CELEX: 51997PC0498
Language: en
Date: 1997-10-01
Title: Proposal for a Council Regulation (EC) imposing a definitive anti-dumping duty on imports of certain footwear with textile uppers originating in the People's Republic of China and Indonesia

COMMISSION OF THE EUROPEAN COMMUNITIES
                                                              Brussels, 01.10.1997
                                                              COM(97) 498 final
                                               Proposal for a
                                     COUNCIL REGULATION (EC)
          imposing a definitive anti-dumping duty on imports of certain footwear with textile
                 uppers originating in the People's Republic of China and Indonesia
                                      (presented by the Commission)
I- v.-',v
 ---pagebreak---  ---pagebreak---                               EXPLANATORY MEMORANDUM
(1)   The Commission, by Regulation (EC) No 165/97l , imposed provisional anti-
      dumping duties on imports into the Community of certain footwear with textile
      uppers originating in the People's Republic of China and Indonesia.
                            •
(2)   Certain interested parties, Community producers, exporters, as well as importers
      submitted comments in writing. Those parties who so requested were granted an
      opportunity to be heard by the Commission. The Commission considered all the
      views expressed before drawing its final conclusions.
(3)   The Commission accepted the claim by one Indonesian exporter regarding the
      omission in the dumping calculation of a factor affecting price comparability, and
      consequently revised downwards its calculations of normal value and dumping for
      both Indonesia and for China since Indonesia was used as the analogue country for
      the purpose of calculating normal value in respect of China.
(4)   In addition, following the submissions received and a further analysis of the data
      available, the Commission considered that the adjustment used at provisional stage
      to take into account the difference of level of trade between the CIF imports and the
      Community producers' delivered sales in the calculation of the injury elimination
      levels ought to increased.
1
  OJ No L 29, 31.1.1997, p.3.
                                             A
 ---pagebreak--- (5) Subsequent to the imposition of provisional measures, the Commission further
    examined matters deemed relevant in analysing the issue of Community interest.
    Having examined a wide variety of aspects and the various interests involved, no
    compelling reasons have come into light which would lead to the conclusion that
    the imposition of definitive measures would not be in the interest of the
    Community.
(6) In the light of the above, the Commission confirmed its provisional conclusions to
    the effect that the footwear concerned originating in Indonesia and the People's
    Republic of China was being dumped in the Community and was causing material
    injury to the Community industry, and concluded that it is in the Community
    interest to take protective measures in the form of definitive anti-dumping duties
    and to collect definitively the provisional duties at the duty rate definitively
    imposed.
(7) The adjustments in the calculations presented above affect the provisional findings,
    to the effect that the individual duty rates for the cooperating Indonesian companies
    are reduced to a range from 0% to 14.1%, as well as the residual injury elimination
    levels which amount to 15.4% for Indonesia and 61.2% for the People's Republic
    of China.
(8) In accordance with Article 9 of Council Regulation (EC) No 384/96, the
    Commission therefore proposes that the Council impose definitive anti-dumping
    duties on imports of certain footwear with textile uppers originating in the People's
    Republic of China and Indonesia. In the light of the extent of the injury, it is also
    recommended that the Council collect the provisional anti-dumping duties to the
    extent of the amount of the definitive duties imposed.
                                                    /) <X
 ---pagebreak---                         COUNCIL REGULATION (EC) No                    191
                                        of
 imposing a definitive anti-dumping duty on imports of certain footwear with textile
           uppers originating in the People's Republic of China and Indonesia
THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty establishing the European Community,
Having regard to Council Regulation (EC) No 384/96 of 22 December 1995 on
protection against dumped imports from countries not members of the European
Community^ and in particular Article 9 thereof,
Having regard to the proposal submitted by the Commission after consulting the
Advisory Committee,
Whereas:
                            A.     PROVISIONAL MEASURES
(1)    By Commission Regulation (EC) No 165/97^ (hereinafter referred to as 'the
       provisional duty Regulation') provisional anti-dumping duties were imposed on
       imports into the Community of certain footwear with textile uppers falling within
       Combined Nomenclature (CN) codes 6404 19 10 and ex 6404 19 90 originating in
       the People's Republic of China and Indonesia.
    OJ No L 56, 6.3.1996, p. 1 Regulation as amended by Regulation (EC) No 2331/96 (OJNoL317.
    6.12.1996, p. 1).
    OJ No L 29, 31.1.1997, p.3.
 ---pagebreak---                           B.      SUBSEQUENT PROCEDURE
(2)  Following the imposition of the provisional anti-dumping measures, certain
      interested parties submitted comments in writing.
 (3) Those parties who so requested were granted an opportunity to be heard by the
     Commission.
 (4) The Commission continued to seek and verify all information deemed necessary for
      its definitive findings.
(5)  Parties were informed of the essential facts and considerations on the basis of
     which it was intended to recommend the imposition of definitive anti-dumping
     duties and the definitive collection of amounts secured by way of provisional
     duties. They were also granted a period within which to make representations
     subsequent to this disclosure.
(6)  The oral and written comments submitted by the interested parties were considered,
     and, where deemed appropriate, taken into account in the Commission's definitive
     findings.
       C. PRODUCT UNDER CONSIDERATION AND LIKE PRODUCT
1.   Product under consideration
(7)  For the purpose of its preliminary findings, the Commission considered "non-
     sports" footwear with outer soles of rubber or plastics and uppers of textile
     materials, intended for use either indoor or outdoor (falling within CN codes
     6404 19 10 and ex 6404 19 90), as one single category of products. In this regard,
     certain interested parties claimed that slippers and outdoor footwear were too
     different, in particular in terms of use, to belong to the same category of products.
 ---pagebreak--- (8)   In this respect, it is worth recalling that most light outdoor shoes of the kind under
      consideration can replace slippers (they can be and are used indoors) and are
      therefore in direct competition with slippers. Accordingly, it is confirmed that
      slippers and outdoor footwear of the kind under consideration should be regarded
      as one single category of products.
(9)  Making reference to the exclusion, at provisional stage, of certain types of footwear
      sometimes known as "espadrilles", several interested parties have requested, on
      various grounds, the further exclusion of certain allegedly very specific products
     from the scope of the proceeding. These claims are analysed below.
     a)         Neoprene shoes
(10) Several importers requested the exclusion of certain types of footwear sometimes
     known as "diving boots", made of neoprene and used for certain water sports such
     as diving. Indeed, neoprene is a material which is generally strengthened with a
     textile coating when used for manufacturing footwear, with the result that the
     constituent material of the upper having the greatest external surface area is the
     textile material, and thus the footwear concerned classifiable under the CN heading
     6404. In addition, since certain water sports, such as diving, are not considered
     expressly as a "sporting activity" within the meaning of the Combined
     Nomenclature, the neoprene shoes concerned were, it was claimed, classifiable
     under CN code 6404 19 90, although such a specific product would not belong to
     the single category of products under consideration.
 ---pagebreak--- (11) Having investigated this issue in more detail the Commission found that-the
     neoprene shoes in question are sold in water sport equipment stores and not in
     footwear stores and clearly belong to a distinct market.               Their physical
     characteristics and the use which they are intended for, make them, in the
     consumer's perception, a clearly distinct product from those belonging to the single
     category of "non-sports footwear with textile uppers" under consideration.
(12) Asked to react on this issue, the representatives of the complaining Community
     industry raised no objections but indicated that, should an exclusion be granted,
     their main concern would be that the description of the footwear concerned be
     sufficiently precise in order to avoid any circumvention of duties.
(13) For all the above reasons and in consideration of the fact that the footwear
     concerned is clearly identifiable by the customs authorities, it is considered that the
     neoprene shoes sometimes known as "diving boots" or "water sports boots" should
     be excluded from the scope of the proceeding.
     b)            "Trekking shoes "
(14) Within the meaning of the Combined Nomenclature "trekking" is not considered as
     a sporting activity and therefore trekking shoes with textile uppers generally fall
     within CN code 6404 19 90. Certain parties requested that this product be excluded
     from the scope of the proceeding, on two grounds. The first ground was based on
     the fact that the product in question would be sold at a high, non dumped, price.
