CELEX: 51995PC0141
Language: en
Date: 1995-04-06
Title: Proposal for a COUNCIL REGULATION (EC) amending Regulation (EEC) N° 3433/91 insofar as it imposes a definitive anti-dumping duty on imports of gas-fuelled, non-refillable pocket flint lighters originating in the People' s Republic of China

COMMISSION OF THE EUROPEAN COMMUNITIES
                                             Brussels, 0604.1995
                                             COM(95) 141 final
                              Proposal for a
                    COUNCIL REGULATION (EC)
amending Regulation (EEC) N° 3433/91 insofar as it imposes a definitive
  anti-dumping duty on imports of gas-fuelled, non-refillable pocket
      flint lighters originating in the People's Republic of China
                     (presented by the Commission)
 ---pagebreak---                                                  -u
                          EXPLANATORY MEMORANDUM
(1)  By Regulation (EEC) N° 3433/911, the Council imposed a definitive anti-dumping
     duty on imports of gas-fuelled, non-refillable pocket flint lighters originating, inter
     alia, in the People's Republic of China. The rate applicable to products originating
     in that country was set at 16.9%, corresponding to the level of the dumping found
     for the People's Republic of China during the original investigation period.
(2)  In November 1993, the Commission received a request for a review of the above
     Regulation lodged by the European Federation of lighter Manufacturers. The
     request alleged changed circumstances concerning the People's Republic of China in
     that there had been an increase in the dumping margin for Chinese exports to the
     Community and, consequently, further injury. In December 1993, considering that
     sufficient evidence had been submitted by the applicant, the Commission announced
     by a notice2 the initiation of a review of Council Regulation (EEC) N° 3433/91 in
     respect of imports originating in the People's Republic of China, in accordance with
      Article 14 of Regulation (EEC) N° 2423/88.
(3)   Since this is a review case it has been decided to proceed directly to definitive
      measures rather than to pass through the provisional stage. In view of this, the
      Commission, prior to drafting its proposal on this case, provided interested parties
      with details of its calculation and gave them sufficient time to comment and correct
      material errors.
(4)   the current review investigation showed that the dumping margin for Chinese
      exports had considerably increased. Expressed as a percentage of the CDF
      Community frontier value of the imports, the dumping margin was found to be
      80.3%.
 1
    OJ No L 326, 28.11.1991, p. 1
2
    OJNo C 343, 21.12 1993, p.10
 ---pagebreak---                                                     if
(5) The investigation also showed that the injury suffered by the Community industry
    had considerably worsened since, in a growing market, the Community producers
    concerned had lost market share and their profitability deteriorated. The analysis of
    the causal link between this injury and the dumped imports from the country
    concerned (detailed in recitals 51 to 61 of the attached proposal), led to the
    conclusion that the said imports had, taken in isolation, caused further material
    injury to the Community industry.
(6) In the original investigation, the adoption of measures was considered to be in the
    interest of the Community. Since no new arguments have been made which would
    lead to reconsider this position, thefindingsof Regulation (EEC) No 3433/91 in this
    respect should be confirmed. Accordingly, the measure in force with regard to the
    People's Republic of China, which is no longer sufficient to counteract the injurious
    dumping, should be amended.
(7) In this respect, given that the injury elimination level was found to be higher than
    the dumping margin, the necessary amendment should be based on the dumping
    margin established in the current investigation. In addition, since prices of the
    Chinese imported disposable flint lighters steadily decreased after the imposition of
    the measures in 1991, it is highly foreseeable that an increased ad valorem duty
    would again lose its effectiveness within a relatively short time. Accordingly, a
    simple amendment to the current ad valorem duty does not appear to be
    appropriate.
    It is therefore proposed to amend the measure in force with regard to the People's
    Republic of China by imposing a specific duty per lighter (namely 0.065 ECU per
    piece) The proposed amendment should constitute, insofar as the People's
    Republic of China is concerned, a modification within the meaning of Article 15 (1)
    of Regulation (EEC) No 2423/88. Accordingly, the amended measure on imports
    of gas-fuelled, non-refillable pocket flint lighters originating in the People's Republic
    of China should, subject to the relevant provisions concerning the duration of
    measures, lapse after a period of five years starting from the date on which it will
    enter into force.
 ---pagebreak---                                Council Regulation ( E Q N°
      amending Regulation (EEC) N° 3433/91 insofar as it imposes a definitive
          anti-dumping duty on imports of gas-fudled, non-refillable pocket
              flint lighters originating in the People's Republic of China
THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty establishing the European Community,
Having regard to Council Regulation (EEC) N* 2423/88 of 11 July 1988 on protection
against dumped or subsidised imports from countries not members of the European
Economic Community1, as last amended by Regulation (EC) No 522Z942, and in
particular Article 14 thereof,
Having regard to the proposal submitted by the Commission after consultations within
the Advisory Committee,
WHEREAS:
                          A. PREVIOUS INVESHGAHONS
(I)   By Regulation (EEC) N° 3433/913, the Council imposed a definitive anti-dumping
      duty on imports of gas-fuelled, non-refillable pocket flint lighters falling within CN
      code ex 9613 10 00 and originating, inter alia, in the People's Republic of China.
      The rate applicable to products originating in that country was set at 16.9%.
1
    OJNaL 209, ©2.08.1988, p. 1.
2
    OJNoL 6$, I0.03.1994,p. 10.
