CELEX: 51994PC0030
Language: en
Date: 1994-03-09
Title: Proposal for a COUNCIL REGULATION (EC) imposing a definitive anti-dumping duty on imports of silicon carbide, originating in the People' s Republic of China, Poland, the Russian Federation and Ukraine

COMMISSION OF THE EUROPEAN COMMUNITIES
                                                             COM(94) 30 final
                                                         Brussels, 09.03.1994
                                     Proposal for a
                           COUNCIL REGULATION (EC)
 imposing a definitive anti-dumping duty on imports of silicon carbide, originating in
    the People's Republic of China, Poland, the Russian Federation and Ukraine
                            (presented by the Commission)
 ---pagebreak---                         Explanatory Memorandum
  By Decision 86/497/EEC, the Commission accepted in October 1986
  price undertakings offered by exporters in connection with the
  anti-dumping proceeding concerning imports of silicon carbide
  originating in Norway, the People's Republic of China, Poland and
  the former USSR.
  In 1991 the Commission received a request for a review of these
  measures under Article 15 of the basic anti-dumping regulation
  (Council Regulation 2423/88), lodged by the European Chemical
  Industry Council (CEFIC), and subsequently announced a review by a
  notice published in official Journal No C 279 of 26.10.1991.
  The review     investigation revealed that, notwithstanding     the
  measures in force, imports of silicon carbide originating in China,
  Poland, the Russian Federation and Ukraine were dumped and were
  continuing to cause injury to the Community industry.
  Imports from Norway were found neither to be dumped nor causing
  injury. It was also found that the lapsing of the existing measures
  with regard to Norwegian exporters would not lead to an imminent
  recurrence of injurious dumping.
* With regard to the former USSR, imports of silicon carbide during
  the period under investigation originated only in the Russian
  Federation and Ukraine. The anti-dumping proceeding concerning the
  other former USSR Republics is consequently terminated.
  In the light of the investigation findings it is considered in the
  interest of the Community to take measures in the form of the
  imposition of an anti-dumping duty.
  The following rates of duty are proposed:
       China                           52.6%
       Poland                           8.3%
       Russian Federation              23.3%
       Ukraine                         23.3%
  The duty for the Russian Federation would be a residual duty as the
   sole Russian exporter, together with the Russian Government, have
  offered undertakings which the Commission considers acceptable.
   It is therefore proposed that the Council imposes a definitive
   anti-dumping duty on imports of silicon carbide originating in the
   People's Republic of China, Poland, the Russian Federation and
   Ukraine.
 ---pagebreak---                                         Proposal for a
                              COUNCIL REGULATION (EC)
    imposing a definitive anti-dumping duty on imports of silicon carbide, originating in
       the People's Republic of China, Poland, the Russian Federation and Ukraine
THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty establishing the European Community,
Having regard to Council Regulation (EEC) No 2423/88 of 11 July 1988 on protection against
dumped or subsidized imports from countries not members of the European Economic
Community(,), and in particular Articles 12, 14 and 15 thereof,
Having regard to the proposal submitted by the Commission after consultation within the
Advisory Committee,
Whereas:
                                     A. PROCEDURE
(1)    In October 1986, the Commission, by Decision 86/497/EEC(2), accepted price
       undertakings offered by the exporters in Norway, the People's Republic of China
       (hereinafter referred to as "China"), Poland and the former USSR, in connection with
       the anti-dumping proceeding concerning imports of silicon carbide. The measures
       concerning Norway were suspended by Council Regulation (EC) No 5/94(3) with effect
       from 1 January 1994.
(2)    Following the publication in April I991(4) of a notice of the impending expiry of the
       measures in force, the Commission received a request for a review lodged by the
       European Chemical Industry Council (CEFIC), on behalf of producers allegedly
       representing a major part of total Community production of silicon carbide.
(i)
       OJ No L 209, 2 8.1988, p. I.
CO
       OJ No L 287, 10 10.1986, p. 25.
