Council Regulation (EC) No 1371/2005 of 19 August 2005 imposing a definitive anti-dumping duty on imports of grain oriented flat-rolled products of silicon-electrical steel originating in the United States of America and Russia and repealing Regulation (EC) No 151/2003 imposing a definitive anti-dumping duty on imports of certain grain oriented electrical sheets originating in Russia

• (149) It has been examined whether, despite the conclusions on dumping, injury and causation, compelling reasons existed which would lead to the conclusion that it is not in the Community interest to adopt any measures in this particular case. For this purpose, and pursuant to Article 21(1) of the basic Regulation, the likely impact of the imposition and non-imposition of measures for all parties concerned in the investigation was considered.

Interest of the Community industry

• (150) The injury analysis has demonstrated that under fair trade circumstances the Community industry is viable and profitable and the industry has also invested in order to stay competitive. This was the case in the years 2001 and 2002, when the Community industry also benefited from the anti-dumping measures in force against large GOES from Russia, and the level of the dumped imports concerned was not yet as significant as it was during the IP.

• (151) It is also recalled that this industry has undergone a major restructuring programme in the Community in 1999. The merging of the three complainants at that time was intended to create a larger entity which could compete more effectively and increase investments.

• (152) As from the year 2002, the continuous increase of low priced dumped imports caused a general price depression on the Community market, which also faced a declining consumption. The Community industry became loss-making and therefore extremely vulnerable. Losses became so heavy that the Italian producer announced the phased closure of its factory. The market development in Italy clearly shows to what extent dumped imports negatively affected the economic situation of the Community industry.

• (153) It is therefore important that prices be restored to a non-dumped or at least a non-injurious level in order to allow all various producers to operate on the Community market under normal fair trade circumstances. This will allow the Community industry to regain a satisfactorily volume of profitable. In the absence of the imposition of measures, it cannot be excluded that the Community industry will face further plant closures.

• (154) In conclusion, any imposition of anti-dumping measures would allow the Community industry to recover from the effects of injurious dumping found.

Interest of users in the Community

• (155) GOES are mainly used in the manufacture of power and distribution transformers. The transformer manufacturers constitute a long-established industry which traditionally supplies large energy producers. The transformer industry, in general, belongs to large industrial groups, which have a worldwide presence. Some smaller independent companies however also operate on the market.

• (156) The product concerned is considered a significant cost item for the users since GOES represents on average between 10 % and 30 % of the total cost of production of transformers.

• (157) Substantiated questionnaire replies, i.e. including all the requested financial information, were received from 16 users. Some other users also submitted comments in writing, but without providing detailed information. According to the financial information they submitted, cooperating users would represent around 30 % of the overall Community consumption.

• (158) Users generally expressed their opposition to the imposition of measures. Firstly, they claimed that the imposition of anti-dumping measures would result in the cessation of imports from the countries concerned and therefore make them dependent on the Community industry, which would arguably also find itself in a monopolistic situation. They further claimed that the imposition of measures would result in a significant price increase, thus negatively affecting their competitiveness vis-à-vis the non-Community transformer industry. Finally, they claimed that, should measures be imposed, the Community industry would not have sufficient capacity to supply the user industry.

• (159) Before specifically addressing the issues raised by the user industry, certain background information should be mentioned at this stage, in order to properly assess the situation on the Community market.

• (160) It should be noted that the number of producers of the product concerned worldwide is rather limited. Indeed, only 13 producers worldwide operate in the GOES business. There are two producers each in Japan, the USA and Russia, one each in South Korea, China and Brazil and six in the European Community (from which three are related). The European Community is therefore the market with the highest number of producers. The distribution network of the Japanese and the US producers is particularly well organised on the Community market since they have their own service-centres and/or related importers in the EU. Furthermore, it appears that only three producers worldwide are able to supply certain high permeable (laser treated) types of the product concerned. Those producers are located in the EU, the USA and Japan.

