CELEX: 51997PC0244
Language: en
Date: 1997-05-28
Title: Proposal for a Council Regulation (EC) terminating the anti-dumping proceeding concerning imports of outer rings of tapered roller bearings originating in Japan and repealing the anti-dumping measures imposed on such imports

COMMISSION OF THE EUROPEAN COMMUNITIES
                                                Brussels, 28.05.1997
                                                COM(97) 244 final
                                 Proposal for a
                       COUNCIL REGULATION (EC)
terminating the anti-dumping proceeding concerning imports of outer rings
   of tapered roller bearings originating in Japan and repealing the anti-
               dumping measures imposed on such imports
                        (presented by the Commission)
 ---pagebreak---  ---pagebreak---                           EXPLANATORY MEMORANDUM
Subject:       anti-dumping proceeding concerning imports of outer rings of
               tapered roller bearings originating in Japan
1. Please find herewith a proposal for a Council regulation terminating the anti-
   dumping proceeding concerning imports of outer rings of tapered roller
   bearings originating in Japan and repealing the anti-dumping measures
   imposed on such imports.
2. The enclosed proposal is the result of a review of the anti-dumping measures
   in force with regard to the imports in question which was requested by the
   Community industry and initiated by the Commission in October 1994.
3. Further to the investigation of the Commission's services, it was found that
   although the Community industry is still in a precarious situation, the imports
   in question did not in isolation have a materially injurious impact on the
   situation of the Community industry. The allegations set forth in the request
   for an interim review submitted by the Community industry that the measures
   in force were insufficient to offset increased injury are therefore refuted.
   Indeed, it is the opinion of the Commission's services that the precarious
   situation of the Community industry may rather stem from imports from other
   third countries.
4. In addition, the Commission's services found that it is not likely that the repeal
   of the anti-dumping measures currently in force would create a situation in
   which    a   materially  injurious  impact    of  these  imports    would    recur.
Given the above findings, it is considered that the result of the review of the anti-
dumping measures in force with respect to imports of the product under
consideration originating in Japan is that the anti-dumping               proceeding
concerning the above-mentioned imports should be terminated and that the anti-
dumping measures in force should be repealed.
 ---pagebreak---                                       Proposal for a
                             COUNCIL REGULATION (EC)
terminating the anti-dumping proceeding concerning imports of outer rings
    of tapered roller bearings originating in Japan and repealing the anti-
                  dumping measures imposed on such imports
THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty establishing the European Community,
Having regard to Council Regulation (EC) N° 384/96 of 22 December 1995 on
protection against dumped imports from countries not members of the European
Community,(1) and in particular Article 9 and Article 11 paragraph 3 thereof,
Having regard to the proposal of the Commission following consultation of the
Advisory Committee,
M>
       OJ N° L 56, 6.3.1996, p. 1, amended by Council Regulation (EC) N° 2331/96, OJ N° L
       317, 6.12.1996, p. 1.
                                           cu
 ---pagebreak---                                        -2-
Whereas:
A.      PROCEDURE
(1.) In June 1994, the Commission received a request for an interim review of
the definitive anti-dumping measures on imports of outer rings of tapered roller
bearings (hereafter referred to as 'Cups') originating in Japan imposed by
Council Regulation (EEC) N° 55/93.(2) This request was lodged by the Federation
of European Bearing Manufacturers' Associations (FEBMA) on behalf of
Community producers whose collective output was stated to constitute a major
proportion of total Community production of Cups.
(2.) The request asserted that the anti-dumping measures in force are not or no
longer sufficient to counteract the dumping which is causing injury as both
dumping and injury resulting therefrom were alleged to have increased.
(2)
        O J N ° L 9 , 15.1.1993, p. 7.
 ---pagebreak---                                                -3-
(3.) Considering that there was sufficient evidence to warrant the initiation of an
interim' review under Article 11 (3) of Council Regulation (EC) N° 3283/94 on
protection against dumped imports from countries not members of the European
Community(3) the Commission published on 20 October 1994 a notice of
initiation of a review of the anti-dumping measure applicable to imports of
Cups.(4)
(4.) The Commission officially advised the Community producers, the importers
and the Japanese producers/exporters known to be concerned as well as the
representatives of Japan of the opening of the investigation and gave the parties
concerned the opportunity to make known their views in writing and to request a
hearing.
