CELEX: 51996PC0005
Language: en
Date: 1996-01-15
Title: Proposal for a COUNCIL REGULATION (EC) imposing a definitive anti-dumping duty on imports of powdered activated carbon originating in the People' s Republic of China and collecting definitively the provisional duty imposed

COMMISSION OF THE EUROPEAN COMMUNITIES
                                                  Brussels, 15.01.1996
                                                  COM(96) 5 final
                                   Proposal for a
                         COUNCIL REGULATION (EC)
imposing a definitive anti-dumping duty on imports of powdered activated carbon
   originating in the People's Republic of China and collecting definitively the
                             provisional duty imposed
                          (presented by the Commission)
 ---pagebreak---  ---pagebreak---                                                 1
                             EXPLANATORY MEMORANDUM
(1)      By Commission Regulation (EC) No 1984/95! a provisional anti-dumping duty
         was imposed on imports of powdered activated carbon ("PAC") originating in the
         People's Republic of China. The rate of the provisional anti-dumping duty was
         66.8% of the net free-at-Community frontier price before duty and was based on
         the injury elimination level found.
(2)      By Regulation (EC) No 2736/952, the Council extended the validity of this duty
         for a period of two months.
(3)      Following publication of the provisional measures, new arguments concerning the
         dumping calculations were presented by certain interested parties. This led to a
         reduction of the dumping margin established from 71.5% to 69.9%.
(4)      Various arguments were also put forward by interested parties concerning, inter
         alia, the comparability of the Chinese product with PAC produced in the
         Community (i.e. "like product") and causation between the injury suffered by the
         Community producers and Chinese imports.
(5)      Certain of these new arguments led the Commission to revise the calculations of
         the undercutting and the injury elimination level. These revisions led to a lower
         average undercutting margin of 21.0% (from 23.5%) and a lower injury
         elimination level of 38.6% (from 66.8%).
1
    O.J. No L 192, 15.8.1995, p.14
2
    O.J. No L 285, 29.11.1995, p.2
 ---pagebreak--- (6) As concerns Community interest, at the request of certain importers/distributors
    various users were contacted following publication of the provisional measures in
    order to ascertain trends in their consumption of PAC and also to find out how
    Chinese PAC is perceived in the market.
(7) None of the new information obtained or arguments presented alter, however, the
    main findings set out in the provisional duty Regulation, which are confirmed in
    the enclosed definitive duty Regulation proposal.
(8) Given that the revised injury elimination level is still lower than the revised
    dumping margin established, the rate of the definitive anti-dumping duty should
    be based on the injury elimination level of 38.6%. Furthermore, the amounts
    secured by way of provisional anti-dumping duty under Regulation (EC) No
    1984/95 should be collected at the duty rate to be definitively imposed. Amounts
    secured in excess of the definitive rate of duty should be released.
(9) A proposal is therefore submitted to the Council for the imposition of a definitive
    anti-dumping duty of 38.6% on imports of PAC originating in the People's
    Republic of China.
 ---pagebreak---                                                 1V>
                              COUNCIL REGULATION (EC)
  imposing a definitive anti-dumping duty on imports of powdered activated carbon
      originating in the People's Republic of China and collecting definitively the
                                  provisional duty imposed
THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty establishing the European Community,
Having regard to Council Regulation (EC) No 3283/94 of 22 December 1994 on
protection against dumped imports from countries not members of the European
Community1, as last amended by Regulation (EC) No 1251/952, and in particular Article
23 thereof,
Having regard to Council Regulation (EEC) No 2423/88 of 11 July 1988 on protection
against dumped or subsidised imports from countries not members of the European
Economic Community3, as last amended by Regulation (EC) No 522/944, and in
particular Article 12 thereof,
Having regard to the proposal submitted by the Commission after consulting the
Advisory Committee,
Whereas:
1
    OJNoL349, 31.12.1994, p. 1.
2
    OJ No L 122, 2.6.1995, p. 1.
3
    OJ No L 209, 2.8.1988, p. 1.
4
    OJ No L 66, 10.3.1994, p. 10.
 ---pagebreak---                                              2
                                 A. PROVISIONAL MEASURES
(1)    The Commission, by Regulation (EC) No 1984/955, hereinafter referred to as 'the
        provisional duty Regulation', imposed a provisional anti-dumping duty on imports
        into the Community of powdered activated carbon (hereinafter referred to as
        "PAC") originating in the People's Republic of China and falling within CN code
        ex 3802 10 00.
       By Regulation (EC) No 2736/956, the Council extended the validity of this duty for
        a period of two months.
(2)     Subsequent to the imposition of the provisional anti-dumping duty, one Chinese
        exporter, the complainants and other interested parties presented written
        submissions, making known their views on the provisional findings. Where
        requested, hearings were granted by the Commission. In particular, nine
        importers/distributors who are members of the Community of Activated Carbon
        Importing Companies in Europe (hereinafter referred to as "CACIC") presented
       joint submissions concerning the Commission's findings.
5
    O J N o L 192, 15.8.1995, p. 14.
6
    OJ No L 285, 29.11.1995, p.2
 ---pagebreak--- (3) In addition, following the imposition of the provisional anti-dumping duty, a
    company based in the USA submitted to the Commission that it started exporting
    PAC produced in a joint venture in People's Republic of China on a private label
    basis to the Community during 1994 (i.e. after the investigation period) and
    requested to be exempted from any definitive duty. The company was advised that
    such an exemption could only be granted after a newcomer review investigation
    had been requested and carried out under the provisions of Article 11(4) of
    Regulation (EC) No 3283/94. Furthermore, as this proceeding relates to exports
    from a non-market economy country, the company was advised that it would also
    have to show to the satisfaction of the Community Institutions that, in its particular
    case, individual treatment should be granted. Nevertheless, certain comments of a
    general nature which the company made had also been raised by other interested
    parties and were therefore already taken into account, where appropriate.