3
    OJ No L 326,28.1LI991, p. 1
 ---pagebreak--- (2)   By a notice published in March 19924, the Commission initiated a review of
      Regulation (EEC) N° 3433/91 insofar as it concerned certain Chinese companies
      which alleged, in particular, that they did not export the product concerned during
      the period covered by the original investigation (a so-called newcomer review).
      By Decision N° 93/377/EEC of 22 June 19935, the Commission terminated the
      above review investigation without any changes to the measures in force.
                       B. CURRENT REVIEW INVESTIGATION
(3)   In November 1993, the Commission received a request for a review of the above
      Regulation insofar as it concerns imports originating in the People's Republic of
       China. The request was lodged by the European Federation of lighter
      Manufacturers, acting on behalf of Community producers together representing a
      major proportion of the Community production of the product in question. The
      request alleged changed circumstances since the conclusion of the original
      investigation in that there had been an increase in the dumping margin for exports
      to the Community from the People's Republic of China and, consequently, further
       injury. It was considered that the review request contained sufficient evidence to
      justify the opening of an investigation.
(4)    In December 1993 the Commission announced by a notice6 the initiation of a
       review of Council Regulation (EEC) N° 3433/91 in respect of imports of gas-
       fuelled, non-refillable pocket flint lighters originating in the People's Republic of
       China, in accordance with Article 14 of Regulation (EEC) N° 2423/88 (hereinafter
       referred to as 'the Basic Regulation').
(5)    The Commission officially advised the exporters and importers known to be
       concerned, the representatives of the exporting country and the complainants and
      gave the parties concerned the opportunity to make their views known in writing
       and to request a hearing.
4
    O J N o C 62, 11.3.1992, p. 2
5
    OJ No L 158, 30.6.1993, p. 43
6
    OJ No C 343, 21.12.1993, p. 10
 ---pagebreak--- (6) One importer, two exporters and one producer of the People's Republic of China
    made their views known in writing. Four Community producers, Bic S.A.,
    Swedish Match S.A, Tokai Setki GmbH and Flamagas S.A. also submitted their
    views in writing. Several of the above-mentioned companies requested and were
    granted hearings.
(7) The Commission sought and verified all the information it deemed necessary for
    the purpose of its investigation and carried out investigations at the premises of the
    following companies:
    Community producers (factories and/or sales offices)
          Bic Deutschland GmbH, Ettlingen, Germany
    -     Bic S.A., Clichy, France
    -     Bic S.A., Redon, France
    -     Biro Bic Ltd, London, United Kingdom                     /
          Bryant & May, High Wycombe, United Kingdom
          Flamagas S.A., Barcelona, Spain
    -     Laforest Bic S.A., Tarragona, Spain
          Swedish Match, Visselhôvede, Germany
          Swedish Match S.A., Rillieux-la-Pape, France
    -     Tokai Seiki GmbH, Mônchengladbach Germany
          Tokai Vesta Hispania S.A., Alcalâ de Henares, Spain
    Exporters
          Capital Line Industries Ltd, Hong Kong.
          Gladstrong Investments Ltd, Hong Kong
    Unrelated importer
          Trôber GmbH, Hamburg, Germany
 ---pagebreak--- (8)  The Commission also sought information from producers in the Philippines which
     was used as the analogue country for the establishment of normal value (see
     recitals 19 to 27 below). Detailed and complete information was provided by and
     verified at Swedish Match Philippines Inc., Manila, Philippines.
(9)  The exporters and the sole importer which co-operated, requested and were
     informed of the essential facts and considerations on the basis of which it was
     intended to recommend the amendment of the definitive anti-dumping duty in force
     on imports of the product concerned originating in the People's Republic of China.
     The Commission took into account, where appropriate, the submissions of the
     parties concerned.
(10) The investigation of dumping covered the period 1 January to 30 September 1993
     (hereinafter referred to as 'the investigation period').
         C. PRODUCT UNDER CONSIDERATION, LIKE PRODUCT
                          AND COMMUNITY INDUSTRY
                             (i) Product under consideration
(11) The product subject to the definitive anti-dumping duty referred to in recital 1, is
     gas-fuelled, non-refillable pocket flint lighters (hereinafter referred to as 'disposable
     flint lighters').
     It should be recalled in this respect that there are other disposable lighters on the
     market (piezo lighters) the technical characteristics of which are quite different
     from the above-mentioned product! Therefore they were not considered to be
     alike to the product concerned in the original investigation, were not covered by
     the original investigation and were excluded from the scope of the measures.
 ---pagebreak--- (12) The importer which co-operated claimed that, in addition to the already existing
     separation between flint and piezo disposable lighters, a new distinction should be
     made amongst disposable flint lighters, between plastic body and nylon body
     lighters.  This importer claimed that two markets for disposable flint lighters
                                *
     existed, one offering luxury nylon-based lighters and the other so-called standard
     plastic body lighters. Alleging that all Chinese disposable flint lighters had a plastic
     body, this importer requested that the product under consideration be restricted to
     such products.
(13) In the course of the investigation carried out by the Commission, it was found that
     such a narrow definition of the product under consideration would not be justified,
     notably because the alleged divisibility of the disposable flint lighters market into
     segments, which is based on differences in physical characteristics and consumers'
     perception of the product, is not confirmed by facts.
     The product in question is indeed manufactured in different sizes and models and
     different materials may be used in the composition of the lighter body. However,
     all these disposable flint lighters have the same basic technical characteristics, the
     same basic application and perform the same function. In contrast to this, it has to
     be noted that the distinction between flint and piezo disposable lighters was based
     on differences in technical characteristics which are clearly established.