(3)
       OJ No L 3, 5 I 1994, p. 1.
(4)
       OJ No C 100, 17.4.1991, p. 17.
 ---pagebreak---      Subsequently, in a notice published in the Official Journal of the European
     Communities'^, the Commission announced a review of the anti-dumping measures
     in force.
(3)  The Commission notified the exporters and importers known to be concerned, the
     representatives of the exporting countries and the complainant Community producers,
     and gave the parties directly concerned the opportunity to make their views known in
     writing and to request a hearing.
(4)  All complainant Community producers replied to the questionnaire and made their
     views known in writing. CEFIC requested and was granted a hearing by the
     Commission.
(5)  The Polish exporter, Intervis Co. Ltd, Warsaw, replied to the questionnaire and made
     its views known in writing. The Norwegian exporters listed below replied to the
      questionnaire only in relation to their export transactions covered by the measures in
      force. Three Chinese corporations, the China Minerals Import and Export Corporation,
     the China Abrasives Export Corporation and the China Metallurgical Import and
      Export Corporation, Jiangu Branch, representing a minor portion of total imports of
      silicon carbide originating in China, replied to the questionnaire. Three export
      organizations of the former USSR were sent questionnaires, but did not reply.
      The original investigation covered the whole of the former USSR. Since information
      at the disposal of the Commission indicates that the silicon carbide concerned
      originates only in the Russian Federation (herinafter referred to as "Russia") and
      Ukraine, this review investigation is limited to imports of silicon carbide originating
      in these two countries of the former USSR.
 (6)  Four importers replied to the questionnaire.
 (7)  The Commission sought and verified all information it deemed necessary for the
      purposes of a determination and carried out investigations at the premises of the
      following companies:
 (5)
      OJ No C 279, 26.10.1991, p. II.
 ---pagebreak---      - complainant Community producers:
        -  Pechiney Electrometallurgie (France)
        -  Elektroschmelzwerk Kempten GmbH (Germany)
        -  Samatec, Societâ Abrasivi e Materiali Ceramics S.A. (Italy)
        -  Navarro SA (Spain)
     - producers/exporters:
        - Arendal Smelteverk AS. (Norway)
         - Norton AS. (Norway)
        - Orkla-Exolon A.S. (Norway)
     - importers:
         - Frank and Schulte GmbH (Germany)
         - Ferrocarbon GmbH (Germany)
     - reference country:
         - Exolon ESK Company, Tonawanda, USA
         - Norton Company, Worchestef, USA
(8)  The investigation of dumping covered the period from 1 Juty 1990 lo 30 June 1991
     (investigation period).
(9)  Owing to the complexity of the investigation and the volume of data gathered, the
     investigation could not be concluded within the normal time limit of ©ne year provided
      for in Article 7(9)(a) of Regulation (EEC) No 2423/88 (hereinafter referred to as "the
     basic Regulation").
           B. PRODUCT UN0ER <3DN!^DÈRAT»0N AM» UB®. PRODUCT
(10) The product covered by the complaint and for which the review investigation was
     initiated is silicon carbide falling within CN code 2849 20 00. It is identical to the
     product which was the subject of the previous investigation and for which price
      undertakings were accepted.
 ---pagebreak--- (11) The production process of silicon carbide is such that output automatically comprises
     a variety of qualities of silicon carbide. These qualities can be segregated into two
     main grades, crystalline and metallurgical. The crystalline grade is normally used,
     depending on the quality, in the manufacture of abrasive tools, grinding wheels, high
     quality refractory products, ceramics, plastic materials etc., while the metallurgical
     grade is normally used in foundry and blast furnace operations as a silicon carrier.
     The various qualities of silicon carbide do not entail any significant differences in
     basic physical characteristics, although in use, differences occur.
     Given that both main grades result from the same production process - one cannot be
     produced without the other - and that the metallurgical grade can technically be
     replaced by the crystalline grade, both grades of silicon carbide and their different
     qualities should be considered as forming one product for the purpose of this
     proceeding.
