CELEX: 51994PC0408
Language: en
Date: 1994-09-22
Title: Proposal for a COUNCIL REGULATION (EC) amending Regulation (EEC) N° 2552/93 imposing a definitive anti-dumping duty on imports of artificial corundum originating in the People' s Republic of China, the Russian Federation and Ukraine, with the exception of those imports sold for export to the Community by companies whose undertakings have been accepted, and definitively collecting the amounts secured by way of the provisional anti-dumping duty imposed by Commission Regulation (EC) N° 1418/94

COMVIISSION OF THE EUROPEAN COMMUNITIES
                                                  C0M(94) 408 final
                                                  Brussels, 22.09.1994
                                    Proposal for a
                              COUNCIL REGULATION (EC)
   amending Regulation (EEC) No 2552/93 imposing a definitive anti-dumping
  duty on imports of artificial corundum originating in the People's Republic of
     China, the Russian Federation and Ukraine, with the exception of those
  imports sold for export to the Community by companies whose undertakings
 have been accepted, and definitively collecting the amounts secured by way of
 the provisional anti-dumping duty imposed by Commission Regulation (EC) No
                                       1418/94
                          (presented by the Commission)
 ---pagebreak---                            Explanatory memorandum
1.  The Commission, by Regulation (EC) No 1418/941 imposed a provisional
    anti-dumping duty on imports into the Community of artificial corundum
    falling within CN code 2818 10 00 (Taric additional code : 8725), originating
    in the People's Republic of China and exported to the Community by six
    Chinese companies which had accepted undertakings. A provisional duty
    was imposed as the Commission had reason to believe that the
    undertakings of these exporters had been violated, and that Community
    interests called for such intervention. The duty was set at 30.8% of the net
    free-at-Community frontier price of the product before customs duty, and
    was based on the facts established before the acceptance of the
    undertaking.
2.  Following the imposition of the provisional anti-dumping duty, the European
    Chemical Industry Council (CEFIC), on behalf of the Community industry of
    artificial corundum, and the Machine Tool and Tool Branch Chamber of the
    Chinese Chamber of Commerce, on behalf of the exporters concerned,
    made their views known in writing and, at their request, were granted an
    opportunity to be heard by the Commission. Both parties were informed 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 the provisional duty,
    and were granted a period within which to make representations subsequent
    to the disclosure. The views of both parties were considered, which resulted
    in the position adopted below.
3.  The facts as finally established show that both the procedural and
     substantive terms of the undertakings have been violated. As the exports
     concerned are thus no longer effectively controlled by the undertaking, the
     imposition of definitive duties is in the interest of the Community. The
     interest of users of artificial corundum is minor in comparison to the very
     existence which is at stake for the EC producers of artificial corundum, of
     which two have recently announced plant closures. The level of this duty
     should be 30.8 percent/as originally established for the People's Republic of
     China. The arguments submitted by the Chinese side do not change, but
     indeed confirm, the original findings regarding dumping and injury. The
     Commission therefore proposes to amend Regulation No 2552/93 imposing
      a definitive anti-dumping duty on imports of artificial corundum originating in,
      inter alia, the People's Republic of China, so as to delete the exemption from
      this duty from which the six Chinese exporters benefited until now.
 4.   Given the seriousness of violating an undertaking, it is also proposed to
      collect definitively and in their entirety the amounts secured by way of
      provisional anti-dumping duty.
      OJ No L 155, 22.6,1994, p. 8.
                                                                                       I
 ---pagebreak---                            COUNCIL REGULATION (EC) No
                                             of
   amending Regulation (EEC) No 2552/93 imposing a definitive anti-dumping
  duty on imports of artificial corundum originating in the People's Republic of
     China, the Russian Federation and Ukraine, with the exception of those
  imports sold for export to the Community by companies whose undertakings
have been accepted, and definitively collecting the amounts secured by way of
the provisional anti-dumping duty imposed by Commission Regulation (EC) No
                                        1418/94
THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty establishing the European Community,
Having regard to Council Regulation (EEC) No 2423/88 of 11 July 1988 on
protection against dumped or subsidized imports from countries not members of the
European Economic Community1, hereinafter referred to as 'the Basic Regulation',
and in particular Article 12 thereof,
Having regard to the proposal from the Commission submitted after consultation
within the Advisory Committee,
Whereas,
                               A. Provisional measures
(1)     By Decision 91/512/EEC of 25 July 1991, the Commission accepted
        undertakings given in connection with the review of anti-dumping measures
        concerning imports of artificial corundum originating in the Soviet Union,
        OJ No L 209, 2.8.1988, p. 1. Regulation as last amended by Council Regulation (EC)
        No 522/94 (OJ No L 66, 10.3.1994, p. 10).
