Council Regulation (EC) No 1095/2005 of 12 July 2005 imposing a definitive anti-dumping duty on imports of bicycles originating in Vietnam, and amending Regulation (EC) No 1524/2000 imposing a definitive anti-dumping duty on imports of bicycles originating in the People's Republic of China

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 (1) (the basic Regulation) and in particular Articles 9 and 11(3) thereof,

Having regard to the proposal submitted by the Commission after consulting the Advisory Committee,

Whereas:

(1) The Council, by Regulation (EEC) No 2474/93 (2) imposed a definitive anti-dumping duty of 30,6 % on imports of bicycles originating in the People's Republic of China (the original measures). Following an anti-circumvention investigation, this duty was extended by Council Regulation (EC) No 71/97 (3) to imports of certain bicycle parts originating in the People's Republic of China (PRC).

(2) Following an expiry review pursuant to Article 11(2) of the basic Regulation (the previous investigation), the Council, by Regulation (EC) No 1524/2000 (4), decided that the above mentioned measures should be maintained.

(3) On 29 April 2004, the Commission announced, by a notice published in the Official Journal of the European Union (5), the initiation of an anti-dumping proceeding with regard to imports into the Community of bicycles originating in Vietnam.

(4) On the same day, pursuant to Article 11(3) of the basic Regulation, the Commission announced by a notice published in the Official Journal of the European Union (6), the initiation of an interim review of the anti-dumping measures applicable to imports into the Community of bicycles originating in the PRC.

(5) The anti-dumping investigations were initiated following a complaint and a request lodged on 15 March 2004 by the European Bicycles Manufacturers Association (EBMA or the applicant), acting on behalf of producers representing a major proportion, in this case more than 35 % of the total Community production of bicycles. The complaint contained evidence of dumping of the said product and of material injury resulting thereof, which was considered sufficient to justify the initiation of the proceeding concerning imports of bicycles originating in Vietnam. The request contained sufficient evidence justifying the initiation of an interim review of the measures applicable to imports of bicycles originating in the PRC.

(6) The Commission officially advised the applicant, the Community producers mentioned in the complaint and the request, any other known Community producers, the exporting producers, importers as well as the associations known to be concerned, and the authorities of the PRC and Vietnam, of the initiation of the investigations. Interested parties were given an opportunity to make their views known in writing and to request a hearing within the time-limits set in the notices of initiation.

(7) A number of Community producers represented by the applicant, other cooperating Community producers, exporting producers, importers, suppliers and user associations made their views known. All interested parties who so requested were granted a hearing.

(8) In view of the large number of exporting producers, Community producers and importers involved in the investigations, the application of sampling techniques was envisaged in both notices of initiation, in accordance with Article 17 of the basic Regulation.

(9) In order to enable the Commission to decide whether sampling would be necessary and, if so, to select a sample, exporting producers and representatives acting on their behalf, Community producers and importers were requested to make themselves known and to provide information as specified in the notices of initiation. The Commission also contacted known associations of exporting producers and the authorities of the PRC and Vietnam. These parties raised no objections to the use of sampling.

(10) In total, 21 exporters/producers in the PRC, 6 exporters/producers in Vietnam, 54 Community producers and 6 importers replied to the sampling questionnaire within the time-limits and provided the requested information.

(11) From the 21 Chinese exporting producers that responded to the sampling return, only 17 reported exports of bicycles to the Community during the investigation period. Given the limited number of Vietnamese exporting producers which indicated their willingness to cooperate, it was decided that sampling was not necessary in respect of Vietnamese exporting producers.

(12) The selection of the sample was made in consultation with, and with the consent of the Chinese cooperating exporting producers and the authorities of the PRC. The sample of the exporting producers was established on the basis of the largest representative volume of exports to the Community, which could reasonably be investigated within the time available and on whether the companies intended to apply for Market Economy Treatment (MET). Only companies that intended to apply for MET were included in the sample, since in an economy in transition, normal value for other companies is established on the basis of prices or constructed normal value of an analogue third country. On this basis, a representative sample of four exporting producers was selected. The four sampled companies represented, according to the replies to the sampling exercise, 16 % of the Chinese exports of the product concerned to the Community and 35 % of all cooperating producers' exports.

(13) As for the Community producers, in accordance with Article 17(1) of the basic Regulation, the sample was selected after consultation of the relevant association and with their consent on the basis of the largest representative volume of sales and production within the Community. As a result, eight Community producers were selected in the sample. The Commission sent questionnaires to the eight companies selected, which submitted complete replies.

(14) Given the limited number of importers who replied to the sampling questionnaire and indicated their willingness to cooperate (six importers), it was decided that sampling was not necessary. However, subsequently none of the importers cooperated in the review investigation and declined to return a complete questionnaire reply. Concerning the investigation of imports from Vietnam, three importers cooperated by submitting complete questionnaire replies.