(4) As mentioned in recital 76 of the provisional duty Regulation, at that stage of the
    investigation, no public utility user or industrial user of PAC had made any
    submissions to the Commission. Subsequent to the imposition of the provisional
    anti-dumping measures, however, several such users made their views known to the
    Commission.
 ---pagebreak---                                             4
    In addition, certain importers/distributors submitted that the Commission should
    approach "major" PAC users in order to obtain information on the evolution of
    their consumption during the last few years and also to find out how they perceived
    Chinese PAC in comparison to the Community produced product.                 As the
    Commission could agree to this request, simple questionnaires were sent to
    numerous PAC users situated in the Community.            In total, twenty-two users
    situated in six different Member States were approached by the Commission.
    Meaningful comments or replies to the questionnaire were only received from
    twelve of these users, representing approximately 6% of total Community
    consumption. Details of the additional information collected are given below in
    recitals 62 to 66 of the present Regulation.
(5) The Commission continued to seek and verify all other information it deemed to be
    necessary for its definitive findings and also reviewed certain aspects of the
    calculations made in the provisional duty Regulation to establish dumping,
    undercutting and the injury elimination level. The parties were informed of these
    revised calculations and also of the essential facts and considerations on the basis
    of which it was intended to recommend the imposition of a definitive anti-dumping
    duty and the definitive collection of the amounts secured by way of a provisional
    duty. They were also granted a period within which to make representations
    subsequent to the disclosure. Their representations were considered and, where
    appropriate, the Commission's findings were modified to take account of them.
 ---pagebreak---                                             5
                     B. PROCEDURAL QUESTIONS RAISED
(6)  As concerns the actual initiation of this investigation, CACIC argued that the
    complaint lodged by the European Chemical Industry Council (hereinafter referred
    to as "CEFIC") was "factually incomplete", contained "false allegations" and
    omitted "a number of relevant facts which would have prevented the Commission
    from initiating this investigation". In support of these arguments, CACIC stated
    that the complainants had omitted the names and addresses of importers known to
    them in several Member States and, as a consequence, these importers were unable
    to participate in the investigation. CACIC also argued that the Commission was
    made aware of many wrong addresses and mistakes in the complaint but did not
    take sufficient measures to investigate the situation in all Member States.
    CACIC also claimed that the Commission had rejected the co-operation of an
    importer/distributor in Sweden and, because of this, the provisional duty Regulation
    did not address the situation in all Community markets. In consequence, CACIC
    considered that the provisional duty Regulation not only infringed the rights of
    importers in the new Member States but was also defective in its market analysis.
 ---pagebreak---                                              6
(7) As concerns the remark made by CACIC concerning the importers omitted from the
    complaint, it has to be pointed out that when the Commission was made aware of
    the existence of these companies early in the proceeding, questionnaires requesting
    information were immediately sent to them. The Commission is not in a position at
    the initiation stage of an investigation to know all the importers or exporters
    concerned by the proceeding, as it initially relies on information provided in the
    complaint. In this particular case, the Commission was satisfied that the
    complainant had furnished all the relevant information it had in its possession.
    Furthermore, it should be remembered that one of the purposes of a notice of
    initiation of an anti-dumping proceeding published in the Official Journal of the
    European Communities is to invite all interested parties to come forward and
    participate in such a proceeding.
    With regard to CACIC's point concerning the incorrect addresses of certain
    interested parties in the complaint, it should be noted that the Commission sent out
    questionnaires for a second time to these companies when it was advised of the
    errors by one of the known importers.
    Concerning the allegation that the co-operation of one Swedish importer/distributor
    had been rejected by the Commission, it should be pointed out that this company
    made itself known in February 1995 and was informed that due to the advanced
    stage of the investigation it was not possible for it to complete a questionnaire. The
    company in question was advised, however, that its comments were most welcome,
    particularly as far as Community interest was concerned. Subsequent to this, the
    company only contacted the Commission again after provisional duties were
    imposed and actually declared that it had not made any imports of PAC from the
    People's Republic of China during the investigation period.
 ---pagebreak---                                              7
(8) In view of the foregoing, it is considered that the rights of defence of all interested
    parties were respected. As concerns the claim that the Commission's investigation
    did not address all markets and that its analysis is therefore defective, this question
    is dealt with below in recital 67 of the present Regulation.
       C. PRODUCT UNDER CONSIDERATION AND LIKE PRODUCT
(9) Certain parties reiterated arguments they had made previously in that Chinese PAC
    should not be considered as a like product to PAC produced in the Community (or
    to PAC produced in the United States of America, the analogue country). These
    parties submitted that in view of the many different grade's of PAC on the market
    and their different production methods, the different raw materials used and the
    diverse technical characteristics imparted to the finished product, it was an over-
    simplification on the part of the Commission to treat them all as one like product.
 ---pagebreak---                                             8
(10) One importer/distributor repeated its argument that the Chinese PAC grade "GA"
     (which was chemically activated using zinc) is extremely efficient for waste water
     treatment, particularly in comparison to Community-produced PAC normally used
     for this purpose. The company therefore submitted again that this Chinese PAC
     grade should not be considered as a like product to the Community-produced
     grades. In this respect, a major user stated that the Chinese PAC grade it had been
     purchasing for waste water treatment from the importer/distributor in question was,
     in economic terms, preferable to certain Community-produced grades. In other
     words, the Chinese PAC grade was of a better quality and at a competitive price in
     comparison to some Community-produced grades. This does not, of course, mean
     there are no better quality Community-produced grades - it simply means that the
     Community-produced grades of a similar quality are more expensive and therefore
     not normally used for waste water treatment.
     The same importer/distributor further argued that this "GA" grade is also not a like
     product as it has a lower purity in comparison to the PAC activated chemically in
     the Community by phosphoric acid. It was claimed, therefore, that it cannot be
     used in many applications where Community-produced PAC is used.
