CELEX: 51998PC0619
Language: en
Date: 1998-10-29
Title: Proposal for a Council Regulation (EC) imposing a definitive anti-dumping duty on imports of gas-fuelled, non-refillable pocket flint lighters originating in Japan

COMMISSION OF THE EUROPEAN COMMUNITIES
                                             Brussels, 29.10.1998
                                             COM(1998) 619 final
                            Proposal for a
                  COUNCIL REGULATION (EC)
      imposing a definitive anti-dumping duty on imports of
gas-fuelled, non-refillable pocket flint lighters originating in Japan
                   (presented by the Commission)
 ---pagebreak---  ---pagebreak---                        EXPLANATORY MEMORANDUM
i. Attached is a proposal for a Council Regulation maintaining the 1991 definitive
   anti-dumping duly on imports of gas-fuel led, iion-rcllllublc pocket Hint lighters
   originating in Japan.
2. The review investigation was initiated on 30 November 1996 under
   Article 11(2) and 11(3) of the Basic Anti-dumping Regulation. In accordance
   with Article 11(2) the measure remains in force pending the outcome thereof.
3.  The proposal to maintain the definitive anti-dumping duty is essentially based
   on the existence of huge idle capacity at the exporter's plant in Japan, and the
   likelihood that the Community industry would suffer serious injury if that
   capacity were used for exports to the European Community, especially if the
   prices of such exports undercut the Community industry's prices by 43 %
   (established for the investigation period) or more. In this regard the existence of
   a plant in Mexico, developed by a subsidiary of the exporter almost immediately
   after the imposition of the measure under review, and the subsequent imposition
   of an anti-dumping measure (price undertaking) on imports originating in
   Mexico in March 1997, were also taken into account.
4.  The co-operating interested parties were informed of the essential facts and
   considerations on the basis of which the Commission services intended to
   recommend that the definitive anti-dumping duty be maintained at its current
   level. Subsequent to this disclosure no comments were received which could
   alter these facts and considerations.
5. The Anti-Dumping Advisory Committee was consulted in April 1998. The
   proposal of the Commission services was not approved by an absolute majority;
   however, six Member States (Belgium, France, Greece, the Netherlands,
   Portugal and Spain) voted in favour of it.
^  The consultation was followed by an exchange of views in writing on the issues
   raised by Member States that had not voted in favour of the proposal of the
   Commission services.
   As the investigation exceeded the normal duration provided for in Article 11(5)
   by almost a year and since this delay cannot be attributed to any of the co-
   operating parties, the proposal makes provision for the duration of the
   maintained measure to be reduced by one year. This approach is in conformity
   with the Judgment of the Court of First Instance of 8 July 1998 (Case T-232/95,
   Committee of European Copier Manufacturers (CECOM) v. Council of the
   European Union).
                              A
 ---pagebreak---                                               Proposal for a
                              C
                                ^ ) l , N ( 1 L K.^C]JI -ATK )N (fC)
               imposing a definitive anti-dumping duty on imports of
       gas-fiullcd, iion-refillabk* pocket flint lighters originating in .Japan
TI IE 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 Articles 11 (2) and (3) thereof,
Having regard to the proposal submitted by the Commission after consulting the
Advisory Committee,
Whereas:
                                         A.      PROCEDURE
                                       1.      Measures in force
(1)   By Council Regulation (EEC) No 3433/91 (2), hereinafter referred to as the
      "definitive duty Regulation", the Council imposed a definitive anti-dumping
      duty on imports of gas fuelled, non-rellllable pocket Hint lighters originating in
      Japan, the People's Republic of China, the Republic of Korea and Thailand. As
      regards Japan, the duty rate was set at 35.7 %.
      OJ No L 56, 6. 3. 1996, p. 1. Regulation as amended by Regulations (EC) No 2331/96 (OJ No L
      317,6. 12. 1996, p. 1) and (EC) No 905/98 (OJ No L 128,30.4. 1998, p. 18).
      OJNoL326, 28. II. 1991, p. I.
                                                     «b^
 ---pagebreak---  (2)   The definitive duly Regulation was amended with respect to China in 1995 (l).
      In as far as Thailand is concerned, it was replaced by Council Regulation (EC)
     No 423/97 in March 1997 (4).
                                2.    Initiation of a review
(3)  In May 1996 the Commission published a notice of the impending expiry of the
     measures in force concerning Japan and the Republic of Korea (5). After this
     publication, the Commission received a request for a review pursuant to Article
      11(2) of Council Regulation (EC) No 384/96 (6), hereinafter referred to as the
     "Basic Regulation", with regard to imports of gas-fuelled, non-refillable pocket
     Hint lighters originating in Japan, lodged by the European Federation of Lighter
     Manufacturers on behalf of BIC S.A. and Hamagas S.A.. Subsequently this
     request received the support of Swedish Match S.A.. BIC S.A., Flamagas S.A.
     and Swedish Match S.A. represent almost the totality of Community production
     of the product concerned.
(4)  The request contained sufficient prima facie evidence that the expiry of
     measures would be likely to result in a recurrence of dumped imports causing
     injury. Evidence of the presence of under-utilised capacity in Japan as well as
     evidence that imports from Japan would have an immediate depressing effect on
     the prices of the Community producers supported this alleged likelihood. It was
     further alleged that this situation would exacerbate the continuing vulnerability
     of the Community industry.
      Council Regulation (EC) No 1006/95, OJ No L 101, 4. 5. 1995, p. 38
      OJNoL65, 6. 3. 1997, p. I.
      OJNoC 155,30.5. 1996, p. 6.