     Moreover, certain importers claimed that they could have legitimately expected that
     trekking shoes would not be subjected to measures because the Spanish version of
     the notice of initiation^ had translated, in the list of exclusions contained therein,
     the words "cross-country ski footwear" by "boras de senderismo", the Spanish
     equivalent of "trekking shoes".
     O J N o C 4 5 , 22.2.1995, p. 2.
 ---pagebreak--- (15) As to the first ground, it has to be noted that the information made, available, by
     cooperating exporters and used by the Commission for the investigation of
     dumping did not confirm the absence of dumping on this type of footwear.
(16) As regards the second ground, i.e. the allegedly legitimate expectation of certain
     importers that trekking shoes would not be subjected to measures (stemming from
     the fact that the Spanish version of the notice of initiation had mis-translated the
     words "cross-country ski footwear"), this argument cannot be accepted for the
     following reasons:
     Reference should first be made to the Court of Justice's jurisprudence
     (Anklagemyndigheden vs. Schumacher and others, Judgement of 27 October 1981,
     case 250/80), according to which it is appropriate, where provisions are affected by
     a disparity between Various language versions, to place them within the context of
     the totality of the Community rules concerned and to interpret them with particular
     regard to their objectives.
     It has been a long standing approach of Community institutions to set up a closed
     list of so-called "sporting activities" within the framework of the Combined
     Nomenclature. More precisely, it was quite clear that the wording of the notice of
     initiation was a mere quotation of the provisions of subheading note 1 (b) of
     Chapter 64 of the Combined Nomenclature, in the Spanish version of which the
     words "ski-boots and cross-country ski footwear" are translated by the words
     "calzado para esquiar" and not by the words "botas de esquî, senderismo".
 ---pagebreak--- (17) Finally, it has to be stressed that the footwear with textile uppers of the type-called
     "trekking shoes" is widely produced in the EC, was aimed by the complaint and
     clearly fell within the scope of the investigation. Indeed, most of these products
     may also be used, and are actually used, for other purposes than the "technical" one
     which they are supposed to be intended for, which confirms their belonging to the
     single category of product under consideration.
     Accordingly, it is considered that the so-called "trekking shoes" should remain
     within the scope of the proceeding.
     c)         Medical shoes
(18) Orthopaedic shoes, i.e. intended to correct a specific and permanent disability or
     physical abnormality, belong to chapter 90 of the Combined Nomenclature and are
     not covered by the present investigation. The product, falling within CN code
     6404 19 90, for which an exclusion was claimed is a medical footwear of the type
     sold in chemists' stores, not per pair but per "foot'', and which is not specifically
     adapted to a given person but is intended for anybody having for instance a
     sprained or broken ankle. This claim was made on the grounds that such a specific
     product could not belong to the single category of products under consideration.
(19) It is clear that the medical shoes in question belong to a different market (they are
     not sold in footwear stores but by chemists). In addition, they are marketed in a
     very specific way (per "foot" and not per pair, and in specific shapes in order to fit a
     plaster rather than a foot), which makes them, in the consumer's perception, a
     clearly distinct product from those belonging to the single category of product
     under consideration.
 ---pagebreak---  (20) Asked to react on this issue, the representatives of the complaining Community
       industry argued that some production of medical footwear exists in the Community
       but did not oppose the conclusion that the shoes in question were sufficiently
       specific, in terms of physical characteristics and uses, for them to fall outside the
       single category of "non-sports footwear with textile uppers" under consideration.
 (21) For all the above reasons (and in consideration of the fact that such a specific
       product is clearly iâentifiable by the customs authorities), it is considered that the
       medical footwear of the type sold in chemists' stores, not per pair but per "foot",
       should be excluded from the scope of the proceeding.
      d)         "Disposable" slippers
(22) The party having claimed the exclusion of "disposable" slippers explained that the
      footwear in question, which is imported at a very low unit price, is generally not
      sold to final consumers but given away (e.g. by certain hotels to their guests or
      certain airlines to their passengers). These circumstances were claimed to result in
      the footwear concerned to fall outside the single category of products under
      consideration.
(23) Asked to comment on this issue, the representatives of the complaining Community
      industry argued that the concept of "disposable" (or "not for sale") was rather
      subjective and that the footwear in question was clearly, in terms of physical
      characteristics and uses, a slipper belonging to the single category of products under
      consideration.
 ---pagebreak--- (24) The footwear in question has indeed physical characteristics, application and uses
      which do not differ from those of other slippers. While at importers' level the so-
      called disposable slipper seems to belong to a distinct market (the claim was made
      by a company dealing with "inflight and hotel service products", and not by a
      footwear distributor), the situation is much less clear at consumer's level since the
      product in question is purely and simply interchangeable with a slipper of the type
      under consideration.
(25) For the above reasons, it is considered that the so-called disposable slippers'should
      remain within the scope of the proceeding.
2.   Like product
     a)        Arguments based on the existence of different production methods
(26) The question of vulcanised footwear, already raised at provisional stage (see recital
      18 of the provisional duty Regulation), has again been addressed by certain
     interested parties. In particular, allegations were reiterated that the Community
     industry did not produce in sufficient quantities shoes with vulcanised soles and
     that its production is rather concentrated on injection moulding. The results of the
     further examination carried out are the following.
 ---pagebreak--- (27) Whilst it is clear that the vulcanisation process is different to that of injection
     moulding, it should be recalled that the main relevant criteria in the determination
     of the "like product" are based on the general technical or physical characteristics
     and the use or functions of products and not the method used for their production.
     In this context, minor differences resulting from different production processes are
     generally disregarded.
                        *
(28) As to the technical arguments raised by various parties, namely the fact that
     vulcanisation means rubber while injection means inter alia PVC, thus differences
     of access to the raw material, visual differences (PVC is more "shiny" than rubber)
     and smell (rubber has a typical smell but PVC has none) and different dissolving
     and melting properties, it cannot be denied that differences in nature exist between
     the chemical and physical reactions taking place during the manufacturing process
     of these types of footwears However, it should be kept in mind that synthetic
     rubber is generally used in the manufacture of footwear. Thus the raw materials
     involved in these processes, i.e. synthetic rubber and PVC, are all petrochemical
     derivatives, manufactured wherever one is able to manage the industrial process
     concerned (e.g. Europe, USA, Middle East).
 ---pagebreak---      Synthetic rubber is indeed available in all parts of the world, one-of the main
     applications being the tyre industry. The argument of better access to raw materials
     for producers of vulcanised footwear in developing countries cannot therefore be
     considered as relevant, as this may make the manufacturing process more cost
     effective but has no impact on the fact that the product concerned is alike the
     Community product. It should also be noted that, to differentiate the shoes in
     question, the parties had to invoke criteria which go far beyond usual criteria
     corresponding to normal use: If PVC, unlike rubber, does indeed melt, it is above
     80°C, well above normal conditions during use. Similarly, customers would not,
     under normal conditions, perform a dissolving test before buying.
(29) As regards the alleged decline in the production of vulcanised footwear in the
     Community, it has to be stressed that this aspect was raised by certain importers at a
     very advanced stage of the proceeding. However, the evidence so far received
     shows that this production process is still used in the Community (for instance in
     Spain where a number of producers have declared that they could still produce a
     total of 22 million pairs/year of this type of shoe) and that there are numerous
     producers in the Community willing and able to produce vulcanised footwear.
     The investigation has also shown that, contrary to allegations made by a number of
     parties, vulcanised footwear imported from the People's Republic of China and
     Indonesia is sometimes sold as a branded product, packed in a cardboard box and
     sold in specialised shoe shops whilst Community produced injection moulded
     footwear can be sold as a non-branded product, in plastic bags and in discount
     stores.
                                            10
 ---pagebreak--- (30) The conclusion to be drawn from the above is that notwithstanding technical
     differences in the manufacturing process used, vulcanised footwear is in direct
     competition with injection moulded footwear. Indeed, these types of footwear are
     so similar in all respects that the average consumer would not be able to
     differentiate them.
