low import quantities, in particular during the review investigation period, when imports accounted for 0,76 % market share.  4.4.   Imports from third countries other than PRC |

|  |  |
| --- | --- |
| (225) | The Commission established the volumes and prices of imports from third countries applying the same methodology as for the PRC (see Section 4.3). |

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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (226) | The volume of imports from third countries developed over the period considered as follows:  Table 5  Imports from third countries   |  |  |  |  |  |  | | --- | --- | --- | --- | --- | --- | | Country |  | 2019 | 2020 | 2021 | RIP | | Serbia | Import volume (m2) | 57 464 814 | 82 916 688 | 103 427 374 | 57 862 648 | | Index (2019 = 100) | 100 | 144 | 180 | 101 | | Market share (%) | 6,81 | 9,58 | 10,21 | 6,04 | | Index (2019 = 100) | 100 | 141 | 150 | 89 | | Average price (EUR/m2) | 0,27 | 0,25 | 0,30 | 0,33 | | Index (2019 = 100) | 100 | 93 | 111 | 122 | | Moldova | Import volume (m2) | 25 112 047 | 23 799 781 | 36 958 795 | 35 010 746 | | Index (2019 = 100) | 100 | 95 | 147 | 139 | | Market share (%) | 2,98 | 2,75 | 3,65 | 3,66 | | Index (2019 = 100) | 100 | 92 | 123 | 123 | | Average price (EUR/m2) | 0,26 | 0,26 | 0,28 | 0,33 | | Index (2019 = 100) | 100 | 100 | 108 | 127 | | North Macedonia | Import volume (m2) | 15 329 645 | 25 493 336 | 30 786 136 | 20 687 170 | | Index (2019 = 100) | 100 | 166 | 201 | 135 | | Market share (%) | 1,82 | 2,95 | 3,04 | 2,16 | | Index (2019 = 100) | 100 | 162 | 167 | 119 | | Average price (EUR/m2) | 0,31 | 0,27 | 0,32 | 0,37 | | Index (2019 = 100) | 100 | 87 | 103 | 119 | | Other third countries | Import volume (m2) | 23 007 130 | 15 855 373 | 27 770 221 | 26 461 114 | | Index (2019 = 100) | 100 | 69 | 121 | 115 | | Market share (%) | 2,73 | 1,83 | 2,74 | 2,76 | | Index (2019 = 100) | 100 | 67 | 101 | 101 | | Average price (EUR/m2) | 0,53 | 0,58 | 0,76 | 0,65 | | Index (2019 = 100) | 100 | 109 | 143 | 123 | | Total imports excluding PRC | Import volume (m2) | 120 913 636 | 148 065 178 | 198 942 526 | 140 021 678 | | Index (2019 = 100) | 100 | 122 | 165 | 116 | | Market share (%) | 14,33 | 17,11 | 19,63 | 14,63 | | Index (2019 = 100) | 100 | 119 | 137 | 102 | | Average price (EUR/m2) | 0,32 | 0,29 | 0,36 | 0,39 | | Index (2019 = 100) | 100 | 91 | 113 | 122 | | |  |  | | --- | --- | | Source: | Eurostat, Surveillance. | | | | | | | |

|  |  |
| --- | --- |
| (227) | Among imports from third countries, imports from Serbia, Moldova and North Macedonia were the most important. All those three countries, as well as other third countries, were steadily increasing their import volumes and shares in the Union market in the years 2019–2021. However, after the peak year of 2021, their import volumes decreased in the review investigation period and market share of the third countries almost came back to the level of year 2019. |

4.5.   Economic situation of the Union industry

4.5.1.   General remarks

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| --- | --- |
| (228) | The assessment of the economic situation of the Union industry included an evaluation of all economic indicators having a bearing on the state of the Union industry during the period considered. |

|  |  |
| --- | --- |
| (229) | For the injury determination, the Commission distinguished between macroeconomic and microeconomic injury indicators. The Commission evaluated the macroeconomic indicators on the basis of data and information contained in the questionnaire reply of the applicant, duly cross-checked with the information in the request and the questionnaire replies of the sampled producers. The Commission evaluated the microeconomic indicators on the basis of data contained in the questionnaire replies of the sampled Union producers. Both sets of data were found to be representative of the economic situation of the Union industry. |