• (161) It is recalled that in 1999, three Community producers merged their activities under the same holding company (ThyssenKrupp) in order to create a larger entity which could compete more effectively with the other GOES producers on the world market. At that time, this merger was analysed in detail by the European Commission, and was approved.

• (162) Finally, the investigation revealed that cooperating users purchased overall during the IP respectively 10 % and 15 % of their GOES from the Russian and American producers for which dumping was established. In other words, cooperating users overall relied mainly on other sources of supply: 75 % of their purchases were from non-dumped sources, from which around 60 % was purchased from the Community industry. Only one user exclusively purchased GOES from dumped sources, but it recently switched to Community industry supply.

• (163) Against this background, and considering the first claim made by the users that they would become dependent exclusively on the Community industry supplies, it should firstly be recalled that the objective of anti-dumping duties is not to close off the Community market from any imports, but to restore a situation of fair trade by removing the effect of injurious dumping. Imports from the countries concerned are therefore not expected to come to an end, but to continue, albeit at non-dumped or non-injurious price levels.

• (164) This is certainly the case for Russia since no dumping margin was established for the major Russian exporting producer, representing around 75 % of the Russian imports during the IP, and since only a relatively limited margin of dumping, i.e. 11,5 % as established for the other exporting producer. Reference is also made to heading I. below, where it is suggested that the measures based on the findings of the present investigation should replace those currently in place concerning large GOES from Russia, which range between 14,7 % and 40,1 %. In other words, in the case of Russia, the overall weight of the anti-dumping measures established by the present investigation would be significantly less important than the measures currently in force.

• (165) In the case of the USA, imports are also expected to continue in view of the continuous demand on the Community market for specific types of the product concerned, which are only produced by a limited number of suppliers worldwide.

• (166) Furthermore, reference is made to recitals (190) to (193) concerning the price undertakings offered by the two exporting producers concerned. By those undertakings, the exporting producers undertake to sell their product on the Community market above a certain price level which will remove the injurious effect of dumping. It is therefore expected that imports from the countries concerned will not cease.

• (167) Because the imports from the countries concerned are expected to continue, and since alternative sources of supply still exist, the claim that the imposition of anti-dumping duties would result in the Community industry being in a monopolistic situation is unfounded. Indeed, not only imports from the countries concerned are expected to continue, but also those from other third countries. In addition, the Community industry consists of more than one producer, and other Community producers (not part of the Community industry) are also active on the market.

• (168) Certain parties claimed that the monopolistic situation of the Community industry would specifically arise with respect to certain specific types of the product concerned, i.e. certain high permeable types, that can only be produced by a very limited number of producers worldwide. In that respect, it should firstly be noted that the investigation concluded that for the purpose of the present anti-dumping proceeding, all types of the product concerned should be regarded as one single product. The investigation, including the Community interest analysis, should therefore be carried out with respect to the product concerned overall, and not individually for certain specific types.

• (169) Notwithstanding the above, it is true that high permeable types of the product concerned are indeed only produced by a limited number of producers worldwide, i.e. one producer in the US, two in Japan and one in the Community (see above). In that respect, it is recalled that those sources of supply are expected to remain available after the imposition of the measures, including those imports from the USA, albeit at a non dumped or injurious prices. Therefore, a sufficient level of competition can be expected to remain also with regard to these specific product types.

• (170) In addition, the claim that it would be against the Community interest to impose measures because only few companies produce those specific types cannot be considered a valid reason for accepting that one of those producers, in this case the US producer, sells its products at dumped and injurious prices on the Community market. It is recalled that a substantial margin of dumping of 47,6 % was established with respect to this company. The investigation revealed that users purchased a significant portion of their products, including the high permeable types, from the Community industry and that the continuous price pressure caused by the dumped imports may lead to plant closures in the Community. In the absence of anti-dumping measures removing the negative impact of injurious dumping, it could not be excluded that users would become exclusively dependent on imports, which would certainly also be detrimental to competition and to the user industry.

• (171) As concerns the claim that prices of the product concerned will increase on the Community market if anti-dumping measures are imposed, it should be acknowledged that since the objective of the measures is to remove injurious dumping, it can also be expected that any imposition of measures would indeed have an overall increasing effect on prices. This effect is however expected to remain moderate.