     There is thus no reason to consider that vulcanised footwear produced in the
     People's Republic of China and Indonesia and exported to the Community is not a
     like product to injection moulded footwear produced in the Community, within the
     meaning of Article 1(4) of Regulation (EC) No 384/96 (hereinafter referred to as
      'the Basic Regulation').
     b)        Arguments based on the alleged existence of different "product segments "
(31) Certain parties have reiterated that imported and Community produced footwear
     belong to different product segments which do not compete with each other. They
     claimed that footwear, imported at a price higher than the average, would not be
     alike, within the meaning of Article 1(4) of the Basic Regulation, to footwear
     imported below or at the average price.
(32) This issue has been the source of repeated and seemingly contradictory statements
     by importers, some of them claiming that they import low quality footwear that they
     simply could not find in the Community, while others claimed that they order in the
     People's Republic of China or in Indonesia sophisticated products manufactured in
     accordance with their own specifications, design and sometimes raw materials.
                                           11
 ---pagebreak---      This contradiction simply shows that the People's Republic of China and Indonesia
     are in fact capable of producing, do indeed produce, and export to the Community,
     the full range of products on offer in the market. This is not apparent from import
     statistics because the average prices are driven by the bulk of imports which is
     indeed made of low-priced footwear. The imports in question and the products
     manufactured by the Community industry are therefore alike within the meaning of
     Article 1(4) of the Basic Regulation.
     c)        Conclusion
(33) In the light of the above, it is confirmed that footwear subject to this proceeding
     produced in the People's Republic of China and Indonesia and exported to the
     Community is a like product to footwear produced in the Community within the
     meaning of Article 1(4) of the Basic Regulation. Similarly, footwear subject to the
     current investigation produced in Indonesia is a like product to the footwear
     produced and exported from the People's Republic of China to the Community.
                                    D.    DUMPING
1.   Indonesia
     (a)        Normal value
(34) The Indonesian exporters contested the Commission's use, in constructing normal
     value, of a profit margin established on the basis of one company's profitable
     domestic sales of a product other than the product concerned, in this case footwear
     with leather or plastic uppers. They alleged that this profit margin was excessive
     and not representative of the industry.
                                             12
 ---pagebreak---       In addition, as the profit margin had been used in the construction of normal value
      for all companies in the sample for Indonesia, the normal values and by extension
      the dumping margins were allegedly excessive and unfair. They contended that the
      use of the profit margin of 7% deemed acceptable by the Commission in the case of
      the Community industry should have been used.
(35) This argument could not be accepted.          Firstly, Article 2 (6) (b) of the Basic
     Regulation provides that where there are no domestic sales of the product
     concerned, the SG&A and profit used in the construction of normal value can be
     established on the basis of the actual amounts applicable to production and sales of
     the same general category of products for the exporter or producer in question in
     the domestic market of the country of origin. This was the methodology applied in
     the case of the company referred to at recital 34 of the present Regulation.
     In the case of two of the sampled companies which had neither domestic sales of
     the product concerned nor of the same general category of product, normal value
     had to be established in accordance with Article 2 (6) (c) of the Basic Regulation
     i.e. any other reasonable method. It was held that in the circumstances of this
     investigation the most reasonable method was to use the SG&A and profit found
     for the company referred to at recital 34 of the present Regulation.
     Secondly, the 7% profit margin used in the calculation of a non-injurious price for
     the Community industry is the minimum that the Commission considers necessary
     to remove the injury suffered by the Community industry and has thus nothing to
     do with the profit margin used in the construction of normal value, which has to be
     based on the actual profit achieved on the Indonesian market. In this regard, it
     should be noted that the European Court of Justice has consistently indicated that
     preference should be given to the use of actual profit margins in the construction of
     normal value.
                                             13
 ---pagebreak--- (36) One of the Indonesian companies included in the sample contended that- in
     calculating its normal values, the Commission should have used the cost estimates
      which they had submitted during the on the spot verification. In this context, it
      should be pointed out that the company concerned did not have a cost accounting
      system, and had only cost estimates which had been used to make price offers to
     potential customers. The latter were the costs reported in their response to the
      questionnaire.
     This claim had to be rejected since the company was unable to demonstrate the
     correctness of the cost estimates.      Furthermore, for some of the models, no
     information at all regarding cost was available. Moreover, no information beyond
     direct material cost was available for any of the models. Therefore, the approach
     adopted in the provisional duty Regulation, i.e. to recalculate costs by reallocating
     the total cost of sales, exclusive of SG&A and profit, over the models concerned
     using the turnover in the company's own accounts is confirmed, as this was deemed
     to be the most appropriate method for establishing the costs of each model of
     footwear.
     (b)       Export price
(37) In the absence of any comments on the establishment of export prices the
     provisional determinations are hereby confirmed.
                                            14
 ---pagebreak---      (c)        Comparison                                                           - -
(38) The Indonesian exporter whose profitable domestic sales were used in the
     construction of normal value for Indonesia and referred to in recital 34 of the
     present Regulation claimed that the Commission omitted to take account of a factor
     affecting price comparability as provided for in Article 2 (10) of the Basic
     Regulation by not granting an allowance to normal value for credit costs. As the
                          »
     Commission established that this adjustment was indeed omitted, it has now
     reviewed its calculations accordingly. As the SG&A of this company was used in
     the construction of normal value for the other Indonesian companies in the sample,
     a reduction of their normal value was also required to reflect the allowance granted.
     All dumping calculations have been adjusted accordingly.
(39) The company referred to at recital 36 of the present Regulation contended that the
     dumping margin had been created by averaging the costs of individual models and
     the application of an artificially high profit margin in the construction of normal
     value. It claimed that the use of averaging meant that normal values were inflated
     and all low priced exports dumped.          It further contended that the use of the
     individual normal values it had submitted and the application of a reasonable profit
     would have led to a finding of no dumping.
     In view of the circumstances outlined in recital 36 of the present Regulation, the
     Commission considered that, in order to arrive at a reasonably accurate calculation
     of costs it had no alternative other than to recalculate the costs using the company's
     own accounting records and to reallocate the total cost of sales, exclusive of SG&A
     and profit,- over the models concerned.
                                             15
 ---pagebreak---        (d)       Dumping margins
 (40) The methodologies used to calculate definitive dumping margins are the same as
       those used for the calculation of the provisional dumping margins.         However,
       dumping margins have been amended in order to take account of the allowance to
       normal value now granted as described in recital 38 of the present Regulation.
          (i)    Cooperating companies in the sample
 (41) The margins thus established and expressed as a percentage of the cif price at
       Community frontier are the following:
       - P.T. Dragon                                                  4.0%
       - P.T. Emperor Footwear                                        0.0%
       - P.T. Sindoll Pratama                                        24.9%.
         (ii)   Cooperating producers/exporters not investigated
(42) In view of the above changes in the dumping margins of the cooperating companies
      in the sample, the margin established for the two cooperating companies not
      investigated, expressed as a percentage of the cif price at Community frontier, is
      now definitively established at 14.2%.
         (iii)  Residual dumping margin
(43) In view of the above changes in the dumping margins of the cooperating companies
      in the sample, the margin established for definitive determinations, expressed as a
      percentage of the cif price at Community frontier, is now 39.7%.
                                           16
 ---pagebreak--- 2.    People's Republic of China
     (a)       Individual treatment
(44) The Chinese exporters argued that the Commission did not sufficiently motivate its
      rejection of the requests for individual treatment by the cooperating Chinese
     exporters.    They insisted that individual treatment be granted for definitive
     determinations.     *
     It should be reiterated that it is the Commission's policy to calculate a country-wide
     duty for non-market economy countries except in those cases where companies can
     demonstrate independence from the State.         However, none of the companies
     concerned were able to adequately demonstrate such independence since they all
     had links to the Chinese State, either directly or via Provincial or municipal
     authorities. In the absence of any further information on this issue, the provisional
     findings with regard to the non-acceptance of the requests for individual treatment
     are hereby confirmed.
     (b)       Normal value
(45) The Chinese exporters alleged that they received insufficient information by the
     Commission regarding the Indonesian shoes used for comparison with the exported
     Chinese models.      They alleged, in particular, that insufficient information was
     disclosed to them concerning raw materials used and production processes
     employed in the production of the Indonesian shoes to enable them to claim
     adjustments for differences in physical characteristics.