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| --- | --- |
| (230) | The macroeconomic indicators are: production, production capacity, capacity utilisation, sales volume, market share, growth, employment, productivity, magnitude of the dumping margin, and recovery from past dumping. |

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| --- | --- |
| (231) | The microeconomic indicators are: average unit prices, unit cost, labour costs, inventories, profitability, cash flow, investments, return on investments, and ability to raise capital. |

4.5.2.   Macroeconomic indicators

4.5.2.1.   Production, production capacity and capacity utilisation

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (232) | The total Union production, production capacity and capacity utilisation developed over the period considered as follows:  Table 6  Production, production capacity and capacity utilisation   |  |  |  |  |  | | --- | --- | --- | --- | --- | |  | 2019 | 2020 | 2021 | RIP | | Production volume (m2) | 830 158 312 | 795 330 105 | 871 470 775 | 918 703 469 | | Index (2019 = 100) | 100 | 96 | 105 | 111 | | Production capacity (m2) | 996 336 815 | 997 527 699 | 1 016 796 092 | 1 036 403 129 | | Index (2019 = 100) | 100 | 100 | 102 | 104 | | Capacity utilisation (%) | 83 | 80 | 86 | 89 | | Index (2019 = 100) | 100 | 96 | 103 | 106 | | |  |  | | --- | --- | | Source: | Applicant, sampled Union producers. | | | | | | |

|  |  |
| --- | --- |
| (233) | The production of the Union industry increased by 11 % over the period considered. It followed the general trend in the Union consumption, although a slight negative impact of the COVID-19 outbreak was visible in 2020, with a noticeable recovery in the 2021 and the review investigation period. |

|  |  |
| --- | --- |
| (234) | The production capacity also increased by 4 % over the period considered. |

|  |  |
| --- | --- |
| (235) | Since the growth in production outpaced growth of production capacity, capacity utilization increased in the review investigation period to the level of 89 %. |

4.5.2.2.   Sales volume and market share

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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (236) | The Union industry’s sales volume and market share developed over the period considered as follows:  Table 7  Sales volume and market share   |  |  |  |  |  | | --- | --- | --- | --- | --- | |  | 2019 | 2020 | 2021 | RIP | | Total sales volume on the Union market – unrelated customers (m2) | 713 589 293 | 706 264 907 | 804 575 378 | 810 036 274 | | Index (2019 = 100) | 100 | 99 | 113 | 114 | | Market share (%) | 84,6 | 81,6 | 79,4 | 84,6 | | Index (2019 = 100) | 100 | 96 | 94 | 100 | | |  |  | | --- | --- | | Source: | Eurostat, applicant, sampled Union producers. | | | | | | |

|  |  |
| --- | --- |
| (237) | Sales volumes of the Union industry increased over the period considered by 14 %, which was at similar level than the 13 % increase of consumption shown in Table 2. Therefore, the Union industry kept its market share of almost 85 % on the increasing market. |

4.5.2.3.   Growth

|  |  |
| --- | --- |
| (238) | During the period considered, the Union consumption increased by 13 %, whereas the Union industry’s volume of sales to unrelated customers in the Union increased by 14 %. Consequently, the Union industry has grown in absolute terms and remained stable in terms of market share. Growth in sales was also accompanied by growth in production, production capacity and investments. |

4.5.2.4.   Employment and productivity

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (239) | Employment and productivity developed over the period considered as follows:  Table 8  Employment and productivity   |  |  |  |  |  | | --- | --- | --- | --- | --- | |  | 2019 | 2020 | 2021 | RIP | | Number of employees | 2 277 | 2 293 | 2 371 | 2 409 | | Index (2019 = 100) | 100 | 101 | 104 | 106 | | Labour Productivity (m2/employee) | 364 653 | 346 891 | 367 511 | 381 401 | | Index (2019 = 100) | 100 | 95 | 101 | 105 | | |  |  | | --- | --- | | Source: | Applicant, sampled Union producers. | | | | | | |

|  |  |
| --- | --- |
| (240) | Over the whole period considered the number of employees increased slightly. In the review investigation period the Union industry employed above 2 400 people compared to 2 277 in the year 2019. Productivity per employee increased in the period considered by 5 %. Temporary decrease in productivity was noted in 2020 due to COVID-related drop in the production. |

