CELEX: 51992PC0067
Language: en
Date: 1992-02-28
Title: Proposal for a COUNCIL REGULATION ( EEC ) imposing a definitive anti-dumping duty on imports of cotton yarn originating in Brazil, and Turkey; and collecting definitively the provisional duty

COMMISSION OF THE EUROPEAN COMMUNITIES
                                              C0MC92) 67 final
                                              Brussels, 28 February 1992
                               Proposal for a
                          COUNCIL REGULATION (EEC)
  imposing a definitive anti-dumping duty on imports of cotton yarn
 originating in Brazil, and Turkey; and collecting definitively the
 provisional duty
                       (presented by the Commission)
 ---pagebreak---                           EXPLANATORY MEMORANDUM
1. The Commission, by Regulation (EEC) N' 2818/91 imposed a provisional
   duty on imports of cotton yarn originating in Brazil, Egypt and
   Turkey.
2. Having been informed of the main conclusions of the investigations,
   the relevant producers/exporters made known their views in writing and
   were heard by the Commission.
3. Whenever appropriate, the Commission's provisional findings were
   modified to take account of those views. Consequently, in accordance
   with the provisions of Article 12 of Council Regulation (EEC) N'
   2423/88, the Commission, after consultation of the Advisory Committee,
   proposes to impose definitive anti-dumping duties on imports of cotton
   yarn originating in Brazil and Turkey.
4. As regards the imports of cotton yarn originating in Egypt, it is
   intended to terminate the proceeding, by Commission decision, since no
   significant margins of dumping have been found.
 ---pagebreak---                                    - I^Vo
                          Council Regulation (EEC) N*
                                       of
imposing a definitive anti-dumping duty on imports of cotton yarn
originating in Brazil, and Turkey; and collecting definitively the
provisional duty
THE COUNCIL OF THE EUROPEAN COtllUNITIES
Having regard to the Treaty establishing the European Economic Community,
Having regard to Council Regulation (EEC) N' 2423/88 of 11 July 1988<1>,
on protection against dumped or subsidised imports from countries not
members of the European Economic Community and in particular Article 12
thereof,
Having regard to the fact that the Commission applied on 18 December 1991
to the EEC-Turkey Association Council, pursuant to Article 47(1) of the
additional Protocol to the Agreement establishing an Association between
the European Economic Community and Turkey<2) and that the Association
Council has taken no decision in this respect, within the time limit
referred to in Article 47(2) of this Protocol,
                       »•
Having informed the EEC-Turkey Association Council, pursuant to Article 47
(2) of the above additional protocol,
Having regard to the proposal from the Commission, submitted after
consultation within the Advisory Committee as provided for under the above
Regulation,
(1) O.J. N- L 209, 2.8.1988, P.1.
(2) O.J. N* L 293, 29.12.1972, p.4.
 ---pagebreak---                                     - 2  -
WHEREAS
                           A. PROVISIONAL MEASURES
(1)   The Commission, by Regulation (EEC) N* 2818/91 of 23 September
      1991,(3) imposed a provisional anti-dumping duty on imports into
      the Community of cotton yarn originating in Brazil, Egypt and Turkey
      and terminated the anti-dumping proceeding in respect of this
      product originating in India and Thailand.   The Council, by
      Regulation (EEC) N*171/92 of 24 January 1992<4>, extended this
      duty for a period not exceeding two months.
                           B. SUBSEQUENT PROCEDURE
(2)   Following the imposition of the provisional anti-dumping duty, the
       interested parties who so requested were granted an opportunity to
      be heard by the Commission.   They also made written submissions
      making known their views on the findings.
(3)   Parties were informed of the essential facts and   considerations on
      the basis of which it was intended to recommend the imposition of
      definitive duties and the definitive collection of amounts secured
      by way of a provisional duty.   They were also granted a period
      within which to make representations subsequent to the disclosure.
(4)   The oral and written comments submitted by the parties were
      considered and, where appropriate, the Commission's findings were
      modified to take account of them.
(3) O.J. N* L 271, 27.9.91, p.17
(4) O.J. N* L 183 25.1.92, p.33
 ---pagebreak---                                   - 3 -
(5) Certain producers of cotton yarn in the exporting countries concerned
    made themselves known and indicated that they had not exported cotton
    yarn to the Community during the reference period, but had since
    started such exports or had the intention of doing so.   These
    companies asked the Commission to take their particular situation
     into consideration.
(6) Due to the complexity of the procedure and the other reasons
     indicated in recital 11 of Commission Regulation (EEC) N' 2818/91,
    the investigation could not be concluded within the time period
    mentioned in Article 7(9) (a) of Regulation (EEC) N' 2423/88.
                      C. PRODUCT UNDER CONSIDERATION
(7) In its provisional findings (Recitals 4 to 6 of Regulation (EEC) N'
    2818/91) the Commission found that although there are various types
    of cotton yarn, differing namely in thickness, they have physical
    characteristics closely resembling each other and are manufactured
    using essentially the same technology and the same type of equipment
    Moreover, they have a high degree of interchangeabiIity in their end
    use.   These findings have not been substantially questioned by the
    producers/exporters.   Some of them, however, claimed again that
    certain specific types of cotton yarn which they exported to the
    Community were of different quality than the products manufactured
    and sold by the EC industry and should not be treated as a like
    product.