(11) In respect of the above observations, it should be noted that the investigation
     revealed that the "GA" grade was sold in the Community to many different types of
     users to which the Community producers are also selling their PAC grades (e.g. the
     food industry, the chemical industry as well as for water treatment). In addition,
     the sole co-operating Chinese exporter itself declared that its "GA" grade is suitable
     for many uses including the chemical, pharmaceutical and food industries. This
     was also confirmed during the course of the investigation by certain
     importers/distributors.
 ---pagebreak--- (12) Another distributor claimed that the Chinese PAC grade "GA" is a very efficient
     grade when used in wine production and, as there is no zinc-activated PAC
     produced in the Community, it should not be considered as a like product. In this
     respect, it should be pointed out that whilst there may be no Community production
     of chemically activated PAC using zinc (see recitals 11 to 17 of the provisional
     duty Regulation), the investigation showed that there are equivalent Community-
     produced grades which have been activated by means of phosphoric acid and
     developed specifically for the wine industry. This was indirectly admitted by the
     distributor itself when it claimed that a high anti-dumping duty on Chinese PAC
     would force it to pull out of the Community market thus leaving only the two main
     Community producers to compete for this particular PAC sales sector.
(13) It was also submitted that it was inappropriate to compare chemically activated
     PAC produced in the USA to that produced in the People's Republic of China as
     these countries used different chemical activation agents for their PAC production.
     In this respect, it is considered that although the activating agents are not always the
     same, the production method used is similar (see recital 13 of the provisional duty
     Regulation). In addition, the raw materials used in the USA are identical to those
     used in the People's Republic of China. This leads to end products which are
     sufficiently alike for them to be comparable.
 ---pagebreak---                                              10
(14) From the above, it is concluded that whilst there can be certain differences between
     PAC grades imported from the People's Republic of China and those produced in
     the Community and the USA, as already explained in recitals 18 and 19 of the
     provisional duty Regulation, the finished products nevertheless remain sufficiently,
     similar in terms of their physical characteristics for them all to be considered as like
     products within the meaning of Article 2(12) of Regulation (EEC) No 2423/88.
     Indeed, all of the arguments presented in the previous recitals of the present
     Regulation refer only to potential differences in quality and, furthermore, none of
     the interested parties has provided evidence that imported Chinese PAC is not in
     direct competition with PAC produced in the Community and the USA.
     Accordingly, the provisions of recitals 17, 20 and 21 of the provisional duty
     Regulation are confirmed.
                            D. COMMUNITY INDUSTRY
(15) No new arguments were received in connection with recital 22 of the provisional
     duty Regulation, therefore these findings are confirmed.
 ---pagebreak---                                            11
                                     E. DUMPING
                    1. Normal Value - choice of analogue country
(16) Certain interested parties questioned the suitability of the USA as the analogue
     country in this particular case. It was argued that the large modern plants in the
     USA could not be compared to the smaller, traditional production plants in the
     People's Republic of China and that differences in the cost of investment and
     depreciation in the USA rendered any such comparison as "absurd".
(17) The argument put forward completely overlooks, however, the fact that the People's
     Republic of China does not have a market economy and that various aspects of a
     producer's input and output are directly controlled by the State. This intervention
     impedes the establishment of reliable domestic prices and costs and it is for this
     reason that an analogue country is sought for the purposes of establishing normal
     value. In all cases, the Commission will use the most appropriate analogue
     country, given the circumstances of the case and, if necessary, make due
     adjustments. In this particular case, for the reasons stated in recital 25 of the
     provisional duty Regulation, the choice of the USA as the analogue country was not
     considered unreasonable.
 ---pagebreak---                                              12
(18) In connection also with the choice of an analogue country, these parties also made
     the assumption that the unidentified co-operating parties in the USA were related to
     Community producers and that this was not conducive to objective results. Despite
     being requested to do so, the Commission is not in a position to reveal the names of
     the co-operating US producers as their average domestic sales prices (and technical
     specifications of the grades taken for normal value comparison purposes) have been
     disclosed to the importers and the co-operating Chinese exporter. To divulge their
     names as well would constitute a breach of confidentiality. It should also be
     remembered that these producers were visited by the Commission and the data
     provided was the subject of an on-spot verification. In addition, the domestic sales
     which formed the basis for the normal value calculations were at profitable levels,
     only to unrelated customers and were representative of US domestic market prices.
     Therefore, the question of whether or not these US producers were related to
     Community producers is totally irrelevant.
(19) Another interested party questioned why Malaysia had not been taken as the
     analogue country instead of the USA since the average Malaysian export price to
     the Community, as indicated in Eurostat during the investigation period (1 January
     to 31 December 1993), was lower than the average Chinese export price during the
     same period. This party also proposed that the average Malaysian export price to
     the Community (obtained from Eurostat) be used for establishing normal value for
     Chinese steam activated PAC. It also submitted that since Malaysia does not
     produce chemically activated PAC, a theoretical export price for Malaysian
     chemically activated PAC should be used to establish normal value for Chinese
     chemically activated PAC.
 ---pagebreak---                                             13
(20) This proposal for establishing normal value in Malaysia on the basis of an average
     export price obtained from Eurostat for many different unknown grades (not all of
     which may be PAC), contradicts the request of all the other interested parties that
     all comparisons for dumping and injury purposes should be made on the basis of.
     data referring to comparable individual PAC grades for each of the two activation
     methods separately. Accordingly, this proposal could not be accepted.
(21) Another reason for not selecting Malaysia as the analogue country in this particular
     case is given in recital 25 of the provisional duty Regulation. Whilst the major
     Malaysian producer of PAC known to the Commission had been approached, this
     company did not in fact respond to the Commission's request for information. It
     should also be noted that available information indicates Malaysia produces only
     steam activated PAC whilst, like the People's Republic of China, the USA produces
     and sells on its domestic market both steam and chemically activated PAC grades.
