CELEX: 51996PC0001
Language: en
Date: 1996-01-11
Title: Proposal for a COUNCIL REGULATION (EC) amending regulation (EEC) nr 2455/93 imposing definitive antidumping duties on imports of monosodium glutamate originating in indonesia, the republic of Korea and Taiwan and collecting definitively the provisional duties imposed and terminating the proceeding with regard to Thailand

COMMISSION OF THE EUROPEAN COMMUNITIES
                                                  Brussels, 11.01.1996
                                                  COM(96) 1 final
                                   Proposal for a
                        COUNCIL REGULATION (EC)
  amending Regulation (EEC) No 2455/93 imposing definitive anti-dumping duties on
imports of monosodium glutamate originating in Indonesia, the Republic of Korea and
 Taiwan and collecting definitively the provisional duties imposed and terminating the
                         proceeding with regard to Thailand
                         (presented by the Commission)
 ---pagebreak---  ---pagebreak---                          EXPLANATORY MEMORANDUM
1. The Council, by Regulation (EEC) No 1798/90, as amended by Regulation (EEC)
   No 2966/92 and by Regulation (EEC) No 2455/93, imposed definitive anti-
   dumping duties on imports of monosodium glutamate originating in Indonesia, the
   Republic of Korea, Taiwan, and Thailand with the exception of imports from
   certain producers in these countries from which the Commission accepted
   undertakings.
2. In July 1994, the Commission initiated a review of the anti-dumping measures in
   force, following an application lodged by the Community industry. The application
   alleged, inter alia, that the existing price-undertakings had been violated resulting
   in renewed financial losses for the Community industry, thereby aggravating the
   injury suffered.
3. In the course of the review investigation the Commission found that there were
   reasons to believe that the undertakings were being violated and consequently, by
   Regulation (EC) No 1754/95 of 18 July 1995, replaced the undertakings previously
   accepted from Cheil Foods & Chemicals Inc., Miwon Co. Ltd., Ve Wong
   Corporation, Tung Hai Fermentation Ind. Corp., PT Indomiwon Citra Inti and Thai
   Fermentation Industry Corporation by a provisional anti-dumping duty.
4. The weighted average dumping margins found ranged from 14.1 to 32.7 for the
   Republic of Korea, from 44.2 to 52.4% for Taiwan and they amounted to 64.7% for
   Indonesia and Thailand.
5. As far as Indonesia, Korea and Taiwan are concerned, it was found that the dumped
   imports caused injury to the Community industry and that the imposition of
   measures was in the interest of the Community. As far as Thailand is concerned, it
   was found that the impact of exports from this country was negligible and that there
   was no indication of a possible resurgence of dumped imports. The measures
   should therefore be repealed with regard to this country.
6. The level of the definitive duty was, with the exception of one country, fixed on the
   basis of the injury margins as these were lower than the dumping margins. The
   duties range from 0.136 ECU/kg to 0.334 ECU/kg.
7. It is therefore proposed that the Council adopts the Regulation annexed amending
   Regulation (EEC) No 2455/93 imposing definitive anti-dumping duties on imports
   of monosodium glutamate originating in Indonesia, the Republic of Korea and
                                                   X
 ---pagebreak--- The level of the definitive duty was, with the exception of one country, fixed on the
basis of the injury margins as these were lower than the dumping margins. The
duties range from 0.131 ECU/kg to 0.334 ECU/kg.
It is therefore proposed that the Council adopts the Regulation annexed amending
Regulation (EEC) No 2455/93 imposing definitive anti-dumping duties on imports
of monosodium glutamate originating in Indonesia, the Republic of Korea and
Taiwan and collecting definitively the provisional duties imposed and terminating
the proceeding with regard to Thailand (see title of the regulation).
                                 A. a.
 ---pagebreak---                                COUNCIL REGULATION (EC) No
                                               of
    amending Regulation (EEC) No 2455/93 imposing definitive anti-dumping duties on
 imports of monosodium glutamate originating in Indonesia, the Republic of Korea and
  Taiwan and collecting definitively the provisional duties imposed and terminating the
                               proceeding with regard to Thailand
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^), as last
amended by Regulation (EC) No 1251/95(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 Articles
12, 14 and 15 thereof,
Having regard to the proposal from the Commission submitted after consulting the Advisory
Committee,
Whereas:
C1)     OJ No L 349, 31.12.1994, p. 1.
(2)     OJ No L 122,02.06.1995, p. 1.
(3)    OJ No L 209,02.0 8.1988, p. 1.
(4)     O J N o L 66, 10.03.1994, p. 10.
                                                  A t
 ---pagebreak---                                    I. PREVIOUS PROCEDURE
(1)  The Council, by Regulation (EEC) No 1798/90(5), as amended by Regulation (EEC) No
     2966/92(6) and by Regulation (EEC) No 2455/93(7), imposed definitive anti-dumping
     duties on imports of monosodium glutamate originating in Indonesia, the Republic of
     Korea, Taiwan, and Thailand with the exception of imports from certain producers in
     these countries from which the Commission accepted undertakings by Regulation (EEC)
     No 547/90(8), Decision 92/493/EEC(9) and Decision 93/479/EEC(10).