     In addition, it is also clear that the difference between flint and piezo lighters is
     perceptible to consumers, while the difference between disposable flint lighters
     with a body made of either plastic or nylon, is not. Indeed, the product concerned
     is a disposable one and the statement that consumers would be aware of the above-
     mentioned difference is not evidenced, among other things, by the existence of
     clearly separate channels of sales. On the contrary, all disposable flint lighters are
     sold indistinctly in the same kind of shops to customers having the same
     expectations and nothing is done to make consumers aware of the alleged
     differences between plastic body and nylon body lighters. In particular, it should
     be noted that plastic body and nylon body lighters are not easily distinguishable
     since they are both available in translucent and opaque forms.
 ---pagebreak--- (14) Therefore, the whole range of models of disposable flint lighters is to be
     considered as forming one single category of product, irrespective of the material
     used to manufacture the body, which represents, in any case, only a minor
     difference in physical characteristics, as well as in cost terms (see below recital 36).
     The findings of the original investigation in respect of the product under
     consideration, as recalled in recital 11 above, are therefore confirmed.
                                     (ii) Like product
(15) The importer which co-operated claimed that the findings of the original
     investigation in respect of the like product definition should be reconsidered, in
     order to take account of the fact that a Community producer, newly involved in the
     proceeding, was manufacturing plastic body lighters, allegedly 'identical' to those
     imported from the People's Republic of China, while other Community producers,
     as well as the co-operating producer in the analogue country, were producing
     nylon body lighters which should be considered according to this importer as, at
     most, 'similar' to Chinese lighters.
     It should be stressed again in this respect that a minor physical difference, such as
     the material used for the manufacture of the lighter body, which has no impact on
     the basic technical characteristics, basic application and function of the product and
     which is not perceptible to consumers, is insufficient to justify a distinction being
     made between allegedly 'identical' and 'similar' disposable flint lighters. This
     conclusion applies to the comparison of disposable flint lighters imported from the
     People's Republic of China with, respectively, all those produced and sold in the
     Community and those produced and sold by the co-operating producer in the
     analogue country.
 ---pagebreak--- (16) The same importer also made representations regarding various physical
     differences said to have an impact on the like product definition. However, these
     allegations, in general already addressed during the original investigation, were not
     supported by decisive new evidence that would justify their being taken into
     account in the like product definition, notably as regards the consumers' perception
     of the product.
(17) In these circumstances, it is confirmed that the disposable flint lighters produced
     and sold by the Community industry and those imported from the People's
     Republic of China possess similar basic physical and technical characteristics for
     them to be considered a like product. While there may be some minor differences
     between the imported product from the People's Republic of China and the
     Community production, these differences are not such as to warrant a finding that
     they should not be regarded as like products. The findings of the original
     investigation in respect of the like product definition are therefore confirmed.
     As explained under recitals 26 and 36 below, the above conclusion is equally valid
     for the disposable flint lighters produced and sold by the co-operating producer in
     the analogue country.
                                (Hi) Community industry
(18) In the light of the above, the elaim that the Community industry should be
     redefined as comprising only the Community producer manufacturing plastic body
     lighters was rejected. On this basis, it was found that during the investigation
     period, the Community producers on behalf of which the request for a review was
     lodged, represented more than 70% of total Community production of the like
     product. Accordingly, it is concluded that the producers in question constitute the
     'Community industry' within the meaning of Article 4(5) of the Basic Regulation.
 ---pagebreak---                                             8
                                     D. DUMPING
                                    (a) Normal value
                                  (i) Analogue country
(19) Since the People's Republic of China is not a market economy country, normal
     value had to be determined on the basis of information obtained in a market
     economy country (so-called analogue country) in accordance with Article 2 (5) of
     the Basic Regulation. For this purpose, the complaint suggested that Thailand be
     used as the analogue country as in the original investigation and contact was made
     with the two Thai producers that had co-operated with the said investigation. On
     this occasion, the Thai producers did not co-operate.
(20) Thus, contact was also made for this purpose with one Korean producer and two
     producers in the Philippines. Only the producers in the Philippines indicated that
     they were willing to co-operate with the Commission and submitted replies to the
     Commission's questionnaire. However, in the case of one producer in the
     Philippines, the reply was too limited and more details were requested.
      Subsequently, the producer concerned informed the Commission that it was not
     willing to supply more detailed information. Consequently, this producer was
     considered as uncooperative, with the result that only one company remained as a
     possible source of information concerning the Philippines.
     Following disclosure of the essential findings of the investigation, the importer
     which co-operated claimed that a Hong Kong Company, Cli-Claque Ltd, allegedly
     manufacturing flint disposable lighters in the Philippines, should also have been
     contacted. The existence of this alleged producer in the Philippines was only
     brought to the attention of the Commission at an extremely late stage of the
     investigation and could not, therefore, be considered without significantly
     impeding the investigation.