(8) The Commission, having re-examined this claim, found that the
    differences in quality did not significantly affect the physical
    characteristics nor the use of the different types of cotton yarn
    imported as compared to those manufactured in the Community.
 ---pagebreak---                                   - 4 -
    The Council confirms therefore the conclusion that the cotton yarn
    manufactured and sold by the Community industry is to be considered
    as a "like product", within the meaning of Regulation (EEC) N*
    2423/88, of both the product manufactured and sold on the domestic
    market of each of the exporting countries concerned and of that
    manufactured and exported to the EC.
(9) A Brazilian producer/exporter contested that its exports of cotton
    yarn wound on cones and then requiring further processing (such as
    dyeing) after having been imported into the Community, should not be
    considered as falling within the scope of the present procedure.
    This producer/exporter argued that while the complaint related only
    to cotton yarn not put up for retail sale, the above product was
    destined for retail sale for home knitting and not suitable for
     industrial use, i.e. weaving or knitting on industrial machines.  In
    addition, the machinery used to produce this particular type of
    cotton yarn could not, without expensive modifications, be used for
    the production of cotton yarn for industrial use.
    This exporter requested therefore that this product should not be
    subject to any anti-dumping duty.
    The Commission, having consulted a specialised institute for the
    purpose of determining the exact characteristics of the cotton yarn
    concerned and   possible uses of this product, has found that it is in
    fact suitable for special  industrial uses which are undertaken in the
    Community on a regular basis.   Moreover, it was found that the
    machines used to produce this type of cotton yarn could also be used
    for other types without significant modification expenditures.   For
    these reasons the Commission considers that the product concerned
    falls within the framework of the proceeding.   The Council confirms
    this conclusion.
 ---pagebreak---                                    - 5 -
                           D. COMMUNITY INDUSTRY
(10) Some producers/exporters claimed that the Community producers
     investigated by the Commission were not fully representative of the
     EC cotton yarn industry.
      In recital 7 of Commission Regulation (EEC) N* 2818/91, the
     Commission outlined the method employed for investigating the
     Community industry and the reasons for its approach.   In the view of
     the Commission, the selection of producers carried out according to
     size and geographic location ensures that the companies concerned are
     représentât ive.
     The Council confirms the Commission's approach on this point.
                           E. PRODUCERS/EXPORTERS
(11) As regards the selection of the exporting companies by the Commission
     for determination of normal values, the following objections have
     been made:
     - one cooperating Turkish producer/exporter, not selected for
     verification claimed that the method used by the Commission is not
     specifically provided for by Regulation (EEC) N' 2423/88.
     Consequently it requested an examination of its individual situation
     concerning the dumping determination;
     - some importers argued that the exporting companies selected for
     verification were not fully representative of the other co-operating
     companies.
 ---pagebreak---                                   - 6 -
(12) The Commission notes that neither Regulation (EEC) N* 2423/88 nor the
     GATT Anti-Dumping Code requires that the entirety of the producing/
     exporting companies be investigated for the purposes of establishing
     normal values.  Consequently, the Commission as well as the
     authorities of other GATT members, signatories to the Code, have, in
     cases involving a great number of exporters, selected companies which
     together can be considered representative.   In the present case, the
     selection criteria applied by the Commission ensures représentâtivity
     as explained in recital 8 of Regulation (EEC) N* 2818/91.
     Furthermore, the methodology used by the Commission was agreed in
     advance by all national Associations, which acted on behalf of the
     member companies, including the Turkish Association.
     As regards the claim by the Turkish producer/exporter that its
     situation be individually investigated, the Commission recalls that
     it had, prior to on-the-spot verification in Turkey, offered all
     exporters, which so wished, including this exporter, such an
     opportunity.  No request to this effect was made at that time by the
     above producer/exporter.  Moreover, the claim in question was
     received well after the adoption of the provisional measures, and at
     a moment in time where the completion of the investigation would have
     been unduly delayed, had a new on-the-spot verification had to be
     carried out by the Commission.
     In these circumstances, the Council confirms the position taken by
     the Commission.
 ---pagebreak---                                    - 7 -
                              F. NORMAL VALUE
(a)  General
(13) For the purposes of the definitive findings, normal value was in
     general established on the basis of the same methods as those used in
     the provisional determination of dumping, after taking into
     consideration new facts and arguments presented by the parties.
(b)  Brazil
(14) Two of the verified Brazilian exporters claimed that the Commission
     had wrongly considered sales of cotton yarn on the domestic market in
     certain months of 1989 as made at a loss.   These exporters objected
     to the Commission having deducted the cost of credit to customers
     from the domestic selling price when comparing it with the cost of
     production of cotton yarn, since financing costs were included in the
     latter.