(22) Accordingly, the conclusions set out in recital 26 of the provisional duty Regulation
     concerning the choice of the analogue country are confirmed.
 ---pagebreak---                                              14
                                    2. Normal value
(23) For the purpose of definitive findings, normal value was established on the basis of
     the methods used in recitals 27 and 28 of the provisional duty Regulation.
                                     3. Export price
(24) A duly substantiated request was received from the sole co-operating Chinese
     exporter concerning the incorrect attribution of a commission to certain export
     transactions which was made in the export price calculation. An adjustment was
     made accordingly.
(25) No other arguments were received in connection with the findings in recitals 29 to
     32 of the provisional duty Regulations. Therefore, these findings are confirmed.
                                     4. Comparison
(26) The Commission provided to all interested parties, upon request, additional
     technical specifications as well as basic uses for certain US PAC grades which had
     been used for product comparison purposes.
(27) Certain parties argued that the comparisons made between the Chinese export
     prices and the normal values were based on inadmissible simplifications They
     reiterated a previous submission made that independent laboratory analyses should
     be carried out in order to allow what they considered to be a "fair comparison"
     between Chinese and US PAC grades for the dumping calculations as well as
     between Chinese and Community-produced grades for the undercutting and
     underselling calculations (see recitals 35, 46 and 47 of the provisional duty
     Regulation).
 ---pagebreak---                                             15
(28) It should be noted that the importer/distributor which first proposed the use of
     independent laboratory analyses, had itself made comparisons between Chinese and
     Community-produced PAC grades in its submissions to the Commission during
      1994 and even indicated a US PAC grade which it considered to be comparable to
     the Chinese. Indeed, the Commission used certain of these comparisons where the
     products appear to have similar commercial specifications and basic uses. It was
     only in January 1995 that this company came with the proposal for independent
     laboratory analyses.
     In this respect, it should be recalled that the investigation showed that different
     PAC grades, irrespective of their origin, are interchangeable to a great extent as far
     as their basic applications are concerned. Indeed, as explained in recitals 14 and 15
     of the provisional duty Regulation, different PAC grades sold for the same
     applications may have certain differences as far as their precise technical
     specifications are concerned and it is for the user to select the most cost effective
     PAC grade for its particular needs. Such differences can be found in the available
     specifications sheets issued by the producers or the importers/distributors for the
     general information of users or which accompany sales invoices, purchase contracts
     etc. The Commission has used these specifications sheets, together with the basic
     known applications, in order to make comparisons between prices of apparently
     similar PAC grades thus avoiding, at the request of certain interested parties, the
     use of overall PAC average prices. It was therefore considered that detailed
     laboratory analyses would not assist further this particular aspect of the
     investigation.
 ---pagebreak---                                            16
(29) The same company requested a meeting with the complainants and "possibly with a
     neutral authority" in order to discuss product comparisons. As the possibility of
     such a meeting is provided for in Article 7(6) of Regulation (EEC) No 2423/88, the
     Commission approached the complainants with this request.            CEFIC stated,,
     however, that such a meeting was not necessary in their view since they considered
     all relevant information and technical expertise at their disposal to make
     meaningful comparisons had already been provided to the Commission. Therefore,
     no such meeting was held between the parties directly concerned.
(30) Although all interested parties and in particular the importers/distributors (which
     have also sufficient expert knowledge on Chinese, Community and even US-
     produced PAC) were asked to propose substantiated specific alternative
     comparisons or even adjustments for differences in physical characteristics between
     the different PAC grades, only a limited amount of relevant information was
     supplied. This information did, however, cast doubt upon the appropriateness of
     the comparison the Commission had made for one Chinese steam activated PAC
     grade and, accordingly, the Commission changed the comparison made for this
     particular Chinese grade.
(31) It is therefore confirmed that the grade-by-grade comparisons made by the
     Commission on the basis of available commercial technical specifications and
     known uses should be maintained.
 ---pagebreak---                                              17
(32) It was also submitted that the prices taken in the US market in order to calculate the
     dumping margin were not at the same level of trade and that adjustments should be
     made accordingly. In particular, it was argued that an importer/distributor of
     Chinese PAC in the Community does not perform the same function as a distributor
     of US origin product in the USA and that costs such as re-packing, storage,
     financing, technical services/development and quality assurance are all elements
     which are built into the domestic sales prices of the US producers, but not into the
     Chinese export price. The parties which raised this particular issue did not,
     however, propose specific levels for such adjustments.
(33) As a general remark, it should be noted that the Commission established normal
     value on the basis of US distributor-delivered domestic prices (i.e. at the same level
     of trade with the Chinese exports to importers/distributors in the Community). As
     provided for in Article 2(10) of Regulation (EEC) No 2423/88, only adjustments to
     take account of differences affecting price comparability (e.g. selling expenses) can
     be made. In this respect, as is indicated in recital 34 of the provisional duty
     Regulation, the Commission adjusted the US domestic prices used in the
     comparisons so as to take account of all discounts, rebates, commissions and
     packing costs.
 ---pagebreak---                                              18
(34) Concerning re-packing, the investigation showed that Chinese PAC is always
     packed in bags which are shipped to the Community in cargo containers. Certain
     Community importers/distributors claimed, however, that these bags are not of an
     acceptable quality to their customers and re-bagging before resale is therefore
     necessary. In this respect, it should be noted that as mentioned in the provisional
     duty Regulation, the Commission had already adjusted the US domestic price
     downwards to take account of all packing costs incurred by the US producers,
     therefore no further adjustment or allowance can be granted.
(35) The argument that there are no storage costs built into the Chinese export prices
     whilst such costs are included in the US prices is not considered to be realistic.
