CELEX: 51998PC0382
Language: en
Date: 1998-06-22
Title: Proposal for a Council Regulation (EC) imposing a definitive anti-dumping duty on imports of potassium permanganate originating in India and the Ukraine and collecting definitively the provisional duty imposed

COMMISSION OF THE EUROPEAN COMMUNITIES
                                                   Brussels, 22.06.1998
                                                   COM(1998) 382 final
                                    Proposal for a
                          COUNCIL REGULATION (EC)
imposing a definitive anti-dumping duty on imports of potassium permanganate
      originating in India and the Ukraine and collecting definitively the
                            provisional duty imposed
                           (presented by the Commission)
 ---pagebreak---  ---pagebreak---                           EXPLANATORY MEMORANDUM
  (1)  By Regulation (EC) No 178/98 of 23 January 1998(l), the Commission imposed
       a provisional anti-dumping duty on imports into the Community of potassium
       permanganate originating in India and the Ukraine. Further to the imposition of
       the provisional measures, interested parties submitted comments in writing and
       were granted an opportunity to be heard by the Commission.
  (2)  The Commission accepted the claims made by the Indian and Ukrainian
       exporting producers in respect of certain deductions to the export price and
       consequently revised downwards its calculations of dumping (from 6.8% to
       5.6% for India and from 40.4% to 36.2% for the Ukraine).
 (3)  All interested parties were informed of the main facts and considerations on the
      basis of which it was intended to recommend the imposition of definitive
      measures and granted sufficient time to make representations. The submissions
      made were examined and taken into account where appropriate.
 (4)  In accordance with Article 9(4) of Council Regulation (EC) No 384/96, the
      Basic anti-dumping Regulation, the Commission therefore proposes that the
      Council impose definitive anti-dumping duties on imports into the Community
      of potassium permanganate originating in India and the Ukraine. Given the
      extent of the injury, it is also recommended that the Council collect the
      provisional anti-dumping duties to the extent of the amount of the definitive
      duties imposed.
        OJNoL 19,24.01. 1998, p. 23
1
 ---pagebreak---                     COUNCIL REGULATION (EC) No                                 /98
                                          of              1998
   imposing a definitive anti-dumping duty on imports of potassium permanganate
          originating in India and the Ukraine 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 (EC) No 384/96 of 22 December 1995 on
  protection against dumped imports from countries not members of the European
  Community 0 \ and in particular Article 9 (4) thereof,
  Having regard to the proposal submitted by the Commission after consulting the
  Advisory Committee,
  Whereas:
                              A. PROVISIONAL MEASURES
  (1) By Commission Regulation (EC) No 178/98(2) (hereinafter referred to as 'the
       provisional duty Regulation') a provisional anti-dumping duty was imposed on
       imports into the Community of potassium permanganate falling within CN code
       2841 61 00 originating in India and the Ukraine.
          OJ No L 56, 6. 3. 1996, p. 1. Regulation as amended by Regulations (EC) No 2331/96 (OJ
          L317, 6.12.1996, p. 1) and No 905/98 (OJL 128, 30.4.1998, p. 18).
          OJNoL 19, 24.1.1998, p. 23
4 eu
 ---pagebreak---                          B. SUBSEQUENT PROCEDURE
(2) Following the imposition of the provisional anti-dumping measures, the
    complaining Community industry and both the Indian and Ukrainian co-
    operating exporting producers submitted comments in writing.
(3) The Ukrainian co-operating exporting producer, who was the only interested
    party to have so requested, was granted a hearing.
(4) The Commission continued to seek and verify all information it deemed
    necessary for its definitive findings.
(5) Parties were informed of the essential facts and considerations on the basis of
    which it was intended to recommend the imposition of definitive anti-dumping
    duties and the definitive collection of amounts secured by way of provisional
    duties. They were also granted a period within which to make representations
    subsequent to this disclosure.
(6) The oral and written comments were considered and, where deemed appropriate,
    taken into account in the definitive findings.