      In order to establish whether domestic sales were in the ordinary
     course of trade in the meaning of Article 2(3)(a) of Regulation (EEC)
     N' 2423/88, the Commission had to examine whether these sales were
     profitable.   To this end, the cost of production was calculated by
     taking into account all cost elements, including production financing
     costs.   The resulting amount was then compared to the domestic sales
     prices at ex works level.   Since these prices do not include, by
     definition, credit to customers, the amounts relating to credit
     contained in actual invoiced prices were deducted.
     The Council confirms the appropriateness of this calculation.
 ---pagebreak---                                     - 8-
(15) As regards the non-cooperating Brazilian producers/exporters, the
     Commission had found for the purposes of its provisional
     determinations, that the level of cooperation had been so low as to
     render the use of the findings made in the investigation
     unrepresentative.    Consequently, normal value was determined on the
     basis of information relating to cost of production, supplied by the
     complainant Community   industry, plus a reasonable profit margin.
     The Brazilian producers/exporters in question objected, maintaining
     that normal value determined on the basis of the complaint was the
     result of a mere estimation and that the calculation should be based
     on more neutral   information available from independent sources such
     as published price lists, official    import statistics, etc.
(16) The Commission has reconsidered this situation in the light of the
     above comments and accepts to use information concerning certain cost
      items for Brazilian cotton yarn contained in a specialised
     publication, which, in the present case, can be considered as a
     re Iiable source.
     Thus, the Commission constructed normal value for the Brazilian non-
     cooperating producers/exporters by using for raw material costs and
     profit the weighted average of data concerning the cooperating
     companies, while all other costs are calculated on the basis of the
     information from the above publication.
(c)  Egypt
(17) For the reasons explained in recital 13 (a) of Regulation (EEC) N'
     2818/91, the Commission constructed normal value of Egyptian cotton
     yarn.   All Egyptian exporters objected to this calculation and
     claimed that normal value should have been calculated on the basis of
     the actual domestic selling prices.
 ---pagebreak---                                    - 9 -
     Furthermore, they insisted that, if constructed values were to be
     applied, the cost of cotton imported from third countries (invoiced
      in dollars) should be calculated on the basis of the special rate of
     exchange in force for raw cotton transactions during the
      investigation period.
     Finally, the Egyptian producers/exporters claimed that the Commission
     had erroneously disregarded certain cost factors like the percentage
     of waste resulting from the cotton yarn manufacturing process and the
     value of this waste when subsequently utilised.
(18)  In addition to the comments above, one Egyptian producer/exporter
     contested the results of the verification, claiming that its
     manufacturing structure was very similar to that of other Egyptian
     producers/exporters for which a lower margin of dumping had been
     determined; that in 1989 costs of production were exceptionally high
     and had decreased in following years; and that export prices of
     Egyptian cotton yarn had been increasing since 1989.
(19) As regards the use of constructed normal values for Egyptian cotton
     yarn, the arguments submitted by interested parties were the same as
     for the preliminary determination.   The Council therefore confirms
     that the Commission's approach, as outlined in recital 13 of
     Regulation (EEC) N' 2818/91, is justified.
(20) With regard to the rate of exchange used for the calculation of the
     cost of imported cotton, the Commission found that the claim of the
     Egyptian producers/exporters was justified.   Consequently the cost
     was recalculated and this modification led to a decrease of normal
     va Iue.
 ---pagebreak---                                   - 10 -
(21) Concerning the costs of production for Egyptian cotton yarn, the
     Commission re-examined its calculations and made the necessary
     modifications to take into account, whenever appropriate, the claim
     relating to the value of the waste.   These modifications also led to
     a decrease of normal value.
(22) As regards the objections listed in recital 18, the Commission
     considers them unfounded, since the differences in normal values are
     explained by differences in the cost of production found in the
     course of the investigation.   Furthermore, factors relating to a
     period outside the period of investigation cannot be taken into
     consideration to determine whether dumping exists.   The Council
     confirms this position.
(d)  Turkey
(23) Two Turkish producers/exporters claimed errors in the calculation of
     the cost of production and the determination of profit.   The claims
     were found to be justified and adjustments to normal values were made
     accordingly.
(e)  Complainants
(24) The complainants contested the Commission's provisional findings
     concerning normal value.   In particular they argued that the
     Commission should, in every instance, have constructed normal value.
     Furthermore, where constructed values were established, they
     questioned the results of the Commission's calculations, referring to
     the figures contained in specialised publications.
 ---pagebreak---                                   - 11 -
     The Commission cannot accept these comments.   Indeed, normal values
     can be constructed only when conditions set out in Article 2 (3)(b)
     of Regulation (EEC) N' 2423/88 are fulfilled. This rule has been
     respected in the present procedure.   Furthermore, normal values have
     been calculated on the basis of costs verified during the
      investigation and these data must receive priority over information
     which has not been the subject of a comparable verification.
     The Council confirms the Commission's view on this matter.
                              G. EXPORT PRICE
(a)  General
(25) With the exception of point (b) below, no substantial objections have
     been raised by any party concerning the provisional determination of
     export prices.   Consequently, the Council confirms these findings.
