CELEX: 51991PC0360
Language: en
Date: 1991-10-01
Title: Proposal for a COUNCIL REGULATION ( EEC ) imposing a definitive anti-dumping duty on imports of video tapes in cassettes originating in the People' s Republic of China and collecting definitively the provisional duty

COMMISSION OF THE EUROPEAN COMMUNITIES
                                           C0M(91) 360 final
                                           Brussels, 1 October 1991
                              Proposal for a
                        COUNCIL REGULATION (EEC)
  Imposing a definitive anti-dumping duty on Imports of video tapes In
  cassettes originating In the People's Republic of China and collecting
  definitively the provisional duty
                      (presented by the Commission)
 ---pagebreak---                                                                           z
                          EXPLANATORY MEMORANDUM
1.  By Regulation (EEC) No 1034/91< 1 > the Commission imposed a
    provisional anti-dumping duty on Imports of video tapes In cassettes
    originating In the People's Republic of China.    That duty was
    extended for a maximum period of two months by Regulation (EEC)
    No 2525/91(2).
2.  Following the imposition of provisional measures, the Commission has
    continued Its investigation and has examined the arguments of the
    complainants and exporters which have requested to be heard.
3.  For purposes of the Provisional Duty Regulation, normal value was
    based on prices paid or payable in the Community.    This was done
    because no producers in third countries were found who were willing
    to cooperate In the Investigation.    Subsequently, several Hong Kong
    producers stated their willingness to cooperate and the Commission
    was able to collect and verify information from those producers.
    Normal values could then be established using Hong Kong as an
    analogue market economy country.
4.  As a result of the use of different normal values, dumping margins
    have been substantially modified.
5.  In the provisional findings, a single uniform dumping margin was
    established for all Chinese exporters.    For purposes of definitive
    findings the Commission has concluded that those exporters which are
    Joint ventures with foreign participation are able to freely
    transfer their profits out of China.    In these circumstances and
    following the approach used in the small screen colour television
    receivers case (Regulation (EEC) No 2093/91) individual dumping
    margins have been established for such imports.
(1) O.J. n - L 106, 26.4.1991, p. 15
(2) O.J. n* L 236, 24.8.91 , p. 1
 ---pagebreak---                                                                        3
6. Provisional findings that the Community video cassette industry has
   suffered material   Injury In terms of loss of market share, price
   undercutting, price depression and subsequent    loss of profitability,
   were confirmed.    It was also confirmed that the dumped  imports from
   the People's Republic of China had, In isolation, caused material
   Injury to the Community   Industry.  Levels of duty necessary to
   remove the Injury were also confirmed.
7. It Is also confirmed - no new facts or arguments having been
   presented - that It is In the Community's    interest to eliminate the
   injurious effects of the dumping determined.     The benefits of such
   protection for the current viability and future development of the
   Community  Industry outweigh the temporary disadvantages to consumers
   of limited price Increases for certain imported cassettes.
8. In the light of the economic structure of the exporters and price
   variations for very similar models, the Commission considers that
   the duty should take the form of a variable duty equal to the
   difference between price per cassette net, free at Community
   frontier, not cleared through customs, and a floor price established
   on the basis of the normal value for each individual model.
9.  It Is proposed therefore to Impose definitive anti-dumping duties in
   the form of a variable duty and in the amount established In
   Article 1(2) on imports of video tapes In cassettes originating In
   the People's Republic of China.
   It is also proposed that the amounts secured by way of the
   provisional duty should be collected up to the levels of the
   definitive duties finally determined.
 ---pagebreak---                              Proposal for a
                       COUNCIL REGULATION (EEC) NO
                                    of
Imposing a definitive antI-dumping duty on Imports of video tapes In
cassettes originating in the People's Republic of China and collecting
definitively the provisional duty
THE COUNCIL OF THE EUROPEAN COMMUNITIES,
Having regard to the Treaty establishing the European Economic Community,
Having regard to Council Regulation (EEC) No. 2423/88 of 11 July 1988 on
protection against dumped or subsidized Imports from countries not
members of the European Economic Commun!ty< 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,
Whereas:
                         A. PROVISIONAL MEASURES
1.  The Commission, by Regulation (EEC) No 1034/91(2>, (hereinafter the
    Provisional Duty Regulation), imposed a provisional anti-dumping duty
    on Imports Into the Community of video tapes in cassettes originating
    in the People's Republic of China and falling within CN Code ex 8523
    13 00.  The Council, by Regulation (EEC) No< 3 ) extended this duty
    for a period not exceeding two months.