     Indeed, it is considered inevitable that the Chinese export prices also contain a
     certain element for storage costs as the product would have to be stored until it is of
     an economically viable quantity for export shipment and/or fulfill the delivery
     timing clauses of the sales contracts. No differences can therefore be established
     for the storage costs which are considered to be included in both the US and
     Chinese prices.
 ---pagebreak---                                            19
(36) With regard to financing costs built into US domestic prices and not into Chinese
     export prices, it should be remembered that under free market economy conditions,
     regardless of their functions as importers, distributors, producers, traders, etc., all
     such companies incur these type of expenses. This would also be the case for the
     Chinese exporters and producers if they too had to operate under free market
     conditions. As this is not the case, this argument is considered irrelevant for the
     purposes of this proceeding. As far as the payment terms granted by the Chinese
     exporters for exports to the Community and by the co-operating US producers for
     their domestic sales, these were found to be similar.        No adjustment for this
     purpose is therefore necessary.
(37) Concerning the question of technical services/development and quality assurance
     costs, the investigation showed that although the Chinese exporters guarantee the
     quality of the delivered product in their sales contracts and should therefore incur
     quality assurance costs, they do not provide technical assistance or product
     development for their customers. As PAC is a customer (i.e. user) oriented product
     and very often producers develop specific qualities for the needs of certain
     customers, it was found that these types of expenditure constitute a part of the
     selling costs incurred by the US producers, although recorded in their accounts
     under "research and development" costs. Accordingly, an adjustment was made to
     the domestic sales prices of each US producer in order to net-back these actual
     technical assistance and product development costs incurred by each producer.
 ---pagebreak---                                            20
                                 5. Dumping margins
(38) In the light of the conclusions set out above with regard to the determination of
     normal value and export price, and the comparison between the two, the definitive
     examination of the facts showed the existence of dumping in respect of imports of
     the product concerned originating in the People's Republic of China.
(39) Taking into account the change made concerning the alternative comparison for one
     PAC grade, the correct attribution of certain commission and an adjustment granted
     to normal value for technical assistance and product development costs, the
     weighted average dumping margin expressed as a percentage of the free-at-
     Community frontier price, customs duty unpaid, is 69.9%.
                                      F. INJURY
                             1. Community consumption
(40) One party argued that for the purposes of examining trends in Community
     consumption, the Commission should have considered not only the period 1990 to
     the investigation period but also previous years as well, since this would have
     demonstrated a decline in consumption (instead of the small increase of 3.3%
     which was observed over the period 1990 to 1993). It is alleged that if such an
     analysis over a longer period had been carried out, the effects of the closure of a
     large PAC production plant in Germany before 1990 would have given different
     trends as regards Community consumption.
 ---pagebreak---                                               21
(41) It is common practice for the Community. institutions to examine trends in
     consumption, import volumes, market shares, prices, etc. over a period of several
     years (normally four years including the investigation period). This practice was
     followed in the present case as it was considered appropriate for giving an objective
     view of the development of the market situation for all parties concerned.           It
     should, however, be noted that even if the period under analysis were to be
     extended and the trend in consumption were to change, the trends relating to the
     Community producers' market share (i.e. declining) as well as those of Chinese
     imports (i.e. increasing), would anyhow remain the same.
(42) Certain importers/distributors also claimed that significant quantities of PAC were
     shipped to the Community from the People's Republic of China but never actually
     put into "free circulation" (i.e. by being entered to bonded warehouse and then sold
     on to third countries outside the Community). It was also submitted that Chinese
     PAC was put into free circulation within the Community but then re-exported to
     third countries. In order to clarify this situation, the Commission requested specific
     data and documentation from the parties concerned. These parties failed, however,
     to provide the necessary information which would enable the Commission to
     attribute the actual year of import to these re-exports of Chinese PAC and thus
     allow their claims that lower quantities of PAC had actually been consumed in the
     Community than had been found in the Commission's investigation.
 ---pagebreak---                                             22
                   2. Volume and market share of dumped imports
(43) Apart from the arguments presented in the previous recital of this Regulation, no
     new submissions were made concerning the volume and market share of dumped
     imports. Therefore, the findings in recitals 37 to 44 of the provisional duty
     Regulation are confirmed.
               3. Prices of the dumped imports and price undercutting
(44) As with the comparisons made by the Commission in order to establish dumping, it
     was again submitted by certain interested parties that comparisons for undercutting
     purposes between Community-produced PAC grades and PAC grades imported
     from the People's Republic of China should be made on the basis of independent
     laboratory analyses.
     It was also argued that the technical specifications of the different PAC grades used
     by the Commission for comparison purposes were incomplete.
     In recitals 46 and 47 of the provisional duty Regulation, as well as in recitals 27 to
     31 of the present Regulation, it has been explained why the comparisons made on
     the basis of available commercial, technical specifications and uses of the PAC
     concerned were considered sufficient for the purposes of this investigation. The
     Commission used the commercial, technical specifications issued by the
     Community producers themselves as well as the Chinese PAC technical
     specifications normally accompanying the purchase contracts of the importers.
 ---pagebreak---                                             23
(45) It should also be noted that although the Commission's comparisons were disclosed
     to all interested parties well before the imposition of provisional measures, no
     specific alternative comparisons or even adjustments for any differences in physical
     characteristics between different PAC grades were proposed by any interested
     party. One could have expected that the importers/distributors, which in certain
     cases are also trading in Community-produced PAC, have the necessary expertise
     to provide the above-mentioned information, if they cared to do so.
(46) It was claimed that the market price of Chinese PAC in the Community is at the
     level of the Community producers or, in some cases, even higher. Whilst it may
     well be the case that some export transactions for Chinese PAC grades are made at
     similar or even higher price levels to certain transactions involving some of the
     Community producers' grades (see recital 48 of the provisional duty Regulation), it
     should not be forgotten that the Community producers' prices, overall, were
     significantly undercut by dumped Chinese import prices.
