CELEX: 51996PC0690
Language: en
Date: 1996-12-16
Title: Proposal for a COUNCIL REGULATION (EC) imposing definitive anti-dumping duties on imports of certain ring binder mechanisms originating in Malaysia and the People's Republic of China and collecting definitively the provisional duties imposed

COMMISSION OF THE EUROPEAN COMMUNITIES
                                               Brussels, 16.12.1996
                                               COM(96)690 final
                                Proposal for a
                      COUNCIL REGULATION fEQ
 imposing definitive anti-dumping duties on imports of certain ring binder
mechanisms originating in Malaysia and the People's Republic of China and
           collecting definitively the provisional duties imposed
                       (presented by the Commission)
 ---pagebreak---  ---pagebreak---                               EXPLANATORY MEMORANDUM
   (1)   The Commission, by Regulation (EC) No 1465/961, imposed provisional anti-
         dumping duties on imports into the Community of certain ring binder mechanisms
         originating in Malaysia and the People's Republic of China.
   (2)   Certain interested parties, Community producers, exporters, importers, as well as
         users of the product concerned, submitted comments in writing. Those parties who
         so requested were granted an opportunity to be heard by the Commission. The
         Commission considered all the views expressed before drawing its final
         conclusions.
   (3)   After a further evaluation of the facts, it was decided to grant one Chinese
         exporter, namely World Wide Stationery, individual treatment,             thereby
         establishing an individual dumping margin and, consequently, an individual anti-
         dumping duty.
   (4)   Subsequent to the imposition of provisional measures, the Commission further
         examined matters deemed relevant in analysing the issue of Community interest.
         Having examined a wide variety of aspects and the various interests involved, no
         compelling reasons have come into light which would lead to the conclusion that
         the imposition of definitive measures would not be in the interest of the
         Community.
   (5)   In the light of the above, the Commission confirmed its provisional conclusions to
         the effect that ring binder mechanisms originating in Malaysia and the People's
         Republic of China were being dumped in the Community and were causing
         material injury to the Community industry, and concluded that it is in the
         Community interest to take protective measures in the form of definitive anti-
         dumping duties and to collect definitively the provisional duties at the duty rate
         definitively imposed.
1
  OJ No L 187, 26.7.1996, p. 47.
 ---pagebreak--- (6)  The Chinese exporter which had been granted an individual treatment indicated
     beyond the specified time limits its willingness to offer an undertaking. The
     Commission considered that, due to the high number of ring binder mechanisms
     types exported by the company concerned, an undertaking in this case would be
     virtually impossible to set up and to monitor. No formal undertaking offer from
     the part of the exporter was finally received.
(7)  World Wide Stationery being granted individual treatment, the injury elimination
     level specific to that company was established at 32.5%. As a consequence, the
     definitive average injury elimination level for all other companies in China was
     established at 39.4%.
(8)  It was established that the imposition of an ad valorem duty on mechanisms with
      17 or 23 rings, at the same rate as the one applicable to other mechanisms, was
      likely to have non desirable effects due to the difference in price between these
     two categories. In this respect, it was found that the setting up of measures in the
      form of a variable duty based on a minimum price was appropriate. Based on the
     price comparisons which were carried out, a CIF minimum import price of 325
      ECU per 1000 pieces for 17 and 23 ring mechanisms was considered adequate to
      remove the injury caused by the dumped imports.
 (9)  In accordance with Article 9 of Council Regulation (EC) No 384/96, the
      Commission therefore proposes that the Council impose definitive anti-dumping
      duties on imports of ring binder mechanisms originating in Malaysia and the
      People's Republic of China. In the light of 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.
 ---pagebreak---                                                   io
                         COUNCIL REGULATION (EC)
                                               of
       imposing definitive anti-dumping duties on imports of certain ring binder
     mechanisms originating in Malaysia and the People's Republic of China and
                    collecting definitively the provisional duties 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
   Community1, and in particular Articles 9 and 23 thereof,
   Having regard to the proposal submitted by the Commission after consulting the
   Advisory Committee,
   Whereas:
                                 I. PROVISIONAL MEASURES
   (1)   By Commission Regulation (EC) No 1465/962 provisional anti-dumping duties
         were imposed (hereinafter referred to as 'the provisional duty Regulation') on
         imports into the Community of certain ring binder mechanisms falling within CN
         code ex 8305 10 00 and originating in Malaysia and the People's Republic of
         China.
1
  OJ No L 56, 6.3.1996, p. 1
2
  OJ No L 187, 26.7.1996, p. 47.
 ---pagebreak---                          II. SUBSEQUENT PROCEDURE
(2) Following the imposition of the provisional anti-dumping measures, certain
    interested parties submitted comments in writing.
(3) Those parties who so requested were granted an opportunity to be heard by the
    Commission.
(4) The Commission continued to seek and verify all information 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 parties' oral and written comments submitted by the interested parties were
    considered, and, where deemed appropriate, taken into account in the
     Commission's definitive findings.
    III. PRODUCT UNDER CONSIDERATION AND LIKE PRODUCT
(7)  For the purpose of its preliminary findings, the Commission considered ring
     binder mechanisms (hereinafter referred to as 'RBM') produced and sold in the
     Community, RBM produced and sold in Malaysia, and those exported to the
     Community from Malaysia and the People's Republic of China as 'like products',
     within the meaning of Article 1 (4) of Regulation (EC) No 384/96 (hereinafter
     referred to as the 'basic anti-dumping Regulation'), because they are either
     identical or have characteristics closely resembling each other.
(8)  One importer, also producer of the downstream product (that is, manufacturer of
     ring binder files and other stationery products) reiterated arguments it had made
     previously, namely that mechanisms with 17 and 23 rings are not like products in
     relation to 'standard' two to four ring mechanisms and should, therefore, be
     excluded from the scope of the proceeding.
 ---pagebreak--- (9)  In support of its claim, the importer argued that only mechanisms with 2 to 4 rings
     were mentioned in the complaint, leaving aside 17 and 23 ring mechanisms from
     the list of allegedly dumped products.
