CELEX: 51997PC0551
Language: en
Date: 1997-10-24
Title: Amended proposal for a Council Regulation (EC) imposing a definitive anti-dumping duty on imports of certain footwear with textile uppers originating in the People's Republic of China and Indonesia

COMMISSION OF THE EUROPEAN COMMUNITIES
                                                  Brussels, 24.10.1997
                                                  COM(97) 551 final.
                                Amended proposal for a
                           COUNCIL REGULATION (EC)
imposing a definitive anti-dumping duty on imports of certain footwear with textile
       uppers originating in the People's Republic of China and Indonesia
              (presented by the Commission pursuant to Article 189 a (2)
                                  of the EC-Treaty)
 ---pagebreak---  ---pagebreak---                               EXPLANATORY MEMORANDUM
 (1)   The Commission, by Regulation (EC) No 165/97l , imposed provisional anti-
       dumping duties on imports into the Community of certain footwear with textile
       uppers originating in the People's Republic of China and Indonesia.
 (2)   Certain interested parties, Community producers, exporters, as well as importers
       submitted comments in writing. Those parties who so requested were granted an
       opportunity to be heard by the Commission. The Commission considered all the
       views expressed before drawing its final conclusions.
(3)   The Commission accepted the claim by one Indonesian exporter regarding the
      omission in the dumping calculation of a factor affecting price comparability, and
      consequently revised downwards its calculations of normal value and dumping for
      both Indonesia and for China since Indonesia was used as the analogue country for
      the purpose of calculating normal value in respect of China.
(4)   It was further considered, with the complainants' consent, that slippers as well as
      beach shoes should be excluded from the proceeding, the scope of which was thus
      limited to the majority of imports, i.e. those of outdoor footwear.
(5)   In addition, following the submissions received and a further analysis of the data
      available, the Commission considered that the adjustment used at provisional stage
      to take into account the difference of level of trade between the CIF imports and the
      Community producers' delivered sales in the calculation of the injury elimination
      levels ought to increased.
1
  OJ No L 29, 31.1.1997, p.3.
 ---pagebreak--- (6) Subsequent to the imposition of provisional measures, the Commission -further
    examined matters deemed relevant in analysing the issue of Community interest.
    Having examined a wide variety of aspects and the various interests involved, no
    compelling reasons have come into light which would lead to the conclusion that
    the imposition of definitive measures would not be in the interest of the
    Community.
(7) In the light of the above, the Commission confirmed its provisional conclusions to
    the effect that the footwear concerned originating in Indonesia and the People's
    Republic of China was being dumped in the Community and was causing material
    injury to the Community industry, and concluded that it is in the Community
    interest to take protective measures in the form of definitive anti-dumping duties
    and to collect definitively the provisional duties at the duty rate definitively
    imposed.
(8) The exclusions and adjustments in the calculations presented above affect the
    provisional findings, to the effect that the individual duty rates for the cooperating
    Indonesian companies are reduced to a range from 0% to 14.1%, as well as the
    residual injury elimination levels which amount to 14.1% for Indonesia and 49.2%
    for the People's Republic of China.
(9) In accordance with Article 9 of Council Regulation (EC) No 384/96, the
    Commission therefore proposes that the Council impose definitive anti-dumping
    duties on imports of certain footwear with textile uppers originating in the People's
    Republic of China and Indonesia. In the light of the extent of the injury, it is also
    recommended that the Council collect the provisional anti-dumping duties to the
    extent of the amount of the definitive duties imposed.
                                            ^hjL,
 ---pagebreak---                                       Amended proposal for a
                                  COI JNCIL REGI JLATION (EC)
imposing a definitive anti-dumping duty on imports of certain footwear with textile
           uppers originating in the People's Republic of China and Indonesia
 THE COUNCIL OF THE EUROPEAN UNION,
 Having regard to the Treaty establishing the European Community,
 Having regard to Council Regulation (EC) No 384/96 of 22 December 1995 on
 protection against dumped imports from countries not members of the European
 Community^ and in particular Article 9(4) thereof,
 Having regard to the proposal submitted by the Commission after consulting the
 Advisory Committee,
 Whereas:
                              A.      PROVISIONAL MEASURES
 (1.)    By Commission Regulation (EC) No 165/97(2> (hereinafter referred to as 'the
         provisional duty Regulation') provisional anti-dumping duties were imposed on
         imports into the Community of certain footwear with textile uppers falling within
         Combined Nomenclature (CN) codes 6404 19 10 and ex 6404 19 90 originating in
         the People's Republic of China and Indonesia.
 1
      OJ No L 56, 6.3.1996, p. 1 Regulation as amended by Regulation (EC) No 2331/96 (OJNoL317,
      6.12.1996, p. 1).
2
      OJ No L 29, 31.1.1997, p.3.
 ---pagebreak---                          B.      SUBSEQUENT PROCEDURE
(2) Following the imposition of the provisional anti-dumping measures, certain
    interested parties submitted comments in writing.
(3) Those parties who so requested were granted an opportunity to be heard by the
    Commission.
(4) The Commission continued to seek and verify all information deemed necessary for
    its definitive findings.
(5) Parties were informed of the essential facts and considerations on the basis of
    which it was intended to recommend the imposition of definitive anti-dumping
    duties and the definitive collection of amounts secured by way of provisional
    duties. They were also granted a period within which to make representations
    subsequent to this disclosure.
(6) The oral and written comments submitted by the interested parties were considered,
    and, where deemed appropriate, taken into account in the Commission's definitive
    findings.
      C. PRODUCT UNDER CONSIDERATION AND LIKE PRODUCT
1.  Product under consideration
(7) For the purpose of its preliminary findings, the Commission considered "non-
    sports" footwear with outer soles of rubber or plastics and uppers of textile
    materials, intended for use either indoor or outdoor (falling within CN codes
    6404 19 10 and ex 6404 19 90), as one single category of products. In this regard,
    certain interested parties claimed that slippers and outdoor footwear were too
    different, in particular in terms of use, to belong to the same category of products.
 ---pagebreak---     In particular, the parties concerned have stressed that an assessment of whether
    indoor and outdoor footwear can be regarded as one single category of products
    should entail that a twofold "interchangeability test" be carried out: firstly whether
    an outdoor shoe can replace an indoor shoe, secondly whether an indoor shoe can
    replace an outdoor shoe.
(8) As regards the first question, it is worth noting that some light outdoor shoes of the
    kind under consideration can replace slippers for indoor use. Conversely, slippers,
    due to their usual flimsiness, do no appear to be suitable for most outdoor uses.
    This also appears to be confirmed by the consumers' perception of both products.
    It has therefore to be concluded that the second "interchangeability test", i.e.
    whether an indoor shoe can replace an outdoor shoe, is not satisfied and
    accordingly that slippers and outdoor footwear of the kind under consideration
    cannot be regarded as one single category of products. Such a conclusion also
    meant that the results of the investigation would have to distinguish between
    slippers and outdoor footwear.
    Informed of this conclusion, the representatives of the complaining Community
    industry, while indicating that they did not fully share the above views, did not
    oppose the withdrawal of slippers from the proceeding.
 ---pagebreak--- (9)  Reffering to the exclusion, at the provisional stage, of certain types_ of footwear
     sometimes known as "espadrilles", several interested parties have requested, on
     various grounds, the further exclusion of certain allegedly very specific products
     from the scope of the proceeding. These claims are analysed below.
     a)        Neoprene shoes
(10) Several importers requested the exclusion of certain types of footwear sometimes
     known as "diving boots", made of neoprene and used for certain water sports such
     as diving. Indeed, neoprene is a material which is generally strengthened with a
     textile coating when used for manufacturing footwear, with the result that the
     constituent material of the upper having the greatest external surface area is the
     textile material, and thus the footwear concerned classifiable under the CN heading
     6404. In addition, since certain water sports, such as diving, are not considered
     expressly as a "sporting activity" within the meaning of the Combined
     Nomenclature, the neoprene shoes concerned were, it was claimed, classifiable
     under CN code 6404 19 90, although such a specific product would not belong to
     the single category of products under consideration.
(11) Having investigated this issue in more detail the Commission found that the
     neoprene shoes in question are sold in water sport equipment stores and not in
     footwear stores and clearly belong to a distinct market.             Their physical
     characteristics and the use which they are intended for, make them, in the
     consumer's perception, a clearly distinct product from those belonging to the single
     category of "non-sports footwear with textile uppers" under consideration.