(1)  OJ No L 209, 2/1/1988, p. 1.
(2)  OJ No L 106, 26/4/1991, p. 15.
(3)  OJ No L
 ---pagebreak---                                                                           s
                        B. SUBSEQUENT PROCEDURE
2. Following the Imposition of the provisional anti-dumping duty, the
   Interested parties who so requested were granted an opportunity to be
   heard by the Commission.   They also made written submissions making
   known their views on the findings.
3. Upon request, parties were Informed of the essential facts and
   considerations on the basis of which it was intended to recommend the
   imposition of definitive duties and the definitive collection of
   amounts secured by way of a provisional duty.   They were also granted
   a period within which to make representations subsequent to the
   disclosure.
4. The oral and written comments submitted by the parties were
   considered and, where appropriate, the Commission's findings were
   modified to take account of them.
5. Due to the complexity of the proceeding, In particular to the
   detailed verification of the voluminous data Involved and the
   numerous arguments put forward, including the study of related Issues
   which arose during the proceeding and which could not have been
   foreseen at Its outset, the investigation could not be concluded
   within the normal time limit.
            C. PRODUCT UNDER CONSIDERATION .LIKE PRODUCT .
                           COMMUNITY INDUSTRY
6. No comments from any of the interested parties were received
   concerning the conclusions of the Commission as set out In recitals 7
   to 11 of the Provisional Duty Regulation, relating to the product
   under consideration, the like product and the Community  industry.
   The Council confirms these conclusions.
 ---pagebreak---                                  D. DUMPING
                              a. Normal Value
7.  For the purposes of provisional findings the Commission for the
    reasons and in the manner described in recitals 12 to 17 of the
    Provisional Duty Regulation, established normal value on the basis of
    the price payable In the Community for the like product.
8.  The Chinese exporters strongly objected to the use of Community
    prices as normal value and requested that normal value should be
    established, in accordance with the provisions of Article 2 (5) of
    Regulation (EEC) in 2423/88, by using Hong Kong as a market economy
    for reference.   In this context, several Hong Kong producers of video
    cassettes, which had previously refused to cooperate in the
    investigation, stated, immediately prior to the imposition of
    provisional duties, their willingness to cooperate with the
    Commission in the conduct of the investigation.
9.  The complainants argued that Hong Kong could not be used as a
    reference market economy territory at this stage of the proceeding
    because the producers now willing to cooperate had previously refused
    cooperation and because there appeared to be close links between some
    of the Chinese exporters and some of the Hong Kong producers willing
    to cooperate with the investigation.
10. The Commission considered that neither of the complainants arguments
    provide sufficient grounds not to select the Hong Kong market as
    reference for establishing normal value.   The producers in Hong Kong
    are not interested parties in the proceeding and therefore their
    refusal to cooperate cannot be Judged in the light of the provisions
    of Article 7 (7)(b) of Regulation (EEC) No 2423/88.   As to the
    alleged links of these Hong Kong producers with Chinese exporters,
    the Commission considers that, insofar as it was able to
    satisfactorily verify all data necessary for the purposes of the
    investigation the existence of those links is irrelevant for the
    establishment of normal value.
 ---pagebreak---                                                                           }
11. In the light of the above conclusions, the Commission addressed
    questionnaires to several Hong Kong producers and obtained
    satisfactory replies from two of them.  The information contained In
    those replies was verified by means of on spot visits.
12. Normal value was established on the basis of the prices paid or
    payable for the sales of the like product In the ordinary course of
    trade In Hong Kong.  The Commission noted that these sales In the
    Hong Kong domestic market allowed the producers a considerable profit
    margin.