                                              17
 ---pagebreak---       In this regard, it should be pointed out that, in an effort to come up with the-fairest
     model comparison, the Commission made repeated efforts to get information from
     the Chinese exporters concerning the design and make up of, and material used in,
     the models which they exported to the Community. Despite this, the Chinese
     exporters only supplied very partial information. Accordingly, the Commission had
     to make its assessment of comparability on the basis of the information available
     and as was the case for provisional measures, the Indonesian models used were
     those found to be similar or, in the absence of similar models, those most closely
     resembling the Chinese models exported to the Community by the Chinese
     companies in the sample. All the information upon which the comparison was
     based was made available to the Chinese exporters.
     (c)        Export price
(46) In the absence of any comments on the establishment of export prices the
     provisional determinations are hereby confirmed.
     (d)        Comparison
(47) Since Indonesia was the analogue country used to establish the normal value for the
     People's Republic of China, the single margin for the People's Republic of China
     was also adjusted downwards to reflect the granting of the allowance for credit.
     costs, to Indonesian normal values referred to in recitals 38 and 40 of the present
     Regulation.
 ---pagebreak---        (e)      Dumping margin                                                        - -
 (48) The Chinese exporters questioned, in some instances, the Commission's
       comparison of weighted average normal values to Chinese export prices of
       individual export transactions to the Community. They claimed that export prices
       did not sufficiently differ amongst different purchasers, regions or time periods and
       that consequently, in accordance with Article 2 (11) of the Basic Regulation, both
      export price and normal value should be compared on a weighted average basis.
      Having reviewed its calculations, the Commission found that the differences in
      prices were small and that for the purposes of definitive determinations weighted
      average normal values should indeed be compared with weighted average export
      prices.
      On that basis, the single dumping margin calculated for the People's Republic of
      China, expressed as a percentage of the cif price at Community frontier, was found
      to be 133.2%.
                             E.     COMMUNITY INDUSTRY
(49) Certain parties have reiterated and expanded their allegations according to which
      the Commission would have failed to establish the representative nature of the
      Community industry providing evidence of injury. This was based on the alleged
      non reliability of the "total Community production" figure used and entailed a
      criticism of the sampling technique applied by the Commission. The justification
      of the "anonymous treatment" granted to certain Community producers was also
      questioned.
                                              19
 ---pagebreak--- 1.   Total Community production
(50) It has to be recalled that the level of support for the complaint was checked before
     initiation. The total estimated EC production volume of the like product, on which
     the standing of the 68 complaining Community producers was assessed, was
     subsequently re-examined (in respect of 1991 until 1994) at the premises of
     national footwear federations and confirmed to be accurate.
     Moreover, it has to be stressed that the "total production" figure of the like product,
     on which the standing was assessed, was set at the maximum possible production in
     the Community. Indeed, due to the lack of reliable data, no examination could be
     carried out in order to determine, in accordance with the provisions of
     Article 4 (1) (a) of the Basic Regulation, whether the production volume of certain
     non-complaining producers should have been excluded from the "total production"
     figure, on the grounds that their core business would be importing rather than
     producing within the EC.
     Such would-be Community producers, of which some are known to have made
     considerable imports, are also known to produce in the EC a relatively large
     number of pairs. Had sufficient information in this respect been made available, it
     is likely that part of this Community-produced volume would have been excluded
     from the total production figure. Conversely, the "core business" test was carried
     out vis-à-vis the 28 companies in the "first group" as defined at recital 6 of the
     provisional duty Regulation and all were found (as explained at recital 55 of the
     provisional duty Regulation) to have their core business in the Community.
(51) The representative nature of the investigated Community industry, assessed in a
     reasonable way and on the basis of fully accurate figures, is therefore confirmed.
                                             20
 ---pagebreak---  2.    Sampling                                                                  .     - -
 (52) In this respect, it has to be recalled that given the very large number of potential
       parties to the proceeding, the notice of initiation of the present proceeding explicitly
       mentioned the fact that the investigation could be conducted by means of sampling.
       As a result, from the beginning of the investigation, cooperation was sought (via
       national federations) from a limited number of Community producers selected
       amongst the 68 companies supporting the complaint.
      Meaningful replies were received from 28 producers, amongst which, for
      verification purposes, 9 were selected and their replies subjected to in depth on-spot
      verifications (this latter group of producers is referred to as "the verification
      sample" in the provisional duty Regulation).
      The 28 companies in the first group do account for slightly more than 25% of
      Community output of the like product, thus qualifying, in the absence of declared
      opposition to the complaint, as the Community industry. This should be viewed as
      an exceptional circumstance, stemming from the fact that the first group was
      originally set up with a view to (inter alia) accounting for more than 25% of output.
      This, however, is not required by the Basic Regulation, and should be considered as
      an additional check on the representativity of the Community industry, instead of
      the fulfilment of a legal requirement.
(53) Concerning the representativity of the investigated Community industry, it has to be
      stressed that the injury findings were based on verified information collected from
      various appropriate sources, all representative of the Community industry:
                                              21
 ---pagebreak---       • Production, sales, market share and employment in the Community- were
      established at the level of each national footwear federation and thus cover the
      entire Community production of the like product. This fact clearly contradicts the
      allegation made by an interested party further to the final disclosure and according
      to which figures relating to the Italian footwear federation had been omitted when
      overall injury indicators were established;
      • General trends concerning prices, costs and profitability were established at the
      level of the 28 cooperating producers in the first group;
     • Undercutting and underselling exercises were carried out on the basis of fully
     verified price and cost data collected from the 9 companies in the verification
     sample, which are representative in terms of size and product range as well as
     located in major producing Member States.
3.   Anonymous treatment of the 9 companies in the verification sample
(54) Certain parties have reiterated and expanded their allegations according to which
     the Commission would have granted without any justification an "anonymous
     treatment" to the 9 companies in the verification sample.         These parties have
     claimed that complaining domestic industries should be prepared to face any kind
     of "commercial retaliation" and have requested that at least the names of the 28
     companies in the first group be disclosed.
 ---pagebreak---  (55) In this respect, it has to be stressed again that the anonymous treatment at stake*was
       granted because the threat exerted went far beyond what would be for importers the
       normal exercise of their freedom of sourcing and what could be considered as
       "normal" in commercial relations. The limited protection so granted was moreover
       considered particularly appropriate in the context of a sampling exercise, where a
       few selected companies are particularly exposed although they represent, and act
       for the benefit of, & much larger group.
(56) As regards the 28 companies in the first group, the company names on the non-
       confidential questionnaire responses had in general been replaced by an
       identification symbol and most national footwear federations (which transmitted the
       answers) had listed separately the names of the companies having replied, without
      of course disclosing the correspondence between the identification symbols and the
      names in the list. It should thus be stressed that all interested parties have had
      access to the non-confidential data provided by both the 28 producers in the first
      group and, in a separate file, to the verified and confirmed data of the 9 companies
      in the verification sample.
(57) Given that the questionnaire responses of the 28 companies in the first group as
      well as the lists established by federations had been made accessible to all parties
      before the Commission became aware of the above pressures, it was considered that
      the files in question, which permitted the identification of 22 (out of 28) companies,
      could not be made anonymous ex post and should thus continue to be accessible in
      an unaltered form. Under these circumstances, it was considered appropriate to
      include, in the final disclosure sent to all parties, the list of the 28 companies in the
      first group, whilst the name of the 9 companies in the verification sample was kept
      undisclosed.
                                              23
 ---pagebreak---                                       F.     INJURY
1.    Cumulative assessment of the effects of the dumped imports
(58) Certain parties have claimed that the impact of Indonesian and Chinese imports
      should not be cumulatively assessed. In particular, it has been alleged that two
      conditions, which ought to be fulfilled to make cumulation possible, were not met:
(59) Firstly, it has been argued that in order to determine, for the purpose of applying
      Article 3 (4) of the Basic Regulation, whether the margin of dumping established in
      relation to the imports from each country (for which cumulation with others is
      considered) was more than de minimis, the Institutions should not take account of
      residual margins but should rather rely on the margins found for cooperating
      exporters. This assertion cannot be accepted, in particular in consideration of the
      low level of cooperation obtained from Indonesian exporters. In addition, it is also
      worth noting that the margins of dumping established in respect of two Indonesian
     cooperating exporters (out of three selected in the sample) were more than de
     minimis.
