Commission Regulation (EC) No 145/2005 of 28 January 2005 imposing a provisional anti-dumping duty on imports of barium carbonate originating in the People's Republic of China

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

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 (1) (the basic Regulation) and in particular Article 7 thereof,

After consulting the Advisory Committee,

Whereas:

(1) On 30 April 2004, the Commission announced, by a notice (notice of initiation) published in the Official Journal of the European Union (2), the initiation of an anti-dumping proceeding with regard to imports into the Community of barium carbonate originating in the People's Republic of China (PRC or country concerned).

(2) The proceeding was initiated as a result of a complaint lodged in March 2004 by Solvay Barium Strontium GmbH (the complainant), the sole producer of barium carbonate in the Community representing 100 % of the Community production. The complaint contained evidence of dumping of the said product and of material injury resulting therefrom, which was considered sufficient to justify the initiation of a proceeding.

(3) The Commission officially advised the complainant, the exporting producers, importers, suppliers and users known to be concerned, and representatives of the PRC, of the initiation of the proceeding. Interested parties were given an opportunity to make their views known in writing and to request a hearing within the time limit set in the notice of initiation.

(4) The complainant producer, exporting producers, importers, users and user associations made their views known. All interested parties, who so requested and showed that there were particular reasons why they should be heard, were granted a hearing.

(5) In order to allow exporting producers in the PRC to submit a claim for market economy treatment (MET) or individual treatment (IT), if they so wished, the Commission sent MET and IT claim forms to the Chinese companies known to be concerned. Five companies requested MET pursuant to Article 2(7) of the basic Regulation or IT should the investigation establish that they did not meet the conditions for MET.

(6) In the notice of initiation, the Commission indicated that in view of the apparent large number of exporters/producers and importers sampling may be applied in this investigation. However, given the lower than expected number of exporting producers in the PRC and importers and users in the Community, which indicated their willingness to cooperate, it was decided that sampling was not necessary.

(7) The Commission sent questionnaires to all parties known to be concerned and to all the other companies that made themselves known within the deadlines set out in the notice of initiation. Replies were received from the complainant Community producer, five unrelated importers, one raw material supplier, six users, one association of users and five exporting producers in the PRC.

(10) The investigation of dumping and injury covered the period from 1 January 2003 to 31 December 2003 (IP). The examination of trends relevant for the assessment of injury covered the period from January 2000 to the end of the IP (period considered).

(11) The product concerned is certain barium carbonate with a strontium content of more than 0,07 % by weight and a sulphur content of more than 0,0015 % by weight, whether in powder, pressed granular or calcined granular form, originating in the PRC, falling within CN code ex 2836 60 00 .

(12) No differences were found between the product concerned and the barium carbonate produced and sold on the domestic market in the PRC and the United States of America (USA), which served as an analogue country for the purpose of establishing the normal value with respect to imports from the PRC. Indeed, barium carbonate produced and sold in the USA has the same basic physical and chemical characteristics and uses compared with that exported from the PRC to the Community. Likewise, no differences were found between the product concerned and the barium carbonate produced by the Community industry and sold on the Community market. They both share the same physical and chemical characteristics and uses. Consequently, barium carbonate produced and sold on the domestic market of the PRC and barium carbonate produced and sold on the domestic market of the analogue country, as well as barium carbonate produced and sold in the Community by the Community industry have the same basic physical and chemical characteristics and uses. It is therefore concluded that all types of barium carbonate are considered to be alike within the meaning of Article 1(4) of the basic Regulation.

(13) In anti-dumping investigations concerning imports originating in the PRC, normal value shall be determined in accordance with paragraphs 1 to 6 of Article 2(7)(b) of the basic Regulation for those producers which were found to meet the criteria laid down in Article 2(7)(c) of the basic Regulation.

(15) Five exporting producers in the PRC requested MET pursuant to Article 2(7)(b) of the basic Regulation and replied to the MET claim form for exporting producers.

(16) The request of two companies has been rejected on the basis of a first analysis of the MET claim form which failed to show that all the criteria were met. In particular these companies, which were fully or predominantly State owned, and had a board of directors entirely or predominantly consisting of State nominated directors, could not demonstrate that there was no significant state interference in their business decisions. For the remaining three companies, the Commission sought and verified at the premises of these companies all information submitted in the MET applications and deemed necessary.

(19) The companies concerned were given an opportunity to comment on the above findings.

(20) As far as company 2 is concerned, the shareholders of its related company could not be identified and it could not be established who ultimately controlled this company. Therefore, significant State interference could not be excluded. Although the company contested this fact, it could not provide any information or evidence which would have shown that it was mainly controlled by private entrepreneurs and free from significant State interference. It was therefore concluded that the criteria laid down in Article 2(7)(c) indent 1 of the basic Regulation was not fulfilled.

