CELEX: 31990R3798
Language: en
Date: 1990-12-21 00:00:00
Title: Commission Regulation (EEC) No 3798/90 of 21 December 1990 imposing a provisional anti-dumping duty on imports of espadrilles originating in the people's Republic of China

28 . 12. 90                            Official Journal of the European Communities                           No L 365/25
                                     COMMISSION REGULATION (EEC) No 3798/90
                                                   of 21 December 1990
                  imposing a provisional anti-dumping duty on imports of espadrilles originating
                                            in the People's Republic of China
THE COMMISSION OF THE EUROPEAN COMMUNITIES,                            views in writing and requested a hearing, which the
                                                                        Commission granted.
Having regard to the Treaty establishing the European
Economic Community,                                                    The complaint indicated that there might be small­
                                                I
                                                                       scale production of beach slippers in Greece. Follo­
Having regard to Council Regulation (EEC) No 2423/88                   wing discussions with the Hellenic Association of
of 11 July 1988 on protection against dumped or subsi­                  Footwear Manufacturers and Exporters, a question­
dized imports from countries not members of the Euro­                   naire was sent to a Greek producer but no reply
pean Economic Community, (') and in particular Article                 was received by the Commission from that
1 1 thereof,                                                            producer nor from any other Greek producer. The
                                                                       view was accordingly taken that it was not possible
After consultations within the Advisory Committee as                    to confirm the existence of any Greek production
provided for by the abovementioned Regulation,                          of the product in question.
Whereas :
                                                                  (4)  Three Chinese exporters (the Zhejiang Arts and
                                                                        Crafts Import and Export Corporation, the Fujian
                                                                        Footwear and Headgear Corporation and the
                           A. PROCEDURE
                                                                        Shanghai Arts and Crafts Import and Export
                                                                        Corporation) replied to the questionnaires within
                                                                        the time prescribed. In addition, the principal orga­
                                                                        nization in the People's Republic of China with
(1 )    In July 1989 a complaint was lodged in writing                  responsibility for trade in footwear, the China
        with the Commission by the French National                      Chamber of Commerce for Import and Export of
      , Footwear Industry Federation, the Spanish Foot­                 Light Industrial Products and Arts-Crafts, here­
        wear Industry Federation and Etchandy Portugal                  inafter referred to as the 'Chinese Chamber of
        (the sole Portuguese producer) on behalf of produ­              Commerce', made known in writing the views of
        cers accounting for the bulk of Community                       Chinese exporters taken as a whole. That organiza­
        production of espadrilles (beach slippers).                     tion likewise sought a hearing and this was granted
                                                                        by the Commission.
        The complaint contained evidence of dumping and
        resultant injury which was considered sufficient to
        warrant the initiation of a proceeding.                         It became apparent in the course of the investiga­
                                                                        tion that the three Chinese exporters which coope­
        The Commission accordingly announced, in a                      rated accounted for approximately one quarter of
        notice published in the Official Journal of the                 the exports of beach slippers from the People's
        European Communities, (2) the initiation of an                  Republic of China to the Community and that no
        anti-dumping proceeding concerning imports into                 information was available regarding exports by
        the Community of beach slippers falling within                  other Chinese exporters.
        CN codes ex 6404 19 90 or 6405 20 99, originating
        in the People's Republic of China,                              Since the People's Republic of China is not a
                                                                        market economy country within the meaning of
 (2)    The Commission officially notified the exporters                Article 2 (5) of Regulation (EEC) No 2423/88 and
        and importers known to be concerned, the repre­                 since the comments made by the Chinese exporters
        sentatives of the exporting country and the                     were submitted en bloc and not all the Chinese
        complainants.                                                   exporters were identified, the Commission took the
                                                                        view that, for the purposes of the proceeding, all
        It requested the parties concerned to reply to the              the Chinese exports should be taken into account
        questionnaires which had been sent to them and                  collectively.
        gave them the opportunity to make known their
        views in writing and to request a hearing.                (5)   The Commission sent questionnaires to the eighty
                                                                        importers listed in the complaint. It became clear
 (3)    Most of the complainant Community producers                     that, firstly, eight of them had not imported beach
        replied to the questionnaires, made known their                 slippers from the People's Republic of China, at
                                                                        least not during the reference period, and, secondly,
 (') OJ No L 209 , 2. 8 . 1988, p. 1 .                                  eight others had changed their address and could
 (2) OJ No C 314, 14. 12. 1989, p. 15.                                  not be contacted.
 ---pagebreak--- No L 365/26                          Official Journal of the European Communities                               28 . 12. 90
     In addition, five importers, of which the Commis­               selected because most of the producers and a
     sion was not aware when the proceeding                          number of the Community importers were small
     commenced, made themselves known to the                         firms. The Commission accordingly considered
     Commission within the period specified in the                   that it was reasonable that the reference period
     notice of initiation.                                           should coincide with the last full accounting year,
                                                                     since the finalized and audited results for that year
     Of the sixty-nine importers thus contacted and                  were the most recent available when the companies
     who could have cooperated, only two sent the                    concerned were required to complete the question­
     Commission complete replies to the questionnaires               naires.
     within the periods stipulated or granted.