                                II. REVIEW INVESTIGATION
(2)  By a notice published in the Official Journal of the European Communities(n), the
     Commission, after consulting the Advisory Committee and in accordance with Article
      14 of Regulation (EEC) No 2423/88 (hereinafter referred to as the Basic Regulation),
     initiated a review of the anti-dumping measures in force, following an application
     lodged by the Community industry.
     The application alleged, in particular, that the normal values established originally had
     generally increased, while the export prices for monosodium glutamate originating in
     most of the countries concerned had significantly decreased during 1993, thus resulting
     in increased dumping when compared to the original findings. It was also alleged that
     the monosodium glutamate originating in the countries concerned had been imported in
     the Community at prices lower than the price levels contained in the existing price-
     undertakings and that, therefore, the price undertakings were not suitable measures in
     this proceeding. It was finally alleged that the aforementioned facts have resulted in
     renewed financial losses for the Community industry, thereby aggravating the injury
     suffered. The evidence of changed circumstances contained in the application was
     considered sufficient to justify the opening of a review investigation.
(5)    OJ No L 167, 30.06.1990, p     1.
(6)    OJ No L 299, 15.10.1992, p     1.
(7)    OJ No L 225, 04.09.1993, p     1.
(8)    O J N o L 56, 03.03.1990, p  23.
(9)    OJ No L 299, 15.10.1992, p   40.
(10)   OJ No L 225, 04.09.1993, p   35.
(n)    OJ No C 187, 09.07.1994, p   13.
 ---pagebreak--- (3) The Commission officially advised the complainant Community industry, the exporters
    and the importers known to be concerned and the representatives of the exporting
    countries, and gave the parties directly concerned the opportunity to make their views
    known in writing and to request a hearing.
(4) The Commission sent questionnaires to parties known to be concerned and received
    replies to its questionnaires from the complainant Community industry, one Indonesian
    producer and its related selling company, two Korean producers, two Taiwanese
    producers, one Thai producer and two importers in the Community.
(5) One Korean exporter, one Indonesian exporter, one important consumer of monosodium
    glutamate and the Fédération des Associations de l'Industrie des Bouillons et Potages de
    la CEE requested and were granted a hearing.
(6) The Commission sought and verified all information it deemed necessary for the
    purposes of a determination and carried out investigations at the premises of the
    following companies:
    (a)   complainant Community producer.
          OrsanS.A. (France)
    (b)   producers/exporters:
          Indonesia:
                 PT Indomiwon Citra Inti
                 PT Jico Argung (related selling company of PT Indomiwon Citra Inti)
          Republic of Korea:
                 Cheil Foods & Chemicals Inc.
                 Miwon Co. Ltd.
                  Miwon Trading & Shipping Co., Ltd. (related selling company of Miwon
                  Co. Ltd.)
 ---pagebreak---             Taiwan:
                   Ve Wong Corporation
                   Tung Hai Fermentation Ind. Corp.
            Thailand:
                   Thai Fermentation Industry Corporation
      (c)   importers:
            GMS-Chemie-Handelsgesellschaft mbH (Germany)
(7)   As Thai Fermentation Industry Corporation submitted a deficient response to the
      Commission's questionnaire and refused to co-operate in the verification of the
      information it submitted, in accordance with Article 7(7)(b) of the Basic Regulation, the
      findings had to be based on the facts available.
(8)   The investigation of dumping covered the period from 1 May 1993 to 30 April 1994
      (hereafter the 'investigation period').
                    III. CONTINUATION OF EXISTING MEASURES
(9) • As the review investigation was still in progress beyond the normal period of expiry of
      the measures, the Commission gave notice(12), in accordance with Article 15(3) of the
      Basic Regulation, that the measures concerning monosodium glutamate originating in
      Indonesia, the Republic of Korea, Taiwan and Thailand would remain in force after the
      end of the relevant five-year period, pending the outcome of the review.
(l2)    OJ No C 164, 30.06.1995, p. 7.
 ---pagebreak---                                IV. PROVISIONAL MEASURES
(10) In the course of the review investigation the Commission found that there were reasons
     to believe that the undertakings referred to in recital (1) were being violated and
     consequently, by Regulation (EC) No 1754/95 of 18 July 1995(13), withdrew its
     acceptance of the undertakings previously accepted from Cheil Foods & Chemicals Inc.,
     Miwon Co. Ltd., Ve Wong Corporation, Tung Hai Fermentation Ind. Corp., PT
     Indomiwon Citra Inti and Thai Fermentation Industry Corporation, and imposed instead
     a provisional anti-dumping duty.
(11) By Regulation (EC) No 2678/95(14), the Council extended the validity of these duties
     for a period of two months.
                              V. SUBSEQUENT PROCEDURE
(12) Following the imposition of the provisional anti-dumping duties, Cheil Foods &
     Chemicals Inc., Miwon Co. Ltd., PT Indomiwon Citra Inti and Tung Hai Fermentation
     Ind. Corp. made their views known in writing. Parties who requested were granted a
     hearing by the Commission.
