Council Regulation (EC) No 1193/2008 of 1 December 2008 imposing a definitive anti-dumping duty and collecting definitively the provisional duties imposed on imports of citric acid 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 Article 9 thereof,

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

Whereas:

(1) On 4 September 2007, the Commission published a notice (2) initiating an anti-dumping proceeding on imports into the Community of citric acid originating in the People’s Republic of China (the PRC). On 3 June 2008, the Commission, by Regulation (EC) No 488/2008 (3) (the provisional Regulation) imposed a provisional anti-dumping duty on imports of citric acid originating in the PRC.

(2) It is noted that the proceeding was initiated following a complaint lodged by the European Chemical Industry Council (CEFIC) (the complainant) on behalf of a producer representing a major proportion of the total Community production of citric acid, in this case more than 25 %.

(3) As set out in recital 14 of the provisional Regulation, the investigation of dumping and injury covered the period from 1 July 2006 to 30 June 2007 (‘investigation period’ or ‘IP’). With respect to the trends relevant for the injury assessment, the Commission analysed data covering the period from 1 January 2004 to the end of the IP (period considered).

(4) Following the imposition of provisional anti-dumping duties on imports of citric acid originating in the PRC, several interested parties submitted comments in writing. The parties who so requested were also granted the opportunity to be heard.

(6) All parties were informed of the essential facts and considerations on the basis of which it was intended to recommend the imposition of a definitive anti-dumping duty on imports of citric acid originating in the PRC and the definitive collection of the amounts secured by way of the provisional duty. They were also granted a period within which they could make representations subsequent to this disclosure.

(7) The oral and written comments submitted by the interested parties were considered and, where appropriate, the findings were modified accordingly.

(8) One exporting producer reiterated the claim that the public version of the complaint did not contain any prima facie evidence of material injury to the Community industry, preventing the interested parties from exercising their rights of defence. According to this exporting producer, the case should not have been initiated due to lack of sufficient evidence included in the complaint. In this respect, it should be noted that the public version of the complaint contained all the essential evidence and non-confidential summaries of data provided under confidential cover in order for interested parties to exercise their right of defence throughout the proceeding. Therefore, this argument should be rejected.

(9) Some interested parties argued that the product concerned, as set out in recital 16 of the provisional Regulation, and the like product are not alike as stated in recital 18 of the provisional Regulation since they would not share the same physical and chemical characteristics and are not used for the same purposes. According to those interested parties, the statement in recital 18 of the provisional Regulation fails to address the arguments brought forward during the investigation and is in contradiction with the adjustment made by the Commission in the undercutting calculations for de-caking certain quantities of the product concerned after arrival in the EU. It is firstly noted that the investigation has shown that the product concerned and the like product are both used in the same basic applications, i.e. mainly for the household cleaning (auto dish-wash products, detergents, water softeners) and as additives in food and beverages, but also in the personal care/cosmetics area. The claim that the product concerned would in fact not be used by certain users in the detergents, food and beverages industry because of its smell and/or colour was not further substantiated by evidence. The investigation has shown that only in one niche application, i.e. the pharmaceutical area, only the European citric acid was indeed used because of the cost of the special compliance test which is required. Since the pharmaceutical area represents only a small portion of the users’ total business, running the compliance test was not considered as economically justifiable business decision. Secondly, there is no contradiction between the adjustment made in the undercutting calculation for de-caking parts of the product concerned after importation, as mentioned in recital 64 of the provisional Regulation, and the statement that both products are alike as it is sufficient that the product concerned and the like product share the same basic chemical, physical and technical characteristics and have the same basic uses, which is the case. It is further noted that the caking as such does not happen because of specific characteristics of the Chinese product, but happens because every citric acid, regardless of its origin, due to its chemical composition shows a tendency to cake when being exposed to humidity and changes of temperature. As naturally only the product concerned is exposed over a longer period of time to humidity and changes of temperature during the shipping time to the EU, the problem mainly occurs for the product concerned, but not exclusively. Therefore, the adjustment simply takes account of the fact that the de-caking incurs additional costs mainly for the product concerned as the quantities that are affected by the caking either are de-caked (by breaking and sieving or liquefying the caked product) before further selling or are sold with a rebate. Thus, this claim should be rejected.

(10) In view of the above, it is definitively concluded that the product concerned and citric acid produced and sold in the analogue country, Canada, as well as the one produced and sold by the Community industry on the Community market are alike, within the meaning of Article 1(4) of the basic Regulation and recitals 15 to 17 of the provisional Regulation are hereby definitively confirmed.

(11) At the provisional stage of the investigation the market economy treatment (MET)/individual treatment (IT) claims of all known exporting producers were investigated. Only a number of the exporting producers had been included in the sample and one company was granted individual examination. In their comments to the provisional Regulation, a number of parties have claimed that this approach has some shortcomings. The matter was therefore reconsidered and, in view also of the fact that it became possible, given the circumstances of the case such as for example the available resources, to increase the number of companies that could reasonably be investigated, it was finally decided that sampling should not be applied. Given that every cooperating company has been granted at least IT at the provisional stage, an individual duty rate should be established for each of them. As a consequence, three companies not selected in the sample or individually examined at the provisional stage were requested to submit questionnaire replies. However, only two of these companies submitted a questionnaire reply. The third company did not submit a questionnaire reply and was not investigated further.