     Lastly, three importers' associations made their
     views known in writing and requested and were                   B.    THE     PRODUCT        IN  QUESTION,       LIKE
                                                                     PRODUCTS            AND       THE      COMMUNITY
     granted hearings.                                                                      INDUSTRY
(6)  As a result, in the case of those parties which failed
     to reply or which failed to make representations in             (a) product in question
     any other way, findings were made, pursuant to
     Article 7 (7) (b) of Regulation (EEC) No 2423/88,          (9)  The products which are the subject of the notice
     on the basis of the facts available, that is to say, in
     this case, the information obtained from the
                                                                     initiating the proceeding are beach slippers with
                                                                     plaited fibre soles, whether or not strengthened
     complainant and the official statistics of the                  with rubber or plastics over a variable surface,
     Community.                                                      falling within CN codes ex 6404 19 90 or ex
                                                                     6405 20 99 .
(7)  The Commission sought and verified all the infor­
     mation it considered necessary for a preliminary                Beach slippers are classified within one or other of
     determination of dumping and resultant injury as                those two CN codes according to the respective
     regards those parties which agreed to cooperate. To             percentage of rope or rubber (or plastics) which
     that end, it carried out on-the-spot checks at the              constitutes the surface of the outer sole in contact
     premises of the following :                                     with the ground :
                                                                     — up to 50 % rubber (or plastics) ; in this case the
     (a) Community producers                                              slippers fall within CN code ex 6405 20 99,
                                                                          hereinafter referred to as 'Type A' ;
     — Berasategui, Hendaye, France                                  — more than 50 % and up to 100 % rubber (or
     — Ets Callian, St Paul les Dax, France                               plastics) ; in this c?se the slippers fall within
     — Ets Causseque, Monte-de-Marsan, France                             CN code ex 6404 19 90, hereinafter referred to
                                                                          as 'Type B\
     — Ets Etchandy, Mauleon, Frane
     — Manufacture Luzienne, Urrugne, France                    (10) The investigation showed that these two CN codes,
     — Pee Laborde, Aramits, France                                  the purpose of which is to enable a distinction to
                                                                     be made when applying the customs tariff on the
     — Ets Tauzin, Mauleon, France                                   basis of the criterion indicated above, corresponded,
     — Calzados Puerta SA, Arnedo, Spain                             in fact, to basically three types of slipper :
     — Dosega SA, Arnedo, Spain                                      — those with a sole coated at three points, all
     — Etchandy Portugal, Covilha, Portugal (since the                    belonging to Type A,
         accounting documents relating to this producer              — those with a 'grid' sole, which can be either
         had been transferred, for the purposes of the                    Type A or Type B,
         investigation, to the registered office of its
         parent company in France, the relevant checks               — those with a fully coated sole, which all belong
         were carried out at the same time as those that                  to Type B.
         were carried out at the premises of the French              The investigation covered beach slippers of these
         producer in question, Ets Etchandy, Mauleon).               three types with a sole of uniform thickness not
                                                                     exceeding 2,5 cm.
     (b) Community importers                                         In so far as all these products have the same basic
                                                                     physical or technical characteristics and are used
     — Netter et Cie, Paris, France                                  for the same purpose, the Commission took the
     — Moritz L. Chrambach GmbH & Co. Hamburg,                       view that all beach slippers constituted the product
         Germany                                                     in question in this Regulation, irrespective of the
                                                                     amount of coating on the sole, on condition that
(8)  The dumping investigation covered the period 1                  the sole was of uniform thickness not exceeding 2,5
     January to 31 December 1988 . This period was                   cm .
 ---pagebreak--- 28 . 12. 90                             Official Journal of the European Communities                           No L 365/27
                                                                                             C. DUMPING
       (b) Like products
(11 )  With regard to the definition of like products, the
       Commission established that there were no signifi­               (a) Normal value
       cant physical differences between the slippers
       exported to the Community by the Chinese expor­
       ters and the corresponding products sold by                 (13) In order to establish that imports of beach slippers
        Community producers.                                            originating in the People's Republic of China were
                                                                        being dumped, the Commission was obliged to
                                                                        take into account the fact that China is not a
        In this regard, the argument put by the China                   market economy country and, accordingly, to base
        Chamber of Commerce and by the Community                        its calculations on the normal value of the product
        importers' associations, that the beach slippers                in question in a market economy country. To that
        produced in China were not comparable from the                  end, the complainant had proposed a price which
        standpoint of quality to those manufactured in the              corresponded to an offer from a producer in
        Community could not be accepted.                                 Uruguay.