 ---pagebreak---                                             24
(47) With regard to the actual level of undercutting found, it should be recalled that on a
     grade-by-grade basis, the Community producers' weighted average net ex-works
     sales prices in the Community to users were compared to the weighted average
     import prices of the equivalent Chinese grades, adjusted to duty-paid net "ex-
     warehouse" levels.
     It was submitted, however, that in uplifting Chinese import prices to make them ex-
     warehouse and thus at a comparable level of trade and commercial stage to the
     Community producers ex-works sales prices, the Commission had not taken into
     account all costs incurred by the Community importers/distributors, nor an
     appropriate profit margin. This is incorrect since, as indicated during the course of
     the investigation to the co-operating parties, an adjustment of 27% was added to the
     Chinese CIF import prices for this purpose.
(48) It should be stressed that this percentage represents the weighted average of all
     costs claimed by the co-operating importers (customs duty which had been paid,
     transport, warehousing, re-packing, financing, depreciation, etc.) and a reasonable
     profit margin based on the importers'/distributors' Profit & Loss Accounts.
     Nevertheless, in conformity with the adjustment granted for establishing normal
     value with regard to technical assistance and customer specific product
     development costs, which are assumed not to be in the Chinese prices, it has been
     decided, for the purpose of definitive calculations of undercutting, to make a
     downwards adjustment to the sales prices of each Community producer to take
     account of such selling costs incurred by that producer during the investigation
     period.
 ---pagebreak---                                             25
(49) On this basis, revised undercutting margins of up to 35% have been calculated.
     The weighted average, however, of these revised undercutting margins is 21%.
                        4. Situation of the Community industry
(50) As no new arguments were presented concerning production, production capacity,
     stocks, sales and market share, profitability and employment (recitals 51 to 59 of
     the provisional duty Regulation), these findings are confirmed.
                           5. Conclusions concerning injury
(51) In the light of the above and in the absence of any other substantiated arguments,
     the conclusions set out in recitals 60 and 61 of the provisional duty Regulation that
     the Community industry concerned suffered material injury within the meaning of
     Article 4(1) of Regulation (EEC) No 2423/88 are confirmed.
 ---pagebreak---                                              26
                                     G. CAUSATION
                                   1. General remarks
(52) A number of interested parties reiterated claims made previously concerning
     causation of injury. These parties claimed that the Commission, when arriving at
     its provisional findings and disclosing the essential facts and considerations upon
     which it had the intention to propose definitive measures, had not sufficiently taken
     account of the arguments raised by them. As shown below, this contention is not
     correct since the points in question were explicitly addressed by the Commission in
     recitals 62 to 71 of the provisional duty Regulation.
(53) The importers continued to argue that there was a downturn in demand in the
     Community for PAC between 1990 and the investigation period caused by
     developments in technology and increasing use of re-cyclable activated carbons.
     The Commission acknowledged in recital 70 of the provisional duty Regulation
     that there may have been an increasing demand for these alternative products,
     however, this does not necessarily mean that the demand for PAC has dropped. As
     stated in recitals 42, 62 and 70 of the provisional duty Regulation, demand (i.e.
     Community consumption) actually increased by 3.3% between 1990 and the
     investigation period. However, the most important factor to be considered is that
     sales of the Community producers decreased whilst imports (and particularly
     dumped imports from China) rose significantly.
 ---pagebreak---                                             27
(54) It was also argued that the closure of a large German PAC production plant before
     1990 (referred to in recital 40 of the present Regulation) caused an increase in
     Chinese imports since the marketing partner of this producer claimed that it was
     "obliged" to replace the Community-produced product with Chinese PAC, even
     though this company was also acting as a distributor of PAC produced by other
     Community producers as well as an importer/distributor of PAC from several third
     countries. Whilst it is accepted that this marketing partner had to look elsewhere
     for its PAC purchases, such a justification for increased imports of Chinese PAC
     does not, however, alter the fact that such imports were made at dumped prices
     which significantly undercut the Community producers' prices and thereby caused
     material injury.
(55) Referring to recitals 45 and 56 of the provisional duty Regulation, one party argued
     that Chinese PAC imports could not have caused injury to the Community industry
     as the average prices of such imports increased by 10.6% between 1990 and 1993
     and, moreover, the average PAC sales prices of the Community producers as a
     whole also increased during the same period. In this respect, it should also be
     recalled that the overall increase in the Community-producers' prices was only
      1.4% over this period and that in certain cases, the prices of Community-produced
     PAC even decreased. Taking into account the significant price undercutting of
     21.0% established for 1993, the conclusion must therefore be drawn that there was
     even higher undercutting in 1990 (when Chinese imports started to penetrate the
     Community market) and not that there is an absence of causation between Chinese
     dumped imports and the injury suffered by the Community industry.
 ---pagebreak---                                             28
(56) Arguments were put forward that the financial difficulties of the Community
     producers were caused not by Chinese imports but, instead, mainly by significant
     increases in the cost of production of the producers and, in the case of one of them,
     by particularly high raw material costs.
     Although Community producers should be able to expect to sell their products at
     prices which cover all costs in a market where fair competition is prevailing, in the
     light of comments made by several interested parties the Commission re-examined
     the overall situation concerning the evolution of the cost of production of the co-
     operating Community producers. The conclusion was drawn that in order to reflect
     costs normally incurred, certain additional raw material costs of an exceptional
     nature incurred during the investigation period by one Community producer should
     not be taken into account when establishing the injury elimination level. This
     approach is confirmed.
 ---pagebreak---                                            29
(57) Certain interested parties also continued to argue concerning the impact on the
     Community market of apparently low priced imports of PAC from Malaysia. No
     new arguments of substance were, however, presented by these parties and it is
     considered that the reasoning given in recitals 67 and 68 of the provisional duty
     Regulation adequately answers the points already raised.