 ---pagebreak---        C. PRODUCT UNDER CONSIDERATION AND LIKE PRODUCT
(7) As no comments or new facts were submitted by any interested party with regard
     to the definition of the product concerned and the like product, the findings made
     on these issues, as set out in recitals 8 and 9 of the provisional duty Regulation,
     are confirmed.
                                     D. DUMPING
     1) Normal value and export price
(8) In the absence of further arguments concerning the establishment of normal value
     and export price, the provisional findings as set out in recitals 10 to 17 of the
     provisional duty Regulation, are hereby confirmed.
     2) Comparison
(9) The Ukrainian and Indian exporting producers claimed that no deduction to the
     export price for certain ancillary costs and credit costs respectively should have
     been made. These issues were examined and since it was found that indeed no
     such deductions should have been made, corrections to the export price were
     made accordingly.
(10) In the absence of any other new arguments concerning comparison, the remaining
     provisional findings, as set out in recitals 18 to 23 of the provisional duty
     Regulation, are hereby confirmed.
 ---pagebreak---     3) Dumping margin
      General
 (11) In the absence of new arguments concerning the determination of the dumping
      margin, the methodology set out in recitals 24 to 26 of the provisional duty
      Regulation is hereby confirmed.
      India
 (12) The dumping margin definitively established for India, expressed as a percentage
      of the CIF price at Community frontier level, is as follows:
      Universal Chemicals and Industries Pvt. Ltd., Mumbai:              5.6%
      As this company is deemed to represent 100 % of the Indian production of the
      product concerned, the residual dumping margin definitively established is also
      5.6%.
      Ukraine
(13) The dumping margin definitively established for the Ukraine, expressed as a
      percentage of the CIF price at Community frontier level, is 36.2%.
                             E. COMMUNITY INDUSTRY
(14) As no comments or new facts were submitted by any interested party with regard
     to the definition of the Community industry, the findings made as set out in
     recital 27 of the provisional duty Regulation, are hereby confirmed.
 ---pagebreak---                                        F. INJURY
     1) General
(15) Comments were made by the exporting producers in respect of the provisional
     findings regarding the following injury factors: prices of the dumped imports,
     price undercutting and the situation of the Community industry. No other
     interested party expressed any contradicting view.
     2) Prices of the dumped imports and price undercutting
(16) The Indian and Ukrainian exporting producers both contested the provisional
     findings concerning price undercutting and claimed in particular that information
     they had previously submitted (in the form of "offers" or invoices) had been
     disregarded without sufficient detailed explanations.    They again submitted
     information concerning resales of the product concerned in the Community (in
     the form, inter alia, of invoices) obtained from a number of unrelated importers
     allegedly showing the absence of price undercutting.
 ---pagebreak---      It should be noted, however, that the previously and newly submitted information
     concerned importers who either did not co-operate or only insufficiently co-
     operated with the Commission's investigation. This information could not,
     therefore, be verified during on-the-spot verifications (in particular as regards the
     existence of possible credit notes reducing actual sales prices or, in the case of
     "offers", as regards the question whether such offers led to actual sales
     transactions or not). In any case it covers a very small part of the imports
     concerned and examined by the Commission.            Moreover, in support of their
     contention that the Commission's price undercutting findings were not correct,
     the Indian and Ukrainian exporting producers had submitted calculations based
     on figures concerning their export price on the Community market which did not
     match the corresponding verified figures they themselves reported in the course
     of the investigation. The information submitted cannot therefore invalidate the
     findings of clear price undercutting as set out in recitals 36 to 38 of the
     provisional duty Regulation.
(17) The Ukrainian exporting producer again claimed that its "special relationship"
     with its sole importer in the Community, allegedly consisting of the importer
     financing the purchase of the raw materials as well as granting pre-payment for
     deliveries, would have necessitated certain adjustments to the export price.
     In this respect, it has to be stressed that this relationship, interrupted in 1997,
     could not be investigated due to the lack of co-operation from the sole importer
     in question. Indeed, despite repeated requests from the Commission, the company
     in question failed to submit relevant data. Therefore, adjustments claimed by the
     Ukrainian exporting producer could not be granted.
 ---pagebreak--- (18) As regards the Community industry's selling price used in order to determine the
     price undercutting margin, it was alleged that data reported by the German
     producer (Chemie GmbH Bitterfeld-Wolfen) had been disregarded.