                                                                                           1
 ---pagebreak---     Hungary, Poland, Czechoslovakia and the People's Republic of China and in
    connection with the anti-dumping proceeding concerning imports of artificial
    corundum originating in Brazil and Yugoslavia2. By Council Regulation (EEC)
    No 2552/93, a definitive anti-dumping duty was imposed on imports of
    artificial corundum originating in the People's Republic of China, the Russian
    Federation and Ukraine, with the exception of those imports sold for export
    to the Community by companies whose undertakings had been accepted3.
(2) The Commission, by Regulation (EC) No 1418/944 imposed a provisional
    anti-dumping duty on imports into the Community of artificial corundum
    falling within CN code 2818 10 00 (Taric additional code : 8725), originating
    in the People's Republic of China and exported to the Community by the
    following companies :
             CMEC-China National Machinery and Equipment Import and Export
             Co., Beijing,
             The second abrasive wheel factory of China, Zhengzhou, Henan,
              Mount Tai Co. of the fourth Grinding Wheel factory of China,
              Zhangian, ZiBo, Sha Dong,
              Shandong Machinery and Equipment Import and Export Co.,
              Qingdao,
              Guandong Machinery and Equipment Import and Export Group Co.,
              Guangzhou,
              CAEC - China Abrasives Import and Export Co., Zhengzhou, Henan.
     This provisional duty was imposed in accordance with Article 10 (6) of the
     Basic Regulation, as the Commission had reason to believe that the
     undertakings of the above-mentioned exporters had been violated, and that
     Community interests called for such intervention. The rate of duty was 30.8%
     of the net free-at-Community frontier price of the product before customs
2
     OJN0L275, 2.10.1991, p. 27.
3
     OJ No L 235, 18.9.1993, p. 1.
4
     OJNoL155, 22.6.1994, p. 8.
                                                                                   k
 ---pagebreak---     duty, and was based on the facts established before the acceptance of the
     undertaking.
                          B. Subsequent Procedure
(3)  Following the imposition of the provisional anti-dumping duty, the European
    Chemical Industry Council (CEFIC), on behalf of the Community industry of
    artificial corundum, and the Machine Tool and Tool Branch Chamber of the
     Chinese Chamber of Commerce (CCC), on behalf of the exporters
    concerned, made their views known in writing and, at their request, were
    granted an opportunity to be heard by the Commission. Both parties were
     informed 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 the
     provisional duty, and were granted a period within which to make
     representations subsequent to the disclosure.
    The views of both parties were considered, which resulted in the position
     adopted below.
                               C. Definitive duty
(4) The CCC contested the need for a provisional or definitive duty arguing that
    the exports covered by the undertaking were not dumped and had been
    made in small volumes only, and that the exporters concerned had not
    violated the substantive terms of the undertaking. Violation of the procedural
    terms of the undertaking was admitted. The idea was raised of a new price
    undertaking, without, however, a precise offer being made. A review was
    also requested, based on the same claim that exports covered by the
    undertaking were not dumped, and on the claim that the undertaking price
    was above EC market prices.
(5) CEFIC argued for the quick introduction of definitive duties, given the alleged
    ineffectiveness of the undertaking. CEFIC underlined that the volume of
    imports of artificial corundum from China as a whole had more than
    quadrupled from 4,149 tonnes in 1991 to 17,324 tonnes in 1993 following
    the acceptance of the undertakings, that the largest part of these exports
    were covered by the undertaking, and that export prices had on average
                                                                                    5
 ---pagebreak---     fallen by 14 percent. This import situation had contributed to the announced
    closure of two plants of EC industry, and to a decline in production volumes,
    capacity utilisation, prices and profitability for the EC producers. CEFIC
    confirmed that, despite this precarious situation, an important Community
    industry for artificial corundum still existed, with an estimated 400 jobs at
    stake in the short term.
(6) The Council considers that undertakings can only operate satisfactorily if
    strict compliance exists in respect of the reporting and other procedural
    obligations that permit the Commission to verify whether the substantive
    terms of the undertaking are being correctly implemented. It was precisely
    because of the non-compliance with the reporting requirement, admitted by
    the CCC, that the Commission was prevented from determining to what
    precise degree the Chinese exporters still complied with their substantive
    obligations.
    Furthermore, the Commission has written evidence in its possession that
    price offers and sales were made by Chinese exporters covered by the
    undertaking to Community customers at prices well below those stipulated in
    the undertaking. In some cases this concerned Chinese exporters, or local
    subsidiaries or branches thereof, that claimed not to have exported anything
    to the Community, thus discrediting the Chinese claim that exports covered
    by the undertaking were small in volume. This evidence was disclosed in
     non-confidential form to the CCC, which was unable to rebut it. In any case,
    even if the quantity exported under the undertaking was small, this is no
     excuse for not respecting the price stipulated in the undertaking. A violation
     of the substantive terms of the undertakings has therefore also been
     determined definitively.
