CELEX: 51998PC0059
Language: en
Date: 1998-02-12
Title: Proposal for a Council Regulation (EC) imposing a definitive anti-dumping duty on imports of certain footwear with uppers of leather or plastics originating in the People's Republic of China, Indonesia and Thailand

COMMISSION OF THE EUROPEAN COMMUNITIES
                                                Brussels, 12.02.1998
                                                COM(1998) 59 final
                                                98/ 0032 (ACC)
                                 Proposal for a
                       COUNCIL REGULATION (EC)
imposing a definitive anti-dumping duty on imports of certain footwear with
 uppers of leather or plastics originating in the People's Republic of China,
                           Indonesia and Thailand
                        (presented by the Commission)
 ---pagebreak---  ---pagebreak---                               EXPLANATORY MEMORANDUM
 1. The Commission, by way of a Notice published in the Official Journal of the
     European Communities on the 22 February 1995, initiated a proceeding concerning
     imports of certain footwear with uppers of leather or plastics originating in the
     People's Republic of China, Indonesia and Thailand and commenced and
     investigation.
2. Investigations were carried out at the premises of the exporting producers, importers in
     the Community and the Community producers. The first results of these
     investigations, communicated to the Advisory Committee in September 1996., showed
    the existence of dumping and resultant injury to the Community industry. The
     investigations, taking into account all the interests involved, with particular regards to
     the interests of the distributors, also led to the conclusion that it was in the Community
     interest to take measures.
3. However, in the light of the fact that Council Regulation (EC) No 519/941 had
     introduced quantitative restrictions on certain types of footwear originating in the
    People's Republic of China, including those concerned by the present proceeding, and
     after information of the Advisory Committee, it was considered that an analysis of the
    effects of the quota on the imports concerned was necessary.
4. The additional analysis established that, although the quota had in 1995 and 1996 the
    foreseeable effect of limiting the volume of imports concerned originating in the
    People's Republic of China, no significant evolution of the corresponding import price
    could be noted. In view of the persistence of the injurious price practices, it was
    concluded that the taking of measures was warranted.
5. The measures proposed are in the form of a variable duty based on a minimum price.
    The level of the measures corresponds to the injury elimination margins, as these were
    found to be lower than the dumping margins. The minimum price- amounts to ECU 5.7
    per pair for the three countries concerned.
6. The attached proposal for a Council Regulation contains more detailed information as
    regards the data on the basis of which the calculations of the proposed minimum price
    have been established.
7. The interested parties were informed of the essential facts and considerations on the
    basis of which the Commission might decide to propose to the Council the imposition
    of anti-dumping duties, and were given an opportunity to comment. The comments
    were taken into account, where appropriate.
8. In accordance with Article 9 of Council Regulation (EC) No 384/96, the Commission
    therefore proposes that the Council impose definitive anti-dumping duties on imports
    of certain footwear with uppers of leather or plastics originating in the People's
    Republic of China, Indonesia and Thailand.
 OJ L67, 10.3.1994, p 89.
 ---pagebreak---                                         Proposal for a
                        COUNCIL REGULATION (EC) No                   /98
                                      of
    imposing a definitive anti-dumping duty on imports of certain footwear with
     uppers of leather or plastics originating in the People's Republic of China,
                                 Indonesia and Thailand
THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty establishing the European Community,
Having regard to Council Regulation (EC) No 384/96 of 22 December 1995 on
protection against dumped imports from countries not members of the European
Community1 and in particular Article 9 (4) thereof,
Having regard to the proposal submitted by the Commission after consulting the
Advisory Committee,
Whereas:
                                   A.      PROCEDURE
(1)   On 22 February 1995, the Commission announced by means of a notice
      published in the Official Journal of the European Communities2\ the initiation
      of an anti-dumping proceeding with regard to imports into the Community of
      certain footwear with uppers of leather or plastics originating in the People's
      Republic of China, Indonesia and Thailand and commenced an investigation.
      OJ L 56, 6.3.1996, p. 1. Regulation as amended by Regulation (EC) No 2331/96 (OJ L 317,
      6.12.r996, p. 1).
      OJC45, 22.2.1995, p. 2.
                                                c*_~
 ---pagebreak--- (2) The proceeding was initiated as a result of a complaint lodged by the European
    Confederation of the Footwear Industry (CEC) on behalf of national footwear
    federations whose complainant members (188 in total) accounted for a major
    proportion (namely 53%) of the Community production of the footwear subject
    to this investigation. The complaint contained evidence of dumping of the said
    product and of material injury resulting therefrom which was considered
    sufficient to justify the initiation of a proceeding.
(3) The Commission officially notified the exporters and importers known to be
    concerned and their representative associations, as well as the representatives of
    the exporting countries involved, of the initiation of the proceeding. All parties
    directly concerned were given the opportunity to make their views known in
    writing and to request a hearing within the time-limit set out in the notice of
    initiation.
(4) The authorities of the exporting countries concerned as well as a number of
    exporters, Community importers, their representative associations and trade
    associations made their views known in writing. All parties who so requested
    within the time limit were granted a hearing.
 ---pagebreak--- (5)  In view of the large number of Community producers which were party to the
     complaint, and in conformity with Article 17 of Council Regulation (EC) No
     384/963 (hereinafter referred to as "the Basic Regulation"), it was considered
     appropriate to limit the investigation to a number of these producers which
     could reasonably be investigated within the time available. In this context, the
     questionnaires used to collect data and thus permit an evaluation of any injury to
     the Community industry, were addressed to the national producers' federations
     in the Community and to 89 of the 188 Community producers expressly
     supporting the complaint.       Of these 89 Community producers, 87.submitted
     complete and meaningful replies. For verification purposes, given the difficulty
     in carrying out detailed on-the-spot investigations in respect of the above
     mentioned 87 Community producers (hereinafter referred to as "the first
     group"), 15 of those Community producers (hereinafter referred to as "the
     verification sample") were selected and their responses subjected to in-depth,
     on-the-spot verifications.
(6)  The Commission also sent questionnaires to the following:
     - the Chinese, Indonesian and Thai producers/exporters listed in the complaint,
    - the Hong Kong exporters listed in the complaint,
    - the authorities of the exporting countries concerned,
    - the exporters who, while not listed in the complaint, made themselves known
        and requested a questionnaire.
    OJ L 56, 6.3.1996, p. 1. Regulation as amended by Regulation (EC) No 2331/96 (OJ L 317,
    6.12.1996, p. 1).
 ---pagebreak---       In total, 13 replies to the questionnaire were received from producers/exporters
      in Indonesia, 17 from producers/exporters in the People's Republic of China and
      three from producers/exporters in Thailand.
 (7)  In view of this number of replies, 33 in total, the Commission proposed, in
      accordance with Article 17 of the Basic Regulation, to limit its investigation to a
      reasonable number of cooperating producers/exporters representing the largest
      representative volume of production which could reasonably be investigated
      within the time available.      Agreement was reached with the cooperating
      producers/exporters on the selection of a sample of four producers'/exporters
      from the People's Republic of China and seven from Indonesia. Given that, in
     total, only three producers/exporters from Thailand cooperated, all three were
      investigated.
(8)  In addition, the Commission sent questionnaires to all known importers.
     Replies were received from 14 such importers.
(9)  The Commission sought and verified all the information it deemed necessary for
     the purpose of a determination of dumping and injury, and carried out
     investigations at the premises of the following companies:
     (a) Community producers
(10) The verification sample referred to in recital 5, consisted of a total of 15
     Community producers situated in France, Italy, Portugal, Spain and the United
     Kingdom, which are all Member States with a significant production of the
     footwear under investigation. Together these Member States accounted for 89%
     of total Community production of the product in question in 1994, i.e. the
     investigation period as defined in recital 13.
 ---pagebreak--- The 15 Community producers in the verification sample requested that their
identities be kept confidential on the grounds that some of them had been
threatened with commercial retaliation by certain customers who were at the
same time importers and major retailers in the Community. The investigation
confirmed that certain Community producers had been subjected to severe
commercial pressure to stop cooperating in the investigation and to withdraw
their support for the complaint. Accordingly, it was considered appropriate not
to disclose the names of these 15 Community producers.
The representatives of certain exporters and importers have criticised the
granting of such anonymity on the grounds that complaining domestic industries
should be prepared to face any kind of "commercial retaliation". In this respect,
it has to be stressed that the anonymous treatment was granted because the
threat exerted went far beyond what could be considered as "normal" in
commercial relations.     The limited protection so granted was, moreover,
considered particularly appropriate in the context of a sampling exercise, where
a few selected Community producers are particularly exposed as they represent,
and act for the benefit of, a much larger group.        The identities of the 87
Community producers in the first group were, however, disclosed to the parties
having so requested.
(b) Unrelated importers/distributors
-    Atlex SA, Rouen (F),
     British Shoe Corporation Ltd, Leicester (UK),
     Chausseurop SA, Le Havre (F),
     Groupe André SA, Paris (F),
     Intermedium BV, Hoofddorp (NL).
 ---pagebreak---       (c) Related importer
          Nick's Sports and Leisure Footwear Ltd, Warrington (UK).
      (d) Exporters/producers in Indonesia
          PT Dragon,
          PT Emperor Footwear Indonesia,
          PT Fortune Mate,
          PT Golden Adishoes,
          PT Indosepamas Anggun / PT Primashoes Ciptakreasi,
          PT Kingherlindo.
     (e) Exporters/producers in Thailand
          Bangkok Rubber,
     -    CK Shoes,
          PSR Footwear.
     (f) Exporter in Hong Kong
          Grosby (China) Ltd.
(11) Parties were informed of the essential facts and considerations on the basis of
     which it was intended to recommend the imposition of definitive anti-dumping
     duties. They were also granted a period within which to make representations
     subsequent to the disclosure.
 ---pagebreak--- (12) The parties' representations were considered, and the Commission altered its
     conclusions where appropriate.
(13) The investigation of dumping covered the period from 1 January 1994 to 31
     December 1994 (hereinafter referred to as "the investigation period").          The
     examination of injury covered the period from 1991 to the investigation period.
     In addition, for the purpose of the additional examination referred to in recitals
     138 to 143, certain developments occurred in 1995 and 1996 were also taken
     into account.
     The geographical scope of the investigation was the Community as constituted
     at the time of initiation of the proceeding, that is to say all 15 Member States.
(14) Owing to the volume and complexity of the information gathered from many
     different sources and, in particular, in the light of the numerous types of
     footwear covered by the investigation and the need to carry out an additional
     examination to evaluate the effects of the Community-wide quota imposed in
     the course of the investigation period on imports of the footwear concerned
     originating in the People's Republic of China, the investigation exceeded the
     normal duration provided for in Article 6 (9) of the Basic Regulation. Pursuant
     to Article 24 of the Basic Regulation this investigation is indeed not subject to
     the mandatory time limits provided for in Article 6 (9).
 ---pagebreak---      B. PRODUCT UNDER CONSIDERATION AND LIKE PRODUCT
1.   Description of the product under consideration
(15) The product under consideration in this proceeding is "non-sports" footwear, not
     covering the ankle, with insoles of a length of 24 cm or more:
     •    with outer soles of rubber, plastics or composition leather and uppers of
          leather, falling within CN codes ex 6403 99 93 (if not identifiable as men's
          or women's footwear), ex 6403 99 96 (if for men) and ex 6403 99 98 (if for
          women),
     •    with outer soles of rubber or plastics and uppers of plastics, for women
          (falling within CN code ex 6402 99 98).
     It should be noted that no footwear for use in sporting activities, with a single or
     multi-layer non injected moulded sole, manufactured from synthetic materials
     specially designed to absorb the impact of vertical or lateral movements and
     with technical features such as hermetic pads containing gas or fluid,
     mechanical components which absorb or neutralise impact or materials such as
     low-density polymers, which can be classified for customs purposes in all the
     above mentioned CN codes, is covered by this proceeding.
 ---pagebreak--- (16) For practical purposes and in order to appropriately gather and handle the data
     collected, each of the above mentioned CN codes was considered as one
     "category". Four categories were thus formulated as follows:
     Category 1 :     CN code ex 6403 99 93 (i.e. "unisex" adults - leather uppers)
     Category 2:      CN code ex 6403 99 96 (i.e. men's - leather uppers)
     Category 3:      CN code ex 6403 99 98 (i.e. women's - leather uppers)
     Category 4:      CN code ex 6402 99 98 (i.e. women's - plastic uppers)
(17) Although the footwear falling within any of the above categories can cover a
     wide range of styles and types, as well as be produced by different production
     methods, their essential characteristics, their uses and consumer perception
     thereof remain basically the same.         Therefore, for the purposes of this
     proceeding and in accordance with consistent Community practice, they were
     regarded as forming one product.
2.   Like product
(18) As regards the footwear produced and sold domestically in Indonesia and
     Thailand, where such sales had taken place and information in that respect had
     been made available, the investigation showed that such products were either
     alike in all respects to, or closely resembling, those exported to the Community
     from the countries in question.
 ---pagebreak--- (19) Similarly, footwear subject to the current investigation produced in Indonesia
     and exported to the Community was considered to be a like product to the
     footwear produced and exported from the People's Republic of China to the
     Community. This is particularly relevant in the light of the fact that Indonesia
     has been used as the analogue country for the determination of normal value for
     the People's Republic of China as set out in recitals 42 and 43.