(13) The Commission continued to seek and verify all information it deemed necessary for
     its definitive findings. In particular, further investigations were carried out at the
     premises of the following importers:
           DCT Chemie B.V. (Netherlands)
           Henry Lamotte GmbH (Germany)
           Quimidroga S.A. (Spain)
           Scanchem Ltd. (United Kingdom)
           Superfos Chemicals A/S (Denmark)
           Tang Frères (France)
           VOS B.V. (Netherlands)
(13)   OJ No L 170, 20.07.1995, p. 4.
(14)   OJ No L 275, 18.11.1995, p. 22.
 ---pagebreak--- (14) The parties were informed in writing of the essential facts and considerations on the
     basis of which it was intended to recommend the imposition of definitive anti-dumping
     duties and the collection of the amounts secured by way of a provisional duty. The
     parties were also granted a reasonable period within which to make representations
     subsequent to the disclosure.
     The oral and written comments presented by the parties were considered and, where
     appropriate, the Commission's findings were modified to take account of them.
(15) The investigation exceeded the period of one year mentioned in Article 7(9)(a) of the
     Basic Regulation due to the unusual complexity of this case. As indicated above,
     verifications were carried out at the premises of seven importers, the need to obtain and
     verify additional information only arising at an advanced stage of the investigation.
          VI. PRODUCT UNDER CONSIDERATION AND LIKE PRODUCT
     1. Description of the product concerned
(16) The product covered by the complaint and for which the review investigation was
     initiated is monosodium glutamate produced in the form of crystals of various sizes and
     falling within CN code ex 2922 42 10. It is mainly used as flavour enhancer in soups,
     broths, fish and meat dishes and ready made foods. The product is the same as that in
     the Regulation under review.
(17) Monosodium glutamate is available in various packing sizes, ranging from consumer
     packs of 0,5 gram to 1000 kilo bulk bags. Smaller packing sizes are sold via retailers to
     private consumers, while the larger sizes of 25 kilo and more are destined for industrial
     users. However, there are no differences in the characteristics of monosodium glutamate
     packed in the various sizes.
     2. Like product
(18) It was found that the conclusions of the Regulation under review are still valid and that
     monosodium glutamate produced and sold by the Community industry on the
     Community market is a product alike to that produced in and exported from the four
     countries in question to the Community.
 ---pagebreak---                                         VII. DUMPING
      1. Preliminary remark
(19) With regard to Thai Fermentation Industry Corporation, it should be noted that this
     company which was the sole producer in Thailand having submitted information,
     although incomplete, in response to the Commission's questionnaire, refused to co-
     operate in the verification of this information. In addition, none of the co-operating
     importers was supplied by this company. In these circumstances, it was not possible to
     make an individual finding for this company, and findings concerning Thailand had to
     be based on the facts available as described in recital (33).
     2. Normal value
     a. General
(20) For all the exporting countries concerned, normal values were established for the
     relevant product types exported to the Community during the investigation period, i.e.
     on the basis of packing sizes of 25 kilo bags.
     b. Indonesia
(21) For the co-operating Indonesian producer normal value had to be constructed in
     accordance with Article 2(3)(b)(ii) of the Basic Regulation, since almost all of its
     domestic sales were made at a loss during the investigation period.
(22) The constructed normal value was based on the company's own manufacturing costs
     incurred during the investigation period, in accordance with Article 2(3)(b)(ii) of the
     Basic Regulation. To these costs, an amount corresponding to the company's own
     selling, general and administrative (SG&A) expenses was added. In the absence of any
     information on profits by other Indonesian producers of the like product or in similar
     business sectors, it was considered that the average profit realised during the
     investigation period by all other co-operating exporters on their domestic sales of the
     like product made in the ordinary course of trade would form the most reasonable basis
     on which to determine profit, since the structure of the markets concerned were to a
     large extent similar to that in Indonesia.
 ---pagebreak---      c. Republic of Korea
(23) For the two Korean producers which replied to the Commission's questionnaire, normal
     value was established, in accordance with Article 2(3)(a) of the Basic Regulation, on the
     basis of the price actually paid in the ordinary course of trade for domestic sales of the
     like product, which were made in sufficient quantities to permit a proper comparison.
     d. Taiwan
(24) For the two Taiwanese producers which replied to the Commission's questionnaire,
     normal value was established, in accordance with Article 2(3)(a) of the Basic
     Regulation, on the basis of the price actually paid in the ordinary course of trade for
     domestic sales of the like product, which were made in sufficient quantities to permit a
     proper comparison.
     2. Export price
(25) Export prices reported by all co-operating producers in Indonesia, Korea and Taiwan in
     their replies to the Commission's questionnaire corresponded to the price levels of the
     price undertakings. However, a verification of these export prices confirmed the
     allegation in the review application that the price undertakings had been violated and
     that the export prices reported were unreliable.
(26) The above conclusion was reached after consideration of the following facts: the
     Commission requested information on resale prices for the product concerned as well as
     information on the costs between importation and resale from all importers having
     purchased monosodium glutamate from those exporters which co-operated in this
     review.