(21) Since no other possibility existed for determining normal value, a change in the
     analogue country could not, therefore, be avoided. In the light of the recent
     jurisprudence of the Court of Justice regarding the criteria applicable to the choice
     of analogue countries, the following were verified to assess the appropriateness of
     the Philippines for this purpose:
 ---pagebreak---      •      representativeness of the market concerned:
     the size of its domestic market makes the Philippines a representative country for
     the establishment of normal value for the People's Republic of China (total
     domestic sales of the co-operating producer in the Philippines amount to more than
     5% of Chinese exports to the Community);
     •      openness of the market:
     the Filipino market is open to competition: the local production of disposable
     lighters is facing price competition mainly due to substantial imports. The
     structure of demand also favours competition since many operators, such as
     supermarkets and medium or small-sized retailers are present on the market;
     •      access to basic materials:
     finally, it does not appear that significant differences exist between China and the
     Philippines regarding the ease of access to basic materials. It is true that some
     parts and components are imported in the Philippines but Chinese producers also
     import from suppliers located outside China some of the most sensitive parts of
     lighters, such as the flint. Overall, the availability of parts of lighters appears to be
     at least as good in the Philippines as it is in the People's Republic of China.
(22) However, given that the company which co-operated in the Philippines is part of a
     group of companies of which a complainant is also part, the Commission also
     considered it necessary to analyse the implications of the existence of such links,
     with a view to determining whether this situation had any distorting effect on the
     data submitted and, accordingly, whether this information could or could not be
     used in the framework of the current review investigation.
 ---pagebreak---                                              10
(23) An in-depth examination of the costs of production supplied by the Filipino
     producer concerned showed that due to the fact that certain parts used in the
     manufacture of disposable flint lighters were bought from related parties,
     additional costs were incurred. Therefore, for the purpose of making a reasonable
     and appropriate profitability test, the additional costs in question were deducted.
     After such adjustment, it was found that the prices practised by the co-operating
     Filipino producer for sales of the like product on the domestic market in the
     ordinary course of trade permitted the recovery of all costs incurred in the ordinary
     course of trade plus a normal profit margin.
     In these circumstances, it was concluded that normal value could be based, in
     accordance with Article 2 (5) (a) (i) of the Basic Regulation, on the prices at which
     disposable flint lighters were actually sold for consumption on the domestic market
     in the Philippines.
(24) This, together with the above mentioned elements concerning the standing of the
     Philippines as analogue country, led the Commission to consider that the
     Philippines was an appropriate and not unreasonable choice. Interested parties
     were informed in due time of this proposed course of action. The main comments
     they have made in this respect are discussed below, as well as under recitals 28 to
     31.
(25) The exporters concerned either agreed or did not react to the proposal to use the
     Philippines as the analogue country.
 ---pagebreak---                                             11.
(26) Within the time limit granted for comments regarding the choice of the analogue
     country, the importer having co-operated indicated that the Philippines would only
     constitute an appropriate choice if the data used would concern a Filipino producer
     manufacturing plastic body lighters and having no links with the Community
     industry.
     As concerns the alleged physical differences between plastic body and nylon body
     lighters, it has to be noted that the arguments put forward are identical to those
     raised in respect of the disposable flint lighters produced and sold by the
     Community industry in the context of the determination of the product under
     consideration and of the like product definition. As explained under recitals 12 to
     17 above, the Commission considered that all disposable flint lighters form one
     single category of product and that plastic body and nylon body disposable flint
     lighters have to be considered as like products. This conclusion is also valid in the
     context of the choice of the analogue country. With regard to the possible
     influence of existing links, the Commission considered that the examination set out
     in recital 23 above had provided ample evidence that, provided that normal value is
     based on domestic selling prices, the concern expressed was without foundation.
     This importer also suggested that Mexico be chosen as the analogue country.
     However, this proposal was made only in September 1994, i.e. more than five
     months after the deadline set for comments on this issue and could not, therefore,
     be considered without significantly impeding the investigation.
 ---pagebreak---                                             12
(27) The conclusion that the Philippines constitutes an appropriate and not
     unreasonable choice for the purpose of establishing normal value for the People's
     Republic of China in accordance with Article 2 (5) of the Basic Regulation is,
     therefore, confirmed.
          (ii) Claims for an application of Article 2 (6) of the Basic Regulation
(28) Some interested parties claimed that normal value should have been established on
     the basis of Article 2(6) of the Basic Regulation, i.e. in accordance with the
     provisions applicable when a product is not imported directly from the country of
     origin but exported to the Community from an intermediate country, and that, in
     this context, normal value should have been established in the exporting country,
     i.e. Hong Kong.
(29) It should be noted that only a limited number of Chinese exporters and one
     unrelated importer co-operated with the Commission. It so happens that the co-
     operating companies either exported to or imported into the Community the
     Chinese lighters via Hong Kong. These companies represent around 53% of total
     exports to the European Community. As concerns the co-operating exporters
     located in Hong Kong, which represent around 13% of total exports of Chinese
     lighters to the European Community, the Commission has established that they
     also sell Chinese lighters on their domestic market. However, for the other
     companies (i.e. non-cooperating exporters whose importers did not co-operate),
     the "exporting route" was not known.
 ---pagebreak---                                             13
(30) In this context, the Commission is of the opinion that, as a general rule, the
     provisions of Article 2(6) are not applicable to imports originating in a non-market
     economy country. However, in the present case, it is likely that the vast majority
     of Chinese disposable flint lighters were simply transhipped in Hong Kong.
     Concerning the existence of production in the country of export, it would appear,
     according to information made available to the Commission, that there was no
     production of finished disposable flint lighters in Hong Kong during the
     investigation period. Finally, as far as sales prices in the country of export are
     concerned, since the lighters concerned are either manufactured in China under
     sub-contracting agreements or the parties involved are related, the Commission
     cannot be satisfied that these sales were made in the ordinary course of trade.
