CELEX: 51996PC0112
Language: en
Date: 1996-03-14
Title: Proposal for a COUNCIL REGULATION (EC) imposing definitive anti-dumping duties on imports of bicycles originating in Indonesia, Malaysia and Thailand and collecting definitively the provisional duties imposed

COMMISSION OF THE EUROPEAN COMMUNITIES
                                                Brussels,14.03.1996
                                               COM(%) 112 final
                                Proposal for a
                      COUNCIL REGULATION (EC)
                 imposing definitive anti-dumping duties
on imports of bicycles originating in Indonesia, Malaysia and Thailand and
           collecting definitively the provisional duties imposed
                       (presented by the Commission)
 ---pagebreak---  ---pagebreak---                               EXPLANATORY MEMORANDUM
          1.     By Regulation (EC) No 2414/95C), the Commission imposed provisional
         anti-dumping duties on imports into the Community of bicycles originating in
         Indonesia, Malaysia and Thailand, falling within CN code 8712 00.
         2.      By Regulation (EC) No 245/96Q, the Council extended the validity of
         these duties for a period of two months until 14 April 1996.
         3.      Subsequent to the imposition of provisional anti-dumping duties, certain
         parties requested and were granted hearings, and presented written comments
         which were taken into account where appropriate.
         4.      The definitive determination confirmed the existence of dumping.
         Changes in the individual dumping margins compared to the provisional
         findings are due to the reassessment of certain adjustments.
         5.      The conclusion that the Community industry suffered material injury is
         also confirmed. For the purpose of the determination of material injury, the
         imports from the countries concerned were analyzed cumulatively because it was
         found that the import volumes for each country were not negligible and the
         imported products competed with each other and with the like Community
         products.
         6.      From 1990 to 1993, total imports from Indonesia, Malaysia and Thailand
         increased by 190.6%. Market share held by these countries increased by 4.4
         percentage points, reaching a market share of 6.8% in 1993. Imports from these
         countries undercut prices of the Community industry by 18.2% to 41.4%. While
         it cannot be excluded that other factors may have contributed to the difficult
         state of the Community industry, the considerable increase of the dumped
( 1 )OJNoL248, 14.10.95, p.12
( 2 )OJNoL32, 10.02.96, p;l
                                        Z
 ---pagebreak---  imports and their significantly low prices which led to the conclusion that these
 imports caused the material injury suffered by the Community industry.
 7.      Given the need to eliminate the trade-distorting effects of injurious
 dumping and to restore effective competition, the fact that a continuation of low
 priced imports would jeopardize the adjustment efforts of the Community
 industry, and would have a negative effect on the level of employment in the
 Community industry, with additional repercussions in the European bicycle parts
 industry, and in view of the limited effect for consumers, it is considered in the
 Community interest that definitive duties should be imposed.
 8.     In accordance with the 'lesser duty rule', the level at which the definitive
duties should be set was determined by the dumping margins found which were
lower than the injury elimination margins. The dumping margins ranged from
21.9% to 28.4% for exports from Indonesia, from 23.1% to 37.3% for those
from Malaysia, and from 13.0% to 38.9% for those from Thailand, which are the
levels at which it is proposed to set the duty rates.
9.      Malaysian companies indicated their readiness to discuss the terms of
undertakings, but made a specific offer only for a quantitative undertaking. The
Commission considered that it would be impractical and unrealistic to accept
price undertakings in the present case because of the enormous number of
different bicycle models and the frequent changes of specifications which would
render monitoring such undertaking impossible. With regard to quantitative
undertakings, irrespective of concerns which could arise as regards their effects
on competition between exporting countries, the Commission considers that, in
the present case, such undertakings would be difficult to monitor because
bicycles do not normally bear a mark of origin.
10.     It is therefore proposed that the Council adopts the draft Regulation
annexed imposing definitive anti-dumping duties on imports of bicycles
originating in Indonesia, Malaysia and Thailand and collecting definitively the
amounts secured by way of the provisional duties.
 ---pagebreak--- COUNCIL REGULATION (EC) No ..../96 imposing definitive anti-dumping duties
      on imports of bicycles originating in Indonesia, Malaysia and Thailand and
                     collecting definitively the provisional duties imposed
THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty establishing the European Community,
Having regard to Council Regulation (EC) No 3283/94 of 22 December 1994 on
protection against dumped imports from countries not members of the European
Community (l% as last amended by Regulation (EC) No 1251/95 of 1995 (2), and in
particular Article 23 thereof,
Having regard to Council Regulation (EEC) No 2423/88 of 11 July 1988 on protection
against dumped or subsidized imports from countries not members of the European
Economic Community (3), as last amended by Regulation (EC) No 522/94 (4), and in
particular Article 12 thereof,
Having regard to the proposal submitted by the Commission after consulting the
Advisory Committee,
WHEREAS:
('jOJ No L 349, 31.12.94, p.l
( 2 )OJNoL 122, 2.6.95, p. 1
(3) OJ No L 209, 2.8.1988, p.2.
( 4 )OJNoL66, 10.3.1994, p. 10
                                                  4
 ---pagebreak---                                  A.PROVISIONAL MEASURES
 (1)      The Commission, by Regulation (EC) No 2414/95(5), hereinafter referred to as
          'the provisional duty Regulation', imposed provisional anti-dumping duties on
          imports into the Community of bicycles originating in Indonesia, Malaysia and
          Thailand.
          By Council Regulation (EC) No 245/96(6), the validity of these duties were
          extended by a period not exceeding two months expiring not later than 14 April
          1996.
                              B.    SUBSEQUENT PROCEDURE
(2)       Immediately after the imposition of provisional measures, the interested parties
          were informed of the essential facts and considerations on the basis of which
          provisional measures had been adopted.
(3)      Most of the Malaysian and Thai exporters had requested that they be informed of
         the essential facts and considerations resulting from the investigation before the
         imposition of provisional measures. The Malaysian exporters claimed that such
         prior disclosure was necessary in order to allow them to exercise their
         fundamental right to be heard. However, Regulation (EEC) No 2423/88, the
         applicable Regulation in this proceeding, (hereinafter referred to as 'the basic
         Regulation') already reflects and transposes into the field of anti-dumping the
         general principle of law of a right to a fair hearing as defined by th^
         jurisprudence of the Court of Justice of the European Communities, and does not
         require that disclosure take place before the imposition of provisional measures
         but before definitive measures. Accordingly, the Commission did not disclose
         the essential facts and considerations before the imposition of provisional
         measures.
( 5 )OJNoL248, 14.10.95, p. 12
( 6 )OJNoL32, 10.02.96, p. 1
 ---pagebreak--- (4) Comments in writing were received from the following interested parties within
    the time limit set:
    1.      Producers and producer's association in Indonesia
            PT Jawa Perdana Bicycle Industry
            PT Wijaya Indonesia Makmur Bicycle Industries
            The Association of Indonesian Bicycle Industry
    2.      Producers in Malaysia
            Akoko Sdn. Bhd.
            Berjaya Cycles Sdn Bhd
            Greenworld Systems Sdn Bhd
            Lerun Group Industries Berhad
            Rolls Rally Sdn Bhd
    3.      Producers in Thailand
            Bangkok Cycle Industrial Co. Ltd
            Siam Cycles MFG. Co. Ltd
            Thai Bicycle Industry Co. Ltd
            Victory Cycle Co. Ltd
    4.     Importers
            Universal Cycles pic.
(5) Parties who so requested were granted an opportunity to be heard by the
    Commission.
(6) Parties were informed of the essential facts and considerations on the basis of
    which it was intended to recommend the imposition of a definitive anti-dumping
    duty and the definitive collection of amounts secured by way of a provisional
    duty. They were also granted a period within which to make representations
    subsequent to the disclosure.
(7) The parties' oral and written comments were considered, and where appropriate
    the conclusions were modified to take account of them.