 ---pagebreak---      A number of importers supplied the requested information on resale prices and costs and
     this information was verified at the premises of those importers which agreed to co-
     operate further in the investigation. It was found that these latter importers, which had
     sourced the product concerned from the co-operating exporters in Korea, Indonesia and
     Taiwan, had all sold the product concerned on the Community market at a loss during
     the period investigated and, in some cases, the resale price did not even cover the
     purchase price. This was a regular pattern of pricing behaviour, spanning the entire
     investigation period, for which no convincing reason could be advanced other than the
     existence of compensatory arrangements. In addition, clear evidence was found during
     the verification visits to certain importers that the undertakings accepted from Miwon
     Co. Ltd. (Korea) and PT Indomiwon Citra Inti (Indonesia) had been violated, i.e that the
     import prices were not at the level of the price undertakings as demonstrated. In the case
     of the Indonesian company, the violation was evidenced by the issue of credit notes
     relating to sales of the product concerned and, in the case of the Korean company, on the
     existence of correspondence referring to prices substantially below the undertaking
     price. The above facts alone show that the actual export prices for the transactions
     concerned were significantly lower than those reported at the undertaking price level.
     In the above circumstances, which strongly support the existence of compensatory
     arrangements and the unreliability of export prices reported, it was concluded that the
     export prices reported by the co-operating exporters should be reconstructed in
     accordance with Article 2(8)(b) of the Basic Regulation i.e. on the basis of the prices at
     which the imported product was first sold to independent customers, allowance being
     made for all costs incurred between importation and resale and for a reasonable profit
     margin for the importers concerned.
(27) Accordingly, for the co-operating exporters in Korea, Taiwan and Indonesia, the export
     price was constructed by deducting from the weighted average resale prices of each of
     the co-operating importers to the first independent customer, an amount which
     corresponded to the importers' costs between importation and resale plus an amount for
     profit of 5%. This amount of profit was considered reasonable as it was in line with that
     considered appropriate for the product concerned in previous investigations and was not
     contested. An additional deduction was made for customs duty and other costs, such as
     ocean freight and insurance, to arrive at an ex-works level in the countries of origin.
 ---pagebreak---  (28) For those transactions by the co-operating producers for which information on resales by
       importers could not be obtained, it was concluded that, in the light of the facts revealed
       by the verification of resale prices of MSG exported by those producers carried out at
       the seven importers referred to above, the export prices submitted by exporters had to be
       disregarded for the above same reasons. The export price therefore had to be
       established, in accordance with Article 7(7)(b) of the Basic Regulation, on the basis of
       the facts available, i.e. it was considered that actual export prices in these cases were at
      the same level as the export prices reconstructed as described in recitals (25) to (27).
      3. Comparison
(29) The weighted average normal value of 25 kilo bags, for each co-operating exporter, was
      compared with the export price established as described in recitals (25) to (28) at the
      same level of trade and on an ex-works basis. For the purpose of a fair comparison, due
      allowance was made for the differences in selling expenses claimed to affect price
      comparability for which satisfactory evidence was submitted. Adjustments were made,
      in particular, in respect of transport, insurance, handling, loading and ancillary costs,
      packing costs, credit and salesmen's salaries.
      4. Dumping margins
(30) The comparison showed the existence of dumping margins, being equal to the amount
      by which the normal value, as established, exceeded the price for export to the
      Community.
(31) The weighted average dumping margin for each producer, expressed as a percentage of
      the free-at-Community-frontier price, is as follows:
      Indonesia
      - PT Indomiwon Citra Inti:                         64.7%
      Republic of Korea
      - Cheil Foods & Chemicals Inc.:                    13.3%
      -Miwon Co. Ltd.:                                   32.7%
                                                                                                 10
 ---pagebreak---      Taiwan
     - Tung Hai Fermentation Ind. Corp.:              44.2%
     - Ve Wong Corporation:                           52.4%
(32) For those producers in Indonesia, Korea and Taiwan which neither replied to the
     Commission's questionnaire nor otherwise made themselves known, the dumping
     margin was determined on the basis of the facts available in accordance with
     Article 7(7)(b) of the Basic Regulation. In this respect, it was considered, in the light of
     the proportion of the total imports into the Community covered by the co-operating
     producers in each of the three countries concerned, that the findings made with regard to
     these companies provided the most appropriate basis for the determination of the
     dumping margin.
     On this basis it was concluded that it would provide a bonus for non-co-operation, and
     might lead to circumvention of anti-dumping measures, should any of the producers
     concerned be deemed to have dumped at levels lower than the highest dumping margin
     found for any producer in the exporting country concerned which had co-operated.
     It was, therefore, considered appropriate to use, for the non-co-operating producers
     concerned, the highest dumping margin found for a co-operating producer in the
     respective country, i.e. 64.7% for Indonesia, 32.7% for Korea and 52.4% for Taiwan.
(33) As far as Thailand is concerned, and for the reasons described in recital (19), it was
     considered appropriate, given the absence of any co-operating producer in this country,
     to base the country-wide dumping margin on the highest margin found for any co-
     operating producer in one of the other countries, i.e. 64.7%.