(20) The investigation also established that the footwear produced in the Community
     and that imported from the three countries concerned were similar as far as their
     overall design, general characteristics and uses are concerned. While there may
     be some minor differences between the product imported from the countries
     concerned and the Community production, these differences do not affect the
     substantial characteristics, properties, perception and uses of the product.
(21) In this respect, certain parties have claimed that imported and Community-
     produced footwear belong to different product segments which do not compete
     with each other. They argued that footwear, imported at a price higher than the
     average, would not be alike, within the meaning of Article 1 (4) of the Basic
     Regulation, to footwear imported below or at the average price.
                                            10
 ---pagebreak--- (22) This issue has been the source of repeated and seemingly contradictory
     statements by importers, some of them claiming that they import low quality
     footwear that they simply could not find in the Community, while other claimed
     that they order in the People's Republic of China, Indonesia or Thailand
     sophisticated    products  manufactured     in  accordance  with    their  own
     specifications, design and sometimes raw materials. This contradiction shows
     that the People's Republic of China, Indonesia and Thailand are in fact capable
     of producing, and do indeed produce and export to the Community, the full
     range of products on offer on the market. The argument that footwear iniported
     from the three countries concerned and Community-produced one would belong
     to different product segments cannot therefore be accepted.
(23) Accordingly, footwear subject to this proceeding produced in the People's
     Republic of China, Indonesia and Thailand and exported to the Community was
     considered to be a like product to footwear produced in the Community within
     the meaning of Article 1 (4) of the Basic Regulation.
 ---pagebreak---                                    C.    DUMPING
1. General
(24) It has been the consistent practice of the Institutions to consider related
     producers/exporters, or producers/exporters within the same group, as one
     economic entity and to establish a single dumping margin (and, where
     appropriate, a single duty) for those producers/exporters. This practice has been
     adhered to in this proceeding. Calculating individual dumping margins and
     anti-dumping duty rates in such circumstances might encourage circumvention
     of any anti-dumping measures by enabling related producers/exporters to
     channel their exports to the Community through the related producer/exporter
     (or the producer/exporter within the same group) with the lowest duty.
2.   Indonesia
     (a) Sampling
(25) As mentioned in recital 7, sampling as provided for in Article 17 of the Basic
     Regulation was used and seven Indonesian producers/exporters were selected as
     the sample, in agreement with the cooperating producers/exporters.
(26) In accordance with Article 9 (6) of the Basic Regulation it was agreed with the
     other Indonesian producers/exporters which cooperated with the investigation
     but which were not included in the sample, that they would be attributed the
     weighted average dumping margin established for the producers/exporters in the
     sample.
                                           12
 ---pagebreak--- (27) The producers/exporters selected in the sample and which fully cooperated with
      the investigation were informed that they would be given their own dumping
      margin (and, where appropriate, their own individual duty rate).
      (b) Normal value
(28) In order to establish normal value for each of the seven Indonesian
      producers/exporters in the sample, it was first determined whether the total
      domestic sales of the footwear concerned by each producer were representative
      when compared to their total sales of the footwear concerned exported to the
      Community. In accordance with Article 2 (2) of the Basic Regulation, domestic
      sales are normally considered representative when the total domestic sales
      volume of the like product sold by each producer represents at least 5% of its
      sales volume of the product under consideration exported to the Community. A
      further representativity test was then carried out on a model by model basis.
(29) Only one of the cooperating Indonesian producers/exporters in the sample had
      sufficient domestic sales of two models of the like product in the ordinary
     course of trade in the investigation period within the meaning of
     Article 2 (2) and (4) of the Basic Regulation to enable normal value to be
     calculated on such a basis. Given that all these sales were profitable, normal
     value was therefore calculated on the basis of the prices paid or payable on the
     domestic market for all these sales. Normal value for this company's other
     models was constructed, in accordance with article 2 (3) and (6) of the Basic
     Regulation, by adding to their manufacturing costs, the selling general and
     administrative expenses (hereinafter referred to as "SG&A") and profit found
     for the two models referred to immediately above.
 ---pagebreak--- (30) The other six Indonesian producers/exporters in the sample did not have
      sufficient domestic sales of the footwear concerned during the investigation
      period within the meaning of Article 2 (2) of the Basic Regulation.        It was
     therefore considered appropriate to construct normal value on the basis of
     Article 2 (3) of the Basic Regulation by adding to the manufacturing cost of
     each model exported to the Community a reasonable amount for SG&A and for
     profit. In this respect, it was considered, in accordance with Article 2 (6) (a) of
     the Basic Regulation, that the amounts of SG&A and profit of the
     producer/exporter which did have sufficient domestic sales (see preceding
     recital) should be used to construct normal value for the six other Indonesian
     producers/exporters in the sample.
(31) One producer/exporter which had agreed to be included in the sample, did not
     provide costs by model, despite several requests to do so. Since it was therefore
     impossible to calculate domestic profitability and constructed normal values for
     this producer/exporter, facts available as set out in recital 41 were applied in
     establishing the dumping margin for this producer/exporter in accordance with
     Article 18 of the Basic Regulation.
     (c) Export price
(32) Exports for six of the seven producers/exporters included in the sample were
     made directly to independent importers in the Community. The export prices of
     these producers/exporters were established by reference to the prices paid or
     payable for the footwear sold, in accordance with Article 2 (8) of the Basic
     Regulation. The export price of one Indonesian producer/exporter included in
     the sample, which sold via a related company in Taiwan, had to be adjusted (see
     recital 36).
                                           14
 ---pagebreak---       (d) Comparison
(33) For the purpose of ensuring a fair comparison between normal value and the
     export prices of the producers/exporters in the sample, due allowance in the
     form of adjustments was made in accordance with Article 2(10) of the Basic
     Regulation for differences affecting price comparability, whenever these were
     claimed and duly justified.      In consequence, adjustments were made, where
     appropriate, for differences in transport, insurance, handling, loading and
     ancillary costs, credit costs, bank charges, guarantees/warranties and levels of
     trade.
(34) In the case of one of the Indonesian producers/exporters in the sample, a level of
     trade allowance was claimed. The producer/exporter contended that such an
     allowance was warranted because its export sales to the Community were made
     in large quantities to distributors and wholesalers, whilst its domestic sales were
     allegedly made in small quantities to retailers and traders.         Upon further
     examination during the on-the-spot investigation, it was established that the
     domestic    purchasers    were    in fact  also distributors     and   wholesalers.
     Consequently, this claim was rejected, since normal value and export price were
     at the same level of trade and no adjustment was therefore required or
     warranted.
                                           15
 ---pagebreak--- (35) An allowance was also claimed by two of the Indonesian producers/exporters in
      the sample as their export sales were, in contrast with their domestic sales,
      allegedly made on an OEM brand basis. This was verified in detail by the
      Commission during the on-the-spot investigations and it was clearly established
      that, for export sales, there were distinct sales channels with consistently lower
      prices for OEM customers. Since the difference in level of trade for OEM
      customers could not be quantified because of the absence of the same sales
      channels on the domestic market in Indonesia, a special adjustment has been
     granted, in accordance with Article 2 (10) (d) (ii) of the Basic Regulation, by
     deducting from the own brand constructed normal values, an amount
     corresponding to 10% of the gross profit margin.
(36) One Indonesian producer/exporter sold footwear for export to the Community
     through a related trading company located in Taiwan. It has been determined
     that because of the relationship between the two companies, the prices charged
     by the producing company to the trading company are not reliable. To establish
     a reliable export price to the Community from Indonesia, the price charged from
     Taiwan to the Community was adjusted to an ex-Indonesia level. As the related
     trader's functions can be considered similar to those of a trader acting on a
     commission basis, an adjustment of 5%. based on information supplied by the
     company itself, was therefore deducted from the prices charged by the related
     company to independent customers in the Community.                This figure was
     considered reasonable given the degree of the related trader's involvement in the
     selling activities of the exporter. No information was provided which would
     indicate that the use of this figure is inappropriate. Thus, the export prices were
     adjusted accordingly.
                                             16
 ---pagebreak---      (e) Dumping margins
(37) To calculate the dumping margin of each Indonesian producer/exporter in the
     sample, a comparison was made between weighted average normal values and
     the weighted average export prices of the producers/exporters, since it was
     clearly established that there was no pattern of export prices which varied
     significantly between either different purchasers, regions or time periods, in
     accordance with Article 2(11) of the Basic Regulation.
(38) The comparison showed the existence of dumping of the footwear concerned
     during the investigation period by all of the producers/exporters included in the
     sample. Because of the relationship between P.T. Indosepamas Anggun and
     P.T. Primashoes Ciptakreasi, these producers/exporters were treated as one
     company and a single margin calculated therefor, in accordance with the
     Institutions' established practice as set out in recital 24.
     The individual dumping margins for these producers/exporters, thus established
     and expressed as a percentage of the CIF price at Community frontier are:
        P.T. Dragon                                                        5.9%
        P.T. Emperor Footwear                                              2.0%
        P.T. Fortune Mate                                                14.9%
        P.T. Golden Adishoes                          '..                18.6%
        P.T. Indosepamas Anggun/P.T. Primashoes Ciptakreasi              12.7%
                                           17
 ---pagebreak--- (39) The dumping margin for the cooperating producers/exporters which were not
     selected was based on the weighted average margin of the individual dumping
     margins established for each producer/exporter in the sample, with the exception
     of the producer/exporter referred to in recital 31 (P.T. Kingherlindo) for which
     facts available were applied. This company's dumping margin was disregarded
     in establishing the weighted average margin for the sample in accordance with
     Article 9 (6) of the Basic Regulation. The dumping margin thus established and
     expressed as a percentage of the CIF price at Community frontier was 12.3%.
     The producers/exporters to which this margin applies are:
     •    P.T. Bosaeng Java
     •    P.T. Karet Murni Jelita
     •    P.T. Koryo International
     •    P.T. Lintas Adhikrida
     •    P.T. Universal Wisesa
     •    P.T. Volmacarol
(40) For those producers/exporters in Indonesia which neither replied to the
     Commission's questionnaire nor made themselves known, the dumping margin
     has, in accordance with Article 18 of the Basic Regulation, been determined on
     the basis of the facts available. In view of the unusually high degree of non-
     cooperation in this case on the part of Indonesian producers/exporters (more
     than 74%o), the absence of other reliable information from independent sources
     and in order to avoid rewarding non-cooperation, it was considered appropriate
     to base the residual dumping margin on the highest margin of dumping alleged
     in the complaint, i.e. 50%.
 ---pagebreak---  (41) In determining the dumping margin for the producer/exporter referred to in
       recital 31 (P.T. Kingherlindo), it was considered that the partial cooperation it
       had shown should be distinguished from the total non-cooperation of the
       producers/exporters referred to in recital 40. Accordingly, it was decided that
       the margin calculated for this producer/exporter should be lower than the margin
       calculated for the non-cooperating producers/exporters.         Its margin was
       therefore based on the arithmetic average of the residual margin and the
       weighted average margin calculated for the sample, i.e. 31.1%.
3.     People's Republic of China
       (a) Choice of analogue country
(42) In accordance with Article 2 (7) of the Basic Regulation, normal value was
      based on data collected from producers in a market economy country (the
       "analogue country").
(43) In the complaint, Thailand was proposed as the most appropriate analogue
      country. However, the choice of this country was opposed by a number of
      importers as well as the Chinese producers/exporters on the grounds that the
      levels of economic development in the People's Republic of China and Thailand
      were dissimilar. Two trade bodies, the Foreign Trade Association (FTA) and
      the Federation of the European Sporting Goods Industry (FESI) put forward
      Indonesia, as did the Chinese producers/exporters. A number of other countries
      were also proposed at various stages of the proceeding by certain interested
      parties without, however, providing evidence justifying why any of these
      countries should be given preference to another.
 ---pagebreak---      Having examined the information available in respect of all the countries
     suggested, it was finally considered that, in accordance with Article 2 (7) of the
     Basic Regulation, Indonesia was a reasonable choice of analogue country as
     there appeared to be a large number of suppliers in that market and a certain
     degree of similarity between the production processes employed there and in the
     People's Republic of China.       Furthermore, no significant differences were
     apparent as regards the access to raw materials.       In addition, sales on the
     Indonesian domestic market were also representative when compared to exports
     from the People's Republic of China to the Community. Moreover, Indonesia
     had been proposed by the Chinese producers/exporters themselves and no
     objection was raised by the Community producers on the Commission's
     intention in this respect.
     (b) Individual treatment
(44) In accordance with Article 9 (5) of the Basic Regulation, it is the Institutions'
     policy to calculate country-wide dumping margins for non market-economy
     countries, except for those producers/exporters who can demonstrate that they
     should be granted individual treatment, i.e. that their export prices should be
     established separately and their dumping margin be calculated individually.
                                          20
 ---pagebreak--- (45) All of the Chinese producers/exporters which replied to the Commission's
     questionnaire requested individual treatment. In examining the merits of these
     claims, the Commission sought to verify whether the producers/exporters which
     cooperated in this proceeding enjoyed a degree of legal and factual
     independence from the State, comparable to that which would prevail in a
     market economy country and which would justify a departure from the principle
     of determining a single country-wide dumping margin. To this end, detailed
     questions regarding the ownership, management, control, determination of
     commercial and business policies were addressed to the producers/exporters.