(12) The investigation showed that the product produced and sold by the Community
     producers on the Community market is identical in its particular characteristics to the
     silicon carbide imported from the five countries in question. It should therefore be
     considered as a like product within the meaning of Article 2(12) of the
     basic Regulation.
                             C. COMMUNITY INDUSTRY
(13) The complainant producers continue to manufacture more than 90% of Community
     output of silicon carbide. It was therefore considered that these producers constitute
     a major proportion of total Community production of this product.
      Account was taken of the fact that some Community producers imported small
     quantities of silicon carbide from the countries under investigation. Since these
     imports were test purchases in order to analyse the products produced by competitors
      and represented, in any event, negligible quantities, there appears no reason to exclude
     these Community producers from the "Community industry", in accordance with
      Article 4(5) of the basic Regulation. Indeed, these importing Community producers
     were neither participating in, nor benefiting from nor shielded from dumping by the
      countries concerned.
 ---pagebreak---           D. THE PRESENT SITUATION IN THE COMMUNITY MARKET
(14) In order to establish whether the expiry of the measures in force would lead again to
     dumping and injury or threat of injury, it was first necessary to examine the present
     economic situation of the Community industry.
(a)  Production, capacity utilization and stocks
(15) The production of silicon carbide by the Community industry showed a brief upturn
     between 1988 and 1989, from 101 500 tonnes to 107 500 tonnes, but then gradually
     declined to 101 700 tonnes in 1990 and to 95 000 tonnes during the investigation
     period. This represented a decrease of 6.4% when compared to 1988, 11.6% when
     compared to 1989 and 6.5% when compared to 1990.
     Since the production capacity of the Community industry remained stable at 129 000
     tonnes, its utilization rate which stood at 79% in 1988 increased to 83% in 1989 to
     decline to 74% in the investigation period.
     During this period the stocks of the Community industry rose gradually from 17 000
     tonnes to 20 500 tonnes, i.e. by 20 6%
(b)  Sales
(16) Between 1988 and the end of the investigation period, the quantity of silicon carbide
     sold on the Community market by the Community industry gradually decreased by
      15% from 93 419 tonnes to 79 385 tonnes.
(c)  Profitability
(17) It was found that the Community industry on the whole suffered a considerable
     deterioration in profitability after 1988. In 1990, although some Community producers
     were still profitable, the industry on average incurred losses, while during the
     investigation period all Community producers incurred losses.
(d)  Employment
(18) The workforce of the complainant producers has generally declined and one plant in
     Italy was closed during the investigation period.
 ---pagebreak--- (e)   Community consumption
(19)  Between 1988 and the investigation period the total estimated consumption in the
      Community of the product concerned increased from 152 977 tonnes to
      185 400 tonnes, i.e. an increase of 21% since 1988.
(f)   Market share of the Community industry
(20)  The Community market share of the Community industry recovered as a result of the
      anti-dumping measures adopted in 1986 from 52.5% in 1984 to 61.1% in 1988.
      However, after 1988 this market share declined to 42.8% at the end of the
      investigation period.
 (g)  Conclusion
 (21) It was accordingly concluded that, in spite of the price undertakings in force, the
      Community industry continues to show clear signs of economic difficulties. This
      situation has consistently deteriorated since 1988, manifested on the one hand by a
      decline of production, capacity utilisation and sales, and, on the other, by increasing
      stocks, loss of employment,financial losses and a declining market share
      notwithstanding the increase in Community consumption.
              E. THE BEHAVIOUR OF THE EXPORTERS CONCERNED
 (22) It was also necessary to examine the behaviour of the exporters concerned.
 (a)  Volume and market share of imports from the exporting countries concerned
 (23) The volume of Norwegian imports increased from 42 035 tonnes to 49 185 tonnes
       between 1988 and 1989, but decreased thereafter to 45 288 tonnes in the investigation
       period. The market share of the Norwegian imports increased slightly between 1988
       and 1989 from 27.5% to 28.8%, but eroded over 1990 to 25.7% and in the
       investigation period to 24.4%.