(58) As explained in recital 68 of the provisional duty Regulation, the Commission had
     no evidence that exports from Malaysia were at dumped price levels during the
     investigation period. Whilst certain evidence was submitted to the Commission
     concerning allegedly dumped Malaysian exports, this in fact referred to the year
     1994 (one year after the investigation period) and, therefore, no link between any
     possible Malaysian dumping in 1994 and injury suffered by the Community
     industry during the investigation period could be established on the basis of the
     evidence provided.
 ---pagebreak---                                             30
(59) Certain interested parties put forward a calculation which attempted to show that
     even if Community-produced PAC equivalent to all the Chinese imports had been
     sold instead by the Community producers during the investigation period, these
     Community producers would still have made significant losses. This calculation
     overlooks, however, the fact that the actual sales volumes and values achieved by
     the Community producers during that period were, in reality, influenced by the low
     priced dumped Chinese imports and for this reason could not form the basis of such
     a theoretical calculation. Therefore, this calculation is considered to be flawed and
     cannot demonstrate the hypothetical financial situation of the Community
     producers if Chinese PAC imports were not present on the Community market.
(60) It was also alleged by certain parties that the Community producers were selling
     PAC outside the Community at much lower prices than in the Community and,
     therefore, the price level on the Community market was not the only reason for
     their actual "economic" situation As indicated in recital 69 of the provisional duty
     Regulation, the Commission found that the Community producers' sales outside the
     Community were made at profitable levels and therefore at much higher prices than
     the PAC sold inside the Community at a loss. In fact, the weighted average selling
     price of all grades of PAC sold outside the Community by the co-operating
     Community producers increased from 1,792 ECU per tonne in 1990 to 1,839 ECU
     per tonne in the investigation period. The allegation, as put forward, is therefore
     based on incorrect assumptions. Nevertheless, the impact of the declining sales
     volumes of Community producers outside the Community is acknowledged in
     recitals 69 and 71 of the provisional duty Regulation.
 ---pagebreak---                                            31
                       2. Conclusions concerning cause of injury
(61) In the light of the above and in the absence of any other meaningful, substantiated
     arguments, the conclusions set out in recital 71 of the provisional duty Regulation
     are confirmed.
                            H. COMMUNITY INTEREST
(62) As mentioned in recital 4 of the present Regulation, twenty-two companies, most of
     them put forward by certain importers/distributors as "major" users of PAC situated
     in six different Member States, were approached by the Commission after the
     imposition of provisional measures. Meaningful comments or replies to a simple
     questionnaire were received from only twelve users, representing approximately
     6% of total Community consumption.
(63) As concerns the PAC purchases of these twelve users, five declared that their PAC
     consumption was stable, four declared they had decreasing consumption and three
     declared they had increasing consumption.
 ---pagebreak---                                            32
(64) Of the users which replied to the questionnaire or submitted comments, seven
     indicated that Community and Chinese PAC prices were comparable, but only two
     of them gave the trade names of the grades they had compared. Examination of the
     specifications of the Community-produced grades compared by these two users
     showed, however, that the Chinese product was technically superior to that
     produced in the Community and, therefore, not comparable for the purposes of this
     investigation. Two other users also indicated that Chinese PAC is much less
     expensive than the same quality of PAC produced in the Community. Three users
     indicated that they had chosen Chinese PAC because of its quality in direct relation
     to its price. On the other hand, another user stated it had chosen the Community
     product for exactly the same reason. Two other users had changed from Chinese
     PAC to that produced in the Community. In view of the conflicting nature of the
     information received from the users, no decisive conclusion can be drawn from this
     data.
(65) Furthermore, despite being so requested, no substantiated comments were made by
     the users concerning the impact that anti-dumping measures on Chinese PAC
     would have on their operating budgets. Most of the users did, however, argue that
     a high anti-dumping duty might mean Chinese imports being excluded from the
     Community market, thus, perhaps, reducing the level of competition.
 ---pagebreak---                                             33
(66) In this respect, it should be repeated that the purpose of trade defence measures is
     to eliminate the trade distorting effects of the injurious dumping and to restore
     effective competition.     Accordingly, no different conclusions other than those
     established in recitals 75 and 76 of the provisional duty Regulation could be
     reached.
(67) One Swedish importer/distributor argued that the imposition of anti-dumping
     measures on Chinese PAC would have a profoundly detrimental effect on its
     business. However, this company declared that there were no imports of Chinese
     PAC into its Scandinavian sales territory (Sweden, Finland, Denmark) during the
     investigation period. This importer also argued that the Commission should have
     taken Sweden and Finland into consideration in its investigation even though they
     were not Members of the Community during the investigation period. In this
     respect, the Commission notes that the total PAC consumption in Sweden and
     Finland is estimated to be approximately 700 tonnes per annum, or about 2% of
     total Community consumption. Given also that there were no imports of Chinese
     PAC there during the investigation period, it is considered that even if data for
     these two new Member States concerning imports, sales, consumption had been
     included in the findings, the impact would have been insignificant.
 ---pagebreak---                                              34
(68) In the light of the above, it is considered that the conclusions drawn by the
      Commission in the provisional duty Regulation concerning Community interest
      should be confirmed. Indeed, no compelling reasons have come to light which
      would lead to the conclusion that adopting definitive measures would not be in the
     interest of the Community.
                                  I. UNDERTAKING
(69) An undertaking based on a combination of one minimum price and a quantitative
     limit for exports of chemically activated PAC was proposed by the sole co-
     operating Chinese exporter. It was suggested by this exporter that the Chinese
     authorities could guarantee the monitoring of the execution of such an undertaking,
     however, the Chinese authorities themselves made no such commitment. This
     suggestion did not, however, contain any specific price or quantity level, nor refer
     to the company's steam activated PAC exports to the Community. In this respect, it
     should be remembered that PAC exists in many different grades which have
     different prices. Therefore, an undertaking with one average minimum price could
     not be accepted. Furthermore, if an undertaking on a grade-by-grade basis had been
     offered, the monitoring of such an undertaking would have been virtually
     impossible as the exact grades this company will export to the Community could
     not be controlled against official statistics (which do not refer to import data on a
     grade-by-grade basis).