 ---pagebreak--- (12) Asked to react on this issue, the representatives of the complaining Community
     industry raised no objections but indicated that, should an exclusion be granted,
     their main concern would be that the description of the footwear concerned be
     sufficiently precise in order to avoid any circumvention of duties.
(13) For all the above reasons and in consideration of the fact that the footwear
     concerned is clearly identifiable by the customs authorities, it is considered that the
     neoprene shoes sometimes known as "diving boots" or "water sports boots" should
     be excluded from the scope of the proceeding.
     b)            " Trekking shoes "
(14) Within the meaning of the Combined Nomenclature, "trekking" is not considered
     as a sporting activity and therefore trekking shoes with textile uppers generally fall
     within CN code 6404 19 90. Certain parties requested that this product be excluded
     from the scope of the proceeding, on two grounds. The first ground was based on
     the fact that the product in question was sold at a high, non dumped, price.
     Moreover, certain importers claimed that they could have legitimately expected that
     trekking shoes would not be subjected to measures because the Spanish version of
     the notice of initiation^) had translated, in the list of exclusions contained therein,
     the words "cross-country ski footwear" by "botas de senderismo", the Spanish
     equivalent of "trekking shoes".
     O J N o C 4 5 , 22.2.1995, p. 2.
 ---pagebreak--- (15) As to the first ground, it has to be noted that the information made, available by
     cooperating exporters and used by the Commission for the investigation of
     dumping did not confirm the absence of dumping on this type of footwear.
(16) As regards the second ground, i.e. the allegedly legitimate expectation of certain
     importers that trekking shoes would not be subjected to measures (stemming from
     the fact that the Spanish version of the notice of initiation had mis-translated the
     words "cross-country ski footwear"), this argument cannot be accepted for the
     following reasons:
     Reference should first be made to the Court of Justice's jurisprudence (CASE
     250/80, Anklagemyndigheden v. Schumacher and others, Judgment of 27 October
     1981), according to which it is appropriate, where there is a disparity between
     various language versions of provisions, to interpret them in their context and and
     with particular regard to their objectives.
     It has been a long standing approach of Community institutions to set up a closed
     list of so-called "sporting activities" within the framework of the Combined
     Nomenclature. More specifically, it was quite clear that the wording of the notice
     of initiation was a mere quotation of the provisions of subheading note 1 (b) of
     Chapter 64 of the Combined Nomenclature, in the Spanish version of which the
     words "ski-boots and cross-country ski footwear" are translated by the words
     "calzado para esquiar" and not by the words "botas de esquî, senderismo".
 ---pagebreak--- (17) Finally, it must be stressed that the footwear with textile uppers of the type-called
     "trekking shoes" is widely produced in the EC, was within the scope of the
     complaint and clearly fell within the scope of the investigation. Indeed, most of
     these products may also be used, and are actually used, for other purposes than the
     "technical" one which they are supposed to be intended for, which confirms their
     belonging to the single category of product under consideration.
     Accordingly, it is considered that the so-called "trekking shoes" should remain
     within the scope of the proceeding.
     c)         Medical shoes
(18) Orthopaedic shoes, i.e. intended to correct a specific and permanent disability or
     physical abnormality, belong to chapter 90 of the Combined Nomenclature and are
     not covered by the present investigation. The product, falling within CN code
     6404 19 90, for which an exclusion was claimed is a medical footwear of the type
     sold in chemists' stores, not per pair but per "foot", and which is not specifically
     adapted to a given person but is intended for anybody having for instance a
     sprained or broken ankle. This claim was made on the grounds that such a specific
     product could not belong to the single category of products under consideration.
(19) It is clear that the medical shoes in question belong to a different market (they are
     not sold in footwear stores but by chemists). In addition, they are marketed in a
     very specific way (per "foot" and not per pair, and in specific shapes in order to fit a
     plaster rather than a foot), which makes them, in the consumer's perception, a
     clearly distinct product from those belonging to the single category of product
     under consideration.
 ---pagebreak--- (20) Asked to react on this issue, the representatives of the complaining-Community
     industry argued that some production of medical footwear exists in the Community
     but did not oppose the conclusion that the shoes in question were sufficiently
     specific, in terms of physical characteristics and uses, for them to fall outside the
     single category of "non-sports footwear with textile uppers" under consideration.
(21) For all the above reasons (and in consideration of the fact that such a specific
     product is clearly identifiable by the customs authorities), it is considered that the
     medical footwear of the type sold in chemists' stores, not per pair but per "foot",
     should be excluded from the scope of the proceeding.
     d)        "Beach shoes "
(22) "Beach shoes" are shoes the upper of which is limited to a stripe of textile material,
     this upper being attached on both sides of a thick, lightweight alveolar plastic, sole.
     Certain interested parties claimed that such a product should vbe excluded from the
     scope of the present proceeding on the ground that it is a product which is too
     specific to belong to the single category of products under consideration. It was
     also claimed that such a product is no longer produced in the Community.
(23) Asked to comment on this issue, the representatives of the complaining Community
     industry conceded that, whilst production of such footwear still exists in the
     Community, it is nevertheless of marginal importance.                 Moreover, the
     representatives of the Community industry agreed that, provided that such an
     exemption is limited to a product which cannot be used for walking beyond areas
     such as a beach or swimming pool, and given that it can be distinguished from
     other types of footwear, it could be excluded from the scope of the present
     proceeding.
 ---pagebreak--- (24) For the above reasons, it is considered that the so-called "beach slippers" should be
     excluded from the scope of the proceeding.
2.    Like product
     a)        Arguments based on the existence of different production methods
(25) The question of vulcanised footwear, already raised at provisional stage (see recital
      18 of the provisional duty Regulation), has again been addressed by certain
     interested parties. In particular, allegations were reiterated that the Community
     industry did not produce shoes with vulcanised soles in sufficient quantities and
     that its production is rather concentrated on injection moulding. The results of the
     further examination carried out are as follows.
(26) Whilst it is clear that the vulcanisation process is different to that of injection
     moulding, it should be recalled that the main relevant criteria in the determination
     of the "like product" are based on the general technical or physical characteristics
     and the use or functions of products and not the method used for their production.
     In this context, minor differences resulting from different production processes are
     generally disregarded.
 ---pagebreak--- (27) As to the technical arguments raised by various parties, namely the fact that
     vulcanisation means rubber while injection means inter alia PVC, thus differences
     of access to the raw material, visual differences (PVC is more "shiny" than rubber)
     and smell (rubber has a typical smell but PVC has none) and different dissolving
     and melting properties, it cannot be denied that there are differences between the
     chemical and physical reactions which take place during the manufacturing process
     of these types of footwear. However, it should be kept in mind that synthetic
     rubber is generally used in the manufacture of vulcanised footwear.              Thus,
     irrespective of the production process, the raw materials involved in these
     processes, i.e. synthetic rubber and PVC, are all petrochemical derivatives.
(28) Synthetic rubber is indeed available in all parts of the world, one of the main
     applications being the tyre industry. The argument that producers of vulcanised
     footwear in developing countries enjoy better access to the raw materials cannot
     therefore be considered as relevant; this may make the manufacturing process more
     cost effective but it has no impact on the fact that the product concerned is alike to
     the Community product. It should also be noted that, to differentiate the shoes in
     question, the parties had to invoke criteria which go far beyond the usual criteria. If
     PVC, unlike rubber, does indeed melt, it only does so above 80°C, well above the
     temperatures that might be encountered under normal conditions of use. Similarly,
     customers would not, under normal conditions, perform a dissolving test before
     buying.
                                             10
 ---pagebreak--- (29) As regards the alleged decline in the production of vulcanised footwear -in -the
     Community, it has to be stressed that this argument was raised by certain importers
     only at a very advanced stage of the proceeding. However, the evidence received
     shows that this production process is still used in the Community (for instance in
     Spain where a number of producers have declared that they could still produce a
     total of 22 million pairs/year of this type of shoe) and that there are numerous
     producers in the Community willing and able to produce vulcanised footwear.
     The investigation has also shown that, contrary to allegations made by a number of
     parties, vulcanised footwear imported from the People's Republic of China and
     Indonesia is sometimes sold as a branded product, packed in a cardboard box and
     sold in specialised shoe shops whilst Community produced injection moulded
     footwear can be sold as a non-branded product, in plastic bags and in discount
     stores.