 ---pagebreak---      Imports from China increased between 1988 and the investigation period from
     1 758 tonnes to 28 295 tonnes; imports from Poland rose over the same period from
     1 276 tonnes to 3 497 tonnes and from Russia and Ukraine from 5 078 tonnes to
     12 921 tonnes. This corresponds to an increase in market share over the same period
     from 1.1% to 15 3% for China, 0.8% to 1.9% for Poland and from 3.3% to 7% for
     Russia and Ukraine. The total volume of imports from China, Poland, Russia and
     Ukraine has accordingly increased by more than four and a half times in this period.
     The market share of the four countries taken together increased from 5.2% to 24.2%
     between 1988 and the investigation period.
     The volume of imports from China, Norway, Poland, Russia and Ukraine has, taken
     together, increased from 50 147 tonnes in 1988 to 90 001 tonnes in the investigation
     period corresponding to an increase in market share from 32.7% to 48.6%.
(b)  Prices
(24) It was investigated whether the exporting producers were undercutting the prices of
     the Community producers during the investigation period. A price comparison was
     made on the basis of sales by both the Community industry and the exporters to
     unrelated customers at the same level of trade on the most important markets of the
     Community. In order to ensure a fair comparison, prices of similar qualities were
     compared.
     This comparison showed significant price undercutting on the part of the exporters in
     all countries involved with the exception of Norway. Norwegian prices were found
     to oscillate around the prices charged by the Community industry.
     For die Polish exporter, the Community producers' prices were found to be undercut
     by margins of up to 29%. Exports from Russia and Ukraine were undercutting
     Community producers' prices by margins from 23% to 49%, and exports from China
     by margins from 50% to 71%.
 ---pagebreak--- (c)   Price undertakings
(25)  This price examination also revealed that the exports from China, Russia and Ukraine
      were consistently sold in violation of the undertakings agreed in the previous
      proceeding with the Commission. Although the Polish exporter was found to be
      undercutting, it did not violate its price undertaking. The Norwegian exporters also
      respected their price undertakings.
(d)   Conclusion
(26)  The increased market penetration of imports from China, Poland, Russia and Ukraine,
      taken together in combination with the price undercutting established for these
      countries and the breach of the price undertakings by all but Norway and Poland, led
      to the conclusion that it was necessary to examine whether dumping is occurring
      which contributed to the deteriorated situation of the Community industry and
      whether the expiry of protective measures would lead to a recurrence of dumping
      and injury.
                              F. RECURRENCE OF DUMPING
 (I)  Reference country
 (27) The countries covered by this proceeding, with the exception of Norway, were, during
      the period of investigation, non-market economy countries (hereinafter referred to as
       "NMEs"). Normal value for these NMEs had therefore to be based on data obtained
       in a market economy country (in accordance with Article 2(5) of the basic
      Regulation). Interested parties suggested several countries including Norway as an
       analogue market for that purpose. Since the Norwegian exporters did not supply
       information relating to domestic prices, cost of production or export prices for all
       grades of the product concerned, Norway could not be used.
       It was determined that the market of the United States of America (hereinafter referred
       to as "the US market") would in this respect be an appropriate and not unreasonable
       choice due to the easy access to raw materials, the availability of competitively priced
       energy, its open and competitive nature and the fact that, in terms of volume and range
       of qualities of silicon carbide, it is considered to be representative in comparison with
       the exports from each individual NME.
 ---pagebreak---      Furthermore, the product manufactured in the USA has the same basic physical and
     chemical characteristics as the product manufactured by all NMEs concerned and can
     therefore be considered a like product.
(II) Normal value
(a)  NMEs
(28) Normal value was determined on the basis of prices in the ordinary course of trade at
     which the silicon carbide was actually sold for consumption on the US market. All
     sales transactions were to unrelated purchasers and involved quantities considered to
     be representative.