4.5.2.5.   Magnitude of the dumping margin and recovery from past dumping

|  |  |
| --- | --- |
| (241) | As explained in recital (198), the low volume of imports from China did not provide sufficient basis for a continuation of dumping analysis. The investigation therefore focused on the likelihood of recurrence of dumping should the anti-dumping measures be allowed to lapse. |

|  |  |
| --- | --- |
| (242) | During the review investigation period, most of injury indicators of Union industry showed favourable trends. On this basis, the Commission concluded that the Union industry recovered from past dumping. |

4.5.3.   Microeconomic indicators

4.5.3.1.   Prices and factors affecting prices

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (243) | The weighted average unit sales prices of the sampled Union producers to unrelated customers in the Union developed over the period considered as follows:  Table 9  Sales prices and cost of production in the Union   |  |  |  |  |  | | --- | --- | --- | --- | --- | |  | 2019 | 2020 | 2021 | RIP | | Weighted average unit sales price in the Union (EUR/m2) | 0,34 | 0,34 | 0,35 | 0,39 | | Index (2019 = 100) | 100 | 100 | 103 | 115 | | Unit cost of production (EUR/m2) | 0,30 | 0,28 | 0,29 | 0,34 | | Index (2019 = 100) | 100 | 93 | 97 | 113 | | |  |  | | --- | --- | | Source: | Sampled Union producers. | | | | | | |

|  |  |
| --- | --- |
| (244) | Unit sales prices remained stable in the years 2019–2021 and then increased by 15 % in the review investigation period, mainly in the first half of 2022. This price increase somewhat reflected the increase in the cost of production over the period considered. |

4.5.3.2.   Labour costs

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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (245) | The average labour costs of the sampled Union producers developed, over the period considered, as follows:  Table 10  Average labour costs per employee   |  |  |  |  |  | | --- | --- | --- | --- | --- | |  | 2019 | 2020 | 2021 | RIP | | Average labour costs per employee (EUR) | 21 170 | 20 717 | 22 242 | 23 286 | | Index | 100 | 98 | 105 | 110 | | |  |  | | --- | --- | | Source: | Sampled Union producers. | | | | | | |

|  |  |
| --- | --- |
| (246) | Between 2019 and the review investigation period, the average labour costs per employee of the sampled Union producers increased by 10 %. |

4.5.3.3.   Inventories

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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (247) | Stock levels of the sampled Union producers developed over the period considered as follows:  Table 11  Inventories   |  |  |  |  |  | | --- | --- | --- | --- | --- | |  | 2019 | 2020 | 2021 | RIP | | Closing stocks (m2) | 73 236 531 | 67 655 734 | 39 610 546 | 41 699 457 | | Index | 100 | 92 | 54 | 57 | | Closing stocks as a percentage of production | 12 | 12 | 6 | 6 | | Index | 100 | 100 | 50 | 50 | | |  |  | | --- | --- | | Source: | Sampled Union producers. | | | | | | |

|  |  |
| --- | --- |
| (248) | As in the second part of the period considered increase in sales volumes outpaced increase in production volumes, closing stock levels decreased substantially both in absolute terms and with relation to the production volume. |