(21) For the same company, the investigation revealed significant deficiencies in the audited accounts. Thus, the company's own auditors made reservations with regard to, amongst others, the booked sales figures, assets valuation and depreciation. However, no corrections were made in order to rectify the shortcomings identified by the auditors and no explanations could be given by the company as to why so far no account was taken of the reservations expressed by the auditors. Given these shortcomings, it would not have been possible to make a reliable dumping calculation on this basis. Although the company contested these conclusions, it did not provide any reasonable explanation why its accounts would be reliable despite these deficiencies. In view of the elements set out above which put into question the reliability of the accounts and that the problems identified by the auditors were not corrected, it is concluded that the criterion set out under Article 2(7)(c) indent 2 of the basic Regulation is not met.

(22) Finally, as far as the acquisition of company 2's assets is concerned, the company could not explain under which conditions some of the company's assets were transferred from the collectively-owned pre-existing company. The Commission therefore concluded that the conditions of Article 2(7)(c) indent 3 of the basic Regulation were not met. Company 2 disagreed with these conclusions, but did not provide any information or evidence with regard to the transfer of assets which would have shown that there are no significant distortions from the former non-market economy regime. The claim made by company 2 was therefore unfounded and was rejected.

(23) The Advisory Committee was consulted and the parties directly concerned were informed accordingly. The Community industry was given the opportunity to comment, and did not oppose to the MET determination.

(24) Further to Article 2(7)(a) of the basic Regulation, a country-wide duty, if any, is established for countries falling under Article 2(7) of the basic Regulation, except in those cases where companies are able to demonstrate, in accordance with Article 9(5) of the basic Regulation, that (a) they are free to repatriate capital and profits; (b) their export prices and quantities, as well as the conditions and terms of the sales are freely determined; (c) the majority of shares belong to private persons. State officials in the board of Directors or holding key management positions are either a minority or it must be demonstrated that the company is nonetheless sufficiently independent from State interference; (d) exchange rate conversions are carried out at market rates, and (e) any State interference is not such as to permit circumvention of measures if exporters are given different rates of duty.

(25) The three exporting producers to which MET was not granted also claimed individual treatment. Therefore, the Commission examined whether these three exporting producers demonstrated that they are complying with the criteria set out in Article 9(5) of the basic Regulation.

(26) Two companies (company 1 and 3) were found to be fully or predominately State owned and had a board of directors consisting fully or entirely of State nominated directors. These companies could not demonstrate that they were sufficiently independent from State interference and consequently did not meet the conditions set in Article 9(5)(c) of the basic Regulation.

(27) Although the third exporting producer (company 2) was partly privately owned, it could not demonstrate who ultimately controlled it and significant State interference could therefore not be excluded. As a consequence, the company was not able to demonstrate that it met criterion 9(5)(c) of the basic Regulation.

(28) Furthermore, for all three companies, it was found that there is a risk of circumvention of the measures if these exporters would be given an individual duty rate. This risk results partly from the above-mentioned State influence in the operation of two of the companies, and the fact that the other exporter could not demonstrate the absence of significant State influence either. Moreover, given the commodity nature of the product concerned, which cannot be identified as having been produced by a particular producer, the risk of circumvention of measures by way of exporting via a company with a lower duty was also deemed significant. The companies therefore did not meet the conditions set in Article 9(5)(e) of the basic Regulation.

(29) Consequently, none of the three exporting producers met the conditions set in Article 9(5) of the basic Regulation. It was therefore concluded that IT should not be granted to any of the exporting producers to which MET was not granted.

(30) Pursuant to Article 2(7)(a) of the basic Regulation, normal value for the exporting producers not granted MET has to be established on the basis of the prices or constructed value in a market economy third country (analogue country).

(31) In the notice of initiation, the USA was envisaged as an appropriate market economy third country for the purpose of establishing normal value for the PRC. Interested parties were invited to comment on this choice.

(32) Three exporting producers contested this choice claiming that the level of economic development, the manufacturing process and the access to raw materials were different in the USA and the PRC. Furthermore, it was argued that the level of competition in the USA was low given that there was only one barium carbonate producer and that the domestic market was protected by anti-dumping duties. South Korea, Russia and India were proposed as alternative analogue countries.

(33) The Commission sought cooperation from other potential analogue countries such as India, Japan and Brazil. However, none of the producers in these countries was willing to cooperate.