     Account was taken of the fact that the companies investigated in the reference market
     were directly or indirectly related to certain silicon carbide producers in the
     Community or in Norway. It was examined whether their relationship had an influence
     on the determination of normal value. Since normal value was determined on the basis
     of sales prices to independent customers on the US market and these prices were
     subject to normal competitive forces, it was concluded that the relationship had no
     influence on the normal value thus determined.
(b)  Norway
(29) No normal value based on prices or costs in Norway could be established as the
     Norwegian producers did not fully cooperate. In view of the similarity of the
     production processes, costs of raw materials, in particular energy costs, and other
     economic circumstances, between Norway and the USA for this product, and the fact
     that in both countries producers are operating on a competitive market, it was
     considered that the prices for this product in the USA constituted the best facts
     available for prices in Norway.
      Normal value for all qualities was therefore established, pursuant to Article 2(3)(a) of
      the basic Regulation, on the basis of the weighted average of the US sales prices. The
      information concerning the production costs of silicon carbide in the USA - increased
      by a reasonable margin for profit (as explained in recital 49) - confirmed the
      reasonableness of the use of the US sales price on the US market.
                                             11
 ---pagebreak---       For the qualities covered by the undertakings accepted from the Norwegian exporters
      concerned, separate normal values were established on the basis of the weighted
      average of the sales prices on the US market of the corresponding qualities.
(Ill) Export prices
(a)   Poland
(30)  Exports by the Polish exporting producer were made directly to independent importers
      in the Community. The export prices were therefore determined on the basis of prices
      actually paid or payable for the products sold.
(b)   China
(31)  The export volume of the cooperating Chinese export corporations represented 22%
      of total Chinese silicon carbide imports into the Community during the investigation
      period. It was considered whether individual company findings should be made for the
      three export corporations referred to in recital 5. Since they are all State-owned
      corporations, individual determinations were not made in conformity with the
      established practice of the institutions, especially since the State can at any time
      interfere in their economic operations. In addition, the percentage of 22% was deemed
      to be too small to be representative of total Chinese silicon carbide exports. Export
      prices of the Chinese export sales were therefore based on the facts available in
      accordance with Article 7(7)(b) of the basic Regulation. Consequently, the data
      supplied by Eurostat was used, from which all costs incurred between the Chinese port
      of loading and CIF Community frontier were deducted.
(c)   Norway
(32)   Since the Norwegian producers supplied information for only part of their exports, an
      average export price for silicon carbide from Norway, irrespective of quality, was
       established on the basis of Eurostat figures.
                                              12
 ---pagebreak--- (d)  Russia and Ukraine
(33) The exporters in Russia and Ukraine, did not cooperate: export prices had therefore
     to be based on the facts available. In this respect, export prices for Russia and Ukraine
     were established on the basis of purchase prices of an independent importer which was
     considered appropriate since it imported during the investigation period more than
     50% of total imports of silicon carbide originating in the countries concerned. These
     purchase prices were at franco destination level. Freight and insurance costs incurred
     were deducted in order to establish an ex-national border price. The data supplied by
     this importer did not permit a distinction to be made between the silicon carbide
     originating in Russia and Ukraine.
(IV) Comparison
(34) For all countries, with the exception of China and Norway, the normal value was
     compared with the export price for comparable qualities, transaction-by-transaction,
     and on an ex-works basis. For the NMEs, ex-factory was taken as ex-national border
     in accordance with normal practice for these countries. No adjustments were claimed
     or deemed necessary in respect of different levels of trade (Article 2(9)(a) of the basic
     Regulation) since the investigation showed that no different price patterns existed on
     the reference market for different types of customers of silicon carbide.
     For the product originating in Russia and Ukraine an adjustment based on detailed
     information supplied by the importer referred to in recital 33 was made to the normal
     value in order to take account of the difference in physical characteristics in
     accordance with Article 2(9)(a) of the basic Regulation.