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

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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (249) | Profitability, cash flow, investments and return on investments of the sampled Union producers developed over the period considered as follows:  Table 12  Profitability, cash flow, investments and return on investments   |  |  |  |  |  | | --- | --- | --- | --- | --- | |  | 2019 | 2020 | 2021 | RIP | | Profitability of sales in the Union to unrelated customers (% of sales turnover) | 14 | 21 | 21 | 14 | | Index | 100 | 150 | 150 | 100 | | Cash flow (EUR) | 29 828 733 | 49 755 437 | 61 438 545 | 40 959 049 | | Index | 100 | 167 | 206 | 137 | | Investments (EUR) | 7 955 638 | 7 703 226 | 14 849 596 | 18 852 344 | | Index | 100 | 97 | 187 | 237 | | Return on investments (%) | 11 | 17 | 19 | 13 | | Index | 100 | 155 | 173 | 118 | | |  |  | | --- | --- | | Source: | Sampled Union producers. | | | | | | |

|  |  |
| --- | --- |
| (250) | The Commission established the profitability of the sampled Union producers by expressing the pre-tax net profit of the sales of the like product to unrelated customers in the Union as a percentage of the turnover of those sales. Over the whole period considered, the Union industry remained profitable with an increasing trend in the years 2019–2021. In the review investigation period profitability dropped, mainly due to the increase of the energy cost in the first half of 2022, but the sampled Union producers still had overall profitability at the level of 14 %. |

|  |  |
| --- | --- |
| (251) | The net cash flow is the ability of the Union producers to self-finance their activities. Overall, in absolute terms, cash flow was at high levels throughout the period considered. |

|  |  |
| --- | --- |
| (252) | Union producers continued investments over the whole period considered. The investments peaked in the review investigation period. |

|  |  |
| --- | --- |
| (253) | The return on investments is the profit in percentage of the net book value of investments. It developed positively during the period considered. During the review investigation period return on assets of the Union producers was two percentage points higher than in 2019. |

|  |  |
| --- | --- |
| (254) | None of the sampled Union producers reported difficulties in their ability to raise capital. |

4.6.   Conclusion on injury

|  |  |
| --- | --- |
| (255) | The volume of imports from the country concerned were negligible over the period considered. |

|  |  |
| --- | --- |
| (256) | Over the period considered, the Union industry increased its production and sales volumes, production capacity and its utilization percentage, employment and productivity. It also maintained a high, 85 % share of the market in the situation of an overall consumption increase. |

|  |  |
| --- | --- |
| (257) | In terms of financial indicators, despite the increase of costs of production, the Union industry kept being profitable in all the years of the period considered. In the review investigation period, its profitability dropped in comparison to years 2020–2021, it was however still on the level of 14 %. Furthermore, the Union industry maintained positive cash flow over the whole period considered, it more than doubled investments in the same period and achieved a good return on them. |

|  |  |
| --- | --- |
| (258) | On the basis of the above, the Commission concluded that the Union industry did not suffer material injury within the meaning of Article 3(5) of the basic Regulation during the review investigation period. |

5.   LIKELIHOOD OF RECURRENCE OF INJURY

|  |  |
| --- | --- |
| (259) | The Commission concluded in recital (258) that the Union industry did not suffer material injury during the review investigation period. Therefore, the Commission assessed, in accordance with Article 11(2) of the basic Regulation, whether there would be a likelihood of recurrence of injury originally caused by dumped imports from China if the measures were allowed to lapse. |

|  |  |
| --- | --- |
| (260) | In this regard, the Commission examined the production capacity in China, the attractiveness of the Union market, and the impact of the potential import volume and import prices on the Union industry’s situation should the measures be allowed to lapse. |

5.1.   Spare capacity in China

|  |  |
| --- | --- |
| (261) | As already explained in recital (207), the Chinese OMF producers still maintain high spare capacity for potential exports to the Union if the measures were allowed to lapse and the Union market was opened to them. |

5.2.   Attractiveness of the Union market

|  |  |
| --- | --- |
| (262) | For the Chinese exporting producers, the prices on the Union market are relatively high, which makes the Union market attractive. Chinese CIF prices to their main export markets in the review investigation period (Türkiye, India and Russia) were from 3 % to 21 % lower than average Union industry price during the review investigation period. |

|  |  |
| --- | --- |
| (263) | Moreover, the Union market is also attractive in terms of its size and is expected to grow further with the development of external thermal insulation composite systems, which is a growing downstream market for OMF. |