        The     Commission      found  that   the  differences          That proposal had been regarded a£ acceptable in
        claimed (essentially the quality of the fabric of the           the context of the complaint and in order to
        upper and the quality of the fibre used to manufac­             initiate the investigation but the said reference to
        ture the sole), firstly, were not discernible in every          an offer could not be regarded as adequate for the
        case and, secondly, where they could be discerned,               purposes of establishing the normal value.
        were so minimal as not to affect the basic characte­
        ristics of the product or the purpose for which it is
        intended.                                                  (14) The Commission accordingly carried out a survey
                                                                         of the various third country producers of beach
                                                                         slippers that might provide a suitable reference and
                                                                         found that :
        In addition, the Commission was able to confirm
        that the Chinese beach slippers were sold on an
        entirely competitive basis with Community slip­                 — there had been some very small-scale produc­
        pers, as witnessed by the fact that in the majority of               tion in Tunisia and in Israel, although no
                                                                             evidence was available as to whether it was
        selling outlets Chinese products and Community
        products are sold together.                                          continuing ;
                                                                        — production had recently commenced in Bangla­
                                                                             desh but it appeared to be too recent to provide
        On these bases, the Commission took the view                         a suitable reference for the purposes of this
        that, firstly, beach slippers produced in the                        investigation ;
        Community, taken as a whole, and, secondly, beach
        slippers exported from the People's Republic of                 — there had been sizeable production of beach
        China to the Community, taken as a whole, are like                   slippers in South America for almost a century.
        products within the meaning of Article 2 (12) of                     They were produced by SA Fabrica Uruguaya
        Regulation (EEC) No 2423/88 .                                        de Alpargatas, Montevideo, Uruguay and Indus­
                                                                             tria Chilena de Alpargatas SA ('Inchal'),
                                                                             Santiago, Chile, which had agreed to cooperate
                                                                             with   the   Commission .   A   second   Chilean
                                                                             producer had stated that it was unable to coope­
                                                                             rate on practical grounds.
        (c) Community industry
                                                                   (15) The Commission carried out investigations at the
(12)    The Commission found that the producers on                       premises    of   the   two  abovementioned     South
        whose behalf the complaint was lodged, which                    American producers and found that :
        cooperated with the Commission and which manu­
        factured beach slippers during the investigation                — the Uruguayan producer was a fully integrated
        period, accounted for the bulk of Community                          company, i.e. it manufactured the braid for the
        production of like products during that period.                      soles and the cotton fabric for the uppers itself,
                                                                             produced approximately 1,4 million pairs of
                                                                             beach slippers a year but did not vulcanize the
        As a result, the Commission took the view that                       soles (unlike the Chinese and Community
        they constitute the Community industry within the                    producers). This producer's manufacturing
        meaning of Article 4 (5) of Regulation (EEC) No                      process was efficient, modem and cost effec­
        2423/88 .                                                            tive :
 ---pagebreak--- No L 365/28                           Official Journal of the European Communities                               28 . 12. 90
      — the Chilean producer which had agreed to                (18)   The Commission took the view that the profit
           cooperate with the Commission was a recently­               margin had to be sufficient to ensure a minimum
           established company and its production had                  return on sales at different marketing stages, inclu­
           not yet attained a level that enabled it to                 ding sales to wholesalers. The Commission took
           operate under economically optimum condi­                   the view that a minimum return must mean a level
           tions. As a result, its costs and prices were               of profit which :
           higher than those of the Uruguyan producer.
           On the other hand, it possessed efficient plant             — enabled the producer in question to make such
           with which it vulcanized the soles.                              investments as were essential to maintaining its
                                                                            plant at the high level of technical efficiency
                                                                           which they had already attained at the time of
      The Commission accordingly took the view that it                      the on-the-spot investigation ;
      was reasonable to establish the normal value on the
      basis of the information obtained and verified at                — ensured an acceptable return on the capital
      the premises of the Uruguayan producer and to                         invested .
      make a suitable adjustment to take account of the
      cost of vulcanization .
                                                                       Under those conditions, the profit margin was esta­
                                                                       blished at 7 % of the constructed normal value.
( 16) In establishing the normal value in Uruguay, the
      Commission took account of the fact that on the
      market of Uruguay imported beach slippers are              (19)  With regard to quality, the Commission found that
      subject to a system of 'reference prices' which are              the beach slippers manufactured in Uruguay were
      intended to protect the local industry from cheap                generally stronger than the Chinese like product
      imports.                                                         but, on the other hand, they were not always as
                                                                       elaborate (lack of inner soles, lack of embroidery,
                                                                       that were usually to be found in the case of the
      In so far as that system might influence the                     articles imported from China). In these circum­
      domestic selling prices of the Uruguayan producer                stances the view was take that there was a balance
      and since its exports to both North and South                    between the value attaching to the said characteris­
      America were negligible compared with its total                  tics and that, therefore, no upward or downward
      production, it appeared necessary to calculate the               adjustment was warranted on account of differences
      normal value on the basis of the constructed value               in quality.
      of the like product in Uruguay. The constructed
      value was determined by adding the cost of produc­
      tion of the beach slippers and a reasonable margin         (20)  The costs of vulcanization were calculated from the
      of profit.                                                        information obtained during the investigation
                                                                        carried out at the premises of the Community
                                                                        producers and in the course of the investigation
      The cost of production was calculated by adding                  carried out in Chile. It appeared that the costs of
      together all costs, both fixed and variable, relating            the Chilean producer were the lowest. Therefore,
      to :                                                             the costs of that producer, limited to the cost of
                                                                       materials and production costs, established on the
      — materials,                                                     basis of a weighted average for the 'Type A' and
                                                                       'Type B' beach slippers, plus the same 7 % profit
      — manufacture, in the country of origin, of medi­                 margin, were added to the constructed value esta­
           um-sized beach slippers (corresponding to                   blished in Uruguay.
           ladies' sizes, which generally constitute most of
           the trade).