     In this respect it should be recalled that, as indicated in the provisional duty
     Regulation, the calculation of price undercutting was made by comparing the
     prices of the Community industry as a whole, i.e. its weighted average prices,
     including those of the Community producer in question, with prices of the Indian
     and Ukrainian exporting producers.
     Moreover, it should be stressed that, as noted in recital 37 of the provisional duty
     Regulation, the Commission based the price undercutting calculation on import
     sales figures adjusted for post-importation costs, i.e. for customs duty, loading
     and warehousing costs and credit costs (prices were adjusted to a cash payment
     level), in conformity with the Community Institutions' established practice and
     as requested by the exporting producers in their submissions.
(19) The undercutting margins of 26% for the Ukraine and 8.4% for India as set out in
     recital 38 of the provisional duty Regulation, are accordingly hereby confirmed.
     3) Situation of the Community industry
(20) The exporting producers alleged that, in the assessment of the situation of the
     Community industry, data relating to the German producer's situation had been
     fully excluded from the analysis.
 ---pagebreak---      Again, this allegation is not correct as the provisional findings were based on an
     overall assessment of the situation of the entire Community industry. Only the
     costs of production of the German producer were disregarded in the calculation
     of the injury elimination level (see recital 31 of the present Regulation), and its
     profitability data were not included when determining the injury indicator
     'profitability of the Community industry'. Indeed, it was found that these figures
     were likely to be influenced by the current restructuring of its operations. This is
     in conformity with the usual practice of the Community Institutions, consisting of
     disregarding extraordinary items in accounts. In any event, had the German
     producer's data relating to these two items been taken into consideration, the
     situation of the Community industry would have been found to be even worse.
     All other injury indicators were examined taking into consideration the verified
     information given by both the German producer and the Spanish producer
     (Industrial Quimica del Nalôn) constituting the Community industry.
(21) It was also alleged that, on balance, the injury indicators did not show that the
     Community industry was experiencing material injury. The exporting producers
     based this allegation on an improvement of the situation of the industry following
     the previous imposition of anti-dumping measures on Chinese imports by
     Council Regulation (EC) No 2819/94 (3) and the data relating to the exceptional
     year 1995 where demand for the product concerned increased substantially
     because of climatic circumstances.
        OJL 298,19.11.194, p. 32
 ---pagebreak---      It is considered that these considerations should not detract from the weak overall
     situation of the Community industry. Indeed, prices of the Community industry
     decreased by 10% from 1992 to the investigation period (April 1996 to March
      1997), in a very price-sensitive market, and the Spanish producer recorded losses
     for the same period, while the Indian and Ukrainian exporting producers undercut
     the Community industry's prices significantly and doubled their market share of
     potassium permanganate on the Community market.
     It should also be recalled that the injury indicators have to be seen in the context
     of an industry recovering from past dumping. Accordingly, the injury indicators
     should be assessed bearing in mind the overall historical situation of the market,
     which had been affected by Chinese dumped imports, with a consecutive impact
     on the Community industry's state and with certain positive consequences for the
     situation of the Community industry after the imposition of anti-dumping
     measures concerning Chinese imports.
     4) Conclusion on injury
(22) In the light of the above and in the absence of other arguments concerning the
     determination of injury, the provisional findings laid down in recitals 28 to 50 of
     the provisional duty Regulation, according to which the Community industry has
     suffered material injury, are hereby confirmed.
 ---pagebreak---                                     G. CAUSATION
(23) In order to show that the injury suffered had not been caused by the dumped
     imports subject to the current investigation, the exporting producers brought
     forward three main other potential causes of injury: pressure of Chinese imports,
     the particular situation of the German producer and certain alleged changes in the
     pattern of consumption.
     1) Impact of Chinese imports
(24) The exporting producers argued that the overwhelming cause of injury was
     Chinese imports.