(b)  Brazil
(26) The Brazilian exporters maintained the claim mentioned in recital 17
     of Regulation (EEC) N* 2818/91. They insisted that the application
     of the official rate of exchange of 1 Novo Cruzado for 1 US dollar,
     during the first quarter of 1989, had depressed export prices, with
     the effect of creating artificial dumping, since at the same time
     inflation had continuously increased prices on the Brazilian market.
(27) This position was supported by the Brazilian authorities, which
     confirmed that the exchange rate between the Novo Cruzado and the US
     dollar was frozen in the first quarter of 1989 for the purposes of
     domestic economic policy.
 ---pagebreak---                                   - 12 -
     The Brazilian authorities expressed the view that, as a resuit of
     that exceptional situation, the use of the official exchange rates
     applicable for that period would prevent a fair comparison between
     normal value and export price.   They requested that the exchange rate
     be adjusted so as to fully reflect the actual depreciation of the
     Novo Cruzado in 1989 in accordance with the rate of inflation in
     BraziI.
(28) The establishment, by the competant authorities, of the exchange rate
     of a third country's currency is a decision which cannot be the
     subject of appreciation by the Community institutions in the
     framework of an anti-dumping proceeding.   It is, therefore, the
     Commission's constant practice, confirmed in the jurisprudence of the
     Court of Justice, to use the official exchange rate applied to
      international commercial transactions.  To adjust this exchange rate
     for the purposes of dumping calculations would be inappropriate and
     contrary to the principle of neutrality as regards the monetary
     aspects of an anti-dumping case.
     The Council confirms this position and consequently considers the
     claim inacceptable.
                               H. COMPARISON
(29) No new arguments were made by the interested parties concerning the
     method followed by the Commission in the comparison between normal
     value and export price, as described in recitals 18 to 20 of
     Commission Regulation (EEC) N" 2818/91. Thus, the Council confirms
     this method.
 ---pagebreak---                                    - 13 -
                             I. DUMPING MARGIN
(a)  Cooperating producers/exporters
(30) In comparing normal values for domestically sold cotton yarn of the
     cooperating producers/exporters with their export prices to the
     Community, the final examination of the facts shows the existence of
     dumping in respect of cotton yarn originating in Brazil, Egypt and
     Turkey.  For the cooperating producers/exporters which were visited,
     individual dumping margins have been established on the basis of the
     amount by which the normal value exceeds the export price to the
     Community.
     Furthermore, for the cooperating producers/exporters which were not
     visited, the dumping margins were established according to the method
     described in recital 8 of Regulation (EEC) N* 2818/91.
(31) The dumping margins, expressed as a percentage of the total CIF value
     of the product concerned varied according to the exporters as
     fo11ows:
     - (i)     BraziI
               Fàbrica de Rendas Arp SA                     7.OX
               Fiaçâo e Tecelagem Kanebo do Brasil         15.8%
               Nisshinbo do Brasil Industria Text il Ltda  12.1%
               The weighted average of the dumping margins found for the
               above companies is 12,9%.
 ---pagebreak---                           - 14 -
- (ii) Egypt
       Misr El Amria Spinning & Weaving Co.         0.4%
       Misr Iran Textile Co -Miratex"               0.1%
       Misr Shebin El Kom For Spinning
       & Weaving (Shebintex)                        0.1%
       Unirab Spinning & Weaving Co.                0.0%
       The weighted average of the dumping margins found for the
       above companies is 0.1%.  These margins are of such a level
       as to be considered de miminis.
- (Mi) Turkey
       Yalova Elyaf ve Iplik Sanayii ve
       Ticaret AS                                   5.6%
       Ceytas (Ceyhan TekstM Sanayii AS)           12.1%
       Yidas                                        4.9%
       Birko (Birlesik Koyunlulular Mensucat
       Tic ve San AS)                               7.7%
       Taris (Tarim Satis Kooperatif 1eri
       Birli Keri)                                  8.6%
 ---pagebreak---                                   - 15 -
               Sôktas Pamuk ve Tarim Urunerini Degerlendirme
               Ticaret ve Sanayii As                         9.5%
     The weighted average of the dumping margins found for the above
     companies is 9,0%.
(b)  Non-cooperating producers/exporters
(32) For the purposes of the provisional findings concerning those
     Brazilian producers/exporters that neither replied to the
     Commission's questionnaire nor otherwise made themselves known,
     dumping had been determined on the basis of the facts available in
     accordance with the provision of Article 7 (7) (b) of Regulation
     (EEC) N' 2423/88.
     The Commission considered it appropriate to apply the highest margin
     of dumping found for non- cooperating producers/exporters from
     Turkey.
     The Council confirms this view since no new evidence has been
     provided showing that the margin of dumping of the non-cooperating
     producers/exporters was actually lower than that of the highest
     margin found for a cooperating company.
(33) For the Brazilian non-cooperating producers/exporters, the margin of
     dumping resulting from the re-caluclation of normal value as
     described in recital 16 is of 16.6%.