     Although it is true that, in the calculations set out in the complaint as prima facie
     evidence of dumping and resulting injury, only models with 2 to 4 rings were used
     as examples, it should also be recalled that, in the product description outlined in
     the complaint, all ring mechanisms, with 2 rings or more, were included. In this
     respect, it should be noted that RBM with e.g. 6, 13 or 16 rings are sold on the
     Community market.
(10) It has been argued that, in addition to the number of rings, 17 and 23 ring
     mechanisms have distinguishing physical characteristics, in particular higher base
     length and width, which make them more wear resistant than other mechanisms,
     and therefore significantly different.
     Having examined this issue it was found that variations, if any, could be
     considered comparable to the ones already existing among the different models of
     2 or 4 ring mechanisms themselves. Therefore, it is considered that there is no
     other significant physical difference than the number of rings between 17 to 23
     ring mechanisms on the one hand and other ring mechanisms on the other hand.
(11) It has been further argued that the manufacturing methods used and the costs of
     production of 17 and 23 ring mechanisms differed significantly from those
     relating to other mechanisms.
     It should be noted that the operations and the machinery necessary to manufacture
     the rings, fix them to the blades and assemble the blades into the mechanism's
     cover are essentially the same for all types of RBM. The higher content of raw
     materials and the ring fixing operation which has to be repeated in the case of 17
     and 23 ring mechanisms cause a difference in production costs. However, this
     difference, although significant, is not out of proportion with those observed
     between small and large types of mechanisms with fewer rings. Therefore, the
     particular manufacturing operations, if any, and the resulting costs relating to 17
     and 23 ring mechanisms are not such as to alter their similarity to other
     mechanisms. In any event, with regard to differences in the manufacturing process
     that may have been used, following consistent practice of the Community
     Institutions, all such differences are irrelevant in the analysis of the like product.
 ---pagebreak--- (12) It has also been alleged that mechanisms with 17 or 23 rings were expensive
      enough for them to be considered as belonging to a separate market segment.
      Although a significant price difference between mechanisms with 17 or 23 rings
      and similar mechanisms with fewer rings could be established, it is considered
      that given the similarity in use and customer, substitution effects could take place
      if the products were to experience sufficiently diverging price evolutions. It
      should therefore be concluded the market segment for mechanisms with 17 or 23
      rings does not possess sufficiently separate characteristics to be excluded
      altogether from the scope of the investigation.
(13) It was argued that differences also arose in the" use of binders with different
      mechanisms. Whereas binders with "standard" mechanisms are allegedly
      primarily aimed at paper where the customer himself punches holes, binders with
       17 and 23 ring mechanisms are used to collect pre-punched paper due both to the
      price of the special hole puncher and the few pages it can punch at a time.
      However, it should be noted that certain types of binders such as organisers or
      catalogues, using ring mechanisms with 2 to 6 rings covered by this proceeding,
      also use pre-punched paper already inserted in the finished product, or pre-
      punched additional pages, and that punchers for some of these are not necessarily
      available to the customer. In addition, pre-punched paper for 2 to 4 ring
      mechanisms is available and sold in significant quantities in the Community, in
      particular for school use (which is also the main market for the 17 and 23 ring
       mechanisms). It can therefore be concluded that 17 and 23 ring mechanisms have
       a similar use as other types of mechanisms.
 (14) It was also argued that lever arch mechanisms which fall within the same CN code
       as RBM and are excluded from the scope of this proceeding, are more similar to 2
       ring mechanisms than 17 and 23 ring mechanisms.
       In this respect, the physical characteristics and the market for lever arch
       mechanisms were found to be sufficiently distinct from those of ring mechanisms
       to justify these lever arch mechanisms being excluded from the complaint and
       from the scope of the proceeding.
 ---pagebreak--- (15) Having examined the arguments put forward, it is confirmed that 17 and 23 ring
     binder mechanisms have characteristics closely resembling those of other RBM,
     and are therefore like products to other RBM within the meaning of Article 1 (4)
     of the basic anti-dumping Regulation. Accordingly, the above claim is rejected.
                                  IV. DUMPING
                          A. Market economy third country
(16) At the time of initiation, one importer had objected to the choice of Malaysia as
     analogue market for the establishment of normal value with respect to the
     People's Republic of China. As his arguments were not substantiated nor any
     alternative country was proposed, the Commission notified this interested party on
     22 November 1995 that his objections had to be rejected. In a letter which reached
     the Commission on 27 November 1995, the same importer proposed to use cost of
     production of an Italian producer, which was not part of the Community industry,
     for the establishment of normal value in the People's Republic of China. Since
     this letter was received 20 days beyond the deadline set out in the Notice of
     Initiation, the suggestion could not be taken into account. After being disclosed
     the essential facts and considerations underlying the imposition of provisional
     measures, the importer repeated his arguments. Although the request was made
     beyond any time limit applicable to the selection of a market economy third
     country, the Commission examined whether a change in methodology would have
     an impact on the level of the duty. For this purpose, and given the fact that the
     cost of production of one single producer could not be considered representative
     for the situation of other Community producers, the Commission interpreted the
     claim as a request to use the Community as analogue market for the establishment
     of normal value for the exports from the People's Republic of China. The
     Commission then compared the target prices established for the Community
     industry (its actual prices being below cost of production) on an average to
     average basis with the Chinese export prices. This dumping calculation showed
     that adopting this methodology would have no impact on the level of the duty
     finally proposed by the Commission since under either method the dumping
     margin found clearly exceeded the injury elimination level finally established.
     Given the above considerations and taking into account thai, in accordance with
     Article 2 (7) of the basic anti-dumping Regulation, if appropriate, a market
     economy country subject to the same investigation could be used, the Commission
 ---pagebreak---       concluded that the selection of Malaysia was not unreasonable for the
      establishment of normal value and that there was no reason to change this choice
      of analogue country.
                                        B. Malaysia
      1. Normal value
(17) One importer argued that the Malaysian domestic sales, representing 5.8% of
      quantities exported to the Community, were not sufficiently representative for the
      establishment of normal value. In this respect, the Commission applied Article 2
      (2) of the basic anti-dumping Regulation, according to which a domestic sales
      volume of 5% is considered as a sufficient quantity, for the representativeness of
      the domestic market.