     None of the responding producers/exporters, with the sole exception of Grosby
     (China) Limited, were able to show, to the satisfaction of the Commission, that
     their operations were sufficiently independent from the Chinese Authorities to
     qualify for individual treatment. Their requests were consequently rejected and
     the producers/exporters informed accordingly.
(46) Grosby (China) Limited was a legal entity incorporated under Hong Kong law
     but manufacturing the like product m a production facility in the People's
     Republic of China. No legal entity existed in the People's Republic of China
     but the capital goods physically present there were included as assets in the
     accounts of the Hong Kong company.
                                          21
 ---pagebreak---       The Commission carried out on-the-spot verifications at the premises of the
      company in Hong Kong in order to examine the circumstances under which it
      operated and its relations with the Chinese State. In particular the company
      concerned was able to show, to the satisfaction of the Commission, that the
      management and control of the factory, both in terms of production and
      marketing, was clearly in their hands and that their operations were sufficiently
      independent from the Chinese Authorities. It was also established that the
     export prices to the Community and the marketing policies were determined by
     the Hong Kong company without any interference from the Chinese State.
     In view of the above, it was considered possible to grant individual treatment to
     Grosby (China) Limited and, consequently, to calculate a separate dumping
     margin as an exception to the principle of calculating country-wide dumping
     margins in respect of non-market economy countries as required by Article 9 (5)
     of the Basic Regulation.
     (c) Country-wide dumping margin for the People 's Republic of China
(47) In total, 17 exporters in the People's Republic of China replied to the
     Commission's questionnaire.       The producers/exporters concerned however
     represented only 14.3% of total exports from the People's Republic of China
     and it was consequently decided, in view of the particularly high level of non-
     cooperation, to establish the margin of dumping for the People's Republic of
     China on the basis of Article 18 of the Basic Regulation, i.e. on the basis of the
     facts available.
                                         22
 ---pagebreak---      In order to calculate the single country-wide margin of dumping for the People's
     Republic of China, the Commission first calculated, the dumping margin of the
     16 cooperating producers/exporters to which individual treatment was not
     granted (see (i) below). Secondly, the Commission established the dumping
     margin for the non-cooperating producers/exporters (see (ii) below).
     The country-wide dumping margin for the People's Republic of China was then
     calculated as the average of these two dumping margins (see (iii) below).
          (i)   dumping margin for cooperating producers/exporters
               Sampling
(48) As mentioned in recital 7, sampling, as provided for in Article 17 of the Basic
     Regulation, was used in respect of the 17 cooperating producers/exporters in the
     People's Republic of China.         Four producers/exporters were selected, in
     agreement with the cooperating producers/exporters concerned.
     However, as one of these producers/exporters, Grosby (China) Limited, was
     subsequently granted individual treatment, it was removed from this sample (see
     recital 46).
     Accordingly, the three remaining producers/exporters included in the sample for
     the People's Republic of China are:
     •    Fujian Footwear and Headgear Import & Export Corporation
     •    Zhejiang Animal By-Products Import & Export Corporation
     •    Zhangjiang Yitai.
                                           23
 ---pagebreak---                Normal value
(49) Normal value for the Chinese producers/exporters included in the sample was
     calculated on the basis of the domestic prices in Indonesia and on constructed
     normal values established for the producers/exporters included in the sample for
     Indonesia, in accordance with Article 2 (7) of the Basic Regulation.
     It should be noted that the three Chinese producers/exporters concerned had
     been requested to give detailed specifications of the footwear exported to the
     Community. Only limited information was provided by the producers/exporters
     and the Commission consequently had to establish, on the basis of the facts
     available, which Indonesian models were identical or, in the absence of identical
     models, those Indonesian models which most closely resembled the Chinese
     models exported to the Community. On this basis, the Commission was able to
     find comparable models for models representing 34.7 % of the total exports
     from the three producers/exporters concerned. For these models, the normal
     values established for the purpose of determining the Indonesian dumping
     margins could therefore be used.
(50) For those Chinese exported models for which there was no like domestically
     sold Indonesian model, the constructed value was established by adding a
     reasonable amount for SG&A expenses and profit to the manufacturing cost of
     comparable exported Indonesian models. The SG&A and profit margin were
     established on the basis described in recitals 29 and 30.
                                          24
 ---pagebreak---                  Export price - calculation of export price
 (51) The     investigation   showed     that   the  exports   of  the   three    Chinese
       producers/exporters in the sample were made directly to independent customers
       in the Community. It was, therefore, possible to establish export prices on the
       basis of prices actually paid or payable, in accordance with Article 2 (8) of the
       Basic Regulation.
                Comparison
(52) For the purpose of ensuring a fair comparison between normal value and the
       export prices of the producers/exporters in the sample, allowance in the form of
       adjustments was made in accordance with Article 2(10) of the Basic Regulation
       for duly justified differences affecting price comparability.      Consequently,
       adjustments were made for differences in physical characteristics, transport,
       insurance, handling, loading and ancillary costs, packing and credit costs.
                Dumping margin
(53) The Commission first calculated a dumping margin for each of the three
      producers/exporters in the sample. For this purpose, the Commission made a
      comparison between normal value at ex-works level and the export prices of the
      cooperating Chinese producers/exporters at FOB level, ex-Chinese frontier.
      This comparison was based on the weighted average selling price of each model
      of footwear manufactured by the producers/exporters in the sample and exported
      to the Community during the investigation period for which a comparable
      model of footwear could be found.
                                            25
 ---pagebreak--- (54) In the absence of any significant variations in export prices either by region,
      purchaser or time period, the normal value was compared with the export price
      on a weighted average basis in accordance with Article 2 (11) of the Basic
      Regulation.
      The comparison showed the existence of dumping of the footwear concerned
      originating in the People's Republic of China and exported by the
     producers/exporters in the sample to the Community during the investigation
     period. The weighted average dumping margin, expressed as a percentage of
     the CIF Community frontier price, amounts to AS.2%.
           (ii)  Dumping margin for non-cooperating producers/exporters.
(55) The dumping margin for the non-cooperating producers/exporters was
     established on the basis of the facts available in accordance with Article 18 of
     the Basic Regulation. In this particular case, given the unusually high level of
     non-cooperation and in the absence of other reliable information from
     independent sources, the most appropriate facts available have been considered
     to be the highest dumping margin alleged in the complaint.        The dumping
     margin established on this basis was 50%) of the CIF Community frontier price.
 ---pagebreak---            (iii) Country-wide dumping margin for the People's Republic of
                 China
(56) As indicated in recital 47, a single dumping margin was calculated for the
      People's Republic of China by using the weighted average of the margins
      established for the cooperating producers/exporters (i.e. 45.2%), see recital 54)
      and the non-cooperating producers/exporters (i.e. 50%, see recital 55).
     The dumping margin thus established for all producers/exporters in the People's
     Republic of China, except Grosby (China) Limited., expressed as a percentage
     of the CIF Community frontier price, was 47.6%.
     (d) Dumping margin for Grosby (China) Limited
           (i)   Normal value
(57) As far as Grosby (China) Limited was concerned, it should be noted that normal
     value was calculated in the same way as that of the other cooperating
     producers/exporters in the People's Republic of China, i.e. on the basis of prices
     or constructed values of comparable models produced in the analogue country,
     i.e. Indonesia.
                                         27
 ---pagebreak---           (ii)  Export price
(58) Since Grosby (China) Limited made its export sales via a related importer,
     Nick's Sports and Leisure Footwear Ltd (UK), the export price was constructed
     pursuant to Article 2 (9) of the Basic Regulation, i.e. on the basis of the price at
     which the imported products were first resold to an independent buyer.
     Adjustments were made for all costs incurred between importation and resale
     and for profits accruing, in order to establish a reliable export price, at the
     Community frontier level. A profit margin of 5% was used since this-was the
     profit margin found for the independent importer which had the most similar
     trading structure to that of Nick's Sports and Leisure Footwear Ltd (UK) and
     had been the subject of an on-the-spot verification visit.
          (iii) Comparison
(59) For the purpose of ensuring a fair comparison between normal value and export
     price, an allowance in the form of adjustments was made, in accordance with
     Article 2(10) of the Basic Regulation for differences in transport and insurance.
          (iv)  Dumping margin
(60) In the absence of any significant variations in export prices either by region,
     purchases or time period, the normal value was compared with the export price
     on a weighted average basis, in accordance with Article 2 (11) of the Basic
     Regulation. On this basis, the dumping margin for Grosby (China) Limited was
     found to be 1.3%.
                                          28
 ---pagebreak--- 4.    Thailand
                                   ».
(i)   dumping margin for cooperating producers/exporters
      (a) Normal value
(61) In order to establish normal value for each of the three co-operating Thai
      producers/exporters, it was first determined whether the total domestic sales of
     •the footwear concerned by each producer/exporter were representative when
      compared to their total sales of the footwear concerned exported to the
      Community. In accordance with Article 2 (2) of the Basic Regulation, domestic
      sales are normally considered representative when the total domestic sales
      volume of the like product sold by each producer represents at least 5%> of its
      sales volume of the product under consideration exported to the Community.
(62) None of the producers/exporters had sufficient domestic sales of the footwear
      concerned during the investigation period within the meaning of Article 2 (2) of
     the Basic Regulation. It was consequently considered appropriate to construct
     normal value on the basis of Article 2 (3) of the Basic Regulation by adding to
     the manufacturing cost of each model exported to the Community a reasonable
     amount for SG&A and for profit. Two of the producers/exporters were related
     and one of these two related producers/exporters sold sports shoes and sports
     wear, i.e. the same general category of products, on the Thai domestic market.
     The SG&A and profit for these two producers/exporters was established by
     reference to the domestic sales of these products in accordance with Article
     2 (6) (b) of the Basic Regulation. In the absence of any domestic sales of the
     product concerned, or the same general category of products by the third
     cooperating Thai producer/exporter, their SG&A and profit was, in accordance
     with Article 2 (6) (c) established on any other reasonable basis, in this case the
     SG&A and profit established for the other two cooperating producers/exporters
     referred to immediately above.
                                           29
 ---pagebreak---  (63) One of the three cooperating Thai producers/exporters produced and exported
       shoes partly made from raw materials which it obtained free of charge from its
       customers in the Community. Because the prices of the raw materials were not
       divulged to the producer/exporter, it was unable to report them in its
       manufacturing costs. As the producer/exporter had no domestic sales, normal
       value had to be constructed.     In the absence of a full information on raw
       material costs the Commission constructed normal value by using the available
       company's manufacturing costs and the SG&A and profit as established in the
       preceding recital. Since both the constructed value and the export price-reported
       by this producer/exporter excluded the same raw material costs, both were
       directly comparable.
       (b) Export price
(64) The investigation showed that, except in the case referred to in recital 67,
      exports were made directly to independent customers in the Community.
      Export prices were consequently established on the basis of the prices actually
      paid or payable.
      (c) Comparison
(65) For the purpose of ensuring a fair comparison between normal value and the
      export prices of the producers/exporters, due allowance in the form of
      adjustments was made in accordance with Article 2 (10) of the Basic Regulation
      for differences affecting price comparability, whenever these were claimed and
      duly justified. In consequence, adjustments were made, where appropriate, for
     differences in transport, insurance, handling, loading and ancillary costs, credit
     costs, bank charges, guarantees/warranties and levels of trade.
                                           30
 ---pagebreak--- (66) An allowance was also claimed by one of the Thai producers/exporters as their
      export sales were, in contrast to their domestic sales, allegedly made on an OEM
      brand basis. During the investigation it was clearly established that export sales
      were made at a different level of trade than domestic sales. An allowance was
      consequently granted by deducting from the own brand constructed normal
      values, an amount corresponding to 10% of the gross profit margin in
      accordance with Article 2(10) (d) (ii) of the Basic Regulation.
(67) One Thai producer/exporter sold footwear for export to the Community through
     a related trading company located in the USA. It has been determined that
     tjecause of the relationship between the two companies, the prices charged by
     the Thai producing company to the US company were not reliable. To establish
     a reliable export price to the Community from Thailand, the price charged to the
     Community was adjusted to an ex-Thailand level. As the related company's
     functions can be considered similar to those of a trader acting on a commission
     basis, an adjustment of 5% was deducted from the prices charged by the related
     company to independent customers in the Community.                 This figure was
     considered reasonable given the degree of the related trader's involvement in the
     selling activities of the exporter. No information was provided which would
     indicate that this figure is inappropriate. Thus, the export prices were adjusted
     accordingly.
                                           31
 ---pagebreak---        (d) dumping margins
(68) To calculate the dumping margin of each cooperating Thai producer/exporter,
      the Commission made, in accordance with Article 2(11) of the Basic
      Regulation, a comparison between weighted average normal values and the
      weighted average export prices of the producers/exporters since it was clearly
      established that there was no pattern of export prices which varied significantly
      between different purchasers, regions or time periods.
(69) The comparison showed the existence of dumping of the footwear .concerned
      during   the   investigation    period    by   one   of   the    three   cooperating
      producers/exporters. The margin thus established and expressed as a percentage
      of the CIF price at Community frontier is:
      •     CK Shoes                                                1.4%
     The     investigation   revealed     that   the   two    other    cooperating   Thai
     producers/exporters were related, one producer/exporter holding shares of the
     other. In addition, shares of one of these producers/exporters were held by a
     company in the USA. Both producers/exporters exported the product concerned
     to the Community during the investigation period.
     Although these producers/exporters maintained separate production facilities
     only one dumping margin was calculated therefor in line with the Institutions'
     established practice as set out in recital 24.