 ---pagebreak--- (8)  Owing to the complexity of the case, in particular the number of exporting
     countries and parties involved, and the variety of technical specifications, the
     proceeding overran the normal duration of one year as provided for in Article
     7 (9) of the basic Regulation.
(9)  After imposition of provisional duties, the Association of Indonesian Bicycle
     Industry (hereinafter 'the AIPI') claimed that the proceeding was discriminatory
     insofar as other exporting countries, such as India and Vietnam, were not
     included.
     At the time of initiation of the current proceeding in early 1994, there were no
     allegations or indications that imports from India or Vietnam were also dumped.
     The proceeding was initiated on the basis of a complaint concerning imports of
     bicycles originating in Indonesia, Malaysia and Thailand, which contained
     sufficient evidence of dumping and of material injury resulting therefrom
     (recitals 1 and 2 of the provisional duty Regulation). At later stages of the
     investigation, when the actual development of imports from these countries
     starting in 1993 became apparent, no additional complaint was received from the
     Community industry. In the absence of such a complaint and of any prima facie
     evidence of injurious dumping from the countries concerned, the Commission
     had no reason to extend the proceeding to these other countries.
                              C.      LIKE PRODUCT
(10) It was concluded at the provisional stage (recitals 13 and 14 of the provisional
     duty Regulation) that all types of bicycles originating in Indonesia, Malaysia and
     Thailand and sold in the Community form one single product and that bicycles
     produced by the Community industry and sold on the Community market, as
     well as bicycles produced in Indonesia, Malaysia and Thailand and sold on those
     markets, are a like product within the meaning of Article 2 (12) of the basic
     Regulation.
(11) After imposition of the provisional duty, two Malaysian companies argued that
     bicycles produced and sold on the Malaysian domestic market are not a like
     product to the bicycles produced and sold for export to the Community. They
 ---pagebreak---      did not substantiate, however, why those bicycles would not be alike in all
     respects to bicycles exported to the Community.
(12) The investigation has established that bicycles produced and sold in Malaysia
     cover a similar model range and their basic technical and physical characteristics
     are identical to those of bicycles exported to the Community. No valid
     comments which would affect these conclusions have been raised. The mere fact
     that the only co-operating Malaysian company selling bicycles on the domestic
     market manufactures them in a factory which is separate from that in which
     export models are produced does not in itself support the claim that products are
     different within the meaning of Article 2 (12) of the basic Regulation. Therefore,
     the findings and conclusions set out in recital 14 of the provisional duty
     Regulation are confirmed.
                                 D.     DUMPING
                               1.      Normal Value
     a)      Indonesia
(13) For two Indonesian companies the provisional dumping findings were based on
     the facts available in accordance with Article 7(7)(b) of the basic Regulation
     because it was not possible to obtain or verify the necessary information
     requested in the questionnaire (recital 28 of the provisional duty Regulation).
     For the other three Indonesian companies, in those cases where normal value had
     to be constructed, it was determined by adding to the manufacturing costs of the
     exported models reasonable SG&A and profit margins which were based on
     actual figures for the companies concerned (recitals 25 and 27 of the provisional
     duty Regulation).
(14) One Indonesian company purchased some bicycle parts for its production
     through a related trading company which charged a commission on such
     purchases. The company requested that such commission should not be included
     in the cost of manufacturing, as was done for the provisional determinations.
     However, it appeared that the commission was actually incurred by the
                                          B
 ---pagebreak---       Indonesian company for the purchase of parts and that it would hear similar
      costs if it directly purchased those parts from unrelated suppliers. Therefore, the
      commission charged had to be considered as an integral part of the cost of the
      materials in question.
(15)  One company argued that interest expenses, which in the provisional
      determinations were included in the selling, general and administrative expenses
      (SG&A), should be deducted as public accounting principles in Indonesia
     exclude interests from operating expenses which are not directly related to the
     production and sales of the goods concerned. The investigation showed that the
     only activity of the company concerned was production and sale of bicycles and
     bicycle parts. Therefore, these interest expenses have to be included in the
      SG&A because they were incurred by this company as a result of the actual
     finance structure necessary for running its bicycle and bicycle parts operations.
(16) Two Indonesian exporters and the AIPI claimed that the allocation of SG&A
     expenses should have been made on the basis of quantities sold. One Indonesian
     producer raised the same argument with regard to the allocation of SG&A
     expenses between export and domestic sales, and, in particular, the allocation of
     financing costs. However, neither of these companies normally allocated SG&A
     expenses to single bicycle models for their internal reporting purposes. It cannot
     be claimed, therefore, that an allocation key based on quantities sold, as was
     proposed by these companies, was historically utilized. Consequently, there is no
     reason to deviate from the principle in Article 2 (11) of the basic Regulation that
     the allocation of such costs is normally done in proportion to the turnover.
(17) The profit ratio applied in constructing normal value was based on the domestic
     sales of each company where these sales were made in the ordinary course of
     trade (recital 26 of the provisional duty Regulation). Two companies argued that
     the resulting profit margins were too high. However, since these companies did
     not substantiate their claims, the methodology which was applied in the
     provisional determinations for the purpose of calculating a reliable profit margin
     in accordance with Article 2 (3) (b) (ii) of the basic Regulation is confirmed.
 ---pagebreak--- (18) The Indonesian exporters made additional claims (concerning namely the
     determination of the domestic sales turnover, the allocation of manufacturing
     costs, details of individual sales transactions, the application of the SG&A ratio
     to the manufacturing costs, and the exchange rates applied) which could not be
     taken into account, because they could not be verified at the late stage of the
     procedure when they were made, are not supported by direct evidence or, after
     double checking, turned out to be factually unfounded.
(19) Consequently, the determination of normal value for Indonesian producers as set
     out in recitals 15 to 27 of the provisional duty Regulation is confirmed.
(20) In the case of one Indonesian company, the AIPI argued that this company faced
     more rigid deadlines for submitting the response to the questionnaire than those
     given to Community producers.
     In fact, the same deadline of 37 days was set for all interested parties for
     responding to the questionnaires. Extensions to this deadline were granted to
     Community and non-Community companies based on the merits of each
     application. No extension was ever requested by the company concerned. The
     AIPI's claim that Community producers received a more favourable treatment
     appears to be based on a misunderstanding. The questionnaires to Community
     producers could only be sent after the sample had been selected (recital 73 of the
     provisional duty Regulation and recital 56 of this Regulation). This explains why
     in spite of the fact that the deadlines were the same as for Indonesian producers,
     the responses of the Community industry arrived later.
     The findings set out in recital 28 of the provisional duty Regulation are therefore
     confirmed.
     b)      Malaysia
(21) In the provisional duty Regulation, two Malaysian companies belonging to the
     same group of companies were considered as one single company. One of them
     exported bicycles to the Community during the investigation period but did not
     sell any on the domestic market. The other, on the contrary sold substantial
     quantities on the domestic market but had no export sales to the Community.
                                           7o
 ---pagebreak---           These two companies requested not to be treated as a single producing exporter
          and to be assigned individual dumping margins.
          However, it has been the consistent practice of the Community Institutions to
          establish one single dumping margin for related companies. The different
          approach followed exceptionally in the Photocopiers case (Regulation (EC) No
          2380/95(7)) which was invoked by the Malaysian companies to support their
          request was due to the very specific circumstances found in that investigation
          which are not present in this case.
          Consequently, the approach followed in recital 29 of the provisional duty
         Regulation is confirmed.