(18) It was also argued by the same importer that there is only a limited competition on
      the Malaysian market and that consequently domestic prices are higher than they
      would be under normal competitive conditions. The Commission had already
      looked into that matter when selecting Malaysia as an appropriate analogue
      country and addressed the argument in recital 10 of the provisional duty
      Regulation. As no new argument nor evidence was put forward, the Commission
      confirmed that a certain degree of competition on the Malaysian market is
      warranted by the presence of RBM originating in the People's Republic of China.
      Therefore, it could be concluded that Malaysia is a reasonable choice for the
      establishment of normal value in the People's Republic of China.
      2. Dumping margin
(19) No other arguments having been presented which could lead to a modification of
      the dumping determination; the Commission considers that the methodology of
      the dumping calculation and the provisional findings as described in recitals 18 to
      26 of the provisional duty Regulation are to be confirmed. Consequently, the
       dumping margin for Malaysia is definitively established at 42.8%.
                              C. People's Republic of China
       1. Normal value
 (20) Two Chinese exporters claimed an adjustment to normal value, because of
       differences in the cost structure due to low labour costs in the People's Republic
       of China and differences in the technology of the production operations.
 ---pagebreak---      As far as labour costs are concerned, the Commission services note that the reason
     for using a third market economy country is the lack of reliable cost and price
     information in the non-market economy country concerned. Therefore, it is
     groundless to argue that certain costs are lower in the non-market economy
     country than in the analogue country and that adjustments to normal value should
     be made, when applying this normal value to the non-market economy country.
     With respect to the different technology, the Commission services consider that
     the production process employed to manufacture a particular product is irrelevant
     as long as the physical characteristics and use of the product are similar. In this
     case, the alleged differences did not lead to any significant differences in the
     essential physical characteristics of the product concerned. Therefore, in
     accordance with Article 2 (10 (a)) of the basic anti-dumping Regulation, the claim
     had to be rejected.
(21) Two interested parties argued that they were not able to comment on the
     Commission's calculation of normal value, as the absolute figures regarding the
     calculation of normal value established in the analogue country were not disclosed
     to the Chinese exporters, on the grounds of confidentiality. In its disclosure letter
     to these parties, the Commission had attached all calculation sheets relevant for
     these companies and set out in detail the methodology applied by the Commission
     for the establishment of normal value, due regard being given to the protection of
     confidential information, in accordance with Article 20 (4) of the basic anti-
     dumping Regulation. The disclosure of the detailed absolute figures would violate
     the legitimate right of an interested party to confidential treatment and was not
     necessary for the understanding of the calculation. Therefore, the argument could
     not be accepted.
     2. Export price
(22) One exporter claimed that excessive amounts were deducted from the export price
     for deferred rebates found at the related importer's premises.
     The Commission notes that this company, in replying to the Commission's
     questionnaire, had failed to report such rebates, which were found by the
     Commission's officials during the on-spot investigation. Therefore, the
     Commission had to determine the deductions on the basis of the data collected
 ---pagebreak---                                               8
      there. Moreover, the exporter's claim refers to an estimated figure of such rebates,
      whereas the amounts actually deducted by the Commission were those verified in
      the investigation.
(23) One exporter claimed that the margin of profit deducted by the Commission was
      too high, in comparison with the actual net profit realised by its related importer.
      Due to the association agreement between the two companies, the Commission
      could not take into account for the construction of a reliable export price the profit
      margin shown in the related importer's accounts. In line with the Commission's
      practice, it was considered reasonable to use actual data of independent companies
      importing the product concerned into the Community. In determining the profit
      margin normally achieved by these companies, only the product concerned was
      taken into account. Therefore, the 7.8% profit margin does not include any profit
      margins achievable on stationery products other than ring binder mechanisms. The
      determination of the profit margin was made on the basis of the independent
       importers' data which were verified at their premises, due account being taken of
      their different sale volumes.
       3. Comparison
(24) Two interested parties enquired about and partly disputed the level of trade
       adjustment which the Commission took into account, to compare the Malaysian
       Normal Value and Chinese export prices. One party claimed that such allowance
       should have been more substantial.
       The Commission notes that none of the exporters concerned had ever claimed
       such an allowance during the different phases of the investigation and that the
       Commission considered on its own initiative that, in view of a fair comparison, it
       was appropriate to grant it in this case. In the absence of any specific evidence
       provided by any of the exporters concerned, the Commission considered it
        appropriate, in order to determine the amount of such an allowance in a reasonable
       way, to base its calculation on its practice in similar situations.
        4. Individual treatment
 (25) World Wide Stationery (hereinafter referred to as 'WWS'), which had at a very
        early stage applied for individual treatment, reiterated its request after the
        imposition of provisional measures.
 ---pagebreak---      After a further evaluation of the facts, the Commission services concluded, after
     verification in Hong Kong, that individual treatment could be granted to this
     company, in view of the substance and implementing modalities of the production
     agreement between WWS and the representatives of the local authorities in the
     People's Republic of China. According to this agreement, the company based in
     Hong Kong seemed to master the production operations in the People's Republic
     of China, since it only paid to the local Chinese authorities a transformation fee
     per ton for the products exported. The machinery used in the operations in the
     People's Republic of China was owned by WWS and appeared as assets in its
     financial accounts. WWS also seemed to be in control of the supply of raw
     materials as well as of all sales of the product concerned. In these circumstances,
     it was considered appropriate to establish for World Wide Stationery an individual
     dumping margin and to determine an individual anti-dumping duty.
(26) The related companies Champion Stationery Manufacturing Co. and Sun Kwong
     Metal Manufacturer Co. Ltd, considered by the Commission as one single
     company for the reason explained in recital 5 (b) of the provisional duty
     Regulation, did not reiterate their request of individual treatment and did not
     submit any further argument in this respect after the imposition of provisional
     measures. Therefore, the Commission confirms its provisional findings as
     reported in recitals 37 to 39 of the provisional duty Regulation, by which the
     request of individual treatment had been rejected.
