CELEX: 51994PC0683
Language: en
Date: 1994-12-22
Title: Proposal for a COUNCIL REGULATION (EC) imposing a definitive anti-dumping duty on imports of furfuraldehyde originating in the People's Republic of China

COMMISSION OF THE EUROPEAN COMMUNITIES
                                                                                COM(94)              683       final
                                                                                Brussels,                 22.12.1994
                                                       Proposal       for       a
                                              COUNCIL REGULATION                    (EC)
  i m p o s i n g a definitive a n t i - d u m p i n g d u t y on i m p o r t s o f f i i r f u r a l d c h y d e o r i g i n a t i n g in the
                                               People's Republic of C h i n a
                                        (presented by the Commission)
 ---pagebreak---  ---pagebreak---                                           explanatory memorandum
          I he Commission Regulation ( I X ) No 1783/94" t) imposed a provisional anti-dumping duty
         on imports of furfuraldehydc originating in the People's Republic o f China.
"> This provisional anti-dumping duty has been extended by a further period of two months by
         Council Regulation (IX") No 28l8/94«2).
3.       Alter examining the arguments put forward by the interested parties, the Commission has
         dellnitively established the facts.
4.       In accordance with Article 12 of Council Regulation (BC) No 2423/88(((3), the Commission,
         after consultation of the Advisory Committee, proposes to impose a definitive duty of the
         same amount ol the provisional duly and to collect definitively the provisional anti-dumping
         duty.
   ' I ) O.J. No. I, 186, 21.07.1994, p. II
   ,,
      2)O.J. No. 1,298, I9.II.IW4, p. 31
   ,,(
       3)()..!. No. 1,209, 02.08.1988, p. I
 ---pagebreak---                                         COUNCIL REGULATION (EC) Nc
                                                             of
  imposing a definitive anti-dumping duty on imports of furfuraldehyde originating in the
                                             People's Republic of China
 iin;COUNCIL01 mi; EUROPBAN UNION,
H a v i n g regard to the Treaty establishing the European C o m m u n i t y ,
Having regard to Council Regulation (EEC) N° 2423/88 of I I July 1988 on protection against
dumped or subsidised imports from countries not members of the European Economic
                   (ll(
Community              i) as last amended by Regulation (EC) N° 522/94 """2), and in particular Article 12
thereof.
Having regard to the proposal submitted by the Commission after consultations within the
Advisory Committee,
Whereas:
A.         PROVISIONAL MEASURES
                                                      (,,lll
(I)        By Regulation (EC) N° 1783/94                    3), hereinafter referred to as "the provisional
           Regulation", the Commission imposed a provisional anti-dumping duty on imports of
            furfuraldehyde falling within the CN code 2932 12 00 and originating in the People's
            Republic of China.
            liy Regulation (EC) N° 2818/94 """'4), the Council extended the validity of these duties for
           a period not exceeding two months.
   " " I ) O.J. No. 1,209,02.08.1988 p. I
   (,<,,
         2)()..l. No. I, 66, 10.03.1994 p. 10
         3) O.J. No. L 186, 21.07.1994, p. I I
   '      4) O.J. No. L 2 9 8 , 19.1 1.1994, p.3 I
 ---pagebreak--- B.  SUBSEQUENT PROCEDURE
(2) Subséquent to the imposition of the provisional anti-dumping duty, Sinochem, the main
    Chinese exporter submitted comments in writing and requested and was granted a hearing.
    One importer made its views known to the Commission in writing.
    In addition, an importer and processor of furfuraldehyde, which had not been taken into
    consideration for the imposition of the provisional duty because it started operating only at
    the beginning of 1994, submitted its written comments. Furthermore it requested and was
    granted the opportunity to be heard orally.
(3) The oral and written comments submitted by the interested parties were considered by the
    Commission services and taken into account where appropriate.
C.  PRODUCT UNDER CONSIDERATION. LIKE PRODUCT AND COMMUNITY
    INDUSTRY
(4) As no further arguments have been presented regarding the product under consideration,
    the like product and the Community industry, the findings set out in recitals (9) to (12) of
    the provisional Regulation are confirmed.
I). DUMPING
 1. Normal value
(5) As the People's Republic of China is a non-market economy country, the Commission
    based the determination of normal value on domestic sales prices of two furfuraldehyde
    producers in a market economy country, in this case Argentina, pursuant to Article 2 (5)
    (a) (i) of the basic Regulation.
 ---pagebreak--- (6) One importer argued that Argentina is inappropriate as an analogue country because the
    volume of the Argentinian production of furfuraldehyde would be too small compared
    with the estimated world production and with Chinese production.