(22)     In the provisional determinations, it was found that only one co-operating
         Malaysian exporter had representative domestic sales of the like product during
         the investigation period, i.e. the domestic sales volume was higher than 5% of
         total export sales (recitals 19 and 30 of the provisional duty Regulation). Since
         bicycle models sold by this company domestically did not permit a proper
         comparison or were not made in the ordinary course of trade (they were
         technically too different, not sold in sufficient quantities, or sold at a loss), for
         models sold by this company the normal value had to be calculated in
         accordance with Article 2(3)(b)(ii) of the basic Regulation, on the basis of a
         constructed value which was established by adding to the manufacturing costs
         the company's domestic SG&A and profit margins. The other Malaysian
         exporters had no domestic sales and therefore a constructed normal value also
         had to be established in accordance with Article 2(3)(b)(ii) of the basic
         Regulation. The SG&A incurred and profit realised by the only producer with
         representative domestic sales were the only data available in Malaysia for this
         purpose. These figures were considered reliable, and therefore the constructed
         value of all models sold for export to the Community by Malaysian companies
         was established by adding to the manufacturing costs of the exported models the
(7) OJ No L 244, 12.10.95, p. 1, recitals 53, 54
                                                  11
 ---pagebreak---        SG&A and profit figures of the only producing exporter with domestic sales
       (recitals 30-35 of the provisional duty Regulation).
 (23)  At the provisional stage, the Commission found that the primary material costs
       of one Malaysian exporter were substantially understated and accordingly
       adjusted these costs upwards. The company concerned later argued that the
       Commission's findings and conclusions were based on inaccurate assumptions
       and consequently objected to the adjustment.
      It was found that while the cost to turnover ratios for all other cost items (such as
      direct labour, factory overhead and SG&A) were stable, the ratio for primary
      material costs differed significantly in the investigation period (the calendar year
       1993) as compared to the financial years 1993 and 1992. A similar disproportion
      was found in the profitability for the investigation period as compared to the
      financial year 1993, even though the investigation period and the financial year
       1993 overlapped by 8 month.
      The determination of the cost of manufacturing for this company is therefore
      confirmed, including the adjustment above.
(24)  Some Malaysian companies questioned whether packing costs (inclusive of
      packaging labour expenses) have not been double counted by treating them as an
      element of cost of manufacturing for each individual exporter while at the same
      time considering them as part of the SG&A costs of the domestic producer used
      for the construction of normal values.
      For all Malaysian producers, packing costs have been considered solely as part
      of the manufacturing costs, and have not been included in the SG&A expenses
      incurred for the domestic sales made by the domestic producer. Packing costs
      were therefore not double counted.
(25)  For the determination of the SG&A and profit ratio for the only co-operating
      producing exporter with representative domestic sales, the Commission excluded
      inter-company sales. The company concerned argued that such an approach is
      inconsistent with the fact that the Commission included inter-company costs
      such as financing costs. It argued, therefore, that inter-company sales should also
                                               i-c
 ---pagebreak--- have been included in the company's domestic sales turnover for the
determination of the SG&A and profit ratios. In addition, it alleged that the
financing costs concerned had no link with the production or sale of bicycles and
therefore should have been excluded from the SG&A.
As far as the determination of the SG&A and profit margins are concerned it
should be noted that the company in question did not report that some sales were
inter-company sales, a fact which only came to light during the verification. As
the prices reported are transfer prices, these sales could not be considered as
made in the ordinary course of trade (Article 2 (7) of the basic Regulation) and
the transactions concerned had to be disregarded for the purpose of calculating
the domestic profit margin.
Concerning the calculation of the SG&A ratio, it was considered in the
provisional findings that for sales to related companies, none or only marginal
SG&A costs are incurred and, consequently, SG&A expenses need not be
allocated to turnover to related companies. After the provisional determination,
the situation was re-examined and it was found that the allocation of SG&A
expenses to turnover to unrelated companies should be limited only in respect of
selling costs which are not incurred for sales to related companies. By contrast,
the ratios for financing and administration costs which can also be incurred for
inter-company sales are now based on the total turnover including sales to
related parties. The calculations have been revised accordingly.
As regards interest paid to a related company, excluding these costs would
ignore the fact that they were incurred by the company concerned as a result of
its actual finance structure required for running its operations. It is irrelevant
who actually provides the necessary resources as long as the terms of the loan
are in the ordinary course of trade (Article 2 (3) (b) (ii) of the basic Regulation).
Claims that the loan was intended for purposes other than the company's
activities were not substantiated. Therefore, in accordance with Article 2 (3) (b)
(ii) of the basic Regulation, these interest expenses have to be included in the
SG&A.
                                        H
 ---pagebreak--- (26) The SG&A margin of the only co-operating producing exporter with domestic
     sales was considered reliable because these sales were sufficiently
     representative, i.e. the domestic sales volume represented more than 5% of the
     export sales volume. The profit margin was considered reliable because this
     company had a sufficient number of profitable domestic sales (recital 33, 34 of
     the provisional duty Regulation). The Malaysian exporters argued that the
     SG&A and profit margins of that company are too high and cannot be
     considered reliable because it had no export sales and should have been treated
     distinctly from its related company specializing in export and because it had a
     monopoly position on the domestic market which renders its data unreliable.
     It is the opinion of the Council, that there are no reasons for treating the only co-
     operating company with domestic sales separately from its related exporter
     (recital 21 of this Regulation). Even if such request for separate treatment were
     to be followed, the information obtained from the only co-operating company
     selling on the domestic market would still constitute the basis for the SG&A and
     profit margins to be applied for the other Malaysian exporters in accordance with
     Article 2 (3) (b) (ii) of the basic Regulation. With regard to the alleged
     monopolistic position of the only co-operating producer/exporter, it was found
     that there was at least one more Malaysian company which had substantial
     domestic sales. No evidence was provided showing that sales in Malaysia did
     not permit a proper comparison. Data on domestic sales in Malaysia were
     therefore considered to be reliable and the selling prices and cost data were
     based on the actual conditions prevailing on the market of the country
     concerned, i.e. conditions which are generally available to all actual and
     potential customers or suppliers.
     Consequently the Council confirms the calculation of normal values as based on
     the SG&A and profit ratios found for the only Malaysian co-operating company
     with domestic sales.
(27) The Malaysian exporters made additional claims (concerning namely the
     calculation of the cost of manufacturing, the classification of SG&A expenses,
     the treatment of discounts, the comparability of bicycle models, the calculation
     of manufacturing overheads,) which could not be taken into account, because
                                         'W
 ---pagebreak---      they could not be verified, were not supported by direct evidence, were
     contradicted by the companies own information, or, after double checking,
     turned out to be factually unfounded.
     c)      Thailand
(28) Four Thai companies co-operated in the proceeding. For the majority of bicycle
     models exported by three of these Thai companies, normal value was
     constructed (recitals 36, 38, 39 of the provisional duty Regulation). For the
     fourth company, normal value could be based on actual domestic prices (recital
     37 of the provisional duty Regulation). In those cases where normal value had to
     be constructed, it was determined by adding to the manufacturing costs of the
     exported models reasonable SG&A and profit margins (recitals 40 - 42 of the
     provisional duty Regulation).
     For the company which had no domestic sales, normal value was constructed by
     adding to the cost of manufacture the weighted average SG&A figure of the
     three other companies and the weighted average profit margin of the two
     companies with reliable profit figures. For another company, its own SG&A
     margin and the weighted average profit margins of the two companies with
     reliable profit margins were added to the manufacturing costs. For the third
     company, its actual figures were used.
(29) For one Thai company, the verification of the manufacturing costs allocated to
     similar bicycle models revealed substantial discrepancies in the value of certain
     materials used which the company was unable to explain. Since the company's
     accounting system did not provide a breakdown of material costs for specific
     bicycle models, it was decided at the stage of provisional findings to allocate
     manufacturing costs in proportion to the turnover in accordance with Article 2
     (11) of the basic Regulation. The company claimed that applying a turnover
     allocation key is unfair because exports of comparable models to third countries
     were made at half of the average unit price charged for exports to the
     Community.
                                    1f
 ---pagebreak---      The accounting system of the company concerned does not distinguish between
     manufacturing costs incurred for export to the Community and for export to
     other third countries, thus, not permitting a global adjustment for the alleged
     differences. Thus the provisional findings and the use of the turnover as basis for
     the allocation of the manufacturing costs is confirmed.