(27) In its reply to the final disclosure, Bensons criticised in the name of WHS Hong
     Kong that WWS alone should benefit from individual treatment. It alleged that
     WHS would have also fulfilled the conditions set by the Commission for
     individual treatment and would therefore also be eligible for this treatment. The
     Commission, however, notes that WHS did not ask for individual treatment within
     the specified time limits, and only raised the question of individual treatment at a
     very late stage of the investigation. Thus, the Commission was not in a position to
     verify, with regard to WHS, the substantive conditions applicable, in view of the
     statutory deadlines applicable to this proceeding. Consequently, the Commission
     was unable to propose individual treatment for WHS.
 ---pagebreak---                                               10
      5. Dumping margin
(28) The Commission considers that the methodology of the dumping calculation and
      the provisional findings as described in recitals 27 to 36 of the provisional duty
      Regulation are to be confirmed.
      World Wide Stationery's individual dumping margin amounts to 96.6%. The
      definitive dumping margin for the other exporters of the People's Republic of
      China as a whole amounts to 129.22%.
                           V.   COMMUNITY INDUSTRY
(29) As regards the Community industry, the treatment of imports from Hungary made
      by one EC producer, including the issue of the non-preferential rules of origin, has
      been questioned by several exporters and one importer, without, however, their
      claims in this respect being substantiated.
      As explained in the provisional duty Regulation (recital 43), the Commission
      accepts the fact that a majority of the products in question clearly originate in
      Hungary : this is the case, for instance, when all parts used come from Hungary
       and/or substantial processing takes place there. Accordingly, these products were
      excluded from the Community production, and, consequently, played no role in
      the definition of the Community industry. Sales of these products (which are, in
       fact, made in Hungary) have indeed not been taken into account amongst the sales
       of the Community industry when assessing the injury this industry suffered.
       Conversely, products merely assembled in Hungary from Austrian parts were
       considered part of Community production since the assembly operation which the
       products had undergone in Hungary did not confer Hungarian origin on the
       finished products. This determination was based on the non-preferential rules of
       origin applicable, as it is the Institutions' practice to base in principle their
       conclusions in anti-dumping investigations on these rules. The use of the
       preferential rules of origin set out in Article 1 of protocol IV to the EU-Hungary
       Association Agreement would be neither appropriate nor warranted in the context
       of an anti-dumping proceeding.
 (30) In conclusion, the finding in the provisional duty Regulation that the two
       complainant Community producers constitute the Community industry in
       accordance with Article 4 (1) of the basic anti-dumping Regulation is confirmed.
 ---pagebreak---                                               11
                                      VI. INJURY
                                  A. Preliminary remark
(31) As regards the methodology used for the establishment of injury, set out in recital
     46 of the provisional duty Regulation, it should be recalled that the Commission
     analysed data relating to the period 1992 to September 1995, and the geographical
     scope of the investigation over this period was the Community as composed at the
     time of the initiation i.e. including all fifteen Member States.
(32) Several exporters repeated the argument, which the Commission had already
     addressed in recital 46 of the provisional duty Regulation, that, for the purpose of
     determining injury, data relating to the Austrian industry can only be taken into
     account insofar as they relate to the period after 1 January 1995, when Austria
     became a Member of the European Union. One exporter argued that the combined
     provisions of Articles 3(4) and 4 of the Agreement on Implementation of Article
     VI of GATT 1994 would exclude non-members countries from the definition of
     the domestic industry, and several exporters argued that neither Article VI of
     GATT 1994, nor the EEA Agreement, would justify the Commission's decision to
     establish injury relying, in part, on data concerning Austria and relating to the
     period between January 1992 and December 1994.
     In addressing this argument, it should be noted that the Agreement on
     Implementation of Article VI of GATT 1994 requires that any imposition of
     measures on a given territory be based on a formal investigation into the effects of
     the alleged dumping within the same territory. Thus, the investigation carried out
     in this case covered all fifteen Member States. This was made possible in
     particular given the integration of the market subject to the analysis prior to the
     enlargement of the Community.
     It is confirmed, therefore, that the Austrian producer has been rightly considered
     as part of the Community industry (as defined in accordance with Article 4 (1) of
     the basic anti-dumping Regulation) and as being entitled to act as complainant.
     For this reason, it is confirmed that, in order to assess the injury suffered, trends
     had to be established for the Community industry as defined at the time of
     initiation of this proceeding, over a number of years.
 ---pagebreak---                                            12
                             B. Community consumption
(33) On the basis of estimates for the annual per head consumption of binders, one
     importer argued that the consumption of RBM on the Community market was 400
     million units and not 283 million units as stated in the provisional duty
     Regulation.
     It should be recalled that the Commission based its provisional findings on the
     information received from the exporters, importers and Community producers.
     Due to the high level of co-operation in this case, the data for all major companies
     present on the market have been analysed, no party being able to give indications
     on a producer/importer which would have been overlooked during the
     investigation period and whose sales could explain the difference between the
     Commission's evaluation and the different alleged market size. It is therefore
     considered that the data obtained from the companies in this case offer a more
     accurate base for the calculation of the Community consumption than a mere
     estimate based on per-head consumption rates. Therefore, the findings set out in
     recital 47 of the provisional duty Regulation are confirmed.
           C. Factors and considerations relating to the dumped imports
(34) One exporter submitted that a quality difference should be taken into account in
     order to ensure a fair comparison between its export sales of the like product in the
     Community and sales by the Community industry. The exporter claimed that it
     produces RBM with a narrower base which are allegedly some 12 to 17.5 %
      cheaper than the wide base mechanisms sold by the complainants. The exporter
      concerned claimed that this should be taken into account in the form of
      adjustments when calculating the degree of price undercutting.
      Having examined the allegation of the exporter, the Commission has verified that
      only models with similar width (within 1 mm difference) were compared, and
      found that, in any event, no consistent price differences could be established
      between mechanisms with different widths. For these reasons, the findings
      outlined in recitals 52 to 54 and the methodology described at recital 84 of the
      provisional duty Regulation are confirmed.