(30) The conclusion to be drawn from the above is that notwithstanding technical
     differences in the manufacturing process used, vulcanised footwear is in direct
     competition with injection moulded footwear. Indeed, these types of footwear are
     so similar in all respects that the average consumer would not be able to
     differentiate them.
                                           H
 ---pagebreak---      There is thus no reason to consider that vulcanised footwear produced-in-the
     People's Republic of China and Indonesia and exported to the Community is not a
     like product to injection moulded footwear produced in the Community, within the
     meaning of Article 1(4) of Regulation (EC) No 384/96 (hereinafter referred to as
     'the Basic Regulation').
     b)       Arguments based on the alleged existence of different "product segments "
(31) Certain parties have reiterated that imported and Community produced footwear
     belong to different product segments which do not compete with each other. They
     claimed that footwear, imported at a price higher than the average, would not be
     alike, within the meaning of Article 1(4) of the Basic Regulation, to footwear
     imported below or at the average price.
(32) This issue has been the source of repeated and seemingly contradictory statements
     by importers, some of them claiming that they import low quality footwear that they
     simply could not find in the Community, while others claimed that they order in the
     People's Republic of China or in Indonesia sophisticated products manufactured in
     accordance with their own specifications, design and sometimes raw materials.
     This contradiction simply shows that the People's Republic of China and Indonesia
     are in fact capable of producing, and do indeed produce and export to the
     Community, the full range of products on offer in the market. This is not apparent
     from import statistics because the average prices are driven by the bulk of imports
     which indeed comprises low-priced footwear. The imports in question and the
     products manufactured by the Community industry are therefore alike within the
     meaning of Article 1(4) of the Basic Regulation.
                                           12
 ---pagebreak---       c)       Conclusion
(33) In the light of the above, it is confirmed that footwear subject to this proceeding
      produced in the People's Republic of China and Indonesia and exported to the
      Community is a like product to footwear produced in the Community within the
      meaning of Article 1(4) of the Basic Regulation. Similarly, footwear subject to the
      current investigation produced in Indonesia is a like product to the footwear
      produced and exported from the People's Republic of China to the Community.
                                    D.    DUMPING
1.   Indonesia
     (a)       Normal value
(34) The Indonesian exporters contested the Commission's use, in constructing normal
     value, of a profit margin established on the basis of one company's profitable
     domestic sales of a product other than the product concerned, in this case footwear
     with leather or plastic uppers. They alleged that this profit margin was excessive
     and not representative of the industry.
     In addition, as the profit margin had been used in the construction of normal value
     for all companies in the sample for Indonesia, the normal values and by extension
     the dumping margins were allegedly excessive and unfair. They contended that the
     use of the profit margin of 7% deemed acceptable by the Commission in the case of
     the Community industry should have been used.
                                             13
 ---pagebreak--- (35) This argument could not be accepted.          Firstly, Article 2 (6) (b) of the-Basic
     Regulation provides that where there are no domestic sales of the product
     concerned, the SG&A and profit used in the construction of normal value can be
     established on the basis of the actual amounts applicable to production and sales of
     the same general category of products for the exporter or producer in question in
     the domestic market of the country of origin. This was the methodology applied in
     the case of the company referred to at recital 34 of the present Regulation.
     In the case of two of the sampled companies which had neither domestic sales of
     the product concerned nor of the same general category of product, normal value
     had to be established in accordance with. Article 2 (6) (c) of the Basic Regulation
     i.e. any other reasonable method. It was held that in the circumstances of this
     investigation the most reasonable method was to use the SG&A and profit found
     for the company referred to at recital 34 of the present Regulation.
     Secondly, the 7% profit margin used in the calculation of a non-injurious price for
     the Community industry is the minimum that the Commission considers necessary
     to remove the injury suffered by the Community industry and has thus nothing to
     do with the profit margin used in the construction of normal value, which has to be
     based on the actual profit achieved on the Indonesian market. In this regard, it
     should be noted that the European Court of Justice has consistently indicated that
     preference should be given to the use of actual profit margins in the construction of
     normal value.
                                             14
 ---pagebreak--- (36) One of the Indonesian companies included in the sample contended that- in
     calculating its normal values, the Commission should have used the cost estimates
     which they had submitted during the on the spot verification. In this context, it
     should be pointed out that the company concerned did not have a cost accounting
     system, and had only cost estimates which had been used to make price offers to
     potential customers. The latter were the costs reported in their response to the
     questionnaire.      ,_
     This claim had to be rejected since the company was unable to demonstrate the
     correctness of the cost estimates.     Furthermore, for some of the models, no
     information at all regarding cost was available. Moreover, no information beyond
     direct material cost was available for any of the models. Therefore, the approach
     adopted in the provisional duty Regulation, i.e. to recalculate costs by reallocating
     the total cost of sales, exclusive of SG&A and profit, over the models concerned
     using the turnover in the company's own accounts is confirmed, as this was deemed
     to be the most appropriate method for establishing the costs of each model of
     footwear.
     (b)       Export price
(37) In the absence of any comments on the establishment of export prices the
     provisional determinations are hereby confirmed.
                                            15
 ---pagebreak---      (c)        Comparison
(38) The Indonesian exporter whose profitable domestic sales were used in the
     construction of normal value for Indonesia and referred to in recital 34 of the
     present Regulation claimed that the Commission omitted to take account of a factor
     affecting price comparability as provided for in Article 2 (10) of the Basic
     Regulation by not granting an allowance to normal value for credit costs. As the
     Commission established that this adjustment was indeed omitted, it has now
     reviewed its calculations accordingly. As the SG&A of this company was used in
     the construction of normal value for the other Indonesian companies in the sample,
     a reduction of their normal value was also required to reflect the allowance granted.
     All dumping calculations have been adjusted accordingly.
(39) The company referred to at recital 36 of the present Regulation contended that the
     dumping margin had been created by averaging the costs of individual models and
     the application of an artificially high profit margin in the construction of normal
     value. It claimed that the use of averaging meant that normal values were inflated
     and all low priced exports dumped.          It further contended that the use of the
     individual normal values it had submitted and the application of a reasonable profit
     would have led to a finding of no dumping.
     In view of the circumstances outlined in recital 36 of the present Regulation, the
     Commission considered that, in order to arrive at a reasonably accurate calculation
     of costs it had no alternative other than to recalculate the costs using the company's
     own accounting records and to reallocate the total cost of sales, exclusive of SG&A
     and profit, over the models concerned.
                                              16
 ---pagebreak---       (d)      Dumping margins
(40) The methodologies used to calculate definitive dumping margins are the same as
     those used for the calculation of the provisional dumping margins.         However,
     dumping margins have been amended in order to take account of the allowance to
      normal value now granted as described in recital 38 of the present Regulation.
        (i)    Cooperating companies in the sample
(41) The margins thus established and expressed as a percentage of the cif price at
     Community frontier are the following:
     - P.T. Dragon                                                   4.0%
     - P.T. Emperor Footwear                                         0.0%
     - P.T. Sindoll Pratama                                         24.9%.
        (ii)   Cooperating producers/exporters not investigated
(42) In view of the above changes in the dumping margins of the cooperating companies
     in the sample, the margin established for the two cooperating companies not
     investigated, expressed as a percentage of the cif price at Community frontier, is
     now definitively established at 14.2%.
       (iii)  Residual dumping margin
(43) In view of the above changes in the dumping margins of the cooperating companies
     in the sample, due account being given to the restriction in the product coverage
     mentioned in recital 8, the margin established for definitive determinations,
     expressed as a percentage of the cif price at Community frontier, is now 39.7%.
                                            17
 ---pagebreak--- 2.   People's Republic of China
     (a)       Individual treatment
(44) The Chinese exporters argued that the Commission did not sufficiently motivate its
     rejection of the requests for individual treatment by the cooperating Chinese
     exporters.    They insisted that individual treatment be granted for definitive
     determinations.
     It should be reiterated that it is the Commission's policy to calculate a country-wide
     duty for non-market economy countries except in those cases where companies can
     demonstrate independence from the State.         However, none of the companies
     concerned were able to adequately demonstrate such independence since they all
     had links to the Chinese State, either directly or via Provincial or municipal
     authorities. In the absence of any further information on this issue, the provisional
     findings with regard to the non-acceptance of the requests for individual treatment
     are hereby confirmed.