    By applying Article 2 (5) (a) of the basic Regulation and, in particular, by evaluating the
    representativeness of the sales on which normal value is to be based, it is the practice of
    the Commission to compare the volumes exported to the Community by the country under
    investigation with the volume of sales on which normal value is based. In applying this
    principle, it has been found that Argentinian domestic sales represented more than 10% of
    the Chinese exports        to the Community,     which    can be regarded as     sufficiently
    representative. The ratio between the production in the analogue country and the world
    production or the production in the country under investigation is not relevant in regard to
    the choice of the analogue country.
(7)  The same importer argued that the production costs of furfuraldehyde in Argentina are
    higher than in other countries.        This could be proved by the fact that Argentinian
    furfuraldehyde could only be exported to other South American countries, whose markets
    are protected by high duties, but which grant preferential treatment to A L A D I (Latin
    American Integration Association) countries.        It was found that this statement by the
    importer in question is incorrect, as during the investigation period about one third of
    Argentinian production offiirfuraldchyde was exported to the Community.
(8) Sinochem also reiterated its arguments with regard to the choice of Argentina as an
    analogue country. The Commission has already given adequate reasons for this choice in
    recitals (13) and ( 14) of the provisional Regulation.
 ---pagebreak--- (9)   Therefore, the Council maintains that the choice of Argentina as an analogue country has
      been made in an appropriate and not unreasonable manner. Recitals (13) and (14) of the
      provisional Regulation are confirmed.
(10)  Consequently, for the purpose ol definitive findings, the Council confirms the normal
      value established on the basis of Argentinian domestic prices, as indicated in recital (15)
      of the provisional Regulation.
2.    Export prices
(11)  No new arguments were presented regarding the establishment of export prices.          The
      findings set out in recitals ( 16) to ( 19) are therefore confirmed.
3.    Comparison
( 12) No new arguments were presented concerning the method followed by the Commission in
      the comparison between normal value and export price. The method set out in recital (20)
      of the provisional Regulation is, therefore, confirmed.
4.    Dumping margin
(13)  No further arguments were submitted on the dumping margin determination by the
      Commission in the provisional Regulation, which consisted of a single dumping margin
      corresponding to the weighted average dumping margins of both cooperating and non
      cooperating exporters.     The dumping margin of 62.6% as indicated in recital (21) of the
      provisional Regulation is, therefore, confirmed.
 ---pagebreak--- I.   Preliminary Remarks
(14) In its provisional Regulation, the (Commission based its calculation on injury on the price
     effect o f the dumped imports from China. In this regard, the Commission only considered
     the part of the market in which Community produced furfuraldehyde competed with the
     furfuraldehyde imported from China. The Commission excluded imports originating from
     a third country whose name cannot be disclosed for reasons of confidentiality.        These
     imports are based on a long term exclusive supply contract between the producer in the
     third country and a company linked to the major Community importer, which covers more
     than 80% o f the furfuraldehyde purchased by this Community importer. The existence of
     this contract leaves the Community producer with only a very low potential volume of
     business with this importer. H i e imports from the third country in question were therefore
     considered to occur in a captive market.
(15) Sinochem argued that there is no captive market as the complainant sells its entire
     production on the open market and the importer in question is by far the largest potential
     purchaser of furfuraldehyde from the Community industry since it accounts for the bulk of
     furfuraldehyde consumption within the Community.          Therefore, by excluding imports
     from the third country the evaluation of consumption and o f the respective market shares
     would have differed.
 ---pagebreak--- (16) The Commission carried out a further inquiry in particular with regard to the specific
     contractual relationship between the producer in the third country and a company linked to
     the Community importer.      This contractual relationship referred to in recital (14) has
     existed since the 1960s and constituted in the investigation period the basis o f over 80% o f
     the furfuraldehyde purchased by the importer in question. The elements available at the
     provisional determination stage led the Commission to conclude that a captive market
     existed. Having now more information on this issue and after further analysis, there are
     doubts whether the situation described above could be qualified with certainty as a captive
     market.     Under   these circumstances, the Commission         has decided to take       into
     consideration the imports from this third country in its assessment o f the injury caused to
     the Community producer.
 ---pagebreak--- 2.   M a r k e t share of the Community production
(17) Necessarily, compared with the provisional findings, when the imports from the third
     country are included, Community consumption increases and the market share of the
     dumped imports and of the Community producer's sales while showing an unchanged
     trend in their developments over the last years, decreases. In particular, the market share
     of the Community producer amounts to 6.3% in the investigation period. This apparently
     low level is explained by the fact that the importer mentioned above (recitals 14 and 15)
     accounts for approximately 75% o f the Community consumption o f furfuraldehyde and as
     also explained above most of the furfuraldehyde from the third country is imported under
     special conditions, so that these imports constitute a market segment separate from that
     served by Ihe Community producer.