                                                                 (21 ) The representatives of the China Chamber of
                                                                        Commerce and the importers' associations objected
      To those costs were added selling and administra­                to the choice of reference country on the ground
      tive expenses and other overheads, which were                     that the beach slippers originating in Uruguay were
      determined by reference to the sales of beach slip­               not exported to the Community. They suggested
      pers made by the Uruguayan producer on its                        that Bangladesh should be used as the reference
      domestic market during the investigation period.                 country and, to that end, proposed that the normal
      Those costs, unlike the profit margin, could not be              value be based on an offer and a purchase from
      influenced by the system of reference prices in                  that country, which took place in 1990.
      force in Uruguay in regard to imported products.
                                                                       The Commission considers that the argument put
( 17) For all calculations, the effects of inflation in                forward is not valid since the normal value must be
      Uruguay were neutralized by the system used by                    as close as possible to prices prevailing in the
      the company which consisted of drawing up                        reference country. Therefore, the fact that Uruguay
      accounts using 'ajustes para inflation operativa'                did not export beach slippers to the Community is
      fixed by the Uruguayan authorities.                              irrelevant.
 ---pagebreak--- 28 . 12. 90                             Official Journal of the European Communities                            No L 365/29
                                                                                           D. COMPARISON
       With regard to Bangladesh, as stated at point 14
       above, according to the information obtained by
       the Commission, its production is too recent to
       constitute a suitable reference within the context of
                                                                   (24)  In its comparison of normal value and export
       this investigation .                                              prices, the Commission took account, in accor­
                                                                         dance with Article 2 "(9) and (10) of Regulation
                                                                         (EEC) No 2423/88, of differences affecting price
(22)   As a result, the Commission concluded that it was                 comparability.
       appropriate and reasonable to establish the normal
       value on the basis of the constructed value in
                                                                         The comparison was made at the ex-works stage on
       Uruguay, adjusted so as to take account of all the                an overall basis for the whole of the reference
       differences affecting price comparability and parti­              period. The necessary adjustments were made :
        cularly with regard to the physical characteristics,
        adding the costs involved in vulcanizing the soles.              — in the case of the normal value, on the basis of
                                                                              the data obtained in the course of the investiga­
                                                                              tion in Uruguay relating, inter alia, to inland
                                                                              transport, the costs of insurance, handling and
                                                                              packaging, financing costs and selling
        (b) Export prices                                                     expenses ;
                                                                         — in the case of the export prices, and in the
(23)    Export prices were established on the basis of the                    absence of data from the Chinese exporters, on
        prices actually paid or payable for products                          the basis of the data available relating, inter
        exported to the Community.                                            alia, to freight rates, insurance, handling,
                                                                              inland transport and packaging costs, financing
                                                                              costs and selling expenses.
        In this regard, the Commission established that the
        prices indicated by the two importers which coope­
        rated in the investigation could not be regarded, on
        their own, as significant because of the small quan­                            E. DUMPING MARGIN
        tities involved (only about 3 % of total imports).
                                                                    (25) The preliminary examination of the facts shows
        The Commission accordingly considered that, in                    that exports of beach slippers effected by the
        order to determine the export prices of the beach                 Chinese exporters are being dumped. The dumping
        slippers, it was appropriate to calculate a weighted              margin is equal to the difference between the
        average of the prices payable as stated by the                    normal value established for medium-sized beach
        Chinese exporters (which made no distinction                      slippers and the price on export to the Community,
        between the 'Type A' and the Type B' slippers) and                and amounts, on a weighted average basis, to
        the prices paid as indicated by the importers which               93,3 % of the free at frontier value at the Commu­
        cooperated in the investigation.                                  nity frontier of imports of the product in question
                                                                          originating in the People's Republic of China, for
                                                                          the Chinese exporters taken as a whole.
        Although the volume of beach slippers thus taken
        into account represents only about 30 % of total
        imports, the said data was preferred to the figures
        shown in the official statistics of the Community in
        so far as the latter combine the data relating to                                      F. INJURY
        beach slippers with that relating to other footwear
        which cannot be regarded as like products.