     (b)       Normal value
(45) The Chinese exporters alleged that they received insufficient information by the
     Commission regarding the Indonesian shoes used for comparison with the exported
     Chinese models. They alleged, in particular, that insufficient information was
     disclosed to them concerning raw materials used and production processes
     employed in the production of the Indonesian shoes to enable them to claim
     adjustments for differences in physical characteristics.
                                              18
 ---pagebreak---      In this regard, it should be pointed out that, in an effort to come up with the fairest
     model comparison, the Commission made repeated efforts to get information from
     the Chinese exporters concerning the design and make up of, and material used in,
     the models which they exported to the Community. Despite this, the Chinese
     exporters only supplied very partial information. Accordingly, the Commission had
     to make its assessment of comparability on the basis of the information available
     and as was the case for provisional measures, the Indonesian models used were
     those found to be similar or, in the absence of similar models, those most closely
     resembling the Chinese models exported to the Community by the Chinese
     companies in the sample. All the information upon which the comparison was
     based was made available to the Chinese exporters.
     (c).      Export price
(46) In the absence of any comments on the establishment of export prices the
     provisional determinations are hereby confirmed.
     (d)       Comparison
(47) Since Indonesia was the analogue country used to establish the normal value for the
     People's Republic of China, the single margin for the People's Republic of China
     was also adjusted downwards to reflect the granting of the allowance for credit
     costs, to Indonesian normal values referred to in recitals 38 and 40 of the present
     Regulation.
                                            19
 ---pagebreak---      (e)      Dumping margin
(48) The Chinese exporters questioned, in some instances, the Commission's
     comparison of weighted average normal values to Chinese export prices of
     individual export transactions to the Community. They claimed that export prices
     did not sufficiently differ amongst different purchasers, regions or time periods and
     that consequently, in accordance with Article 2 (11) of the Basic Regulation, both
     export price and normal value should be compared on a weighted average basis.
     Having reviewed its calculations, the Commission found that the differences in
     prices were small and that for the purposes of definitive determinations weighted
     average normal values should indeed be compared with weighted average export
     prices.
     On that basis, withdue account being given to the restriction in the product
     coverage mentioned in recital 8, the single dumping margin calculated for the
     People's Republic of China, expressed as a percentage of the cif price at
     Community frontier, was found to be 133.2%.
                           E.     COMMUNITY INDUSTRY
(49) Certain parties have reiterated and expanded their allegations that the Commission
     has failed to establish the representative nature of the Community industry
     providing evidence of injury. This was based on the alleged non reliability of the
     "total Community production" figure used and entailed a criticism of the sampling
     technique applied by the Commission.          The justification of the "anonymous
     treatment" granted to certain Community producers was also questioned.
                                            20
 ---pagebreak--- 1.   Total Community production
(50) It should be recalled that the level of support for the complaint was checked before
     initiation. The total estimated EC production volume of the like product on which
     the standing of the 68 complaining Community producers was assessed, was
     subsequently re-examined (in respect of 1991 until 1994) at the premises of
     national footwear federations and confirmed to be accurate.
     Moreover, it has to be stressed that the "total production" figure of the like product
     on which the standing was assessed, was set at the maximum possible production in
     the Community. Indeed, due to the lack of reliable data, no examination could be
     carried out in order to determine, in accordance with the provisions of
     Article 4 (1) (a) of the Basic Regulation, whether the production volume of certain
     non^complaining producers should have been excluded from the "total production"
     figure, on the grounds that their core business is importing rather than producing
     within the EC.
     Such would-be Community producers, of which some are known to have made
     considerable imports, are also known to produce a relatively large number of pairs
     in the EC. Had sufficient information in this respect been made available, it is
     likely that part of this Community-produced volume would have been excluded
     from the total production figure. Conversely, the "core business" test was carried
     out vis-à-vis the 28 companies in the "first group" as defined at recital 6 of the
     provisional duty Regulation and all were found (as explained at recital 55 of the
     provisional duty Regulation) to have their core business in the Community.
(51) The representative nature of the investigated Community industry, assessed in a
     reasonable way and on the basis of fully accurate figures, is therefore confirmed.
                                             21
 ---pagebreak--- 2.   Sampling
     (a) Initial investigation
(52) In this respect, it should be recalled that given the very large number of potential
     parties to the proceeding, the notice of initiation of the present proceeding
     mentioned that the investigation might have recourse to sampling. As a result,
     from the beginning of the investigation, cooperation was sought (via national
     federations) from a limited number of Community producers selected amongst the
     68 companies supporting the complaint.
     Meaningful replies were received from 28 producers, amongst which, for
     verification purposes, 9 were selected and their replies subjected to in depth on-spot
     verifications (this latter group of producers is referred to as "the verification
     sample" in the provisional duty Regulation).
     The 28 companies in the first group do account for slightly more than 25% of
     Community output of the like product, thus qualifying, in the absence of declared
     opposition to the complaint, as the Community industry..
                                             22
 ---pagebreak--- (b) Subsequent developments
(53) As has been mentioned in recital 8 of the present Regulation, it was decided to
      restrict the scope of the present proceeding to footwear intended for outdoor use
      and to exclude slippers. A separate examination of information relating exclusively
      to outdoor footwear covered by the present proceeding was thus deemed necessary.
      This examination has shown that 17 out of the above mentioned 28 Community
      producers in the first group and 8 out of the 9 Community producers in the
      verification sample produce footwear intended for outdoor use. It was established
      that, in line with the criteria used in assessing the representativity of the first group
      (see recital 59 of the provisional duty Regulation), the 17 producers mentioned are
      equally representative of the Community industry producing outdoor footwear. The
      fact that these 17 Community producers were found to represent 22,3% of
      Community output of the like product, the definition of which had been resticted in
      the course of the present investigation, does not alter the above mentioned
      conclusion on the representativity of the Community industry. Indeed, in a situation
      such as the present, where the number of Community producers is such as to justify
      the recourse to sampling, it is almost inevitable that the sample selected, whilst
      being representative of the Community industry, will not reach the 25% threshold.
 (54) Concerning the representativity of the investigated Community industry, it has to be
      stressed that the injury findings were based on verified information collected from
      various appropriate sources, all representative of the Community industry:
                                               23
 ---pagebreak---      • Production, sales, market share and employment in the Community, were
     established at the level of each national footwear federation and thus cover the
     entire Community production of the like product. This fact clearly contradicts the
     allegation made by an interested party further to the final disclosure according to
     which figures relating to the Italian footwear federation had been omitted when
     overall injury indicators were established;
     • General trends concerning prices, costs and profitability were established at the
     level of the cooperating producers in the first group;
     • Undercutting and underselling exercises were carried out on the basis of fully
     verified price and cost data collected from the companies in the verification sample,
     which are representative in terms of size and product range as well as located in
     major producing Member States.
3.   Anonymous treatment of the companies in the verification sample
(55) Certain parties have reiterated and expanded their allegations that the Commission
     was unjustified in granting "anonymous treatment" to the companies in the
     verification sample.      These parties have claimed that complaining domestic
     industries should be prepared to face any kind of "commercial retaliation" and have
     requested that at least the names of the companies in the first group be disclosed.
                                             24
 ---pagebreak--- (56) In this respect, it has to be stressed again that the anonymous treatment was granted
       because the threat exerted went far beyond what could be considered as "normal" in
      commercial relations. The limited protection so granted was moreover considered
      particularly appropriate in the context of a sampling exercise, where a few selected
      companies are particularly exposed, although they represent, and act for the benefit
      of, a much larger group.
 (57) As regards the companies in the first group, the company names on the non-
      confidential questionnaire responses were generally replaced by an identification
      symbol and most national footwear federations (which transmitted the answers)
      listed separately the names of the companies having replied, without of course
      disclosing the correspondence between the identification symbols and the names in
      the list. It should thus be stressed that all interested parties have had access to the
      non-confidential data provided by both the producers in the first group and, in a
      separate file, to the verified and confirmed data of the companies in the verification
      sample.