(30) Another Thai company had fully allocated a major SG&A item to export sales.
     The company failed satisfactorily to explain the nature of the expenses in
     question, despite the fact that detailed explanations had been requested both
     prior to and during the verification. Consequently, for the purpose of provisional
     determinations, the expenses in question were allocated to export and domestic
     sales on a turnover basis in accordance with Article 2 (11) of the basic
     Regulation. The company claimed that explanations were provided and that the
     appropriateness of the allocation could have been verified.
     In the view of the Council, the company did not provide a proper explanation.
     On the basis of available verified information, it is impossible to clarify the
     correctness or otherwise of the explanations given. Consequently, the allocation
     of the expenses in question on the basis of the turnover to export and domestic
     sales is confirmed.
(31) For the provisional determination, domestic profits were considered reliable
     when the number of bicycles sold at a price above the calculated cost of
     production constituted more than 10% of total domestic sales. This was not the
     case for one of the Thai companies with representative domestic sales, i.e. with a
     domestic sales volume which was higher than 5% of total export sales.
     Whenever normal values had to be constructed for this company, the weighted
     average profit margin of the two other Thai companies with domestic sales was
     consequently applied. This company claimed that the methodology applied here
     is not in line with the basic Regulation.
     Pursuant to Article 2 (3) (b) (ii) of the basic Regulation, the profit margin used
     for constructing normal value should be based on the profit realized on the
     profitable domestic sales, if such data is inter alia reliable. After having
     excluded domestic sales which did not permit a proper comparison or which
                                         1£
 ---pagebreak---      were not made in the ordinary course of trade (recitals 38 and 22 of the
     provisional duty Regulation), the remaining profitable sales might be so few that
     the profits realized on these sales might not constitute a reliable basis to
     calculate a profit margin for use in the constructed normal value. This is why the
     Commission also verified that the remaining profitable sales were sufficient to
     constitute a reliable basis for the determination of the profit margin.
     This was considered to be the case if the remaining profitable domestic sales
     represented not less than 10 % of the domestic sales volume which could be
     used as a basis for the profitability test, whereby the proportion of profitable
     sales was determined by comparing net sales prices to the calculated cost of
     production (recitals 21, 22 and 31 of the provisional duty Regulation). The ratio
     is the same as was applied to determine whether sales of particular bicycle
     models were made in the ordinary course of trade (recital 22 of the provisional
     duty Regulation). Since the profits realized on the domestic market depend on
     the prices charged for domestic sales, it is appropriate and consistent to apply the
     same threshold used to determine whether such prices constitute an appropriate
     basis for the normal value. A similar approach was adopted by the Community
     institutions in earlier cases.
     Consequently, the Council confirms that the profit margin of the company
     concerned was not reliable and that constructed normal value had to be
     calculated by applying the weighted average profit margin of the two other Thai
     producers for which a reliable profit realized on profitable domestic sales was
     found.
(32) Finally, one Thai exporter made an additional claim (concerning namely the
     calculation of manufacturing overheads) which could not be taken into account,
     because it could not be verified, and was not supported by direct evidence.
                                        "n
 ---pagebreak---                                  2.      Export price
     a)      Indonesia
(33)  One Indonesian exporter made comments concerning adjustments to the export
     price which cannot be taken into account, because they are not supported by
     direct evidence.
     The determination of export price for Indonesia (recital 43 of the provisional
     duty Regulation) is therefore confirmed.
     b)      Malaysia
(34) It was found during the verification visit to one Malaysian company that part of
     the export sales which had been reported by this company as direct sales to
     independent importers in the Community were in fact sales to a related company
     in Taiwan which subsequently re-sold the products to the importers concerned.
     Since, this company had clearly supplied misleading information in respect of
     these transactions -which, in addition, happened to reflect a transfer between
     related companies- the prices reported for such transactions were disregarded
     and the highest dumping margin found for a model sold by this company to
     unrelated customers was attributed to those sales in accordance with Article
     7(7)(b) of the basic Regulation (recitals 46, 47 of the provisional duty
     Regulation).
     This company argued that the actual link with the Taiwanese company had no
     impact on prices, and that it was treated in a discriminatory manner vis-à-vis the
     two Indonesian exporters to which Article 7 (7) (b) of the basic Regulation was
     also applied. In addition it claimed that the sales in question were made directly
     to the customers in the Community and provided copies of invoices as new
     evidence.
     It was only after publication of the provisional duty Regulation that the company
     concerned claimed that the sales in question were actually made directly to
     customers in the Community. This claim contradicts the findings of the
     verification which were not disputed by the company at the time. Any differing
                                       n
 ---pagebreak---       presentation cannot be verified at this stage of the proceeding and therefore
      cannot be taken into account.
      The relationship with the Taiwanese company was first denied by the Malaysian
      company and was only established during the verification on the basis of direct
      and conclusive evidence. This clearly impeded the factual investigation by the
      Commission. In view of this dissimulation of information by the Malaysian
      company, it is unlikely that the relationship had no impact on prices; anyway, at
     this stage of the procedure, the question could not be further investigated and
     applying article 7 (7) (b) in the above described manner is fully justified.
     As regards the comparison with the two Indonesian companies to which Article
     7 (7) (b) of the basic Regulation was also applied (recitals 28, 68 of the
     provisional duty Regulation), there is no serious ground to complain of
     discriminatory treatment. The application of Article 7 (7) (b) of the basic
     Regulation was based on the merits of each case, thereby reflecting the degree of
     co-operation and the degree to which necessary information was not provided or
     could not be verified or the extent to which misleading information was
     submitted.
(35) One Malaysian company argued that for establishing the free-at-Community-
     frontier price for its export sales to the Community, the Commission should
     have included a mark-up added by its sales agent. That company never
     substantiated its claim. However, the agent for the company concerned already
     received a commission fee which was taken into consideration and it remained
     unclear which transactions were made via the agent, since sales were also
     directly invoiced to customers in the Community. Therefore, the calculation of
     thefree-at-Community-frontierprice for the exports of the company concerned
     is confirmed.
(36) The Malaysian exporters made additional claims (concerning namely the nature
     of certain deductions, the treatment of certain bank charges and letters of credit
     charges) which could not be taken into account, because they and were not
     supported by direct evidence.
                                         19
 ---pagebreak---      c)      Thailand
(37) In its questionnaire response one Thai company stated that it was not providing
     any guarantee/warranty to its customers in the Community. It was discovered
     during the verification that it agreed with one of its customers that spare parts
     equivalent to 1% of the invoice value were shipped with each order free of
     charge. It was also found that a significant number of major customers also
     received spare parts free of charge. Such discounts were given in lieu of a
     guarantee.
     Since such sales conditions are a determining factor for the export prices, [the
     actual value of the spare parts shipped is irrelevant. Having received misleading
     information, the Commission had to determine the deduction for agreed
     discounts on the basis of the facts available. The most tangible and reasonable
     basis being the agreed terms identified above, a 1% adjustment for agreed
     discounts was deducted from the export price.
     The company argued that this adjustment was made without any apparent
     justification, since the Commission received a summary listing of all cases
     where spare parts were given free of charge to customers in the Community, on
     the basis of which a negligible adjustment would have been required.
     Although a listing of customers and corresponding 'warranty' amounts was
     provided by the company, this was done only towards the end of the verification
     when a satisfactory clarification of the complete situation was no longer
     possible. Since no other direct evidence supports the company's claim, it is
     confirmed that, having received misleading information, the deduction for
     agreed discounts was correctly determined on the basis of the facts available
     (Article 7 (7) (b) of the basic Regulation). Any lower deduction would constitute
     a premium for non co-operation.
     The adjustment made for agreed discounts is therefore confirmed.
