CELEX: 51994PC0374
Language: en
Date: 1994-08-12
Title: Proposal for a COUNCIL REGULATION (EC) imposing a definitive anti-dumping duty on imports of certain magnetic disks (3.5" microdisks) originating in Hong Kong and the Republic of Korea, and collecting definitively the provisional duty imposed

COMMISSION OF THE EUROPEAN COMMUNITIES
                                         C0M(94) 374 final
                                         Brussels, 12.08.1994
                            Proposal for a
                       COUNCIL REGULATION (EC)
                   imposing a definitive anti-dumping duty
          o n imports of certain magnetic disks (3.5» microdisks)
1
I            originating in Hong Kong and the Republic of Korea
         and collecting definitively the provisional dut
                                                          y imposed
                    (presented by the Commission)
 ---pagebreak---                                   EXPLANATORY    MEMORANDUM
1.   The Commission, by Regulation (EEC) No 534/94 of 9 March 1994 (^
     imposed a provisional duty on imports of certain magnetic disks
     (3.5" microdisks) originating in Hong Kong and the Republic of
     Korea. The Council, by Regulation (EC) No 1340/94 (2) of 8 June
     1994 extended this duty for a period not exceeding two months.
2.   Following the adoption of the provisional measures, the interested
     parties, who so requested, were heard by the Commission and made
     written submissions. 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.
3.   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.
4.   The   facts, as finally established, show dumping for all the
     exporters concerned as well as injury to the Community industry
     caused thereby, especially demonstrated by sales suppression, price
     depression and a resulting lack of profitability.
5.   In these circumstances, the Commission considers that it is in the
     Community    interest          to adopt    definitive  measures  intended   to
     eliminate the injurious effect of the dumped imports concerned.
     Consequently, in accordance with Article 12 of Council Regulation
      (EEC) No 2 4 2 3 / 8 8 ^ ) t the Commission, after consultation within the
     Advisory Committee, proposes the imposition of definitive anti-
     dumping   duties         on     imports  of   certain  magnetic  disks   (3.5"
     microdisks) originating in Hong Kong and the Republic of Korea.
6.   In view of the dumping margins established, and the seriousness of
     the injury caused to the Community industry, it is also proposed
     that the amounts secured by way of provisional anti-dumping duty be
     definitively collected to the extent of the amount of the duty
     definitively imposed.
 (1) OJ No L 68, 11.3 .94, p. 5
 (2) OJ No L 14 6, 11.6.94, p. 1
(3) OJ No L 209, 2.8.1988, p. 1
 ---pagebreak---                                      COUNCIL REGULATION (EC) No
                                            of      1994
                           imposing a definitive anti-dumping duty
            on imports of certain magnetic disks (3.5" microdisks)
             originating in Hong Kong and the Republic of Korea,
           and collecting definitively the provisional duty imposed
THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty establishing the European Community,
Having regard to Council Regulation (EEC) No 2423/88 of 11 July 1988 on
protection against dumped or subsidized imports from countries not
members of the European Community(-^ , 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 (EC) N° 543/94<2^ , hereinafter
      referred to as the "provisional Regulation", imposed a provisional
      anti-dumping duty on imports into the Community of certain magnetic
      disks (hereinafter referred to as 3.5" microdisks) originating in
      Hong Kong and the Republic of Korea, and falling within CN Code ex
      8523 20 90.           The duty was extended for a maximum period of two
      months by Council Regulation (EC) N° 1340/94<3)
(1) OJ No I 209, 2 . 8 . 1 9 8 8 , p.1
(2) OJ No I 68, 1 1 . 3 . 9 4 , p.5
(3) OJ No L 146, 1 1 . 6 . 9 4 , p. 1
                                                  >l<x_
 ---pagebreak---       B. SUBSEQUENT PROCEDURE
(2)   Subsequent to the imposition of the provisional anti-dumping duty,
      the Government of Hong Kong and other interested parties who so
      requested were granted an opportunity to be heard by the Commission.
      Certain of these parties also presented written submissions making
      known their views on the findings.    In particular, the Hong Kong
      authorities reiterated certain views expressed at various stages of
      the proceeding.
(3)   One importer, which had not cooperated in the proceeding, made
      written representations to the Commission following the introduction
      of the provisional anti-dumping duty.