      OJNoL56, 6. 3. 1996, p.I.
 ---pagebreak--- (5) Therefore, the Commission announced the review of the definitive duty
    Regulation in respect of Japan (7). This review was opened in accordance with
    Articles 11(2) and 11(3) of the Basic Regulation, as an interim review also
    seemed to be appropriate. As regards Korea, the measure was allowed to
    expire (8).
                              3.       Review investigation
(6) The Commission officially advised the only producer in the exporting country
    known to be concerned, Tokai Corporation, its related importer in the
    Community, Tokai Seiki GmbH, the representatives of the exporting country
    and the complainants.
(7) The parties directly concerned were given the opportunity to make their views
    known in writing and to request a hearing. One of the complainants requested
    and was granted a hearing.
(8) The Commission sent questionnaires to all parties known to be concerned and
    received detailed information from the complainant Community producers, their
    subsidiaries, the Japanese exporter and its related importer located in the
    Community.
(9) The Commission sought and verified all information it deemed necessary for the
    purpose of the investigation and carried out verifications at the premises of the
    following companies:
    OJNoC361,30. II. 1996, p.3.
    OJ No C 360 of 29. 11. 1996, p. 2.
 ---pagebreak---      ( 'ommunHy producers and their subsidiaries
     - BIC S.A. (the BIC group), Clichy, France,
     - BIC BJ 75, Redon, France,
     - BIC Deutschland GmbH & Co., Ettlingen, Germany,
     - BIRO BIC Ltd, London, UK,
     - Laforest BIC S.A., Tarragona, Spain,
     - Swedish Match Lighters B.V., Assen, Netherlands,
     - Swedish Match Lighters (including Cricket SA), Rillieux-la-Pape, France,
     - Arnold André GmbH & Co., KG, Blinde, Germany,
     - Flamagas S.A., Barcelona and Llinas del Valle, Spain.
     Producer in the country of origin
     - Tokai Corporation Japan, Tokyo, Japan.
(10) For the purpose of the dumping, injury and Community interest determinations,
     the geographical scope of the investigation was the Community of 15.
(11) The investigation of dumping covered the period from 1 January 1996 to 30
     September 1996 (hereinafter referred to as the 'investigation period'). The
     examination of injury covered the period from 1992 up to the end of the
     investigation period.
 ---pagebreak--- (12) The investigation exceeded the normal time period provided for in Article 11(5)
     of the Basic Regulation. This was due to the fact that the Commission
     considered that the data gathered and examined initially were not sufficient to
     be used as a basis for a new anti-dumping duty and that, for an accurate
     assessment of the likelihood of recurrence of injurious dumping, a verification
     visit to the exporter had to be carried out at an advanced stage of the
     investigation, faking into account thai Article I 1(5) protects the interests of the
     exporter and that, since the anti-dumping measure under review remained in
     force pending the investigation, the extension of the investigation was to its
     detriment, any measure maintained or imposed as a result of the investigation
     should remain in force for a shorter period of time than foreseen by the Basic
     Regulation.
              B. PRODUCT CONCERNED AND LIKE PRODUCT
                                /.   Product concerned
(13) The products under consideration are gas-fuelled, non-refiliable pocket flint
     lighters (hereinafter referred to as "disposable Hint lighters") falling within CN
     code ta 9613 10 00.
 ---pagebreak---      - Request for inclusion of other lighters
(14) It should be recalled in this respect that there are other disposable lighters on the
     market (so called electronic or piezo lighters) which are not subject to anti-
     dumping measures. Two months after the opening of the review investigation,
     Swedish Match S.A. made a request to extend the scope of this review
     investigation to electronic (or piezo) lighters arguing that gas-fuelled, non-
     refillable pocket flint lighters and gas-fuelled, non-re tillable electronic lighters
     (hereinafter "electronic lighters") were forming one single category of product.
(15) As regards this request, it should be recalled that the proceeding - opened in
     April 1990 - concerns gas-fuelled, non-refillable pocket flint lighters and that it
     has already been assessed (9) that the (basic) technical characteristics of
     electronic lighters were quite different from those of the disposable flint lighters
     currently subject to anti-dumping duties. The request did not contain any
     evidence showing that this conclusion was no longer appropriate. In particular,
     it did not show any changes in the (basic) technical characteristics, such as the
     ignition system, of either type of lighters, which could have invalidated the
     findings of the definitive duty Regulation.
(16) As the evidence that was presented was insufficient to justify the inclusion of
     electronic lighters in the investigation, and the request was made belatedly by a
     party that had supported the request for a review without reservation, the request
     for an extension of the scope of the review investigation could not be granted.
        See in particular Council Regulation (EEC) No 3433/91 which confirms the provisional
        findings laid down in recital 11 to Council Regulation (EEC) 1386/91 (OJ No L 133, 28. 5.
        1991, p. 20).
 ---pagebreak---      - Different sizes and models
(17) Finally, it should be noted that the product under consideration is manufactured
     in different sizes and models. All these disposable Hint lighters have the same
     basic technical characteristics and the same basic application, and perform the
     same function. As in previous investigations, the whole range of models of
     disposable flint lighters was, therefore, considered as forming one single
     category of product.
                                  2.    Like product
(18) As regards the disposable flint lighters produced and sold domestically in Japan,
     the investigation showed that such products were in all respects identical to, or
     closely resembling, those exported to the Community from the country in
     question.
(19) The investigation also established that the disposable flint lighters imported
     from the country concerned, on the one hand, and those produced by the
     Community industry and sold in the Community market, on the other hand,
     possess similar basic technical characteristics and are intended for the same use.