 ---pagebreak---                                     - 16 -
(34) The Council has also considered the situation of producers of cotton
     yarn in the exporting countries concerned that did not have any
     exports of cotton yarn to the Community during the reference period,
     but have since started such exports or have the intention of doing so
      (so-called "newcomers").   The Council notes that the Commission is
     ready to initiate without delay a review proceeding for exporters who
     supply sufficient evidence to the Commission that they did not export
     cotton yarn to the Community during the reference period; that they
     only started such exports after the said period or have a firm
      intention of doing so*, and that they are not related to or associated
     with any of the exporters subject to the ant I-dumping duty.
                                  J. INJURY
(a)  Cumulation
(35)  In its provisional findings, the Commission concluded that the
     effects of Brazilian, Egyptian, and Turkish dumped imports had to be
     assessed cumulatively.    A number of exporters and importers objected
     to this conclusion.
(36) The Commission notes that its provisional findings were based on the
     standard practice of the Community    institutions to cumulate imports
     from several countries when these imported products compete with each
     other and with the like product of the Community    industry and when
     the dumped imports are not negligible as such.
     The Council considers that, in the present case, these conditions are
     met for the imports from Brazil and Turkey, while the Egyptian
     imports for which no significant dumping has been finally determined,
     are not to be taken into account for the purpose of injury
     assessment.
 ---pagebreak---                                      - 17 -
(37) The Brazilian exporters claimed that their exports should not be
     cumulated with those from other countries, since the volume of their
     exports in 1989 was different from that considered by the Commission
      in its provisional findings and at such a low level as to be
     negligible.     In this context they provided the Commission with the
     Brazilian official statistics concerning exports of cotton yarn to
     the EEC showing a total volume of exports actually lower than that
      indicated by Eurostat.
(38) The Commission has again examined this question and confirms the
     accuracy of the data used which corresponds to Eurostat figures.
     The Council agrees wih this position.
(39) The Brazilian exporters argued also that their market share in 1989
     was lower than that considered by the Commission in its provisional
     findings.    They claimed that, based upon an overall EC consumption of
     1.728.571 tonnes of cotton yarn in 1989, the Brazilian market share
     did not exceed 1,55%.
     The Commission notes that, as indicated in recital 28 of Regulation
     (EEC) N' 2818/91, the overall EC consumption amounted to 1.184.000
     tonnes.   Under these conditions, the market share of dumped imports
     from Brazil corresponded in 1989 to 2.25%, which cannot be considered
     as negIi g i bIe.
(40) The Council confirms the above findings and concludes therefore that
     the effects of Brazilian and Turkish imports have to be assessed
     cumulatively.
(b)  Volume and market share of dumped imports
 ---pagebreak---                                       18 -
(41)   As concluded in recital 36, for the purposes of the definitive
       findings the volume and market share of dumped imports must refer, to
       the products exported from Brazil and Turkey.    In considering the
       period between 1986 and 1989, dumped imports from these two countries
      were approximately 111 305 tonnes in 1986, 120 682 tonnes in 1987,
       117 824 tonnes in 1988 and 104 130 tonnes in 1989.     The market share
       of the Brazilian and Turkish exporters considered together was as
       follows: 9.6% in 1986, 9.3% in 1987, 9.8% in 1988 and 8.7% in 1989.
       The Council confirms these findings.
(c)   Price undercutting of dumped   imports
(42)  No comments having been made by the interested parties, the Council
      confirms the findings and conclusions of the Commission, as described
       in recitals 31 and 32 of Commission Regulation (EEC) N' 2818/91.
(d)   Other relevant economic factors
(43) The Commission concluded in its provisional findings (recitals 33 to
     40 of Regulation (EEC) N* 2818/91) that the Community     industry had
     suffered material  injury which manifested itself, in particular, by a
     sharp decline of selling prices, financial   losses especially in 1988
     and 1989, lack of return in investment, closure of a large number of
     plants and substantial loss of jobs.
(44) No new facts concerning the injury findings were submitted to the
     Commission but the exporters concerned objected that some relevant
     economic factors relating to the Community industry, like the
     evolution of its production and of its market share proved that this
     industry was not suffering from material  injury.    The
     producers/exporters pointed to the fact that the Community producers
     investigated, increased their production in the period from 1986 to
     1989 by 5% and their market share from 19.5% to 20.5%, while their
     capacity utilisation was stable.   Furthermore, they invested the
     amount of 542 million ECU in only two years.
 ---pagebreak---                                   - 19 -
(45) The Commission considers that, as established   by Regulation (EEC) N'
     2423/88, the relevant economic factors of injury must not be
     evaluated in isolation since no one or several of them can
     necessarily give decisive guidance.   When examining these factors,
     the Commission agrees that the figures concerning the evolution of
     the EC producers' output as well as of their market share, were not
     substantially negative from 1986 to 1989.   Nevertheless, these
     figures must be analysed in close conjunction with those relating to
     other important factors like profitability, investment, plant
     closure, employment etc.
     As explained in Commission Regulation (EEC) N* 2818/91, the cotton
     yarn prices of the Community producers declined from ECU 3.47 per
     kilo in 1986 to ECU 3.12 in 1989.   In the same period there was a
     decrease in profitability of 14 percentage points.    In particular, in
     1989 losses were registered amounting to 5.7%, and out of all the
     Community producers investigated only 4 showed profits.