(4)   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 provisional duty.     They were also granted
      a reasonable period within which to make representations subsequent
      to the disclosure.
(5)   It should be noted that the complainant Community producer RPS,
      Rhone Poulenc Systems, mentioned at recital 4(a) of the provisional
      Regulation should now be referred to as RPS Boeder International.
(6)   Because of the volume and complexity of the data examined, the
      investigation could not be concluded within the time limit provided
      for in Article 7 (9)(a) of Regulation   (EEC) N° 2423/88   (hereinafter
      referred to as the basic Regulation).
(7)   Following an anti-dumping proceeding on imports of certain magnetic
      disks   (3.5" microdisks) originating in Japan, Taiwan and the
      People's Republic of China, hereinafter referred to as the "prior
      proceeding", definitive anti-dumping duties were imposed in October
                                                    (4)
       1993 by Council Regulation  (EEC) No 2861/93     .
(4) OJ No L 262, 21.10.1993, p.4
 ---pagebreak---      C. PRODUCT UNDER CONSIDERATION/LIKE  PRODUCT
(8)  As no further arguments have been presented regarding the product
     under consideration and the like product, the findings set out in
     recitals  (8) to (12) of the provisional Regulation are confirmed.
     D. DUMPING
     1. Normal value
(9)  For the purpose of the definitive findings, normal value was, in
     general, established on the basis of the same methods as those used
     in the provisional determination of dumping, after taking into
     consideration new facts and arguments presented by the parties.
(10) Following publication of the provisional Regulation, two producers
     in Hong Kong and the Hong Kong authorities contended that, even
     although their domestic sales of the like product had been
     insufficient to permit a proper comparison, the amount for selling,
     general and administrative expenses used in constructing normal
     value should have been based on the selling, general and
     administrative expenses of the companies concerned, even those
     relating to export sales, rather than those of another producer in
     Hong Kong.   The Hong Kong authorities also questioned the
     reasonableness of the level of profit used in constructing normal
     value.
     It was not possible to follow the approach suggested for selling,
     general and administrative expenses, since Article 2(3)(ii) of the
     basic Regulation requires that these relate to domestic sales and
     not export sales.
     The investigation showed that the selling, general and
     administrative expenses for the domestic producer referred to in the
     provisional duty regulation related to sales in the same business
     sector.  These were, therefore, used for the construction of normal
     value for the other Hong Kong producers.
 ---pagebreak---      As to the level of profit of 10% used, it should be noted that this
     was the level alleged by the complainant, and was found to be less
     than that realised by the sole producer with sales of the product
     concerned on the Hong Kong market, albeit in unrepresentative
     quantities.
(11) The Korean producer argued that an adjustment should have been made
     to normal value for promotional items given to certain of its
     customers, on the grounds that the value of these goods represented
     a rebate, and should thus be deducted from the domestic price of the
     product concerned.
     As the items in question were not 3.5" microdisks, and there was no
     evidence that the price of the product concerned would have been
     different in the absence of the promotional goods, the costs
     incurred should be regarded as promotional expenses and not as
     rebates.
     The adjustment claimed, therefore, is not allowable under the
     provisions of Article 2(3)(a) of the basic Regulation.
(12) In the light of the foregoing, the findings set out in recitals 13
     and 14 of the provisional Regulation are confirmed.
     2. Export price
(13) One Hong Kong producer made its sales to the Community through its
     parent company in Japan.  At the provisional stage, in the absence
     of sufficient information on the price at which the parent company
     sold for export to the Community, the Commission considered that
     export price should be established on the basis of the price charged
     by the producer to its parent company.
     Subsequent to the introduction of the provisional duty, the producer
     in question has provided evidence on the price at which its parent
     company sold for export to the Community.
     The export price has been adjusted accordingly.
 ---pagebreak--- (14) No other new arguments were presented regarding the establishment of
      export price.         The findings set out in recitals (15) and (16) of the
      provisional Regulation are, therefore, confirmed.
      3. Comparison
(15) One Hong Kong producer argued that, as its export sales were mainly
      to OEM customers, these sales could not be compared to domestic
      sales made under a producer's brand name, because OEM sales would be
      at lower prices as a result of lower selling, general and
      administrative expenses and profit.