(3)
         OJ N° L 349, 31.12.1994, p. 1, replaced by Council Regulation (EC) N° 384/96.
 (4)
         OJ N° C 292, 20.10.1994, p. 5.
 ---pagebreak---                                         -4-
(5.) The Commission sought and verified all information it deemed to be
necessary for the purpose of its determination.
(6.) The investigation period applied in the present proceeding for establishing
whether dumping and undercutting existed was from 1 October 1993 to 30 June
1994. For the analysis of the trends of the factors analysed for the purposes of
establishing whether the Community industry suffered injury caused by the
imports in question the period from 1 January 1991 to 30 June 1994 was used.
In order to ensure comparability of the data relating to the investigation period
with that relating to the previous calendar years, this was extrapolated to reflect
the situation in a twelve months' period. Since the present interim review was
initiated before the accession of Sweden, Austria and Finland, meaning that the
investigation period ended before that accession, the investigation of injury is
based on an analysis of facts pertaining to the Community of twelve.
 ---pagebreak---                                         - 5-
(7.) The investigation has exceeded the normal time period because of the
complexity of the assessment of the injury and causality aspects of the
proceeding, which were mainly caused by the high number and degree of
diversity of the types within the product investigated.
(8.) The complainant, FEBMA, lodged the.request for an interim review  on
behalf of the following producers:
FAG Kugelfischer Georg Schàfer KGaA (Germany);
SKF GmbH (Germany);
SKF Industrie SpA (Italy);
SKF Espagnola S.A. (Spain);
Timken France (France)
British Timken (United Kingdom); and
Société Nouvelle de Roulements (France).
 ---pagebreak---                                         -6-
(9.) During the investigation period, the following companies exported Cups from
Japan to the Community:
Koyo Seiko Co. Ltd. (Osaka); and
NTN Corporation (Osaka).
(10.) Both of these companies co-operated in the investigation by submitting a
response to the Commission's questionnaire and on the spot verification visits
were carried out on their premises by the Commission's services.
(11.) No unrelated importers co-operated with the Commission in the present
investigation.
 ---pagebreak---                                        -7-
(12.) In addition, numerous end-users submitted their comments which were
taken into account when they were substantiated by supporting evidence.
B.      PRODUCT UNDER CONSIDERATION AND LIKE PRODUCT
(13.) The product under consideration is outer rings of tapered roller bearings
which is a component of tapered roller bearings.
(14.) In Japan and in the Community, Cups are mainly sold to two categories of
customers, namely industrial users and distributors.
 ---pagebreak---                                               - 8-
(15.) It should be noted that complete tapered roller bearings include the
following components: (1-) an inner ring, being a cone-shaped ring, made of the
same material as the outer ring (the inner and outer ring are often stamped from
the same piece of material); (2) tapered anti-friction rollers, fitted on the inner
ring and which allow it to move in relation to the outer ring; (3) a cage, which
holds the rollers in place on the inner ring; and (4) an outer ring or cup which is
the female part into which the male part, the cone (consisting of the inner ring,
rollers and cage), is assembled in order to produce a complete tapered roller
bearing.
(16.) In connection with the present investigation, FEBMA and certain Japanese
producers submitted arguments in favour of the Commission regarding complete
tapered roller bearings and Cups as one like product and thus merging the
present review investigation with the investigation concerning imports of
complete tapered roller bearings originating in Japan.(5)
 (5)
        Commission Decision of 3 December 1996 terminating the anti-dumping proceeding
        concerning imports of tapered roller bearings originating in Japan. OJ N° L 10,14.1.1997,
        p. 34.