• (172) Indeed, there would remain various sources of supply that will not be hit by measures and ensure competition. Also, as already mentioned above, as far as Russia is concerned, in view of the level of the measures established by the present investigation and since those measures would replace the existing measures concerning large GOES (see recital 194, 195), anti-dumping measures based on the current findings would overall have a lesser impact than the measures in force during the IP. Indeed, when applying a level of measures as established by the present investigation on Russian imports of the product concerned into the Community during the IP, the anti-dumping duties would overall be four times less that the actual duties paid.

• (173) As to the imports from the USA, in application of the lesser duty rule, only the injurious part of the dumping margin will be removed, which would on average bring back the price of the US imports to a level that is still below its 2002 level.

• (174) The allegation that the imposition of anti-dumping measures would result in a shortage should also be refuted. Indeed, as set out above, imports are in any event expected to continue if anti-dumping measures are imposed. Moreover, the Community industry's production capacity is larger than the overall Community consumption during the IP. In addition, if Community prices are restored to a fair level, it can be expected that the Community industry will shift back sales on its domestic market by decreasing export sales.

• (175) Some interested parties claimed that the closure of the Italian plant would decrease the Community industry's overall production capacity of the product concerned, thus possibly resulting in shortages on the Community market. This argument is however ambiguous since it would, rather call for protection of the Community industry against dumped imports, in order to prevent further plant closures thus maintaining production capacity.

• (176) Moreover, it should be noted that even after the announced plant closure, the overall Community industry's production capacity will still be larger than the Community demand during the IP, and that it is the intention of the remaining producers to invest in their production capacities in order to further guarantee a sufficient supply on the Community market. A situation whereby fair competition and price level are restored on the Community market, thus ensuring a satisfactory return for the Community industry, would certainly favour such investments and a shift back of sales on the Community market.

• (177) Finally, it should be noted that most of the above claims were already made by the users in the framework of the previous investigations that led to the imposition of anti-dumping measures on large GOES from Russia. In spite of those claims, which at that time were all rejected because they were either considered unfounded or they were not found to be against the interest of the Community as a whole, the users did not provide any evidence, in framework of the current investigation, that those measures indeed had the negative impact that was claimed at the time. This gives an indication that any measures based on the current findings are also expected not to have a significant negative impact on the user industry.

• (178) For all the above reasons it can be concluded that, in case of imposition of measures, users of the product concerned overall would not exclusively depend on the Community industry, that in many circumstances the purchase price of the users would not be directly affected by the imposition of any measures, or only in a moderate way, and that there would be no shortage of GOES supply overall in the future on the Community market.

Interest of the unrelated importers

• (179) Only one unrelated importer cooperated with the investigation and opposed the imposition of measures on the grounds that measures would allegedly make an end to their trading operations with respect to the product concerned. Since this company exclusively imported GOES from one of the countries concerned, it can be expected that it will be directly affected by the imposition of measures. This importer would nevertheless still have the possibility to also import from other suppliers not subject to measures. Furthermore, it appears that around 75 % of this importer's turnover does not relate to the product concerned. Considering those elements, it is considered that the negative impact of imposition of measures would be expected to remain relatively limited. In view of the fact that no other importer claimed any adverse effect resulting from the possible imposition of measures, it can be concluded that importers would overall not be significantly affected.

• (180) It should be noted that the low level of cooperation of importers is explained by the fact that users mostly import GOES themselves, and reference is therefore also made to the above conclusions.

Conclusion on Community interest

• (181) The effects of the imposition of measures are expected to give the Community industry the opportunity to regain profitable sales volumes on the Community market and a higher market share. It was established that dumped imports highly contributed to the phased plant closure of one company that is part of the Community industry and, in view of the deteriorated situation of the Community industry overall, there is a risk that in the absence of measures, other Community producers will have to close down some production lines or even their whole production facilities and lay-off part of their workforce. Whilst some negative effects are likely to result in the form of price increases for the users, it is considered that such effect will remain limited. It should also be considered that it is also in the interest of the users that viable and competitive Community producers remain active on a market that is no longer distorted by unfair trade practices.