 ---pagebreak---                                             35
(70) It should also be noted that although this Chinese exporter, which is in reality a
     trading company, may be the largest exporter of Chinese PAC to the Community, it
     does not represent the totality or even the majority of Chinese PAC exports to the
     Community. Given that there are several other exporters and that the Chinese
     authorities themselves have not indicated their willingness to guarantee the
     execution of such an undertaking, this course of action is not considered
     appropriate for this case.
(71) The exporter was advised accordingly that an undertaking could not be accepted.
     This approach is confirmed.
 ---pagebreak---                                             36
                                        J. DUTY
(72) As concerns the detailed calculations used to establish the injury elimination level
     in the provisional duty Regulation, the actual weighted average net ex-works sales
     prices of those Community-produced PAC grades considered to be comparable to
     the imported Chinese grades were uplifted on an individual basis by the weighted
     average loss of all the Community producers to levels which yielded a reasonable
     profit margin of 5%. In this regard, CEFIC argued that the reasonable profit margin
     to be added on to the break-even PAC sales prices of the Community producers in
     order to establish the injury elimination level should be based only on profitable
     sales realised by the Community producers in their activated carbon activities and
     not on an average profit which also includes loss-making PAC sales. Furthermore,
     it was submitted that the 5% pre-tax profit is too low to secure a reasonable return
     on investments particularly as in 1990, before major market penetration by Chinese
     imports, the Community producers were achieving on average a 9.6% profit on
     their PAC sales in the Community.
 ---pagebreak---                                              37
(73) In this respect, it should be made clear that the average profit margins earned by
     each of the three co-operating Community producers on their total turnover of all
     activities relating to activated carbon, excluding PAC sold in the Community at a
     loss, ranged from 4.1% to 5.4% during the investigation period. It should also be
     noted that as only 70% of the lost PAC sales volumes of the Community producers
     between 1990 and the investigation period have been taken over by dumped
     Chinese imports, it is unreasonable for the purposes of this exercise to uplift the
     break-even prices of the Community producers by the full profit margin of 9.6%
     which they enjoyed in 1990.
(74) In the light, however, of all the above comments made by interested parties, certain
     aspects of the methodology used for the provisional measures have been reviewed
     and an alternative method is now considered to be the most appropriate to calculate
     break-even (i.e. full cost of production) and reasonable profit-yielding price levels
     for the different grades of the Community producers which were compared to each
     Chinese grade.
(75) In this respect, the full cost of production per grade for each Community producer,
     adjusted where appropriate (see recital 56 of the present Regulation), was taken and
     to this a 5% profit was added. In order to make correct comparisons, a downwards
     adjustment was then made to these theoretical, profit-yielding prices to take
     account of technical assistance and product development selling costs incurred
     during the investigation period by each one of these producers (see recital 48 of the
     present Regulation).
 ---pagebreak---                                            38
(76) The average ex-warehouse selling price (i.e. CIF import price plus 27% for
     importers'/distributors' mark-up) for each imported Chinese grade was then
     compared to a single weighted average profit-yielding Community producers' price.
     This single Community producers' price for each Chinese grade was calculated for
     injury elimination purposes using the individual grade prices by Community
     producer as established in the previous recital (weighted according to quantities
     sold by each Community producer).
(77) Any difference resulting from the above-mentioned comparison (weighted
     according to the quantities imported) was the injury elimination amount. The total
     injury elimination amount was then expressed as a percentage of the total Chinese
     CIF import value.
(78) The above methodology is confirmed and the revised injury elimination amount,
     expressed as a percentage of the import price, free-at-Community frontier is 38.6%.
     Given that this revised injury elimination level is still lower than the revised
     dumping margin established (see recital 39 of the present Regulation), definitive
     anti-dumping duties should be imposed as follows:
           People's Republic of China: 38.6%.
 ---pagebreak---                                            39
                  K. COLLECTION OF PROVISIONAL DUTIES
(79) In view of the nature and the level of the injury caused to the Community industry
     by the dumped imports and since the Commission's provisional findings are, for the
     most part, definitively confirmed, it is considered necessary that the amounts
     secured by way of the provisional anti-dumping duty should be definitively
     collected. As the provisional duty exceeds the duty rate definitively imposed, the
     amount collected should not exceed that of the definitive anti-dumping duty.
HAS ADOPTED THIS REGULATION:
                                       Article 1
1.   A definitive anti-dumping duty is hereby imposed on imports of powdered
     activated carbon falling within CN code ex 3802 10 00 (Taric additional code 3802
     10 00*91) originating in the People's Republic of China.
2.   The rate of the definitive anti-dumping duty shall be 38.6% of the net, free-at-
     Community frontier price, before duty.
3.   Unless otherwise specified, the provisions in force concerning customs duties shall
     apply to the said duty.
 ---pagebreak---                                             40
                                         Article 2
 1.   The amounts secured by way of the provisional anti-dumping duty pursuant to
      Regulation (EC) No 1984/95 shall be definitively collected at the duty rate
      definitively imposed.
2.    Amounts secured in excess of the definitive rate of duty shall be released.
                                         Article 3
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 to all Member
States.
Done at Brussels,
                                                            For the Council
                                                            The President
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                                                                   ISSN 0254-1475
                                                              COM(96) 5 final
                                              DOCUMENT
EN                                                                        02 u
                                     Catalogue number : CB-CO-96-008-EN-C
                                                             ISBN 92-77-99468- i
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