 ---pagebreak---                                          -9-
(17.) The above interested parties have stated that Cups, just as cones, the
latter being covered by the proceeding concerning complete tapered roller
bearings, are merely a component of the finished product and are only sold
separately when delivered in conjunction with the other constituent components
of tapered roller bearings in order to be assembled into a complete tapered roller
bearing at the premises of the final customer.
(18.) However, in line with the reasoning set forth by the Court of First Instance
of the European Community,(6) it is considered that tapered roller bearings and
Cups constitute separate products, each of which can legally be the subject of a
separate anti-dumping proceeding.
 (6)
        Case T-166/94 Koyo Seiko Co. Ltd. v Council of the European Union. Judgment of 14
        July 1995.
 ---pagebreak---                                       -10-
(19.) It was found that Cups produced in Japan, sold domestically and exported
to the Community and Cups produced by the Community producers and sold on
the Community market are alike in their physical characteristics and uses. They
were therefore considered as a like product in accordance with Article 1(4) of
Council Regulation (EC) N° 384/96.
C.      DEFINITION OF THE COMMUNITY INDUSTRY
(20.) One Japanese owned companies produced tapered roller bearings and
components thereof, including Cups, in the Community during the period under
consideration. This, company, however, was not considered part of the
Community industry within the meaning of Article 4(1 )(a) of Regulation (EC) N°
384/96. This approach was considered justified as the company is related to an
exporter from Japan of the product under investigation. The company sell all its
production to the sales subsidiaries located in the Community and equally
related to the exporter from Japan and which are also involved in selling
imported Cups originating in Japan. It is considered that in those circumstances
the producing company located in the Community might therefore benefit from
any unfair business practices. In such circumstances, the producer was not
considered to be behaving as a normal Community producer, but rather as a
complementary source of supply for an exporter accused of practising dumping.
 ---pagebreak---       •'                                -11 -
(21.) One of the Community producers mentioned in recital 8 did not submit a
response to the Commission's questionnaire within the deadline set by the
Commission. In view of this non-cooperation on the part of the company in
question, it was excluded from the definition of Community industry for the
purpose of the injury determination in connection with the present investigation.
Consequently, for the remainder of this analysis, the term Community industry
refers to the cooperating Community producers which supported the complaint,
whose collective output of Cups constitutes a major proportion of total
Community production within the meaning of Article 4(1) of Regulation (EC) No.
384/96.
D.       INJURY
(22.) In view of the fact that the product under investigation in the present review
is a component of tapered roller bearings, the majority of the Community
producers could, in certain instances, not distinguish in their internal accounts
between data relating to complete tapered roller bearings and Cups respectively.
Thus, where necessary, it was considered appropriate to resort to an application
of Article 3(8) of Council Regulation (EC) N° 384/96 which provides that, "if [...]
separate identification of [the production, sales and profits of the product under
investigation] is not possible, the effects of the dumped imports shall be
assessed by examination of the production of the narrowest group or range of
products, which includes the like product, for which necessary information can
be provided".
 ---pagebreak---                                           -12-
(23.) In the present review, the narrowest group of products for which the
Community producers could provide the necessary information on the above
factors is complete tapered roller bearings. Whenever the above-mentioned
principle of estimation has been applied in the analysis below, this has been
clearly indicated.
(24.) Also, as in the initial investigation, accurate officially compiled statistics are
not available since the combined nomenclature heading under which Cups are
classified covers more than just that product. The injury analysis is therefore
based on data provided by the Community producers and the Japanese
exporters and on estimated data based on information submitted by the parties
concerned.
 ---pagebreak---                                          -13-
Community consumption
(25.) Between 1991 and the investigation period, the estimated consumption of
Cups in the Community (of twelve) decreased by 4.2 percent. The above
decrease of the market is the result of the general evolution of the business
cycle on the Cup market whose size varies according to the general level of
activity on the part of the users of Cups.
Volume, sales and market share of imports
(26.) It is considered that, in this specific case, only sales of Japanese Cups on
the open market to independent purchasers, i.e. sales of Cups released as such
for free circulation in the Community, are relevant for the injury determination
since only such sales are in direct competition with the sales of the Community
industry.