(58) Given that the questionnaire responses of the companies in the first group as well as
      the lists established by federations was made accessible to all parties before the
      Commission became aware of the above pressures, it was considered that the files
      in question, which permitted the identification of most companies, could not be
      made anonymous ex post and should thus continue to be accessible in an unaltered
      form. Under these circumstances, it was considered appropriate to include, in the
      final disclosure sent to all parties, the list of companies in the first group, whilst the
      name of the companies in the verification sample was kept undisclosed.
                                                25
 ---pagebreak---                                      F.     INJURY
1.   Cumulative assessment of the effects of the dumped imports
(59) Certain parties have claimed that the impact of Indonesian and Chinese imports
     should not be cumulatively assessed. In particular, it has been alleged that two
     conditions, which ought to be fulfilled to make cumulation possible, were not met:
(60) Firstly, it has been argued that in order to determine, for the purpose of applying
     Article 3 (4) of the Basic Regulation, whether the margin of dumping established in
     relation to the imports from each country (for which cumulation with others is
     considered) was more than de minimis, the Institutions should not take account of
     residual margins but should rather rely on the margins found for cooperating
     exporters. This assertion cannot be accepted, in particular in consideration of the
     low level of cooperation obtained from Indonesian exporters. In addition, it is also
     worth noting that the margins of dumping established in respect of two Indonesian
     cooperating exporters (out of three selected in the sample) were more than de
     minimis.
(61) Secondly, it has been argued that certain differences in conditions of competition
     (allegedly evidenced by average import prices per pair, said to be markedly higher
     in the case of Indonesia when compared to the People's Republic of China) were
     such as to make cumulation unwarranted. In this respect, although the alleged
     differences are somewhat confirmed at Eurostat level, it was considered that:
                                             26
 ---pagebreak---      ' - these differences are not such as to allow a clear distinction to be made between
       the Indonesian and Chinese pricing policies, (in particular when the average prices
       of both Indonesia and the People's Republic of China are compared to the average
       price of the other third countries supplying the Community market, which is much
       higher than the average prices of both countries under investigation);
       - a detailed examination of the available information shows that imports from
       Indonesia, as well as those from the People's Republic of China, cover the full
       range of prices; and
       - on the basis of the information available, the most plausible explanation of the
      existing difference is a slightly different product mix rather than a clearly different
      pricing policy.
(62) Further to the exclusion of slippers from the single category of products under
      consideration, the conclusions as to whether the cumulative assessment of imports
      from both countries was warranted were reexamined. In 1994, the volume of
      footwear imported under CN code 6404 19 90 originating in the People's Republic
      of China stood at 101.1 million pairs, .id that originating in Indonesia at 24 million
      pairs. The market shares of these dumped imports for the same period stood at
      50.5% and 12% respectively.
 ---pagebreak---      Moreover, substantial dumping margins have been confirmed in respect of these
     products, and the conclusions set out in recital 68 of the provisional duty
     Regulation as regards the conditions of competition on the market could be
     confirmed after the exclusion of slippers from the proceeding. On this basis, it was
     considered that the cumulative assessment of the effects of the dumped imports of
     outdoor footwear from the two countries concerned was warranted. Accordingly,
     the provisional findings in this respect (as set out in recital 64 to 69 of the
     provisional duty Regulation) should be confirmed in respect of the restricted
     category of outdoor footwear.
(63) The total volume of imports of outdoor, footwear from the People's Republic of
     China and from Indonesia taken together increased from 65.4 million pairs in 1991
     to 125.1 million pairs in 1994, a significant increase of more than 90%. This
     corresponds to an increase in combined market share from 40.5% in 1991 to 62.4%
     in 1994.
2.   Undercutting calculation
(64) It has been alleged that undercutting was not always practised, if at all, at the level
     indicated in the provisional duty Regulation. During the hearings certain parties
     have shown samples of allegedly comparable models where imported models
     (generally manufactured in accordance with the importer's own specifications and
     design) were more expensive than Community-produced ones.
                                           28
 ---pagebreak---      Although these claims may be true in some particular cases, it has to be stressed
     that they were not confirmed on a broader basis by the investigation into both the
     exporters' prices for certain models and Eurostat prices. In these circumstances, the
     Commission considered it appropriate, for the purpose of establishing definitive
     findings, to continue to rely exclusively on the detailed and/or global information
     collected (and verified to the maximum extent possible) in the course of the
     investigation, on the basis of which the existence of price undercutting has been
     positively established.
(65) It has been claimed that the adjustment for differences in level of trade was
     insufficient and ought to be revised. In particular, evidence was provided showing
     that the 13% adjustment granted at provisional stage to take account of differences
     in the level of trade between importers and Community producers' clients, only
     covered intra EC transport and other ancillary costs.
     A further analysis was carried out, concentrating on the importers for which
     corroborated data relating to this adjustment had been provided, i.e. the five
     cooperating importers named in the provisional duty Regulation. These importers
     had been the subject of a verification visit and together represented 12.5% of the
     import volume concerned during the investigation period.
                                           29
 ---pagebreak--- It could be verified that three of them had not sourced the product concerned in a
significant way from Community producers during the investigation period, but had
rather the same customers as the Community producers. It was therefore concluded
that, to be compared in a fair way, import prices had to be adjusted for the costs
incurred between the importation and the point when the products actually reached
the customers, and for a reasonable profit. For this purpose, all costs which could
be allocated to the product concerned were taken into account, with the exception
of those which appeared to be part of the production costs (such as raw materials
provided by the importer to the producer in the exporting country) and thus to have
been included in the customs value of the goods as reported in Eurostat.
Conversely, two of the five importers appeared to be customers of the Community
producers, and thus only their costs from CIF to delivered duty paid at their
warehouse level (DDP) were taken into account, as this corresponded to the level of
trade where the Community producers' prices and costs had been established.
For each importer, the relation between the average import price for the product
concerned and the costs mentioned above was examined. It resulted from this
analysis that, to adjust the CIF price to a level of trade comparable to that of the
Community producers' deliveries, two elements had to be taken into account.
Indeed, although a part of the costs can be considered as proportional to the value
of the goods, an adequate adjustment was found to require also a fixed amount per
pair, to reflect the costs incurred inevitably by any importation, independently from
the goods' value.
                                         30
 ---pagebreak---  (66) On the basis of the evidence examined it was found that, in order to be compared in
      a fair way to the Community producers' prices and costs, the CIF import price for
      the product concerned had to be adjusted 20% upwards and then increased by an
      amount of 0.2 ECU per pair, plus the normal customs duty rate.
(67) Calculations have been amended accordingly, resulting in the confirmation of the
      existence of the undercutting practices established in the provisional duty
      Regulation. On the basis of Eurostat, as for the cooperating exporters subject to a
      provisional anti-dumping duty, average undercutting margins, expressed as a
      percentage of the Community industry's prices, were found to be in excess of 7%
      for Indonesia and 18% for the People's Republic of China.
3.    General injury factors
(68) Since no new representations were made by any interested parties as regards the
      provisional assessment of general injury factors (such as, inter alia, consumption
      on the Community market, production, sales, profitability, and employment of the
      Community industry), no re-examination of the findings concerned was undertaken.
                                           31
 ---pagebreak--- (69) However, given the exclusion of slippers from the single category, of products
     under consideration, the main findings relating to the market and the Community
     industry manufacturing outdoor footwear, which were not detailled in the
     provisional duty Regulation, are outlined below:
     •     the total Community consumption increased from 161.3 million pairs in 1991
           to 200.4 million pairs in 1994.
     •     the production decreased from 40.4 million pairs in 1991 to 30.8 million pairs
           in 1994, a 24% drop.
     •     the sales experienced a decrease of 45% in volume terms and 32% in value
           terms over the same period, corresponding to a fall in market share from
           20.8% to 9.2%.
     •     the profitability on sales of outdoor footwear for companies in the first group
           experienced a decrease from 12.3% in 1991 to 2.8% in 1994, this downward
           trend being confirmed by that established in relation with the companies in
           the control sample.
     •     As far as employment and company closures are concerned, due to the ability
           of most companies in the sector to produce both indoor and outdoor footwear,
           no absolute figures limited to outdoor footwear production were established
           in the course of the investigation. In view, however, of the indicators
          presented above, when compared to those established in the provisional duty
          Regulation, the negative trend of employment and the significant number of
          company closures could be confirmed in respect of the Community industry
          manufacturing outdoor footwear.