(38)  Some Thai exporters made claims (concerning namely the allocation of
     transportation costs, the calculation of packing costs, ) which either could not be
     taken into account, because they could not be verified and were not supported by
                                        zo
 ---pagebreak---       direct evidence, or which are contradicted by direct evidence provided by the
      company concerned.
                                 3.       Comparison
      a)      Indonesia
(39)  One Indonesian company sold bicycles for export to the Community through a
      related trading company located in Japan. In the provisional determinations,
      export prices for that exporter were established by reference to the prices
      actually paid or payable to the related trading company in Japan, while the
     Community investigating authorities indicated their intention to review the
     appropriateness of that approach (recital 44 of the provisional duty Regulation).
(40) 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 Japan 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 6%, based on
     the companies own SG&A rate and a reasonable amount for profits, 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 of the selling activities of the exporter.
     No information was provided which would indicate that this figure is
     inappropriate. Thus, for the purpose of definitive determinations, the export
     prices were adjusted accordingly.
(41) In the provisional determinations (recital 56 of the provisional duty Regulation),
     some adjustments were disregarded in view of their insignificant character.
     Upon request of the companies concerned, the Commission reconsidered its
     appreciation. It appeared that in some cases, the insignificant character of the
     respective adjustments had been determined in relation to the export price or the
     normal value separately. However, in accordance with previous practice, it
     appears to be more appropriate to consider adjustments to be de minimis only if
                                       f)
 ---pagebreak---      the difference between the percentages to be deducted from the export price and
     the normal value respectively is less than 0.5 %. On this basis, certain
     adjustments which were considered as insignificant at the provisional stage were
     now taken into account. The calculations were revised accordingly.
(42) In its provisional determinations (recital 53 of the provisional duty Regulation),
     the Commission rejected requests for adjustments for credit costs on the grounds
     that no evidence was provided that the credit granted was part of the sales terms
     agreed with the buyers of the goods at the date of sale and therefore could have
     affected the price paid or payable on the domestic market.
     Two Indonesian companies and the AIPI reiterated their request for such an
     adjustment and stated that credit terms of 90 to 120 days are commonly accepted
     business conditions in Indonesia which therefore do not need to be explicitly
     included in the terms of sale. However, the only evidence presented to support
     this claim was a reference to the accounts receivable of the companies concerned
     which did not show such a clear pattern. Thus, it is not proven that prices were
     set on the basis of such alleged commonly accepted business conditions.
     Consequently, it is confirmed by the Council that an adjustment for credit costs
     is not warranted.
(43) In the provisional duty Regulation (recital 55) requests for adjustments for
     advertising and promotion expenses were rejected because such promotion and
     advertising costs belong to the category of overheads and general expenses, for
     which allowances are not generally made. Two companies reiterated their
     request for an adjustment for advertising and promotion expenses. They claimed
     that these cost differences between export and domestic sales are effectively
     allowable as OEM or level of trade adjustments.
     As regards an adjustment for sales made on an OEM basis, such claim was not
     explicitly made in the responses to the questionnaire submitted by the companies
     concerned, nor was it substantiated despite specific instructions in the
     questionnaire to claim and substantiate any request for deductions if applicable.
     Furthermore, the substantive requirements for such an adjustment are not met:
                                       ze
 ---pagebreak---       none of the export sales of the Indonesian exporters concerned were made at a
      level which would constitute an OEM sale, i.e. normally a level between
      manufacture and distribution.. These sales were made at a level on the
      Community market the function of which is, in substance, only that of
      distribution. Thus, no appropriate (OEM) adjustment is required in this respect.
      In examining this OEM claim, it was found that the substantive requirements
      for a level of trade adjustment were not met, as sales appeared to be made to a
      similar mix of customers on both the export and the domestic market. In any
      event, the Indonesian exporters concerned did not make any distinction between
      sales at different levels of trade. In fact, no significant differences appeared
      during the investigation in the levels of trade at which export and domestic sales
     were made. Therefore, no level of trade adjustment is necessary on the basis of
     the information available.
(44) The Indonesian exporters made some additional claims (concerning namely
     allowances made to account for differences in physical characteristics, the rate
     applied for an allowance for duty draw back and the deduction of an amount for
     duty draw back in the case of constructed normal value) which could not be
     taken into account, because they could not be verified, were not supported by
     direct evidence, or, after double checking, turned out to be unsubstantiated.
     b)      Malaysia
(45) In the provisional determination it was found that the domestic SG&A figure
     used for the construction of normal value included direct selling expenses for
     which adjustments had to be made. However, no such deduction was sufficiently
     substantiated (recital 57 of the provisional duty Regulation) and, therefore,
     claims for adjustment to the normal value for direct selling expenses were
     rejected. However, adjustments to the export price were made, where necessary,
     for one or several of the following selling expenses: transport, insurance,
     handling, loading and ancillary costs, credit costs and bank charges, guarantees,
     commissions paid to agents and salaries paid to salesmen.
                                        zi>
 ---pagebreak--- (46) The other Malaysian exporters considered that the comparison was unfair since
     they were deprived of otherwise justifiable adjustments (such as for direct
     selling expenses) because the only co-operating Malaysian producer with
     domestic sales was not sufficiently motivated to provide a proper reply to the
     questionnaire and to ensure the necessary co-operation during the verification.
     The Malaysian producer in question actually replied to the questionnaire, agreed
     to and was subject to a verification. Being directly related to an exporter of
     bicycles to the Community, it had a clear incentive to co-operate properly with
     the verification. However, this company failed to provide supporting evidence
     for its claims or gave contradictory explanations. In addition, some information
     which was not reported in the response to the questionnaire was discovered only
     during the verification.
     The Council nevertheless recognises that given the very special circumstances of
     this case, it is appropriate to deduct a reasonable amount from the constructed
     normal values of those three Malaysian exporters who are not related to the
     domestic producer/seller in question. The calculations have been revised
     accordingly. As regards the related export and domestic producers, it was the
     responsibility of these two companies to provide the necessary and verifiable
     information and supporting evidence which they failed to do. Therefore, no such
     additional adjustment can be made to the constructed normal value of the related
     exporter.
(47) In the provisional determination, no adjustment was made to normal value to
     account for credit costs (recital 57 of the provisional duty Regulation).
     Malaysian exporters requested such adjustment on similar grounds as those
     invoked in relation to the adjustment for direct selling expenses. However, there
     is no evidence that, apart from a discount scheme which was taken into account,
     additional credit was granted as part of the sales terms agreed with the buyers of
     the goods at the date of sale. Therefore there is no valid ground for an
     adjustment to normal value for credit costs.
(48) In the provisional determination, no adjustment was made to the normal value to
     account for differences in the level of trade. In their comments at disclosure after
                                        2
                                          V
 ---pagebreak---       the provisional duty Regulation was published, the Malaysian exporters
      requested to be granted an 'OEM-adjustment' in the form of a reduced profit
      margin for the calculation of the constructed normal value.
       Such claim was not made in the response to the questionnaire nor was it
      substantiated despite specific instructions in the questionnaire to claim and
      substantiate any request for deductions if applicable. Furthermore, the
      substantive requirements for such an adjustment are not met: the majority of the
      export sales of the Malaysian exporters were not made at a level which would
      constitue an OEM sale, i.e. normally a level between manufacture and
      distribution. These sales were made to a level on the Community market the
      function of which is, in substance, only that of distribution. From the
      information available, no clear and distinct pricing pattern existed for export
      transactions to the manufacturer concerned as compared with sales to
      distributors in the Community. Thus, no appropriate (OEM) adjustment is
     required in this respect.
     In examining this OEM claim, it was it was found that the substantive
     requirements for a level of trade adjustment were not met as sales appeared to be
     made to a similar mix of customers in both the export and the domestic market.
     In any event, the Malaysian domestic seller did not make any distinction
     between sales to wholesalers and retailers. Furthermore, no significant
     differences appeared during the investigation in the levels of trade to which
     export and domestic sales were made. Therefore no level of trade adjustment is
     necessary on the basis of the information available.