 ---pagebreak---                                               13
                         D. Situation of the Community industry
(35) One exporter argued that the Community industry's negative trends on production,
      sales and employment were caused by the progressive relocation of a former
      British producer to the Far East.
      It should be noted that, as the producer in question ceased its manufacturing
      operations in the Community in 1991, it has not been included in the definition of
      the Community industry for the purpose of this proceeding, and the injury
      indicators established in this case do not rely on its data. Consequently, this
      argument was rejected.
(36) No additional substantiated arguments have been presented in relation to the
      findings set out in recitals 55 to 62 of the provisional duty Regulation.
                                  E. Conclusion on injury
(37) In the light of the above and in the absence of other arguments, it is confirmed that
      the Community industry has suffered material injury within the meaning of
      Article 3 of the basic anti-dumping Regulation.
                                   VII. CAUSATION
(38) One exporter argued that the injury suffered by the Community industry was due
      to the restructuring it had undergone.
      As explained in the provisional duty Regulation, and in particular in its recitals 61
      and 65, the actual situation shows rather that the Community industry has been
      prevented from benefiting from its restructuring since, in the face of the dumped
       imports, it could neither achieve positive financial results nor obtain stability of
      market share. It is therefore considered that the injury suffered has not been
       caused by the Community industry's restructuring, and this argument was, for this
       reason, rejected.
 (39) The same exporter reiterated its argument that the injury suffered by the
       Community industry was caused by the partial shift to Hungary of one of the
       Community producer's operations.
 ---pagebreak---                                               14
      As no new evidence substantiating this allegation has been submitted, the findings
      set out in recital 71 of the provisional duty Regulation are confirmed.
(40) The allegation that the injury suffered is resulting from past anti-competitive
      practices, which had been put forward before the provisional duty Regulation, has
      been reiterated by a number of parties.
      The parties making these allegations did not provide any evidence in this respect,
      and it should be recalled that no complaint has been lodged with any competition
      authority within the Community. For this reason such an allegation could not be
      taken into account.
(41) In conclusion, as no new arguments were received in connection with the findings
      in recitals 67 to 74 of the provisional duty Regulation, these findings are
      confirmed.
                             VIII. COMMUNITY INTEREST
                                          A. General
(42) It should be recalled from recitals 75 et seq of the provisional duty Regulation that
      an appreciation of all the various interests, including the interests of the
      Community industry and users was made, and that the Commission provisionally
      concluded that there were no compelling reasons not to take action against the
      imports in question. Subsequently, a further examination of matters deemed
      relevant in analysing the issue of Community interest took place.
                                     B. Impact on users
       1. Introduction
(43) Several interested parties reiterated their arguments, presented in recital 77 to 80
       of the provisional duty Regulation, that anti-dumping measures would affect the
       situation of EC binder manufacturers.
       2. Information collection
 (44) The conclusions set out below are based on submissions received from a variety
       of interested users, twenty seven companies overall, the quantitative data existing
       or being meaningful for nine of these which represented 17% of the annual
 ---pagebreak---                                               15
     apparent Community consumption of RBM. The reliability of this data,-where
     possible, was verified during company visits.
     3. Industrial impact on the downstream industry
(45) In establishing the size of the downstream industry which could be affected by
     measures on RBM, the part of the stationery companies dealing with office
     products other than binders should be excluded. On the basis of the annual
     Community binder production and of the productivity ratios found in the
     submissions, it is considered that the employment in the Community binder
     industry amounts to 6000 employees.
(46) A to the structure of the binder industry, the existence of two categories of
     products, standard and custom made, was established. On the basis of the
     productivity level for these two categories, and on the market shares of the users
     concerned, it is considered that the custom-made binder business represents one
     third of the Community binder industry in volume and 50% of its total turnover.
(47) Some parties argued that anti-dumping measures on RBM would exclude the
     imported RBM from the Community market, so that the sources of supply would
     be reduced to the two Community producers. It has been further argued that, due
     to the large size of one of the two Community producers, the supply market could
     become a monopoly in the near future. It should be noted, however, that the
     difference in size of the two Community producers is limited and not such as to
     lead to the disappearance of one of them being likely. Moreover, no new evidence
     in respect of the first part of this argument was received. The findings set out in
     recital 78 of the provisional duty Regulation are therefore confirmed.
     4. Direct financial impact on the downstream industry
(48) First, it has been alleged that for certain particular types of binders, the RBM was
     the source of up to 30% of the manufacturing cost of a binder.
      In this respect, it was found that the mechanism is a major component of a
      finished binder, and that the number of rings and size have a strong influence on
      its proportion of the cost of the finished binder. Given this variety, it is considered
      that a meaningful analysis of the cost influence of the RBM could not be based on
      any particular model of binder, but should be done on a global basis for each
      company, taking into account the actual product mix of its sales.
 ---pagebreak---                                             16
     It was therefore considered that the total cost for the RBM supply for a* given
     company should be examined in the light of the total value of its binder sales. This
     resulted in a weighted average ratio of 10.8% ("cost ratio"), which was fairly
     homogeneous for the companies examined. Although differences existed between
     companies dedicated to the production of standard binders in comparison with
     others dedicated to custom-made production, no company showed, on average, a
     ratio higher than 13%.
                             •v
(49) As far as the possible price impact of the RBM on standard made products is
     concerned, one submission received after the final disclosure refers to a 14.4%
     cost ratio. This is allegedly derived from the fact that the price of a custom made
     binder is twice as high as the one of a standard made binder, and that the cost ratio
     for them should therefore be half of the one for standard made.
     This approach totally neglects the fact that these two categories of binders are not
     necessarily    manufactured     with the, same mechanisms. Special types of
     mechanisms, in small series, are expensive and used in custom-made binders. This
     means that both terms of the cost ratio are different, and that although the cost
     ratio for standard made binders is higher than the one for custom made binders, it
     is not twice as high. As explained in recital 48 above, no higher cost ratio than
      13% could be found. Furthermore, some companies are exclusively dedicated to
     standard made products.