(60) Secondly, it has been argued that certain differences in conditions of competition
     (allegedly evidenced by average import prices per pair, said to be markedly higher
     in the case of Indonesia when compared to the People's Republic of China) were
     such as to make cumulation unwarranted. In this respect, although the alleged
     differences are somewhat confirmed at Eurostat level, it was considered that:
     - these differences are not such as to allow a clear distinction to be made between
     the Indonesian and Chinese pricing policies, (in particular when the average prices
     of both Indonesia and the People's Republic of China are compared to that of the
     other third countries supplying the Community market, which are much higher than
     the average prices of both countries under investigation);
                                             24
 ---pagebreak---        - a detailed examination of the available information shows that imports from
       Indonesia, as well as those from the People's Republic of China, cover the full
       range of prices; and
       - on the basis of the information available, the most plausible explanation of the
       existing difference is a slightly different product mix rather than a clearly different
       pricing policy.
 (61) Accordingly, the provisional findings in this respect (as set out at recitals 64 to 69
       of the provisional duty Regulation) should be confirmed.
2.     General injury factors
(62) Since no new representations were made by any interested parties as regards the
      provisional assessment of general injury factors (such as, inter alia, consumption
      on the Community market, production, sales, profitability and employment of the
      Community industry), no re-examination of the findings concerned was undertaken.
3.    Undercutting calculation
(63) It has been alleged that undercutting was not always practised, if at all, at the level
      indicated in the provisional duty Regulation. Certain parties have shown during the
      hearings samples of allegedly comparable models where imported ones (generally
      manufactured in accordance with the importer's own specifications and design)
      were more expensive than Community-produced ones.
                                               25
 ---pagebreak---       Although these statements may be true in some particular cases, it has to be stressed
     that they were not confirmed on a broader basis by the investigation into both the
     exporters' prices for certain models and Eurostat prices. In these circumstances, the
     Commission considered it appropriate, for the purpose of establishing definitive
     findings, to continue to rely exclusively on the detailed and/or global information
     collected (and verified to the maximum extent possible) in the course of the
     investigation, on the basis of which the existence of price undercutting has been
     positively established.
(64) It has been clairned that the adjustment for differences in level of trade was
     insufficient and ought to be revised. In particular, evidence was provided showing
     that the 13% adjustment granted at provisional stage to take account of differences
     in level of trade between importers and Community producers' clients, only covered
     intra EC transport and other ancillary costs.
     A further analysis was carried out, concentrating on the importers for which
     corroborated data relating to this adjustment had been provided, i.e. the five
     cooperating importers named in the provisional duty Regulation. These importers
     had been the subject of a verification visit and together represented 14.8% of the
     import volume concerned during the investigation period.
                                            26
 ---pagebreak---  It could be verified that three of them had not sourced the product concerned "in a
 significant way from Community producers during the investigation period, but had
 rather the same customers as the Community producers. It was therefore concluded
 that, to be compared in a fair way, import prices had to be adjusted for the costs
 incurred between the importation and the point when the products actually reached
 the customers, and for a reasonable profit. For this purpose, all costs which could
 be allocated to the product concerned were taken into account, with the exception
 of those which appeared to be part of the production costs (such as raw materials
 provided by the importer to the producer in the exporting country) and thus to have
 been included in the customs value of the goods as reported in Eurostat.
 Conversely, two of the five importers appeared to be customers of the Community
producers, and thus only their costs from CIF to delivered duty paid at their
 warehouse level (DDP) were taken into account, as this corresponded to the level of
trade where the Community producers' prices and costs had been established.
For each importer, the relation between the average.import price for the product
concerned and the costs mentioned above was examined. It resulted from this
analysis that, to adjust the CIF price to a level of trade comparable to that of the
Community producers' deliveries, two elements had to be taken into account.
Indeed, although a part of the costs can be considered as proportional to the value
of the goods, an adequate adjustment was found to require also a fixed amount per
pair, to reflect the costs incurred inevitably by any importation, independently from
the goods' value.
                                        27
 ---pagebreak---  (65) On the basis of the evidence examined it was found that, in order to be compared in
       a fair way to the Community producers' prices and costs, the CIF import price for
       the product concerned had to be adjusted 20% upwards and then increased by an
       amount of 0.2 ECU per pair, plus the normal customs duty rate.
 (66) Calculations have been amended accordingly, resulting in the confirmation of the
       existence of the undercutting practices established in the provisional duty
       Regulation.    On a category-by-category basis as for the cooperating exporters
       subject to a provisional anti-dumping duty, average undercutting margins,
       expressed as a percentage of the Community industry's prices, were found to be in
       excess of 10% for Indonesia and 30% for the People's Republic of China.
4.     Conclusion on injury
(67) In the light of the above and in the absence of other arguments, it is confirmed that,
      as was established in recital (84) of the provisional duty Regulation, the
      Community industry has suffered material injury within the meaning of Article 3 of
      the Basic Regulation.
                                       G. CAUSATION
(68) Most exporters and importers raised again the case of imports from Vietnam as
      being a cause of the injury suffered by the Community industry. In this respect, it
      has to be stressed that at the time of the lodging of the complaint Vietnam's known
      share of the market was relatively limited.         The increase which took place
      afterwards was already noticeable during the investigation period, where the market
      share held by the products originating in Vietnam was, however, much more
      limited than that of Chinese products. It follows from the above that the effects of
      Vietnamese imports could not have broken the causal link established between the
      imports subject to the current investigation and the injury suffered by the
      Community industry.
                                              28
 ---pagebreak--- (69) Since no other potential cause of injury has been put forward with-substantiated
     evidence, the provisional findings in this respect as set out at recitals 85 to 95 of the
     provisional duty Regulation are therefore confirmed.
                            H.    COMMUNITY INTEREST
1.   Impact on consumers
(70) Although no representations have been received either from consumers or
     consumer organisations following the publication of the provisional duty
     Regulation, some parties have argued that anti-dumping measures would seriously
     affect the Community consumers and, among these, in particular those with the
     lowest income.
     This argument concerning the foreseeable impact of measures on the consumers'
     buying price has been examined in detail. The results of this examination are as
     follows:
     (a)        Impact in absolute terms
(71) Firstly, as far as footwear prices to distributors are concerned, it is likely that the
     Community industry, with a 29% market share and a 4.82 ECU per. pair average
     price, would not be able to increase its prices above the 4.4% necessary to reach the
     reasonable profit as defined in the provisional duty Regulation (recital 106) without
     running the risk of worsening its current strong downward trend in terms of market
     share.    In addition, imports from countries not concerned by this proceeding
     represent 21.4% of the market for the product concerned and it is expected that
     producers in these third countries will not be willing or able to command
     significant price increases.
                                            29
 ---pagebreak---       As for Indonesia, it should be recalled that the injury elimination level foreseen for
      this country is considerably lower than for the People's Republic of China, the
      average price of the imports being 2.34 ECU per pair.           The market share of
      footwear originating in the People's Republic of China being 39.9%, (with an
      average price of 1.65 ECU per pair) and in view of the duty rate proposed, the
      average maximum foreseeable impact of the measures proposed on the market of
      the footwear concerned as a whole amounts to 0.5 ECU per pair.
      Thus, only if distribution chooses to keep its margins unchanged and charges the
     entirety of its increased costs to the consumers, would the latter have in turn to pay
      the corresponding amount of 0.5 ECU per pair.           Since the average per head
     consumption of the footwear concerned in the Community is below one pair per
     person per year, the impact of the proposed measures for the consumer remains
     clearly marginal.