                                                                          (a) Volume and price of imports
        In addition, the Commission took the view that
        establishing a weighted average that was valid for                (i) Volume of dumped imports
        both types of beach slipper was a suitable and
        reasonable method since most of the available data          (26) As indicated above (at points 9 and 23) there is no
        made no distinction between 'Type A' and 'Type B'                 specific CN code for beach slippers (hence the 'ex'
        slippers. As far as sizes were concerned, the                     headings). Eurostats therefore aggregate beach slip­
        invoices examined at the premises of the importers                pers with other footwear and the resultant data
        which cooperated showed that most of the trade                    must be qualified. With the assistance of the
        was in medium-sized slippers and that the said data               Member States, these statistics were rectified and it
        was, accordingly, compatible with that obtained in               was possible to bring them more in line with the
        order to establish the normal value .                             actual level of beach slipper imports. In addition,
 ---pagebreak--- No L 365/ 30                         Official Journal of the European Communities                                 28 . 12. 90
     the China Chamber of Commerce communicated                      other third countries, were imported into the
     to the Commission the Chinese export statistics                 Community between 1985 and 1988 .
     with which it was possible to confirm, at least in
     part, the rectifications made.                                  According to the information obtained by the
                                                                     Commission, the quantities in question do not
(27) On the basis of the raw data shown in the Euros­                generally relate to sales of beach slippers but
     tats, imports originating in the People's Republic of           mainly to supplies of other footwear (for example,
     China more than doubled between 1985 and 1988                   slippers with rubber soles).
     (rising from 29,25 million pairs in 1985 to 35,98
     million pairs in 1986, 69,21 million pairs in 1987              On this basis China can be considered as by far the
     and 68,83 million pairs in 1988).                               major if not strictly speaking the solethird country
                                                                     supplying beach slippers to the Community. The
                                                                     Commission therefore felt that other third coun­
     The rectified Eurostats figures, which are available            tries were responsible for such small quantities (as
     for 1986, 1987 and 1988 only, also show that                    can be seen from French statistics which draw a
     imports from China increased substantially, but                 distinction between 'beach slippers' and 'other foot­
     slightly less so, from 28,56 million pairs in 1986 to           wear') that they can be disregarded.
      59,27 million pairs in 1987 and 56,34 million pairs
     in 1988 .
                                                                     The Commission therefore considered that a rea­
                                                                     sonable basis for calculating total sales of the
     The latter figures are partially confirmed by the               product in question on the Community market was
     Chinese export statistics which show that Chinese               to add up Chinese imports and Community produ­
                                                                     cers' sales .
     deliveries rose from 21,89 million pairs in 1985 to
     28,19 million pairs in 1986, 54,30 million pairs in
      1987 and 36,85 million pairs in 1988 .
                                                                     (iii) Market share of dumped imports
     The only significant discrepancy between the               (29) On the basis indicated in the above paragraph, it
      Chinese statistics and the rectified Eurostats figures         transpires that the Chinese exporters' market share
     relates to 1987 and 1988 . The reason for this may              has risen substantially, from 64 % in 1985 to 84 %
      lie in the interval between the shipments (in 1987)            in 1988 .
     and the collection of data relating to imports into
      the Community (in 1988). However, this discre­
      pancy does not call in question the general trend              This increase of over 30 % in the Chinese expor­
     brought to light.                                               ters' market share between 1985 and 1988 must
                                                                     also be looked at in the light of the increase of over
                                                                     50 % in Community consumption in the same
     The Commission therefore considers that a reaso­                period.
     nable estimate of the increase in volume of imports
      of beach slippers originating in the People's Repu­
      blic of China is as follows :                                  (IV) Prices
     — for the period 1985-88 : approximately 70 %              (30) During the investigation it became clear that a
          (on the basis of the statistics supplied by the            distinction should be drawn between two types of
          Chinese Chamber of Commerce) ;                             beach slippers, sold on the Community market at
     — for the period 1986-88 : approximately 65 %                   very different prices :
          (midway between the percentage resulting from
          the export figures of the People's Republic of             (a) the traditional or standard beach slipper (with
          China and that resulting from the rectified                     an upper made of plain canvas or with simple
          Eurostats figures).                                             woven or printed decorations such as coloured
                                                                          patterns or stripes), accounting for over 90 % of
                                                                          Community production and an even higher
      In both cases the rate of increase is substantial.                  percentage of Community consumption ;
                                                                     (b) a more elaborate product, hereafter called 'fancy
                                                                          beach slippers' (with an upper made of a special
     (ii) Volume of imports originating in other third                    weave and/or made of a more special fabric
           countries                                                      than cotton canvas, which may also have deco­
                                                                          rations such as laces, elastic or inset or embroi­
                                                                          dered patterns) accounting for less than 10 % of
(28) Eurostats indicated that products falling within CN                  Community production and an even smaller
     codes 6404 1 9 90 and 6405 20 99, originating in                     percentage of Community consumption.
 ---pagebreak--- 28 . 12. 90                            Official Journal of the European Communities                            No L 365/31
       Although the Chinese exporters representatives                   Community producers it emerged, however, that
       admitted that they also supplied the Community                   capacities could be reasonably established.
       market with fancy beach slippers, they said that the
       market share was minimal (which did not justify
       their being taken into account in calculating the          (35)  Overall, Community producers still in business at
       margin of dumping, besides which the Chinese                     the time of the investigation, slightly increased
       exporters had provided no precise information                    their production capacity between 1985 and 1988,
       about them). The Commission therefore decided                    because of improvements in installations or, in a
       that for price comparison purposes, sales of fancy               few cases, because of purchasing machines from
       beach slippers by Community producers should be                  other Community producers who had shut down.
        disregarded.