     The disposable flint lighters produced and sold by the Community industry
     should therefore be regarded as like products to those imported from the country
     concerned.
(20) Accordingly, it was concluded that the disposable flint lighters produced and
     sold in the Community, as well as those produced and sold in Japan should be
     regarded as like products, within the meaning of Article 1 (4) of the Basic
     Regulation, to those exported to the Community from Japan.
 ---pagebreak---                                     C. DUMPING
                                 /.     Normal vaine
(21) As in the original investigation, Tokai Corporation was the sole co-operating
     exporting Japanese producer. During the investigation period it sold 20 different
     models of the product concerned on its domestic market. Only two of those
     models were exported to the Community.
(22) It was found that this exporter's overall domestic sales of the product concerned
     during the investigation period were representative since the total volume of
     such sales exceeded the threshold of 5 % of export sales provided for in Article
     2(2) of the Basic Regulation. Domestic sales of each of the two product models
     exported to the Community were also representative because they met the same
     5 % criterion.
(23) In accordance with Article 2(4) of the Basic Regulation the Commission also
     had to determine whether domestic sales of each model were made in the
     ordinary course of trade by looking at the proportion of profitable sales to total
     sales. The investigation showed that all domestic sales made during the
     investigation period were profitable. Consequently, normal value was based on
     the average weighted sales price of all domestic transactions of the two models
     in question.
 ---pagebreak---                                   2.   Export price
(24) The totality of the export sales made by the exporter concerned during the
     investigation period was made to a related company in the Community. The
     export prices were therefore constructed, in accordance with Article 2(9) of the
     Basic Regulation, on the basis of resale prices to the first independent buyer
     adjusted to take account of all costs incurred between importation and resale
     including customs and anti-dumping duties and a 5 % profit margin. The latter
     was established on the basis of the profit margins considered reasonable in this
     business sector for unrelated importers.
(25) Where cost allocations for importers' general administration and selling
     expenses were necessary in the construction of export prices, these were made
     on the basis of turnover.
                       3.   Comparison and dumping margin
(26) In accordance with Articles 2(10) and 2(11) of the Basic Regulation, the
     weighted average normal value per model was compared with the weighted
     average export price per model, at ex-factory level and at the same level of
     trade. For the purpose of a fair comparison, adjustments were granted for those
     differences affecting price comparability for which satisfactory evidence was
     supplied. Thus, adjustments were made in respect of transport, insurance, credit
     and packaging.
(27) The comparison of normal value and export prices showed the existence of
     dumping. The dumping margin expressed as a percentage of the CIF
     Community frontier value of the imports was found to be 208.1 %.
 ---pagebreak---                               I). COMMUNITY INDUSTRY
(28) In the present investigation, Tokai Seiki GmbH, a subsidiary of Tokai
     Corporation, a producer of the product concerned in the Community and the
     only co-operating importer in the Community of disposable flint lighters
     originating in Japan, was not included in the definition of the Community
     industry in accordance with Art. 4 (1) (a) of the Basic Regulation as it was the
     sole importer of the product under consideration and a 100% subsidiary of
      Tokai Corporation Japan.
(29) Disregarding Tokai Seiki GmbH's production, the three Community producers
     which co-operated with the present investigation (including their subsidiaries)
     represented almost the totality of Community production of disposable flint
     lighters. Consequently, these three co-operating Community            producers
     constitute the Community industry within the meaning of Article 4 of the Basic
     Regulation.
                                          E. INJURY
                                  1.     Preliminary remark
(30) In the definitive duty Regulation it was concluded that "the cumulated dumped
     imports from Japan, the People's Republic of China, the Republic of Korea and
     Thailand had caused material injury to the Community industry" (,0). As
      meanwhile the measure concerning the Republic of Korea was allowed to lapse
     and the measures concerning the People's Republic of China and Thailand have
      been amended further to interim reviews ("), the actual impact of imports
      originating in Japan, as well as the possible impact seen from the angle of
      recurrence, had to be examined in isolation.
      Recital 15 to Council Regulation (EEC) No 3433/91 referred to above.
      See recital 2.
 ---pagebreak---                           2.     Consumption in the Community
(31) In order to calculate total apparent consumption of disposable Hint lighters in
     the Community, Community producers' sales in the Community were added to
     the total imports originating in third countries, as declared under CN code
     ex 9613 10 00. An adjustment was made as regards imports originating in China
     for the years 1994 and 1995 (l2). On this basis annual apparent consumption in
     the Community increased by 27%, from 617.7 million units in 1992 to 785.4
     million units in 1996.
                 3.     Factors relating to imports originating in Japan
                                  Volume and market share
(32) From 1992 to the investigation period, imports from Japan plummeted to very
      low levels in absolute terms. The indexed import figures were 100 in 1992, 150
     in 1993, 33 in 1994 and 83 in 1995, while sales of such imports during the
     investigation period represent but 6.1. The market share of imports from Japan
     decreased from around 0.5% in 1992 and 1993 to 0.06 % during the
     investigation period. The anti-dumping measure under review therefore
     effectively limited the impact of dumping of imports of disposable flint lighters
     originating in Japan.
(33) In this context it should, however, be noted that a considerable portion of
     overall imports was dumped. In particular, imports from Mexico, the
     Philippines and Thailand should be mentioned in this regard (,3).
     See recital 46 to Council Regulation (EC) No 423/97 referred to above.
     See Council Regulation (EC) No 423/97 referred to above.