(49) The Malaysian exporters made additional claims (concerning namely the nature
     of 'technical assistance' fees, the treatment of certain commission interests,
     double counting of certain commissions, adjustment for forwarding costs, a
     rounding difference, the allocation of packaging costs) which either could not be
     taken into account, because they could not be verified, were not supported by
     direct evidence, or, after double checking, were taken into account. The
     calculations were revised accordingly.
                                         àS
 ---pagebreak---      c)      Thailand
(50) In the provisional determination, no adjustment was made to the normal value to
     account for differences in the level of trade. In their comments at disclosure after
     the provisional duty Regulation was published, Thai exporters requested to be
     granted an 'OEM-adjustment' and claimed that they had requested such
     adjustment from the beginning of the proceeding.
     In a covering letter which accompanied the questionnaire responses of three Thai
     companies, these producers requested in imprecise terms an OEM adjustment.
     Such claim was not explicitly made in the response to the questionnaire nor was
     it substantiated despite specific instructions in the questionnaire to claim and
     substantiate any request for deductions if applicable. Furthermore, the
     substantive requirements for such an adjustment are not met: the majority of the
     export sales of the Thai exporters were not made at a level which would
     constitute an OEM sale, i.e. normally a level between manufacture and
     distribution. These sales were made to a level on the Community market the
     function of which is, in substance, only that of distribution. From the
     information available to the Commission, it appears that no clear and distinct
     pricing pattern existed between exports to the manufacturer concerned as
     compared with sales to distributors in the Community. Thus, no appropriate
     (OEM) adjustment is required in this respect.
     In examining the OEM claim, it was it was found that the substantive
     requirements for a level of trade adjustment are not met as sales appeared to be
     made to a similar mix of customers on both the export and the domestic market.
     In any event, the Thai exporters concerned did not make any distinction between
     sales to different levels of trade. Furthermore, no significant differences
     appeared during the investigation in the levels of trade, namely distributors and
     retailers, to which export and domestic sales were made. Where domestic sales
     were made directly to end-users this had no apparent effect on prices. Therefore,
     no level of trade adjustment is necessary on the basis of the information
     available to the Commission.
                                          z&
 ---pagebreak--- (51)  For the provisional determinations, the Commission partially rejected a request
      by one Thai company for an adjustment to the normal value for the salaries paid
      to its salesmen because of misleading information and lack of supporting
      evidence. The company reiterated its request for the full adjustment and gave
      new explanations.
      However, the company did not submit supporting evidence for its new
      explanations. Since there was no direct evidence available to support the
      company's claim either, the partial rejection of its request is confirmed by the
      Council.
(52)  In the provisional duty Regulation (recital 65) it was stated that a number of
      claims for adjustments of various types were disregarded in view of their
      insignificant character (namely adjustments with an ad valorem effect of less
     than 0.5%). Some Thai companies claimed that, in fact, not all insignificant
      adjustments were to be disregarded. The Commission re-examined the situation
     and found that, in this particular case, export prices are compared with
     constructed normal values which include weighted average SG&A and profit
     margins. When calculating these SG&A and profit ratios it had to be taken into
     account that adjustments for the same cost items were sometimes either
      insignificant or significant depending on the respective company. In this
     particular case, it was found administratively more practicable to deduct all
     justified adjustments whether significant or not. The calculations were
     accordingly re-examined and where necessary revised. The global value of these
     adjustments was between 0.37% and 4.45%% according to the company
     concerned.
(53) The Thai exporters made additional claims (concerning e.g. adjustments for
     credit costs, deduction of certain export expenses, calculation of an adjustment
     for salesmen's salaries,) which either could not be taken into account, because
     they could not be verified and were not supported by direct evidence, or, after
     double checking, were taken into account. Insofar as these claims could be taken
     into account, the calculations were accordingly revised.
                                         2}
 ---pagebreak---                                4.      Dumping margin
(54)  Like the weighted average dumping margins which were provisionally
      established (recital 66), definitive dumping margins for each producer were
      expressed as a percentage of the free-at-Community-frontier price.
(55)  Applying the same methodology as explained in the provisional duty Regulation
      (recital 66 of the said Regulation) and after having made the necessary revisions
     to the dumping calculations, the weighted average dumping margins for the fully
     co-operating producers are:
     a)       Indonesia
               PT Insera Sena                                              0.4%
               PT Jawa Perdana Bicycle Industry                          27.7%
              PT Wijaya Indonesia Makmur Bicycle Industries              21.9%
     b)       Malaysia
              Akoko Sdn. Bhd.                                            23.1%
              Berjaya Cycles Sdn Bhd                                     37.3%
              Greenworld Systems Sdn Bhd                                 27.7%
              Lerun Group Industries Berhad                              37.3%
              Rolls Rally Sdn Bhd                                        25.3%
     c)       Thailand
              Bangkok Cycle Industrial Co. Ltd                           17.7%
     - .       Siam Cycles MFG. Co. Ltd                                  38.9%
              Thai Bicycle Industry Co. Ltd                              13.0%
              Victory Cycle Co. Ltd                                      13.3%
(56) For the two Indonesian companies which did not sufficiently co-operate with the
     investigation, the methodology applied in the provisional duty Regulation
     (recital 68) is confirmed: the dumping margin for the two companies concerned
     is based on the arithmetical average between the highest margin found for a fully
     co-operating Indonesian producer and the residual duty. The resulting dumping
     margins are:
                                          2%
 ---pagebreak---                PT Federal Cycle Mustika                                     28.4 %
               PT Toyo Asahi Bicycle Industries                             28.4 %
                          E.     COMMUNITY INDUSTRY
(57)    The AIPI and Thai producers questioned the correctness of the level of support
       calculated by the Commission.
       The Council notes that those producers which expressly supported the complaint
       account for 55.3% of the Community production of bicycles, and therefore
       represent a major proportion of the Community industry within the meaning of
       Article 4 (5) of the basic Regulation (recital 72 of the provisional duty
     • Regulation). Those producers which were selected for a sample which was
       necessary in view of the large number of producers and which fully co-operated
       represented 36.5% of the'Community's bicycles production.
       The AIPI also argued that companies which, in their opinion, did not suffer
       injury should not be considered as complainants. In response to this argument, it
       has been noted that the question of whether individual Community producers
       have been injured is irrelevant when examining whether such producers qualify
       as part of the Community industry within the meaning of Article 4 (5) of the
       basic Regulation. Furthermore, it should be recalled that injury has to be
       determined on a global basis, i.e. for the Community industry as a whole or a
       major proportion thereof and not for individual Community producers.
(58)   The AIPI questioned both the legality of the use of a sampling technique and the
       actual selection of the sample. In particular, it has been claimed that the use of
       production and sales data led to a flawed sample because sales and production
       trends are also the basis for the injury determination (recitals 88 - 90 of the
       provisional duty Regulation).
       The Council notes that the basic Regulation does not explicitly provide for the
       use of sampling techniques for the purpose of injury determinations. However, it
       does not require the Commission to investigate each complaining Community
       producer either (Article 4). In accordance with previous practice and for the
                                        23
 ---pagebreak---      reasons already indicated, it was decided to select a sample of Community
     producers on which injury determinations were based. The Council notes that
     the sample was selected exclusively according to the size and geographic
     location of the companies concerned. The number of companies selected from
     each of the Member States thus reflects the size of bicycle production in that
     Member State. No trends or financial data were taken into consideration in the
     selection which was exclusively based on the volume of production of the
     companies concerned during the investigation period.
     Therefore, it is concluded that the Commission was entitled to use a sampling
     technique, which yielded a representative selection of Community producers.
     The findings and conclusions set out in recitals 72 to 74 of the provisional duty
     Regulation are therefore confirmed.
                                 F.      INJURY
                               1.      Cumulation
(59) As no comments were received concerning cumulation, the findings and
     conclusions set out in recitals 75 to 79 of the provisional duty Regulation are
     confirmed.