5.3.   Impact of potential import volume and import prices on the Union industry

|  |  |
| --- | --- |
| (264) | The Commission analysed also the likely price level at which the Chinese exporting producers would export to the Union market. |

|  |  |
| --- | --- |
| (265) | The comparison of the Chinese export prices at CIF level, adjusted by adding the conventional customs duty and post-importation costs, to the ex-work sales prices of the sampled Union producers resulted in undercutting margin of 5 % for the review investigation period. |

|  |  |
| --- | --- |
| (266) | Furthermore, before the review investigation period, over the whole period considered, the gap between Chinese CIF prices and the Union industry prices was even bigger. The situation in the review investigation period was exceptional: the price increases at CIF and landed levels reflect mainly increases in freight costs – at FOB level Chinese export prices remained stable. Container prices for shipping routes from China to the Union increased significantly from the second half of 2021 and through first half of 2022 as a result of the government measures taken in response to the COVID pandemic. During the latter half of 2022 (just after the review investigation period) shipping costs decreased back to 2019 levels and Chinese landed export price was again undercutting Union industry prices more seriously. |

|  |  |
| --- | --- |
| (267) | The price increases during the review investigation period were therefore not the result of any structural change in the Chinese producers’ aggressive pricing policy and unfair trading practices – Chinese OMF prices overall continue to be low in comparison to the prices of the Union industry. |

|  |  |
| --- | --- |
| (268) | The above price undercutting calculation is based on low import quantities. However, the conclusion concerning low level of the Chinese export prices is confirmed by the findings on Chinese exports to their main third countries’ markets. As indicated in recital (262) prices of the Chinese exports to these markets are lower than prices of the Union producers. The latter calculations are based on volumes amounting to 23 % of the Union consumption in the review investigation period. |

|  |  |
| --- | --- |
| (269) | If measures lapse, the impact of increasing low priced volumes of Chinese exports to the Union will certainly lead to the loss of the Union industry market share or if the Union industry tries to compete with the prices to prevent it, to the deterioration of the Union industry financial situation. |

5.4.   Conclusion on the likelihood of recurrence of injury

|  |  |
| --- | --- |
| (270) | The significant capacity in China, the attractiveness of the Union market, and the level of Chinese prices to the Union and third markets indicate that, in the absence of measures, significant volumes of Chinese exports would be directed towards the Union market at prices significantly below Union industry’s prices. |

|  |  |
| --- | --- |
| (271) | This would result in the Union industry quickly losing market shares and having to decrease its sales prices significantly, to the detriment of its profitability and viability. |

|  |  |
| --- | --- |
| (272) | Considering the international and European current economic context (energy crisis, war, increasing costs, etc.), the Union market therefore cannot absorb additional volumes of dumped and low priced OMF imports from China. A termination of the measures would allow imports of Chinese OMF to harm Union producers again, putting them quickly out of business. |

|  |  |
| --- | --- |
| (273) | On this basis, it is concluded that allowing measures to lapse would in all likelihood result in a significant increase of dumped imports from China at injurious prices and, as a consequence, material injury would be likely to recur. |

6.   UNION INTEREST

|  |  |
| --- | --- |
| (274) | In accordance with Article 21 of the basic Regulation, the Commission examined whether maintaining the existing anti-dumping measures would be against the interest of the Union as whole. The determination of the Union interest was based on an appreciation of all the various interests involved, including those of the Union industry, importers, and users. |

|  |  |
| --- | --- |
| (275) | All interested parties were given the opportunity to make their views known pursuant to Article 21(2) of the basic Regulation. |

|  |  |
| --- | --- |
| (276) | On this basis, the Commission examined whether, despite the conclusions on the likelihood of recurrence of dumping and injury, compelling reasons existed which would lead to the conclusion that it was not in the Union interest to maintain the existing measures. |

6.1.   Interest of the Union industry

|  |  |
| --- | --- |
| (277) | As concluded in recital (258), the Union industry is no longer suffering from material injury. However, as concluded in recital (273), the Union industry would not be able to cope with a removal of the measures, which would likely result in a significant quantity of dumped imports entering the Union market at prices undercutting those of the Union industry. A repeal of the measures would therefore put the industry’s long term financial viability at stake. The continuation of the measures, therefore, is in the interest of the Union industry. |