                                                                                               11
 ---pagebreak---                                         VIIL INJURY
Preliminary remark
(34) In accordance with Article 14 of the Basic Regulation, the investigation sought to
     determine the extent of any changes in the circumstances established in the Regulation
     under review with regard to the behaviour of the exporters on the Community market or
     the situation of the Community industry. Since the original five-year period of validity
     of the measures being reviewed would normally have lapsed, the question of the
     likelihood of injury recurring in the absence of measures was also examined.
     The examination of the injury trends covered the period from 1991 to 1993 and the
     investigation period.
                                   A. Community industry
(35) The complainant Community producer is the sole producer of the like product in the
     Community and, consequently, represents total Community production of the product
     concerned. Therefore, it constitutes the Community industry in the meaning of Article
     4(5) of the Basic Regulation.
                          B. Situation of the Community industry
(36) As there is only one Community producer of the product concerned and due to the
     confidential nature of the information relating to injury indicators, the figures describing
     the development of production, capacity, capacity utilisation, Community consumption,
     sales volume, market shares, price evolution and profitability are given in the form of
     indices, starting from a base of 100 for 1991 figures.
     Production, capacity and capacity utilisation
(37) Production by the Community industry of the product concerned decreased in 1992 to
     97.58, but recovered slightly in 1993 to 98.58. During the investigation period,
     Community production achieved 101.08.
                                                                                                12
 ---pagebreak---      The Community industry's production capacity for the product concerned remained by
     and large stable. The capacity decreased in 1992 to 99.8 and thereafter increased in 1993
     to 101.76 and during the investigation period to 103.72. Between 1991 and the
     investigation period the capacity utilisation rate varied between 100 and 96.88.
      Community consumption
(38) Community consumption was stable during the period examined. It was, on an indexed
     basis, 100 in 1991 and decreased'to 96.83 in 1992. In 1993, it increased to 101.08 and
     decreased subsequently to 100.25 during the investigation period.
     Sales volume and market share
(39) The Community industry's sales volume in tonnes dropped from 100 in 1991 to 93.21 in
      1992. In 1993, the quantity sold was 107.36 and during the investigation period it
     decreased slightly to 106.12.
     The market share of the complainant Community producer dropped, also on an indexed
     basis, from 100 in 1991, to 92.43 in 1992, increased to 102.73 in 1993 and fell again
     slightly to 102.28 during the investigation period. It should be noted, however, that its
     market share was at all times very substantial.
     Price evolution
(40) Although the Community industry's sales prices increased slightly to 101.66 in 1992,
     they fell substantially in the following year to 95.13. The situation improved somewhat
     during the investigation period as the prices recovered to 95.91.
                                                                                            13
 ---pagebreak---      Profitability
(41) At the outset, it should be noted that, despite the anti-dumping measures in force, the
     profitability of sales by the Community industry of the product concerned was at no
     time during the period examined at a satisfactory level, although the Community
     industry had achieved a reduction in costs of production. Indeed, the Community
     industry's actual level of profitability was not only far below the level considered by the
     Regulation under review as appropriate, as evidenced by the request for a review of the
     undertakings submitted by Community industry in 1992, but remained so low over an
     extended period of time that the industry's viability was jeopardized. The already low
     level prevailing in 1991 underwent a further sharp decrease in 1992. The downward
     trend continued in 1993, when the Community industry came very close to a loss-
     making situation. The investigation period saw some improvement of profitability
     which did not, however, reach the level of 1991. When considering profitability, it
     should also be borne in mind that, as mentioned above, its decline would have been
     even more significant had the Community producer not achieved a reduction in costs of
     production.
     Conclusion
(42) The examination of the above-mentioned indicators shows that, notwithstanding certain
     positive effects of the anti-dumping measures currently in force, the financial situation
     of the Community industry remains precarious. While material injury was established by
     the Regulation subject to review for the period from January 1989 to September 1992,
     the examination of the facts established in the current review demonstrates that material
     injury has persisted in the subsequent period. This is shown in particular by the further
     decrease inof prices and the persistent extremely low level of profitability.
                                                                                               14
 ---pagebreak---                          B. Behaviour of the exporters concerned
     Volume of imports
(43) The volume of imports from the four countries concerned increased from 11228 tonnes
     in 1991 to 12871 tonnes in 1992, but decreased thereafter to 7921 tonnes in 1993 and
     7478 tonnes in the investigation period. With the exception of Thailand, the imports of
     the product concerned broken down by the four countries involved, follow, by and large
     a similar pattern to the development of total imports of monosodium glutamate from
     Indonesia, Korea, Taiwan and Thailand. They represented the following market shares:
                              1991            1992            1993        Investigation
                                                                          period
           Indonesia          2.99%           3.55%           3.21%       2.34%
           Korea              9.94%           12.34%         6.78%        7.39%
           Taiwan             7.56%           8.55%          4.61%        4.24%
           Thailand           0.70%           0.64%          0.18%        0.10%'
     This represents a development of the total market share of the imports concerned from
     21.18% in 1991 to 25.07% in 1992 with a subsequent decrease to 14.78% in 1993 and
     14.07% in the investigation period.
     Prices of the dumped imports
(44) It was investigated whether the exporting producers had undercut the prices of the
     Community industry during the investigation period. A comparison was therefore made
     on the basis of the constructed weighted average export price (CIF Community frontier,
     duty paid) as established in recitals (25) to (28) and the Community industry's weighted
     average ex-works selling price for monosodium glutamate sold in the Community.