 ---pagebreak---                                       -14-
(27.) Between 1991 and the investigation period sales of imported Cups
originating in Japan to independent purchasers in the Community (expressed in
pieces) decreased by 35 percent. In line with this decrease in sales and contrary
to the allegations by the Community industry, the resulting market share of the
imports under consideration decreased steadily from a market share of 6.6
percent in 1991 to a market share of 4.5 percent in the investigation period.
Prices of imports
(28.) The prices charged by the Japanese producers were compared with the
prices charged for identical types by the Community producers which could
provide transaction by transaction data for Cups sold separately by channel in
the four most important Member States (Germany, the UK, France and Italy
which, in view of the volumes of sales made in those Member States, were
considered as being representative of the situation in the entire Community).
Based on this analysis, it was found that undercutting on the part of the
Japanese producers did occur during the investigation period.
 ---pagebreak---                                       -15-
(29.) However, no pertinent conclusions can be drawn from this analysis due to
the fact that the Japanese companies involved sell only a limited number of
types which are identical or directly comparable to those manufactured by the
Community producers in sufficient quantities to render meaningful a comparison
with European producers. Under these conditions, no individual margins for price
undercutting have been established for each company involved.
 ---pagebreak---                                        -16-
Situation of the Community industry
        Sales and market shares
(30.) The quantity of Cups manufactured and sold in the Community by the
Community industry (expressed in pieces) decreased by 16.5 percent during the
period under consideration. The resulting market share of the Community
industry decreased in the same period from around 84 percent in 1991 to around
74 percent at the end of the investigation period.
(31.) The market share of imported Cups, sold separately, manufactured by the
Community producers outside the Community of twelve (in Austria and the
United States) at long-established manufacturing facilities increased from 3.6
percent to 7.3 percent. In addition, the market share of imports from other third
countries increased from 5.5 percent in 1991 to 11.8 percent in the investigation
period.
 ---pagebreak---                                      -17-
       Production. capacity and capacity utilisation
(32.) For the reasons given above in recitals 21 and 22, the analysis of the
evolution of production, capacity and capacity utilisation is based on data
regarding complete tapered roller bearings.
(33.) As to production, between 1991 and the investigation period, production of
the Community industry decreased by 10.8 percent.
(34.) In the same period the production capacity of the Community industry
decreased by 9.3 percent whilst its capacity utilisation decreased from 88.8
percent to 86.6 percent.
 ---pagebreak---                                       -18-
       Prices and profitability
(35.) The evolution of prices between 1991 and the end of the investigation
period in the Community of the Cups sold separately by the Community
producers was investigated. In view of the argument by the Community
producers that the Japanese pricing policy affected the prices applied by the
Community producers, this irrespective of whether the types sold by the
Japanese producers were identical to those sold by the Community producers or
not, the analysis of the evolution of the prices applied by the Community
producers comprised all types sold by these producers during the investigation
period and not only those which were considered as identical to those sold by
the Japanese producers.
(36.) This analysis was made for the prices charged by the Community
producers (all sales channels) in Germany, the UK, France and Italy. On this
basis, it was found that the prices in the Community of Cups remained stable
over the period investigated. Indeed, the prices of the types sold by the
Community industry during the investigation period, on a weighted average basis
(comprised of the prices of all the Community producers for their sales to all
categories of customers) increased by 1.88 percent.
 ---pagebreak---                                        -19-
(37.) In this respect, it should be noted that, indeed, the return on sales of the
Community producers specifically relating to complete tapered roller bearings
during the period under consideration developed from a loss of around 11
percent in 1991 to a loss of around 17 percent in 1993. Between 1993 and the
end of the investigation period, the situation of the Community industry
improved, however, to a loss of around 7 percent, thus showing a certain
recovery.
        Employment
(38.) Between 1991 and the investigation period, in the Community industry
employment, relating to the manufacture of complete tapered roller bearings,
decreased by 27.4 percent.
 ---pagebreak---                                       -20-
Conclusion on injury
(39.) Based on the above analysis, it is concluded that, during the period under
investigation, the Community industry suffered certain difficulties but improved
its financial situation.