                         2.    Prices of dumped imports
(60) The AIPI claimed that Indonesian bicycles were not undercutting prices of
     Community industry bicycles.
     These claims are contradicted by the detailed price comparisons made by the
     Commission (recitals 82 - 86 of the provisional duty Regulation) in respect of
     which the following comments were made after the imposition of provisional
     measures:
(61) One Indonesian producer argued that model comparisons should have been
     based on the full set of specifications. However, it did not indicate in which
     respect the methodology applied by the Commission yielded unreliable results
     nor why a different approach would have been more reliable.
                                       50
 ---pagebreak--- (62) One Malaysian company argued that the methodology applied was unreliable
     because the value of the parts used for comparing different bicycle models
     account for only 10-20% of the total value of the bicycle and it leads to
     significant fluctuations in the undercutting margins found for two comparable
     bicycle groups. However, it has not been demonstrated that bicycle models
     classified in the respective groups were actually not comparable and that a
     different methodology would yield significantly different results. Fluctuations in
     undercutting margins as such may simply indicate variable pricing patterns and
     therefore do not prove that the comparison and grouping of certain bicycles was
     not justified.
(63) As a result of the foregoing, the methodology set out in the provisional duty
     Regulation (recitals 82-86) is confirmed.
(64) Some technical adjustments were made to the undercutting calculation upon the
     request of another Malaysian company and proprio motu by the Commission.
(65) The resulting individual undercutting margins for the fully co-operating
     producing exporters expressed as a percentage of the Community producers
     prices, undelivered to distributors, vary from 18.2% to 41.4% for producing
     exporters in Indonesia, from 29.7% to 38.4% for those in Malaysia, and from
     15.3% to 30.7% for those in Thailand.
           G.       SITUATION OF THE COMMUNITY INDUSTRY
(66) No further comments were received concerning the injury sustained by the
     Community industry. The findings and conclusions set out in the provisional
     duty Regulation (recitals 87-96) that the Community industry has been suffering
     material injury within the meaning of Article 4 of the basic Regulation, are
     therefore confirmed.
                               H.      CAUSATION
(67) Thai exporters claimed that the precarious profitability situation of the
     Community industry cannot be related to dumped imports but was caused by
                                        51
 ---pagebreak---      high investments by the Community industry made during the investigation
     period (recital 94 of the provisional duty Regulation).
     The increase of investments by 125% in the investigation period as compared to
      1992 can, to a large extent, be attributed to two Community producers which
     either built new production facilities or improved existing ones. Even if these
     two producers were excluded from the profitability determination, the average
     profitability figure for the investigation period would only change marginally.
(68) As indicated in the provisional duty Regulation (recital 101), it was found that
     bicycle imports reported in EUROSTAT as coming from Vietnam are actually
     other imports originating in the People's Republic of China. Indonesian
     exporters claimed that this fact did not preclude such imports from having had
     an injurious effect. Imports of bicycles declared as originating in Vietnam had a
     smaller total volume in 1993 than the imports under consideration. Furthermore,
     no indication was found that these bicycles were sold at prices as low as those
     for bicycles from the countries under investigation. Price information available
     in EUROSTAT cannot be referred to since the statistics only distinguishes two
     subheadings which do not reflect the variety and heterogeneity of bicycle
     specifications and accordingly prices. In these circumstances, no clear
     assessment of a possible injurious impact of the imports allegedly coming from
     Vietnam can be made. Although these imports could have contributed to the
     difficult state of the Community industry, this does not affect the conclusion
     made in the provisional duty Regulation that imports of bicycles originating in
     Indonesia, Malaysia and Thailand caused material injury to the Community
     industry.
(69) Since no other new arguments were submitted in this respect, on the basis of the
     findings made and conclusions reached in recitals 97 to 109 of the provisional
     duty Regulation it is definitively concluded that the aggregate dumped imports
     from the three countries in question, given the substantial increase in import
     volumes and considerable degree of price undercutting, taken in isolation, have
     caused material injury to the Community industry.
                                                3c
 ---pagebreak---                          I.      COMMUNITY INTEREST
(70) Neither new evidence nor new arguments were submitted as to whether the
     Community interest call for intervention.
     In this respect the Council notes that without measures against the dumped
     imports and the resulting unfair competition on the Community market, there is
     an imminent danger that even more Community producer will face the prospect
     of closure. Consumers will therefore without measures have at least in the
     medium term less sources of supply. Although consumer prices of the imported
     products will increase, the global effects on the consumer will be limited since
     there is still a variety of suppliers who are not subject to any anti-dumping
     measures. In this respect it should be noted that no comments or submissions
     were received from consumer organizations.
     In view of these considerations and for the reasons mentioned in recitals 110 to
      117 of the provisional duty Regulation, no compelling aspects concerning the
     Community interest were found on the basis of which the Council could clearly
     conclude that it is not in the Community interest to apply measures.
                           J.      DUTY CALCULATION
(71) The AIPI claimed that individual duty rates should have been established for
     different types of bicycles. It argued that the application of weighted average
     rates as established in the provisional duty Regulation (recitals 66 and 119) has
     the effect of setting the duty rates at a level above the dumping or injury margins
     for some bicycle models in breach of Article 13 (3) of the basic Regulation.
     It is the normal practice of the Community institutions, in accordance with the
     basic Regulation, to establish a single duty rate for the like product concerned. It
     has not been disputed in the present case that all types of bicycles originating in
     Indonesia, Malaysia and Thailand and sold in the Community do form one
     single like product (recital 12). There is therefore no reason to deviate from the
     approach followed at the provisional stage. The ad valorem duty rates are thus
     based on a weighted average of the dumping margins established for the bicycle
                                                   33
 ---pagebreak---       models sold for export to the Community and expressed as a percentage of the
      free-at-Community-frontier price. The duty amount collected for a particular
      bicycle model may be higher or lower than the dumping margin, but on an
      overall basis, the duty rates reflect exactly the dumping margins found for the
      like product in strict accordance with Article 13 (3) of the basic Regulation. In
      addition, given the uncertainties for clearly defining types or categories of
      bicycles (recital 12 of the provisional duty Regulation), setting separate duty
      rates for types or categories would render the enforcement of the measures
      administratively impossible.
 (72) For the purpose of establishing the level of definitive duty, and in applying the
      same methodology already applied at the provisional stage, account was taken of
      the dumping margins found and the level of duty necessary to eliminate the
      injury sustained by the Community industry.
(73^  It was confirmed at the definitive stage that for all companies the undercutting
      margin was higher than the dumping margin found, both being expressed as a
      percentage of the CIF Community frontier price, and that given the precarious
      financial situation of the Community industry, even higher rates of duty would
      be required to fully eliminate injury (recital 119 of the provisional duty
      Regulation). Consequently, in accordance with Article 13 (3) of the basic
      Regulation, the level of the duty rates should be based on the level of the
      dumping margins.
 (74) With regard to one Indonesian company, it is confirmed that the dumping
      margin established is de minimis and this company should consequently be
      excluded from the scope of the duty imposed on imports originating in
      Indonesia.
 (75) It is also confirmed that for producers in the three countries concerned who
      neither replied to the Commission's questionnaire nor otherwise made
      themselves known, it is appropriate, for the reasons outlined in recitals (69) to
      (71) of the provisional duty Regulation to establish the level of definitive duty at
      the weighted average of the highest dumping margins found for bicycle models
      exported to the Community in representative quantities.
                                              *[
 ---pagebreak---      K.       DEVELOPMENTS AFTER THE INVESTIGATION PERIOD
(76)  In the provisional duty Regulation (recitals 122-125), the Commission rejected
     requests from Indonesian, Malaysian and Thai companies and from
     representatives of these countries, that import developments after the
     investigation period should be taken into account.