     In this respect, it should be noted that the Chinese imports have been countered
     by a definitive anti-dumping measure imposed in November 1994 and virtually
     ceased after 1994. The Chinese imports could not, since then, be regarded as a
     cause of the injury experienced by the Community industry, particularly
     noticeable at the end of the five year period examined for the assessment of
     injury, i.e. during the period 1 April 1996 to 31 March 1997.
 10
 ---pagebreak---      2) Competitiveness of the Community industry /self-inflicted injury
(25) It was alleged that one of the complainants, the German producer, is inefficient
     and undercuts its competitor's prices on the Community market.
     In this respect it should be noted that the findings of substantial undercutting by
     Ukrainian and Indian exports were based on data including sales prices of the
     German producer. It was therefore confirmed by the investigation that, contrary
     to the allegation made, the Indian and Ukrainian exporting producers' prices
      undercut in fact the average Community industry's price.
      In addition, while it is a mere assumption that the current restructuring is in itself
      a proof of inefficiency of the Community producer concerned, it was established
      that the dumped imports weakened the position of this producer and, in fact,
      impeded the improvement of its economic situation.
      3) Changes in the pattern of consumption
(26) The exporting producers argued that the injury suffered was also due to a change
      in the pattern of consumption resulting from competition from emergent
      substitute products.
      As regards substitute products, it should be recalled that potassium permanganate
      is mainly used for potable water treatment, wastewater treatment, chemical and
      pharmaceutical manufacture, metal refining and disinfectant. Four substances
      were put forward as emergent substitute products to potassium permanganate:
      sodium dichromate, mono potassium persulphate, ozone and hydrogen peroxide.
 II
 ---pagebreak---       The first three products mentioned above, even if sold in significant quantities on
     the Indian market, are still marginal on the Community market. Sodium
      dichromate is not in use in the Community due to its cancerogenic characteristics.
      Mono-potassium persulphate is a chemical product totally unknown in the water-
      treatment sector in the Community and only marginally used in other
      applications. Ozone can be potentially seen as a substitute product to potassium
      permanganate in water treatment.       However, use of this product is, for the
      moment, limited, and cannot be considered to have had a significant impact on
     the Community potassium permanganate market and the situation of the
     Community industry. Finally, hydrogen peroxide cannot be considered as an
      emergent product because it has been used as an industrial oxidiser for as long as
     potassium permanganate and did not gain importance at the expense of potassium
     permanganate.
     It is therefore considered that none of these alleged substitute products have
     significantly affected the pattern of consumption of the product concerned.
     Accordingly, the alleged emergence of such products cannot be construed as a
     significant alternative source of injury to the Community industry.
     4) Conclusion on causation
(27) None of the above factors can be considered to have an impact such as to break
     the causal link between the dumped imports and the injury suffered by the
     Community industry in this case. Therefore, the provisional findings concerning
     causation, as set out in recitals 51 to 72 of the provisional duty Regulation, are
     hereby confirmed.
 12
 ---pagebreak---                              H. COMMUNITY INTEREST
(28) The only comments submitted on this issue were in respect of the Community
     industry's interest in seeing the dumping practices counteracted.
     1) Interest of the Community industry
(29) In this respect, it was argued that the imposition of anti-dumping duties would be
     against the interests of the German producer, which was allegedly reluctant to
     support the current anti-dumping proceeding as anti-dumping measures would
     serve only the Spanish producer because of its allegedly dominating position.
     This argument was not supported by any evidence. The German producer is a
     complainant, which co-operated fully in the investigation and did not make any
     indication that it would no longer support the current anti-dumping proceeding.
     Furthermore, as noted in the provisional duty Regulation, in the absence of
     measures, the existence of the Community industry as a whole would ultimately
     be at risk. Moreover, given the price sensitivity of the product, it is likely that the
     measure would, to a large extent, equally help the German producer to obtain a
     more favourable market position. In any event, anti-dumping measures are not
     designed to prevent competition on the Community market. Rather, their purpose
     is to allow Community producers to compete on a level playing field with
     imports in the Community.
 13
 ---pagebreak---      2) Conclusion on Community interest
(30) It is therefore confirmed that there are no compelling reasons not to take action
     against the injurious dumping found. Accordingly, the findings concerning
     Community interest, as set out in recitals 73 to 86 of the provisional duty
     Regulation, are hereby confirmed.