E.      CAUSALITY
(40.) In accordance with the provisions of Regulation (EC) N° 384/96, the
Commission therefore investigated whether the volumes and prices of the
imports concerned were responsible for the situation of the Community industry
and had an impact thereon to a degree which enables it to be classified as
material within the meaning of Article 3(6) of Regulation (EC) N° 384/96. In this
investigation, care was taken to ensure that any impact on the Community
industry caused by other factors was not attributed to the imports concerned.
 ---pagebreak---                                        -21-
(41.) The imports from Japan and their market shares in the Community have
been falling over the period examined for the analysis of injury. The market
share of own-imports on the part of the Community producers from countries in
which it has long-established manufacturing facilities and imports from other
third country imports have increased by a rate which more than compensates for
the registered decrease in the Community industry's market share.
(42.) As to prices, the Community industry has claimed that the undercutting or
lower price offers on the part of the Japanese exporters has had the effect of
imposing pressure on prices which forced the Community Cup producers to
follow the prices downwards in order to defend their market shares at great
financial expense. It is considered that the analysis of the evolution of the prices
applied by the Community producers refutes the conclusion submitted by the
Community producers that the imports had the effect of depressing or
suppressing prices applied by the Community producers during the period under
consideration to an extent which may be characterised as material within the
meaning of Article 3(3) of Council Regulation (EC) N° 384/96. With regard to the
submission of the Community industry that it was prevented from increasing its
 ---pagebreak---                                         -22-
prices due to Japanese price undercutting, in particular for major high volume
customers, it is considered that if such price suppression took place in order to
maintain volumes and market shares which in fact to a large extent was
accomplished, the result would have been increased financial losses. However,
the above-mentioned findings of the investigation demonstrate the opposite. The
statements on the part of the Community industry, that prices are highly
depressed or suppressed to a material degree, are not substantiated especially
in view of the fact that the period in question was characterised by a recession.
No price depression was found and the price increase found cover a substantial
part of the general cost increases registered in the industry.
(43.) As regards the Community industry's reduction in capacity, the Community
industry has argued that it had to reduce its capacity and investment during the
 reference period in order to lower the break-even point of the industry and thus
to reduce its losses. This leads to a situation where Community producers were
 not able to meet customer requests during the year 1995, which was after the
 ---pagebreak---                                        -23-
investigation period, but during which the consumption of Cups improved. In
order to invest in new capacity, the Community producers claim that they should
reach a substantially higher return on sales that what was registered during the
investigation period.
(44.) While information relating to a period subsequent to the investigation
period normally cannot be taken into account, it is acknowledged that in 1995
demand for complete tapered roller bearings and components thereof boomed.
For this reason also, the Community industry published excellent results (also
financial) for 1995. It is acknowledged that there have been shortages in supply
from the Community producers' manufacturing facilities in the Community during
this year. However, it is considered that it is normal business behaviour to
reduce costs and this the more so when the industry is in an economic
 ---pagebreak---                                        -24-
recession. On the other hand, during a booming market, it may also be normal to
increase capacity and to finance this by normal financial resources. This
capacity restriction should therefore not be attributed to the imports in question
and this the more so as the volume of these imports decreased more than the
capacity restriction of the Community industry. In addition, this capacity
restriction must be seen in conjunction with the apparent shift of production on
the part of the Community industry to long established manufacturing facilities in
countries outside the Community of twelve.
(45.) As to the decrease in employment, during the period in question, the
Community industry shifted capacity within their global manufacturing structure
and undertook important restructuring efforts to improve productivity in general
which have been reflected in a decrease in employment which cannot be
attributed to the imports in question.
 ---pagebreak---                                        -25
Conclusion
(46.) Given the above findings, it is concluded that the imports in question did
not, in isolation, have a materially injurious impact on the situation of the
Community industry and the allegations set forth in the request for an interim
review submitted by the Community industry that the measures in force were
insufficient to offset increased injury are therefore refuted. The precarious
situation of the Community industry may rather stem from other factors such as
other third country imports and the recession which prevailed during the
investigation period. Thus, the measure under review did have the desired
effects, i.e. to reduce the impact of the imports in question below the degree of
material within the meaning of Article 3(6) of Council Regulation (EC) N° 384/96.