     The margin thus established was :
     •      PSR Footwear/Bangkok Rubber Company                            0%.
                                            32
 ---pagebreak--- (ii)   dumping margin for non-cooperating producers/exporters
(70) For those producers in Thailand which neither replied to the Commission's
       questionnaire nor made themselves known, the dumping margin has, in
       accordance with Article 18 of the Basic Regulation, been determined on the
       basis of the facts available. In view of the unusually high degree of non-
       cooperation in this case on the part of Thai producers/exporters (99%), the
       absence of other reliable information from independent sources and in order to
      avoid rewarding non-cooperation, it was considered appropriate to base the
      residual dumping margin on the highest margin of dumping alleged in the
      complaint, i.e. 50%.
                           D.   COMMUNITY INDUSTRY
(71 ) As mentioned in recital 5, in view of the large number of Community producers
      which were party to the complaint, it was considered appropriate to collect data
      concerning the Community industry from three sources, namely the national
      producers' federations in the Community, the 87 Community producers in the
      first group and the 15 Community producers in the verification sample. Injury
      indicators were then considered at the most appropriate level (i.e. on the widest
      basis for general indicators and on a narrower basis for those which could only
      be collected from individual companies).
      Accordingly:
      • Production, sales, market share and employment in the Community were
      established at the level of each national footwear federation and thus cover the
      entire Community production of the like product;
 ---pagebreak---       • General trends concerning prices, costs and profitability were established at
      the level of the 87 Community producers in the first group, which were selected
      with a view to covering, in as balanced a way as possible, the four categories of
      product under consideration, as well as reflecting the various company sizes and
     production structures in the main producer Member States;
      • Price undercutting and injury-elimination level calculations were earned out
     on the basis of fully verified price and cost data collected from the 15
     Community producers in the verification sample, which are representative in
     terms of size and product range as well as location (they are all located in the
     major producing Member States).
(72) Certain parties have claimed that the above methodology was deficient on the
     grounds that it would depart from the provisions of both Article 5 (4) and 4(1)
     of the Basic Regulation, according to which the representative nature of the
     investigated Community industry would have necessarily to be established on
     the basis of the "major proportion" test, and thus any evidence of injury would
     have to be based on data provided by producers representing at least 25% of
     total Community production of the like product. In particular, it was argued that
     the "total Community production" figure used for assessing the representativity
     of the 188 complaining Community producers would not be reliable.
     The sampling exercise carried out by the Commission was. also questioned on
     the alleged grounds that the decision to resort to sampling was taken at an
     advanced stage, in response to an insufficient cooperation from the complaining
     industry during the initial stages of the investigation.
                                            34
 ---pagebreak--- 1.    Total Community production
(73) it should first be stressed that the level of support for the complaint was
      established before initiation of the investigation.   During the course of the
      investigation it was established that the 188 complaining Community producers
      continued to represent more than 25%) of total Community output (namely
      53%>). Therefore, the complaining Community producers represent a major
      proportion of total Community output of the like product within the meaning of
      Article 4(1) of the Basic Regulation.
      Moreover, it has also to be stressed that the "total Community production"
      figure of the like product was set at the maximum possible level. Indeed, due to
     the lack of reliable data, no examination could be carried out in order to
     determine whether, in accordance with the provisions of Article 4 (1) (a) of the
     Basic Regulation, the production volume of certain non-complaining producers
     should have been excluded from the "total production" figure, on the grounds
     that their core business would be importing rather than producing within the
     Community.
     Such would-be Community producers, some of which are known to have made
     considerable imports, are also known to produce relatively large quantities in
     the Community. Had sufficient information in this respect been made available,
     it is likely that part of this "total Community production" would have been
     excluded.     Such reduction would have increased the share of Community
     production of the complaining Community producers.              Conversely, the
     investigation established that out of the 188 complaining Community producers,
     87 (i.e. the Community producers in the "first group" as defined at recital 5)
     were neither related to any producers/exporters nor themselves significantly
     importing the product covered by this investigation.
                                            35
 ---pagebreak--- 2.     Sampling
(74) In this respect, it has to be recalled that given the very large number of potential
      parties to the proceeding, the notice of initiation of this proceeding explicitly
      mentioned the fact that the investigation could be conducted by means of
      sampling. As a result, from the initial stages of the investigation, cooperation
      was sought (via national federations) from 89 Community producers selected
      amongst the 188 Community producers supporting the complaint.
      Meaningful replies were received from 87 producers (referred to as. "the first
      group" in recital 5), from which, for verification purposes, 15 were selected and
      their replies subjected to in-depth on-the-spot verifications (this latter group of
      producers is referred to as "the verification sample" in recital 5).
      It should be noted that the provisions of the Basic Regulation do not require in
     the case of sampling that relevant data be collected from Community producers
     representing a major proportion of total Community production as defined in
     Articles 4(1) and 5 (4) of the Basic Regulation. Rather, Article 17(1) of the
     Basic Regulation provides for the possibility of collecting data from a sample
     which is representative of the Community industry. The very purpose of such
     sampling provisions is to allow for a situation in which the share of production
     represented by such sampled Community producers could, depending on the
     circumstances, be substantially less than 25% of total Community production.
     In any event, the 87 Community producers in the first group alone were found to
     account for 25.7%) of Community output of the like product, thus qualifying, in
     the absence of declared opposition to the complaint, as the Community industry.
                                            36
 ---pagebreak--- 3.    Conclusion
(75) In the light of the above, it is concluded that the representative nature of the
     investigated Community industry was assessed in a reasonable way and in
     conformity with the relevant provisions of the Basic Regulation.
                                     E.   INJURY
1.   General remark
(76) To the extent possible, all Eurostat figures used in the calculations "detailed
     below (relating to import volumes, values and thus prices per pair) were
     corrected on the basis of data available (provided by the Taric database), in
     order to exclude footwear involving special technology (none of which, as
     explained in recital 15, is covered by this proceeding).
2.   Consumption in the Community
(77) In calculating the total Community consumption of footwear subject to this
     investigation, the following data were added together:
     •   the total sales volume in the Community of all Community producers of the
         product concerned (using information obtained from the Community
         footwear producers' national federations in combination with data for
         exports outside the Community as per Eurostat), and
     •   the total imports into the Community of the product concerned from third
         countries including the People's Republic of China, Indonesia and Thailand.
                                          37
 ---pagebreak---      On this basis, Community consumption of the product concerned was found to
     have declined from 327 million pairs in 1991 to 307 million pairs in the
     investigation period, a decrease of approximately 6%.
3.   Volume and market share of dumped imports during the investigation
     period
(78) The total volume of imports for the footwear subject to the present investigation
     originating in the People's Republic of China was 28.6 million pairs in the
     investigation period.
     The total volume of imports for the product concerned originating in Indonesia
     stood at 15.9 million pairs in the investigation period whilst the corresponding
     figure for Thailand was 11.8 million pairs.
     Calculated on the basis of Community consumption (see preceding recital), the
     share of the Community market held, during the investigation period, by
     Chinese imports was 9.3%) whilst that of Indonesia was 5.2%) and Thailand
     3.9%.
4.   Cumulation
(79) In accordance with Article 3 (4) of the Basic Regulation, an examination was
     made as to whether or not the effect of the dumped imports from the three
     countries concerned should be assessed cumulatively.
 ---pagebreak---       As can be seen from the preceding recital, the individual volume of imports
      from the People's Republic of China and Indonesia and their market shares in
      the Community (9.3%) and 5.2% respectively) were not negligible during the
      investigation period. Furthermore, dumping margins which were more than de
      minimis were established for both countries (see recitals 56 and 38 to 41).
      Similarly, although not as large as that of the other two countries concerned by
      this investigation and in spite of a slight decline over the period 1991 to 1994,
      the Thai market share in the Community was 3.9%), i.e. more than de minimis,
      as was the residual dumping margin of 50% established for this country (see
      recital 70).
(80) The investigation also showed that the conditions of competition on the
      Community market for the footwear imported from the People's Republic of
      China, Indonesia and Thailand are similar. Indeed, the Chinese, Indonesian,
      Thai and Community products are:
           interchangeable from the consumer's point of view
           offered for sale in the same geographical areas of the Community
           sold through the same distribution channels
           simultaneously present on the Community market
           generally aimed at the same segment of the Community footwear market
           (i.e. the low to lower-middle priced part of the market).
     In addition, the Chinese, Indonesian and Thai products are sold at prices found
     to undercut the Community industry's prices (see recital 86).
                                            39
 ---pagebreak--- (81) On this basis, it is considered that cumulation is warranted and, accordingly, the
     effect of the dumped imports from all three countries should be assessed jointly
     for the purpose of injury analysis.
5.   Cumulated volume, cumulated market share and developments of dumped
     imports
(82) The total volume of imports from the People's Republic of China, Indonesia and
     Thailand taken together rose from 38.6 million pairs in 1991 to 56.3 million
     pairs during the investigation period, a significant increase of more than 45%.
     This corresponds to an increase in combined market share from 11.8% in 1991
     to 18.4%) during the investigation period.
6.   Prices of dumped imports and undercutting
(83) Given the different product mixes which can occur within each of the four CN
     codes in question (see recital 17), any general examination of the evolution of
     the import prices of dumped imports between 1991 and 1994 using only the
     corresponding categories of footwear should be viewed with caution. To this
     end, using information received from importers and importers' organisations, the
     investigation showed that there had been a gradual shift to more sophisticated,
     up-market types of footwear being imported, with a corresponding overall
     increase in import prices.
(84) As regards price undercutting, comparisons were first made on a category-by-
     category basis between the CIF import price (as reported by Eurostat, after
     correction in order to exclude footwear involving special technology as
     explained in recital 76), adjusted to duty paid, customer-delivered levels and the
     selling prices in the Community of the Community producers at the same level
     of trade (i.e. to distributors/wholesalers).
                                            40
 ---pagebreak---         A second undercutting exercise was also carried out by selecting those Chinese,
        Indonesian and Thai models exported to the Community in the greatest volumes
        by the three Thai cooperating producers/exporters and the Chinese and
        Indonesian producers/exporters in the dumping samples (grouped into 17
        representative so-called "families" of footwear, for example: men's lace up town
        shoes) and comparing their adjusted, customer-delivered price levels within the
        Community to those of identical or comparable models produced by the
        Community producers in the verification sample.
 (85) In adjusting import prices to the duty paid, customer-delivered level, account
       was taken of the normal duty rate or the duty rate applicable under the GSP (as
       appropriate), as well as a margin for all unloading, transport and other ancillary
       costs incurred specifically in relation with the imports, together with the profits
       achieved by the importers. On the basis of the evidence examined in respect of
       the product concerned it was found that, in order to be compared in a fair way to
      the Community producers' prices and costs, the CIF import price for the product
      concerned had to be adjusted 2% upwards, reflecting the variable costs incurred,
      and then increased by an amount of ECU 0.96 per pair, reflecting the average
      fixed amount of costs incurred, plus the customs duty.
(86) The two methods used to determine undercuting described in recital 84 resulted
      in the establishment of average undercutting margins (expressed as a percentage
      of the Community industry's prices) in excess of 25%o for the People's Republic
      of China and of 10%> for both Indonesia and Thailand.
                                            41
 ---pagebreak---  7.    Conclusion concerning the volume of dumped imports and their effect on
       prices in the Community
 (87) As has been shown above, there was a significant increase of more than 45%) in
       the combined volume of dumped imports from the three countries in question
       between 1991 and the investigation period. Consumption, however, declined by
       about 6% over the same time scale.
       Even though certain increases in import prices which reflected the evolution of
      the product-mix were observed over the four year period under examination,
      these prices were nevertheless at highly dumped levels which significantly
      undercut the prices of the Community producers.
8.    Situation of the Community industry
      Preliminary remark
(88) As concerns the type of data given below, it should be noted that not all
      economic factors collected at the level of individual Community producers in
      the first group and the verification sample were found to have a bearing on the
      state of the Community footwear industry for the determination of injury. For
      example, because production takes place to order, stocks were usually not held
      and consequently were found to have very little meaning in the injury analysis,
      as was the case with capacity and capacity utilisation (since idle capacity cannot
      be strictly allocated only to the like product).        Thus, in accordance with
      Article 3 (5) of the Basic Regulation, in the analysis of the situation of the
      Community industry, only those economic factors which were found to have a
      bearing on the state of this particular industry were taken into consideration.
                                             42
 ---pagebreak---      Production
(89) The information received from the national federations showed that production
     in the Community fell from approximately 259 million pairs in 1991 to 224
     million pairs in the investigation period, a drop of 14%.
     Sales volume
(90) The data obtained from the national federations and Eurostat showed a massive
     decline in sales volume of 22% between 1991 and the investigation period
     (calculated using total production in the Community minus exports outside the
     Community).
     Turnover
(91) The decline in sales value of the product concerned was found to be 16%>
     between 1991 and the investigation period.         Such a decline, although less
     marked than in terms of volume, was nevertheless significant.
     Market share
(92) On the basis of consumption figures as determined in recital 77 and using data
     obtained from national federations and Eurostat, it was found that the market
     share of the Community producers on the Community market went down from
     64.5%) in 1991 to 53.3%) during the investigation period.