                                                                                            15
 ---pagebreak---      The level of undercutting of the Community industry's prices was found to range
     between 20 and 22% for imports originating in Taiwan, between 9 and 11% for imports
     originating in the Republic of Korea and 26% for imports originating in Indonesia. With
     regard to the Thai exporter, it was not considered possible to calculate undercutting
     given the fact that, as set out in recital (19), they did npt co-operate in the investigation.
     In view of the conclusion reached on the existence of compensatory arrangements,
     entered into by the co-operating exporters (see recital (26)), EUROSTAT figures
     concerning imports from Thailand could also not be considered as a reliable source.
     Conclusion
(45) Although the market penetration of imports from the countries concerned has decreased
     considerably, their market share has remained substantial, and a clear pattern of price
     undercutting has emerged.
                                       C. Cause of injury
     1. Cumulation
(46) As far as imports from Thailand are concerned, it was concluded that these imports,
     whose market share decreased to 0.1 % in the investigation period, should not be
     analysed cumulatively with imports of the other countries concerned with a view to
     determining their effect on the situation of the Community industry as such a low import
     volume could not have any serious impact on the latter.
     As in the original investigation and the reviews carried out prior to this review, it was
     found that the effects of the imports from Korea, Taiwan, and Indonesia have to be
     analysed cumulatively, since the imports of the product under consideration originating
     in each of these countries are alike in all respects, interchangeable and followed the
     same pricing behaviour. These imports competed with the like product manufactured by
     the Community industry and with each other.
                                                                                                 16
 ---pagebreak---      2. Effect of the dumped imports from the countries concerned
(47) In determining whether any changes had occurred in the causal link established by the
     Regulation and the Commission decision subject to review between the dumped imports
     and the material injury, the further developments since these earlier findings were
     examined. While some of the Community industry's indicators improved, its
     performance remained poor in particular regarding its price level, which fell after the
     imposition of the measures, and its continuing low profitability. The latter can clearly be
     linked to the pricing behaviour of the exporters as established in recitals (25) to (28)
     which through price undercutting in a price sensitive market managed to maintain their
     pressure on the prices of the Community industry.
(48) Taking this into consideration as well as the fact, as was outlined above, that the volume
     of imports from the three countries concerned remained at a substantial level, there
     cannot be any reasonable doubt that these imports have been a decisive factor on the
     Community industry's continuing poor financial situation.
     In conclusion, although certain improvements occurred in the Community industry, it is
     still experiencing overall material injury as a result of the behaviour of the Indonesian,
     Korean and Taiwanese exporters which, through price undercutting, could not fail to
     affect severely an industry in the process of recovering from dumping.
     3. Effect of other factors
(49) The impact on the situation of the Community industry of factors other than the dumped
     imports concerned was also examined.
                                                                                              17
 ---pagebreak---      Imports from Brazil
(50) It was alleged that the Community producer imported substantial quantities of the
     product concerned from Brazil at prices with which exporters from the four countries in
     question were prevented from competing. It was found that the Community producer
     imported monosodium glutamate from Brazil during the investigation period in order to
     meet a sudden surge in demand and to counteract the effects of industrial action. The
     Community producer's imports only however represented a small proportion of its
     output. Consequently, the purpose of these imports by the Community producer was to
     defend its competitive position in the Community and to maintain its market share.
     Moreover, contrary to the above allegation, these products were imported and resold at a
     price level which was comparable with the Community producer's own production costs
     and selling prices respectively.
(51) Some interested parties claimed that imports of monosodium glutamate from Brazil
     were the reason for the difficult situation of the Community industry.
     It was found that, while imports originating in Brazil increased substantially over the
     period examined (from 1076 tonnes in 1991 to 4376 tonnes during the investigation
     period), the price levels of these imports, on the basis of information from EUROSTAT,
     increased slightly. Even if it were to be concluded that imports from Brazil had
     contributed to the injury suffered by the Community industry, this would not alter the
     fact that the injury caused by the dumped imports concerned, taken in isolation, is
     material.
                                                                                           18
 ---pagebreak---      Imports from the United States of America
(52) One party claimed that imports of monosodium glutamate from the United States of
     America might be responsible for the difficult situation of the Community industry.
     It was found, however, that imports from the United States of America during the period
     examined remained at negligible levels (23 tonnes in 1991 and 27 tonnes in 1993 and, in
     terms of market shares, 0.04% in 1991 and 0.05% in 1993) and were sold at prices well
     above those of the dumped imports. It was, in addition, claimed by the complainant that
     imports originating in the United States of America surged in July and August 1994.
     This development, however, took place after the investigation period and, therefore,
     could not be taken into consideration, in conformity with the Community institutions'
     consistent practice, for the purpose of the present injury determination. Indeed, the final
     determination of the facts in an investigation always refers to the investigation period.
     Developments, which occurred after the end of this period, can not be taken into
     consideration since any other method would render the investigation virtually
     permanent, so that operators concerned could manipulate the results by short-lived
     changes of the pricing policy. Finally, neither the Basic Regulation nor the Agreement
     on Implementation of Article VI of GATT 1994 warrant another method.
