CELEX: 52000PC0556
Language: en
Date: 2000-09-13
Title: Proposal for a Council Regulation amending Regulation (EC) No 119/97 imposing a definitive anti-dumping duty on imports of ring binder mechanisms originating in the People's Republic of China

COMMISSION OF THE EUROPEAN COMMUNITIES
                                               Brussels, 13.09.2000
                                               COM(2000) 556 final
                                  Proposal for a
                          COUNCIL REGULATION
amending Regulation (EC) No 119/97 imposing a definitive anti-dumping duty on
imports of ring binder mechanisms originating in the People's Republic of China
                         (presented by the Commission)
 ---pagebreak---                             EXPLANATORY MEMORANDUM
The purpose of the proposal is to amend Regulation (EC) No 119/97 imposing a definitive
anti-dumping duty on imports of ring binder mechanisms originating in the People's Republic
of China.
1.      The present proposal to amend the measures in force follows a finding that the
        measures imposed have been to a large extent absorbed.
2.      This finding of absorption was based on a comparison of resale prices in the
        Community charged prior to the imposition of measures and those charged during
        the present investigation period, which showed that there was limited movement in
        resale prices since measures were imposed.
3.      Having established that resale prices failed to adequately reflect the cost of the anti-
        dumping duty, export prices were reassessed on the basis of Article 2(9) of the Basic
        Regulation since there appeared to be a compensatory arrangement between the
        exporters and importers. On this basis, the recalculated dumping margin for World
        Wide Stationery Manufacturing Company Ltd. amounts to 115.3% of the CIF value
        and for all other exporters from the People's Republic of China 168.6% of the CIF
        value.
4.      As the measures currently in force are based on the level of injury found in the
        original investigation period, the revised measures should also be established by
        comparing the reassessed export prices with the injury level found in the original
        investigation period. Accordingly, the proposed level of duty expressed as a
        percentage of the CIF value is 51.2% for World Wide Stationery Manufacturing
        Company Ltd. and 78.8% for all other exporters from the People's Republic of
        China.
5.      The consultation of the Member States in the Advisory Committee has shown that
        the United Kingdom, Denmark, Italy and Ireland were opposed to the proposed
        amendment, the Netherlands and Germany abstained whereas the remaining Member
        States were in favour of the proposed amendment.
6.      It is therefore proposed that the Council decides to amend Regulation (EC)
        No 119/97 by adopting the attached Regulation which increases the measures in
        force to 51.2% and 78.8% for World Wide Stationery Manufacturing Company Ltd.
        and all other exporters from the People's Republic of China respectively.
                                              2
 ---pagebreak---                                         Proposal for a
                                 COUNCIL REGULATION
    amending Regulation (EC) No 119/97 imposing a definitive anti-dumping duty on
    imports of ring binder mechanisms originating in the People's Republic of China
THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty establishing the European Community,
Having regard to Council Regulation (EC) No 384/96 of 22 December 1995 on protection
against dumped imports from countries not members of the European Community1, as last
amended by Regulation (EC) No 905/982, and in particular Article 12 thereof,
Having regard to the proposal submitted by the Commission after consulting the Advisory
Committee,
Whereas:
                                      A. PROCEDURE
         1. Measures in force
(1)    In January 1997, by Regulation (EC) No 119/973, the Council imposed a definitive
       anti-dumping duty on imports of ring binder mechanisms ("RBM") originating in the
       People’s Republic of China. The rate of the definitive duty applicable to the net, free-
       at Community frontier price, was 32,5% for World Wide Stationery, which obtained
       individual treatment, and 39,4% for all other companies in the People’s Republic of
       China.
         2. Request for a review
(2)    On 7 December 1998, a request for a review of the above mentioned measures was
       lodged pursuant to Article 12 of the Council Regulation (EC) No 384/96 (hereinafter
       referred to as the "Basic Regulation"). The lodging was made on behalf of the
       Community producers whose collective output of ring binder mechanisms constituted
       a major proportion of the total Community production of that product within the
       meaning of Article 5 (4) of the Basic Regulation, namely Koloman Handler AG
       (Austria) and Robert Krause Ringbuchtechnik GmbH (Germany).
(3)    The request contained information which showed that the resale and subsequent
       selling prices in the European Community of the product under consideration did not
       adequately reflect the level of the anti-dumping measures imposed. This information
1
    OJ L 56, 6.3.1996, p.1.
2
    OJ L 128, 30.4.1998, p.18.
3
    OJ L 22, 24.1.1997, p. 1.
                                               3
 ---pagebreak---        was based on price lists and other information obtained from the Chinese exporters
       and their resellers. It was also alleged that in certain Member States, exporters
       discounted their prices immediately after the imposition of measures and that the
       insufficient movement in resale and subsequent selling prices after the imposition of
       measures had led to the continued erosion of prices obtained by the Community
       industry.