    For those models which were not sold In the Hong Kong domestic market
    normal value was constructed on the basis of the average cost of
    production plus the profit margin realised on the sales of the most
    sold model In Hong Kong which comprised substantially all the
    domestic sales of the product concerned In the Hong Kong market.  The
    selling, general and administrative expenses Included in the cost of
    production were calculated by obtaining a weighted average for the
    two producers visited.
    The Council confirms these conclusions.
                             b. Export price
13. Hong Kong
    For the purposes of the Provisional Duty Regulation, the export
    prices were established on the basis of the prices paid or payable
    for the products sold for export to the Community.  No comments from
    any party have been made on this course of action except Insofar as
    the situation of companies with foreign participation is concerned.
    These arguments are considered in recital 18 below.  The Council
    confirms the course of action followed by the Commission as set out
    in recital 18 of the Provisional Duty Regulation.
 ---pagebreak---                                                                          s
                                C. Comparison
14. As explained in the Provisional Duty Regulation at recitals 20 and
    21, all comparisons were made at the ex-factory basis and at the same
     level of trade.   For the purposes of ensuring a fair comparison
    between normal value and export prices, the Commission took account
    where appropriate of differences affecting price comparability, such
    as transport, packing, credit and other selling expenses.
15. The China Association of Enterprises with Foreign Investment (CAEFI),
    representing several cooperating Chinese exporters, alleged that
    Chinese produced video cassettes were of a significantly lower
    quality than that of Hong Kong produced cassettes, mainly due to the
    use of inferior raw materials and processing methods, and requested
    an adjustment for differences in physical characteristics which it
    quant If led at 20%.
    The complainant contested the request of the exporters on the basis
    that both Chinese and Hong Kong producers were manufacturing the
    tapes under the same licence and should therefore obtain the same
    level of quality and that consumers made no distinction between Hong
    Kong and Chinese produced cassettes.
16. After examination of the facts, the Commission considers that there
    are no differences in comparable physical characteristics which
    Justify an allowance as far as the comparison between Hong Kong and
    Chinese produced video cassettes Is concerned.    Furthermore, the
    Commission considers that there is no difference in the consumer's
    perception of Hong Kong and Chinese made video cassettes.
    Consequently, the exporters' claim was rejected.
    The Council confirms these conclusions.
                              d. Dumping margins
17. For purposes of Its provisional findings, the Commission established
    a single dumping margin for all Chinese exporters.    This was done
 ---pagebreak---                                                                           9
    since the People's Republic of China is a non-market economy and, in
    accordance with previous Community practice, the Commission
    considered that, because of the lack of independence of the
    exporters, a single dumping margin should be established to avoid
    purely arbitrary results and the likelihood of circumvention.
18. The Shenzhen Video Tape Manufacturers Association, acting on behalf
    of one cooperating exporter and CAEFI on behalf of four cooperating
    exporters, argued that these exporters were joint ventures with
    foreign participation which operated In an environment very similar
    to that of market economy companies and requested that, because of
    their specific characteristics, individual company findings should be
    determined for them.         In addition the Shenzhen Video Tape
    Manufacturers Association requested that the Joint venture exporters
    which did not reply to the questionnaire be granted a different
    treatment than that given to State owned companies.
19. The Commission considered that these cooperating Chinese exporters
    had supplied sufficient evidence to determine that they were
    genuinely Joint venture companies with foreign Investment, were able
    to freely establish their export prices and subject to certain
    administrative requirements, were able to transfer profits from China
    to their foreign shareholders.
    The Commission considered that this was also the case for two other
    cooperating exporters which had supplied information indicating that
    they were joint ventures with foreign participation.
     In these circumstances and following the Community's previous
    practice as set out in Council Regulation (EEC) No 2093/91 of 15 July
    1991 imposing a definitive anti-dumping duty on imports of small-
    screen colour television receivers originating in Hong Kong and the
    People's Republic of China and collecting definitively the
    provisional d u t y * 4 ) , the Commission concluded that  individual
    dumping margins could be determined for those companies.
(4)   OJ No L 195, 18/7/91, p. 1.