(31) In view of the above, it is concluded that even if Article 2(6) were to be considered
     applicable to imports originating in a non-market economy country, it would not
     be appropriate in the context of the current investigation to establish normal value
     on the basis of the prices on the domestic market of the country of export, since
     there was no production of finished disposable flint lighters in Hong Kong and,
     additionally, no reliable comparable price would exist for these products in that
     territory. The normal value would thus have to be based on the prices on the
     domestic market of the country of origin. However, since the People's Republic of
     China is a non-market economy country, normal value must be established in
     accordance with Article 2(5) of the Basic Regulation.
 ---pagebreak---                                            14
                    (Hi) Domestic sales price on the Filipino market
(32) The Commission considered whether normal value could be established on the
     basis of the prices at which the product is actually sold for consumption on the
     Filipino market, fa this respect, it was noted that the co-operating Filipino
     company sold its disposable flint lighters to several big customers, one of these
     customers being an independent distributor which resold the lighters to both
     retailers and wholesalers, another being a big tobacco company. The Commission
     also established that the sales prices allowed for a profit on sales (see recital 23
     above).
     It is therefore concluded that the domestic sales prices of the co-operating
     producer on the Filipino market constitute an appropriate basis for the
     establishment of normal value.
                                   (b) Export price
(33) The Commission sent questionnaires to all exporters knownfromthe two previous
     investigations concerning this product. Only the two exporters and one importer
     mentioned under recital 7, as well as one Chinese producer (namely Dong Guan
     Lighter Factory, Dong Guan City, People's Republic of China) submitted
     completed replies.
 ---pagebreak---                                              15
     The total quantities reported by the co-operating exporters and the co-operating
     importer represent 53% of the total imports. For the remaining exports and in
     accordance with Article 7(7)(b) of the Basic Regulation, since Eurostat statistics
     contain price information based on a mix of different lighters (from the point of
     view of presentation, shape, size, etc.) and, therefore, not suitable for the purpose
     of establishing the export price and given the level of co-operation, the export
     price for the non-cooperating exporters was based on the average price of the co-
     operating company with the lowest average price. At the same time, it was
     assumed that the fighters delivered by non-cooperating exporters were "naked"
     lighters sold in 50 unit packs (so-called "bulk').
(34) The co-operating exporters requested individual treatment (i.e. the establishment
     of separate export prices and thus of individual dumping margins). Although
     individual treatment may be given to certain exporters in non-market economy
     countries, in particular where they have demonstrated their independence from the
     State in the conduct of their export policy and in the fixing of their export prices, it
     was considered that the utmost prudence was required in this matter.
     In this respect, it has to be recalled that the newcomer review investigation
     referred to in recital 2 above concluded that no individual treatment could be
     granted to any of the four Chinese companies involved in the said investigation.
     Since that conclusion concerned, among others, the two companies having co-
      operated in the current investigation and given that the companies in question did
     not submit any new substantiated evidence with regard to their claimed
     independence, the granting of individual treatment to the applicants was considered
      neither appropriate nor consistent with the Community Institutions' established
     approach.
 ---pagebreak---                                              16
                                     (c) Comparison
(35) Although all disposable flint lighters can be considered one single product, they are
     sold in different forms, i.e. naked, printed, sleeved, etc. The exports from China
     reported by co-operating companies consisted, by about 80%, of naked lighters in
     "bulk". Only small quantities exported concerned one or two side printed
     disposable lighters. For the purposes of the dumping calculation, only the normal
     value and the export price of naked lighters in bulk packing were compared. This
     approach was considered reasonable since naked lighters in bulk constituted the
     great majority of the exported quantities as reported by co-operating companies.
(36) The importer having co-operated claimed that the lighters manufactured by the co-
     operating Filipino company were not comparable with the Chinese lighters because
     they were made out of different material, i.e. the body of the Filipino lighter is
     made of nylon and the body of the Chinese lighter of plastic. With regard to the
     other parts, the same importer also claimed that differences existed and should be
     taken into account in the form of a price adjustment of 100%. This importer
     claimed that these physical differences resulted in a higher cost of production and
     thus have an impact on the selling price for the Filipino lighter when compared to
     the Chinese lighter.
     As concerns the material used for the manufacture of the body, the information
     available to the Commission showed that the type of raw material used by Chinese
     producers is indeed less costly per kilogram than the one used by the Filipino
     producer. However, the technical characteristics of the plastic body lighter
     indicate that the walls of the body are up to 2.5 times thicker than the walls of the
     nylon body lighter, and therefore that more material is used. In addition, the
     processing cycle is longer in the case of the plastic body lighter due to the longer
     period required for cooling. On balance, the difference in cost is thus negligible.
 ---pagebreak---                                             17
     The Commission accepts that the parts used by the Chinese and the Filipino
     producers are not absolutely identical and that consequently the assembly process
     is not strictly identical. However, on the basis of the information made available to
     the Commission, an allegedly more sophisticated part and/or a slightly different
     part was not systematically more costly to produce than the corresponding
     allegedly less sophisticated one. Furthermore, no information was available to
     suggest that the alleged physical differences, which only negligibly affect costs,
     have an impact on sales prices.
     In these circumstances, it is concluded that no price adjustment is warranted to
     take account of alleged physical and/or qualitative differences.
(37) For the purpose of ensuring a fair comparison, an adjustment to normal value was
     granted in respect of the domestic sales tax on the Filipino market. As far as the
     export price is concerned and where available, the actual freight, insurance and
     other costs were deducted to come to FOB level, otherwise a percentage
     corresponding to the latter deductions was taken. No further adjustment was
     claimed or considered necessary.