(17) The investigation of dumping and injury in both investigations covered the period from 1 April 2003 to 31 March 2004 (the IP). The examination of trends in the context of the analysis of injury covered the period from January 2000 to the end of the IP (the period considered).

(18) Some interested parties raised the fact that the investigation covered the situation in the EU of fifteen Member States (EU-15) while measures would be imposed on imports into the enlarged EU of twenty-five Member States. In regard to imports from Vietnam, it must be noted that imports into the ten new Member States of the EU (EU-10) were negligible during the IP. Therefore, it was considered that any impact that these imports might have had on the injury or dumping situation would also be negligible. In regard to imports from the PRC, there were significant quantities of imports into the EU-10 in the IP at prices that were lower than those into the EU-15. In these circumstances, it is considered that the findings of dumping and the conclusion that there is a likelihood of continuation of dumping if measures were allowed to expire, would likely be reinforced by the level and prices of imports from the PRC into the EU-10. As there is significant production of bicycles in the EU-10, it was also considered that the impact of the level and prices of imports from the PRC would be such as to confirm the existence of injury to the broader Community industry, i.e. including producers in the EU-10. In these circumstances, it is considered that enlargement would not automatically vary the dumping and injury parameters which form the basis of the proposed measures.

(19) The product concerned is the same as that covered by the original and previous investigations, namely bicycles and other cycles (including delivery tricycles), not motorised, currently classifiable within CN codes 8712 00 10 , 8712 00 30 and 8712 00 80 .

(21) A similar categorisation was used in the investigation which led to the original measures in the PRC and in the previous investigation covering the PRC. However, due to the development of new bicycles types, the classification had to be slightly amended. For instance, in the present investigations, the category B contains the types hybrid and VTC, which are further developments of previously existing types.

(22) The investigations confirmed that all types of bicycles as defined above have the same basic physical and technical characteristics. Furthermore, they are sold through similar distribution channels such as specialised retailers, sport chains and mass merchandisers on the Community market. The basic application and use of bicycles being identical, they are largely interchangeable and models from different categories therefore compete with each other. On this basis, it was concluded that all the categories form one single product.

(23) The investigations also showed that bicycles produced and sold by the Community industry on the Community market, those produced and sold by Mexican producers on the Mexican market and those imported into the Community market originating in the PRC and Vietnam have the same basic physical and technical characteristics and the same uses. They are therefore considered to be alike within the meaning of Article 1(4) of the basic Regulation.

(24) One interested party claimed that, in the framework of the review investigation, the extension of the scope of the product concerned by Council Regulation (EC) No 71/97 of 10 January 1997, as a result of an anti-circumvention investigation pursuant to Article 13 of the basic Regulation should be limited to those parts which have a significant potential to be involved in circumvention operations, such as frames and forks. In this respect, it should be noted that the present review was initiated in order to examine whether the existing measures are no longer sufficient to counteract the injurious dumping. The scope of the product concerned, i.e. bicycles from the PRC, as extended by the above mentioned regulation, remains therefore the same and a possible review of the anti-circumvention measures should be carried out in the context of a separate review investigation, if the conditions therefore are met.

(25) During the investigation one importer in the Community claimed that unicycles should be exempted from the scope of the product concerned because they allegedly have different basic physical and technical characteristics and different uses. The Commission investigated the claim and found that basic physical and technical differences clearly exist. Unlike bicycles, unicycles have no second wheel, no handlebar for steering and no breaking system. In addition, there is a clear dividing line between the uses of unicycles and other cycles. Unicycles are normally not used for transportation or sport, they are normally considered and used for acrobatic purposes. It was therefore concluded that the claim was duly justified and that the definition of the product concerned should be adjusted accordingly.

(26) Pursuant to Article 2(7)(b) of the basic Regulation, in anti-dumping investigations concerning imports originating in the PRC and/or Vietnam, normal value is to be established in accordance with paragraphs 1 to 6 of the said Article for those exporting producers which can show that they meet the criteria laid down in Article 2(7)(c) of that Regulation, i.e. that market economy conditions prevail in respect of the manufacture and sale of the like product.

(29) One of these companies (Komda Industrial Co. Ltd), at a later stage in the investigation, withdrew its request for MET but maintained its request for individual treatment pursuant to Article 9(5) of the basic Regulation. In the case of another company (Olympic Pro Manufacturing Co., Ltd) it was found that it had no exports of the product concerned into the Community during the IP. Therefore, its request for MET and individual treatment became irrelevant.

(30) The claims of the fifteen remaining companies were analysed on the basis of the five criteria set out in Article 2(7)(c) of the basic Regulation.