                                           43
 ---pagebreak---       Prices of the Community producers
(93) As explained in recital 83 concerning the prices of imports, it is considered that
      given the different product mixes which can occur within each of the four CN
      codes in question, any general examination of the evolution of the import prices
      of dumped imports between 1991 and 1994 using only the categories of
      footwear should be viewed with caution. This also applies when analysing on
      this aggregate level data relating to the Community industry.
      On a category basis, the investigation did, however, show certain trends in the
      Community producers' prices since it was found that only the Community
     producers' weighted average selling price of the product belonging to category 1
      ("unisex" footwear) went up by a significant amount between 1991 and the
      investigation period. This price increase is likely to result from the fact that this
     category includes a very large proportion of fashion footwear, very popular with
     young people, which have been very much in demand during recent years.
     On the other hand, the prices of the products belonging to the other categories
     either remained stable or only went up slightly, but in any case this increase has
     been below the average level of inflation for the period under consideration and
     does not reflect the increase in the production costs.          The conclusion can
     therefore be drawn that prices have been suppressed.
                                            44
 ---pagebreak---       Profitability
(94) The profitability (in relation to turnover) on sales in the Community of the like
      product for the Community producers in the first group increased slightly from
      +6.8%o in 1991 to +13% during the investigation period.          The Community
      producers in the verification sample also confirmed this relatively stable trend
      with margins going up from +8.1% to +8.2%>. The Community producers'
      capacity to maintain their profitability in the face of the above mentioned price
      suppression is the result of a considerable effort of rationalisation and cost
      reduction on the part of the surviving Community producers.
      More importantly, the cost structure of this particular industry explains that its
      operating businesses are either profitable or do disappear. Indeed, with direct
     expenses (raw materials and labour etc.) representing up to 80% of the cost of a
     shoe, footwear is only made to order, after a direct costing showing a sufficient
     profit for each order. In this situation, no company can show losses for more
     than a few months without being forced to close down. This explains why the
     Community producers in the first group and the verification sample were, on
     average, not loss making.
     This cost structure together with the increasing leverage of a number of large
     retailers-importers who are able to select and change their source of supply for
     any order on the sole basis of price (in the case of the People's Republic of
     China, Indonesia and Thailand dumped prices) is a key element and explains the
     extreme vulnerability of this labour intensive industry which has no means, over
     an extended period of time, to resist sustained pressure from low-priced,
    dumped imports.
                                           45
 ---pagebreak---         The Community industry had therefore no choice but to try to maintain
       profitability at the expense of market share.       This was still feasible and
       profitability remained stable at around 7%> over the period covered since, despite
       a fall of more than 11 percentage points in their market share since 1991, the
       Community producers still held 53% of the Community market in 1994.
       Employment and company closures
 (95) In the light of the above, the analysis of employment developments and
       company closures appeared to be particularly relevant. Information received
       from the national federations showed that employment in the sector producing
       the footwear under investigation declined from about 127,250 people in 1991 to
       114,000 people in the investigation period, a drop of approximately 10%>.
       As concerns the number of Community producers manufacturing the footwear
       subject to the current investigation which ceased produotion between 1991 and
       1994, details of the closure of 67 factories in seven Member States (Belgium,
      France, Italy, the Netherlands, Portugal, Spain and the United Kingdom) were
      received from national producers' federations. Given that some Member States
      do not keep detailed statistics for very small companies, the true figure on
      company closures may have been much higher.
9.    Conclusions on injury
(96) All of the economic indicators mentioned above, based on information supplied
      by the national footwear producers federations clearly show that the Community
      producers' situation has deteriorated between 1991 and the investigation period
      (i.e. as regards production, sales volume, market share, employment and
      company closures).
                                            46
 ---pagebreak--- (97) Figures from individual companies (such as those relating to profitability),
      examined at the end of the injury analysis period, relate to "survivors" and thus
      the most resilient producers. It follows that such data understate the level of
      injury as a whole as far as the entire Community production of the footwear
      under investigation is concerned.       It is only when the global situation is
      examined that the disappearance of producers, the reduction in production, sales
      and employment and thus the full extent of the injury becomes evident.
      In addition, any apparent "well-being" of the Community producers belonging
      to the first group or the verification sample may also have come about due to
     their taking over of part of the market share previously held by the Community
     producers which went out of business during the four year period under
     examination. These Community producers have also been obliged to shift their
     production towards certain types of footwear which, up until the present time,
     have been less subject to the pressure exerted by dumped imports (e.g. fashion
     footwear which has formed one of the "niches" on the market).
     In this respect, it has been claimed by a number of interested parties that the
     Community producers have very successfully engaged in a strategy of
     specialisation in up-market fashion products. The result of this is alleged to be
     that the Community producers no longer have the capacity to make large
     volumes of low-cost product of the type produced in the exporting countries
     concerned by this proceeding.
                                           47
 ---pagebreak---       It is true, that, given the advantages of their geographical proximity to the
      Community markets and their ability to make quick delivery to meet rising, and
      very often short-lived, consumer demand for fashion footwear, it is to this sector
      that many of the Community producers have retreated with all or part of their
      output. Some producers have had to relinquish altogether production of less •
      fashionable, cheaper and less value-added but high volume lines to the imports
      from outside the Community, whilst others have tried to produce a mixture of
      fashion footwear and high volume, "classic" lines. These "classic" lines are
      indeed the only ones generating the volumes required for maintaining an
      industrial and commercial structure of a viable size.
(98) It was therefore concluded that, overall, the Community producers of the
     footwear under investigation have suffered injury which is sufficient for it to be
     classified as material.
                                   F. CAUSATION
(99) In accordance with Article 3 of the Basic Regulation, it was examined whether
     the material injury suffered by the Community industry was caused by the
     Chinese, Indonesian and Thai dumped imports, or whether other factors had
     caused or contributed to that injury.
                                           48
 ---pagebreak---  1.      Effect of the dumped imports
 (100) In examining the effects of the dumped imports, it has to be borne in mind that,
         because of the nature of the products concerned and the leverage of certain large
        distributors, the Community footwear market is, at least at wholesale level,
        transparent and price sensitive.     Moreover, as mentioned in recital 80, the
        imports of dumped products from the countries concerned are affecting mainly
        the lower to lower-middle end of the market, which is generally recognised as
        being the most sensitive to price variations and, consequently, the segment
        where sales at low prices have inevitably substitution effects.
        In addition, it should be recalled that the footwear subject to this proceeding
        which is produced in the Community and the equivalent footwear imported
        from the People's Republic of China, Indonesia and Thailand are in direct
        competition with each other since they are sold through the same sales channels
       and there are very often, for the consumer, few perceptible or significant
       differences in quality between the imported products and the products produced
       in the Community.
( 101 ) In this context it was found that the increasing volume and market share of those
       imports, in conjunction with the significant undercutting found, coincided with
       the loss of market share and general decline of the Community industry.
       It was accordingly concluded that the low-priced, dumped imports from the
       countries concerned are linked to the deteriorating situation of the Community
       industry.
                                             49
 ---pagebreak--- 2.     Effect of other factors
(102) Consideration has also been given to the question of whether factors other than
       the dumped imports from the People's Republic of China, Indonesia and
       Thailand might have caused, or contributed to, the material injury suffered by
       the Community industry in order to ensure that any injury caused by other
       factors is not attributed to the dumped imports.
       (a) Imports from other third countries
(103) The question whether imports from-countries other than the three currently
      under investigation may have contributed to the material injury suffered by the
      Community industry was firstly examined. In this respect, particular reference
      was made by certain interested parties to imports into the Community from
      Vietnam. Eurostat data showed (after correction in order to exclude footwear
      involving special technology as explained in recital 76) that the volume of
      imports in the Community of the products concerned from Vietnam increased
      very significantly from approximately 30,000 pairs in 1991 to 15.9 million pairs
      in 1994.
      Given the surge in the volume of imports from Vietnam, it cannot be denied that
     these imports may also have had a detrimental effect on the situation of the
     Community industry. However, as concerns the prices of these imports, given
     the lack of information on the product mix, it was not. possible to establish
     reasonable data upon which conclusions could be drawn.         It was therefore
     considered that the evidence produced to date concerning the pricing of
     Vietnamese exports to the Community was insufficient to warrant extending the
     scope of the current investigation to Vietnam.
                                            50
 ---pagebreak---   ( 104) Moreover, it should be noted that the Community market share of all third
         countries including Vietnam, but excluding the People's Republic of China,
         Indonesia and Thailand, increased by 12%> between 1991 and 1994, whereas the
         market share of the three countries concerned by this investigation increased
         more substantially, i.e. by 46%>, during the same period.
  (105) It is therefore concluded that, even if imports from other third countries may
         have contributed to the injury suffered by the Community industry, their impact
         cannot be considered as such as having broken the causal link between the
         dumped imports from the three countries concerned and the material injury
         suffered by the Community industry.
         (b) Intra-Community competition
  (106) It has been argued by several interested parties that there was significant internal
        competition in the Community between producers in Italy, Portugal and Spain
        and producers in the other Member States and it was for this reason that certain
        Community producers found themselves in an adverse economic situation. The
        competitive devaluations of some Member States' currencies and the
        Commission's decision not to allow the payment of a State aid to the Italian
        footwear industry4 on the ground, inter alia, of its good health, have also been
        cited as further indication that any injury the Community industry might have
        suffered has been largely self-inflicted.
 (107) In'addressing the above arguments, however, a distinction should be made
        between fair competition and unfair competition and it should be recalled that,
        within the framework of a single market, there are mechanisms to ensure that
        competition between Community producers remains equitable.
4
     By Commission Decision 96/542/EC (OJ L231, 12.9.1996, p. 23).
                                              5!
 ---pagebreak---  In addition, in the assessment of the injury suffered by the Community industry,
 the situation of the Community producers of the products in question in all
 Member States where these types of footwear are produced in significant
 quantities has been considered.       The results of this assessment reflect the
 situation of the Community industry as a whole. Accordingly, the aggregated
 data used for the injury assessment would compensate for internal differences, if
 any, in the Community industry's performance.          In this respect, it is, for
 instance, worth noting that if internal competition had been the only driving
 force on the market, the Community industry's market share would hot have
 experienced a decline from 64.5% in 1991 to 53.3% in 1994 as the loss of
 market share by some would have been the gain of the others.
The investigation has shown that the diminishing production, market share, and
employment of producers in some Member States have in no way been
compensated by an improvement of the situation of producers in other Member
States, as a number of interested parties have argued.
It must also be stressed that the Commission's decision not to allow the granting
of a State aid to the Italian footwear industry was based on an assessment of this
industry as a whole, as opposed to the segment of the market concerned by the
present investigation. Furthermore, this decision was based on the impact that
such a measure might have had on the functioning of the internal market and
specifically acknowledges, inter alia, the difficult situation of employment in
this sector in all Member States.
                                      52
 ---pagebreak--- (108) Further to the final disclosure, certain interested parties have argued that, in
      view of the fact that certain Community producers reported strongly negative
      developments in recent years while others maintained their turnover, the injury
      suffered by the Community industry might result from disparities in the quality
      of the companies' management, and not from the impact of the dumped imports
      concerned.
(109) In this respect, it should be stressed that, due to differences in their product
      range, it is normal that not all companies are as acutely confronted with the
      competition from the low-priced, dumped imports. It is also normal that, in a
      competitive market, some companies perform better than others and it is
      precisely the number of Community producers which ensures that competition
      exits.  Moreover, no evidence of mis-management (relating for instance to
      investment or employment policies) was found in the course of the
      investigation. As stated above, internal competition cannot, in particular, be the
      cause of the overall decrease in market share of the Community industry and
      therefore considered as a factor breaking the causal link between the dumped
      imports and the injury suffered by the Community industry.
 ---pagebreak---        (c) Recourse to subcontracting of labour intensive operations
(110) In addition, it was also argued that a number of Community producers have
       transferred some of their more labour intensive operations to third countries
       with low labour costs, thereby contributing to the overall injury suffered by the
       Community industry, particularly with regard to employment. In this regard, it
       is considered that the fact that some producers have had to resort to such a
      course of action, which is a defensive step taken in order to keep costs at levels
      which enable them to compete with the low-priced imports, is additional
      evidence of the pressure exerted by the dumped imports.
3.    Conclusions on causation
(111) Although certain factors other than dumped imports from the countries
      concerned may have contributed to the injury suffered by the Community
      industry, it is nevertheless concluded that a causal link exists between low-
      priced, dumped imports from the People's Republic of China, Indonesia and
      Thailand, taken in isolation, and the material injury suffered by the Community
      industry. This conclusion is based on the various elements set out above and in
      particular the level of price undercutting, the significant market share gained by
      these countries (and the corresponding loss in market share suffered by the
      Community industry) and the huge increase in the quantities concerned which
     resulted in a great number of producers situated in the Community being forced
     to close. This conclusion is moreover strengthened by the fact that the overall
     efficiency of the Community footwear industry producing the products
     concerned is not in question, as evidenced, inter alia, by the achievements of the
     Community producers on export markets outside the Community (exports in
     volume by the Community industry indeed rose by 25% between 1991 and
      1994).
                                           54
 ---pagebreak---                            G.   COMMUNITY INTEREST
 (112) On the basis of all evidence submitted, an examination was made of whether,
       despite the conclusion on dumping and injury caused thereby, compelling
       reasons existed which would lead to the conclusion that it was not in the
       Community interest to impose measures in this particular case.           For this
       purpose, and pursuant to Article 21 (1) of the Basic Regulation, the impact of
       possible measures for all parties concerned as well as the consequences of not
       taking measures were examined.
