CELEX: 51991PC0109
Language: en
Date: 1991-04-04
Title: PROPOSAL FOR A COUNCIL REGULATION ( EEC ) IMPOSING DEFINITIVE ANTI-DUMPING DUTIES IN CONNECTION WITH THE REVIEW OF ANTI-DUMPING MEASURES CONCERNING IMPORTS OF FERRO-SILICON ORIGINATING IN BRAZIL

COMMISSION OF THE EUROPEAN COMMUNITIES
                                                 C0M(91) 109 final
                                                 Brussels,   4 Apr iI 1991
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                                       Proposal for a
                                  COUNCIL REGULATION (EEC)
                          imposing definitive anti-dumping duties
                  in connection with the review of anti-dumping measures
                concerning imports of ferro-siI icon originating in Brazil
                               (presented by the Commission)
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 ---pagebreak---                                           - 2 -
                               EXPLANATORY MEMORANDUM
1. In   a   notice    published    in   the   Official   Journal    of   the   European
   Communities (No C 109 of 3 May 1989), the Commission announced a review,
   under Article 14 of Regulation (EEC) No 2423/88, of the current anti-
   dumping measures regarding        imports into the Community of ferro-siI icon
   or iginat ing in BraziI.
2. The Commission's      investigation covered the period from 1 September 1989
   to 30 ApriI 1990.
3. The normal value of the dumped product was established:
          for  one   Brazilian   firm,    on   the  basis  of   a  constructed    value
         determined     by  adding   a   reasonable   profit   margin  to    production
         costs.    The dumping margin established was 12.18%;
          for the other Brazilian firms, on the basis of the prices charged
         on   the domestic market       by   the producers   concerned.     The margin
         established ranged from 0% to 66.56% for the five exporting firms.
4. For two Brazilian firms, which, while not exporting during the reference
   period,     cooperated    with    the    investigation,    a   normal    value   was
   established on the basis of prices they charged on the domestic market.
 ---pagebreak---                                          - 3
5. With   regard   to  injury, exports from Brazil       have  increased;   Community
   production    capacity    has   fallen,    although   consumption    has  remained
   stable.    In many cases, the resale price of imports was lower than that
   charged by Community producers; the prices of the imports              in question
   were undoubtedly      lower than those which would       have enabled    Community
   producers to cover their costs and obtain a reasonable profit.
   Moreover, with regard to the threat of injury, Brazil            is maintaining a
   high   production    capacity   although   domestic   consumption    is relatively
   low.   The Community is a market with attractive price levels.
6. In these circumstances,        it would   seem   appropriate   to maintain   anti-
   dumping measures in the form of satisfactory price undertakings offered
   by   six  producer/exporters      concerned   and   a  duty  of   12.20%  for  one
   producer    not   wishing   to   offer   an  undertaking.    One   firm  has  been
   entirely exempted from duty.
7. To close any loopholes and to prevent the recurrence of the events which
    led to the    initiation of this review, an anti-dumping duty should be
    imposed on imports of products sold to the Community by exporters other
   than those referred to at 5.        This duty is 39%.
 ---pagebreak---                                         - 4
                                   Proposal for a
                             COUNCIL REGULATION (EEC)
                     imposing definitive anti-dumping duties
            in connection with the review of anti-dumping measures
          concerning imports of ferro-siI icon originating in Brazi
THE COUNCIL OF THE EUROPEAN COMMUNITIES,
Having regard to the Treaty establishing the European Economic Community,
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,1 and in particular Article 10 thereof,
Having   regard   to   the  proposal     from   the  Commission,     presented   after
consultation within the Advisory Committee as provided             for   in the above
Regulation,
Whereas:
                                     A. PROCEDURE
1.   Council    Regulation    (EEC)   No 3650/872     imposed   a  definitive    anti-
     dumping duty on imports of ferro-siI icon originating           in Brazil.    This
     duty   does  not   apply   to   the product    manufactured    and   exported   by
     Companhia    Brasileira     Carbureto    de   Calcio   SA   and   Electrometalur
     (currently    trading    as   Rima SA)   which    were   not  dumping,    nor   to
     Italmagnesio SA, which, when the duty was            imposed, offered a price
     undertaking which was considered acceptable by the Commission.3
1  0J No L 209, 2.8.1988, p. 1.
2  OJ No L 343, 5.12.1987, p. 1.
3  OJ No L 219, 8.8.1987, p. 24.
 ---pagebreak---                                       - 5-
2.   Commission Regulation (EEC) No 2409/87 3 and Council Regulation (EEC)
     No 341/90 4  imposed  measures   on   imports   originating   in   the  Soviet
     Union, Norway, Sweden, Iceland, Venezuela and Yugoslavia.