                             I. DEFINITIVE MEASURES
     1) Injury elimination level
(31) As no comments, other than those concerning the need for adjustment to the
     export price, requested by the Ukrainian exporting producer in order to take into
     account its special relationship with its sole importer in the Community (see
     recital 17 of the present Regulation), were received with regard to the
     methodology used in calculating the injury elimination level, the findings, as set
     out in recitals 88 to 90 of the provisional duty Regulation, are hereby confirmed.
     2) Form of duty
(32) The provisional measures were imposed in the form of a variable duty based on
     minimum prices. The Ukrainian exporting producer requested that the minimum
     price concerning the Ukraine should be set at the same level as the minimum
     price applicable to imports from India.
 14
 ---pagebreak---    As indicated in recitals 11, 14 and 93 of the provisional duty Regulation, this
   situation arose from the following:
   Although both minimum prices were based on the domestic prices of the Indian
   producer, the Indian minimum price was the weighted average of the lower price
   for potassium permanganate with a purity below 99% and the higher price for
   potassium permanganate with a minimum purity of 99% while the Ukrainian
   minimum price equalled the price for potassium permanganate with a minimum
   purity of 99% since this country only exports this grade.
   Given this factual background, the request made by the Ukrainian exporting
   producer could not be granted as the difference in minimum prices reflected a
   difference in the exported product types concerned. However, in view of the
   different existing product types it was examined whether the use of different
   minimum prices for India and the Ukraine might result in a discriminatory
   treatment. It was also examined whether the use of this form of anti-dumping
   measure was appropriate with a view to removing the injurious effect of dumping
   for all the different types in which the product concerned exists.
15
 ---pagebreak---      In this respect it is clear that if in the future both countries were to export
     potassium permanganate with a minimum purity of 99% exclusively, the Indian
     exporting producer would benefit without justification from a lower minimum
     price compared to the minimum price established for the Ukrainian exporting
     producer and that the anti-dumping measure imposed would not ensure that the
     effect of dumping would be removed.
     Such non desirable potential effects outweigh the arguments which motivated at
     the provisional stage the decision to depart from the usual form of anti-dumping
     duties. Accordingly, the definitive anti-dumping duty should take the form of an
     ad valorem duty.
     3) Level of duty
(33) Since, for each country concerned, the injury elimination margin established is
     higher than the dumping margin, the definitive anti-dumping duty should be
     based on the respective dumping margins, namely 5.6% and 36.2% for India and
     the Ukraine respectively.
 ---pagebreak---                  J. COLLECTION OF THE PROVISIONAL DUTY
(34) Given the magnitude of the injury suffered, the amounts secured by way of
     provisional anti-dumping duty, under Regulation (EC) No 178/98, should be
     definitively collected to the extent of the amount of the definitive duties imposed,
HAS ADOPTED THIS REGULATION:
                                         Article J
 1.     A definitive anti-dumping duty is hereby imposed on imports of potassium
        permanganate falling within CN code 2841 61 00 originating in India and the
        Ukraine.
2.      The rate of the definitive anti-dumping duty applicable to the net, free-at-
        Community-frontier price, before duty, shall be:
        - 5.6% for potassium permanganate originating in India,
        - 36.2% for potassium permanganate originating in the Ukraine.
3.      Unless otherwise specified, the provisions in force concerning customs duties
        shall apply.
 17
 ---pagebreak---                                          Article 2
The amounts secured by way of the provisional anti-dumping duty imposed pursuant
to Regulation (EC) No 178/98 shall be definitively collected at the level of the duties
definitively imposed on imports of potassium permanganate originating in India and
the Ukraine.
The collection shall be limited to the amounts secured. In addition, the amounts
secured in excess of the definitive antidumping duties shall be released.
                                        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,              1998.
 For the Council
The President
 18
 ---pagebreak---                                                                   ISSN 0254-1475
                                                           COM(98) 382 final
                                              DOCUMENTS
EN                                                                02 11 10
                                    Catalogue number : CB-CO-98-395-EN-C
                                                             ISBN 92-78-37272-2
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