(50) Secondly, and partly on the basis of the above-mentioned allegation on the cost
     ratio, it has been alleged that the imposition of anti-dumping measures would have
     a serious adverse impact on the financial situation of the binder manufacturers.
     These allegations concerning the foreseeable impact of measures have been
     examined in detail. As far as selling prices for RBM are concerned, it is likely that
     the Community industry, with a 35% market share, would not be able to increase
      its prices above a certain limited level, (which can be estimated below 10%),
     without risking to strengthen its current downward trend in respect of market
      share. In addition, imports from countries not concerned by this proceeding
      represent 9% of the RBM market, and it is expected that these producers will not
      be willing or able to command price increases. As for the imports from Malaysia,
      it should be recalled that the injury elimination level foreseen for this country is
      considerably lower than for the People's Republic of China. The market share of
 ---pagebreak---                                             17
     mechanisms with Chinese origin being 45%, it was established that even rf these
     mechanisms were to experience a 20% price increase at resale level and those
     originating in other countries than the People's Republic of China the price
     increases assumed in this paragraph, the average price increase on the market as a
     whole would be an estimated 12%.
     Consequently, in view of the average cost ratio established in recital 48, it is
     considered that the overall impact on the turnover likely to be experienced by the
     binder industry following the imposition of measures would be 12% of 10.8%, i.e.
     1.3%). Even in the unlikely event of a full reflection of the highest anti-dumping
     duty proposed in the RBM resale price , i.e. 39.4% on CIF or 29.9% at RBM
     resale level, an impact of not more than 3.2% on the binder producers' selling
     prices can be foreseen.
(51) It has also been argued that the increased costs for binders could not be reflected
     in price increases of the final product due to the binder offer exceeding the market
     demand, to the changes in the binder distribution and to the fear of reduction in
     demand.
     In the light of the fact that the average binder price increase which would take
     place at a retail or business customer level would be below 1% (see recital 50
     where ex-factory price increase for binders is estimated at 1.3%), it is considered
     that no significant contraction in demand is likely to be caused and that the
     impact, if any, on the situation of the consumers of the binders will be minimal. In
     addition, it should be noted that substitutes to binders which would be in such a
     competitive situation that they would replace them following the slightest price
     evolution do not appear to exist. Some companies in the binder business have
      even confirmed that no change of the pattern of consumption could be foreseen in
      the next 5 to 10 years.
      It is concluded, therefore, that neither the relatively strong competition amongst
      binder producers nor the emergence of substitute products within the EC are likely
      to prevent the binder producers from increasing their prices in line with their
      costs, in consideration in particular of the limited size of the increase needed to
      reflect the impact of the anti-dumping duties of the magnitude proposed.
 ---pagebreak---                                             18
     5. Competition from third countries
(52) Several interested parties reiterated their arguments, outlined in recital 79 of the
     provisional duty Regulation, that anti-dumping measures would affect EC binder
     manufacturers' competitive position vis-à-vis binder producers located in third
     countries. These exporters could benefit from lower mechanism costs and global
     supply policies of certain large standard binder distributors whose influence on the
     market is increasing. It was alleged that this could result in the Community
     downstream industry losing market share and thus being tempted to relocate its
     production in neighbouring countries. In addressing this allegation it should be
     recalled that the binder market can be divided into two segments, namely the
     custom-made and standard made binders.
       (a) custom-made products
(53) It should be stressed again that, for the part of the market which is business-to-
     business oriented, it is fundamental that producers are situated close to the
     customers, and have flexibility in production in order to meet the required demand
     and service. Moreover, for this type of product, the impact of the RBM on the
     final price can be lower than the calculated average established at recital 48. It
     should be stressed, therefore, that the issue of the competitive position for this
     segment of the market is mainly relevant in terms of the existence of imported
     standard products for later customisation. In this context, there are imports of
     finished polypropylene presentation products from the Far East, including the
     smallest binder models. As to the substitutability which could exist between these
     products and the cu"stom made binders, however, it should be stressed that a
     custom made binder is not simply a standard binder with a printed logo. Custom
     made binders indeed rely on a variety of different raw materials and assembling
     techniques used to produce a small number of totally individualised products. For
     public relations purposes, a switch from this particular custom-built product to a
     standard binder after the mere addition of a logo would require such an important
     price difference that such evolution is not likely to be caused by the effect of anti-
     dumping measures.
       (b) standard made products
(54) As far as the standard binder manufacturers in the Community are concerned, it
     has been alleged that their market was driven by the influence of binder
     distribution. This distribution is increasingly marked by large chains of
 ---pagebreak---                                             19
     superstores running supply policies taking advantage of the world lowest purchase
     price for comparable products, these policies being only limited by the
     transportation costs. In this respect, it was established that road transport costs
     over a normal distance within one Member State or between a neighbouring non-
     EC country and the Community would not be below 5% of the value of the
     product. Over a longer distance, between non-EC countries and the EC, if
     maritime transport had to be used, transport costs could reach 10% of the product
     value.
(55) As a consequence of the maximum cost ratio referred to at recital 49 above, it is
     considered that the foreseeable price impact on the standard made binder industry
     would be limited to 13% (standard made maximum cost ratio) times 12% (average
     price increase), equal to 1.6%.
     On this basis, the analysis should distinguish between competition from Norway,
     the CEEC, and Far Eastern countries.
           (b. 1) Competition from Norway
(56) It has been alleged that imports from Norway constituted the greatest current
     threat to the EC binder industry, as imports from this country were already
     significant and increasing.
     No complaint or substantiated evidence having been submitted in respect of unfair
     trading practices, it would seem reasonable to consider that the EC-binder industry
     has identical or similar ex-factory costs as their competitors in Norway. The
      Commission consider that the cost increase that the EC binder producers could
      experience would still allow them to be competitive, since the transport costs for
      the EC sales of their Norwegian competitors in this case would be at least three
      times higher (5%) than this foreseeable cost increase (1.6%).
            (b.2) Competition from the CEEC
(57) The Central and Eastern European Countries (CEEC) have been alleged to be in a
      competitive situation to build up a binder industry able to compete on the EC
      market.