3.   In their request for a review lodged in November 1989, the Brazilian
     producers and/or exporters claimed that they were no          longer dumping
     this product and that the Community      industry was therefore no longer
     suffering   material   injury  connected  with    the dumping   of   Brazilian
     products.   The measures adopted    in 1987 should therefore be repealed
     or amended.
4.   Having decided, after consultation, that there was sufficient evidence
     to  Justify    a  review,   the  Commission    began   an  investigation    in
     accordance with Article 14 of Council Regulation (EEC) No 2423/88.          As
     the Commission has, moreover, reason to believe that the circumstances
     cited  by some Brazilian exporters are equally          applicable    to other
     Brazilian producer/exporters, the review was extended to all Brazilian
     producer/exporters.5
5.   The Commission officially notified the exporters, Community producers
     and importers known to be concerned and gave the parties concerned the
     opportunity   to make known their views       in writing and to request a
     hearing.
6.   The Community producers, the exporters and some importers made their
     views known fn writing.
7.   Some exporters and several      importers and consumers of ferro-siI icon
     requested and were granted hearings.
4 OJ No L 38, 10.2.1990, p. 1.
5 OJ No C 109, 3.5.1990, p. 5.
 ---pagebreak---                                      - 6-
8. The Commission     sought  and   verified all  the  information   it   deemed
   necessary   for  the purposes of determining     dumping,   injury and    the
   threat of injury and carried out inspections at the premises of:
   -   Community producers
       Pechiney Electrométallurgie SA, France,
       SKW Trostberg AG, Germany,
       Carburos Metâlicos, Spain,
       Industria Elettrica Inde I, Italy,
       UtiIizzazioni Elettro Industrial (UEI), Italy.
   -   Community   importers
       Considar Europe SA, Belgium,
       Sogem Rohstoffhandel GmbH, Germany.
   -   BrazlI Ian producer/exporters
       Companhia Bras Ile ira Carbureto de Calcio (CBCC),
       Companhia Italmagnesio SA,
       Companhia Ferroligas da Bahia - Ferbasa,
       Companhia Cimento Portland Maringa,
       Companhia Paulista de Ferroligas,
       Companhia Ferroligas Minas Gérais - Minasiigas,
       Companhia Ferroligas Piracicaba Ltda,
       Companhia Rima Eletrometalurgia SA.
9. The   Commission    received   and   used information  from   the    importer
   Marc Rich, Zug, Switzerland.
 ---pagebreak---                                      - 7-
10. All   producer/exporters  were    informed  of  the   principal  facts  and
    considerations which would serve as the basis for the recommendation
    to impose definitive measures.       They were also given time to submit
    their comments following the communication of this information.       Their
    comments were examined and, where appropriate, taken into account in
    the Commission's conclusions.
11. The dumping investigation covered the period from 1 September 1989 to
    30 April 1990.
                                  B. PRODUCT
    1- Description of the product
12. The product concerned is ferro-siI icon containing between 10% and 96%
    of   silicon   by  weight  and    falling  within   CN   codes  7202 21 10,
    7202 21 90 and ex 7202 29 00.
    2. Like product
13. The Commission    established   that   the ferro-siI icon produced   in the
    Community   and that exported    from Brazil   were  like products   in all
    essential physical and technical properties.
                                  C. DUMPING
    1- Normal value
14.  In general, itormat value was calculated firm by firm and month by
    month and based on the prices chargedon the dcmestte market by seven
    Brazilian producers, five of wtiich exported to the Community during
    the reference perfod am* provided sufficient evidence.
 ---pagebreak---                                          - 8
15. Normal value was also calculated for two Brazilian producers which had
    not   exported    to   the    Community     in    the   reference      period.    These
    exporters   cooperated     fully with      the   investigation      and   expressed a
    desire to export to the Community in the near future.
16. During the reference period, one Brazilian producer made negligible
    and   unrepresentative      domestic     sales,     averaging     a    loss.    It  was
    therefore    necessary    to   find   another     method   of   calculating      normal
    value.   Normal value was constructed on the basis of average monthly
    fixed and variable raw material           and manufacturing costs - weighted
    according    to the volume of export           production    -   together     with  the
    selling   costs,    administrative       expenditure     and    general     overheads.
    Allowance was also made for a reasonable profit margin of 6%.
17. To offset the inflationary effect of domestic prices in Brazil, normal
    values were expressed on a monthly basis in US dollars and according
    to the monthly average exchange rate.