    B. REVIEW INVESTIGATION PURSUANT TO ARTICLE 12 OF THE BASIC
                                        REGULATION
         1. Initiation of the review pursuant to Article 12
(4)    On 19 January 1999, the Commission announced by a notice published in the Official
       Journal of the European Communities4 the initiation of a review, pursuant to Article
       12 of the Basic Regulation, of the anti-dumping measures applicable to imports of
       certain imports of ring binder mechanisms originating in the People’s Republic of
       China and commenced and investigation.
(5)    The Commission officially advised the producers/exporters known to be concerned,
       the representatives of the exporting country and the applicant Community producers of
       the initiation of the review. Interested parties were given the opportunity to make their
       views known in writing and to request a hearing within the time limit set out in the
       notice of initiation.
(6)    The Commission services sent questionnaires to all exporters known to be concerned,
       namely: World Wide Stationery Manufacturing Company Ltd., Hong Kong ("WWS");
       Guangzhou Wah Hing Stationery Manufactury Limited, PRC; Hong Kong Stationery
       Manufacturing Company Limited, Hong Kong; Champion Stationery Manufacturing
       Co. Ltd., PRC; and Sun Kwong Metal Manufacturing Co. Ltd., PRC.
(7)    From the above exporters, only WWS, Hong Kong, provided a complete reply to the
       Commission's questionnaire.
(8)    One exporting producer provided false and misleading information in its reply to the
       Commission's questionnaire. The information provided by this exporting producer did
       not coincide with declarations made to the national customs authorities. In fact, some
       of the goods of Chinese origin were declared to national customs authorities as being
       of Thai origin and thus avoided payment of the anti-dumping duties normally due.
       Moreover, certain consignments from the People's Republic of China were entered
       under the wrong CN code which again meant that there was no payment of the anti-
       dumping duties. The precise extent of these practices could not be accurately
       identified and as a result, the whole reply to the questionnaire had to be disregarded.
(9)    In these circumstances, findings had to be made on the basis of the facts available, in
       accordance with Article 18 of the Basic Regulation. In this regard, the facts available
       indicated absorption of the anti-dumping duty as demonstrated by the fact that
       invoices of this exporting producer showed that export prices were on an "anti-
       dumping duty paid" basis, i.e. the duties were paid by the exporter.
       For the other three producers/exporters, one of which refused to submit a complete
4
    OJ C 14, 19.1.1999, p. 4.
                                                4
 ---pagebreak---      questionnaire reply on the grounds that a full reply would impose an unreasonable and
     disproportionate burden on it and for the remaining two producers/exporters which did
     not make themselves known, findings were made on the basis of facts available in
     accordance with Article 18 of the Basic Regulation.
(10) Questionnaires were also sent to independent importers known to have imported RBM
     from the People's Republic of China so as to ascertain the resale prices of the product
     concerned before and after the imposition of the anti-dumping duties. In this regard, it
     should be noted that a high level of cooperation was obtained by the unrelated
     importers. Replies to the questionnaires were received from the following unrelated
     importers: Bensons International Systems B.V., The Netherlands, (“Bensons NL”);
     Bensons International Systems Ltd, United Kingdom, (“Bensons UK”); KWH Plast
     Vertriebsges. GmbH, Germany, (“KWH Germany”); KWH Plast (Danmark) AS,
     Danmark, (“KWH Danmark”); and KWH Plast (UK) Limited, United Kingdom,
     (“KWH UK”).
     Verification visits were carried out at the premises of KWH Germany and Bensons
     NL.
(11) The investigation period of this review ("new investigation period") ran from 1
     January 1998 to 31 December 1998. This new investigation period was used to
     determine the level of export prices, resale and subsequent selling prices charged after
     the imposition of anti-dumping measures to ascertain whether the measures were
     failing to achieve their intended effects because of increased dumping.
(12) In establishing whether resale and subsequent selling prices had moved sufficiently,
     the price levels charged in the new investigation period were compared to those
     charged during the original investigation period which had covered the period from 1
     October 1994 to 30 September 1995.
(13) Owing to the volume of data gathered and examined, in particular in view of the
     complexity of the analysis regarding the movement in the resale and subsequent
     selling prices of the unrelated importers as well as the enquiries and examination of
     one exporting company's practices as set out above in recital 8, the investigation
     exceeded the normal period of 6 months provided for in Article 12(4) of the Basic
     Regulation.
       2. Product concerned
(14) The product concerned by the request and for which the review was initiated is the
     same as in the original investigation, i.e. certain ring binder mechanisms used as
     fittings for loose-leaf binders or files, but excluding lever arch mechanisms, which
     consists of two or more round, arched or D-shaped sturdy metal rings. The product is
     currently classifiable within CN code ex 8305 10 00.