     This situation had strong negative consequences especially in terms
     of job losses and plant closures.   Only in the Community companies
      investigated, the job losses in the years 1988 and 1989 amounted to
     2.149.   When the situation is considered in respect of the entire
     Community industry, it appears from the information available to the
     Commission that, in 1989 only, 29 cotton spinners closed definitively
     their plants with a loss of 7.263 jobs.
(e)  Conclusion on injury
(46) In the light of the above, the Council concludes that the Community
     industry suffered material injury, within the meaning of Article 4(1)
     of Regulation (EEC) N' 2423/88.
 ---pagebreak---                                     - 20 -
                            K. CAUSATION OF INJURY
(a)  General
(47) For the purposes of its provisional findings, the Commission had
     concluded that the investigation had not revealed any     factors
     causing material    injury to the Community industry other than the
     dumped imports from Brazil, Egypt and Turkey.     This conclusion was
     based mainly on the fact that the loss of profitability and the other
     negative economic circumstances had coincided with the continuing
     price depression and price undercutting on the Community market,
     owing to the low prices of dumped imports.
     The exporters concerned objected, maintaining that the difficulties
     faced by the Community industry were due to reasons other than the
     imports of cotton yarn in question.     They argued that the Commission
     had omitted to consider the following points:
             - the Community   industry had taken wrong commercial and
             financial decisions when investing heavily on automated
             spinning mills and concentrating on open end technology
              instead of persisting in the traditional ring spun cotton
             yarn.   Moreover, these investments have had the effect of
             removing many manual tasks.
             - a part of the Community   industry had voluntarily withdrawn
             from the EC cotton yarn market, since their production efforts
             were concentrated on viscose and other blended yarns.
             - EC producers' costs had gone up in the period between 1986
             and 1989 because of a substantial   increase of interest rates.
            - Some of the Community industry's difficulties were the
            consequence of internal factors such as the increased
            competition among Community producers in the course of the
            completion of the EC's single market.
 ---pagebreak---                                     - 21 -
(48) The Commission considers that most of the arguments listed in recital
     47 have already been answered in the Regulation imposing the
     provisional duties.    It agrees that, as indicated in recital 37 of
     Regulation N* 2818/91, the Community industry made considerable
      investments to modernise plant and equipment but this was due to the
     reasonable purpose to remain in the ranks of the technologically most
     advanced spinners in the world in order to keep a high level of
     compet it iveness.
     Furthermore, as regards investments on the open end technology, a
     comparison relating to the period between 1980 and 1989, showed that
      in fact the EC producer investments in the sector were less than
     those of the North American spinners.
      Indeed, regarding the installation of new machinery, for every 100
     new spindles there were 49 new rotors in North America and only 21 in
     the Community.    This clearly shows that the Community industry
      investments in the sector were not, in the period considered,
     abnormal I y high.
     Furthermore, the Commission notes that the considerable amounts
      invested by the Community industry for restructuring indicate its
     precise intention to be present and competitive in the whole cotton
     yarn market, rather than to partially withdraw from this market or to
     concentrate on the production of special types of cotton yarn.
     As regards the interest rates operating in the cotton yarn
     manufacturing sector, the Commission found that they increased in the
     EC from 1987 to 1989 by only 0.5% which cannot be considered a cause
     of abnormal increase of the Community industry's costs.
 ---pagebreak---                                    - 22 -
     As indicated in recital 43 of Regulation (EEC) N* 2818/91, the
     Commission is aware of the fact that some Job losses might have been
     the consequence of investments in high technology plants removing
     manual tasks.   In addition, the Commission cannot exclude that the
      internal competition between Community spinners may have had negative
     effects for some of them.   However, these factors do not exclude that
     the dumped imports had a clear detrimental   impact, due especially to
     their low prices, on the state of the Community    industry.
(b)  Effects of quantitative restrictions
(49) Exporters argued that the existence of bilateral agreements with the
      interested countries establishing quantitative restrictions for
      imports of cotton yarn had the consequence that no injury could have
     been caused to the Community industry by these imports.
     The Commission reiterates in this context its considerations in
     recital 45 of Regulation (EEC) N' 2818/91.    Indeed, quantitative
     restrictions protect the Community industry from excessive volumes of
      imports, but do not prevent injury resulting from unfair trading
     practices such as dumping imports at very low prices.
(50) Furthermore, it has been argued by the Turkish exporters that their
     exports of cotton yarn to EC were subject, in addition to
     quantitative restrictions, to a system of minimum prices applied
     until 1988 and that it followed, from the combined effect of this
     system and the quantitative restrictions, that no injury could have
     been caused by Turkish exports, at least up to 1988.
     This argument cannot be accepted since the price mechanism mentioned
     above was suspended in 1988 upon the request of the Commission
     because it was ineffective and could easily be circumvented.
 ---pagebreak---                                      23 -
(c)  Effects of other factors
(51) The Commission examined whether its conclusions on causation of
      injury in Regulation (EEC) N' 2818/91 could be maintained, given that
     the dumping margins for cotton yarn imports from Egypt were found to
     be insignificant and that these imports therefore have to be
     disregarded from the framework of the present proceeding.