(35) The average price of all Norwegian export transactions of silicon carbide, based on
      Eurostat figures, was compared on an ex-works basis with the normal value for silicon
     carbide established on the basis of the average price of all transactions on the US
      market, all qualities taken together.
      The export prices for certain qualities reported under the Norwegian producers'
      undertakings were also compared with the sales prices on the US market for the
      comparable qualities. These findings confirmed the results found in the comparison
     of all Norwegian export transactions.
                                              13
 ---pagebreak--- (36) In the case of China, the three exporters which replied to the Commission's
     questionnaire claimed several adjustments for differences in physical characteristics
     and certain selling expenses. Since, as previously mentioned, these exporters were
     deemed to be unrepresentative of total Chinese exports of silicon carbide to the
     Community, it was not possible to determine on the basis of the evidence available
     whether such adjustments were applicable to all exports to the Community. However,
     since it became known from different sources during the investigation that China
     exports predominantly metallurgical silicon carbide, it was considered that in applying
     the provisions of Article 7(7)(b) of the basic Regulation (facts available), it would be
     unreasonable to use an average normal value based on both crystalline and
     metallurgical grades. A normal value based on the average price for metallurgical
     grade only was therefore used . The comparison was made between this normal value
     and the export price as determined above. In so doing, adjustments warranted for
     differences affecting price comparability, in respect of the volume of exports by the
     three Chinese cooperating exporters, have been taken into account.
     Claims for adjustments for differences in cost factors, such as labour, between the US
     producers on the one hand and the Chinese producers on the other were rejected since
     no adjustments other than those resulting from comparative natural advantages can be
     granted. Cost differences, if any, due to the economic system existing in the exporting
     country cannot be taken into consideration as this would negate the purpose of
     Article 2(5) of the basic Regulation of determining normal value on the basis of prices
     or costs in a market economy; however, cost differences resulting from comparative
     natural   advantages   are not    due   to   the  economic    system   existing   in  an
     exporting country.
(V)  Dumping margins
(37) These comparisons showed the following weighted average dumping margins,
     expressed as a percentage of the free-at-Community frontier price:
        China:                                    72.5%
        Norwegian exporting producers:              0.0%
        Poland:                                     8.3%
        Russia.                                   23.3%
        Ukraine:                                  23.3%
                                             14
 ---pagebreak---                            G. RECURRENCE OF INJURY
(38)  In the light of the above analysis and in order to assess the effect of the expiry of
      measures in force, the following was considered:
(I)   Norway
(39)  Although the Norwegian exporters did not fully cooperate, evidence available
      clearly indicates that the Norwegian product is mostly present in the high quality
      market segment, where higher prices prevail.
      In the light of the past pricing behaviour of Norwegian producers which has led
      to prices being kept generally in line with those of Community producers, even at
      the expense of loss of market share, it appeared unlikely that the expiry of the
      undertakings would lead to an imminent recurrence of dumped imports and injury
      caused by Norwegian exporters.
(II)  China, Poland, Russia and Ukraine
(40)  Exporters in these countries sold silicon carbide at high undercutting prices to the
      Community in increasing quantities, without respecting, except for the Polish
      exporter, the undertaking conditions agreed with the Commission.
      Since these imports continued to injure the Community industry, it can be expected
      that the expiry of measures would only lead to a further deterioration of an already
      weakened Community industry.
(III) Effect of the cumulated, low-priced imports
(41)  For this examination, it was considered appropriate to cumulate the imports from
      China, Poland, Russia and Ukraine because the exporters in these countries followed
       largely the same low-pricing behaviour and the imports have the same basic
      physical characteristics, are interchangeable, have the same channels of distribution
       and were sold in the same geographical market during the same period.
                                            15
 ---pagebreak--- (42)  In considering the relationship between these low-priced imports and the weak
      situation of the Community industry, it was found that the increase in volume and
      market share of these imports in combination with their undercutting prices,
      coincided with the deterioration of the situation of the Community industry.