(47.) The question is then whether the removal of this measure would reverse
this situation.
 ---pagebreak---                                         -26-
F.      LIKELY EFFECTS OF THE REPEAL OF THE MEASURES IN FORCE
(48.) As was demonstrated above, the facts established show that the measures
under review have reduced the injurious impact of the imports in question below
the degree of material within the meaning of Article 3(6) of Regulation (EC) N°
384/96.
(49.) The Community industry has submitted that if the measure currently in
force would be repealed it is likely that material injury caused by the imports in
question would recur.
(50.) It is considered that it is not likely that the removal of the anti-dumping
measure under review would create a situation in which a materially injurious
impact of these imports would recur. This position is based on an analysis of the
trend of the Japanese market shares, the lack of any material effect thereof on
the Community producers' pricing and the significant increase in imports from
sources other than Japan including from facilities related to the Community
producers.
 ---pagebreak---                                         -27-
(51.) Other elements should also be high-lighted in this regard, such as the high
market share held by the Community industry, the fact that its sales are, to a
significant extent, regulated by long term contracts with large industrial users and
the fact that the Community. industry, both presently and historically has
constituted a secure source of supply for the Community user industry due to its
proximity and high level of quality and service levels.
(52.) In addition, official statistics demonstrate that production capacity for
bearings in Japan has remained stable since 1990 until 1994 and increased
subsequently in line with the recovery of demand world-wide. However, further to
an analysis of exports from Japan to countries other than the Community, it
would appear that there is no sufficiently disposable capacity in Japan to
produce substantially increased quantities for export to the Community.
 ---pagebreak---                                         -28-
(53.) Finally, it should be stressed that the situation described above for the
Community industry during the investigation period has shown a certain recovery
in the market for tapered roller bearings and components thereof. This
development was sustained and further improved after the investigation period
as illustrated by general results of the major Community producers published for
1995. It is not considered as likely that this situation would change as a result of
the lapse of the current measures due to the immaterially injurious impact of the
imports in question on the situation of the Community producers as
demonstrated above.
 ---pagebreak---                                        -29
G.     DUMPING
(54.) In view of the above conclusion, it was not considered necessary to
analyse whether the imports in question were dumped, and if so, if the dumping
margin thereof had increased or not since this would not have any relevance on
the above analysis and would consequently not alter the conclusions reached.
H.     CONCLUSION
(55.) Given the above findings, it is considered that the result of the interim
review of the anti-dumping measures in force with respect to imports of Cups
originating in Japan is that the anti-dumping proceeding concerning these
imports should be terminated and that the anti-dumping measures in force
should be repealed.
(56.) The Commission informed the interested parties, including the Community
industry, of its findings. After having been informed by the Commission of the
above facts, findings and conclusions, representatives of the Community
industry made further representations, both in writing and orally, concerning the
impact of the Japanese imports in question on the Community industry.
However,    it is considered that these representations could not, after
examination, reverse the above conclusions. Certain Member States raised
objections to this course of action.
 ---pagebreak---                                        -30-
HAS ADOPTED THE FOLLOWING REGULATION:
                                      Article 1
The anti-dumping proceeding concerning imports of outer rings of tapered roller
bearings falling within with CN Code N° ex 84829900 originating in Japan is
terminated and the anti-dumping measures imposed Council Regulation (EEC)
N° 55/93 on such imports are hereby repealed.
                                      Article 2
This Regulation shall enter into force on the day following that of 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
 ---pagebreak---  ---pagebreak---  ---pagebreak---                                                                   ISSN 0254-1475
                                                           COM(97) 244 final
                                             DOCUMENTS
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                                    Catalogue number : CB-CO-97-236-EN-C
                                                             ISBN 92-78-20120-0
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