6.2.   Interest of unrelated importers and users

|  |  |
| --- | --- |
| (278) | All known unrelated importers and users were informed about the initiation of the review. |

|  |  |
| --- | --- |
| (279) | No importer of the product concerned [(94)](#ntr94-L_202400357EN.000101-E0094) or Union user cooperated in the expiry review or submitted any data or comments. Therefore, there were no indications that the maintenance of the measures would have a negative impact on the importers and users, outweighing the positive impact of the measures on the Union industry, nor did the Commission’s investigation establish the contrary. |

|  |  |
| --- | --- |
| (280) | Therefore, there were no indications that the maintenance of the measures would have a negative impact on the users and/or importers outweighing the positive impact of the measures. |

|  |  |
| --- | --- |
| (281) | Therefore, there were no indications that the maintenance of the measures would have a negative impact on the importers outweighing the positive impact of the measures, nor did the Commission’s investigation establish the contrary. |

6.3.   Conclusion on Union interest

|  |  |
| --- | --- |
| (282) | The Union is an important and attractive OMF market. Union environmental policy increases the demand for OMF in external insulation systems. The Union production capacity is one billion square meters, with a current production exceeding 900 million square meters and demand of 957 million square meters. This means that Union producers can almost fully supply the internal market – especially that there is still potential to grow their capacity. |

|  |  |
| --- | --- |
| (283) | Furthermore, there is growing internal competition inside the Union market. After the imposition of the anti-dumping measures, the number of the Union producers of OMF increased from six to fourteen companies. |

|  |  |
| --- | --- |
| (284) | The Union OMF industry plays a significant role in developing new applications and improving technologies that enhance the performance of insulation materials, and the continued existence of a healthy Union OMF industry is clearly of key importance to the achievement of the EU’s climate targets. |

|  |  |
| --- | --- |
| (285) | On the basis of the above, the Commission concluded that there were no compelling reasons of Union interest against the maintenance of the existing measures on imports of OMF originating in China.  7.   ANTI-DUMPING MEASURES |

|  |  |
| --- | --- |
| (286) | On the basis of the conclusions reached by the Commission on recurrence of dumping, recurrence of injury and Union interest, the anti-dumping measures applicable to imports of certain open mesh fabrics of glass fibres, extended to imports of certain modified open mesh fabrics of glass fibre, originating in or consigned from the PRC should be maintained. |

|  |  |
| --- | --- |
| (287) | To minimize the risks of circumvention due to the difference in duty rates, special measures are needed to ensure the application of the individual anti-dumping duties. The companies with individual anti-dumping duties must present a valid commercial invoice to the customs authorities of the Member States. The invoice must conform to the requirements set out in Article 1(3) of this regulation. Imports not accompanied by that invoice should be subject to the anti-dumping duty applicable to ‘all other imports originating in the People’s Republic of China’. |

|  |  |
| --- | --- |
| (288) | While presentation of this invoice is necessary for the customs authorities of the Member States to apply the individual rates of anti-dumping duty to imports, it is not the only element to be taken into account by the customs authorities. Indeed, even if presented with an invoice meeting all the requirements set out in Article 1(3) of this regulation, the customs authorities of Member States must carry out their usual checks and may, like in all other cases, require additional documents (shipping documents etc.) for the purpose of verifying the accuracy of the particulars contained in the declaration and ensure that the subsequent application of the lower rate of duty is justified, in compliance with customs law. |

|  |  |
| --- | --- |
| (289) | Should the exports by one of the companies benefiting from lower individual duty rates increase significantly in volume after the imposition of the measures concerned, such an increase in volume could be considered as constituting in itself a change in the pattern of trade due to the imposition of measures within the meaning of Article 13(1) of the basic Regulation. In such circumstances and provided the conditions are met an anti-circumvention investigation may be initiated. This investigation may, inter alia, examine the need for the removal of individual duty rate(s) and the consequent imposition of a country-wide duty. |