                                                                        Calculated on the basis of the capacity actually
                                                                        available each year from 1985-88 , Community
(31 )   During the period 1985 to 1988 Chinese exporters                producers' rate of capacity utilization fell steadily
        taken overall reduced their selling prices by about             between 1985 and 1988, from 71 % in 1985 to
        35 % .
                                                                        64 % in 1986, 67 % in 1987 and 43 % in 1988 .
(32)   To calculate the differences in selling prices in the
        Community between beach slippers from China                     (iii) Stocks
        and those produced in the Community, the
        Commission compared the average price of
        products imported from China (free at Community            (36) As beach slippers are seasonal products, generally
        frontier, cleared through customs) and the weighted             sold to wholesalers and retailers at the beginning of
        average price of standard beach slippers sold to                the year, the Commission saw nothing unusual in
        wholesalers by Community producers. This method                 stocks being generally high at the end of each
        was deemed appropriate as Chinese exporters sell                accounting year and felt that the size of these
                                                                        stocks should therefore not be taken into conside­
        to importers who act as wholesalers on the market.               ration.
        This comparison showed that the Community
        producers had been unable to follow the prices set              (iv) Sales
        by the Chinese exporters since price undercutting
        during the reference period had reached 181 % .
                                                                   (37)  Community producers' sales on the Community
                                                                         market were as follows : using the index 1985 =
                                                                         100 as a basis, sales went from 98 in 1986 to 105 in
                                                                         1987 and 72 in 1988 . This trend (a fall of 28 %
        (b) Other economic factors to be considered                      between 1985 and 1988) concerns only those
                                                                         manufacturers still in business at the time of the
                                                                         investigation. The overall loss would therefore be
                                                                        both greater and steadier (40 % between 1985 and
        (i) Production                                                   1988) if the sales of producers who went out of
                                                                         business during the period 1985-88 were also taken
                                                                         into consideration .
 (33)   The Commission found that Community produc­
        tion of beach slippers had developed as follows :
        using the index 1985 = 100 as a basis, production                (v) Market share
        reached 94 in 1986, 103 in 1987 and 67 in 1988 .
        These figures, based solely on the production
         figures of those beach slipper manufacturers still in     (38)  Calculated on the same basis as for China,
        business at the time of the investigation, reveal :              Community producers' market share fell from
                                                                         36 % to 29 % in 1986, 17 % in 1987 and 16 %
        — a temporary improvement in production in                       during the reference period, while the volume of
             1987, owing to an increase in demand, followed              transactions in the Community rose between 1984
                                                                         and 1988 .
             by a major drop in 1988 ;
        — a drop of about 30 % between 1985 and 1988 .
                                                                         (vi) Prices
        (ii) Capacity utilization
                                                                   (39)  Having seen their market share fall steadily
                                                                         between 1985 and 1988, Community producers
 (34)   The complaint indicated that the concept of                      gave up trying to match the prices charged by the
         production capacity could not be applied to the                 Chinese exporters in order to avoid suffering irre­
         sector in question. During on-the-spot checks of                versible financial losses.
 ---pagebreak--- No L 365/32                           Official Journal of the European Communities                               28 . 12. 90
      They did, however, try to make standard beach slip­             G. CAUSAL LINK BETWEEN THE INJURY AND
                                                                                   THE DUMPED IMPORTS
      pers more attractive (for example by developing
      new fabrics). As a result of these efforts, they
      managed to maintain or slightly increase their
      prices during the period 1985-88 .
(40)  Using the index 1985 = 100 as a basis, the price of       (45)  The Commission examined the extent to which the
      standard beach slippers was 106 in 1986, 102 in                 injury to the Community industry had been caused
      1987 and 106 in 1988 . This increase was very                   by the effects of dumping. It emerged that the drop
      moderate considering the rise in the price of raw               in the Community industry's market shares and
      materials during the same period.                               profit margins had coincided with the increase in
                                                                      the volume of imports of beach slippers from
                                                                      China. Since prices are an important factor in sales
                                                                      of these products, the considerable price undercut­
      (vii) Profits                                                   ting by the Chinese products had a direct effect on
                                                                      the Community industry's volume of sales.
(41 ) The Commission found that the financial results
      achieved by Community industry, which overall
      showed a very slight profit between 1985 and 1987,         (46) with regard to the closures referred to at point 42,
      had seriously deteriorated in 1988, a year in which             the Commission considers that shut-downs which
      the sector suffered losses. These losses were caused            took place between 1985 and 1988 are not strictly
      by the major drop in sales sustained during the                 speaking linked with the market situation created
      reference period.                                               by imports of Chinese beach slippers. Although
                                                                      information available is incomplete it appears that
                                                                      an equally significant factor in the closures was the
                                                                      restructuring and modernization of the sector in
      (viii) Activity and employment                                  the 1980s.