       In making such an appreciation, the need to eliminate the trade distorting effects
      of injurious dumping and to restore effective competition was given special
      consideration.
1.    Impact on the Community industry and its suppliers
      (a) Interest of the Community industry
(113) Without measures to correct the effect of the dumped Chinese. Indonesian and
      Thai imports, it is considered inevitable that the position of the Community
      producers would further deteriorate. More Community producers, and finally
      the Community industry as a whole, would begin to incur financial losses, with
      the result that there would be further factory closures and considerable job
      losses in addition to those resulting from rationalisation and technological
      improvements. It should also be borne in mind that if fewer producers are
      present   on   the   Community      market,   competition     may    be   reduced
      commensurately.
                                          55
 ---pagebreak---   (114) Certain interested parties argued that, given the mobility of the footwear
         industry world-wide, anti-dumping measures against the People's Republic of
         China, Indonesia and Thailand would have no positive effect on the situation of
       . the Community industry due to a likely shift of supply to other cheap labour
         third countries such as Bangladesh, India or Vietnam.               It has been argued
         moreover that the situation of the industry producing footwear with uppers of
         leather or plastics was comparable in this respect to that of the synthetic
         handbags manufacturers and that accordingly the Council should also in the
         present case refrain from taking measures'.
  (115) Shift of supply between various countries has been an important factor on the
         footwear market for a number of years. In this regard, it should be noted that
        the Community industry has been able, by its automation and rationalisation, to
        partly compensate for the importer's constant search of countries with the
        lowest labour costs. This could however not be the case in the face of the surge
        in dumped imports from the three countries concerned by this proceeding. As
        far as the alleged parallelism between the present proceeding and the synthetic
        handbags case is concerned, it should be stressed that the substantial market
        share still held by the complainant Community industry in this case, the nature
        of the capital holders in most exporting companies, as well as the important
        industrial investment necessary to produce footwear, clearly exclude any
        reasonable and meaningful comparison between the two industries.                        The
        Council cannot accept therefore that for the sake of consistency, it should refrain
        from taking measures in the present case.
5
    See recitals 105 and 106 of Council Regulation (EC) No 1567/97 (OJ L 208, 2.8.1997, p. 31).
                                                  56
 ---pagebreak---       In addition, the fact that producers/exporters could transfer their production
      facilities to other countries in order to avoid payment of anti-dumping duties is
      not, in itself, a sufficient reason for the Council not to impose measures in a
      case where exports have been found to have been dumped on the Community
      market and to have caused material injury to the Community industry. Were
      such a situation to arise, the Community industry could lodge a complaint
      requesting, for instance, the initiation of an anti-dumping proceeding against
      such imports or the initiation of circumvention investigation in accordance with
      Article 13 of the Basic Regulation.
(116) It was further argued that if measures were to be imposed, Chinese, Indonesian
      and Thai producers/exporters would switch to the production of those types of
      footwear where the Community producers have a technological and fashion-
      related advantage, thereby causing further injury to the Community industry.
      Leaving aside the fact that this type of argument cannot lead to the conclusion
      that the Council should refrain from adopting measures in the presence of
      injurious dumping, there is nothing to suggest that, even in the absence of
      measures, producers/exporters in the above mentioned countries will not, in the
      future, decide to expand the range of footwear which they manufacture and
      export. Indeed, a number of submissions by importers pointed out that a trend
     towards higher quality imported goods, with correspondingly higher prices had
     been observed.       As has been mentioned previously, this'" trend had already
     started before the investigation period.
                                            57
 ---pagebreak---        (b) Interest of companies supplying the Community industry (with raw
          >• materials and machinery)
 (117) It has been a notable feature of this investigation that the Community producers
       (and their raw material or component suppliers etc.) in many Member States
       tend to be grouped together geographically. The closure of one factory can
       therefore have an adverse knock-on effect on other companies in the area in
       particular with regard to employment.
(118) It has been argued that, should measures be imposed, this would jeopardise
       Community footwear machinery producers' sales to the People's Republic of
       China, Indonesia and Thailand.
       As far as the suppliers of footwear production machinery are concerned, no
       evidence has been received showing that producers/exporters in the People's
       Republic of China, Indonesia or Thailand are the main or most important clients
      of the Community equipment manufacturers.
      In any event, it should be noted that the Community industry is clearly investing
      in automation, and in the injection process in particular.       This automation,
      which contributes to the technological improvement of the                footwear
      manufacturing process in the Community, is linked with investments in
      machines and moulds produced in the Community.
2.    Impact on consumers
(119) Although no representations were received from consumer organisations
      following the publication of the notice of initiation of this proceeding, some
      parties have argued that anti-dumping measures would seriously affect
      Community consumers, particularly those with the lowest income.
                                            58
 ---pagebreak---       This argument concerning the foreseeable impact of measures on the
      consumers' buying price has been examined in detail.           The results of this
      examination, which has been based on the information available, are as follows:
      (a) Impact in absolute terms
(120) Firstly, as far as footwear prices to distributors are concerned, it is likely that,
      given the level of competition and the number of suppliers either in the
      Community (where the Community industry still has a 53.3% market share), or
      in third countries not concerned by this proceeding (imports from which total a
      28.3% market share), these suppliers would not be able to significantly increase
      their prices without running the risk of losing market share.
      As for Indonesia and Thailand, it should be borne in mind that the injury-
      elimination levels established for these countries are considerably lower than for
      the People's Republic of China, their average import price being during the
      investigation period ECU 6.97 and ECU 7.16 per pair respectively. Given that
     the market share of footwear originating in the People's Republic of China is
      9.3%), (with an average price of ECU 5.47 per pair during the investigation
     period) and in view of the duty level proposed, the average maximum
     foreseeable impact of the measures proposed on the price of the footwear
     concerned as a whole amounts to ECU 0.4 per pair.
                                           59
 ---pagebreak---       Thus, consumers would only have to pay an additional amount of ECU 0.4 per
      pair if distributors decide to keep their margins unchanged and pass the
      increased costs on to the consumer.         Since the average consumption of the
      footwear concerned in the Community is below one pair per person per year, the
      impact of the proposed measures on the average consumer's annual budget
      would be clearly marginal.
      (b) Impact in relative terms, effect of price on consumption
(121) In relative terms, the basis of the calculations was the average price of the
      footwear concerned at delivered-warehouse distributor level, namely ECU 13.5
      per pair, which takes into account, for the imports, the adjustment for
      differences in level of trade referred to in recital 85 of this Regulation. Using
      the lowest mark-up found among the distribution channels analysed below, i.e.
      125%, it is estimated that the average price for the consumer of the product
      concerned is above ECU 30 per pair; including all costs and duties incurred
      between importation and sale to the final customer. As a consequence, the
      impact of the anti-dumping duties on the price to the consumer would amount to
      approximately 1.3%.
      This percentage should, as explained above, be examined in the light both of the
      absolute value of the increase (ECU 0.4 per pair) and the general evolution of
      prices over the injury investigation period.         Indeed, over the four years
      examined, and due to the penetration of the dumped imports, the average market
      price at delivered-warehouse distributor level decreased in absolute terms, this
      decrease being of more than 10% when adjusted in order to take into
      consideration the general inflation rate.
                                            60
 ---pagebreak--- ( 122) It should be added that, even if consumers do compare the prices which are
       simultaneously offered in different shops, they are generally less sensitive, as
       regards the product under investigation, to developments in the general level of
       prices. Indeed, the above mentioned decrease in prices did not prevent the
       global consumption of the product concerned to decrease by 6%.
       This can be explained by a certain saturation which can be observed for
       products which are consistently sold at such low prices that consumers are
       unlikely to react to a limited overall change in the level of prices. It is therefore
       doubtful that the full reflection of the duty, i.e. a maximum price increase of
       1.3%, will have any significant impact on the current trends of demand on the
       Community market.
(123) In the absence of any other element or reaction from consumer organisations, it
       was concluded that the impact of the proposed measures on the consumer of the
       footwear concerned was likely to be minimal.
3.     Impact on distribution
       (a) Impact on distribution as a whole
(124) It has been argued that the imposition of measures would also have a strong
       negative impact on importers.       More generally, diverging views have been
       expressed on the situation of the whole footwear distribution chain which, it has
       been argued, is an activity with a far greater significance in the Community than
       footwear production, in terms of both turnover and employment.
 ---pagebreak---  It should first be pointed out that, by its very nature, for a given quantity of
 footwear, the distribution chain will have a higher turnover than the
 manufacturing companies it buys from, simply by virtue of its distribution
 margin. Secondly, the employment figures for footwear distribution in general,
 which include sales of all types of footwear, cannot be compared with those of
 the Community production of the product concerned only.
 As final consumers in the Community do not buy shoes in significant quantities
 outside the Community, negative consequences of anti-dumping duties for
 distribution as a whole could only result from a significant reduction of
 consumption and therefore of turnover, or a downward pressure on distribution
 margins in order to minimise an increase in consumer prices and a decrease in
 consumption.
As explained above, in the light of the foreseeable impact of possible measures
on the consumers of the product concerned, it can be considered as highly
unlikely that consumption of the product concerned would drop significantly as
a result of anti-dumping measures, even if the distribution sector were to
maintain its current margins.
Taken as a whole, it can therefore be concluded that the effects of possible
measures on the distribution chain will be very limited. Care was however
taken to make an in-depth analysis in the light of the structure of footwear
distribution in the Community.
                                     62
 ---pagebreak---       (b) Structure of footwear distribution in the Community
(125) Footwear distribution in the Community comprises four different channels of
      sale to the end customer: branded retail chains, independent retailers, non-
      specialised supermarkets and other types of generally               non-specialised
      distribution, for example clothing stores. '
       (i)   Independent retailers
(126) The traditional distribution channel consists of independent retailers, generally
      buying from wholesalers. In the evolution of distribution however, wholesalers
      tend to disappear as retailers enter into a closer relationship with a more limited
      number of producers or tend to group in purchasing associations while retaining
      their independence.
      As far as the retailers themselves are concerned, they face an adverse
      competitive situation due to both their individual lack of price control on
      suppliers and the high margins of between 150% to 200% that are required to
      cover the fairly high costs of operating in urban, often upmarket, areas. In fact,
      they have lost ground in a certain number of Member States to more recent
      forms of distribution falling within the other three categories and in particular
      the branded chains.
                                            63
 ---pagebreak---        However, as a consequence of their strong presence in some other Member
       States and their situation at the upper end of the market where they maintain a
      continuous commercial relationship with their customers, it should be noted that
      independent retailers are still, at least in terms of value added and employment
      (over 250 000 persons), the most important distribution channel in the
      Community, although probably not the largest one in terms of market share in
      volume.
      (ii)   Branded retail chains
(127) These chains, which are sometimes also involved in production in the
      Community, are generally owned by one or two large companies in each
      country, which in turn own several brands and operate across the whole market
      range. They operate from out-of-town super or discount stores, which, because
      of their sales volume, prices and specialisation, can resist the non-specialised
      supermarkets' pressure.
      The branded retail chains also sell through town centre shops replacing the
      independent    retailers   with    less   costly,  standardised  premises  which
      accommodate the need, on the part of some customers for an alternative retail
      buying environment to discount stores. Due to their leverage, their access to
     world supply since they import on their own account and the relatively low
     margins with which they operate, generally around 25% of the cost of sales for
     the central trading arm and 100% on average for the shops, branded retail chains
     are able to gain market share- rapidly once they enter a market and to achieve
     growth rates in excess of 5% per year.
                                             64
 ---pagebreak---        (iii) Non-specialised supermarkets
(128) Important in terms of volume, but less in terms of value on the total footwear
       market due to the low average price of their sales, non-specialised supermarkets
       have a strong influence at the lower end of the market.           Although they
       sometimes buy directly from suppliers located outside the Community, they
       usually rely on specialised importers for their imports, which constitute an
       important part of their footwear sales. Their traditional mark-up is around
       100%), but it can range from around 60% on promotional" operations to over
       130% on some Community products. Due to the additional level of the importer
      and the fixed part of the costs incurred, imports from the countries concerned
      through this sales channel usually reach the consumer at a price which is three
      times higher than the CIF level.
       (iv) Other sales channels
(129) Other sales channels, such as mail order companies or garment stores, have
      gained significance in certain Member States but none of these has individually
      acquired importance on a Community-wide basis. In certain Member States,
      specialised mail-order firms have a cost structure similar to the branded chains.
      Community-wide apparel chains of "small" shops also introduce footwear in
      their stores as a fashion branded accessory, generally with higher margins than
     on their usual clothing articles. Due to the fashion aspect of these sales, they are
      in competition with the branded chains, although to a lesser extent than the large
     general city centre stores.
                                          65
 ---pagebreak---        (c) Specific impact of the proposed measures on the various sales channels
(130) As regards the independent retailers, which still constitute the largest source of
      employment in Community footwear distribution, the general conclusion
      presented in recital 124 of this Regulation is strengthened by the fact that a low
      proportion of their supplies of the product concerned usually originates in the
      People's Republic of China, Indonesia or Thailand. It should be added that they
      are grouped in a confederation representing eight Member States on a
      representative level, and that no submission opposing the possible imposition of
      anti-dumping measures was received from this source or any other on their
      behalf.