                                             32
 ---pagebreak--- 4.    Conclusion on injury
(70) In the light of the above and in the absence of other arguments, it is confirmed that,
      as was established in recital 84 of the provisional duty Regulation for the
      Community industry producing both outdoor and indoor footwear, the Community
      industry producing outdoor footwear has suffered material injury within the
      meaning of Article 3 of the Basic Regulation.
                                      G. CAUSATION
(71) Most exporters and importers again raisecj the case of imports from Vietnam as
     being a cause of the injury suffered by the Community industry. In this respect, it
     has to be stressed that at the time of the lodging of the complaint Vietnam's known
     share of the outdoor footwear market was relatively limited. The increase which
     took place afterwards was already noticeable during the investigation period, where
     the market share held by the products originating in Vietnam was, however, much
     more limited than that of Chinese products. It follows from the above that the
     effects of Vietnamese imports could not have broken the causal link established
     between the imports subject to the current investigation and the injury suffered by
     the Community industry.
(72) Since no other potential cause of injury has been put forward with substantiated
     evidence, the provisional findings in this respect as set out at recitals 85 to 95 of the
     provisional duty Regulation are therefore confirmed. Furthermore, in view of the
     above trends, it is considered that the above conclusion applies equally to outdoor
     footwear.
                                             33
 ---pagebreak---                             H.    COMMUNITY INTEREST
1.   Impact on consumers
(73) Although no representations have been received either from consumers or
     consumer organisations following the publication of the provisional duty
     Regulation, some parties have argued that anti-dumping measures would seriously
     affect the Community consumers and, among these, in particular those with the
     lowest income.
     This argument concerning the foreseeable impact of measures on the consumers'
     buying price has been examined in detail. The results of this examination are as
     follows:
     (a)       Impact in absolute terms
(74) Firstly, as far as footwear prices to distributors are concerned, it is likely that the
     Community industry, with a 9.2% market share and a 5.1 ECU per pair average
     price, would not be able to increase its prices above the 4.2% necessary to reach the
     reasonable profit as defined in the provisional duty Regulation (recital 106) without
     running the risk of worsening its current strong downward trend in terms of market
     share.   In addition, imports from countries not concerned by this proceeding
     represent 28.4% of the market for the product concerned and it is expected that
     producers in these third countries will not be willing or able to command
     significant price increases.
                                             34
 ---pagebreak---       As for Indonesia, it should be recalled that the injury elimination level foreseen.for
      this country is considerably lower than for the People's Republic of China, the
      average price of the imports being 2.57 ECU per pair.           The market share of
      footwear originating in the People's Republic of China being 50.5%, (with an
      average price of 1.83 ECU per pair) and in view of the duty rate proposed, the
      average maximum foreseeable impact of the measures proposed on the market of
      the footwear concerned as a whole amounts to 0.5 ECU per pair.
      Thus, only if distribution chooses to keep its margins unchanged and charges the
      entirety of its increased costs to the consumers, would the latter have in turn to pay
      the corresponding amount of 0.5 ECU per pair.            Since the average per head
     consumption of the footwear concerned in the Community is below one pair per
     person per year, the impact of the proposed measures for the consumer remains
     clearly marginal.
     (b)        Impact in relative terms, effect of price on consumption
(75) In relative terms, the basis of the calculations was the average price of the footwear
     concerned at delivered-warehouse distributor level, namely 3.6 ECU per pair,
     which takes into account, for the imports, the adjustment for differences in level of
     trade referred to in recital 66 of the present Regulation. Using the lowest mark-up
     found among the distribution channels analysed below, i.e. 125%, it is estimated
     that the average price for the consumer of the product concerned is above 8.1 ECU
     per pair. As a consequence, the impact on the consumer price of fully reflected
     duties would be below 6.5%.
                                              35
 ---pagebreak---      This percentage should, as explained above, be examined in light both .of.the
     absolute value of the increase (0.5 ECU per pair) and the general evolution of
     prices. Indeed, over the four years examined, and due to the penetration of the
     dumped imports, the average market price at delivered-warehouse distributor level
     decreased of more than 16% when corrected from the general inflation rate.
(76) In the absence of any other element or reaction from consumer organisations, it was
     therefore concluded that the impact pf the proposed measures on the consumer of
     the footwear concerned was likely to be minimal. It could as a consequence be
     concluded that no significant contraction in demand was to be foreseen as a result
     from a possible full reflection of the duty on the consumer price.
2.   Impact on the distribution
     (a)       Impact on the distribution as a whole
(77) It has been argued that the imposition of measures would have a strong negative
     impact on the importers. More globally, diverging views have been expressed on
     the situation of the whole distribution chain which, it has been argued, was an
     activity with a far greater significance in the Community than the footwear
     production, in terms of both turnover and employment.
                                             36
 ---pagebreak--- It should be recalled first that, by its very nature, for a given quantity_of footwear,
the distribution chain will have a higher turnover than the manufacturing companies
it buys from, simply by virtue of its distribution margin. Secondly, the employment
figures for the footwear distribution in general, where all types of footwear are sold,
cannot be compared with those of the Community production of the product
concerned only.
As consumers do not buy shoes in significant quantities outside the Community,
negative consequences of anti-dumping duties for the distribution as a whole could
only result from a significant reduction of consumption and therefore of turnover,
or a downward pressure on distribution margins in order to minimise an increase in
consumer prices (and a decrease in consumption).
As explained above, in the light of the foreseeable impact of possible measures on
the consumers of the product concerned, it can be considered as highly unlikely that
consumption of the product concerned would drop significantly, even if the
distribution sector were to maintain its current margins.
                                        37
 ---pagebreak---      Taken as a whole, it can therefore be concluded that the effects of possible
     measures on the distribution chain will be very limited. Care was however taken to
     make an in-depth analysis in the light of the structure of footwear distribution in the
     Community.
     (b)       Structure of the footwear distribution in the Community
(78) Among the footwear distribution in the EC, four different channels of sale to the
     end customer are generally identified.         These are the branded chains, the
     independent retailers, the non-specialised supermarkets, and, as a fourth category,
     the other types of generally non-specialised distribution (clothing and general stores
     for example).
       (i)    The independent retailers
(79) The traditional distribution channel consists of independent retailers, generally
     buying from wholesalers. In the evolution of the distribution however, wholesalers
     tend to disappear as retailers enter into a closer relationship with a more limited
     number of producers, or tend to group in purchase associations while keeping their
     independence.
                                            38
 ---pagebreak---      As far as the retailers themselves are concerned, they face an adverse competitive
     situation due to both their individual lack of price control on suppliers and the high
     margins they require to cover the fairly high costs of the city centres retail outlets
     from which they predominantly operate (150% to 200%). In fact, they have lost
     ground in certain Member States to more recently developed forms of distribution
     falling within the other three categories, in particular the branded chains.
     However, as a consequence of their strong presence in some other Member States
     and their situation at the upper end of the market where they maintain a continuous
     commercial relationship with their customers, it should be noted that independent
     retailers are still, at least in terms of value added and employment (over 250 000
     persons), the most important distribution channel in the Community, although
     probably not the first one in terms of market share (in volume).
       (ii)    The branded chains
(80) These chains, which are sometimes involved in production activity in the
     Community, are generally owned by one or two large companies in each country,
     which own several brands and operate across the whole market range.             They
     operate from out-of-town super or discount stores, which, because of their sales
     volume, prices and specialisation, can resist the non-specialised supermarkets'
     pressure.
                                              39
 ---pagebreak---      The branded chains also sell through in-town shops replacing the_ independent
     retailers with less costly, standardised shops which accomodate the need, on the
     part of some customers' for an alternative retail buying environment to discount
     halls. Due to their purchasing power, their access to world supply (they import on
     their own account) and the relatively low margins they operate with, generally
     around 25% of the cost of sales for the central trading arm and 100% on average for
     the shops, they are able to gain market share rapidly once they enter a market and to
     achieve growth rates in excess of 5% per year.
       (iii)   The non-specialised supermarkets
(81) Important in terms of volume, but less in terms of value on the total footwear
     market due to the low average price of their sales, non-specialised supermarkets
     have a strong influence at the lower end of the market. Although they sometimes
     buy directly from suppliers located outside the Community, they usually rely on
     specialised importers for their imports, which constitute an important part of their
     footwear sales. Their traditional mark-up is around 100%, but it can range from
     around 60% on promotional operations to over 130% on some Community
     productions. Due to the supplementary step of the importer and the fixed part of
     the costs incurred, imports from the countries concerned through this sales channel
     usually reach the consumer at a price 3 times higher than the CIF level.