(42)  The complaint referred to the closure of several
      firms and claimed that these shut-downs were a                  The Commission is, however, of the opinion that
      source of injury.                                               the job losses incurred by producers who remained
                                                                      in business were due, at least partially, to the drop
                                                                      in their sales, which itself can be attributed to
(43)  With regard to the employment situation of produ­               massive imports of Chinese beach slippers sold at
      cers still in business at the time of the investiga­            dumped prices.
      tion, the Commission found that the staff they
      employed had been cut by over 20 % during the
      period 1985-88, and they had also been obliged to
      introduce occasional short-time working.                   (47) Only the Chinese exporters gained by the increase
                                                                      in consumption seen in the Community from 1985
                                                                      to 1988 because of the prices at which they sold
      The Commission is of the opinion that even if                   their beach slippers. At the same time Community
      some of these staff cuts are linked with improved               producers' sales volume and market share dimi­
      productivity, they are to a large extent due to the             nished which meant that they were not only
      fall in production and sales.                                   prevented from taking advantage of the expansion
                                                                      of the market but they also lost market shares that
                                                                      they had held for several years.
      (c) Conclusion                                             (48) Imports of beach slippers from other third coun­
                                                                      tries are unlikely to be responsible for the injury
                                                                      sustained by the Community industry as the
(44)  On the basis of the information examined the
                                                                      volume of imports is marginal, of no comparison
      Commission is of the    opinion that the Community              with the quantities exported by China, and has
      industry is in a very   bad state, mainly because of            virtually no effect on the market.
      the considerable drop   in production and in the rate
      of capacity utilization and the significant reduction
      in the volume of sales and market share.
                                                                 (49) The Chinese. Chamber of Commerce and Commu­
                                                                      nity importers' associations claimed that another
      Although it has managed to maintain its price                   cause of injury lay in the competition exerted by
      levels, the Community industry has suffered losses              certain substitute products, sales of which rose
      and is therefore sustaining major injury.                       during the period 1985-88 .
 ---pagebreak--- 28 . 12. 90                             Official Journal of the European Communities                            No L 365/33
       In this connection the Commission would point              (53)  The importers associations put forward two main
       out that the consumption of beach slippers not                   arguments with regard to Community interest.
       only did not drop but on the contrary increased in
       the period 1985-88 .
                                                                        The first was that maintaining a source of low­
                                                                        priced supplies was in the consumers' interest.
        In these circumstances the Commission cannot
        reasonably accept the argument whereby the
        increase in sales of other footwear, possible substi­           The strength of this argument is called in to ques­
        tutes for beach slippers, but not like products, had            tion by the Commission's findings according to
        caused injury to the Community beach slipper                    which the benefits of low-priced imports were not
        industry.                                                       necessarily passed on to the final consumers but
                                                                        often went no further than the traders themselves .
        In any event, the Commission considers that even                It should also be borne in mind that the recent
        if part of the injury suffered by the Community
        industry could be attributed to substitute products,            price advantages that consumers have occasionally
        the dumping found would still be responsible for                enjoyed are the result of unfair commercial prac­
        injury, which is itself considerable.                           tices and there is no justification for allowing them
                                                                        to continue.
(50)    No likely cause of the injury, other than the
        dumped imports, has been put forward.                           The price of Chinese beach slippers has fallen
                                                                        dramatically over the last few years and the slight
                                                                         increase brought about by anti-dumping measures
(51 )   The Commission therefore concludes that the                     will at most bring prices up to their previous level.
        serious injury sustained by the Community                        In any event, Chinese products will remain a lot
        industry was caused by dumped imports of beach                   cheaper than those produced in the Community
        slippers originating in the People's Republic of                 and they will not be prevented access to the
        China.                                                           Community market.
                                                                        The measures in question will not, therefore,
                                                                         prevent imports from playing their beneficial role
                                                                         for consumers. On the contrary such measures
                                                                         should result in increased production and capacity
                     H. COMMUNITY INTEREST
                                                                         utilization by the Community industry which, as a
                                                                         result of lower costs, will be able to limit its price
                                                                         increases or even reduce its selling prices.
                                                                   (54)  The second argument put forward by the importers
 (52)   The purpose of anti-dumping duties is, in general,               was that Community producers did not have the
         to stop distortion of competition arising from                  capacity to satisfy market demand.
         unfair commercial practices and thus to re-establish
         open and fair competition on the Community
         market, which is fundamentally in the general                   The Commission would point out that this capacity
         Community interest.                                             was reduced, at least in part, because of unfair
                                                                         imports.
        With regard to this proceeding, the Commission
         considers that without measures to correct the                  This capacity can therefore be boosted if distortions
         effects of dumped Chinese imports, those firms still            of competition caused by unfair commercial prac­
         producing beach slippers may be forced to shut                  tices are eliminated.
         down completely. It is worth underlining that the
         firms in question are generally sound and competi­
         tive following a decade of radical restructuring and      (55)  In assessing Community interest, the Commission
         modernization .                                                 also took account of the fact that beach slippers
                                                                         originating in China are subject to regional quanti­
                                                                         tative limits. The    Commission considered that
        The Commission feels that it would not be in the                 neither Community law nor international rules
         Community's interest to abandon a structurally                  prevented the imposition of anti-dumping duties
         sound industry at a time when, faced by unfair                  where regional quantitative limits existed, provided
         competition, it is sustaining serious injury which is           that it was established that injury had been caused
         jeopardizing its short-term viability.                          despite these restrictions.