     (b)       Impact in relative terms, effect of price on consumption
(72) In relative terms, the basis of the calculations was the average price of the footwear
     concerned at delivered-warehouse distributor level, namely 3.6 ECU per pair,
     which takes into account, for the imports, the adjustment for differences in level of
     trade referred to in recital 65 of the present Regulation. Using the lowest mark-up
     found among the distribution channels analysed below, i.e. 125%, it is estimated
     that the average price for the consumer of the product concerned is above 8.1 ECU
     per pair. As a consequence, the impact on the consumer price of fully reflected
     duties would be below 6.2%.
                                             30
 ---pagebreak---      This percentage should, as explained above, be examined in light both-of the
     absolute value of the increase (0.5 ECU per pair) and the general evolution of
     prices. Indeed, over the four years examined, and due to the penetration of the
     dumped imports, the average market price at delivered-warehouse distributor level
     decreased in nominal terms, this decrease being of more than 11% when corrected
     from the general inflation rate.
(73) It should be added that, even if consumers do compare the prices which are
     simultaneously offered in different shops, they are generally less sensitive, as
     regards the product under investigation, to developments in the general level of
     prices. Indeed, the above mentioned decrease in prices did not influence the global
     consumption of the product concerned in the same proportion (as would have had
     happened if consumers had reacted on a "constant budget" basis).
     This can be explained by a certain saturation which can be observed for products
     which are consistently sold at such low prices that consumers are unlikely to react
     to a limited overall change in the Jevel of prices.. ' Even if the pattern of
     consumption is not necessarily symmetric in the short term, it is doubtful that,
     everything else being equal, the full reflection of the duty, i.e. a maximum price
     increase of 6.2%, will cause a relative contraction in demand of more than 1.6 %.
(74) In the absence of any other element or reaction from consumer organisations, it was
     therefore concluded that the impact of the proposed measures on the consumer of
     the footwear concerned was likely to be minimal.
                                             31
 ---pagebreak--- 2.    Impact on the distribution
      (a)       Impact on the distribution as a whole
(75) It has been argued that the imposition of measures would have a strong negative
      impact on the importers. More globally, diverging views have been expressed on
      the situation of the whole distribution chain which, it has been argued, was an
      activity with a far greater significance in the Community than the footwear
      production, in terms of both turnover and employment.
      It should be recalled first that, by nature, on a given geographic territory,
      distribution will have a higher turnover than the manufacturing companies it buys
     from, by the mechanical effect of its distribution margin.               Secondly, the
     employment figures for the footwear distribution in general, where all types of
     footwear are sold, cannot be compared with those of the Community production of
     the product concerned only, which were disclosed in the provisional duty
     Regulation (recital 81).
     However, the importance of the distribution companies for the footwear sector in
     general and this analysis in particular has to be stressed, notably in consideration of
     the value added by these companies. In examining the possible impact of the
     measures on the distribution, care was taken to clearly differentiate general
     considerations, having an indirect bearing on the product concerned, and
     considerations specific to the product concerned.
     As consumers do not buy shoes in significant quantities outside the Community,
     negative consequences of anti-dumping duties for the distribution as a whole could
     only result from a significant reduction of consumption and therefore of turnover,
     or a downward pressure on distribution margins to precisely minimise an increase
     in consumer prices (and a decrease in consumption).
                                             32
 ---pagebreak---       As explained above, in light of the foreseeable impact of possible measures-on*the
      consumers of the product concerned, it can be considered as highly unlikely that
      consumption of the product concerned would drop significantly, even if the
      distribution sector were not to reduce its current margins.
     Taken as a whole, it can therefore be concluded that the effects of possible
      measures on the distribution, limited for the sake of argument to that of the product
     concerned, will be very limited. Care was however taken to analyse this conclusion
     in light of the structure of footwear distribution in the Community.
     (b)        Structure of the footwear distribution in the Community
(76) Among the footwear distribution in the EC, four different channels of sale to the
     end customer are generally identified.           These are the branded chains, the
     independent retailers, the non-specialised supermarkets, and, as a fourth category,
     the other types of generally non-specialised distribution (clothing and general stores
     for example).
       (i)      The independent retailers
(77) The traditional distribution channel consists of independent retailers, generally
     buying from wholesalers. In the evolution of the distribution however, wholesalers
     tend to disappear as retailers enter into a closer relationship with a more limited
     number of producers, or tend to group in purchase associations while keeping their
     independence.
                                             33
 ---pagebreak---      As far as the retailers themselves are concerned, they face an adverse competitive
     situation due to both their individual lack of price control on suppliers and the high
     margins they require to cover the fairly high costs of the city centres (150% to
     200%). In fact, they have lost ground in a certain number of Member States to
     more recent forms of distribution falling within the other three categories, in
     particular the branded chains.
     However, as a consequence of their strong presence in some other Member States
     and their situation at the upper end of the market where they maintain a continuous
     commercial relationship with their customers, it should be noted that they are still,
     at least in terms of value added and employment (over 250 000 persons), the most
     important distribution channel in the Community, although probably not the first
     one in terms of market share (in volume).
       (ii)    The branded chains
(78) These chains, sometimes involved into a production activity in the Community, are
     generally the property of one or two large companies in each country, owning
     several brands and operating on the whole market range. They operate out-of-town
     super or discount stores, which can resist, because of their sales volume, prices and
     specialisation, the non-specialised supermarkets' pressure.
                                            34
 ---pagebreak---       The branded chains also sell through in-town shops replacing the- independent
      retailers with less costly, standardised shops corresponding to the need, for a part of
      the customers' purchases, to have a more adequate buying environment than
      discount halls. Different brands are allocated different market segments, to the
      effect that when two companies are present on the market, or even among the same
      company, upmarket brands suffer. Due to their purchasing power, their access to
      world supply (they import on their own account) and the relatively low margins
      they operate with, generally around 25% of the cost of sales for the central trading
      arm and 100% on average for the shops, they are able during their period of
      introduction on the market to rapidly gain market share and obtain growth rates in
     excess of 5% per year.
        (iii)   The non-specialised supermarkets
(79) Important in terms of volume, but less in terms of value on the total footwear
     market due to the low average price of their sales, non-specialised supermarkets
     have a strong influence at the lower end of the market. Although they sometimes
     buy directly from suppliers located outside the Community, they usually rely on
     specialised importers for their imports, which constitute an important part of their
     footwear sales. Their traditional mark-up is around 100%, but it can range from
     around 60% on promotional operations to over 130% on some Community
     productions. Due to the supplementary step of the importer and the fixed part of
     the costs incurred, imports from the countries concerned through this sales channel
     usually reach the end-customer at a price 3 times higher than the CIF level.
                                              35
 ---pagebreak---         (iv)    Other sales channels                                                 -
(80) Other channels of sale, such as mail order companies or garment stores, gained a
      significance in certain Member States but not such as for a given type to have
      acquired an importance on a Community-wide basis. In certain Member States,
      specialised mail-order firms have a cost structure similar to the branded chains.
      Community-wide apparel chains of "small" shops also introduce footwear in their
      stores as a fashion branded item, generally with higher margins than on their usual
      articles. Due to the fashion aspect of these sales, they constitute competition for the
     branded chains, generally less marked however than the one due to large general
     city centre stores.
     (c)        Specific impact of the proposed measures on the various sales channels
(81) As regards the independent retailers, which still constitute the largest source of
     employment in the Community footwear distribution, the general conclusion
     presented in recital 75 of the present Regulation is strengthened by the fact that they
     usually have a low proportion of their supplies of the product concerned originating
     in Indonesia or the People's Republic of China. It should be added that they are
     grouped in a confederation representing 8 Member States on a representative level,
     and that no submission opposing the possible imposition of anti-dumping measures
     was received from this source or any other.
                                             36
 ---pagebreak--- (82) The companies owning branded chains have for their part contested the need-forthe
     imposition of anti-dumping duties.        Although the general conclusion is also
     applicable to them, the fact that some of them rely more than the independent
     retailers on the dumped imports for the supply of the product concerned explains
     why, within the distribution, they could fear a negative effect of the measures on
     their comparative competitive situation.
     The direct effect of possible measures on the financial situation of these companies
     will be negligible if the amount of the duty were to be fully passed on to the
     consumer. Indirect financial effect:; could only be expected if, due to this price
     increase, consumers would reduce their purchases of the product concerned".