 ---pagebreak---                                                                         4o
20. As to the remaining three cooperating exporters, namely Dong Guan
    Changan Jlekou Magnetic Tape Factory, Long Gung Xln Shen Fung Fu
    Plastic Mfg. and Shantou Ocean Audio-Video Gen. Corp., the Commission
    received no evidence or information indicating that these companies
    were joint ventures with foreign participation.   The Commission
    considered that, because of their lack of independence, the same
    approach as the one set out in recital 22 of the Provisional Duty
    Regulation should be applied and a single dumping margin calculated
    for these three exporters.
    The Council confirms the above conclusion.
21. On this basis, export prices were compared on a transaction by
    transaction basis with normal values for each of the exporters
    concerned with the three exceptions mentioned in recital 20 above.
    The final examination of the facts shows the existence of dumping in
    respect of the product concerned originating in the People's Republic
    of China from all the exporters involved, the margin of dumping being
    equal to the amount by which the normal value as established exceeds
    the price for export to the Community.
22. The weighted average margins, expressed as a percentage of CIF
    Community frontier prices varied according to the exporter as
    fo11ows:
         Acme Cassette Manufacturing                       9,3%
         BujI Bant Ian Oscar Video Products Fty.           5,1%
         Fuzhou Wonderful Video Tapes Co. Ltd.             6,4%
         Fuzhou Fortune Video Tapes Co. Ltd.               3,8%
         Nan-Hua Magnet Electricity Co. Ltd.               5,4%
         Song Gang Hang Sing Cassette Factory Song Gang    1,3%
         All other Chinese exporters                      12,5%
23. For those producers that neither replied to the Commission's
    questionnaire, nor otherwise made themselves know, dumping was
    determined on the basis of the facts available in accordance with the
    provision of Article 7 (7) (b) of Regulation (EEC) No 2423/88.   In
    this conection, the Commission considered that the result of its
     investigation concerning other companies provided the most apropriate
 ---pagebreak---                                                                           A^
    basis for determination of the margin of dumping.   Since It could
    create an opportunity for circumvention of the duty, If the dumping
    margin for those producers was any lower than the highest dumping
    margin found In their respective countries determined with regard to
    those producers who had cooperated In the investigation, it is
    considered appropriate to use the highest dumping margin found in
    their respective country for these groups of producers.
                                 E. INJURY
24. The Commission concluded in its provisional findings (See recitals 33
    to 35) that the Community industry had suffered material injury as a
    result of the dumped imports of video tapes In cassettes originating
    in the People's Republic of China.
25. Both CAEFI and the Shenzen video Tape Manufacturers Association
    objected to the Commission's findings concerning Injury by Indicating
    that:
        the volume of sales of the Community producers increased between
        1986 and 1989,
        stocks decreased in the same period,
        the decrease in capacity utilisation between 1986 and 1989 was
        the result of an increase In capacity and not of the existence of
        dumped imports,
        the decrease in employment was due to cost rationalization and
        automat izat ion,
        one of the Community producers already incurred losses in 1986 at
        a time when imports of video tapes In cassettes from China were
        minimal.
26. The Commission considers that these arguments neglect the basic
    facts.   Imports of the product concerned from the People's Republic
    of China increased from 0,74 million units in 1986 to 38,67 million
    units In 1989, the market share of the Community producers decreased
    in a fast growing market and their prices were significantly
    depressed decreasing by 28,6% from 1986 to 1989.
 ---pagebreak---                                                                         'U
    These facts are by themselves sufficient to establish the existence
    of material injury to the Community Industry, taking Into account
    that Article 4(2) of Regulation (EEC) No 2423/88 does not require
    that all the factors listed therein show a negative trend.
27. In addition to these arguments, the Commission notes that the
    exporters have not objected to the findings concerning price
    undercutting as set out in recital 28 of the Provisional Duty
    Regulation, except to request a 40% adjustment instead of the 20%
    used.   The exporters based their request for this further adjustment
    on pretended differences in physical characteristics among Community,
    Hong Kong and Chinese produced video tapes.
    Given the very similar nature of the Hong Kong and Chinese produced
    video tapes (see recital 16), the Commission considers that the
    evidence submitted is not conclusive enough to indicate that any
    adjustment for differences in physical characteristics and the
    perceptions of imported and Community produced video tapes by
    consumers should differ from that used provisionally.