     Domestic sales prices in the Philippines and Chinese export prices were compared
     at the same level of sales, i.e. FOB national border.
                                   (d) Dumping margin
(38) The dumping margin expressed as a percentage of the CIF Community frontier
     value of the imports was found to be 80.3%.
 ---pagebreak---                                               18
                                        E. INJURY
                                   (a) General remarks
(39) It should be stressed that the present review investigation was carried out further
     to a request from the Community industry alleging that dumping of Chinese
     disposable flint lighters had dramatically increased since the conclusion of the
     original investigation and claiming that the measures in force should be amended in
     order to remove further injury caused to the Community industry.
     Taking into account the provisions of Article 13(3) of the Basic Regulation, it was
     necessary to investigate the level of injury. In the original investigation, the
     injurious effects of Chinese dumped imports had been assessed and established
     cumulatively with imports from three other third countries. Accordingly, an injury
     investigation was also conducted with a view to establishing whether the increased
     dumping by the Chinese exporters had led to further injury which would warrant a
     modification of the measures in place in respect of the People's Republic of China.
                          (b) Total Community consumption
(40) In calculating total consumption of the product in question on the Community
     market, the Commission added Community producers' sales in the Community of
     disposable flint lighters to the total imports of these products into the Community,
     as declared under CN code 9613 10 00. On this basis, the total consumption has
     grown between 1989 (i.e. the investigation period of the original investigation) and
      1993 by 15%.
 ---pagebreak---                                             19
     It is known, however, that the imports under CN code 9613 10 00 do not only
     cover disposable flint lighters but also disposable piezo lighters. The quantity of
     imported piezo lighters is not exactly known and, therefore, it is not possible to
     assess the consumption increase due to the imports of this type of disposable
     lighters. The Commission made an attempt to differentiate flint and piezo lighters
     in global import statistics on the basis of Taric statistics supposed to differentiate
     these two types of disposable lighters but no reliable historical data could be
     established on this basis.
     Nevertheless, as far as the People's Republic of China is concerned, it should be
     noted that the information available to the Commission showed that no piezo
     lighters were imported from that country up to and during the current investigation
     period. This means, as far as the People's Republic of China is concerned, that no
     over-estimation of its market share for disposable flint lighters could occur since all
     imports from China under that CN code related to imports of the product under
     investigation.
                     (c) Factors relating to the dumped imports
                              (i) Volume and market share
(41) Between 1989 and the end of the investigation period, imports from China
     increased substantially when compared with 1989. Imported quantities were
     indeed 9.6 million units in 1989, then 69.3 in 1990, 78.1 in 1991, 45.5 in 1992 and
     71.6 million units in 1993 (investigation period adjusted to 12 months).
 ---pagebreak---                                              20
     After a relative decrease in 1992 due to the imposition of measures in 1991, the
     imports increased by a much higher rate than consumption. Consequently, the
     market share of Chinese imports increased substantially, i.e. from 1.5% in 1989 to
     11% in 1991, then from 7% in 1992 to 10% in 1993 (investigation period adjusted
     to 12 months).
                                        (ii) Prices
(42) In the context of this review investigation, it is extremely important to note that the
     export price of the Chinese lighters dropped by around 23% in the current
     investigation period when compared to the original investigation period (1989). In
     this respect, it should also be noted that this trend was established on the basis of
     figures reported by the co-operating exporters and the co-operating importer since,
     for the reasons stated in recital 33 above, Eurostat statistics were not suitable for
     the purpose of establishing export prices.
(43) The prices of Chinese lighters were also compared with those of lighters produced
     in the Community and sold by the Community industry. As in the original
     investigation, the Commission considered that only those lighters with an equal or
     almost equal amount of gas, and therefore a similar quantity of ignitions, should be
     taken as a basis for this price comparison exercise, which was made on the basis of
     a representative percentage of sales, at the level of sales to wholesalers and large
     retailers. For the reasons stated in recital 36, which are also relevant in this
     context, no adjustment was applied to take account of other alleged physical
     and/or qualitative differences.
(44) The sales price of the imported Chinese disposable lighters was, during the
     investigation period, significantly below the average sales price of the comparable
     disposable lighters produced by the Community producers. The weighted average
     margin of price undercutting was found to amount to 26% (expressed on the basis
     of Community sales price).
 ---pagebreak---                                             21
                      (d) Situation of the Community industry
                                       (i) General
(45) The lighter market is very price sensitive. In order to be able to sell or to keep
     market share, the numerous producers and buyers on the market tend to adjust
     their prices to the lowest level possible. Faced with low priced dumped imports
     from the People's Republic of China, the Community industry was forced to lower
     its prices in order to try to maintain market share, production level and capacity
     utilisation.
                         (ii) Production, sales and market share
(46) Production and sales of the Community industry remained stable between the
     original investigation period and the current investigation period, despite a certain
     improvement noticeable in 1990 and 1991. However, over the same period, in a
     growing market, its market share decreased by 9 percentage points, while the
     market share held by Chinese imports grew by 8.5 percentage points.
                        (Hi) Prices, profitability and employment
(47) Prices of the Community industry have, on average, dropped when comparing the
     original investigation period with the current investigation period. A decrease in
     price was indeed the only means to keep the loss of market share to a minimum.
     Despite this decrease, the Community industry did not achieve this result.