    2. Export prices
18. Export prices - expressed         in US dollars - were based on the prices
    actually   paid    or   payable     for   products     sold    for    export    to  the
    Community.    Where exports were made           to subsidiary      companies     in the
    Community or where there was a compensatory arrangement between the
    exporter and the importer, export prices were determined on the basis
    of   the price at which        the   imported    product   was    first    sold   to an
     independent purchaser, with due allowance for all costs borne between
     import  and   resale of     the products      concerned    and    for   a  reasonable
    profit margin of 3%, calculated on the basis of the profit margin of
     independent    importers    of  the product.        All  these     sales   were   made
    before payment of the anti-dumping duty.
 ---pagebreak---                                   -   9  -
    3. Comparison
19. In comparing normal value with the export prices on a transaction-by-
    transaction basis, the Commission took account when appropriate and
    where sufficient evidence was provided, of differences affecting the
    comparability @f prices; such adjustments were concerned mainly with
    payment  and  delivery   terms,    transport  and  insurance costs  and
    different forms of presentation and packaging.
20. Costs resulting from non-recoverable waste, incurred at each loading
    and unloading   in the export    process, were also deducted   from the
    export prices.   Where producers had failed to quantify such costs, a
    percentage deemed reasonable    in the light of all the data verified
    during the investigation with other producers which did provide such
    evidence was deducted from the selling price to obtain the net ex-
    works price of exports.
21. Given Brazil's high and relentless inflation, normal values and export
    prices were compared in US dollars.
22. All comparisons were made at the ex-works stage.
    4. Margin
23. Comparison of normal value with the export prices for the period from
    September 1989   to April 1990 shows     that five Brazilian producers'
    exports to the Community were being dumped, with the following average
    margins based on the free-at-Community-frontier price:
 ---pagebreak---                                    - 10 -
    -   ItaImagnesio SA                                 66.56%
    -   Cia. Cimento Port land Maringa                  39.31%
    -   Cia. Ferroligas da Bahia                        41.18%
    -   Cia. Ferroligas Minas Gérais                    26.03%
    -   Rima Eletrometalurgia SA                        12.18%
    -   Cia. Brasilelra Carbureto de Calcio SA              0%
                                  D. INJURY
24. The Commission's task was to determine whether, in spite of the anti-
    dumping measures    imposed on certain exporters, there was injury or
    threat of injury.
I.  CURRENT SITUATION
1•  Volume and price of imports
25. Brazilian   exports   to  the  Community have  increased,  rising from
    7 000 tonnes   in 1986 to 17 000 tonnes   in 1987, the year the anti-
    dumping measures entered into force, and reaching some 22 000 tonnes
     in 1990.  Brazil's market share grew from about 1% in 1986 to over 4%
     in 1990. This relatively small market share must be considered in the
     light of that of other countries, such as Norway, Sweden, Iceland,
    Venezuela, the Soviet Union and Yugoslavia, which between them hold
    about 65% and, having been guilty of dumping, are subject to measures.
 ---pagebreak---                                       - 11
26. The Commission also established that while during the reference period
    the resale prices of the imports originating          in Brazil were improved
    by the anti-dumping measures in force, many cases were found in which
    they remained lower than those charged by Community producers.
2.  Impact on the Community industry
    The Commission took note of the following information:
    (a) Community capacity and production
27. Between    1986   and  1990   Community    production     capacity    fell   from
    285 000 tonnes     to 252 000 tonnes;      in   reducing    its  capacity,    the
    Community    industry  has sought    to specialize     to some extent      in an
    attempt to limit its losses in the face of downward pressure exerted -
    despite   the anti-dumping    measures    in force - by exporters of non-
    member countries and Brazil in particular, on prices for standard and
    other products in the Community.
28. Community     production    has    fallen    by   about    41%:    standing    at
    227 000 tonnes in 1986, it fell to 133 000 tonnes in 1990 and part of
    this output was exported or stockpiled.
     (b) Market share and consumption
29. Between   1986 and 1990 the Community         industry's market    share shrank
    from   39% to 20%, while annual        Community   consumption    stabilized at
    about   500 000 tonnes    in    the   same   period:    consumption    obviously
    benefited imports from non-member countries, including Brazil.
 ---pagebreak---                                       - 12 -
    (c) Prices
30. In almost all cases, the resale prices for dumped              imports during the
    reference    period   would   not    have   covered    the   costs   of   Community
    producers    and  allowed   them  a reasonable      profit;     in an   attempt   to
    preserve    their   sales   and   their    share   of    the   Community    market,
    Community producers were forced during the reference period to sell
    their products at ever-lower prices until they could not even cover
    costs.