• (182) Indeed, in view of the limited sources of supply worldwide, it is also in the interest of the Community users that sources of supply in the Community are not further weakened by dumped imports which could result in a further decrease of the Community industry's activity, thus make users of GOES progressively more dependent on imported material.

DEFINITIVE ANTI-DUMPING MEASURES

• (183) In view of the conclusions reached with regard to dumping, resulting injury and Community interest, measures on imports of the product concerned from the USA and Russia should be imposed.

Injury Elimination Level

• (184) The level of the definitive anti-dumping measures should be sufficient to eliminate the injury to the Community industry caused by the dumped imports, without exceeding the dumping margins found. When calculating the amount of duty necessary to remove the effects of the injurious dumping, it was considered that any measures should allow the Community industry to cover its costs and obtain a profit before tax that could be reasonably achieved under normal conditions of competition, i.e. in the absence of dumped imports.

• (185) On the basis of the information available, it was preliminarily found that a profit margin of 5 % of turnover, which the Community industry achieved in 2001, could be regarded as an appropriate level that the Community industry could be expected to obtain in the absence of injurious dumping. It is to be noted that this level of profit was also used for the determination of the injury margin in the framework of the investigation that led to the imposition of the measures currently in place concerning GOES with a width of more than 500 mm. The necessary price increase was then determined on the basis of a comparison, at the same level of trade, of the weighted average import price, as established for the price undercutting calculations, with the non-injurious price of products sold by the Community industry on the Community market. The non-injurious price has been obtained by adjusting the sales price of each company composing the Community industry to a break-even point and by adding the above-mentioned profit margin. Any difference resulting from this comparison was then expressed as a percentage of the total CIF import value.

Definitive duties

• (186) In the light of the foregoing, and in accordance with Article 9(4) of the basic Regulation, it is considered that definitive anti-dumping measures should be imposed in respect of imports originating in Russia and the USA at the level of the lowest of the dumping and injury margins, in accordance with the lesser duty rule.

• (187) On the basis of the above, the proposed definitive duties are as follows:

• (188) The individual company anti-dumping duty rates specified in this Regulation were established on the basis of the findings of the present investigation. They therefore reflect the situation found during that investigation with respect to these companies. These duty rates (as opposed to the country-wide duty applicable to ‘all other companies’) are thus exclusively applicable to imports of products originating in the countries concerned and produced by the companies and thus by the specific legal entities mentioned in the operative part of this Regulation. Imported products produced by any other company not specifically mentioned in the operative part of this Regulation with its name and address, including entities related to those specifically mentioned, cannot benefit from these rates and shall be subject to the duty rate applicable to ‘all other companies’.

• (189) Any claim requesting the application of these individual company anti-dumping duty rates (e.g. following a change in the name of the entity or following the setting up of new production or sales entities) should be addressed to the Commission forthwith with all relevant information, in particular any modification in the company's activities linked to production, domestic and export sales associated with, for example, that name change or that change in the production and sales entities. If appropriate, the Regulation will accordingly be amended by updating the list of companies benefiting from individual duty rates.

Undertakings

• (190) One exporting producer in the USA and one in Russia offered a price undertaking in accordance with Article 8(1) of the basic Regulation.

• (191) The Commission considers that the undertakings offered by AK Steel Corporation and NMLK can be accepted since they will eliminate the injurious effect of dumping. Moreover, the regular and detailed reports which the companies undertook to provide to the Commission will allow effective monitoring and the structure of the companies is such that the Commission considers that the risk of circumvention of the undertakings is minimised.

• (192) In order to ensure the effective respect and monitoring of the undertakings, when the request for release for free circulation pursuant to the undertakings is presented, exemption from the duty is conditional upon presentation of a commercial invoice containing the information listed in the Annex, which is necessary for customs to ascertain that shipments correspond to the commercial document at the required level of detail. Where no such invoice is presented, or when it does not correspond to the product presented to customs, the appropriate rate of the anti-dumping duty should be payable.