      After examination of the domestic sales of the cooperating Hong Kong
      producers, the Commission has come to the conclusion that prices
      were not a function of the channel of sale.         No pattern of prices
      specific to OEM sales could be identified and, therefore, the
      adjustment claimed could not be made.
      4. Dumping margins
(16) On the basis of the modifications made to the calculations of normal
      value and export price, the definitive dumping margins calculated by
      the Commission, expressed as a percentage of the GIF value,
      established in accordance with the provisions of Regulation (EEC) No
      1224/80 of 28 May 1980 on the valuation of goods for customs
      p u r p o s e s ^ , for each of the companies concerned, are as follows :
      Hong Kong
      - Jackin Magnetic Company Limited :          7.2
      - Plantron (HK) Ltd.                      :   6.7
      - Technosource Industrial Ltd.            : 13.3
      It should be noted that Swire Magnetic Holdings Limited ceased
      production and trading of 3.5" microdisks in the first quarter of
      1994.       It was therefore not found necessary to establish an
      individual dumping margin for this producer.
(5) OJ No L 134, 31.5.1980, p.1
 ---pagebreak---      Republic of Korea :
     - SKC                             :   8.1
(17) As far as non-cooperating producers are concerned, the Hong Kong
     authorities contended that the dumping margin to be applied for Hong
     Kong should be based on the highest margin established for producers
     in Hong Kong which cooperated in the investigation.
     The Commission has examined this contention and reaffirms its
     findings at recital (23) of the provisional Regulation that the low
     level of cooperation on the part of Hong Kong producers makes the
     adoption of such a solution unreasonable, as the dumping margin for
     such cooperating exporters is not a reliable basis for assessing the
     level of dumping on the very large volume of imports from non-
     cooperating exporters.
     The Commission has, however, adjusted the dumping margin to be
     applied to non-cooperating producers in Hong Kong to the weighted
     average margin for the different product types sold for export to
     the Community, as alleged by the complainant.
     The findings in this respect, and those set out in recital (22) of
     the provisional Regulation regarding non-cooperating producers in
     the Republic of Korea, are confirmed.  The dumping margin for non-
     cooperating producers in the countries subject to this proceeding
     are thus set as follows :
     - Hong Kong           : 27.4%
     - Republic of Korea   :  8.1%
 ---pagebreak---      E. COMMUNITY INDUSTRY
(18) No new arguments were presented in relation to the definition of the
     Community industry.  The findings set out in recitals (24) and (29)
     of the provisional Regulation are, therefore, confirmed.
        INJURY
     1. Cumulation of the effects of the dumped imports
(19) No new arguments having been received in connection with the
     findings at recitals (30) to (34) of the provisional Regulation,
     these findings are confirmed.
     2. Community consumption, volume and market share of the dumped
        imports
(20) As no comments were received, the findings stated in recitals (35)
     and (36) of the provisional Regulation are confirmed.
     3. Prices of dumped imports
(21) In the absence of comment, the findings in recital (37) of the
     provisional Regulation are confirmed.
     4. Situation of the Community industry
(22) The Korean producer and the Hong Kong authorities questioned the
     view expressed by the Commission in recital (39) of the provisional
     Regulation, on the grounds that a 2.5% increase in the market share
     of the Community industry between 1989 and the investigation period
     would lead to the conclusion that the Community industry had
     actually performed better than the market average.
 ---pagebreak---      It is correct that the sales volume of the Community industry
     increased in absolute terms and that its limited market share grew
     from 9.8% in 1989 to 12.3% in the investigation period.   This,
     however, does not detract from the fact that the relative
     performance of the Community industry can only be properly assessed
     in the light of prevailing market circumstances.   Ideally this would
     be a market free from the distortions, which was clearly not the
     case in the period examined.  Dumped imports from the countries
     concerned in this and the prior proceeding prevented a relatively
     young industry from achieving a market share of a size it could
     reasonably have attained at a time of rapid growth in consumption.
     The findings in recitals (38, (39) and (42) of the provisional
     Regulation are, therefore, confirmed.
     G. CAUSATION
(23) No new arguments were presented as to causation of injury.   The
     findings at recitals (44) to (50) of the provisional Regulation are
     therefore, confirmed.
     H. COMMUNITY INTEREST
 24) No new arguments have been received in respect of Community
     interest.