       3. Movement of export prices from the People's Republic of China and of resale
           prices in the Community
(15) The purpose of this investigation was to establish whether measures were having the
     intended effects and whether any failure to have such effects was as a result of
     increased dumping through a fall in export prices. For the purpose of the present
     investigation, such a fall in export prices may be reflected by a fall in the direct export
                                              5
 ---pagebreak---      prices charged by exporters to the Community or it may be reflected in a lack of
     movement or insufficient movement in resale prices or subsequent selling prices in the
     Community due to a compensatory arrangement.
(16) In this case, it was decided that the problem of absorption should be addressed in
     relation to movements in resale prices of the product concerned in the Community.
(17) The movement of resale prices in the Community was assessed separately on the one
     hand, for WWS since this company had been granted individual treatment and on the
     other, for the other Chinese exporters. The duty rate applicable to it is 32.5%.
(18) The comparison was made between resale prices both prior to and following the
     imposition of measures. This comparison was based on the information on resale
     prices provided by the five co-operating unrelated importers in the Community. The
     imports of the above five companies account for the great majority of export sales
     from the People's Republic of China to the EC during the new investigation period. In
     order to make a proper comparison, a sufficient degree of representativeness was
     ensured during both the original and new investigation periods in terms of quantity,
     value and the number of the product types sold and used for comparison.
(19) The comparison showed that the movement of resale prices between the two
     investigation periods was limited. It was established that on a weighted average basis,
     for all product types concerned and for all co-operating unrelated importers, the level
     of movement was 3.1%, while prices should have increased by over 30%.
(20) With regard to the non-cooperating parties, findings were made in accordance with
     Article 18 of the Basic Regulation (see recitals (8) and (9) above). In this context, the
     incomplete information available to the Commission on export prices for these parties
     indicated that full absorption was taking place. On this basis and given that
     cooperating parties were absorbing most of the duties, it is reasonable to consider that
     the non-cooperating parties were absorbing in full.
       4. Claims made by interested parties
             (a) General
(21) Interested parties were provided with an opportunity to provide evidence that could
     justify a lack of movement in prices in the Community following the imposition of
     measures. The reasons which can justify such a lack of movement include a reduction
     in the selling, general and administrative (hereinafter referred to as "SG&A") expenses
     (efficiency gains) and profit of the importer or a fall in normal value. These
     allowances cannot be granted for every fall in the level of these items. Rather, they
     must be restricted to those reductions which can be said to have offset the cost of the
     anti-dumping duty and which consequently need not be fully reflected in the resale
     prices. Credit will also be given to the importers and exporters concerned for any
     amount by which the resale prices have increased between the original and the new
     investigation period.
             (b) Claims for change in normal value
(22) Together with its reply to the questionnaire, WWS requested market economy status
     and asked the Commission to take into account changed normal values. WWS was
                                              6
 ---pagebreak---      informed, however, that a market economy status review should be pursued under
     Article 11(3) of the Basic Regulation.
(23) Similarly, other non-cooperating companies which requested a revision of normal
     values in relation to a market economy treatment request were informed that the
     request for market economy treatment should be pursued under Article 11(3) of the
     Basic Regulation.
             (c) Reduction in SG&A and profit
(24) It was also examined whether the lack of movement of resale prices was due to a
     lasting decrease in the SG&A expenses and profits of the unrelated importers. All five
     co-operating importers supplied information to that effect.
(25) It was found that for all co-operating unrelated importers, SG&A expenses had
     increased by 0.86% and profits have decreased by 4.72% between the original and the
     new investigation periods.
(26) As regards the changes in the profit, it was established that of the total decrease of
     4.72%, 3.8% was related to offsetting the cost increases of the anti-dumping duty.
     Therefore, credit of 3.8% was granted for a fall in profit at resale level, which
     corresponds to 7.6% at CIF level.
             (d) Increase in resale prices
(27) Credit was also granted for the amounts by which the resale prices had increased
     between the original and the new investigation period. Based on the information
     provided by the five co-operating importers, on an overall level, resale prices had
     moved between the original and the new investigation period by 3.1%.
(28) As regards the movement in resale prices between the two investigation periods, the
     co-operating unrelated importers argued that when converting national currencies into
     the Euro (or its predecessor, the ECU), the exchange rates prevailing during the
     original and new investigation period respectively should have been used.
(29) In this regard, it should be noted that the methodology adopted to compare the resale
     prices between both investigation periods, that is, using the exchange rate prevailing
     during the original investigation period for both investigation periods, was simply used
     to provide the same result as if the comparison was calculated in each national
     currency. The reasoning behind the use of a single denominator was that it allowed the
     calculation of a weighted average result for the Community as a whole. Movements in
     exchange rates are, therefore, irrelevant.