     In view of the above the Commission confirms Its conclusions
    concerning the level of undercutting (59,9%) and concerning the
    existence of material   Injury to the Community industry.
    The Council confirms these conclusions.
                           F. CAUSATION OF INJURY
28. In recitals 36 to 38 of the Provisional Duty Regulation, the
    Commission concluded that the imports of video tapes In cassettes
    originating in the People's Republic of China had caused material
     injury to the Community  industry.
    The representatives of the exporters have contested this conclusion.
     In support of their contention they have argued that the only fact
    alleged by the Commission to establish the existence of a causal link
    between the dumped Chinese Imports and the existence of material
     injury to the Community industry was simultaneity and that this time
 ---pagebreak---                                                                          13
    factor by Itself Is not sufficient, according to the provisions of
    Article 4 of Council Regulation (EEC) No 2423/88, to establish the
    existence of a causal link.   The exporters have argued that the
    Injury suffered by the Community industry must have been caused by
    imports from other sources.
29. The Commission cannot accept these arguments.    Simultaneity is not
    the only factor which determines the existence of a causal link.     The
    Commission notes that the Chinese imports arrive in the Community
    market at very low prices and, as the market Is very price sensitive,
    this results in a general price depression of the Community prices
    which prevents the Community producers from increasing their prices
    and restoring their profitability to acceptable levels.
30. As to the argument concerning injury caused by Imports from other
    sources the Commission considers that the fact that the Increase of
    market share of the Chinese Imports has been done at the expense of
    the Hong Kong and Korean exports does not render the causal link non
    existing nor the Injury non material.    The very low prices of the
    Chinese Imports and the heavy price undercutting have caused Injury
    by not allowing the community Industry to reach acceptable levels of
    profitability which might secure Its continuing operation.    The
    exporters also referred to the surge of Imports from unidentified
    sources as a possible cause of injury to the Community Industry.     The
    Commission notes that none of the parties involved has provided any
     information on prices of these imports which are not known to
    undercut Community prices.   However, even If it was admitted that
    these Imports from unidentified sources were undercutting Community
    prices and causing injury to the Community industry, the volume and
     low prices of the dumped imports are such that this would not modify
    the finding that the Chinese exports, taken in isolation, have caused
    material Injury to the Community   Industry.
     In view of the above, the Commission confirms Its conclusions In
    recitals 36 to 38 of the Provisional Duty Regulation.
    The Council confirms these conclusions.
 ---pagebreak---                                                                           *<,
                          G. COMMUNITY INTEREST
31. No further facts or arguments concerning this subject were submitted
    to the Commission by any of the parties.  The Council therefore
    confirms the Commission's conclusions set out in recitals 39 to 47 of
    the Provisional Duty Regulation, that it is in the Community's
    interest to eliminate the Injurious effects to the Community Industry
    of the dumping determined.  The benefits of such protection for the
    current viability and future development of that industry outweigh
    the possible disadvantages, of a temporary nature, for the consumer
    in terms of limited price increases for certain imported video tapes
    in cassettes.
                                 H. DUTY
                            (a) Level of duty
32. Provisional measures took the form of anti-dumping duties.  These
    were imposed at the level of the increase in price considered
    necessary to prevent injury being caused during the proceedings.
    This duty was established (recital 49 of the provisional Duty
    Regulation) at the level of 25,8%.
33. Subsequently both the exporters and the complainant contested the
    method followed by the Commission on establishing the level of duty
    necessary to remove the injury.
34. The Commission considers that, since the dumping margins definitively
    determined are significantly below the level required to eliminate
    the injury caused, neither the argument of the exporters nor that of
    the complainants has any practical relevance in terms of the final
    result.
35. As the dumping margins established are in all cases lower than the
    percentage needed to remove the injury, duties should be established
    at the level of the dumping margins.
    The Council confirms these conclusions.