(131) The companies owning branded chains have contested the need for the
      imposition of anti-dumping duties. Although the general conclusion is also
      applicable to them, the fact that some of them rely on the dumped imports for
      the supply of the product concerned more than the independent retailers explains
      why, within the distribution chain, they could fear a negative effect of the
      measures on their comparative competitive situation.
      The direct effect of possible measures on the financial situation of these
      companies would be negligible if the amount of the duty were to be fully passed
      on to the consumer. Indirect adverse financial effects could only be expected if,
     due to this price increase, consumers were to significantly reduce their
     purchases of the product concerned. However, should this happen, it would
     only be to a limited extent, as explained in recital 122.
                                           66
 ---pagebreak---       Moreover, the product concerned is never the sole source of revenue for these
       specialised shops and, due to its particularly low prices, represents less than
       12%o of the turnover of the cooperating companies operating branded chains. In
      this perspective, even a small contraction in the demand for the product
      concerned, which appears unlikely, would have a negligible impact on the
      companies as a whole, in particular if the demand is at least partly re-oriented to
      footwear with a higher price, with probably a higher margin in absolute terms.
(132) As far as non-specialised supermarkets or other non-specialised stores are
      concerned, in view of the even more limited extent to which their sales rely on
      the product concerned, their situation should not be affected by the imposition
      of measures even in the case of the market evolution envisaged above.
(133) The situation of the importers supplying these non-specialised distribution
      channels was examined, as the portion of their turnover based on products
      imported from the countries concerned was found to be significant.           These
      companies are generally run with a very limited and flexible structure allowing
      them to sell only when the trading margin they foresee covers the costs incurred.
      Their expertise on the market and their ability to design and sell are not affected
      by the country of origin of the goods. The anti-dumping measures having an
      impact on footwear distribution as a whole, these importers will be able to
      benefit from any market situation, and continue to supply their clients with
      Chinese, Indonesian or Thai imports, or any non-dumped products, as well as
      Community-produced ones.
                                          67
 ---pagebreak--- (134) In conclusion, it could not be established that the imposition of anti-dumping
      measures on the footwear concerned would be such as to affect significantly the
      financial situation of either the footwear distribution chain as a whole or of a
      part of it.
4.    Conclusion concerning Community interest
(135) Having examined all the various interests involved, it is considered that positive
      reasons exist for taking measures and that there are no compelling reasons not to
      take action against the dumped imports in question.           Indeed, leaving the
      Community industry without adequate protection against the injurious dumping
      would add to the difficulties of this industry and could lead to its disappearance
      or relocation outside the Community. The limited price increase resulting for
      consumers from the imposition of anti-dumping measures can by no means be
      considered to be of the same magnitude as the cost of the total disappearance of
                                                                  «
      a major Community industry.
      Finally, in view of, inter alia, the time which has elapsed since the completion
      of the investigation of dumping and injury, it is considered appropriate that
     definitive anti-dumping duties on the imports of the product concerned be
     directly imposed, i.e. without resorting to the intermediate step of provisional
     duties.
                                             6S
 ---pagebreak---                                   H.   DEFINITIVE DUTY
  1.     Simultaneous application of anti-dumping measures and quantitative
         restrictions
          (a) Legal aspects
  (136) Certain interested parties argued that no anti-dumping measures should be
         imposed on imports of the products subject to the present investigation
         originating in the People's Republic of China since they are already subject to a
         Community-wide quantitative quota imposed by Council Regulation (EC)
         No 519/946, i.e. during the investigation period.
  (137) The Community Institutions cannot subscribe to this point of view which, they
         consider, is based on an incorrect interpretation of the rationale of the above
         mentioned Regulation. That Regulation introduced a new trade regime which
         led to the abolition of some 4,617 national restrictions provided for under the
        previous regime vis-à-vis non market economy countries, almost all of which
        concerned the People's Republic of China. These restrictions were replaced by
        Community quotas for seven Chinese products and Community surveillance for
        26 other products.
        Overall, these autonomous quotas, restricted to few particularly sensitive
        products, cannot be considered as an exception to some hypothetical liberal
        trading regime with the People's Republic of China but are part of the means of
        achieving the goal of a more liberal and, above all, more uniform trading regime
        with the People's Republic of China, while any action under the Basic
        Regulation is directed against injurious dumping.
6
     OJ L 6 7 , 10.3.1994, p. 89.
                                              69
 ---pagebreak---        Accordingly, the injury which the imposition of anti-dumping measures would
       attempt to remedy has not been addressed by means of another commercial
       defence instrument. Therefore, following an anti-dumping investigation which
       has shown that measures are warranted with a view to remedying injurious
       dumping, the imposition of such measures may be considered, irrespective of
       the existence of any quantitative restrictions which may be applicable to the
       products in question. This conclusion had however to be subjected to a further
       analysis, from an economic angle.
       (b) Economic aspects (impact of the quotas on import trends)
(138) Data available when preliminary findings were established (restricted to 1995)
      were showing that, after the end of the investigation period, import volume from
      the People's Republic of China had decreased significantly, while prices
      appeared to have increased.
      These circumstances were considered as sufficiently exceptional to warrant an
      additional examination, on the basis of the most recent data available, of the
      trends in imports which occurred after the investigation period. During the time
      needed to cany out this additional examination, it was considered appropriate
      not to impose any provisional measures.
(139) In order to examine the import trends for the product concerned in the two years
      following the imposition of the quota, consideration was given to some
      methodological points:
                                           70
 ---pagebreak---       First, since the quota is allocated on an annual basis and for calendar years,
      estimates on the basis of partial data corresponding to only some months of
       1996 were considered as insufficiently accurate.      Accordingly, the analysis
      detailed below was carried out on the basis of full-year data concerning both
      1995 and 1996 and could only be completed when such data were available for
      1996.
      Secondly, Regulation (EC) No 519/94, as amended, while imposing quantitative
      restrictions on certain footwear falling within the same nomenclature
      subheadings as those concerned by the present proceeding, excluded from these
      restrictions footwear   involving "special technology", which is by definition
      sold at least at ECU 9 (originally ECU 12) per pair at CIF level. As explained
      in recital 15, footwear intended for the same use and with the same
      characteristics as footwear involving special technology, but irrespective of its
      price, was excluded from the present anti-dumping investigation.
(140) For the years 1995 and 1996, footwear involving special technology was
      excluded from the total imports reported under the CN codes concerned, on the
      basis of TARIC data, in order to establish the import volumes and values for the
      product concerned. In the absence of complete TARIC statistics before 1995,
      corrections were made for previous years, taking that year as a reference. When
      comparing figures concerning imports from the People's Republic of China in
      1995 and 1996 with those referring to the years prior to thé imposition of the
      quota, two conclusions can be drawn:
                                          71
 ---pagebreak---       As foreseen, the quota had an obvious impact on import volumes from the
      People's Republic of China, which declined most noticeably between 1994 and
       1995 from 28.6 to 16.1 million pairs. More in detail, import volumes decreased
      for all four categories of the product concerned, corresponding to the four CN
      codes, between 1994 and 1995. However, the volumes imported increased
      again between 1995 and 1996, where they reached 19.1 million pairs.
      Furthermore, and more significantly in the context of an anti-dumping
      proceeding, prices were not found to have increased as a consequence of the
      implementation of the quota. Although one could have expected prices to rise
      in parallel to the decrease in import volumes imposed by the quota, no such
      thing happened. Indeed, the average import price remained stable since the
      imposition of the quota, ranging from ECU 5.75 per pair in 1993, peak year for
      the volumes, to ECU 5.69 per pair in 1996. For none of the four categories
      concerned could a change in the trend of the import price from the People's
      Republic of China be observed. It should also be noted that, of the exporting
      countries concerned, the Chinese price levels are, by far, the lowest.
(141) Within the four CN codes analysed, it could not be established either that a
      progressive shift to footwear involving special technology, which was excluded
      from the investigation and highly priced, had taken place, which could have
      explained the stagnation of the import price for the remaining products. Indeed,
      the proportion of footwear involving special technology in the total imports of
      the codes concerned remained stable between 1995 and 1996 both in volume
      and value terms.
                                          72
 ---pagebreak--- (142) As far as Thailand and Indonesia are concerned, no significant change in the
      overall trends of their imports and of the competitive conditions on the market
      could be established which would contradict the findings detailed in recitals 78
      to 87.
(143) In the light of the above, it has been concluded that the impact on import trends
      of the quantitative restrictions applicable to imports of the footwear concerned
      originating in the People's Republic of China is not such as to justify a global
      reconsideration of the conclusion that, in the present case, anti-dumping
      measures are warranted.        However, as explained below, it is considered
      appropriate that, for the determination of the form for the measures, the above
      described trends be taken into account.
2.    Injury elimination level
      (a) Methodology
(144) In accordance with Article 9 (4) of the Basic Regulation, an examination was
      carried out with a view to determining the level of duty which would be
      adequate to remove the injury suffered by the Community industry as a
      consequence of dumping.
      Accordingly, it was considered that the export price of dumped imports should
      be increased to a non-injurious price level corresponding to the Community
      industry's cost of production and a reasonable profit (hereinafter referred to as
      the "non-injurious price").
 ---pagebreak---       As far as the cost of production is concerned, it was considered appropriate to
      take as a reference the cost of production of the Community producers in the
      verification sample.
      As far as the profit margin is concerned, it was considered that a margin of 7%
      on turnover could be regarded as an appropriate minimum, taking into account
      the need for long-term investment and, more particularly, the amount which the
      Community industry itself was able to maintain as a minimum during the four
      year period under examination (1991-1994), at the expense of its market share.
(145) As explained in recital 16, at the outset of the investigation it was considered
      appropriate to divide the product in question into categories, and perform price
      comparisons on the basis of these categories.        However, as mentioned in
      recital 84, during the course of the investigation it appeared that, as far as the
      cooperating producers/exporters were concerned, greater certainty in the product
      matching could be achieved by using an even more detailed product split. To
      this end, the most exported models of the Chinese and Indonesian
      producers/exporters in the samples and the most exported models of the
      cooperating Thai producers/exporters were selected and separated into 17
      families of footwear.
                                           74
 ---pagebreak---        In order to calculate the injury-elimination margin, the CIF import price,
       adjusted to duty paid, customer-delivered levels was compared to the non-
       injurious price of the Community producers at the same level of trade. Given
       the high level of non-cooperation from all three countries concerned, this
       calculation was carried out on a category-by-category basis and, only for
       cooperating producers/exporters, on a family-by-family basis whenever the
       greater precision conferred a benefit to them for their cooperation. It should be
       noted that import prices were adjusted to the duty paid, customer-delivered level
       by using the adjustment methodology used for the undercutting assessment, as
      presented at recital 85.
       (b) People's Republic of China
(146) Since the dumping margin established for Grosby (China) Limited was de
      minimis (1.3%) and should thus result in any definitive anti-dumping duty for
      this company to be set at 0%, no injury-elimination level calculation was carried
      out for Grosby (China) Limited.
(147) As far as other exports from the People's Republic of China are concerned, the
      residual injury-elimination margin was found to be 46.0%), which is lower than
      the established dumping margin and should therefore, in accordance with
      Article 9 (4) of the Basic Regulation, constitute the basis for the definitive anti-
      dumping duty for all other imports originating in the People's Republic of
      China.
                                           75
 ---pagebreak---       (c) Indonesia
(148) Individual injury-elimination margins for cooperating producers/exporters in the
      sample for Indonesia, expressed as a percentage of CIF price, were found to
      range from 0% to 99.5%, with an average to be applied to the cooperating
      producers/exporters outside the sample of 33.6%.
      For the producers/exporters in the sample, these margins were found to be, in all
      cases except two (P.T. Golden Adishoes and P.T. Indosepamas Anggun / P.T.
      Primashoes Ciptakreasi), higher than the respective dumping             margins
      established. In accordance with Article 9 (4) of the Basic Regulation, the level
      of the definitive anti-dumping duty for all cooperating producers/exporters in
      Indonesia should therefore be based on the dumping margins established, with
     the exception of:
         - P.T. Golden Adishoes, whose injury-elimination margin, lower than its
         dumping margin, was found to be nil and should thus result in any definitive
         anti-dumping duty for this company to be set at 0%>,
         and
         - P.T. Indosepamas Anggun / P.T. Primashoes Ciptakreasi, whose common
         injury-elimination margin (2.6%) was lower than their dumping margin and
         should thus constitute the basis for the definitive anti-dumping duty
         applicable to both producers/exporters as explained in recital 24.
                                          76
 ---pagebreak---  (149) As regards the producer/exporter referred to in recital 31 (P.T. Kingherlindo) for
       which facts available had to be applied, it was also considered in this context
       that the partial cooperation it had shown would have to be distinguished from
       the total non-cooperation of those producers in Indonesia which neither replied
    ' to the Commission's questionnaire nor made themselves known.             However,
       since a calculation based on the same methodology as the one used for dumping
       calculations (see recital 40) would have resulted in the injury-elimination
       margin applicable to the company to amount to 26.9%, i.e. to be higher than the
       one found      for non-cooperating producers/exporters, it was considered
       appropriate to align P.T. Kingherlindo's injury-elimination margin on the
       residual injury-elimination margin, which, as explained in the following recital,
       amounted to 20.3%.
(150) The injury-elimination margin for non-cooperating producers/exporters in
       Indonesia was found to be 20.3% and therefore lower than the residual dumping
      margin of 50% established for this country. Accordingly, the residual anti-
      dumping duty for imports originating in Indonesia should be established on the
      basis of this injury-elimination margin.