(31) For all exporting producers of bicycles in the PRC it was established that they were subject to an export quota system, in accordance with a Regulation of export permit management of 20.12.2001 approved by the Ministry of Foreign Trade and Economic Cooperation (MOFTEC) and the customs authorities. The allocation of the quotas was made by a Committee comprised of members of the MOFTEC, the relative Chamber of Commerce and the Association of Foreign Funded Enterprises on the basis of criteria set up by the MOFTEC. The system also included the setting of minimum export prices per product type and the control of prices and quantities of the exporter sales contract by the government, before an export licence could be issued.

(32) In view of the above, the companies requesting MET were not able to demonstrate that their decisions regarding sale prices and quantities were taken in response to market signals and without significant State interference, as required by the first criterion of Article 2(7)(c) of the basic Regulation. Consequently, after consulting the Advisory Committee, it was decided not to grant MET to the applicant companies, since they did not meet the criteria set in Article 2(7)(c) of the basic Regulation.

(33) Certain exporting producers and the China Chamber of Commerce for Import and Export of Machinery and Electronic products (CCCME) argued that the export licence scheme cannot be considered to affect the exporters' determination of export quantities and prices and are not subject to significant State interference within the meaning of Article 2(7)(c) of the basic Regulation. In this respect, it should be firstly noted that the export licence scheme restricts the companies to export bicycles beyond a maximum allowed quantity and below the minimum prices set by the State. This restriction indicates clearly that they are not free to determine their export activities without significant State interference. Indeed, they are obliged to tender for an annual quantity which may be accepted as such, or modified on the basis of unspecified grounds or even be rejected by the above mentioned Committee. Furthermore, a company with less than 5 000 bicycle exports in the previous year can be totally excluded from the tender procedures, leaving thus to the absolute discretion of that Committee the continuation of the company's export activities. Moreover, the quantities and prices are closely monitored by the State, involving MOFTEC and the customs authorities, via the validation of the actual export sales contracts, on the basis of which the export licence can be issued. This is considered to be an undeniable State interference in the company's business decisions within the meaning of Article 2(7)(c) of the basic Regulation. On this basis, the argument was rejected.

(34) It was found that five of the companies concerned were situated in a so-called Industrial Zones (IZ) and one of the companies was situated in a so-called Export Processing Zone (EPZ).

(35) Regarding companies situated in an IZ, it was established that the Government Decree 24/2000ND-CP of 31 July 2000 implementing the Law on Foreign Investment of Vietnam, provided for a general obligation for companies subject to this law to export at least 80 % of their production (export obligation) in order to obtain an investment licence. It was also found that the export obligation was included in the investment licences of all five companies situated in an IZ.

(36) Moreover, the investigation showed that the investment licence of the company situated in an EPZ did not contain the export obligation referred to above.

(37) The five companies who had the export obligation included in their investment licences alleged that due to a subsequent change in the applicable Vietnamese legislation which was implemented by Government decree 27/2003ND-CP (amending decree) the export obligation ceased to exist after 7 May 2003.

(38) In this regard, it is to be noted that according to the amending decree, the export obligation can only be removed under the condition that other compelling requirements included in the amending decree are met. Therefore, the amending decree did not remove the export obligation but rather amended the requirements which the companies needed to meet for the annulment of their export obligation.

(39) The companies further alleged that they would have been entitled to have their export obligation removed from their investment licences had they complied with the supplemental conditions listed in the amending decree. However, according to the applicable legislation, the investor first has to request from the investment licence issuing authority an amendment of its licence and, subsequently, the investment licence issuing authority shall amend the investment licence of the investor so that the investor can enjoy the repeal of the export obligation.

(40) The investment licence issuing authorities had not repealed the export obligation in the investment licences of any of the five companies at any time during the IP. Therefore, the companies also failed to demonstrate that they would have complied with the additional conditions.

(41) The same companies also alleged that even if the export obligation were to be considered to be in force during the IP, the companies' decisions were, nevertheless, made in response to market signals. However, not only was this export obligation in place during the IP but, moreover, this export obligation was included in the investment licences and in the articles of association of all five companies throughout the investigation period. Consequently, it is concluded that the export obligation has to be considered as a significant State interference of such a nature as to effectively preventing the companies from making their decisions according to market signals.

(42) It was also concluded that the company, for which it was found that neither the investment licence nor its articles of association contained the said export obligation, was free to sell the product concerned both on the domestic and on the export market and was not subject to significant State interference.

(43) Furthermore, it has to be mentioned that in the case of four companies of the five companies referred to in recital 34 above subject to the export obligation, it could not be concluded that they had one clear set of accounting records independently audited in line with international accounting standards and applied for all purposes. It was found that a non-transparent invoicing arrangement was in place with regard to the invoicing of the product concerned to the Community. This arrangement involved intermediary companies in tax havens and other locations outside Vietnam and it did not allow an audit trail to be followed. As a result, the accounting records of the companies in Vietnam did not represent faithfully the underlying export sales transactions.