 ---pagebreak---                                                                            IS"
                               (b) Form of duty
 36. In the light of the economic structure of the exporters and price
     variations for very similar models, the Commission considers that the
     duty should take the form of a variable duty equal to the difference
     between price per cassette net, free at Community frontier, not
     cleared through customs, and a floor price established on the basis
     of the normal value for each individual model.
     In order to avoid difficulties in the application of the duties
     should developments in the market result in the appearance of
     cassettes with different lengths from those known at present, the
     models of cassettes are to be described in such a way that all
     possible future combinations are included.
 37. The Commission notes that the variable duty provides Individual
     results for the cooperating Chinese Joint venture exporters as the
     duty for each one of them will be the equivalent to the difference
     between their export prices and the normal value.
     The Council confirms these conclusions.
                     I. COLLECTION OF PROVISIONAL DUTIES
38.   in view of the dumping margins established, and the seriousness of
     the Injury caused to the Community industry, the Council considers it
     necessary that amounts collected by way of provisional anti-dumping
     duties should be definitively collected to the extent of the amount
     of the duty definitively imposed,
 HAS ADOPTED THIS REGULATION
                                   ARTICLE 1
 1.  A definitive anti-dumping duty is hereby imposed on imports of video
 tapes of VHS standard In cassettes falling within CN Code ex 8523 13 00
 (TARIC codes: see Annex) and originating in the People's Republic of
 China.
 ---pagebreak---                                                                          K
2.  The amount of the duty shall be equal to the difference between the
minimum prices listed below and the price per cassette net, free at
Community frontier, not cleared through customs for cassettes with tapes
having a playing time :
    up to and including 30 minutes                       0.76 ECU
    exceeding 30 minutes and up to 60 minutes            0.92 ECU
    exceeding 60 minutes and up to 90 minutes            1.08 ECU
    exceeding  90 minutes and up to 120 minutes          1.26 ECU
    exceeding 120 minutes and up to 180 minutes          1.57 ECU
    exceeding 180 minutes and up to 195 minutes          1.74 ECU
    exceeding 195 minutes and up to 240 minutes          1.95 ECU
    exceeding 240 minutes                                2.22 ECU
3.  The provisions in force concerning customs duties shall apply.
                                ARTICLE 2
Amounts secured by way of the provisional anti-dumping duty imposed by
Regulation (EEC) No 1034/91 will be definitively collected to the extent
of the amounts resulting from the application of the definitive duty as
fixed in Article 1 (2).
Secured amounts in excess of these amounts will be released.
ANNLA
 ---pagebreak---                                                                     1}
                                ARTICLE 3
This Regulation shall enter into force on the day following its
publication In the Official Journal of the European Communities.
This Regulation shall be binding in its entirety and directly applicable
in a 11 Member States.
Done at Brussels,                         For the Council
                                          The President
 ---pagebreak--- ANNEX
                                                             n
  CN        TARIC           D E S C R IP T      0 N
  CODE      SUBHEADING
                              Video tapes :
                       - - - - in cassettes :
                       - - - - - falling under VHS standards :
                       _ _ _ _ _ _   having a playing time :
   85231300 * 21       _ _ _ _ _ _ _   up to and including
                                       30 minutes
   85231300 * 23       - - - - - - -   exceeding 30 minutes
                                       and up to 60 minutes
   85231300 * 25       _ _ _ _ _ _ _   exceeding 60 minutes
                                       and up to 90 minutes
   85231300 * 27       - - - - - - -   exceeding 90 minutes
                                       and up to 120 minutes
   85231300 * 28       - - - - - - -   exceeding 120 minutes
                                       and up to 180 minutes
   85231300 * 31       - - - - - - -   exceeding 180 minutes
                                       and up to 195 minutes
   85231300 * 33       - - - - - - -   exceeding 195 minutes
                                       and up to 240 minutes
   85231300 * 35       - - - - - - -   exceeding 240 minutes
   85231300 * 39                   Other
   85231300 * 49                Other
 ---pagebreak---                                                                                       T3
                                                                       ISSN 0254-1475
                                                                COM(91) 360 final
                                                        DOCUMENTS
EN                                                                                02
                                Catalogue number : CB-CO-91-410-EN-C
                                                               ISBN 92-77-75888-0
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