      In this respect, it should be noted that until now the size of the binder industry in
      these countries remained small and the import statistics for office products show
      low imports. Nevertheless, neither the growth of this industry nor its comparative
 ---pagebreak---                                             20
     advantage in terms of labour costs can be denied. The reduction -in the
     manufacturing cost which can be obtained in these countries in comparison to the
     Community outweighs the necessary transportation costs to the Community
     market.
     However, it should be considered that the creation of an export-oriented binder
     industry in neighbouring countries would result from the relocation of EC
     producing operations. Although reference to business plans for a production shift
     to these countries has been made, the elements received by the Commission only
     consisted of the comparison of current labour costs and transportation costs. On
     this basis, even before the introduction of any anti-dumping measure on RBM,
     these comparisons would militate in favour of immediate relocation of the binder
     industry. This shows that, in taking a management decision to relocate production,
     a firm also weighs other important factors. In this context, the cost of shifting
     production facilities in themselves and, above all, the uncertainty linked with
     rapidly expanding countries have to be factored in.
     It is considered that in such decisions to shift production to the CEEC, the
     possible impact of a price increase on RBM, due to its limited amount of 1.6% on
     average, could only play a minor role, if any. Consequently, no compelling
     evidence has been received showing that the imposition of a duty on RBM would
     lead to the relocation of the binder industry in the CEEC and to an important surge
     of imports originating in these countries.
            (b.3) Competition from the Far East
(58) One exporter submitted information according to which finished binders from the
     Far East could be imported below their Community cost of production.
     Eurostat import statistics show that imports of plastic office products originating
      in these countries are relatively low and stable. Accordingly, nearly all binder
      manufacturers in the Community, small companies as well as important ones,
      minimise the competitive impact of these imports.
      It is therefore considered that the competitive situation between Far Eastern and
      EC binder producers described above is unlikely to be altered by the imposition of
      measures on the Community imports of RBM.
             (c) Conclusion on competition from third countries
(59) In conclusion, it could not be established that the imposition of anti-dumping
      measures on RBM would be such as to significantly affect the EC binder
 ---pagebreak---                                            21
     manufacturers* competitive situation vis à vis binder producers located outside the
     Community. This conclusion stands both in respect of custom made and standard
     made binders.
                          C. Impact on the Community industry
(60) Concerning the consequences for the Community industry of an absence of anti-
     dumping measures, it was established at the provisional stage (recital 76 of the
     provisional duty Regulation) that this would lead to a further worsening of the
     Community industry's financial situation. The recurrent losses since 1992 would
     continue despite the far-reaching restructuring already carried out.
     It should be added that the heavily depressed net equity situation and the amount
     of short term debt would become unsustainable. From a commercial point of view,
     any reduction in the product range offered by the Community industry in reaction
     to depressed prices would be no solution. Indeed, should Community producers be
     tempted to do so, they would lose one of their competitive advantages and,
     because of a dispersed customer industry, would not be able, to reach the high
     volumes in production and sales necessary in this type of industry. Industrially,
     the investments in automation have been both important and successful, resulting
     in a highly competitive industry at a world level. With the level of automation and
     integration reached, certain equipment such as metal treatment installations being
     unique in each company, it would not be sustainable to abandon certain product
     lines without worsening the situation of the remainder.
     For these reasons, and as a consequence of the unfair competition from the
     dumped imports, production in the Community would, within a short period of
     time, no longer have viable prospects and would cease altogether.
                                       D. Conclusion
(61) In the light of the above, the conclusions drawn by the Commission in the
     provisional duty Regulation concerning Community interest are confirmed.
     Indeed, having examined a wide variety of aspects and the various interests
     involved, no compelling reasons have come into light which would lead to the
     conclusion that adopting definitive measures would not be in the interest of the
     Community, in accordance with Article 21 of the basic anti-dumping Regulation.
 ---pagebreak---                                              22
                        IX. ANTI-DUMPING MEASURES
                                           A. General
(62) It should be recalled that the detailed calculations used to establish the injury
     elimination level at the provisional stage were based on the price level, per
     category of models with the same specific characteristics, (based on a weighted
     average cost of production including profit) of the Community industry's best
     selling models (60% by volume). This was then compared to the resale price of
     the imported products, or where appropriate to the CIF import price adjusted to
     customer delivered level, for each corresponding category. In order to ensure a fair
     comparison, only categories with the same basic characteristics were compared,
     and it was considered that for matching categories the duty should cover the
     difference between the calculated non-injurious price level and the actual selling
     prices of the imports into the Community. The per-category price increase thus
     established was then expressed as a percentage of the free-at-Community frontier
     price of the imported goods for each category. A single injury elimination level
     for each country subject to the proceeding was then established by calculating the
     weighted average of the per-category injury elimination level.
(63) In this regard, one importer claimed that the Commission, by using for the
     comparison between the dumping margin and the injury elimination level an
     approach based on an average, failed to examine the different situations prevailing
     in the different market segments. It asked the Commission to compare, for each
      segment of the market (e.g. 2-rings mechanisms), the injury elimination level
     found with the dumping margin, and to retain only the lesser margin per segment
      in the calculation of the final average of a single duty for all segments.
      It has to be noted in this respect that the calculation method used in this case
      complies with the requirements of Article 9 (4) of the basic anti-dumping
      Regulation and with previous practice concerning the calculation of a duty lower
      than the dumping margin in cases where such a duty is adequate to remove the
      injury to the Community industry. This approach is justified by the fact that the
      present anti-dumping investigation covers sales of one like product within which
      various categories and models have been found to compete with each other.
 ---pagebreak---                                             23
(64) Under these conditions, the injury elimination level methodology as set-out in
     recitals 82 to 84 of the provisional duty Regulation are confirmed.
                            B. Level and form of the duties
(65) Based on the above conclusions on dumping, injury, causal link and Community
     interest, it was examined what form and level the anti-dumping measures would
     have to take to remove the trade-distorting effects of injurious dumping and to
     restore fair competitive conditions on the Community RBM market.