(34) In any case, the Commission concluded that South Korea was not an appropriate analogue country because it had no domestic source of barite, the most important raw material, and only an insignificant production of barium carbonate. Furthermore, the Commission rejected Russia as an appropriate analogue country because the barium carbonate produced in Russia was of a significantly lower quality and therefore not comparable to the product produced in the PRC and the Community. The investigation revealed, also that the domestic market in Brazil was small and that the level of protection was higher than in the USA. Brazil was therefore not considered as an appropriate analogue country. Furthermore, no evidence was available indicating that any of the countries proposed as an alternative analogue country was more suitable than the USA.

(35) With regard to the USA, it was found that the production volume was substantial and representative with regard to Chinese exports of barium carbonate.

(36) As far as the level of economic development and the different production processes are concerned it was considered that there might indeed be some differences. USA is a highly industrialised economy and the producer in the USA employed a more advanced and more efficient production method than that used in the PRC. However, it should be noted that even if these differences would affect normal value, they should normally result in a lower normal value in the USA and thus be to the advantage of the Chinese exporting producers. Furthermore, it is recalled that, if necessary, appropriate adjustment can be made. In any case, although local variations of the production processes cannot be excluded, it has not been demonstrated that in any particular country other than the USA the production process would be more comparable to the one used in the PRC.

(37) Regarding the competition on the domestic market of the USA, the USA producer was subject to competition from imports from the PRC, Germany and Mexico. Imports of these countries represented approximately 30 % of the market, which was considered substantial. It was therefore concluded that there was a fair level of competition in the USA.

(38) As far as the access to raw materials is concerned, it was found that the USA was, together with the PRC, one of the largest barite producers and had substantial barite reserves. It was therefore concluded that the access to the raw material in terms of availability was comparable in the USA and in the PRC.

(39) In view of the above, it was provisionally concluded that the United States constitutes an appropriate analogue country in accordance with Article 2(7) of the basic Regulation.

(40) Pursuant to Article 2(7)(a) of the basic Regulation, normal value for the exporting producers not granted MET was established on the basis of verified information received from the producer in the analogue country with regard to domestic costs and sales of the like product in the USA market for comparable product types.

(41) Normal value was established by using the methodology outlined in recitals 43 to 47 and 53 to 59. Domestic sales in the USA were representative, albeit certain product types were not sold in the ordinary course of trade, i.e. were sold at losses. For these product types, normal value was constructed in accordance with Article 2(3) and 2(6) of the basic Regulation, by adding a reasonable amount of selling, general and administrative (SG&A) expenses and profit margin to the cost of manufacturing. Since domestic sales of the product concerned were representative, the company's SG&A were considered reliable and were used. As far as the profit margin is concerned, the company's own profit margin realised for domestic sales of the product concerned could not be used because these sales were overall made at a loss. Since no other producer in the US cooperated, the Commission used the profit margin applicable to the production and sales of the same general category of products in accordance with Article 2(6)(b) of the basic Regulation.

(42) For all other product types, normal value was established as the weighted average domestic sales price to unrelated customers by the cooperating producer in the USA, adjusted as described below.

(43) As far as the determination of normal value is concerned, the Commission first established, for each cooperating exporting producer, whether its total domestic sales of barium carbonate were representative in comparison with its total export sales to the Community. In accordance with Article 2(2) of the basic Regulation, domestic sales were considered representative when the total volume of such sales represented at least 5 % of the total export sales volume of the producer to the Community. On this basis, for both exporting producers overall domestic sales of the product concerned during the IP were made in representative quantities.

(44) The Commission subsequently identified those types of the product concerned sold domestically that were identical or directly comparable with the types sold for export to the Community.

(45) For each type sold by the exporting producers on their domestic markets and found to be directly comparable with the type of barium carbonate sold for export to the Community, it was established whether domestic sales were sufficiently representative for the purposes of Article 2(2) of the basic Regulation. Domestic sales of a particular type of barium carbonate were considered sufficiently representative when the total domestic sales volume of that type during the IP represented 5 % or more of the total sales volume of the comparable type of barium carbonate exported to the Community. As a result of this analysis, all product types but one, were sold in representative quantities.

(46) The Commission subsequently examined whether the domestic sales of each type of barium carbonate, sold domestically in representative quantities could be regarded as having been made in the ordinary course of trade in accordance with Article 2(4) of the basic Regulation, by establishing the proportion of profitable sales to independent customers of the barium carbonate type in question.

(47) Domestic sales transactions were considered profitable where the unit price of a specific product type was equal to or above the cost of production. Cost of production for each product type sold on the domestic market during the IP was therefore determined.

(48) One exporting producer claimed an adjustment for start-up costs on the basis that production at normal capacity utilisation rates only started after the beginning of the IP. The company started producing barium carbonate only shortly before the beginning of the IP. The company argued that after it bought its production lines it invested substantial amounts in repairs before test production and finally normal production started. It was claimed that the average start-up phase for both production lines was 11 months and that normal production would have started eight months after beginning of the IP.