                                                II
 ---pagebreak---                                        Price undercutting
(34) The Commission calculated to what extent the prices charged by the exporter in
     the Community market undercut the price charged by the Community
     producers. As all sales made by the exporter were made to its related importer,
     this comparison was made at the level of sales to the first independent customer,
     and on the basis of the related importer's and the Community producers'
     weighted average selling prices free of all rebates and taxes. The price charged
     by the related importer was not adjusted for anti-dumping duties paid.
(35) The comparison was made at the level of prices to wholesalers (thus excluding
     sales to retailers and the advertising sector). Moreover, the price comparison
     was made for naked lighters (including, however, the lighters the exporter
     presented as 'wrapped') as the exporter had not exported any printed or sleeved
     lighters during the investigation period.
(36) As in the original investigation and in accordance with Article 11(9) of the
     Basic Regulation, the price undercutting calculation was made for lighters with
     a similar gas content (I4).
(37) On this basis it was found that the average price of the imported products
     undercut the weighted average price of the Community producers by 22.9 %
     during the investigation period. This is to be compared with the average
     undercutting of 11.5 % found in the original investigation. It should therefore be
     concluded that the exporter's undercutting level has increased, despite the
     upward effect the anti-dumping duty of 35.7 % must have had on the price
     charged by the related importer.
      See recital 13 to Council Regulation (EEC) No 3433/91 referred to above.
                                                 12
 ---pagebreak---                         4.     Situation of the Community industry
                                           Production
(38) From 1992 to 1996 production by the Community industry increased by 28 %.
                            Capacity and Utilisation of capacity
(39) The capacity utilisation rate increased from 66 % in 1992 to 73 % in 1994, to
     drop to 71 % during the investigation period. This drop coincided, however,
     with an increase in capacity. Although an increase in capacity of almost 25 %
     was reported, the increases in capacity are quite recent as from 1992 to 1994
     capacity did not increase at any material rate.
                                          Sales volume
(40) Sales in units in the Community market by the Community industry increased
     by 33 % from 1992 to the investigation period.
                                          Market share
(41) In a growing market, the market share of the Community industry dropped
     rather steadily from 66.1 % in 1992 to 46.8 % in 1995, after which it increased
     somewhat to 53.6 % during the investigation period. This market share is still
     somewhat lower than the 1990 market share of 57.3 % (|S) but shows that the
     Community industry is beginning to recover from the effects of dumped
     imports.
     See recital 48 to Council Regulation (EC) No 423/97 referred to above.
                                                13
 ---pagebreak---                             Price evolution and total sales value
(42) It was established that weighted average sales prices of the Community industry
     had dropped by almost 8 % from 1992 to the investigation period. The
     favourable development of sales volume was therefore not fully reflected in
     terms of turnover: the value of sales in the Community market increased by only
     23 %.
(43) The lighter market is known to be very price sensitive. This means that faced
     with low priced dumped imports, the Community industry is either forced to
     lower its prices in order to try to maintain market share, production level and
     capacity utilisation, or set to lose market share if it tries to maintain its prices.
                                          Profitability
(44) After several years of losses, the Community industry's return on sales became
     slightly positive in 1991 and deteriorated somewhat in 1992 ("').
(45) For the present investigation 1992 was taken as the basis for comparison. After
     a further deterioration in 1993, the Community industry's financial results have
     steadily improved: compared to 1992, the profit rates more than doubled in
      1994 and more than tripled in the investigation period.
     See recital 55 to Council Regulation (EC) No 423/97 referred to above.
                                                14
 ---pagebreak--- (46) Nevertheless, the data supplied by the Community industry, which for (his
     purpose did not include one of the complainants given that it did not give an
     admissible reply on profitability, show that since 1992 its overall financial
     performance continued to be below the target set as a reasonable profit for this
     industry in the definitive duty Regulation (l7). In fact, profits in 1992 and 1993
     were very small and, although in the following years an improvement was
     noticeable, profits were less than half the non-injurious level set.
                                             Stocks
(47) The Community industry did not build up any significant stocks. It is usual
     practice in this sector to stop production if stocks become too big because of the
     security risks of stocking lighters containing gas for a long period of time.
     Moreover, as rationalisation efforts have been made the overall stocks at the end
     of the investigation period were some thirty percent smaller than those at the
     end of 1992.
                                           Employment
(48) From 1992 to the investigation period, employment in the Community industry
     was stable from 1992 to 1994 and increased by some 17 % since 1995. While
     this could be said to be a sign of recovery, it should be noted that the
     employment figure for 1992 was at its lowest level and had fallen by 13 % since
      1989 (l8). It was noted that a considerable portion of the expansion pertains to
     the sales and administrative segment rather than to production.
     Recital 17 to Council Regulation (EEC) No 3433/91 referred to above.
     See recital 49 to Council Regulation (EC) No 1006/95 referred to above.
                                                15
 ---pagebreak---                                          Exports
(49) The Community industry performed well in export markets. Its sales in units
     steadily increased from 1992 to the investigation period. Over this period export
     sales, which represent approximately 60 % of the Community industry's overall
     production, increased 69 %.
                                   5.    Conclusion
(50) The situation of the Community industry has improved in recent years due to an
     increase of their sales in both the Community market and third countries. This
     development coincided with the imposition of several anti-dumping duties.
(51) The increase in sales in the Community market is most probably due to both the
     growth of consumption and, to a lesser extent, to the beneficial effects of anti-
     dumping measures taken by the Community.
(52) The downward trend of the market share of the Community industry was
     reversed since 1995, but its 53.6 % market share during the investigation period
     is still smaller than the 1992 one.