     However, should this happen, it would only be to a limited extent, even if the 1.6%
     average given in recital 73 was slightly exceeded in the branded chains.
     Moreover, the product concerned is never sold separately in specialised shops and
     due to its particularly low prices, represents less than 10% of the turnover of the
     companies operating branded chains and having cooperated. In this perspective,
     even a small contraction in the demand for the product concerned, which appears
     unlikely, would have a negligible impact on the companies as a whole, in particular
     if the demand is at least partly reoriented to footwear with, a higher price, with a
     likely higher margin in absolute terms.
(83) As far as non specialised supermarkets or other non-specialised stores are
     concerned, in view of the even more limited extent to which their sales rely on the
     product concerned, their situation should not be affected by the imposition of
     measures even in the case of the market evolution envisaged above.
                                            37
 ---pagebreak---   (84) The situation of the importers supplying these non-specialised distribution channels
         was examined, as they imported in some cases a more important portion of their
         turnover from the countries concerned than their clients. These companies are
         generally run with a very limited and flexible structure allowing them to sell only
         when the trading margin they foresee covers the costs incurred. Their expertise on
         the market and their ability to design and sell are not affected by the country of
         origin of the goods. The anti-dumping measures having an impact on the footwear
         distribution as a whole, these importers will be able to benefit from any market
         situation, and continue to supply their clients with Chinese or Indonesian imports,
         or any non-dumped product, as well as Community-produced ones.
  (85) In conclusion, it could not be established that the imposition of anti-dumping
        measures on the footwear concerned would be such as to affect significantly the
        financial situation of either the footwear distribution as a whole or of a part of it.
 3      Impact on the Community industry and its suppliers
 (86) The argument according to which the measures would have no positive effect on
        the situation of the Community industry due to the shift of supply to other third
        countries has been presented again. It has been argued moreover that the situation
        of the textile footwear industry in this respect was comparable to that of the
        synthetic handbags manufacturers and that accordingly the Council should also in
        the present case refrain from taking measures4.
4
   See recitals 105 and 106 of Council Regulation (EC) No. 1567/97 (OJ No L208, 2.8.1997, p.31.)
                                                    38
 ---pagebreak---         Shift of supply between various countries has been an important factor on the
        footwear market for a number of years. In this regard, it should be noted that the
        Community industry has been able, by its automation and rationalisation, to partly
       compensate, by its own increase in exports, for the constant change of country from
       which varying volumes were imported in the Community. This could however not
       be the case for the massive surge in dumped imports from the two countries
       concerned in the present proceeding. As far as the alleged parallelism between the
       present proceeding and the synthetic handbags case is concerned, it should be
       stressed that the significant market share still held by the complainant Community
       industry in this case, the nature of the capital holders in most exporting companies,
       as well as the important industrial investment necessary to produce footwear,
       clearly exclude any reasonable and meaningful comparison between the two
       industries. The Council cannot accept therefore that for the sake of consistency, it
       should refrain from taking measures in the present case.
 (87) It has been argued again that, should measures be imposed, this would have
      negative consequences on the footwear machine manufacturers which would be
      limited in their sales to Indonesia and the People's Republic of China.
      As far as the machine suppliers are concerned, it should be noted that the
      Community industry is clearly investing in automation, and in the injection process
      in particular.   This automation is linked with investments in machines and in
      moulds produced in the Community, which continue to create a virtuous circle of
      technological improvement. No evidence has been received on the other hand
      showing that exporters in Indonesia or the People's Republic of China are main
      clients of the Community equipment manufacturers.
(88) .No new evidence having been submitted in respect of these arguments, the
      conclusions presented in recitals 99 and 104 of the provisional duty Regulation are
      accordingly confirmed.
                                              39
 ---pagebreak---      4.        Quantitative restrictions on slippers
(89) It has again been claimed that slippers should not be subjected to anti-dumping
     measures because they are already, if Chinese, subjected to an effective quota.
     As regards the principle, it has to be recalled that following an anti-dumping
     investigation which has shown that measures are warranted (with a view to
     remedying a price-related injury), the imposition of such measures should be
     considered without reference to the existence of any quantitative restrictions which
     may be applicable to the products in question. In addition, it should be recalled that
     more than 75% of the footwear concerned by this investigation is not subject to any
     quantitative restrictions.
5.   Conclusion concerning Community interest
(90) As a conclusion, and having examined all the various interests involved, it is
     considered that there are no compelling reasons not to take action against the
     dumped imports in question.       The conclusions set out in recital 105 of the
     provisional duty Regulation are therefore confirmed.
                                           40
 ---pagebreak---                            I.    ANTI-DUMPING MEASURES
 1.   Injury elimination level
      (a) General considerations
(91) It should be recalled that the calculations used to establish the injury elimination
      level at the provisional stage were based on two different sets of price comparisons.
      As far as the cooperating exporters were concerned, the prices of the most exported
      models were compared to the Community industry's corresponding non-injurious
     prices on the basis of a grouping into 16 so-called families of footwear. For the
      vast majority of imports, however, in the absence of cooperation from any
     exporters, the injury elimination level had to be calculated on an average basis for
     the CN codes concerned, this approach having been called the category-by-category
     comparison.
(92) It has been argued that, in performing these comparisons, the Commission failed to
     take into account the alleged differences between vulcanised and injected footwear.
     Further to what has been explained at recitals 26 to 30 of the present Regulation, it
     is considered that there are no global differences between vulcanised and injected
     footwear which are such as to significantly affect global price comparisons.
     Indeed, the difference in the manufacturing processes used for the production of the
     soles of two comparable models does not induce a different consumer perception.
     As far as the cooperating exporters are concerned, in the case where imported
     vulcanised models were compared to Community-produced injected footwear
    .because these were the most similar models found, the exporters were given the
     opportunity to comment on the basis of the documents and non-confidential files
     available to them, and none of them contested the comparison made.
                                            41
 ---pagebreak--- (93) Exporters from the People's Republic of China claimed that the descriptive
     elements of the Community produced models used for comparison purposes were
     insufficient. In this respect, it should be recalled that the exporters were provided
     with copies of the non-confidential files where photographs of the Community-
     produced models used as a reference in each family were provided. This was done
     in addition to the written explanations given and the calculation sheets included in
     the disclosure.
(94) Following the .claim made by importers, and in order to perform the price
     comparisons in the, calculation of the injury elimination level, CIF import prices
     were adjusted to the duty-paid, customer-delivered price level by using the
     adjustment methodology used for the undercutting assessment, as presented at
     recital 65 of the present Regulation.
(95) Some importers argued that the calculations of the residual duty rates could not be
     understood in the form they were presented in the disclosure of the essential facts
     and considerations on the basis of which provisional measures were imposed. This
     was, at least for a part, due to the fact that the Community producers' non-injurious
     prices were not given in the disclosure.
     It was subsequently decided that these average non-injurious prices for the footwear
     concerned, which resulted from calculations involving several Community
     producers, could be disclosed to facilitate the understanding of the price
     comparisons, without risking a breach of confidentiality.            The provisional
     calculations being however affected by the change in the level of trade adjustment
     presented above, disclosure of details concerning the provisional calculations could
     not be regarded as of major interest. As a consequence, detailed explanations on
     the injury elimination level, including all figures and charts, were given in the final
     disclosure sent to the parties.
                                               42
 ---pagebreak---  (96) It was argued by certain importers that, even if it could be admitted that injurrous
       dumping in respect of footwear with an import price below three US dollars was
       taking place, this was not the case for more sophisticated footwear. The latter
       category, according to the importers in question, should be attributed a 0% injury
       elimination level.
       In this respect, it should be recalled that, although huge volumes are indeed
       imported below 2.5 ECU (equivalent to 3 US dollars), these imports covered, in the
       sample of the importers' transactions examined, only 48% of the value of the
       imports concerned. The fact that a majority of the import turnover was above the
      alleged price break shows that, in reality, the imports of the product concerned',
      though made at extremely low prices when compared to what they would be if
      normal competitive conditions prevailed, are spread over a continuous price scale.