|  |  |
| --- | --- |
| (290) | The individual company anti-dumping duty rates specified in this Regulation are exclusively applicable to imports of the product under review originating in the People’s Republic of China and produced by the named legal entities. Imports of the product under review produced by any other company not specifically mentioned in the operative part of this Regulation, including entities related to those specifically mentioned, should be subject to the duty rate applicable to ‘all other imports originating in the People’s Republic of China’. They should not be subject to any of the individual anti-dumping duty rates. |

|  |  |
| --- | --- |
| (291) | A company may request the application of these individual anti-dumping duty rates if it changes subsequently the name of its entity. The request must be addressed to the Commission [(95)](#ntr95-L_202400357EN.000101-E0095). The request must contain all the relevant information enabling to demonstrate that the change does not affect the right of the company to benefit from the duty rate which applies to it. If the change of name of the company does not affect its right to benefit from the duty rate which applies to it, a regulation about the change of name will be published in the Official Journal of the European Union. |

|  |  |
| --- | --- |
| (292) | An exporter or producer that did not export the product concerned to the Union during the period that was used to set the level of the duty currently applicable to its exports may request the Commission to be made subject to the anti-dumping duty rate for cooperating companies not included in the sample. The Commission should grant such request, provided that three conditions are met. The new exporting producer would have to demonstrate that: (i) it did not export the product concerned to the Union during the period that was used to set the level of the duty applicable to its exports; (ii) it is not related to a company that did so and thus is subject to the anti-dumping duties; and (iii) has exported the product concerned thereafter or has entered into an irrevocable contractual obligation to do so in substantial quantities. |

|  |  |
| --- | --- |
| (293) | All interested parties were informed of the essential facts and considerations on the basis of which it was intended to recommend that the existing measures be maintained. They were also granted a period to make representations subsequent to this disclosure. No comments were received. |

|  |  |
| --- | --- |
| (294) | In view of Article 109 of Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council [(96)](#ntr96-L_202400357EN.000101-E0096) when an amount is to be reimbursed following a judgment of the Court of Justice of the European Union, the interest to be paid should be the rate applied by the European Central Bank to its principal refinancing operations, as published in the C series of the Official Journal of the European Union on the first calendar day of each month. |

|  |  |
| --- | --- |
| (295) | The measures provided for in this regulation are in accordance with the opinion of the Committee established by Article 15(1) of Regulation (EU) 2016/1036, |

HAS ADOPTED THIS REGULATION:

Article 1

1.   A definitive anti-dumping duty is hereby imposed on imports of open mesh fabrics of glass fibres, of a cell size of more than 1,8 mm both in length and in width and weighing more than 35 g/m2, excluding fibreglass discs, currently falling under CN codes ex 7019 63 00, ex 7019 64 00, ex 7019 65 00, ex 7019 66 00 and ex 7019 69 90 (TARIC codes 7019630019, 7019640019, 7019650018, 7019660018 and 7019699019) and originating in the People’s Republic of China.

2.   The rate of the definitive anti-dumping duty applicable to the CIF net, free-at-Union-frontier price, before duty, of the product described in paragraph 1 and originating in the People’s Republic of China shall be as follows:

|  |  |  |
| --- | --- | --- |
| Company | Duty (%) | TARIC additional code |
| Yuyao Mingda Fiberglass Co., Ltd | 62,9 | B006 |
| Grand Composite Co., Ltd and its related company Ningbo Grand Fiberglass Co., Ltd | 48,4 | B007 |
| Yuyao Feitian Fiberglass Co., Ltd | 60,7 | B122 |
| Companies listed in Annex | 57,7 | B008 |
| All other imports originating in the People’s Republic of China | 62,9 | B999 |

3.   The application of the individual duty rates specified for the companies mentioned in paragraph 2 shall be conditional upon presentation to the Member States’ customs authorities of a valid commercial invoice, on which shall appear a declaration dated and signed by an official of the entity issuing such invoice, identified by his/her name and function, drafted as follows: ‘I, the undersigned, certify that the (volume) of (product under review) sold for export to the European Union covered by this invoice was manufactured by (company name and address) (TARIC additional code) in [country concerned]. I declare that the information provided in this invoice is complete and correct.’ If no such invoice is presented, the duty applicable to ‘all other imports originating in the People’s Republic of China’ shall apply.