(66) Since the level of prices at which the injurious effects of the imports would be
     removed was lower that the dumping margin of both exporting countries
     concerned, the injury elimination level was used in order the determine the level
     of measures.
(67) The granting of individual treatment to World Wide Stationery was found to affect
     the provisional findings. The methodology described above has been applied to
     calculate the individual injury elimination level of this company, for which a
     32.5% injury elimination level was established.
(68) The reduced injury elimination level for World Wide Stationery resulted in an
     increase, from 35.4% to 39.4%, of the injury elimination level for all other
     exporters from the People's Republic of China .
(69) On this basis, definitive anti-dumping duties, in the form of ad valorem duties,
     would be imposed as follows:
                                                      Rate of duty
     - Malaysia:                                      10,5%
     - People's Republic of China:
       World Wide Stationary:                         32.5%
       Residual duty for all other companies:         39.4%
              C. Form of the duty for mechanisms with 17 and 23 rings
(70) It has been however submitted that the imposition of an ad valorem duty on 17
     and 23 ring mechanisms, at the same rate as the one applicable to other
 ---pagebreak---                                              24
     mechanisms, was inappropriate in the light of the difference in price between
     these two categories.
     In this context, it should be noted that the import price in respect of mechanisms
     with 17 or 23 rings is substantially higher than the average import price for all
     mechanisms. In these circumstances, in the light of the exclusive nature of some
     of the uses of these mechanisms and the ease with which these products can be
     identified, it is considered that, on balance, in calculating the injury elimination
     level, due consideration should be given to the particularly high price of
     mechanisms with 17 and 23 rings and to the intensity of competition between
     certain segments of the market by ensuring that it is not affected by
     disproportionate price discrepancies. This could be achieved by ensuring that 17
     and 23 ring mechanisms are imported above a certain price level adequate, as for
     other RBM, to remove the injury caused by the dumped imports. In these
     circumstances, the setting up of measures in a form different from an ad valorem
     duty was considered appropriate. Based on the price comparisons which were
     carried out (see recital 62) it is considered that, by ensuring that the CIF import
     price for mechanisms with 17 or 23 ring be raised at the minimum of 325 ECU per
      1000 pieces, the requirements mentioned above are fulfilled.
                                     X. UNDERTAKING
(71) In accordance with Article 8 (2) of the basic anti-dumping Regulation, the
     deadline for the representations following the final disclosure was also applicable
     to possible undertaking offers. The Chinese exporter which had been granted an
      individual treatment, sent a letter shortly after this deadline indicating its
     willingness to offer an undertaking.
      In this respect, it is considered that, due to the high number of RBM types
      exported by the company concerned, an undertaking in this case would be
      virtually impossible to set up and to monitor. No formal undertaking offer from
      the part of the exporter was finally received.
                   XI. COLLECTION OF THE PROVISIONAL DUTIES
(72) In view of the magnitude of the dumping margins found for the exporting
      producers and countries, and in light of the seriousness of the injury caused to the
 ---pagebreak---                                                  25
          Community industry, it is considered necessary that the amounts secured by way
          of provisional anti-dumping duties for transactions involving the product
          concerned should be definitively collected at the level of the definitive duties.
   (73) As regards World Wide Stationery, the collection of provisional anti-dumping
          duties should be limited to the rate of duty definitively imposed, i.e. 32.5%.
   (74) Where it could be shown, to the satisfaction of customs authorities, that the
          securities were made in relation to 17 or 23 ring mechanisms, the collection of the
          amounts secured should be limited to the duty definitively imposed for these types
          of RBM, if lower than the one secured,
HAS ADOPTED THIS REGULATION:
                                               Article I
1.     Definitive anti-dumping duties are hereby imposed on imports of certain ring binder
mechanisms falling within CN code ex 8305 10 00 originating in Malaysia and the People's
Republic of China.
For the purpose of this Regulation, ring binder mechanisms consist of two rectangular steel
sheets or wires with at least four half rings made of steel wire fixed on it and which are
kept together by a steel cover. They can be opened either by pulling the half rings or with
a small steel-made trigger mechanism fixed to the ring binder mechanism.
2.     The rate of duty applicable to the net free-at-Community-frontier price, before duty,
shall be as follows:
   a) for mechanisms with 17 and 23 rings (Taric code: 8305 10 00 20) originating in the
   People's Republic of China and Malaysia, the amount of duty shall be equal to the
   difference between the minimum import price of ECU 325 per 1000 pieces and the free
   at Community-frontier not cleared through customs price.
   b) for mechanisms other than those with 17 or 23 rings (Taric code: 8305 10 00 10)
                                       Rate of duty         Taric additional code
      Malaysia                            10.5%
 ---pagebreak---                                                  26
      People's Republic of China:
      World Wide Stationary                32.5%                     8934
      all other companies                  39.4%                     8900
3.     Unless otherwise specified, the provisions in force concerning customs duties shall
apply.
                                             Article 2
1.     The amounts secured by way of provisional anti-dumping duty under Regulation
(EC) No 1465/96 shall be definitively collected:
a) For the amounts secured for which it can be established, to the satisfaction of the
customs authorities, that they related to imports of mechanisms with 17 or 23 rings, the
amount collected shall be equal to the one secured, but limited to an amount calculated in
accordance with the provisions of Article 1 (2) (a), if lower that the one secured. If it can
not be established that the amounts secured related to mechanisms with 17 or 23 rings, b)
shall apply.
b) For the amounts secured in respect of mechanisms other than those with 17 and 23 rings,
the collection shall be at the duty rate definitively imposed if lower or equal to the one
secured. In the other case, the collection shall be limited to the one secured.
2.     Amounts secured in excess of the definitive rate of anti-dumping duty 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,
                                                            For the Council
 ---pagebreak---  ---pagebreak---                                                                   ISSN 0254-1475
                                                           COM(96) 690 final
                                              DOCUMENTS
EN                                                                       02 11
                                    Catalogue number : CB-CO-96-701-EN-C
                                                             ISBN 92-78-13716-2
Office for Official Publications of the European Communities
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