(53) The increase in apparent consumption and the fact that anti-dumping measures
     were imposed, should normally have had an upward effect on prices in the
     Community market. Nevertheless, the prices of the Community industry were
     found to have decreased by 8 %.
                                           16
 ---pagebreak--- (54) Sales by the Community industry in the Community market proved more
     profitable during the investigation period than in e.g. 1992. However, the prices
     charged by the exporter in the Community market still undercut the Community
     industry's prices after application of the anti-dumping duty and the levels of
     profitability were still much lower than the non-injurious level fixed in the
     definitive duty Regulation.
(55) In the light of the above, it is considered that the Community industry continues
     to suffer injury, notably in terms of profitability and the growth of market share.
     As the market share of imports of disposable flint lighters originating in Japan
     was very small, it was not possible to establish a causal link between the
     dumped Japanese imports and this injury. The injury caused by these imports is
     therefore considered negligible or, in any case, not material.
      F. LIKELIHOOD OF RECURRENCE OF INJURIOUS DUMPING
                                    /.   Introduction
(56) The Community industry requested that the definitive duty Regulation be
     reviewed arguing that there was a likelihood of recurrence of injurious dumping.
     In order to make a determination on this point, a number of factors were
     considered, in particular the exporter's group behaviour, the availability of
     unused capacity at the exporter's plant in Japan, the existence of a price
     undertaking with respect to exports by a company belonging to the exporter's
     group and the price the exporter might charge if the duty were allowed to expire.
     In addition to the examination of the position of the Community industry, the
     impact that resumed exports from Japan would be likely to have on the
     Community industry, the existence of dumping practices and the evolution of
     the share of overall imports in the Community market were examined.
                                            17
 ---pagebreak---                              2.    Exporter 's group belt a viour
(57) In recent years, only small quantities of disposable flint lighters were imported
     from Japan and sold on the Community market, especially when compared to
     imports from several other third countries (primarily China, Mexico, the
     Philippines and Thailand) whose prices were found to be at dumped levels.
     I lowever, the low level of imports originating in Japan has to be considered in
     the light of the Tokai group's behaviour.
(58) The sole exporter in the investigation concerning, inter alia, imports originating
     in Mexico - further to which definitive anti-dumping measures were imposed in
     March 1997 - was a fully owned and controlled subsidiary of the Tokai group
     developed after the imposition of anti-dumping measures on disposable flint
     lighters originating in Japan (,9). The import figures show that imports from
     Mexico have simply replaced those produced (and exported) by Tokai
     Corporation at its Japanese plant, after the imposition of measures on the latter
      in 1991. Indeed, the imported quantities of lighters originating in Mexico are
      similar to the quantities that Tokai Corporation used to deliver to the
      Community market from Japan prior to the imposition of the 1991 measure.
      Moreover, it should be recalled that Tokai Corporation started a downward price
      trend by selling Japanese lighters at dumped prices in the late 1980s. This trend
      was subsequently reinforced by dumping practices of other Asian producers and
      its resumption of dumping through its subsidiary set up in Mexico.
       See recitals 9 and 36 to Regulation (EC) No. 423/97 referred to above.
                                                18
 ---pagebreak--- (59) In the light of the above, the low level of Japanese imports during the
     investigation period cannot lead to the conclusion that these developments,
     which occurred after the imposition of measures in 1991, are the result of
     normal economic behaviour of an exporting producer, i.e. behaviour
     independent of the measures subject to review. As they are, in fact, the result of
     an apparent strategy of the Tokai group, there is clearly a risk that Tokai would
     decide to resume exporting disposable flint lighters to the Community market
     from Japan should measures be allowed to lapse.
(60) It is therefore considered appropriate to lake into account that, as of 7 March
      1997, definitive anti-dumping duties were imposed on imports of disposable
     flint lighters originating in Mexico, the Philippines and Thailand (20) and that
     the Mexican exporter, currently subject to anti-dumping measures, is a
     subsidiary of the Japanese exporter, when examining what is likely to happen if
     the existing measure were allowed to lapse.
                          3.     Japanese production capacity
(61) from 1992 to the investigation period, the exporter's production capacity
     decreased by 54 %. However, in addition to the decrease of production capacity,
     the utilisation rate (expressed in percent) of its remaining capacity also
     decreased by 38 % from 1992 to the investigation period.
     Council Regulation (EC) No 423/97 referred to above.
                                              19
 ---pagebreak--- (62) During the investigation period, unused capacity at the exporter's Japanese plant
     accounted for a bigger quantity than the 56.6 million disposable flint lighters
     Tokai Corporation exported from Japan in 1989 (i.e. the investigation period of
     the original investigation). It was also established that, from 1992 to the
     investigation period, the unused capacity had been rather stable in absolute
     terms, given the concomitant decreases of production capacity and the capacity
     utilisation rate.
            4.    Price undertaking applicable to another group company
(63) The point should be made that, after the imposition of the measure under
     review, the exporter shifted the production of disposable flint lighters destined
     for export to the Community market to Mexico and subsequently offered a price
     undertaking in respect of imports originating in that country when anti-dumping
     measures on these imports were unavoidable in March 1997.
(64) The lapse of the existing measure could therefore bring about sourcing of
     production for the Community market in Japan, given that the price undertaking
     does not apply to imports from that country and that, even without moving
     production lines from Mexico to Japan, the exporter disposed of sufficient freely
      disposable capacity at its Japanese plant to supply the Community market with a
      quantity higher than its 1989 exports. This may in particular occur if the
      exporter would wish to be able to charge lower prices on the Community market
      than allowed for imported products originating in Mexico.