4.   The definitive anti-dumping duty applicable to imports originating in the People’s Republic of China, as set out in paragraph 2, is hereby extended to:

|  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| — | imports of the same open mesh fabrics consigned from India and Indonesia, whether declared as originating in India and Indonesia or not (TARIC codes 7019630014, 7019630015, 7019640014, 7019640015, 7019650014, 7019650015, 7019660014, 7019660015, 7019699014, and 7019699015),   |  |  |  |  |  |  |  |  |  |  | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | — | with the exception of those produced by:   |  |  | | --- | --- | | — | Montex Glass Fibre Industries Pvt. Ltd (TARIC additional code B942), |  |  |  | | --- | --- | | — | Pyrotek India Pvt. Ltd (TARIC additional code C051), |  |  |  | | --- | --- | | — | SPG Glass Fibre Pvt. Ltd (TARIC additional code C205), and |  |  |  | | --- | --- | | — | Urja Products Private Limited (TARIC additional code C861), | | |

|  |  |
| --- | --- |
| — | imports of the same open mesh fabrics consigned from Malaysia, whether declared as originating in Malaysia or not (TARIC codes 7019630011, 7019640011, 7019650011, 7019660011 and 7019699011), |

|  |  |
| --- | --- |
| — | imports of the same open mesh fabrics consigned from Taiwan and Thailand, whether declared as originating in Taiwan and Thailand or not (TARIC codes 7019630012, 7019630013, 7019640012, 7019640013, 7019650012, 7019650013, 7019660012, 7019660013, 7019699012 and 7019699013). |

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

6.   Where any new exporting producer in the People’s Republic of China provides sufficient evidence to the Commission that:

|  |  |
| --- | --- |
| (1) | it did not export to the Union the product described in paragraph 1 in the period between 1 April 2009 to 31 March 2010 (the original investigation period); |

|  |  |
| --- | --- |
| (2) | it is not related to any exporter or producer in the People’s Republic of China which is subject to the anti-dumping measures imposed by this Regulation; and |

|  |  |
| --- | --- |
| (3) | it has actually exported to the Union the product concerned or it has entered into an irrevocable contractual obligation to export a significant quantity to the Union after the end of the original investigation period, |

the Commission may amend the Annex by adding the new exporting producer to the cooperating companies not included in the sample and thus subject to the weighted average duty of 57,7 %.

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, 23 January 2024.

For the Commission

The President

Ursula VON DER LEYEN

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ANNEX

Cooperating Chinese exporting producers not sampled:

|  |  |
| --- | --- |
| Name | TARIC additional code |
| Jiangxi Dahua Fiberglass Group Co., Ltd | B008 |
| Lanxi Jialu Fiberglass Net Industry Co., Ltd | B008 |
| Cixi Oulong Fiberglass Co., Ltd | B008 |
| Jiangsu Tianyu Fibre Co., Ltd | B008 |
| Jia Xin Jinwei Fiber Glass Products Co., Ltd | B008 |
| Jiangsu Jiuding New Material Co., Ltd | B008 |
| Changshu Jiangnan Glass Fiber Co., Ltd | B008 |
| Shandong Shenghao Fiber Glass Co., Ltd | B008 |
| Yuyao Yuanda Fiberglass Mesh Co., Ltd | B008 |
| Ningbo Kingsun Imp & Exp Co., Ltd | B008 |
| Ningbo Integrated Plasticizing Co., Ltd | B008 |
| Nankang Luobian Glass Fibre Co., Ltd | B008 |
| Changshu Dongyu Insulated Compound Materials Co., Ltd. | B008 |

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ELI: http://data.europa.eu/eli/reg\_impl/2024/357/oj

ISSN 1977-0677 (electronic edition)

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