      Since this is a price-sensitive product in a transparent market which consists mainly
      of industrial users, sales at low prices inevitably have substitution effects as
      customers choose to be supplied at the lowest price offered. It was therefore
      concluded that these low-priced imports can be clearly associated with the
      deteriorating situation of the Community industry.
(IV)  Effect of other factors
(43)  It was examined whether factors, other than the low-priced imports from these four
      countries, might have led to or contributed to the weak situation of the Community
      industry and especially whether imports from countries other than the four
      mentioned, may have contributed to this situation. This examination was based on
       "Eurostat" figures.
(a)    Norway
 (44)  Regarding imports from Norway, it has to be noted that Norwegian prices of silicon
       carbide imported into the Community were in general in line with those of the
       Communtiy producers. Furthermore, the Norwegian market share has declined from
       1989 to the investigation period. Therefore, it was considered unlikely that
       Norwegian imports have contributed to the deteriorating situation of the
       Community industry.
 (b)   Other third countries
 (45)  A certain quantity of imports (7.7% market share during the investigation period)
       originates from third countries other than Norway. It was found that prices of
       imports from these countries were on average below those charged by the
       Community producers.
       No evidence has been supplied to the Commission as to whether these prices were
       low in respect of low-quality silicon carbide or whether these products were actually
       being sold at dumped prices.
 ---pagebreak---      Conclusion
(46) It was considered arguendo that, even if the imports from other countries had
     contributed to the difficult state of the Community industry, it would not affect the
     conclusion that the cumulated imports from the four countries in question taken in
     isolation have been a cause of this difficult state.
(V)  Conclusion on recurrence of injury
(47) In the light of the new dumping and injury findings, it was concluded that a
     continuation of measures for all countries except Norway, would be warranted but
     that the nature of such measures should be reconsidered in the light of the new
     dumping and injury findings. With regard to Norway, the findings of no dumping
     for all grades of silicon carbide exported to the Community and not only for those
     grades covered by the undertakings confirms that the pricing behaviour of the
     Norwegian exporters is such that there is nothing to suggest that the expiry of the
     measures would lead to an imminent recurrence of injury caused by dumping.
                            H. COMMUNITY INTEREST
(48) The purpose of anti-dumping measures is, in general, to eliminate distortion of
     competition arising from dumping practices and thus to re-establish open and fair
     competition on the Community market. In considering the Community interest,
     account has been taken of the effectiveness of the existing measures in addition to
     the interest of the Community silicon carbide industry, the users of silicon carbide
     and the final consumers of the end product. In this respect it is also recalled that
     in the previous investigation, the adoption of measures was considered to be in the
     interest of the Community.
      Leaving the Community industry without adequate protection against the unfair
     competition as established would add to the difficulties of this industry and could
     lead to its disappearance with the consequent negative effect on employment and
     investment. One plant in Italy had already closed during the investigation period and
                                            17
 ---pagebreak---      a further plant in France has subsequently had to close Such closures, resulting in
     reduced competition for the supply of silicon carbide, have a negative impact on
     users. As far as these purchasers of silicon carbide are concerned, it may be argued
     that they could derive some benefit from buying silicon carbide at dumped prices.
     Any such benefit, however, would be minimal, since the silicon carbide in question
     accounts for only a fraction of the price of most end-products.
     In these circumstances, it is in the Community interest to maintain definitive anti-
     dumping measures to eliminate the injurious effects of dumped imports and that
     these measures should take the form of anti-dumping duties.
                                       I. DUTY
(49) When calculating the amount of duty necessary to provide adequate protection to
     the Community industry from continued injurious dumping, it was considered that
     any measures should allow the Community industry to cover its costs of production
     and to obtain a reasonable profit.
      In this respect and based on the findings in the reference country, it was found that
      a profit margin of 5% of the cost of production for this sector could be regarded as
      an appropriate minimum taking into account the need for long-term investment.
(50)  In order to calculate the amount of duty, a price level was established which would
      permit the Community industry to achieve this result.