      Moreover, the non-injurious price levels established for the investigated
      Community producers were also both below and above the alleged price break,
      adjusted to the appropriate customer-delivered level (3.7 ECU), depending on the
      shoe type. In the absence of any other evidence relating to this aspect of the
      market, this claim should therefore be rejected.
(97) No other remarks having been submitted, the general injury elimination level
      methodology, as. established in recitals 106 to 112 of the provisional duty
      Regulation, are therefore confirmed.
      The change in the level of trade adjustment, however, affects the provisional
      findings, as set out below.
                                            43
 ---pagebreak---       (b) Indonesia                                                                  - -
(98) In conformity with the methodology set out in the provisional duty Regulation, the
      revised injury elimination levels for the cooperating companies in the sample for
      Indonesia, expressed as a percentage of the CIF import price, ranged from 0 to
      31.5%, with an average to be applied to cooperating companies outside the sample
      of 14.1%. By the same token, the revised residual margin, established on the basis
      of Eurostat statistics, was found to be 15.4%.
      (c) People's Republic of China
(99) In accordance with the methodology set out in the provisional duty Regulation, the
      revised single injury elimination level for the People's Republic of China was
      found to be 61.2%.
2.    Duty
(100) One of the cooperating Indonesian companies not included in the sample objected
      to the fact that it had been attributed a duty based on the weighted average dumping
      margin found for the sample.
      This argument could not be accepted since Article 9(6) of the Basic Regulation
      provides that, where the Commission has limited its examination in accordance
      with Article 17, any anti-dumping duty imposed on cooperating companies not
      included in the sample shall not exceed the.weighted average margin of dumping
      established for the parties in the sample. Moreover, it will be recalled from recital
      23 of the provisional duty Regulation that the Indonesian companies concerned had
      agreed to this methodology.
                                               44
 ---pagebreak--- (101) Since the residual injury elimination level for Indohesia and the People's Republic
      of China, as well as the individual level for PT Sindoll Pratama, is lower than the
      corresponding dumping margins, the anti-dumping duty should be based on these
      levels. For the other cooperating exporters in Indonesia, the anti-dumping duty
      should be based on the dumping margins established above.
(102) The anti-dumping duty rates, applicable to the net, free at Community frontier price
      before duty should therefore be as follows:
 Country                                  Manufacturer and exporter         Rate of duty
 PEOPLE'S REPUBLIC OF CHINA               All companies                     61.2%
 INDONESIA                                PT Dragon                           40%
                                          PT Emperor Footwear Indonesia     0%
                                          PT Sindoll Pratama                0%
                                          PT Bosaeng Jaya                   14.1%
                                          PT Volmacarol                     14.1%
                                          All other companies               15.4%
               J.    COLLECTION OF THE PROVISIONAL DUTIES
(103) In view of the magnitude of the dumping margins found for the exporting producers
      and countries, and in the light of the seriousness of the injury caused to the
      Community industry, it is considered necessary that the amounts secured by way of
      provisional anti-dumping duty under Regulation (EC) No 165/97 should be
      definitively collected at the rate of the duty definitively imposed. However, the
      amounts for which it can be established, to the satisfaction of the customs
      authorities, that they related to imports of shoes excluded from the scope of the
      present proceeding, as described under Article 1 (3) (b) and (c) of the present
      Regulation, should be released in their totality.
                                             45
 ---pagebreak---                         K.    NEW EXPORTING PRODUCERS
 (104) Pursuant to Article 11(4) of the Basic Regulation, a new exporter's review to
       determine individual dumping margins cannot be initiated in this proceeding with
       regard to Indonesia as sampling was used in the original investigation. However, in
       order to ensure equal treatment between any new exporting producers and the
       companies cooperating in this investigation, it is considered that provision should
       be made for the weighted average duty imposed on the latter companies to be
       applied to any new exporting producers which would otherwise be entitled to a
       review pursuant to Article 11 (4),
HAS ADOPTED THIS REGULATION:
                                          Article 1
1.    A definitive anti-dumping duty is hereby imposed on imports of footwear falling
      within CN code 6404 19 10 and, with the exceptions described below, of footwear
      falling within CN code ex 6404 19 90 (Taric code 6404 19 90 * 90), originating in
      the People's Republic of China and Indonesia.
2.    The rate of the definitive anti-dumping duty on the basis of the net, free-at-
      Community-frontier price, before duty, shall be:
                                             46
 ---pagebreak---           Country               Products manufactured      rate of duty        Taric
                                           by                  (%)           Additional
                                                                               Codes
People's Republic of China     All companies                  61.2%               -
Indonesia                      All companies                  15.4%             8900
                               with the exception of:
                               P.T. Dragon                    4.0%              8941
                               P.T. Emperor Footwear
                               Indonesia                      0.0%             8942
                               P.T. Sindoll Pratama           0.0%             8942
                               P.T. Bosaeng Jaya              14.1%            8943
                               P.T. Volmacarol                14.1%            8943
     The duty shall not apply to:
     a) shoes sometimes known as "espadrilles", which, for the purpose of the present
     Regulation, are shoes with canvas uppers and unheeled plaited fibre soles, whether
     or not strengthened with rubber or plastics over a variable surface, which are not
     thicker than 2.5 cm (Taric code 6404 19 90 * 10);
     b) shoes sometimes known as "diving boots" or "water sports boots", which, for the
     purpose of the present Regulation, are shoes with an upper made of neoprene,
     whether laminated on one or both sides with textile material, where the neoprene
    •thickness is of 2.5mm or more, covering the entirety of the foot, with an abrasion-
     resistant sole , and designed for certain water sports such as diving (Taric code
     6404 19 90*20);
                                            47
 ---pagebreak---     c) shoes sometimes known as "medical shoes", which, for the purpose "of "the
    present Regulation, are shoes which, although not manufactured according to the
    individual medical need of one person, are designed for easing the recovery during
    or after a therapy or a medical operation, as for example shoes to walk while having
    a plastered or banded foot. These shoes do not cover the foot entirely and have a
    wide opening which enables even a banded foot to fit inside. They are sold not per
    pair, but individually, and show at the same time more than one of the following
    characteristics:
       - The closing device can be adjusted to the bandage or plaster size
       - Special internal soles or pads can be inserted for medical purposes
       - The design of the sole is such that it prevents certain harmful contacts from the
       foot with the ground, but at the same time bans a non medical use of the shoe
       - The design is functional and does not use decorations or other fashionable
       accessories
   (Taric code 6404 19 90 * 30);
4. Where any Indonesian.party provides sufficient evidence to the Commission that it
   did not export the goods described in paragraph 1 during the investigation period,
   that it is not related to any exporter or producer subject to the measures imposed by
   this Regulation and that it has exported the goods concerned after the investigation
   period, or that it has entered into an irrevocable contractual obligation to export a
   significant quantity to the Community, then the Council, acting by simple majority
   on a proposal submitted by the Commission, after consulting the Advisory
   Committee, may amend paragraph 2 by attributing that party the duty applicable to
   cooperating exporting producers not in the sample, i.e. 14.1%.
                                           48
 ---pagebreak---  5.     Unless otherwise specified, the provisions in force concerning duties and other
       customs practices shall apply.
                                          Article 2
 1.    The amounts secured by way of provisional anti-dumping duty under Regulation
       (EC) No 165/97 shall be definitively collected at the rate of the duty definitively
       imposed, with the exception of the amounts for which it can be established, to the
       satisfaction of the customs authorities, that they related to imports of shoes
       described under Article 1 (3) (b) or (c), which shall be integrally released.
2.     Amounts secured in excess of the definitive rate of anti-dumping duty shall be
      released.
                                         Articled
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
                                                      The President
                                             49
 ---pagebreak---  ---pagebreak---  ---pagebreak---                                                                     ISSN 0254-1475
                                                             COM(97) 498 final
                                              DOCUMENTS
EN                                                                      02 11
                                    Catalogue number : CB-CO-97-502-EN-C
                                                              ISBN 92-78-25132-1
Office for Official Publications of the European Communities
L-2985 Luxembourg
                                                    so