                                            20
 ---pagebreak---         5.    Continuation of dumping and price the exporter might charge
(65) As stated above, during the investigation period, imports of disposable flint
     lighters originating in Japan continued to be dumped. As the imported products
     were sold at prices which were significantly more dumped than in the original
     investigation it appears likely that dumping will continue.
(66) Despite the application of the anti-dumping duty, undercutting of the average
     unit price charged by the Community producers was still significant (22.9 %)
     during the investigation period. If the anti-dumping duty had been deducted
     from the price charged to the first independent customer, the average price of
     the Community industry would have been undercut by as much as 43.1 %.
                       6.     Impact on the Community industry
(67) The price depressing effect of continued dumping during the investigation
     period was minimal, due to the application of the anti-dumping duty and the
     small quantities imported. The exporter had, however, sufficient unused
     capacity to resume exports of disposable flint lighters originating in Japan at
     significant levels, e.g. similar to the quantity imported in 1989 (56.6 million). If
     such a quantity would be sold in the Community market at the same prices that
     the German subsidiary of the exporter charged during the investigation period,
     this would result in substantial downward pressure on prices in the Community
     market and corresponding losses of turnover and market share.
                                            21
 ---pagebreak--- (68) The level of actual losses will depend on the extent to which Tokai Seiki Cnnbl I
      would lower its customer delivered prices charged in the Community market, as
      a result of the anti-dumping duty of 35.7 % being lifted. If these prices would be
      lowered by the entire amount of the anti-dumping duty and imports would be
      56.6 million, the Community industry would suffer an immediate loss of at least
      4.88 % of its 1996 (whole year) turnover in the Community market as a result of
      undercutting alone if they were to lower their price accordingly in order not to
      lose their customers. However, such loss does not include the losses on other
      sales due to the general, widespread price depressive effect of such undercutting
      and does not take into account the impact on the volume of sales, while the
      Community industry is set to lose sales as a result of price undercutting.
(69) The quantity imported from Japan in 1989 would presently represent a market
      share of approximately 7.2 %. This market share is too significant to be without
      any impact on the situation of the Community industry. It was, however, not
      possible to establish with precision what the effect of the removal of the
      measures would be on such factors as market shares, profitability and
      employment of the Community industry as much would depend on uncertain
       factors such as the growth of consumption in the Community and the general
       price depression which may be caused by the resumption of importation of
       significant quantities.
 (70) A global analysis of some specific aspects of the main regional markets in the
       Community was made to assess the impact the importation of significant
       quantities of disposable flint lighters originating in Japan at prices which
       significantly undercut the Community price is likely to have on the Community
       industry.
                                            22
 ---pagebreak--- (71) It was established that competition on the German market was extremely fierce
     as major distributors and, in particular, supermarket chains are usually selecting
     one or two suppliers per product offered in their outlets and thus exercise
     downward pressure on the prices of these suppliers. In this situation even
     minimal price undercutting precludes the Community industry's access to
     distribution networks representing a large number of consumers. The effects of
      future price undercutting would therefore be out of proportion (be it in terms of
     loss of market share or loss of profitability) and would most likely last for an
     extended period of time as access to the distribution network is normally
     granted for long contract periods.
(72) It was also established that at producer level prices in the United Kingdom were
      relatively low and the Community producers were not well established in this
      market. In these circumstances, future price undercutting would impair the
      penetration of Community producers' disposable flint lighters in this already
      difficult market and further reduce the profitability of their sales.
(73) Competition in the Trench market was found to be important due to the very
      presence of the manufacturing plants of two major Community producers but
      price depression appeared less important than in e.g. Germany and the UK. As
      the penetration of imported products was relatively low and the Community
      industry is well established in this market, future price undercutting is likely to
     bring about not only some price depression but also a loss of market shares.
                                           23
 ---pagebreak--- (74) It was also established that two Community producers have production plants in
     Spain and are well established in that market. 'It was found that a very
     substantial part of the Spanish market is supplied by non-Community producers,
     as Spain was the second largest importing Member State in 1995, and prices
     were low compared to France and Germany. As one of the producers established
     in Spain indicated that further rationalisation and cost reduction in its
     production plant was not possible, a loss of a substantial market share or a price
     war in the Spanish market is likely to result in closure of its plant, especially if
     this loss were matched by a similar development in the nearby, important
     French market.
(75) Irrespective of the final destination in the Community of such future imports,
     sales of significant quantities of disposable flint lighters originating in Japan,
     would affect the Community industry's position in such a way that their
     beginning recovery would be severely impaired if not nullified as the
     Community industry would lose sales and market share. As a result of the
     additional price depression caused by price undercutting in respect of this
     quantity, e.g. at the level of the investigation period (43.1 % in the absence of
     anti-dumping duty), the recovery of the Community industry's profitability
     would, moreover, be impaired and the Community producers would probably
     close one or more plants in the European Community.
                      7.    Volume and prices of overall imports
(76) As stated above, the Japanese exporter decided to supply the Community market
     with products manufactured in Mexico, on which anti-dumping measures were
     imposed in March 1997. Therefore, the remedial effect of the measure imposed
     in 1991 was much smaller than it would have been under normal circumstances.
                                           24
 ---pagebreak--- (77) In addition, overall imports of disposable flint lighters increased by 74 % from
      IW2 to the investigation period, an increase much higher than the increase of
      consumption during that period. As a result, the market share of these imports
      increased from 33.5 % in 1992 to 53 % in 1995 and 46.3 % in 1996.
