CELEX: 51987PC0317
Language: en
Date: 1987-07-01
Title: Proposal for a COUNCIL REGULATION (EEC) imposing a definitive anti-dumping duty on mechanical wrist-watches originating in the USSR (presented by the Commission)

ARCHIVES HISTORIQUES
DE LA COMMISSION
COLLECTION RELIEE DES
DOCUMENTS "COM"
COM (87) 317
Vol. 1987/0188
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 ---pagebreak--- COMMISSION OF THE EUROPEAN COMMUNITIES
                                                    COM(87 ) 317 final
                                                    Brussels , 1 July 1987
                             Proposal for a
                        COUNCIL REGULATION ( EEC )
 imposing a definitive anti-dumping duty on mechanical wrist-watches
                        originating in the USSR
                     (presented by the Commission )
C0MC87 ) 317 final
 ---pagebreak---                                                                         V C KSrv^ *> 1 y
                                    EXPLANATORY MEMORANDUM
1 . By Regulation ( EEC ) No 1882 /82 the Council imposed a definitive anti-dumping duty
    on mechanical wrist-watches originating in the USSR .
2. Following the imposition of these measures the complainant , Timex Corporation ,
    Dundee , lodged an application with the Court of Justice of the European
    Communities pursuant to the second paragraph of Article 173 of the EEC Treaty for
    partial annulment of Article 1 of Regulation ( EEC ) No 1882 /82 .
    The Court , in its judgment , declared void the Article in question and ordered the
    anti-dumping duty imposed by that provision to be maintained until the competent
    institutions adopt the measures needed to comply with its judgment .
3 . In order to comply with this judgment the Commission , as competent authority ,
    considered the most appropriate procedure to be a reopening of the proceeding and
    a new investigation undertaken . A Notice of reopening was accordingly published in
    the Official Journal of the European Communities .
4. In order to establish whether products originating in the USSR were being imported
    at dumped prices , the Commission had to take into account the fact that the USSR
    does not operate a market economy . In such circumstances the normal value for the
    product in question must ordinarily be determined on the basis of the prices
    charged for , or the constructed value of , the like product of a market economy
    third country .
5. In the original investigation the analogue market chosen by the Commission was
    Hong Kong . In the present investigation , the main Community producer , Timex
    Corporation , again objected to this choice and suggested the Swiss market as an
    alternative . The Commission , however , saw no reason to alter its previous position
    on its choice of analogue market and normal values were accordingly based on Hong
    Kong prices . Since the product was not sold on the Hong Kong market prices used
    were those for export to third countries and to the Community .
6. A comparison of these normal values with the export prices of the USSR products
    sold to the Community revealed a weighted average dumping margin of 13.4%.
7. With regard to injury caused by the dumped imports , the evidence available to the
    Commission showed that imports into the Community of the product concerned from
    the USSR increased from approximately 350 000 units in 1982 to approximately
     1 050 000 units in 1985 i.e. by 200%. Since , in 1985, more than 90% of these
     imports were concentrated in the Uhited Kingdom market , the injury assessment was
    based mainly on information obtained regarding the situation in that Member State .
 ---pagebreak---                                           - 2 -
 8.  Since the advent of inexpensive Liquid crystal diode and quartz analogue watches /
    consumption of mechanical watches in the Community has fallen steadily . By 1985 ,
    mechanical watches accounted for approximately 19% of total watch conscription as
    against almost 30% in 1982 . This fall in consumption together with the increased
    sales of the USSR product has resulted in a considerable increase in the market
    share held by the imports from the USSR . In the Uhited Kingdom , the Community
|   market in which almost all sales of USSR products took place and^which by far the
     largest volume of relatively inexpensive mechanical watches were sold , this
    market share has risen from approximately 9% in 1982 to about 32% in 1985 . The
    evidence available to the Commission on prices showed that the USSR watches
    undercut the prices of the Community producer by up to 20% during the reference
    period .
 9. The impact on the Community producer of the dunped imports has been a fall in
    market share in the llhited Kingdom from an estimated 35% in 1982 to 18% in 1985 .
    During this period , Timex attempted to increase prices on a regular basis .
    Despite Timex' increased prices the effect of the loss of volume on unit costs
    has been that this company made losses on its sales on mechanical watches in each
    year from 1983 to 1985 . A further impact of the dumped imports on the Community
    industry has been a considerable reduction in the workforce employed in
    mechanical watch manufacturing .