     The Commission considers that taking due account of the considerable
     market share held by Brazilian and Turkish exports and the important
     margin by which these exports undercut Community producers' prices,
     the dumped imports from Brazil and Turkey taken in isolation have to
     be considered as causing material injury to the Community industry.
     The Council confirms this conclusion.
                           L. COMMUNITY INTEREST
(52) In its provisional findings, the Commission considered and weighed up
     the interests of the Community industry as well as those of other
     parties like importers of cotton yarn, end-users, etc.   For the
     reasons given in recitals 42 to 49 of Regulation (EEC) N' 2818/91, it
     concluded that the interest of the Community called, on balance, for
     granting protection to the Community industry against unfair
     competition from dumped imports.
(53) Following the provisional measures, a number of submissions were
     received from Community importers and, in particular, users of cotton
     yarn.   In these submissions it was argued that an increase in import
     prices of cotton yarn from the countries concerned due to anti-
     dumping dut ies would have negative effects on their businesses.
 ---pagebreak---                                    - 24 -
     Weavers of cotton yarn especially complained that an increase in the
     price of their raw material would reduce their competitiveness vis-à-
     vis weavers in third countries, and would bring about an increase in
     ready-made textiles exports to the Community.    It was submitted that
     the result could be job losses and mill closures in the Community
     weaving industry, especially in the case of single-stage weaver
     (weaving mills that are not integrated with spinning mills).    Some
     weavers claimed difficulties in sourcing cotton yarn from a
     particular area of the Community arguing that the spinning industry
      in that area had already been "decimated beyond revival".
     Others argued that it would have been more logical if the Community,
      in taking action against unfairly low-priced imports, had started at
     a higher stage in the production process leading to finished garments
     and fabrics.
(54) Since the basic purpose of anti-dumping duties is to remove the
      injury which dumped imports cause to a Community  industry and thereby
     to re-establish open and fair competition In the Community market for
     the product concerned, prices of cotton yarn should normally increase
     due to anti-dumping duties on dumped imports. As regards end-users of
     cotton yarn, the Commission considers that an advantage, in terms of
      low prices, cannot justify unfair commercial practices, which are
     detrimental to the Community producers of this product and that the
      importers have no vested rights that this advantage persists.
(55) With respect to the alleged difficulties of sourcing cotton yarn in a
     particular area of the Community, the Council sees no reason why
     sourcing should be restricted to a particular area of the internal
     market.   Taking the Community spinning industry as a whole, it
     appears unfounded, provided that measures are taken against unfairly
     priced imports, to declare its demise beyond revival.
 ---pagebreak---                                      25 -
(56) Furthermore, the Council notes that, should definitive anti-dumping
     measures not be taken, the number of cotton yarn spinners in the
     Community would continue to decline with additional  loss of jobs.
      Indeed, the trend in factory closures due to dumped imports is such
     that, without measures, the continued existence of the industry as a
     whole may be said to be in danger.   From 1989 to the end of 1991, 87
     production units of cotton yarn in the Commmunity, including 3 of the
     EC producers verified, were forced to close, causing a loss of 17,423
     jobs.   This amount does not include job losses due to the
     restructuration of companies which are still operational.
     Similar views were expressed by the European Trade Union Committee
     for Textiles, Clothing and Leather, representing Community workers in
     these industrial sectors.
(57) The Council also notes that Eurocoton and the European Trade Union
     Committee for Textiles, Clothing and Leather represent producers and
     workers in both the spinning and the weaving industries of the
     Community.   It can be assumed that, in strongly supporting definitive
     anti-dumping duties, both organisations have carefully weighed the
     interests of all their members, including weavers.
     Provided that the injury from dumped imports is removed, the
     Community spinning industry should be able to be fully competitive,
     the more so as it has made significant  investments in technology,
     enabling it to compete with low-labour cost countries, to well adapt
     to market requirements in the Community.
(58) No submissions were received from Community consumers of products
     made from cotton yarn.   The Council considers that in the medium-term
     consumers should benefit from a sound competitive situation in which
     the number of suppliers of cotton yarn is not diminished by unfair
     trading.
 ---pagebreak---                                     - 26 -
(59)   In the light of the above, the Council confirms the Commission's
      findings that it is in the Community's interest to impose anti-
      dumping measures to eliminate the injurious effects of imports of
      cotton yarn originating in Brazil and Turkey.
                               M. UNDERTAKINGS
Both the Turkish and Brazilian authorities, having been informed of the
essential facts and considerations on the basis of which it was intended to
recommend the imposition of definitive duties, offered, on behalf of the
exporters concerned, a form of undertaking.
In the case of Turkey, this offer did not correspond to the provisions of
Article 10 of Regulation (EEC) n* 2423/88, and in particular the
possibility of imposing duties in the case of violation or withdrawal as
provided for in article 10 (6) of Regulation n* 2423/88.   In addition, the
Commission considers that effective monitoring of the adherence of
companies to such an undertaking would not be practicable.