     However, as regards the interests of users and despite the fact that
     no representations have been made at any time during the proceeding
     by final consumers of 3.5" microdisks, the Commission has sought to
     determine with some degree of precision from the information
     available to it whether the imposition of anti-dumping duties would
     have an impact on users that would go beyond the restoration of
     fair, undistorted trading.
 ---pagebreak--- In view of the total lack of input from user interests in this
proceeding, the following remarks draw on general sources of
information on developments in the Community and world markets for
3.5" microdisks.
On a global level, overall demand continues to increase, although,
in line with the growing length of time between the release of new
packages (one major release now takes place approximately every 3
years), slower growth in the software duplication sector is exerting
a negative influence on the rate of increase.   Demand could also be
expected to decline as alternative data storage systems develop.
On the supply side, excess production capacity continues to exist on
a world level.   This has resulted in continuing price declines in
1993 and in the early months of 1994.
The Community market is, of course, not immune to the imbalance
between global demand and supply.   Prices in the Community have
continued to decline, and given the competition that exists on both
the world and Community markets, there are no grounds for believing
that user interests will be adversely affected by the imposition of
definitive anti-dumping duties in the present proceeding.
A further factor which would relieve any unjustified upward pressure
on prices to users that resulted from definitive duties is that the
Community will continue to rely on imports as, despite recent
increases in production capacity by the Community industry, total
existing capacity in the Community is able to meet only about 70% of
Community demand.
The conclusion to be drawn, therefore, is that users of 3.5"
microdisks in the Community are unlikely to experience any
significant negative consequences as a result of the introduction of
definitive anti-dumping duties, in particular no unjustified price
increases.
In the light of the foregoing, the findings set out in recitals (51)
to (56) of the provisional Regulation are confirmed.
 ---pagebreak---         DOTY
(25) No comments were received on the methodology adopted by the
     Commission for the establishment of the duty rates to be applied, as
     set out in recitals (57) to (60) of the provisional Regulation.
     These are therefore confirmed, and as the injury thresholds
     established exceed the dumping margins definitely determined,
     measures should be imposed at the levels of these dumping margins.
     J. COLLECTION OF THE PROVISIONAL DUTIES
(26) In view of the dumping margins established, the injury caused to the
     Community industry, and of the latter's precarious financial
     situation, it is considered necessary that amounts secured by way of
     provisional anti-dumping duty for all companies should be collected
     definitively.  Where the provisional duty exceeds the duty rate
     definitively imposed, the amount collected should not exceed that of
     the definitive anti-dumping duty.
     HAS ADOPTED THIS REGULATION :
                                Article 1
     A definitive anti-dumping duty is hereby imposed on imports of 3.5"
     microdisks used to record and store encoded digital computer
     information, falling within CN Code ex 8523 20 90 (Taric Code 8523
     20 90*10), and originating in Hong Kong and the Republic of Korea.
                                    10
 ---pagebreak--- 2.   The rate of duty applicable to the net free-at-Community-frentier
     price, not cleared through customs, shall be as follows :
 (a) 27.4% in respect of the products specified in paragraph 1
     originating in Hong Kong (Taric additional code :  8772), with the
     exception of imports which are manufactured by the following
     companies, which shall be subject to the rates of duty mentioned
     hereunder :
     - Jackin Magnetic Co. Ltd. :  7.2% (Taric additional code :  8775)
     - Plantron HK Ltd.          : 6.7% (Taric additional code :  8776)
     - Technosource Industrial
       Ltd.                     : 13.3% (Taric additional code :  8778)
4b)  8.1% in respect of the products specified in paragraph 1 originating
     in the Republic of Korea.
3.'  The provisions in force concerning customs duty shall apply to the
     said duty.
                                Article 2
1.   The amounts secured by way of the provisional anti-dumping duty
     under Regulation (EC) N° 534/94 in respect of 3.5" microdisks shall
     be definitively collected.  Where the provisional duty exceeds the
     duty definitively imposed, the amount collected should not exceed
     that of the definitive duty.
2.   Amounts secured in excess of the definitive rate of duty shall be
     released.
                                    ll
 ---pagebreak---                                 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 all Member States.
Done at Brussels,                          For the Council
                                    12
 ---pagebreak---                                                                     ISSN 0254-1475
                                                             COM(94) 374 final
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