3.   Market shares on the dumped imports
(18) When furfuraldehyde imports from the third country are included, the dumped imports
     from China show, in volume terms between 1989 and the investigation period, a stronger
     decrease (31.7%) than that of the total Community consumption (23.7%). This situation
     reflects the fact that between 1989 and 1992 the market share of imports from the third
     country referred to in recital (14) increased; between 1992 and the investigation period
     this trend however, was reversed and the market share of the Chinese imports increased
     from 13.7% to 15.2%.        Furthermore, it should be noted that the imports from China
     represent more than double of Ihe sales volume of the Community producer and are by far
     Ihe largest in volume after those from the third country in question.
 ---pagebreak--- 4.   Price of dumped imports
(19) As explained in recital 28 of the provisional Regulation import prices of furfuraldehyde
     originating in China were found to undercut the prices of the Community producer by
     24.4% and to have dropped by more than 30% during the investigation period.              This
     calculation was based on the CI F prices paid to Chinese exporters by the importers which
     co-operated. Sinochem, without contesting this calculation argued that the Commission
     has wrongly included in its injury calculation the resales of furfuraldehyde, allegedly
     made by the importer purchasing primarily in the third country.            This argument is
     incorrect.
(20) As no other argument was brought forward concerning the prices of dumped imports, the
     findings in recital (28) of the provisional Regulation are confirmed.
5.   Situation of the Community Industry
(21) No further argument concerning injury, in particular on the situation of the Community
     industry, has been received. In particular the financial losses incurred by the Community
     producer have not been contested by the Chinese exporters. The findings of recitals (29),
     (30) and (32) to (35) are, therefore, confirmed.
6.   Conclusions on injury
(22) In conclusion, the injury findings in recital 36 of the provisional Regulation are confirmed,
     in view, in particular, of the heavy financial losses suffered by the Community producer as
     a consequence of the strong decrease of furfuraldehyde prices on the Community market.
F.   CAUSATION
I.   Effect of the dumped imports
(23) As no argument has been submitted, the provisional findings in recital (37), with regard to
     the effect of Ihe dumped imports, are confirmed.
 ---pagebreak--- 2.   Other factors
;24) With regard to causation of injury, Sinochem argued that the Commission, by excluding
     imports originating in the third country in question, from the assessment of injury had
     ignored an important "other factor" causing injury.      It alleges that these imports, which
     would amount to more than four times the volume ol imports from the People's Republic
     of China, were made available to the importer mentioned above (recitals 14 and 15) at a
     very low price.
(25) As regards the imports from the third country, they have, over the last 30 years provided
     Ihe major proportion of the furfuraldehyde consumed in the Community. These imports,
     however, benefited a single, albeit major importer, which, for the reason explained above
     (recitals 14 and 15) did almost no business with the Community producer.          Despite that
     situation Ihe Community producer was able to maintain its prices, its market share and
     remained largely profitable until 1991. Il was only starting from 1992 when the price for
     furfuraldehyde imported from China dropped abruptly, that the Community producer was
     compelled to cut its domestic sales prices and follow this downward trend in order to
     preserve ils market share.     Under these conditions, it can be excluded that the imports
     from the third country in question are the cause of its precarious situation.        Regarding
     resales of furfuraldehyde imported by that importer and the possible effect of such
     transactions on the price level in ihe Community, the Commission established that this
      importer, in addition to furfuraldehyde from the third country referred to in recital (9), also
     bought Chinese furfuraldehyde and that a certain quantity of the imported material was
     resold in the Community.       The prices of these resales, however, were significantly and
     consistently higher than those of Ihe Chinese exports and did not undercut those charged
      by the Community producer. The Council concludes therefore that these resales cannot be
     considered a factor which eliminates the injurious effect of the Chinese exports.
                                                 10
 ---pagebreak--- (26) A s no other argument has been submitted on this issue and since the changes in the market
     share figures do not alter the trends in market developments, the conclusions in recitals
     ( 3 8 ) to (11 ) o f the provisional Regulation are c o n f i r m e d and it is therefore maintained that
     Ihe l o w priced imports from the People's Republic o f C h i n a w h i c h brought about a serious
     price depression starting in 1992, have, taken in isolation, caused the material                                        injury
     suffered by the C o m m u n i t y industry.
<;.  C O M M U N I T Y INTEREST
(27) Some interested parlies argue that the C o m m u n i t y producer does not have the capacity to
     supply Ihe C o m m u n i t y market. Furthermore, an importer o f furfuraldehyde w h i c h was set
     up at the b e g i n n i n g o f 1994 w i t h Ihe aim o f p r o d u c i n g f u r f u r i l a l c o h o l , argued that the
     a n t i - d u m p i n g duty on furfuraldehyde imports from China w o u l d make the p r o d u c t i o n o f
     f u r f u r i l alcohol unprofitable for itself as il cannot rely on an agreement o f an exclusive and
     cheap supply o f furfuraldehyde from the third country in question, as the other importer
     processor is able to do.