(78) As shown by the successive anti-dumping measures imposed from 1992 to
      1998, there has been a continuous influx of low-priced and dumped imports
      from third countries in the Community market. As a result prices on the
      Community market have continuously dropped to reach low levels: in a growing
      market the prices of the Community industry nevertheless decreased by 8 %
      from 1992 to the investigation period.
                                    8.    Conclusion
(79) After the imposition of the anti-dumping duty, dumping of disposable flint
      lighters originating in Japan continued during the investigation period. It is
      therefore likely that dumping will also continue in the future.
 (80) It is considered likely that, should the measure subject to review be allowed to
       lapse, a resumption of the importation of large quantities of disposable flint
      lighters originating in Japan would cause material injury to the Community
       industry. First of all, because, if one bases oneself on the prices of Japanese
       lighters sold during the IP, the prices of such imports would significantly
       undercut the Community producers' price and thus affect their financial results.
      Secondly, because prices on the Community market are already very low as a
      result of downward pressure on prices, and further downward pressure is
      therefore likely to force the Community industry to sell with a minimal profit
      margin or even at a loss. Thirdly, because the quantities are likely to be big
      enough to impair or nullify the recent recovery of this industry, to endanger its
      economic viability and to cause a loss of crucial markets for the Community
      industry.
                                            25
 ---pagebreak--- (81) In this regard, it should be noted that profit margins have been small for several
     years, that overall imports have shown a disproportionate increase and that, even
      if the exporter's sales of disposable Hint lighters originating in Japan decreased,
      the remedial effect of the measure was undermined by that same exporter's
     decision to supply the Community market with dumped products originating in
     Mexico.
(82) Given this link between the Mexican and the Japanese exporters, and the
     existence of sufficient, freely disposable capacity in Japan, the Japanese
     exporter would not only have the means to supply the Community market, but
     also the option to charge lower prices than permitted by its price undertaking in
     respect of its Mexican production, if the definitive duty Regulation were to be
     allowed to expire. The small market share of imports originating in Japan during
     in particular the investigation period could not invalidate this conclusion on the
     exporter's potential for future exports.
(83) As it was established that there was sufficient unused capacity at the exporter's
     plant in Japan to supply the Community market with significant quantities of
     disposable flint lighters, that the dumped imports during the investigation period
     significantly undercut the Community industry's price, that the Community
     industry is only beginning to recover and its prices dropped some 8 % from
     1992 to the investigation period, it is considered likely that the expiry of the
     measure under review would entail a recurrence of injurious dumping, if the
     exporter would decide to source its exports to the Community at its plant in
     Japan. Given the price competitiveness of the market and the exporter's strategy
     to avoid the anti-dumping duty under review, such a decision does not appear to
     be unlikely.
                                            26
 ---pagebreak---                            C. COMMUNITY INTEREST
                              /.    Community industry
(84) The Community industry has for almost a decade been suffering from low-
     priced and dumped imports of disposable flint lighters. The objective of the
     definitive duty under review, to re-establish fair competition in the Community
     market between the Community producers and their exporting counterparts in
     third countries, has not been fully met as is shown by subsequent developments:
     Tokai itself set up a production plant in Mexico and started exporting from there
     to the European Community at dumped prices, while other third countries -
     more particularly China, the Philippines and Thailand - also resorted to
     dumping. As a result the Community industry has not been able to recover
     entirely, despite its efforts to reduce costs and to benefit from economies of
     scale.
(85) The Community industry consists of two multinational groups selling several
     products other than disposable flint lighters and a relatively small producer,
     which combines the production of disposable flint lighters with a trading
     company.
(86) The Community industry has been making considerable efforts to improve its
     productivity in recent years in an attempt to obtain the lowest possible cost of
     production and to enhance its competitiveness in this price sensitive market.
     Rationalisation efforts were made: the two producing groups have rationalised
     their production process and adapted their structures, the third producer's efforts
     were primarily based on the realisation of economies of scale. New investments
     were also made to improve productivity. However, given that export sales
     increased much faster than sales in the Community and export sales represent
     more than half of the Community producers' sales, the investments in
     production capacity were primarily made for the purpose of supplying markets
     other than the Community market.
                                           27
 ---pagebreak---  (87) Although no closure o\' production plants occurred, this appears due to a
      strategic approach of the producers concerned, supported by the existence of
      anti-dumping measures concerning disposable flint lighters and the development
      of their export sales. In this regard, it should be noted that all three producers
      have profitable activities in other sectors, which provide enough financial
      resources to maintain their production plants for disposable flint lighters for
      some time. It cannot, however, be ruled out that the effects of a discontinuation
      of an anti-dumping measure will provoke the mere closure of any of the
      production plants.
(88) In view of the above, the effectiveness of the Community's measures designed
      to re-establish fair and open market conditions and to protect the Community
      industry against an unfair trading practice is at stake. This major consideration
      apart, there is a serious risk that Community producers put an end to production
      at one or more plants, if the anti-dumping measure were allowed to lapse and
      subsequently injurious dumping of large quantities of disposable flint lighters
      originating in Japan would occur. The impact thereof could be detrimental for
      some, if not all, of the regions in the Community where the plants are
      established.
                                      2.   Importers
(89) As the exporter did not report any direct sales to unrelated parties in the
      European Community and no reaction was received from any importer after the
      publication of the notice of initiation, no unrelated importers of Tokai's lighters
      originating in Japan could be identified.
                                             28
 ---pagebreak--- (90) As regards Tokai's subsidiary in Germany, which is the sole importer of
      disposable flint lighters originating in Japan, it should be noted that it employed
      a very limited number of people as compared to the Community industry. The
      impact on this importer of maintaining the measure under review is therefore
      likely to be minimal.