10. Given the extent of the injuiry contained by the Community industry it is
    proposed that a definitive anti-dumping duty be imposed at the level of dumping
    found i.e. 13.4% .
 ---pagebreak---                                                                                    ORIGINAL
                                     ‘•'•‘Proposai for a -
                                   COUNCIL REGULATION ( EEC )
 imposing a definitive anti-dumping duty on mechanical wrist-watches originating in
 _the USSR
THE COUNCIL OF THE EUROPEAN COMMUNITIES ,
Having regard to the Treaty establishing the European Economic Community ,
Having regard to Council Regulation (EEC ) No 2176 /84 of 23 July 1984 on protection
against dumped or subsidized imports from countries not members of the European Economic
Community (1 ), and in particular Article 12 thereof ,
Having regard to the proposal submitted by the Commission after consultation within
the Advisory Committee as provided for under the above Regulation ,
Uhereas :
A. PROCEDURE
1 . By Regulation ( EEC ) No 1882 /82(2 ) the Council imposed a definitive anti-dumping
     duty on mechanical wrist-watches originating in the USSR .
2 . Following the imposition of these measures the complainant , Timex Corporation ,
      Dundee , lodged an application with the Court of Justice of the European
     Communities pursuant to the second paragraph of Article 173 of the EEC Treaty for
     partial annulment of Article 1 of Regulation ( EEC ) No 1882 /82 .
     The Court , in its judgment in Case 264 / 82 ( 3 ), declared void the Article in question
     and ordered the anti-dumping duty imposed by that provision to be maintained until
     the competent institutions adopt the measures needed to comply with its judgment .
3 . In compliance with this judgment , the Commission , as competent authority ,
     considered , together with Timex , the most appropriate procedure to be undertaken .
      In view of the time which had elapsed since the original investigation and the
     change in circumstances which had occured particularly regarding the producers of
     mechanical wrist-watches in the chosen analogue market , Hong Kong , it was
 (1 ) OJ No L 201 , 30.7.1984, p. 1 .
 (2 ) 0J No L 207, 15.7.1982, p . 1 .
 G ) ( not yet reported )
 ---pagebreak---     considered that the proceeding should be reopened and an investigation commenced
    at Community level . Accordingly/ the Commission announced / by a notice published
     in the Official Journal of the European Communi ties (4 ) the initiation of an
    anti-dumping proceeding concerning imports into the Community of certain
    mechanical wrist-watches falling within Common Customs Tariff heading ex 91.01
    corresponding to NIMEXE codes ex 91.01-37 and 57 and originating in the USSR .
4. The Commission officially advised both the exporters and the importers known to be
    concerned and the Community producers, and gave the parties directly concerned the
    opportunity to make known their views in writing and to request a hearing .
    The principal Community producer / Timex / which accounts for a major proportion of
    Community output of the product in question and the main importer / Global Watches
    Ltd . Leicester / a wholly-owned subsidiary of Time Products PLC / London / which
    accounts for approximately 95% of imports of the USSR product made their views
    known both in writing and orally and requested and received the essential facts
    and considerations on the basis of which it was intended to recommend definitive
    action . The USSR exporter did not cooperate in the investigation .
5 . In order to verify the export prices to the Community of the product in question
    and the extent of injury caused to the Community industry the Commission carried
    out an inspection at the premises of the principal importer concerned / Global
    Watches Ltd ./ and of the principal Community producer / Timex Corporation .
6. The investigation of dumping covered the period from January to October 1985
    inclusive .
B. NORMAL VALUE
7. In order to establish whether products originating in the USSR were being imported
    at dunped prices / the Commission had to take into account the fact that the USSR
    does not operate a market economy . In such circumstances the normal value for the
    product in question must ordinarily be determined on the basis of the prices
    charged for / or the constructed value of / the like product of a market economy
    third country .
8 . In the original investigation the analogue market chosen by the Commission was
    Hong Kong .
(4 ) 0J No C 248/ 7.11.1985/ p. 3
 ---pagebreak---                                                    - 3 -
       However , in both the previous and present proceedings , Timex contended that the
      prices of Swiss mechanical wrist-watches would be the most appropriate basis for
      establishing normal value . Timex' current contention was based mainly on the
      assertions that the use of any data regarding watches produced in Hong Kong would
      raise problems of reliability and that the type of manufacturing operation of
      the Swiss producers would provide the basis of a fairer comparison than those of
      Hong Kong .