(28) The C o u n c i l is aware I hat the C o m m u n i t y is not self-sufficient in f u r f u r a l d e h y d e , but
     t a k i n g into account Ihe number o f suppliers from third countries, it can be expected that no
     supply shortage w i l l occur and price c o m p e t i t i o n          w i l l continue to be considerable.
     Furthermore, the C o u n c i l points out Ihal al Ihe l i m e when the new processing c o m p a n y
     was sel up in January 1994 the present a n t i d u m p i n g proceeding had already been initiated
     f o l l o w i n g Ihe note published on 31 July, 1993. T h i s fact should have been k n o w n by the
     company            in question, w h i c h should have taken into account                    the p o s s i b i l i t y that an
     a n t i d u m p i n g duty might be levied on its principal raw material as a proceeding had already
     been initiated. In a d d i t i o n , the disadvantage for the importer/processor in question has to
     be viewed against (he background o f the threat o l the disappearance o f the sole producer
     o f furfuraldehyde still operating in the C o m m u n i t y .       T h i s C o m m u n i t y producer is m a i n l y
     oriented to Ihe o i l r e f i n i n g industry market      for w h i c h a sale and t i m e l y supply                      of
     furfuraldehyde can be considered o f strategic importance. Finally should this c o m p a n y be
     shut d o w n , at leasl 80 employees w i l l become redundant in an area w i t h one of the highest
     u n e m p l o y m e n t rates in the C o m m u n i t y .
 ---pagebreak---      N o other arguments were made w i t h respect to C o m m u n i t y interest.                             It can therefore be
     considered as sel oui in recitals (12) lo (49) o f the provisional Regulation Ihal it is in Ihe
     ( ' o i n m u n i l y inleicsl lo impose d e f i n i t i v e a n t i - d u m p i n g measures lo eliminate Ihe injurious
     effects o f d u m p e d imports.
II.   UNDERIAKLNC;
(29)   Sinochem has proposed a price underlakiiig coupled w i t h a c o m m i t m e n t not lo exceed a
     m a x i m u m quantity o f export o f furfuraldehyde.                         A c c e p t i n g such an undertaking w o u l d
     i m p l y granting i n d i v i d u a l treatment lo Sinochem.                   However, S i n o c h e m , as a state-owned
     company, does not                meet Ihe requirements to be granted                            individual  treatment for a
     company in a non-market economy.                       Furthermore, a number o f violations o f undertakings
     by Chinese exporters have taken place in recent years.                                 In particular, Sinochem itself has
     previously breached an underlakiiig. The offer o f an undertaking is therefore rejected.
I.    DUTY
( W)  Provisional measures consisted o f an a n t i - d u m p i n g duty in the form o l a specific amount
     per tonne.            T h i s was imposed al the i n j u r y e l i m i n a t i o n level determined, since this was
     lower than the d u m p i n g margin established, as set out in recital (51) o f the p r o v i s i o n a l
     Regulation.
     No new arguments were put forward lo contradict this approach. The relevant findings as
     expressed in recitals (21 ) and (50) o f the provisional Regulation are therefore c o n f i r m e d .
     A c c o r d i n g l y Ihe amount o f Ihe d e f i n i t i v e a n t i - d u m p i n g duty should be the same as the
     amount o l the provisional duty.
                                                                  12
 ---pagebreak--- .1.    ( O l ,LEC 1l( )N ( )E 11 IE P l « ) V I S I O N A I , DUTY
(31 )  In view of Ihe dumping margin established and of the seriousness ol the injury caused to
       Ihe ( 'ommunily industry, it is considered necessary that the amounts secured by way of the
      provisional anti-dumping duty should be definitively collected,
HAS A D O P I I I ) THIS R I X i U L A T I O N :
                                                  Article 1
 1.   A definitive anti-dumping duly is hereby imposed on imports ol furfuraldehyde falling
      within CN code 2932 12 00 and originating in the People's Republic o f China.
2.    The rate of the duly applicable is \X'\\ 352 per tonne.
3.    I Inless otherwise specified, the provisions in force concerning customs duties shall apply.
                                                  Article 2
      The amounts secured by way of Ihe provisional anti-dumping duty pursuant to Regulation
      (F,C) N" 1783/94 shall be definitively collected in full.
                                                  Article 3
      This Regulation shall enter into force on Ihe day following its publication in the Official
      Journal of the Furopean Communities.
      This Regulation shall be binding in its entirety and directly applicable in all Member
      Slates.
Done al Brussels,
 ---pagebreak---                                                                      ISSN 0254-1475
                                                              COM (94) 683 final
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