                                            40
 ---pagebreak---         (iv)    Other sales channels
(82) Other sales channels, such as mail order companies or garment stores, gained a
      significance in certain Member States but none of these has individually acquired
      an importance on a Community-wide basis. In certain Member States, specialised
     mail-order firms have a cost structure similar to the branded chains. Community-
     wide apparel chains of "small" shops also introduce footwear in their stores as a
     fashion branded item, generally with higher margins than on their usual articles.
     Due to the fashion aspect of these sales, they are in competition with the branded
     chains, although to a lesser extent than the large general city centre stores.
     (c)       Specific impact of the proposed measures on the various sales channels
(83) As regards the independent retailers, which still constitute the largest source of
     employment in the Community footwear distribution, the general conclusion
     presented in recital 77 of the present Regulation is strengthened by the fact that they
     usually have a low proportion of their supplies of the product concerned originating
     in Indonesia or the People's Republic of China. It should be added that they are
     grouped in a confederation representing 8 Member States on a representative level,
     and that no submission opposing the possible imposition of anti-dumping measures
     was received from this source or any other.
                                            41
 ---pagebreak--- (84) The companies owning branded chains have contested the need for the imposition
     of anti-dumping duties. Although the general conclusion is also applicable to them,
     the fact that some of them rely more than the independent retailers on the dumped
     imports for the supply of the product concerned explains why, within the
     distribution, they could fear a negative effect of the measures on their comparative
     competitive situation.
     The direct effect of possible measures on the financial situation of these companies
     will be negligible if the amount of the duty were to be fully passed on to the
     consumer. Indirect financial effects could only be expected if, due to this price
     increase, consumers would significantly reduce their purchases of the product
     concerned. However, should this happen, it would be only to a limited extent, as
     explained in recital 76.
     Moreover, the product concerned is never sold separately in specialised shops and
     due to its particularly low prices, represents less than 10% of the turnover of the
     cooperating companies operating branded chains. In this perspective, even a small
     contraction in the demand for the product concerned, which appears unlikely,
     would have a negligible impact on the companies as a whole, in particular if the
     demand is at least partly reoriented to footwear with a higher price, with probably a
     higher margin in absolute terms.
(85) As far as non specialised supermarkets or other non-specialised stores are
     concerned, in view of the even more limited extent to which their sales rely on the
     product concerned, their situation should not be affected by the imposition of
     measures even in the case of the market evolution envisaged above.
                                             42
 ---pagebreak---   (86) The situation of the importers supplying these non-specialised distribution channels
         was examined, as they imported in some cases a more important portion of their
         turnover from the countries concerned than their clients. These companies are
         generally run with a very limited and flexible structure allowing them to sell only
         when the trading margin they foresee covers the costs incurred. Their expertise on
         the market and their ability to design and sell are not affected by the country of
         origin of the goods. The anti-dumping measures having an impact on the footwear
         distribution as a whole, these importers will be able to benefit from any market
         situation, and continue to supply their clients with Chinese or Indonesian imports,
         or any non-dumped product, as well as Community-produced ones.
  (87) In conclusion, it could not be established that the imposition of anti-dumping
         measures on the footwear concerned would be such as to affect significantly the
        financial situation of either the footwear distribution chain as a whole or of a part of
        it.
 3      Impact on the Community industry and its suppliers                 -*
 (88) The argument according to which the measures would have no positive effect on
        the situation of the Community industry due to the shift of supply to other third
        countries has been presented again. It has been argued moreover that the situation
        of the textile footwear industry in this respect was comparable to that of the
        synthetic handbags manufacturers and that accordingly the Council should also in
        the present case refrain from taking measures4.
4
   See recitals 105 and 106 of Council Regulation (EC) No. 1567/97 (OJ No L208, 2.8.1997, p.31.)
                                                    43
 ---pagebreak---      Shift of supply between various countries has been an important factor-on-the
     footwear market for a number of years. In this regard, it should be noted that the
     Community industry has been able, by its automation and rationalisation, to partly
     compensate, by its own increase in exports, for the constant change of country from
      which varying volumes were imported in the Community. This could however not
     be the case for the massive surge in dumped imports from the two countries
     concerned in the present proceeding. As far as the alleged parallelism between the
     present proceeding and the synthetic handbags case is concerned, it should be
     stressed that the significant market share still held by the complainant Community
     industry in this case, the nature of the capital holders in most exporting companies,
     as well as the important industrial investment necessary to produce footwear,
     clearly exclude any reasonable and meaningful comparison between the two
     industries. The Council cannot accept therefore that for the sake of consistency, it
     should refrain from taking measures in the present case.
(89) It has been argued again that, should measures be imposed, this would have
     negative consequences on the footwear machine manufacturers which would be
     limited in their sales to Indonesia and the People's Republic of China.
     As far as the machine suppliers are concerned, it should be noted that the
     Community industry is clearly investing in automation, and in the injection process
     in particular.   This automation is linked with investments in machines and in
     moulds produced in the Community, which continue to create a virtuous circle of
     technological improvement. No evidence has been received on the other hand
     showing that exporters in Indonesia or the People's Republic of China are main
     clients of the Community equipment manufacturers.
                                             44
 ---pagebreak--- (90) No new evidence having been submitted in respect of these arguments, - the
     conclusions presented in recitals 99 and 104 of the provisional duty Regulation are
     accordingly confirmed.
4.     Conclusion concerning Community interest
(91) As a conclusion, and having examined all the various interests involved, it is
     considered that there are no compelling reasons not to take action against the
     dumped imports in question.       The conclusions set out in recital 105 of the
     provisional duty Regulation are therefore confirmed.
                                           45
 ---pagebreak---                           I.    ANTI-DUMPING MEASURES
1.   Injury elimination level
     (a) General considerations
(92) It should be recalled that the calculations used to establish the injury elimination
     level at the provisional stage were based on two different sets of price comparisons.
     As far as the cooperating exporters were concerned, the prices of the most exported
     models were compared to the Community industry's corresponding non-injurious
     prices on the basis of a grouping into 16 so-called families of footwear, of which
     13, relating to outdoor footwear, were considered for the purpose of the definitive
     determination.    For the vast majority of imports, however, in the absence of
     cooperation from any exporters, the injury elimination level had to be calculated on
     an average basis for the CN code concerned, this approach having been called the
     category comparison.
(93) It has been argued that, in performing these comparisons, the Commission failed to
     take into account the alleged differences between vulcanised and injected footwear.
     Further to what has been explained at recitals 26 to 30 of the present Regulation, it
     is considered that there are no differences between vulcanised and injected
     footwear which are such as to significantly affect global price comparisons.
     Indeed, the difference in the manufacturing processes used for the production of the
     soles of two comparable models does not result in a different consumer perception.
     As far as the cooperating exporters are concerned, in the case where imported
     vulcanised models were compared to Community-produced injected footwear
     because these were the most similar models found, the exporters were given the
     opportunity to comment on the basis of the documents and non-confidential files
     available to them, and none of them contested the comparison made.
                                            46
 ---pagebreak--- (94) Exporters from the People's Republic of China claimed that the descriptive
      elements of the Community produced models used for comparison purposes were
      insufficient. In this respect, it should be recalled that the exporters were provided
      with copies of the non-confidential files where photographs of the Community-
      produced models used as a reference in each family were provided. This was done
      in addition to the written explanations given and the calculation sheets included in
      the disclosure.
(95) Following the claim made by importers, and in order to perform the price
      comparisons in the calculation of the injury elimination level, CIF import prices
      were adjusted to the duty-paid, customer-delivered price level by using the
      adjustment methodology used for the undercutting assessment, as presented at
     recital 66 of the present Regulation.
(96) It was argued by certain importers that, even if it could be admitted that injurious
     dumping in respect of footwear with an import price below three US dollars was
     taking place, this was not the case for more sophisticated footwear. The latter
     category, according to the importers in question, should be attributed a 0% injury
     elimination level.