      Since silicon carbide consists of two main grades, chrystalline and metallurgical,
      two different price levels were calculated, consisting of the weighted average cost
      of production of the Community producers for each main grade and the profit
      margin.
(51)  It was considered that the duty should cover the difference between this price and
      the actual selling prices of the exporters in the Community.
(52)  In order to determine the level of the duty, price increases thus established have
      been expressed as a percentage of the weighted average free-at-Community frontier
      value of the imported goods.
                                           18
 ---pagebreak--- (53) For Russia and Ukraine, an injury margin of 51.1% was found. Since this margin
     was higher than the dumping margin, the rate of duty should be established on the
     basis of the latter.
(54) The free-at-Community-frontier price established for exports originating in China
     was compared with the injury level determined for the Community industry in
     respect of metallurgical grade silicon carbide. This comparison results in an injury
     margin of 52.6%, which is lower than the dumping margin. Therefore, the duty
     should be established on the basis of the injury margin.
(55) For Poland, an injury margin of 27% was found. Since this margin is higher than
     the dumping margin determined, a duty should be established on the basis of the
     latter.
     The undertaking accepted in 1986 from the only Polish exporter is no longer apt to
     prevent injury. This exporter has not offered a revised undertaking, despite having
     been given the opportunity to do so by the Commission.
     Notwithstanding the acceptance of an undertaking from the Russian government (see
     recital 56), a residual duty should be imposed on imports originating in Russia in
     view of the rapid changes taking place in that country's economic system which
     may lead to the emergence of new producers and exporters of silicon carbide
     operating independently of the State.
     Undertakings
(56) Having been informed of the essential facts and considerations on the basis of
     which it was intended to recommend the imposition of definitive duties, certain
     exporters in China and Russia offered undertakings.
     For China, these exporters are those mentioned in recital 5 which responded to the
     Commission's questionnaire. They offered undertakings in respect of their
     individual circumstances as to dumping and injury caused thereby. It has been
     deemed inappropriate to determine individual company findings for these State-
     owned corporations for the reasons set out in recital 31. The Commission has
     therefore considered the undertakings offered by the Chinese exporters unacceptable
     and have informed the three Chinese exporters accordingly.
                                          19
 ---pagebreak---            The Russian government, in conjunction with the State-trading organization
           V/O Stankoimport, offered undertakings which would remedy the injurious effects
           of the dumped exports. The Commission consulted the Advisory Committee on
           acceptance of these undertakings and, since some objections were raised, sent a
           report on these consultations to the Council. These undertakings were accepted by
ftC        Commission Decision ^5/... EC*,
  HAS ADOPTED THIS REGULATION:
                                              Article 1
  1. A definitive anti-dumping duty is hereby imposed on imports of silicon carbide falling
     within CN Code 2849 20 00 originating in the People's Republic of China, Poland, the
     Russian Federation and Ukraine.
     However, the duty shall not apply to silicon carbide exported by V/O Stankoimport,
     Moscow, Russia (Taric additional code 8746).
  2. The rate of the duty applicable to the net, free-at-Community-frontier price, before duty,
     shall be as follows:
     Country                            Rate of duty (%)           Taric additional code
     People's Republic of China              52.6
     Poland                                   8.3
     The Russian Federation                  23.3                          8747
     Ukraine                                 23.3
  3. The provisions in force concerning customs duties shall apply.
  *See page .... of this Official Journal.
                                                  20
 ---pagebreak---                                           Article 2
This Regulation shall enter into force on the day following that of its publication in the
Official Journal of the European Communities.
This Regulation shall be binding in its entirety and directly applicable in all Member States.
Done at Brussels,                                                           For the Council
                                                                             The President
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 ---pagebreak---                                                                      ISSN 0254-1475
                                                               COM (94) 30 final
                                                      DOCUMENTS
EN                                                                          11 02
                                Catalogue number : CB-CO-94-036-EN-C
                                                             ISBN 92-77-64867-8
Office for Official Pablications of the European Communities
1^2985 Luxembourg
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