     Therefore, imports from the United States of America could not have had any
     significant negative impact on the situation of the Community industry during the period
     considered which ended in April 1994.
     Other imports
(53) The effects of imports other than those from Brazil, the USA and the four countries
     concerned on the Community industry were also examined on the basis of the figures
     reported by EUROSTAT. These imports, made mainly from Switzerland, Austria,
     China, Japan and Hong Kong, were, with the exception of Hong Kong, usually at
     significantly higher prices than those from the four countries concerned. The quantities
     imported from Hong Kong were, in any event, very low. In this context, it is interesting
     to note that neither Switzerland, Austria nor Hong Kong had any production facilities
     for monosodium glutamate.
                                                                                              19
 ---pagebreak---      In these circumstances, it can be ruled out that these other imports have had any
     significant adverse impact on the situation of the Community industry.
     Mismanagement of the Community industry
(54) One importer and the Fédération des Associations de l'Industrie des Bouillons et Potages
     de la CEE alleged that the Community industry used outdated technology in order to
     produce the product concerned. It was also alleged that the injury sustained by the
     Community industry was due, at least in part, to the Community industry's own deficient
     management and know-how.
     However, these allegations were not substantiated and, therefore, had to be rejected.
     They were also contradicted by the Commission's own findings on the productivity and
     efficiency of the Community industry, as shown by its successful rationalization efforts.
     4. Conclusion
(55) In these circumstances, it was concluded that, even if it was accepted that the factors
     mentioned above had an adverse effect on the situation of the Community industry, the
     dumped imports from Indonesia, Korea, and Taiwan had, taken in isolation, continued
     to cause material injury to the Community industry.
                                   D. Recurrence of injury
(56) In the light of the above analysis and in order to assess the effect of expiry of the
      measures in force, the following was considered:
(57) - As far as Thailand is concerned, as stated in recital (46), the impact of exports from
         this country is negligible and there is no indication of a possible resurgence of
         dumped imports. The measures should therefore be repealed.
                                                                                             20
 ---pagebreak---      - Monosodium glutamate is a commodity and price is the key factor in customer
        choice, all customers being industrial users. Sales at low prices have therefore
        inevitable substitution effects as certain customers choose to be supplied at the
        lowest price offered,
     - Undercutting margins of up to 26% have been established. These injurious prices
        would most likely persist in the future and would continue to prevent the Community
        industry recovering from injury, the situation of which would be further aggravated
        should the anti-dumping measures currently in force not be continued,
     - Further evidence of the need for the Community industry to continue to be protected
        against injurious dumping is the behaviour of the exporters which led to the
        withdrawal of the undertakings by the Commission. Export prices reported by the
        exporters had to be considered as unreliable because of low resale prices on the
        Community market which can only be explained by the existence of compensatory
        arrangements. The likelihood of injurious dumping recurring is also confirmed by
        information received by the Commission concerning exports of monosodium
        glutamate originating in the four countries concerned which were made to the three
        new Member States before their Accession. These exports were found to have been
        made at prices substantially lower than the price level in the Community,
        demonstrating the propensity for dumping by the countries concerned.
(58) Under these circumstances it is concluded that the injury already suffered by the
     Community industry and caused by dumped imports from Korea, Taiwan, and Indonesia
     could only worsen if measures were allowed to lapse.
                              IX. COMMUNITY INTEREST
(59) The Council, in Regulation (EEC) No 2455/93, concluded that it was in the Community
     interest that measures be imposed on imports of monosodium glutamate from the four
     countries concerned. It was found that the conclusion on Community interest as set out
     in the Regulation subject to review should remain unchanged since in the subsequent
     period the development of the facts underlying this conclusion have only strengthened
     the case for maintaining the measures.
                                                                                          21
 ---pagebreak--- (60) It should be noted that monosodium glutamate production is subject to strict
     environmental standards, continuing compliance with which may require substantial
     investment. The ability of the Community industry to undertake any necessary
     investment would be endangered if its poor financial situation resulting from injurious
     dumping were not remedied and effective competition not restored through the
     maintenance of anti-dumping measures, amended to reflect the latest findings.
(61) One interested party argued that to maintain the anti-dumping measures at their current
     level would allow the Community industry to reinforce its strong position on the
     Community market to the detriment of users of monosodium glutamate. In this respect,
     it should be noted that, notwithstanding the significant share of the Community market
     held by the Community industry, there is sufficient competition in that market as
     demonstrated by the presence of imports from seven other countries during the
     investigation period, equal in volume to those from the countries concerned. As far as
     the impact of anti-dumping measures on the situation of the Community users of
     monosodium was concerned, it was acknowledged that any increase of the price of
     inputs was of importance to them. However, although the industry using monosodium
     glutamate refused to indicate the percentage of its total costs attributable to monosodium
     glutamate, it did not deny that, as revealed by the investigation, the price of
     monosodium glutamate has only a minor effect on the costs of the products in which it
     was used.
(62) In the light of the above, it is considered to be in the interest of the Community that the
     anti-dumping measures remain in force, duly amended, in order to give the Community
     industry the necessary opportunity to continue to redress its precarious financial
     situation.