     In this respect, it should be recalled that, although huge volumes of outdoor
     footwear are indeed imported below 2.5 ECU (equivalent to 3 US dollars), these
     imports covered, in the sample of the importers' transactions examined, only 45%
     of the value of the imports concerned. The fact that a majority of the import
     turnover was above the alleged price break shows that, in reality, the imports of the
     product concerned, though made at extremely low prices when compared to what
     they would be if normal competitive conditions prevailed, are spread over a wide
     price range.
                                              47
 ---pagebreak---      Moreover, the non-injurious price levels established for the- investigated
      Community producers were also both below and above the alleged price break,
      adjusted to the appropriate customer-delivered level (3.7 ECU), depending on the
      shoe type. In the absence of any other evidence relating to this aspect of the
      market, this claim should therefore be rejected.
(97) No other remarks having been submitted, the general injury elimination level
      methodology, as established in recitals 106 to 112 of the provisional duty
     Regulation, are therefore confirmed.
     The reduction in the product coverage of the proceeding and the change in the level
     of trade adjustment, however, affect the provisional findings, as set out below.
     (b) Indonesia
(98) In conformity with the methodology set out in the provisional duty Regulation, the
     revised injury elimination levels for the cooperating companies in the sample for
     Indonesia, expressed as a percentage of the CIF import price, ranged from 0 to
     31.5%, with an average to be applied to cooperating companies outside the sample
     of 14.1%. As regards the calculation of the residual injury elimination margin, it
     was considered that, in the case of a market economy country such as Indonesia, the
     most reasonable basis was to use the average level found on the basis of verified
     data established in respect of the cooperating exporters in the sample, i.e. 14.1%.
     (c) People's Republic of China
(99) In accordance with the methodology set out in the provisional duty Regulation, the
     revised single injury elimination level for the People's Republic of China was
     found to be 49.2%.
                                            48
 ---pagebreak--- 2.    Duty
(100) One of the cooperating Indonesian companies not included in the sample objected
      to the fact that it had been attributed a duty based on the weighted average dumping
      margin found for the sample.
      This argument could not be accepted since Article 9(6) of the Basic Regulation
      provides that, where the Commission has limited its examination in accordance
      with Article 17, any anti-dumping duty imposed on cooperating companies not
      included in the sample shall not exceed the weighted average margin of dumping
      established for the parties in the sample. Moreover, it will be recalled from recital
      23 of the provisional duty Regulation that the Indonesian companies concerned had
      agreed to this methodology.
(101) Since the residual injury elimination level for Indonesia and the People's Republic
      of China, as well as the individual level for PT Sindoll Pratama, is lower than the
      corresponding dumping margins, the anti-dumping duty should be based on these
      levels. For the other cooperating exporters in Indonesia, the anti-dumping duty
      should be based on the dumping margins established above.
(102) The anti-dumping duty rates, applicable to the net, free at Community frontier price
      before duty should therefore be as follows:
 Country                                   Manufacturer and exporter          Rate of duty
 PEOPLE'S REPUBLIC OF CHINA                All companies            •         49.2%
 INDONESIA                                 PT Dragon                           4X)%
                                           PT Emperor Footwear Indonesia      0%
                                           PT Sindoll Pratama                 0%
                                           PT Bosaeng Jaya                    14.1%
                                           PT Volmacarol                      14.1%
                                           All other companies                14.1 %
                                               49
 ---pagebreak---                J.     COLLECTION OF THE PROVISIONAL DUTIES .
(103) In view of the magnitude of the dumping margins found for the exporting producers
      and countries, and in the light of the seriousness of the injury caused to the
      Community industry, it is considered necessary that the amounts secured by way of
      provisional anti-dumping duty under Regulation (EC) No 165/97 should be
      definitively collected at the rate of the duty definitively imposed. However, to the
      extent to which it can be established, to the satisfaction of the customs authorities,
      that imports related to footwear falling within CN Code 6404 19 10 (slippers) or
      shoes excluded from the scope of the present proceeding, as described under Article
      1 (3) (b), (c) and (d) of the present Regulation, the amounts secured of provisional
      anti-dumping duty should be released in their totality,
HAS ADOPTED THIS REGULATION:
                                          Article 1
1.   A definitive anti-dumping duty is hereby imposed on imports of footwear falling
     within CN code ex 6404 19 90 (Taric code 6404 19 90*90), originating in the
     People's Republic of China and Indonesia, except as regards the footwear described
     in paragraph 3,
2.   The rate of the definitive anti-dumping duty on the basis of the net, free-at-
     Community-frontier price, before duty, shall be:
                                              50
 ---pagebreak---        Country                  Products manufactured            rate of      Taric
                                           by                     duty      Additiona
                                                                   (%)           1
                                                                              Codes
People's Republic of     All companies                           49.2%          -
China
Indonesia                All companies                           14.1%        8900
                         with the exception of: %
                         P.T. Dragon                              4.0%        8941
                         P.T. Emperor Footwearlndonesia           0.0%        8942
                         P.T. Sindoll Pratama                     0.0%        8942
3.   The duty shall not apply to:
     a) shoes sometimes known as "espadrilles", which, for the purpose of the present
     Regulation, are shoes with canvas uppers and unheeled plaited fibre soles, whether
     or not strengthened with rubber or plastics over a variable surface, which are not
     thicker than 2.5 cm (Taric code 6404 19 90 * 10);
     b) shoes sometimes known as "diving boots" or "water sports boots", which, for the
     purpose of the present Regulation, are shoes with an upper made of neoprene,
     whether laminated on one or both sides with textile material, where the neoprene
     thickness is of 2.5mm or more, covering the entirety of the foot, with an abrasion-
     resistant sole , and designed for certain water sports such as diving (Taric code
     6404 19 90*20);
                                            51
 ---pagebreak--- c) shoes sometimes known as "medical shoes", which, for the purpose, of. the
present Regulation, are shoes which, although not manufactured according to the
individual medical need of one person, are designed for easing the recovery during
or after a therapy or a medical operation, as for example shoes to walk while having
a plastered or bandaged foot. These shoes do not cover the foot entirely and have a
wide opening which enables even a banded foot to fit inside. They are sold not per
pair, but individually, and show at the same time more than one of the following
characteristics:
    - The closing device can be adjusted to the bandage or plaster size
    - Special internal soles or pads can be inserted for medical purposes
   - The design of the sole is such that it prevents certain harmful contacts from the
   foot with the ground, but at the same time bans a non medical use of the shoe
    - The design is functional and does not include decorations or other fashionable
    accessories
(Taric code 6404 19 90* 30);
d) shoes sometimes known as "beach shoes", which, for the purpose of the present
Regulation, are shoes the upper of which is limited to a stripe of textile material,
this upper being attached on both sides of a thick, lightweight alveolar plastic sole,
in contact both with the foot and the ground. This textile stripe leaves the front as
well as the rear part of the foot uncovered, and its width does not exceed one third
of the shoe's length. As the back of the foot is not enclosed by the shoe, the wearer's
heel lifts from the sole when walking. Beach shoes are designed to be worn with
wet or sandy feet on the beach or around swimming pools, and their design
excludes any practical use for walking over a longer distance. (Taric code
6404 19 90*40).
                                         52
 ---pagebreak---                                                           •^{bv.
 4.     Unless otherwise specified, the provisions in force concerning duties and other
        customs practices shall apply.
                                          Article 2      y
 1.    The amounts secured by way of provisional anti-dumping duty under Regulation
       (EC) No 165/97 shall be definitively collected at the rate of the duty definitively
       imposed, with the exception of the amounts for which it can be established, to the
       satisfaction of the customs authorities, that they related to imports of footwear
       falling within CN code 6404 19 10 or shoes described in Article 1 (3) (b), (c) and
       (d), which amounts shall be released.
2.     Amounts secured in excess of the definitive rate of anti-dumping duty shall be
       released.
                                         Article 3
This Regulation shall enter into force on the day of its publication in the Official Journal
of the European Communities.
This Regulation shall be binding in its entirety and directly applicable in all Member
States.
Done at Brussels,
                                                    For the Council
                                                      The President
                                             53
 ---pagebreak---  ---pagebreak---  ---pagebreak---                                                                   ISSN 0254-1475
                                                            COM(97) 551 final
                                              DOCUMENTS
EN                                                                    02 11
                                    Catalogue number : CB-CO-97-569-EN-C
                                                             ISBN 92-78-26275-7
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