                                     3.    Consumers
(91) in the original investigation, the importers alleged that the interests of
      consumers would be adversely affected by anti-dumping measures on
      disposable    flint  lighters.    However,   in the present       investigation,  no
      representations of consumers associations were received and there is otherwise
      no reason to assume that a change of circumstances has occurred which could
      invalidate the arguments used in previous investigations to reject this allegation.
 (92) It was therefore concluded that usually importers benefit from low-priced
      imports rather than the consumers and that it is the long-term consumers'
      interest that a wide range of products is offered at fair (rather than extremely
       low) market prices. Moreover, as disposable flint lighters are inexpensive
      products even when sold without dumping and do not therefore constitute a
      major part of any consumer's overall expenditure, consumers are not likely to
      refrain from buying this product if the absolute level of prices is increased
      somewhat.
                                     4.    Conclusion
(93) In view of the above, no compelling reasons not to take action were identified. It
      was therefore concluded that it is in the Community interest to maintain the
      anti-dumping measure on disposable flint lighters originating in Japan to avoid a
      recurrence of material injury to the Community industry caused by dumped
      Japanese imports.
                                             29
 ---pagebreak---                             H. DEFINITIVE MEASURES
                                 /.   Level of measures
(94) As during the investigation period only a very small quantity of lighters
     originating in Japan was sold on the Community market, the market share of
     these imports was very small and, accordingly, the injury caused by such
      imports is considered negligible and, in any case, not material. In view thereof,
     and despite a substantially increased dumping margin, it is considered that the
     data concerning dumping and injury during the investigation period do not
     constitute a proper basis for an upward amendment of the anti-dumping duty.
(95) It was, however, established that dumping had continued after the imposition of
     anti-dumping measures, that the exporter's unused capacity during the
     investigation period was considerable and that, given the existence of a price
     undertaking applicable to the Mexican subsidiary of the exporter, a decision to
     source again production for the Community market in Japan is not excluded, if
     the measures in force would expire.
(96) It was also established that, after imposition of the duty, the prices charged
     during the investigation period still undercut those of the Community industry.
     If significant quantities of disposable flint lighters originating in Japan would be
     sold on the Community market at similar prices, it is considered likely that the
     Community industry would suffer material injury as a result of the price
     depressing effect on prices in the Community market and a loss of sales which
     might well be disproportionate.
                                            30
 ---pagebreak--- (97) In these circumstances, it was established that there is a likelihood of recurrence
      of injurious dumping and it is considered that the current measure should be
      maintained to prevent dumping which would cause material injury to the
      Community industry.
                                  2.     Residual duty
(98) As Tokai Corporation is the sole co-operating exporting Japanese producer,
      whose exports to the Community represented during the investigation period a
      high proportion of total exports of disposable flint lighters from Japan, it is
      considered appropriate to set the duty for any non co-operating companies
      which are not known at present, at the level of the duty set for that producer.
                               3.    Duration of measures
(99) As the length of the review was unusual, the duration of the maintained measure
      should, in this specific case, be fixed in such a way as to balance the rights and
      obligations of all co-operating parties. Given that the extension of the
       investigation was to the detriment of the exporter in that the measure remained
      in force for an additional period of almost one year, the duration should be four
      years rather than the five years that would otherwise have applied.
                                    4.    Conclusion
(100) In view of the considerations and facts stated above, it is considered appropriate
      that the anti-dumping measure concerning the imports of disposable flint
      lighters originating in Japan be maintained at the current rate of duty for a
      period of four years. The new duty should therefore be 35.7 %.
                                            31
 ---pagebreak---                                  I. FINAL PROVISIONS
(101) All interested parties co-operating with the investigation, the complainants, the
      exporter and the Japanese government, received disclosure in writing of the
      essential facts and considerations on the basis of which the Commission
      intended to recommend that the definitive measure be maintained,.
(102) The complainant producers did not submit any written comments and the
      exporter submitted comments of a general nature that did not justify any
      modification of the conclusions brought to its attention.
(103) For the sake of clarity, provision should be made to amend the definitive duty
      Regulation, given that the anti-dumping duly on imports originating in the
      Republic of Korea has lapsed and the present Regulation imposes a definitive
      anti-dumping duty on imports originating in Japan,
HAS ADOPTED THIS REGULATION:
                                           Article I
(1)     A definitive anti-dumping duty is hereby imposed on imports of gas-fuelled,
        non-rcfillable pocket flint lighters falling within CN code ex 9613 10 00 (Taric
        code 9613 10 00* 10) originating in Japan.
(2)     The rate of the duty, applicable to the net, free-at-Community-frontier price,
        before duty, shall be 35.7 %.
(3)     Unless otherwise specified, the provisions in force concerning customs duties
        shall apply.
                                               32
 ---pagebreak---                                          Article 2
        Regulation (EEC) No 3433/91 is hereby amended as follows:
(i)     At the end of Article 1(1) the words "originating in Japan, the People's
        Republic of China and the Republic of Korea" shall be replaced by
        "originating in the People's Republic of China".
(ii)    Article 1(2) shall be replaced by the following:
        "2. The amount of duty shall be ECU 0.065 per lighter."
                                         Article 3
(I )    This Regulation shall enter into force on the day following its publication in the
      Official Journal of the European Communities.
(2)   This Regulation shall remain in force for four years, provided that, should any
      review of that measure be pending on that date, it shall remain in force until that
      review is concluded.
 This Regulation shall be binding in its entirety and directly applicable in all Member
States.
Done at Brussels,               1998.
For the Council
The President
                                             33
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                                                           COM(98) 619 final
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