                                                                                               22
 ---pagebreak---                    X. AMENDMENT OF THE MEASURES IN FORCE
     1. Co-operating exporters
(63) The co-operating exporters, on being informed of the findings of the investigation,
     offered new minimum price undertakings in respect of exports to the Community of the
     product concerned. However, for the reasons described in recitals (25) to (28) above, it
     was considered that undertakings were not an appropriate measure for removing the
     injury being suffered by the Community industry. Indeed, the undertakings previously
     accepted had to be withdrawn owing to violation and no appropriate guarantees were
     given by the exporters regarding price levels or compliance that could justify the
     acceptance of such undertakings. Accordingly, the undertakings offered were, after
     consultation, not accepted by the Commission.
(64) For the purpose of establishing the level of the duty to be imposed, account was taken of
     the dumping margins found and of the amount of duty necessary to eliminate the
     remaining injury sustained by the Community industry.
     Since the remaining injury consisted mainly of price depression and continuing
     abnormal low profitability, the removal of such injury required that the industry be put
     in a position in which its prices could be increased to a profitable level. In order to
     achieve this, export prices should be increased accordingly. For calculating the
     necessary price increase, it was considered that prices of the dumped imports had to be
     compared with the cost of production of the Community industry plus a margin of profit
     sufficient to ensure the viability of that industry.
     On this basis, the weighted average export prices were compared, for the investigation
     period, on a free-at-Community-frontier level increased by customs duties, where
     appropriate, with the cost of production of the Community producer concerned, plus a
     margin of profit. This profit level used, which cannot be stated for reasons of
     confidentiality and which did not reach the level of profits made by that producer prior
     to the impact of the imports concerned, is considered to be obtainable in the absence of
     dumped imports and is in line with that considered reasonable by the Commission in the
     original investigation.
                                                                                            23
 ---pagebreak---      These comparisons showed injury margins which, expressed on a weighted average
     basis as a percentage of the free-at-Community-frontier price, ranged from 25.4% to
     35.7%.
(65) For one exporter, the margin of dumping found was below the corresponding increase in
     export prices necessary to remove the injury as calculated above. The duty to be
     imposed for this company should, therefore, correspond to the dumping margin
     established. For the other co-operating exporters, as the margins of dumping found were
     above the corresponding increases in export prices necessary to remove the injury, as
     calculated above, the duties to be imposed for these companies should, therefore,
     correspond to the injury margins established.
(66) Given the potential for absorption of the effect of an ad valorem anti-dumping duty and
     given the violation of the undertakings, as established, a duty should be imposed in the
     form of a specific duty, i.e. a fixed amount of ECUs per kilo.
     2. Other producers in the exporting countries concerned
(67) The co-operating exporters accounted for a very high proportion of total exports of the
     product concerned to the Community. In establishing the level of duty for producers in
     the countries concerned which neither replied to the Commission's questionnaire nor
     otherwise made themselves known, it was, therefore, considered appropriate to establish
     the level of duty applicable to such producers at the highest amount of duty found for an
     exporter in each country.
(68) 3. Conclusion
     The Regulation subject to review should therefore be amended in accordance with the
     above findings.
                  XII. COLLECTION OF THE PROVISIONAL DUTY
(69) In view of the dumping margins established, the violation of the undertakings and of the
     seriousness of the injury caused to the Community industry, it is considered necessaiy
     that the amounts secured by way of the provisional anti-dumping duty be definitively
     collected, with the exception of those collected for imports from Thailand for the
     reasons set out in recital 57,
                                                                                             24
 ---pagebreak--- HAS ADOPTED THIS REGULATION:
                                            Article I
Article 1 of Council Regulation (EEC) No 2455/93 is hereby replaced by the following:
                                            "Article I
'1. Definitive anti-dumping duties are hereby imposed on imports of monosodium glutamate,
falling within CN code 2922 42 10, originating in Indonesia, the Republic of Korea and
Taiwan.
2. The rates of duty applicable to the net free-at-Community-frontier price, before duty, shall
be as follows:
                                                         Amount of duty        Taric
   Country            Products manufactured by           (ECU per kilogram)    additional code
   Indonesia          All companies                      0.334
   Republic of Korea Cheil Food & Chemicals Ltd          0.129                 88 43
                      All other companies                0.286                 88 76
  Taiwan              All companies                      0.289
3.   Unless otherwise specified, the provisions in force concerning customs duties shall apply.'
                                            Article 2
The amounts secured by way of provisional anti-dumping duties pursuant to Commission
Regulation (EC) No 1754/95 shall be definitively collected in full. The amount secured by
way of provisional duty on imports from Thailand shall be released.
                                                                                             25
 ---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,           1995                              For the Council
                                                                                               26
 ---pagebreak---  ---pagebreak---                                                                    ISSN 0254-1475
                                                              COM(96) 1 final
                                              DOCUMENTS
EN                                                                        02 11
                                     Catalogue number : CB-CO-96-Q01-EN-C
                                                             ISBN 92-77-99420-7
OfiSce for Official Publications of the European Communities
L-2985 Luxembourg
                                                 *?