 ---pagebreak--- No L 365/34                         Official Journal of the European Communities                                 28 . 12. 90
     The Commission noted that the quantitative limits                The anti-dumping duty to be imposed should
     in question, which concerned the French, Spanish                 therefore correspond to the margin of dumping
     and United Kingdom markets, had had a limited                    established.
     effect and had made no impact on prices, nor had
     any effect on unfair commercial practices in the
     rest of the Community, which is a major market for               (b) Form of duty
     the products in question.
                                                               (58)   In the light of the economic structure of the expor­
(56) In the light of the above, the Commission                        ters and price variations for very similar models,
     concluded that it was in the Community interest to               the Commission considers that the duty should
     adopt measures to eliminate the injury caused to                 take the form of a variable duty equal to the dif­
     Community production by imports of beach slip­                   ference between price per pair net, free at Commu­
     pers originating in the People's Republic of China.              nity frontier, not cleared through customs, and a
                                                                      floor price established on the basis of the normal
     In order to prevent further injury being caused                  value, which had originally been set for average
                                                                      sizes. However, in order to avoid :
     before the end of the proceeding, the measures
     should take the form of a provisional anti-dumping               — creating a disadvantage for smaller sizes,
     duty.
                                                                      — imposing complicated calculations on impor­
                                                                           ters and the authorities in charge of control and
                                                                           recovery,
                   I. PROVISIONAL DUTY                                this normal value was lowered to the level of the
                                                                      smallest sizes, namely ECU 1,15 per pair, free at
                                                                       Community frontier, not cleared through customs.
                                                                      This minimum price of ECU 1,15 will therefore
     (a) Level of duty                                                 constitute the basis for calculating the variable duty
                                                                       and will apply to all sizes.
(57) In order to determine the level of the provisional
     duty the Commission took account of the margin
     of dumping and the amount of duty needed to
     eliminate the injury.                                                           J. FINAL PROVISIONS
     To this end it compared the weighted average              (59)    In the interests of proper management, a reason­
                                                                       able period should be fixed within which
     selling price of Chinese beach slippers during the                concerned parties may make known their views in
     reference period (on a free-at-Community frontier
                                                                      writing and request a hearing from the Commis­
     basis, plus customs duties and clearance charges)                 sion,
     with the average weighted production cost of stan­
     dard beach slippers produced during the same
      period by Community manufacturers which had
     been the subject of on-the-spot checks, plus a
                                                               HAS ADOPTED THIS REGULATION :
     reasonable profit margin.
     7 % of the target price thus established was consi­                                  Article 1
     dered a reasonable profit margin, which appeared
     to be the minimum needed to allow a beach
     slipper producer to keep his plant working in              1 . A provisional anti-dumping duty is hereby imposed
     acceptable technical conditions and give him a rate       on imports of espadrilles (beach slippers) originating in
     of return on invested capital close to that generally     the People's Republic of China falling within CN codes
     required in the sector in question.                       ex 6404 19 90 (Taric code 6404 19 90 * 10) and ex
                                                               6405 20 99 (Taric code 6405 20 99 * 10).
     On this basis the Commission found a considerable
                                                               2. The amount of the duty shall be equal to the dif­
     price difference. Expressed as a percentage of the        ference between the sum of ECU 1,15 per pair and the
     free-at-Community frontier price, not cleared             price per pair net, free at Community frontier, not cleared
     through customs, this price difference amounted to        through customs.
     221 % .
                                                               The free-at-Community-frontier price shall be net if the
     It therefore transpires that the margin of dumping        effective conditions of payment are such that payment is
     established, also expressed as a percentage of the        made in the 30 days following the date of arrival of the
     free-at-Community-frontier price, not cleared             goods in the customs territory of the Community. It shall
     through customs, is much lower than the percen­           be reduced by 1 % for each extra month's delay in
     tage needed to eliminate the injury.                      payment.
 ---pagebreak--- 28 . 12. 90                          Official Journal of the European Communities                            No L 365/35
3. For the purposes of this Regulation footwear with           point of view in writing and request a hearing from the
plaited fibre soles, whether or not strengthened with          Commission within one month of this Regulation enter­
rubber or plastics over a variable surface, with a sole of     ing into force.
uniform thickness not exceeding 2,5 cm, shalt be consi­
dered as beach slippers.
4.    The provisions in force with regard to customs                                      Article 3
duties shall apply.
5. The release for free circulation in the Community of        This Regulation shall enter into force on the day follo­
the goods mentioned in paragraph 1 shall be conditional        wing that of its publication in the Official Journal of the
on the deposit of a security equivalent to the amount of        European Communities.
the provisional duty.
                        Article 2                               Subject to Articles 11 , 12 and 14 of Regulation (EEC) No
                                                                2423/88, it shall apply for four months unless the Council
Without prejudice to Article 7 (4) (b) of Regulation (EEC)      adopts definitive measures before the expiry of this
No 2423/88, concerned parties may make known their              period.
                This Regulation shall be binding in its entirety and directly applicable in all Member
                States.
                 Done at Brussels, 21 December 1990.
                                                                         For the Commission
                                                                          Frans ANDRIESSEN
                                                                             Vice-President