    (d) Profits
31. The financial performance of the Community           industry was negative from
    1986 to 1987.     Only in 1988 did a number of firms make a small profit.
    There was a brief       recovery    in the first     half of     1989 owing     to a
    substantial    increase in the selling prices of the product in question.
    This relative improvement was modest, despite the upturn in the iron
    and   steel    industry,  which    is   the  main   customer     for   the   product
    concerned,    and despite    restructuring, which        allowed   better,    though
    still   not satisfactory, capacity utilization.            During    the reference
    period,    the   Community    industry    once   more    registered     appreciable
     losses.   The current anti-dumping measures did, however, curb firms'
     losses at a time when prices were falling.
3.  Cause and effect and other factors
32. The combination of the increase in imports originating in Brazil, the
     increase in their market share, the pressure exerted by the prices of
    those   imports and the worsening situation           in the Community      industry
    despite the restructuring undertaken by the Community producers shows
    that   the position of      the Community      industry   remains precarious       in
    spite of the current anti-dumping measures.
 ---pagebreak---                                     - 13
    In such a situation, low-priced imports from Brazil further debilitate
    the industry and constitute an additional injury.
33. The Commission examined     whether   other   factors could      be behind     the
    injury caused to the Community      industry, such as imports of products
    originating in other non-member countries.        It established that, while
    other non-member   countries held a substantial         share of the market,
    measures  had been   imposed   on dumped    imports    from   these countries,
    namely Norway, Sweden,    Iceland, Venezuela, Yugoslavia and the USSR.
    It would   seem  that  all    these   countries    have   contributed     to   the
    difficulties of the Community     industry.    These countries would be the
    object of discrimination, if measures were not taken against Brazil,
    which has also played a part     in the aggravating the situation          in the
    Community.
34. The  Commission  therefore    concluded,   on   the   basis   of   the  evidence
    above, that the imports of products originating in Brazil concerned by
    this proceeding were, by themselves, a         cause of material       injury to
    the Community industry.    The Council confirms this conclusion.
II. THREAT OF INJURY
35. There has been a significant increase in dumped imports originating in
    Brazil.   If  sustained,    this   rate   of    increase    would    have    grave
    consequences for the Community industry.        Brazil's production capacity
    of 280 000 tonnes, moreover, accounts for about 16% of the total for
    market economy countries, which       is also a significant       proportion of
    world  capacity.   In 1989    its output    reached    about   230 000 tonnes,
    while   domestic  consumption    peaked    at   about    120 000 tonnes.      This
    disparity leaves about 100 000 tonnes available for export.
 ---pagebreak---                                        - 14 -
36.  As regards the possibility of Brazil        adopting a more active export
     policy should the anti-dumping measures expire, it should be borne in
     mind that the Community is a very attractive market by virtue of its
     price levels, its terms of payment and the quality of its currencies.
37.  The    investigation has also shown that       low-priced Brazilian    imports
     constantly undercut the Community industry.        For all the reasons given
     in recitals 34, 35 and 36, the Council finds that there             is also a
     threat of injury.
III. CONCLUSIONS
38.   In these circumstances, the Commission         concludes   that  the present
     anti-dumping measures should be maintained in an amended form and new
     measures     be  imposed on   some exporters.    The Council    confirms  this
     conclusion.
                               E. COMMUNITY INTEREST
39.   It is in the Community's interest to restore fair competition, without
     the disturbance by unfair practices.       Continued dumping would threaten
     the survival of the Community industry.
      In view of ferro-siI icon's importance in steelmaking, it could not be
      in   the   Community's    interest  to  depend    wholly   on   non-Community
     suppliers, particularly      since some are    located at a great distance
     from the Community.
40.  The    representatives    of  Community  manufacturing    industries   and  of
      individual firms have argued that it would be against the Community's
      interest to keep the protective measures in force, since they would
     weaken      competitiveness    against    imports    of   finished    products
     or i g i nat i ng in non-member count ries.
 ---pagebreak---                                          - 15 -
41.  As is the case for any raw material, it is probable that price rises
      influence the costs of the manufacturing industries.           However, no firm
      provided the Commission with clear evidence of a specific effect of
      ferro-siI icon   price    increases    on   its  production    costs;  nor  was
      evidence   supplied     of    the   possible    impact   of   an   increase   in
     manufacturers' prices on their total sales.            The Commission considers
      that  the  impact would      be slight, particularly      in view of    the  low
      percentage of ferro-siI icon used in the production of a tonne of steel
      and the relatively small proportion of the overall cost of a tonne of
      steel represented by this product.