             (e) Total allowances
(30) At resale level, the overall credit granted amounted to 6.9%, i.e. 3.8% for decrease in
     profit and 3.1% for increase in resale prices. Expressed as a percentage of the CIF
     value, this overall credit was 13.8%.
       5. Reassessment of the export prices
(31) As it was established that the resale and subsequent selling prices failed to reflect the
     full amount of the anti-dumping duty, export prices were reassessed on the basis of
                                              7
 ---pagebreak---      Article 2(9) of the Basic Regulation. Export prices were reconstructed since there
     appeared to be a compensatory arrangement between the exporters and importers. The
     reassessment was made by reference to the export prices found in the original
     investigation period, deducting the amount of the anti-dumping duty in force and
     adding any adjustments found to be warranted i.e. any reduction in the SG&A
     expenses of importers, any reduction in the profit level of importers and any amount
     by which resale prices had increased since the imposition of measures.
(32) In the case of WWS, these adjustments amounted to 13.8% at CIF level. Thus, export
     prices were reassessed by taking the old export prices, deducting the anti-dumping
     duty applicable to WWS, i.e. 32.5% and adding an allowance of 13.8% for decrease in
     profit and increase in resale prices.
(33) In the case of other non-cooperating exporters from the People's Republic of China,
     the reassessment of the export prices was made in accordance with Article 18 of the
     Basic Regulation. Consequently, export prices were re-assessed by taking the export
     prices found in the original investigation and deducting the amount of the anti-
     dumping duty paid. For the reasons outlined above in recital (20) no adjustments were
     granted.
(34) One party alleged that export prices should not have been reassessed in accordance
     with Article 2(9) of the Basic Regulation since no compensatory arrangement between
     the exporters and the importers has been proven. This argument was rejected on the
     grounds that it appeared that the export price was unreliable due to an association or
     compensatory arrangement and this was considered sufficient reason to reassess
     export prices on the basis of Article 2(9) of the Basic Regulation.
(35) It was also argued that there was no compensatory arrangement since any decrease of
     the export prices was due to an increase in the value of the US dollar to which the
     Hong Kong dollar, the currency in which sales are invoiced, was pegged. This
     argument was rejected as currency movements cannot on their own, without taking
     account of all factors which could have affected the dumping margins, be used to
     justify a failure to adequately reflect the cost of measures in resale prices and
     subsequent selling prices. In any event, in this case, taking account of these
     movements would not have changed the result.
       6. Recalculation of the dumping margin taking account of reassessed export
          prices
(36) As required under Article 12 of the Basic Regulation, the dumping margin for the
     Chinese producers/exporters concerned was recalculated. This was done by comparing
     the reassessed export prices with the normal values established in the original
     investigation. For WWS, which has been granted individual treatment in the original
     investigation, the recalculated dumping margin, expressed as percentage of the CIF
     value is 115.3%. For all other Chinese exporters, the recalculated dumping margin,
     expressed as percentages of the CIF value, is 168.6%.
       7. New level of duties
(37) The measures currently in force are based on the level of injury found in the original
     investigation which for WWS was 32,5% and the residual duty for all other exporters
     from the People's Republic of China was 39,4%. In order to ensure that injury is
                                              8
 ---pagebreak---           eliminated, the revised measures should be established by comparing the reassessed
          export prices with the non-injurious price found in the original investigation period.
          Since the injury margin calculated on this basis is lower than the dumping margin, the
          new level of the duty should be based in the former. Accordingly, the proposed level
          of duty expressed as a percentage of the CIF value is 51.2% for WWS and 78.8% for
          all other exporters from the People's Republic of China.
(38)      One party argued that measures should not have been increased on the grounds of
          Community interest since such increase would unfairly penalise importers who had
          co-operated with the investigation and demonstrated that they had passed on the duties
          in terms of reduced profits and increased prices. This argument cannot be accepted
          since the investigation showed that the cost of the anti-dumping duty had not been
          adequately reflected in the resale prices and an allowance was made for the increase in
          prices and reduction in profits. In any event, Community interest is not taken into
          account in Article 12 investigations as these are carried out to verify whether the
          measures imposed, which were deemed to be in the interest of the Community, are
          having their intended effects and that such effects are not being undermined through
          increased dumping.
HAS ADOPTED THIS REGULATION:
                                               Article 1
Article 1, paragraph 2 (b) of Regulation (EC) No 119/97 is hereby replaced by the following:
"(b) for mechanisms other than those with 17 or 23 rings (Taric code: 8305 10 00*10)
                                           Rate of duty               Taric additional code
Malaysia                                      10,5 %                           ----
People's Republic of China:
- WWS                                         51.2 %                          8934
- all other companies                         78,8 %                          8900
            ."
                                                   9
 ---pagebreak---                                             Article 2
This Regulation shall enter into force on the day following that of 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
                                                10