As regards the Brazilian offer which provides for voluntary quantitative
export restrictions, the Commission was not satisfied that its acceptance
would eliminate the injurious effects of the dumping.
The Council notes that for these reasons both these offers of undertaking
have, after consultation, been rejected.
                                   N. DUTY
(60)  Provisional anti-dumping duties were imposed at the level of the
      dumping margins determined, with the exception of one Brazilian
      exporter for which the level imposed was that adequate to remove the
      injury caused.   On the basis of the definitive findings, this result
      remains unchanged.
 ---pagebreak---                                     - 27 -
                     O. COLLECTION OF PROVISIONAL DUTIES
(61)  In view of the dumping margins established and the seriousness of the
       injury caused to the Community industry, the Council considers it
      necessary that amounts secured by way of provisional anti-dumping
      duties, with the exception of those relating to the imports of
      Egyptian cotton yarn, should be definitively collected to the extent
      of the amount of the duty definitively imposed.
HAS ADOPTED THIS REGULATION:
                                  Article 1
(1)   A definitive anti-dumping duty is hereby imposed on imports of cotton
      yarn falling within C.N. codes 5205 11 00 to 5205 45 90 and 5206 11
      00 to 5206 45 90 and originating in Brazil and Turkey.
(2)   The rate of the duty applicable to the net free-at-Commun!ty-front1er
      price before duty shall be as follows:
      (a)     16,6% for cotton yarn originating in Brazil, Taric additional
              code 8551 with the exception of imports manufactured by the
              following companies, which shall be subject to the rate of
              duty mentioned hereunder:
                                                Rate of   Taric additional
                                                duty      code
      Fàbrica de Rendas Arp. SA                  7.0%     8552
      Nisshinbo do Bras il Indûstria
      TôxtiI Ltda                               12.1%     8553
 ---pagebreak---                              - 28 -
Fiaçao e Tecelagem Kanebo
do BrasiI                                 11.2%     8554
Filobel SA Indûstrias Téxtels
do BrasiI                                 12.9%     8555
Toyobo do BrasiI Indûstria
TéxtiI Ltda                               12.9%     8555
Indûstria Têxtil Tsuzuki Ltd              12.9%     8555
SA Text il Nova Odessa                    12.9%     8555
Coton!fieio de Sao Bernardo               12.9%     8555
Companhla BrasiIeira
de Fiaçào                                 12.9%     8555
(b)     12,1% for cotton yarn originating in Turkey, Tarie additional
       code 8562 with the exception of imports manufactured by the
        following companies, which shall be subject to the rate of
       duty mentioned hereunder:
                                          Rate of   Taric additonal
                                          duty      code
Birko (Birlesik Koyunlulular
Mensucat Tic ve San AS)                    7.7%     8563
Ceytas (Ceyhan Tekst iI
SanayiI AS)                               12.1%     8564
 ---pagebreak---                                 - 29 -
Sôktas Pamuk ve Tarim Urunerini
Degerlendirme Ticaret ve
Sanay i i AS                                  9.5%     8565
Tar is (Tar im Sat is
Kooperatifieri Birli keri)                   8.6%     8566
Yalova Elyaf ve Iplik SanayM ve
Ti caret AS                                  5.6%     8567
Yidas                                        4.9%     8568
Sonnez Pamuklu Sanayii AS                    9.0%     8569
Cukurova Sanayi isletmeleri
TAS                                          9.0%     8569
Akip TekstiI                                 9.0%     8569
Karsu (Tekstil Sanay ve
Tic AS)                                      9.0%     8569
Trakya Iplik Sanayi AS                       9.0%     8569
Bisas Bursaiplik Sanayii AS                  9.0%     8569
Meptas Manisali Errensel
Pazadama ve Ticaret AS                       9.0%     8569
Hateks (Hatay TekstiI
isletmeleria AS)                             9.0%     8569
The free-at-Community-frontier price as indicated in paragraph 2
shall be net if the actual conditions of payment provide for payment
within 30 days of the arrivai of the goods on the customs territory
of the Community.     It shall be increased by 1 % for each further
month by which the period for payment is extended.
 ---pagebreak---                                     - 30 -
4.     In cases where the exporting company is not the same as the producing
       company the rate of duty applicable to the imports of the products of
       the producing company shall apply.
5.     The provisions in force concerning customs duties shall apply.
                                  Article 2
The amounts secured by way of provisional anti-dumping duty under
Regulation (EEC) N' 2818/91 concerning the imports from Brazil and Turkey,
shall be definitively collected at the duty rate definitively imposed.
Amounts secured in excess of the definitive rate of duty shall be released
                                  Article 3
This Regulation shall enter into force on the day of its publication in the
Official Journal of the European Communities.
This Regulation shall be binding in its entirety and directly applicable in
a 11 Member states.
Done at Brussels,                               For the Council
                                                The President
 ---pagebreak---                                             il -
                                                                     ISSN 0254-1475
                                                               CO M (92) 67 final
                                                      DOCUMENTS
EN
^                                                                          03 02
                                 Catalogue number : CB-CO-92-077-EN-C
                                                             ISBN 92-77-41663-7
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