      (c) Thailand
(151) Since the dumping margin established for the three cooperating Thai
      producers/exporters (namely CK Shoes and PSR Footwear/Bangkok Rubber
      Company) were found to be either nil or de minimis and should thus result in
      any definitive anti-dumping duties for these producers/exporters to be set at 0%,
      no    injury-elimination    level  calculations   were    carried   out  for   the
      producers/exporters concerned.
                                           77
 ---pagebreak--- (152) For Thai non-cooperating producers/exporters, the injury-elimination margin
      was found to be 24.7%, i.e. lower than the residual dumping margin of 50%>
      established for this country. Accordingly, the residual anti-dumping duty for
      imports originating in Thailand should be established on the basis of this injury-
      elimination margin.
3.    Form of definitive duties
(153) On the basis of the analysis detailed in recitals 138 to 143, it appeared that while
      the imposition of the quota had the obvious desired effect of limiting- import
      volumes of the product concerned originating in the People's Republic of China
      and thus the cumulated volumes originating in the three countries concerned, it
      had no apparent effect on the prices of the imports in question, which can
      therefore be assumed to have remained injurious. This effect arises mainly from
      the concentration of imports on the low to lower-middle end of the range.
(154) In these circumstances, it was considered that an ad-valorem duty would
      disproportionately affect relatively expensive footwear, while having a lesser
      effect on the low to lower-middle end sector. Conversely, a variable duty, based
      on a minimum price, would precisely target the injurious price element left
      unremedied by the quota. Accordingly, it was considered that the definitive
      anti-dumping duty should take the form of a variable duty based on a minimum
      price.
                                           78
 ---pagebreak---        Such a measure will indeed encourage price increases relating to the bulk of
      imports, which are concentrated at the low to lower-middle end sector. The
      expected price increase will thus take place in the product range most affected
      by the dumped imports, while at the same time minimizing the effect on the
      price of the least injurious imports of more sophisticated footwear. Therefore,
      while the quota has obviously created a safety net against sudden and potentially
      injurious surges in imports of the product concerned, a variable duty appears to
      be particularly appropriate as a complementary safety net against the injurious
      prices of these imports.
(155) As far as the level of the minimum price is concerned, the following
      considerations were taken into account:
      On the Community industry side, it was considered that the effects of the
      proposed measures should allow the average import price, when adjusted to the
      delivered importer warehouse level (in accordance with the methodology
      presented in recital 85), to be equal to the average non-injurious price
      established for the calculation of the injury elimination level for the product
      concerned as explained in recitals 144 and 145, which amounted, on a weighted
      average basis for the four categories concerned, to ECU 9.6 per pair on a
     delivered basis.
                                          79
 ---pagebreak---  (156) As regards the imported products and their price breakdown, Eurostat
       information on both import volumes and average prices was analysed in greater
       detail in the light of data relating to individual export transactions provided by
       cooperating producers/exporters and importers. On this basis it was established
       that, by setting the minimum price at ECU 5.7 per pair on a CIF basis, the price
       breakdown of imports would be changed to the effect that the foreseeable
       average import price for products originating in the People's Republic of China
       would be ECU 7.5 per pair at CIF level, equivalent to the non injurious price of
       ECU 9.6 per pair at a delivered-warehouse-importer level.
       Indeed, both in volume and value terms, a majority of the total imports and a
       part of the imports in each category took place under the proposed minimum
       price. The increase in the price of these predominant imports resulting from the
       imposition of the variable duty is thus expected to have a strong influence on the
       average foreseeable import price. In doing this analysis, care was taken to
      ensure that the effect of the quotas on the import volumes, as presented in recital
       140, be reflected in an appropriate way.
(157) The data available in relation with products originating in Indonesia and
      Thailand were for certain categories too limited to be considered as
      representative of the total imports from these countries. However, the general
      conclusions presented in the preceding recital could be confirmed to the effect
      that some imports originating in these countries did in fact take place during the
      investigation period below the level foreseen for the minimum price. It could
      also be confirmed that the setting of the minimum price at ECU 5.7 per pair for
      Indonesia and Thailand would, in line with the conclusions drawn in recitals
      150 and 152, ensure that imports be made, on average, at non-injurious price
      levels.
                                             80
 ---pagebreak--- (158) As regards producers/exporters for which individual duty rates were foreseen, it
       is considered that the duty applicable should be the one based on the minimum
       price, if such a duty is lower than the one resulting from their individual ad
       valorem duty rate.
       For all those producers/exporters for which a dumping margin of less than 2%,
       i.e. de minimis, was established, no duty shall apply thereto in accordance with
      Article 9 (3) of the Basic Regulation.
(159) Further to the final disclosure, certain interested parties, while opposing any
      measures, have questioned the appropriateness of a duty based on a single
      minimum price applicable to all four categories of footwear concerned and
      claimed that, in order to reflect price differences, at least two different minimum
      prices, one for the category of footwear with uppers of plastics, the other for the
      three categories of footwear with leather uppers, should be set. Conversely, in
      the knowledge of .the above claim, other interested parties have beforehand
     opposed any split mainly on the ground that it would result in an increase of the
     minimum price applicable to footwear with leather uppers.
 ---pagebreak--- ( 160) It cannot be denied in this respect that average import prices relating to footwear
       with uppers of plastics are lower than those relating to footwear with leather
       uppers. However, it should be stressed that imports of both types also spread
       over wide and overlapping price ranges. Moreover, they are one like product
       and it is often beyond the consumer's perception capacity to differentiate plastic
       material from leather. In this context, it can be expected that the measure will
       have a very limited impact, if any, on the usual hierarchy of prices amongst the
       four footwear categories concerned. It is therefore considered that a variable
      duty based on a single minimum price constitute an appropriate and reasonable
      way to obtain the expected average price increase for all footwear categories
      concerned.
(161) The representatives of the complaining Community industry expressed concern
      about the remedial effect one could expect from an anti-dumping duty based on
      a minimum price in the case of imports which are spread over a wide price
      range.    They accordingly requested that an ad valorem duty be considered
      instead.
(162) The Council cannot agree with this line of reasoning and confirm that the
      various considerations detailed in recitals 153 to 157 should have an influence
      on the form of the measures and will be appropriately taken into account by the
      setting up of a variable anti-dumping duty based on a minimum price. Such a
      measure will indeed not lead to the automatic collection of a duty but should
      nevertheless result, for imports originating in the three countries concerned, in
      average price increases which are consistent with the conclusions of the injury-
      elimination level calculations.
                                            82
 ---pagebreak--- (163) The definitive anti-dumping duty should therefore be calculated as follows:
a)    People's Republic of China: for all producers/exporters, with the exception of
      Grosby (China) Limited, for which a de minimis dumping margin was found,
      the duty should be equal to the difference between the minimum price of ECU
      5.7 per pair and the net, free at Community frontier, before duty, price per pair.
b)    Indonesia: for all producers/exporters, with the exception of P.T. Golden
      Adishoes, whose exports were found to have been sold at prices above the
      injury-elimination level, the duty should be equal to the difference between the
      minimum price of ECU 5.7 per pair and the net, free at Community frontier,
      before duty, price per pair.
      For the following cooperating Indonesian producers/exporters, the duty should
      be equal to the following rates or to the difference between the minimum price
      of ECU 5.7 per pair and the net, free at Community frontier, before duty, price
     per pair, whichever is the lowest:
                     P.T. Emperor Footwear                   2.0%)
                     P.T. Indosepamas Anggun                 2.6%
                     P.T. Primashoes Ciptakreasi             2.6%>
                     P.T. Dragon                             5.9%
                     P.T. Fortune Mate                       14.9%
                     P.T. Bosaeng Jaya                       12.3%
                     P.T. Karet Murni Jelita                 12.3%
                     P.T. Koryo International                12.3%
                     P.T. Lintas Adhikrida                   12.3%
                     P.T. Universal Wisesa                   12.3%
                     P.T. Volmacarol                         12.3%
                     P.T. Kingherlindo                          20.3%
                                           83
 ---pagebreak--- c)    Thailand: for all producers/exporters, with the exception of Bangkok Rubber,
      CK Shoes and PSR Footwear, for which no or de minimis dumping margins
      were found, the duty should be equal to the difference between the minimum
      price of ECU 5.7 per pair and the net, free at Community frontier, before duty,
      price per pair.
                      I.    NEW EXPORTING PRODUCERS
(164) Pursuant to Article 11 (4) of the Basic Regulation, a new exporter's review to
      determine individual dumping margins cannot be initiated in this proceeding
      with regard to Indonesia as sampling was used in the original investigation.
      However, in order to ensure equal treatment between any new exporting
      producers and the producers/exporters cooperating in this investigation but not
      selected in the sample, it is considered that provision should be made for the
      weighted average, ad valorem, duty rate (12.3%) applicable, as an alternative to
      the variable duty, to the latter producers/exporters to be applicable to any new
      exporting producers which would otherwise be entitled to a review pursuant to
      Article 11 (4),
HAS ADOPTED THIS REGULATION:
                                        Article 1
1.   A definitive anti-dumping duty is hereby imposed on imports of footwear
     falling within CN codes ex 6402 99 98 (Taric code 6402 99 98 * 90), ex
     6403 99 93 (Taric code 6403 99 93 * 90), ex             6403 99 96 (Taric    code
     6403 99 96 * 90) and ex 6403 99 98 (Taric code 6403 99 98 * 90), originating
     in the People's Republic of China, Indonesia and Thailand, except as regards the
     footwear described in paragraph 3.
                                           84
 ---pagebreak--- 2.     The definitive anti-dumping duty shall be:
                                                                                    Taric
   Country      Products manufactured by        Variable or ad valorem duty       Additional
                                                                                   Codes
 People's     All producers/exporters      equal to the difference between a         8900
 Republic of                               minimum price of ECU 5.7 per pair
 China                                     and the net, free at Community
                                           frontier price per pair, before duty
              with the exception of:
              Grosby (China) Limited                          0%                    8759
 Indonesia    AH producers/exporters       equal to the difference between a        8900
                                           minimum price of ECU 5.7 per pair
                                           and the net, free at Community
                                           frontier price per pair, before duty
              with the exception of:
              P.T. Golden Adishoes                            0%                    8759
              and of the following         equal to the following rates or to the
             producers/exporters:          difference between a minimum price
                                           of ECU 5.7 per pair and the net, free
                                           at Community frontier price per pair,
                                           before duty, whichever is the lowest:
              P.T. Emperor Footwear                          2.0%                   8760
              P.T. Indosepamas Anggun                        2.6%                   8761
              P.T. Primashoes Ciptakreasi                   2.6%                    8761
             P.T. Dragon                                    5.9%                   8763
             P.T. Fortune Mate                              14.9%                  8764
             P.T. Bosaeng Jaya                              12.3%                  8765
             P.T. Karet Murni Jelita                        12.3%                  8765
             P.T. Koryo International                       12.3%                  8765
             P.T. Lintas Adhikrida                          12.3%                  8765
             P.T. Universal Wisesa                          12.3%                  8765
             P.T. Volmacarol                                12.3%                  8765
             P.T. Kinsherlindo                             20.3%                   8762
 Thailand    All producers/exporters      equal to the difference between a        8900
                                          minimum price of ECU 5.7 per pair
                                          and the net. free at Community
                                          frontier price per pair, before duty,
             with the exception of
             Bangkok Rubber                                  0%                    8766
             CK Shoes                                        0%                    8766
             PSR Footwear                                    0%                    8766
 ---pagebreak--- 3.  The duty shall not apply to footwear for use in sporting activities, with a single
    or multi-layer moulded, not injected sole, manufactured from synthetic
    materials specially designed to absorb the impact of vertical or lateral
    movements and with technical features such as hermetic pads containing gas or
    fluid, mechanical components which absorb or neutralise impact or materials
    such    as   low-density   polymers      (Taric    codes    6402 99 98 * 11    and
    6402 99 98 * 19, 6403 99 93 * 11 and 6403 99 93 * 19, 6403 99 96 * 11 and
    6403 99 96 * 19 and 6403 99 98 * 11 and 6403 99 98 * 19).
4.  Where any Indonesian party provides sufficient evidence to the Commission
   that it did not export the goods described in paragraph 1 to the Community
   during the investigation period, that it is not related to any exporter or producer
   subject to the measures imposed by this Regulation and that it has exported the
   goods concerned to the Community after the investigation period, or that it has
   entered into an irrevocable contractual obligation to export a significant quantity
   to the Community, then the Council, acting by simple majority on a proposal
   submitted by the Commission, after consulting the Advisory Committee, may
   amend paragraph 2 by attributing that party, as an alternative to the variable
   duty, the ad valorem duty rate applicable to cooperating exporting producers not
   in the sample, i.e. 12.3%.
                                       86
 ---pagebreak--- 5.    Unless otherwise specified, the provisions in force concerning duties and other
      customs practices shall apply.
                                       Article 2
This Regulation shall enter into force on the day following its publication in the
Official Journal of the European Communities.
This Regulation shall be binding in its entirety and directly applicable in all Member
States.
Done at Brussels,
                                                             For the Council
                                                             The President
                                         87
 ---pagebreak---  ---pagebreak---                                                                    ISSN 0254-1475
                                                             COM(98) 59 final
                                              DOCUMENTS
EN                                                                02   11 10
                                    Catalogue number : CB-CO-98-062-EN-C
                                                             ISBN 92-78-30833-1
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