(48) Since the original investigation period the financial situation of the Community
     industry as a whole - after a certain improvement in 1991 - deteriorated up to the
     end of the current investigation period. The continued price fall could not be
     offset by reductions in costs. In 1993, the average sales price was below the
     average cost, including selling, general and administrative expenses.
 ---pagebreak---                                              22
(49) The Community industry has made considerable efforts to cope with the
     continuous decrease of prices, notably by reducing the number of its employees
     between the original investigation period and the current investigation period by
      13% but, at the same time, maintaining production and sales in order to remain
     viable.
                                 (e) Conclusion on injury
(50) In these circumstances, it is concluded that the injury suffered by the Community
     industry has considerably worsened. In a growing market, the Community
     producers concerned have lost market share and their profitability has deteriorated
     in spite of severe cost reductions, including reduction of jobs.
                              F. CAUSATION OF INJURY
(51) The Commission examined whether the additional injury suffered by the
     Community industry was caused by the Chinese exporters' increased dumping and
     whether other factors may have caused or contributed to that injury.
                            (a) Effect of the dumped imports
(52) In examining the effects of the dumped imports, it was found that the increasing
     volume of the low priced dumped imports from the People's Republic of China
     coincided with the loss of market share, the price decreases and the deterioration in
     the financial situation of the Community industry.
 ---pagebreak---                                                23
(53) Indeed, between the original investigation period and the current investigation
     period the market share held by Chinese imports has considerably increased,
     namely from 1.5% to 10%, i.e. 8.5% of total consumption, while the Community
     industry's market share decreased by 9% of total Community consumption. During
     the same period, the level of undercutting by Chinese exports also increased from
     around 20% before the imposition of the measures to 26% in the current
     investigation period.
     Given that the market in question is highly price sensitive, as already explained in
     recital 45 above, it is clear that this substantial and increasing price undercutting by
     Chinese dumped imports, with consequentialy increased market share, has
     significantly affected the Community industry, both in respect of volumes sold by
     this industry on a market that was experiencing growth and on its selling prices,
     with the consequent impact on unit costs and profit.
     Given, in addition, that the dumping margin of Chinese imports has substantially
     increased during the same period, it is concluded that such heavily dumped imports
     have caused further injury to the Community industry concerned.
                                 (b) Effect of other factors
(54) The Commission examined whether factors other than the dumped imports had
     caused or contributed to the material injury suffered by the Community industry,
     such as falling exports to third countries by the Community industry or an increase
     of imports from countries other than the People's Republic of China.
(55) Between the original investigation period and 1993, exports to third countries by
     the Community industry showed an overall stable trend (in volume, index basis
      1989 = 100, 1990 amounted to 106, 1991 to 105, 1992 to 95 and 1993 to 100).
     This evolution cannot therefore be considered as a factor having adversely affected
     the Community industry.
 ---pagebreak---                                               24
(56) Imports from countries other than the People's Republic of China showed between
      1989 and the investigation period a stable market share at around 25% of total
      consumption. A more detailed analysis showed that certain countries have taken
      over traditional suppliers now subject to anti-dumping measures (other than the
      Chinese) and may have entered the market due to an aggressive pricing policy,
      which may have had an impact on the situation of the Community industry.
      This is confirmed by the recent lodging of a complaint and initiation of an anti-
      dumping proceeding concerning imports of disposable flint lighters originating in
      certain third countries which were not involved in the original proceeding?
      However, the hypothetical existence of dumped imports from other third countries
      does not detract from the fact that Chinese imports, having dramatically increased
      their market share by increased undercutting and dumping, should be considered,
      in isolation, as a cause of further material injury to the Community industry.
(57) One importer claimed that the introduction of new products such as the piezo
      disposable lighter and the flameless refillable lighter had adversely affected the
      Community industry by contracting demand and depressing prices for disposable
      flint lighters. However, these allegations were not supported by evidence
      indicating that purchases of these new products by Community consumers were
      replacing those of disposable flint lighters. In fact, it appears that the product
      concerned remained attractive, given the increased imports and consumption.
(58) The same importer also claimed that the economic recession was one of the main
      reasons for the injury suffered by the Community industry. As a result, consumers
      were allegedly looking for the lowest priced lighter available. Prices have
      therefore dropped, it was argued, and the Chinese lighters become more attractive
      to consumers.
    SeeOJNoC67, 18.3.1995. p. 3.
 ---pagebreak---                                             25
     While it is clear that Chinese dumped prices severely undercut the Community
     industry's prices and thus affected its pricing policy and profitability, no
     substantiated evidence of the alleged impact of the economic recession on the
     Community lighter market as a whole, and on the Community industry's situation
     in particular, has been provided. Indeed, while such impact, if any, would also be
     noticeable on the overall Community market, it should be stressed that the
     consumption of disposable flint lighters in the Community has increased (see recital
     40 above). In these circumstances, the argument that the economic recession
     would be responsible for the injury suffered by the Community industry cannot be
     accepted.
(59) The same importer claimed that the difficult situation of the Community industry
     also related to the fact that, compared with refillable lighters, the disposable flint
     lighters it was producing were environmentally unfriendly products and that the
     increasing environmental awareness of consumers in the Commumty made it more
     difficult to sell such disposable products, on which governments were moreover
     considering the imposition of so-called "Ecb taxes".