42.   Having carefully compared        the above arguments and      the particularly
      serious problems faced by the Community ferro-siI Icon industry, which
      can be attributed to a significant extent to the imports in question,
      the Commission has concluded that it is in the Community's interest to
      maintain anti-dumping measures.        The Council confirms this conclusion.
                                    F. UNDERTAKINGS
43.   Six Brazilian producer/exporters,
      -  Companhia de Cimento Portland Maringa, Sao Paolo,
      -  Companhia de Ferroligas da Bahia - Ferbasa, Pojuca,
      -  Companhia Ferroligas Minas Gérais - Minas Ligas, Contagem,
      -  Companhia Italmagnesio SA, Sao Paolo,
      -  Companhia Ferroligas Piracicaba Ltda, Sao Paolo,
      -  Companhia Paulista de Ferroligas, Sao Paolo
      have   offered    price    undertakings    which    the  Commission   considers
                     6
      satisfactory.      They will    bring   the   import prices of    ferro-siI icon
      originating in Brazil up to a level considered sufficient to eliminate
      the Injury to the Community industry.
6   OJ No L ... , .•.
 ---pagebreak---                                   - 16 -
                                 G. DUTIES
44. With   regard to the firm Rima Eletrometalurgla    SA, Belo Horizonte,
    which has offered no undertaking, the Commission      considered   that a
    duty   deemed sufficient  to eliminate   the dumping   margin  determined
    should be imposed.
    To facilitate customs clearance    the Commission   considered   that  the
    duty should   take the form of an ad valorem ant i-dumping duty.       The
    Council confirms this conclusion.
    Expressed as a percentage of the net free-at-Community-frontier price
    of the product before duty, the rate of duty     is 12.2%.    The Council
    confirms this conclusion.
45. To close any    loopholes, an ant i-dumping duty  should be    imposed on
     imports of the Brazilian product sold to the Community by Brazilian
    firms other than those referred to in recital 8.     The rate of duty to
    be imposed on these other Brazilian exporters was determined on the
    basis of the weighted average injury to the Community     industry, which
     is lower than the highest dumping margin.    The  injury threshold was
    based on the target price required by the Community       industry, which
    consists of the industry's weighted average production costs with the
    addition of a reasonable profit margin.
    Expressed as a percentage of the net free-at-Community-frontier price
    of the product    before duty, the rate of duty    is 39%.    The Council
    confirms this conclusion,
 ---pagebreak---                                      - 17 -
HAS ADOPTED THIS REGULATION:
                                   Article 1
1.   A definitive anti-dumping duty is hereby imposed on imports of ferro-
     si I icon  falling    within   CN   codes   7202 21 10,   7202 21 90   and
     ex 7202 29 00 (TARIC code 7202 29 00 * 10) and originating in Brazil.
2.   The duty, expressed     as a percentage of    the net  free-at-Community-
     frontier price of the product before duty, shall be 39% (additional
     TARIC code - 8537).
     Free-at-Community-frontier prices shall be net      if the terms of sale
     provide for payment within thirty days of consignment.      They shall be
      increased or reduced by 1% for each month's increase or decrease in
     the period of payment.
3.   The duty, expressed     as a percentage of    the net  free-at-Commun ity-
     frontier price of the product before duty, is 12.2% for the products
     referred to in paragraph 1 which are manufactured and exported direct
     to the Community by the Brazilian firm Rima Eletrometalurgla SA, Belo
     Horizonte (additional TARIC code - 8538).
4.   The duty shall not apply to products produced and/or exported by the
     fol lowing BraziIian firms (additional TARIC code - 8539):
     -   Companhia Bras Lie ira Carbureto de Calcio, Rio de Janeiro,
     -   Companhia de Cimento Portland Maringa, Sao Paolo,
     -   Companhia de Ferroligas da Bahia - Ferbasa, Pojuca,
     -   Companhia Ferroligas Minas Gérais - Minas Ligas, Contagem,
     -   Companhia ItaImagnesio SA, Sao Paolo,
     -   Companhia Ferroligas Piracicaba Ltda, Sao Paolo,
     «   Companhia Paulista de Ferroligas, Sao Paolo.
5.   The provisions in force concerning customs duties shall apply.
 ---pagebreak---                                    - 18 -
                                  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
a I I Member States.
Done at Brussels   ,                            For the Council
                                                The President
 ---pagebreak---                                                   -19 -
                                                                              . ISSN 0254-1475
                                                                COM(91) 109 final
                                                        DOGUI\l
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