     All Malaysian and Thai producers reiterated their claim that up-to-date trends of
     import volumes after the investigation period should have been taken into
     account. They contend that the basic Regulation does not prevent the
     Community Institutions from doing so, and that such extended assessment is
     necessary to show the actual and persisting causation of injury through dumped
     imports. In addition, Thai exporters claimed that in past investigations the
     Community institutions have accepted to take into consideration developments
     after the investigation period.
     It is the Community institutions' constant practice, as now laid down in Article 6
     (1) of Regulation (EC) No 3283/94, to limit findings to the investigation period
     unless the effects of new circumstances are manifest, undisputed, lasting, and not
     open to manipulation or do not stem from deliberate action of interested parties.
     Concerning the alleged decrease of import volumes after the investigation
     period, this may stem from deliberate strategies of the economic operators in the
     exporting countries and in the Community In addition, there is no assurance that
     imports volumes will remain at such levels. Reference was also made to a
     change in the GSP preferential duty rate applying to the imports in question
     which occurred in 1995. However, the possible effects which the changes in the
     GSP system may have on prices in the Community is completely unknown.
              For these reasons it is confirmed that in the present case the definitive
     determination should be based on the findings relating to the investigation
     period.
                                       3J"
 ---pagebreak---  L.   GATT REQUIREMENTS CONCERNING DEVELOPING COUNTRIES
                            AND UNDERTAKINGS
(77) Malaysian exporters claim that a more lenient treatment in the application of
     anti-dumping rules should have been granted to them because they are located in
     a developing country. In this connection, the Malaysian and Thai companies
     refer to Article 15 of the Agreement on Implementation of Article VI of the
     General Agreement on Tariffs and Trade 1994 ('1994 AD-Agreement': 'It is
     recognized that special regard must be given by developed country Members to
     the special situation of developing country Members when considering the
     application of anti-dumping measures under this Agreement. Possibilities of
     constructive remedies provided for by this Agreement shall be explored before
     applying anti-dumping duties where they would affect the essential interests of
     developing country Members. ') and complain that this Article was not respected.
     The Malaysian exporters referred in this respect to a Report of the GATT
     Working Party on 'Acceptance of the Anti-dumping Code' (Report adopted on
     31 November 1975, 22S/27, 28, para 4) and to a Decision adopted by the GATT
     Committee on Anti-dumping Practices (ADP/2, Decision of 5 May 1980,
     27S/16, 17).
     It follows from Article 18.3 of the 1994 AD-Agreement that Article 15 of the
     1994 AD-Agreement is not applicable to the present proceeding. In any event,
     Article 15 by no means entails an obligation for the Community to change
     calculation methods as was confirmed in the recent Cotton Yarn Panel for the
     former Article 13 of the Agreement on Implementation of Article VI of the
     General Agreement on Tariffs and Trade 1979 (1979 AD-Code) which is
     similarly worded as Article 15 of the 1994 AD-Agreement.
     As also confirmed in the Cotton Yarn Panel, the said Decision of the GATT
     Committee on Anti-dumping Practices cannot change the content of Article 13
     of the 1979 AD-Code. The report mentioned by the Malaysian exporters is a
     preparatory document which has no intrinsic legal value and thus does not
     provide any guidance in the present case.
                                       3£
 ---pagebreak--- According to Article 15 of the 1994 AD-Agreement, constructive remedies are
those provided for 'by this Agreement' which, in practice, are undertakings.
Actually no undertakings were offered by Indonesian or Thai companies.
Malaysian companies indicated their readyness to discuss the terms of
undertakings, but made a specific offer only for a quantitative undertaking.
As regards price undertakings, it would be impractical and unrealistic to accept
these undertakings in the present case because of the enormous number of
different bicycle models and the frequent changes of specifications which would
render monitoring undertakings impossible.
As to quantitative undertakings, it was examined in the present case whether the
quantitative undertaking offered could remedy the injurious effect of dumping
and could be satisfactorily monitored. The co-operating Malaysian exporters
argued that a non injurious volume could be determined by reference to the
criteria contained in Article 5.8 of the 1994 AD-Agreement, namely the 3%
threshold as in relation to the total imports into the Community of the like
product, an offer which, it is claimed, would reduce imports from Malaysia to a
negligible volume. However, this approach ignores tha fact that the injurious
effect of dumped bicycle imports from Indonesia, Malaysia and Thailand was
assessed cumulatively. Furthermore, the undertaking was offered on behalf of
Malaysian exporters which do not account for the totality of Malaysian bicycle
exports to the Community. In these circumstances, it is impossible to determine
which import volume to be allocated to the exporters in question could
effectively remedy the injurious effects of dumping and it is doubtful whether
such undertaking could be satisfactorily monitored.
Therefore, the Commission considers neither price nor quantitative undertakings
acceptable in this case. Finally, it should be recalled that the Community would
not be obliged under Article 15 to pursue this option in the circumstances of the
present case, since it was not demonstrated that applying anti-dumping duties
would affect the essential interests of the exporting countries.
                                   34
 ---pagebreak---                M.      COLLECTION OF THE PROVISIONAL DUTY
(78)    In the light of the seriousness of the injury, and in view of the high level of
        dumping, the Council considers that the provisional duty should be definitively
        collected at the level of the definitive duties.
HAS ADOPTED THIS REGULATION:
                                           Article J
1.      A definitive anti-dumping duty is hereby imposed on imports of bicycles falling
within CN code 8712 00 and originating in Indonesia, Malaysia and Thailand.
2.      The rates of anti-dumping duty applicable to the net-free-at-Community-frontier
price, before duty, shall be as follows:
                                            2£
 ---pagebreak---  Country                  Products manufactured by                 Rate of       Taric
                                                                    duty      additional
                                                                                 code
Indonesia:   -  P.T. Federal Cycle Mustika                        28.4%       8859
             -  P.T. Jawa Perdana Bicycle Industry, Tangerang     27.7%       8861
             -  P.T. Toyo Asahi Bicycle Industries, Jakarta       28.4%       8859
             -  P.T. Wijaya Indonesia Makmur Bicycle              21.9%       8862
                Industries, Surabaya
             -  other companies                                   29.1%       8863
Malaysia:    -  Akoko Sdn Bhd, Klang                              23.1%       8864
             -  Berjaya Cycles Sdn Bhd, Kulim                     37.3%       8865
             -  Greenworld Systems Sdn Bhd, Kuala Lumpur          27.7%       8866
                (previously Fairly Toraya Sdn Bhd)
             -  Lerun Group Industries Berhad, Petaling Jaya      37.3%       8865
             -  Rolls Rally Sdn Bhd, Pelabuhan Kelang             25.3%       8867
             -  other companies                                   39.4%       8868
Thailand:    -  Bangkok Cycle Industrial Co. Ltd., Bangkok        17.7%       8869
             -  Siam Cycle MFG. Co. Ltd., Samuthprakarn           38.9%       8870
             -  Thai Bicycle Industry Co. Ltd., Samuthprakarn     13.0%       8871
             -  Victory Cycle Co. Ltd., Samuthprakarn             13.2%       8883
             -  other companies                                   39.2%       8872
3.      The duties shall not apply to imports of the product specified in paragraph 1,
manufactured by P.T. Insera Sena, Sidoarjo, (Taric additional code 8860)
4.      Unless otherwise specified, the provisions in force concerning customs duties
shall apply.
                                       Article 2
The amounts secured by way of provisional anti-dumping duty under Regulation (EC)
No 2414/95 shall be definitively collected at the duty rate definitively imposed.
Amounts secured in excess of the definitive rate of anti-dumping duty shall be released.
                                         ^
 ---pagebreak---                                         Article 3
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,
                                          M-°
 ---pagebreak---                                                                    ISSN 0254-1475
                                                        - COM(96) 112 final
                                              DOCUMENTS
EN                                                                       02 ii
                                     Catalogue number : CB-CO-96-122-EN-C
                                                             ISBN 92-78-01732-9
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