9.    Having visited the premises of three of the largest producers of mechanical
      watches in Hong Kong , Kaybee International Ltd ., Foremost Trading Company and
      Swiss Watch and Jewellery Manufacturing Company , the Commission was satisfied on
      the question of the reliability of the information obtained . As regards the
      nature of the manufacturing or assembly operations in Hong Kong the Commission
      continued to be of the view          that , while the structure of the manufacturing
      process in the country in question is a criterion in the choice of analogue
      market , it is not necessarily determinative . In any event , it was not
      demonstrated that buying parts or sub-assemblies from an outside firm ( as is the
      case in Hong Kong) rather than producing them internally ( as is allegedly the
      case in the USSR ) materially influences the final selling price . Furthermore , the
      Swiss industry , advanced by Timex as a more appropriate analogue for establishing
      normal value , operates ( as is the case with Hong Kong ) on the basis of buying
      parts and sub-assemblies .
      Accordingly , in the absence of satisfactory alternatives to either Hong Kong or
      Switzerland , the Commission saw no reason to alter its opinion , as motivated in
      Regulation ( EEC ) No 84 /82 (5 ) which imposed a provisional anti-dumping duty on
      export of the product concerned and confirmed in Regulation ( EEC ) No 1882 / 82,
      that normal value based on the choice of Hong Kong as an analogue market was
      determined in an appropriate and not unreasonable manner and thus in accordance
      with Article 2(5 ) of Regulation ( EEC ) No 2176 /84. Accordingly, normal value was
      therefore established on the basis of the price at which watches , comparable to
      those exported to the Community from the USSR, were actually sold by producers in
       Hong Kong . Following submission by the Commission to the interested parties of
      details of watches which were considered comparable , no objection was received on
      the comparability of these watches .
10. Since the three Hong Kong companies visited had virtually no sales of the product
       concerned in the Hong Kong market , normal value , in accordance with Article
       2 (5 ) ( a) ( ii ) of Regulation (EEC ) No 2176 /84, was established on the basis of
 (5 ) 0J No L 11 , 16.1.1982, p. 14.
 ---pagebreak---                                            - 4 -
      prices obtained by these companies for export sales , including those to the
      Community . Where prices varied for comparable Hong Kong models , weighted average
     normal values were established .
C.  EXPORT PRICE
11 . With regard to export prices of the USSR products these were determined on the
     basis of the prices actually paid for the product concerned sold for export to
     the Community .
D.  COMPARISON
12 . For the purpose of a fair comparison between normal value and export prices the
     Commission took account , where appropriate , of differences affecting price
     comparability , such as differences in physical characteristics and differences in
     conditions and terms of sale where claims of a direct relationship to the sales
     under consideration could be satisfactorily demonstrated . This was the case in
     respect of differences in packaging , transport , handling and ancillary costs . As
     regards physical characteristics , the USSR products were imported without a strap
     or bracelet and the movements generally have seventeen jewels . An appropriate
     adjustment was made , therefore , to take account of the fact that the Hong Kong
     product was sold complete with strap or bracelet and generally had a one jewel
     movement .
     All comparisons were made at an ex-works level and covered approximately seventy
     per cent of exports during the reference period .
E.  PUPPING MARGINS
13 . The comparison between normal value and export prices showed the existence of
     dumping in respect of all imports of mechanical wrist-watches originating in the
     USSR during the reference period .
     The margin of dumping was the amount by which the normal value exceeded the
     prices for export to the Community , and , expressed as a percentage of the total
     cif value of the imports of the product concerned , equalled 13.4% .
F. INJURY
14. With regard to injury caused by the dumped imports , the evidence available to the
     Commission showed that imports into the Community of the product concerned from
     the USSR increased from approximately 350 000 units in 1982 to approximately
     1 050 000 units in 1985 i.e. by 200% . Since , in 1985 , more than 90% of these
     imports were concentrated in the United Kingdom market , the injury assessment was
     based mainly on information obtained regarding the situation in that Member
      State .
 ---pagebreak---                                            - 5 -
15 . Since the advent of inexpensive Liquid crystal diode and quartz analogue watches ,
     sales of mechanical watches in the Community have fallen steadily . By 1985 ,
     mechanical watches accounted for approximately 19% of total watch sales as
     against almost 30% in 1982 . The increased sales of the USSR product has resulted
     in a considerable increase in the market share held by the imports from the
     USSR . In the Uhited Kingdom , the Community market in which almost all sales of
     USSR products took place and in which by far the largest volume of relatively
     inexpensive mechanical watches were sold , this market share has risen from
     approximately 9% in 1982 to about 32% in 1985 .