     Once an undertaking has been violated, whether in terms of procedure or
     substance, or, as in this case, both, there is normally no valid reason for the
     Commission to maintain or renew the undertaking. By not complying with the
     terms of the undertaking, exporters know and accept in advance the
     consequences that may flow therefrom. In this case, it was established that
     ail six Chinese exporters violated the terms of the undertaking in one way or
     another. In addition, it was established that the CCC, which has acted as co-
     signatory of the undertaking and has represented ail of the six exporters
     concerned before the Commission, could not be relied upon to ensure the
                                                                                     £
 ---pagebreak---     correct functioning of the undertaking in respect of those exporters. This
    undertaking has therefore proven unreliable as a whole. The Council thus
    considers that the imposition of a definitive duty on all six Chinese exporters
    is in the interest of the Community,     in order to prevent injury to the EC
    Industry from imports into the Community that are no longer effectively
    controlled by an undertaking.
(7) This interest is not outweighed by the interests of the industrial users of
    artificial corundum. They have had an exceptional advantage resulting from
    unfair low prices, which under normal trading conditions would not have
    existed. It is the basic purpose of anti-dumping measures to restore normal
    trading conditions. This price benefit to companies which use artificial
    corundum as one input into their production process is, in any case, minor in
    comparison with the very survival of an entire EC industry which is at stake
    in the case of artificial corundum, as documented by CEFIC. The Council
    therefore considers that in this respect the same considerations regarding
    Community interest still apply as mentioned in Commission Decision
    91/512/EEC of July 1991 accepting the undertakings, and confirmed in
    September 1993 by Regulation 2552/93 imposing a residual duty. No
    comments were received from users of artificial corundum that contested this
    view.
(8) The arguments by the CCC that exports are not dumped have been
    examined. In this context it was submitted that China is no longer a non-
    market economy country, that Chinese export prices are higher than prices
    in the Chinese market, and that under the market mechanism prices cannot
    be lower than cost of production. The Council observes, in this respect, that
    China is regarded as a non-market economy country, that its domestic prices
    therefore cannot be used to prove an absence of dumping, and that, even in
    a market economy, experience indicates that it is quite possible for prices to
    be below full cost of production.
    It was also argued that the undertaking price would be above EC market
    prices. Even if true, this would not be relevant as there is no reason to
    believe that the undertaking price is at a level higher than necessary to
    remove the injury to the EC industry. The prices currently prevailing in the
    EC market are not prices that permit the EC industry a reasonable profit, the
    more so as those prices are influenced by the same Chinese exporters that
                                                                                    I
 ---pagebreak---       violated their undertaking by offering artificial corundum at lower prices. The
      closure of two additional plants of the EC industry is an indication that
      reasonable profits are in fact not being made.
(9)   In its September 1993 Regulation imposing a residual duty, the Council
      considered that the findings of the original investigation, including those on
      dumping and injury resulting therefrom, remained reliable and that the
      residual duty introduced at that time for other Chinese exporters than the
      ones from which undertakings had been accepted could be based thereon.
      The export prices now advanced by the CCC to demonstrate an absence of
      dumping are well below the injury threshold and do not indicate that these
      findings need to be revised downward. The Council therefore considers that
      the level of the duty should be set at 30.8 percent, as determined originally
      for the People's Republic of China.
(10)   Regulation No 2552/93 exempted the six Chinese exporters concerned from
      the country-wide duty of 30.8 percent, on the basis that undertakings had
       been accepted from them. Since those undertakings have now been
       violated, this exemption should be revoked. The Council thus considers that
       Regulation No 2552/93 should be amended so as apply the same duty of
       30.8 percent to all Chinese exporters.
                          D. Collection of provisional duty
(11)   In view of the seriousness of violating an undertaking, it is considered
       necessary to collect definitively and in their entirety the amounts secured by
      way of provisional anti-dumping duty pursuant to Commission Regularion
       (EC) No 1418/94,
HAS ADOPTED THIS REGULATION,
                                        Article 1
The references to the People's Republic of China and the six Chinese exporters
mentioned in Article 1 (5) of Regulation (EEC) No 2552/93 are deleted.
                                        Article 2
 ---pagebreak--- The amounts secured by way of the provisional anti-dumping duty imposed
pursuant to Regulation (EEC) No 1418/94 shall be definitively collected.
                                     Articles
This Regulation shall enter into force on the day following its pubKcation in the
Official Journal of the European Communities.
                                                                                  1
 ---pagebreak---                                                                       ISSN02S4-147S
                                                               COM(94) 408 final
                                                      DOCUMENTS
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                                                             ISBN 92-77-80839-X
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