• (193) In the event of a suspected breach, breach or withdrawal of the undertaking, and anti-dumping duty may be imposed, pursuant to Articles 8(9) and (10) of the basic Regulation.

CONCLUSION WITH RESPECT TO THE INTERIM REVIEW INVESTIGATION CONCERNING RUSSIA

• (194) It is recalled that, as mentioned in recital (3) of this regulation, an interim review was initiated in order to allow for any amendment or repeal necessary of the definitive anti-dumping measures imposed on imports from Russia of large GOES. This was due to the fact that those products fall within the scope of the products subject to the proceeding concerning imports into the Community of grain oriented flat-rolled products of silicon-electrical steel originating in the USA and Russia

• (195) On the basis of the above findings and conclusions, the investigation established that measures should be imposed on GOES of all widths, as described in recital (3), originating, inter alia, in Russia. It is therefore considered that because those measures also cover large GOES, the continued imposition of those measures imposed by Council Regulation (EC) No 151/2003, are no longer appropriate and should accordingly be repealed.

HAS ADOPTED THIS REGULATION:

Article 1

Article 2

• (a)the goods declared and presented to customs correspond precisely to the product described in Article 1(1),

• (b)a commercial invoice containing at least the elements listed in the Annex is presented to Member States' customs authorities upon presentation of the declaration for release into free circulation, and

• (c)the goods declared and presented to customs correspond precisely to the description on the commercial invoice.

Article 3

Council Regulation (EC) No 151/2003 is hereby repealed.

Article 4

This Regulation shall enter into force on the day following that of its publication in the Official Journal of the European Union.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

ANNEX

The following elements shall be indicated in the Commercial Invoice accompanying the Company's sales to the Community of goods which are subject to the Undertaking:

• 1.The heading ‘COMMERCIAL INVOICE ACCOMPANYING GOODS SUBJECT TO AN UNDERTAKING’

• 2.The name of the Company issuing the Commercial Invoice

• 3.The Commercial Invoice number

• 4.The date of issue of the Commercial Invoice

• 5.The TARIC additional code under which the goods on the invoice are to be customs-cleared at the Community frontier (as specified in the Regulation imposing the definitive anti-dumping duty),

• 6.The exact plain language description of the goods and: —the product code number (PCN), —technical specifications of the PCN as described in Annex I, —the company product code number (CPC), —CN code, —quantity (to be given in kg/ton)

• 7.The description of the terms of the sale, including: —price per units (kg/ton) —the applicable payment terms, —the applicable delivery terms, —Total discounts and rebates.

• 8.Name of the Company acting as an importer to which the invoice is issued directly by the Company.

• 9.The name of the official of the Company that has issued the Commercial Invoice and the following signed declaration: ‘I, the undersigned, certify that the sale for direct export to the European Community of the goods covered by this invoice is being made within the scope and under the terms of the Undertaking offered by [COMPANY], and accepted by the European Commission through Decision 2005/622/EC. I declare that the information provided on this invoice is complete and correct.’

[^E0001]: OJ L 56, 6.3.1996, p. 1. Regulation as last amended by Regulation (EC) No 461/2004 (OJ L 77, 13.3.2004, p. 12).

[^E0002]: OJ C 144, 28.5.2004, p. 2.

[^E0003]: OJ L 25, 30.1.2003, p. 7. Regulation as last amended by Regulation (EC) No 990/2004 (OJ L 182, 19.5.2004, p. 5).

[^E0004]: OJ L 183, 20.5.2004, p. 10.

[^E0005]: OJ L 344, 20.11.2004, p. 21.

[^E0006]: Council Regulation (EC) No 2155/97 (OJ L 298, 1.11.1997, p. 1).

[^E0007]: OJ L 25, 30.1.2003, p. 12, recital (50).

[^E0008]: Sinochem case (T-161/94).