     In this context, it is worth noting that although imported lighters are equally
     environmentally unfriendly, they remain the subject of intense trading. The
     consumption of disposable lighters in general also continues to increase. In
     addition, the above argument based on the increasing environmental awareness of
     consumers was not supported by any clear evidence that a significant proportion of
     the Community consumers was now showing a marked preference for refillable
     lighters.
(60) Finally, this importer also claimed that any injury to the Community industry
     should be significantly diminished because the increase in imports from the People's
     Republic of China, noticeable in 1993, was due to developments on the Italian ancf
     U.K. markets, namely the abolition of excise taxes on disposable lighters which,
     until the end of 1992, were limiting the consumption of these products.
 ---pagebreak---                                             26
     This argument cannot be accepted. Indeed, nothing explains why the abolition of
     excise taxes in the said Member States should result in an increase in imports
     which was significant with regard to products of Chinese origin only. In the
     absence of unfair trading practices, any competitive suppliers would have been able
     to enter, and compete on, the expanding Italian and U.K. markets. The fact that
     Chinese dumped imports gained a substantial share of the market in Italy and the
     U.K. underlines the specific impact of the Chinese dumped imports, which resulted
     in the Chinese achieving a larger market share by lower prices. These
     circumstances do not therefore warrant a modification to the findings regarding the
     causation of injury.
                             (c) Conclusion on causation
(61) In view of the above, it is evident that Chinese dumped imports have put a
     considerable downward pressure on disposable flint lighter prices in the
     Community market.
     The effect of other factors, such as imports from other third countries, on the
     injury sustained by the Community industry cannot be totally set aside. However,
     given the various elements set out above and especially the significant increase in
     quantities imported at dumped prices from the People's Republic of China,
     combined with the greater level of price undercutting by Chinese exporters, it is
     concluded that the dumped imports from the People's Republic of China have,
     taken in isolation, caused further injury to the Community industry, and that this
     injury was material.
 ---pagebreak---                                             27
                            G. COMMUNTTY INTEREST
(62) In the previous investigations, the adoption of measures was considered to be in
     the interest of the Community. Since no new arguments have been made which
     could lead to a reconsideration of this position, thefindingsof Regulation (EEC)
     No 3433/91 in this respect are confirmed.
      ^                                 H. DUTY
                              (a) Injury elimination level
(63) In the original investigation, for the purpose of establishing the injury elimination
     level, it was considered that any measure should allow the Community industry to
     cover its costs of production and to achieve a reasonable profit, namely 15% on
     sales turnover. This profit margin was considered as the minimum necessary to
     finance new investments in manufacturing facilities and research and development.
     It was also considered that the comparison should be restricted to those models
     with an equal or almost equal amount of gas, and therefore a similar quantity of
     ignitions.
     In the absence of any new substantiated argument in respect of the profit that the
     Community industry should be allowed to achieve, it was considered appropriate
     to follow the same approach in the current investigation as in the original
     investigation. For the reasons stated in recital 36,"which are also relevant in this
     context, it was considered that alleged physical differences, other than the amount
     of gas, should not be taken into account for the purpose of determining
     comparable models.
 ---pagebreak---                                            28
     On the above basis, the comparison showed that, in order to eliminate injury,
     Chinese CIF prices would have to increase by 96.6%.
(64) Since the injury elimination level is higher than the dumping margin, the duty
     should be based on the dumping margin found.
                                  (b) Form of the duty
(65) Since prices of the Chinese imported disposable flint lighters steadily decreased
     after the imposition of the measures in 1991, it is highly foreseeable that an
     increased ad valorem duty would again lose its effectiveness within a relatively
     short time. Therefore, a simple amendment to the current ad valorem duty does
     not appear to be appropriate. The number of different types of lighters, i.e. naked,
     printed one side, printed two sides, one colour, multiple colours, etc., makes it
     virtually impossible tofixa minimum price level for disposable lighters.
     It is therefore considered appropriate to amend the measure in force by imposing a
     specific duty per lighter (namely 0.065 ECU per piece). In this respect, it has to be
     noted that by applying such a duty which stays within the limits of the dumping
     margin, the additional value of special features will not be penalised. In other
     words, no duty will be applied to the added value concerning printing or other
     special items which are at present very exceptional in the case of Chinese imports.
 ---pagebreak---                                            29
              L PERIOD OF VALroiTY OF THE REGULATION
(66) This Regulation should be considered as an amendment to Regulation (EEC)
     N° 3433/91 within the meaning of Article 15.(1) of Regulation (EEC) No 2423/88
     only insofar as the People's Republic of China is concerned. The measure imposed
     on imports from the People's Republic of China should, therefore, lapse after a
     period of five years starting from the date on which this Regulation enters into
     force, subject to the provisions of Regulation (EC) No 3283/948,
HAS ADOPTED THIS REGULATION:
                                        Article 1
1.   The first phrase of Article 1(2) of Regulation (EEC) N° 3433/91 shall be replaced
     by the following:
      "2. The rate of the duty, applicable to the net,free-at-Communityfrontierprice
     before duty, or the amount of duty per lighter, shall be set as follows: "
2.   Paragraph (b) of Article 1(2) of Regulation (EEC) N° 3433/91 shall be replaced by
     the following:
     M
       (b) 0.065 ECU per lighter for the products originating iiithe People's Republic
           ofChina;"
*   OJ No L 349, 31.12.1994, p. 1.
 ---pagebreak---                                             30
                                        Article 2
This Regulation shall enter into force on the day following 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
 ---pagebreak---                                                                    ISSN 0254?1475
                                                            COM(95) 141 final
                                              DOCUMENTS
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