16. The evidence available to the Commission on prices showed that the USSR watches
     undercut the prices of the Community producer by up to 20% during the reference
     period . This calculation took account of the fact that the USSR watches were
     generally imported as " heads" only , the importer adding the strap or bracelet and
     presentation packaging .
17. The impact on the Community producer of the dumped imports has been a fall in
     market share in the Uhited Kingdom from an estimated 35% in 1982 to 18% in 1985 .
     During this period , Timex attempted to increase prices on a regular basis . Faced ,
     however , with relatively stable prices for USSR watches , price undercutting has
     consequently increased with the result that Timex has lost both volume and , more
     particularly , market share .
18. Despite Timex' increased prices the effect of the loss of volume on unit costs
     has been that this company made losses on its sales on mechanical watches in each
     year from 1983 to 1985 .
19. A further impact of the dumped imports on the Community industry has been a
     considerable reduction in the workforce employed in mechanical watch
     manufacturing .
20. The Commission has considered whether injury has been caused by other factors
     such as a change in the pattern in consumption . While consumption of
     mechanical watches has fallen steadily in the Community in recent years , sales of
     USSR watches have actually increased in volume , thus accounting for a higher
     market share held by these imports .
      In addition , it was alleged that injury to Timex' mechanical watch operations was
      due to internal corporate problems . Even if this may have been partially the
      case , considerable rationalisation and diversification has taken place at Timex'
      two mechanical watchmaking facilities in the Community in an attempt to reduce
      the fixed cost element of the total cost of its products .
 ---pagebreak---                                                - 6 -
     Thus , the increasing volumes of dunped imports and the low prices at which they
     were sold in the Community has led the Commission to determine that the effect of
     the dunped imports of mechanical wrist watches from the USSR , taken in isolation ,
     had to be considered as materially injuring the Community industry concerned .
G. COMMUNITY INTEREST
21 . No observations were received on the question on whether it would be in the
     Community interest to impose anti-dunping measures in the present case . In view
     of the extent of the injury caused by the dumped imports and in particular the
     possibility of further redundancies at the Community producers' plants , the
     Commission has come to the conclusion that it is in the Community interest that
     action be taken and that this action take the form of a definitive anti-dunping
     duty .
H. RATE OF DUTY
22. The Commission and the Council , as the responsible Community institutions , are
     satisfied that , in re-opening the proceeding and undertaking the present investi­
     gation , the judgment of the Court in Case 264/82 has been complied with and that
     the anti-dumping duty imposed by Regulation ( EEC ) No 1882 / 82 need no longer be
     maintained in force . However , in view of the finding that imports into the
     Community of mechanical wrist watches originating in the USSR were again being
     dumped and , taking into consideration the injury sustained , in particular the
     level of the losses incurred by the Community producer , it is considered that a
     definitive anti-dumping duty , which would eliminate the dumping found , should be
     imposed . The rate of duty should therefore be 13.4% .
23 . No objections to this proposal were raised in the Advisory committee .
HAS ADOPTED THIS REGULATION :
                                           Article 1
1 . A definitive anti-dunping duty is hereby imposed on     imports of mechanical wrist-wat (
falling within heading No ex 91.01 of the Common Customs Tariff , corresponding to
NIMEXE codes ex 91.01-37 and 57, originating in the USSR .
2. The amount of the definitive anti-dunping duty shall be 13.4% of the value
free-at - Community- f rontier , duty unpaid .
 ---pagebreak--- 3. The    f ree-at- Community-f rontier price ,   not cleared through customs , shall be
net if the actual terms and conditions of sale provide that payment shall be made
within 30 days of the date of dispatch and it shall be lowered by 1% for each month
by which payment is actually deferred .
4. The provisions in force with regard to customs duties shall apply .
                                        Article 2
The anti-dumping duty imposed or collected pursuant to Article 1 shall be collected
on imports into Spain and Portugal only in so far as the emulative amount of the
customs duty in force in these Member States on the product in question and of the
anti-dmping duty does not exceed the emulative amount of the Common Customs Tariff
and the anti-dmping duty concerning the same product .
                                        Article 3
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