(12) The company referred to in recital 27 of the provisional Regulation insisted that the subsidy mentioned in that recital was not for the purposes of the product concerned and that the non-payment of rents was justified by private inter-group arrangements for the setting off of profits against rent due. However, in the absence of any new elements or information concerning the issue, and in view of the distorting effects on the accounting of the practices mentioned concerning rent, the conclusions in respect of this company remain unchanged and are hereby definitively confirmed.

(13) Further to provisional disclosure one group of companies referred to in recital 25 of the provisional Regulation claimed that it had received loans on the basis of a detailed financial analysis of one of the banks and after having been granted a high credit rating. However, the fact that a bank formally carried out an analysis and granted a high credit rating does not eliminate the fact that the company in question gave guarantees to other companies despite having mortgaged the majority of its non-current assets, nor the fact that the loans granted to the company in question were granted by a bank found to be under State influence. Therefore, the conclusions in respect of this company remain unchanged and are hereby definitively confirmed.

(14) One of the companies referred to in recital 26 of the provisional Regulation insisted that it was penalised for the fact that its majority shareholder had acquired land use rights for a good price and then correctly had them revalued according to market price developments. However, the enormous difference between the acquisition price and later evaluations (1 000-2 000 %) could not be explained. Therefore, in the absence of any new elements or information concerning the acquisition and subsequent revaluation of the land use rights and in view of the advantages that the company received by obtaining assets for prices significantly below market value, the conclusions in respect of this company remain unchanged and are hereby definitively confirmed.

(15) In the absence of any other comments concerning MET, recitals 25 to 30 of the provisional Regulation are hereby definitively confirmed.

(16) Five companies or groups of companies that were not granted MET fulfilled all the criteria set out in Article 9(5) of the basic Regulation and were granted IT. One company which had been granted provisionally IT, failed to further cooperate and, thus, no IT was finally granted (see recitals 11 and 34).

(17) As explained in recital 11, following comments to the provisional Regulation, it was decided that sampling should not be applied and the three companies not selected in the sample or individually examined at the provisional stage were requested to submit questionnaire replies. Normal value was established for one of these companies (Laiwu Taihe), which was granted MET and which submitted a questionnaire reply.

(18) Since the sole company which could be granted MET and which was examined individually at the provisional stage of the investigation did not submit any comments on normal value, the findings in recitals 35 to 39 of the provisional Regulation are hereby definitively confirmed.

(19) As for the only other company which was granted MET (Laiwu Taihe) and which was further investigated for the reasons explained in recital 11, it was first verified whether the company’s total domestic sales of the like product were representative within the meaning of Article 2(2) of the basic Regulation. Domestic sales of the product concerned were slightly below 5 % of the exports of the like product to the Community. However, such lower ratio is nonetheless of sufficient magnitude to provide for a proper comparison and the domestic prices of the like product are considered representative given also the overall domestic sales of the company in question. Therefore, they were used to determine normal value.

(20) For each product type sold for export to the Community by Laiwu Taihe, it was established whether a directly comparable product type was sold on the domestic market. Product types were considered to be directly comparable when they were of the same product type (defined by the chemical composition), comparable granulation and packing. It was established that for only one product type sold for export to the Community a directly comparable product type was sold on the domestic market.

(21) It was subsequently examined whether the domestic sales of this product type could be regarded as being sold in the ordinary course of trade pursuant to Article 2(4) of the basic Regulation. It was established that there were profitable domestic sales of this product type to independent customers during the IP, and therefore in the ordinary course of trade.

(22) Since the volume of profitable sales of this product type represented 80 % or less of the total sales volume of that type, normal value was based on the actual domestic price, calculated as a weighted average of profitable sales of that type only.

(23) As domestic prices of Laiwu Taihe could not be used in order to establish normal value for the other product types, normal value was constructed in accordance with Article 2(3) of the basic Regulation.

(24) When constructing normal value pursuant to Article 2(3) of the basic Regulation, the amounts for selling, general and administrative costs (SG & A) and for profits have been based, pursuant to Article 2(6) first introductory subparagraph of the basic Regulation, on the actual data pertaining to the production and sales, in the ordinary course of trade, of the like product, by Laiwu Taihe.

(25) In their comments to the provisional Regulation, some parties claimed that Canada would not be an appropriate analogue country given the fact that the United States of America (US) have recently initiated an anti-dumping proceeding against citric acid originating, inter alia, in Canada. Thailand was therefore again brought forward as an alternative analogue country. However, the analysis showed that while anti-dumping measures on citric acid originating in Canada were not in force during the IP, anti-dumping measures were in force during the IP on citric acid originating in Thailand. The latter measures were imposed by India and consisted in substantial anti-dumping duties of USD 374,36/tonne, which only expired in August 2007, i.e. two months after the end of the IP. Therefore, also considering the arguments already mentioned in recitals 42 and 43 of the provisional Regulation and the fact that the US investigation on citric acid originating in Canada was still ongoing at the moment of finalising the Community investigation, it is concluded that there is no reason why Thailand should be preferred to Canada as an analogue country.

(26) According to Article 2(7)(a) of the basic Regulation, normal value for the exporting producers mentioned in recital 11 above that were not granted MET had to be established on the basis of the prices or constructed value in the analogue country.

(27) In the case of the two companies which were further investigated for the reasons explained in recital 11 above, the export price was established following the same methodology explained in recitals 45 to 47 of the provisional Regulation.

(28) Since no companies submitted any comments on export prices, the findings contained in recitals 45 to 47 of the provisional Regulation are hereby definitively confirmed.

(29) In its comments to the provisional Regulation and to the definitive disclosure, one group of companies contested the deduction of a notional commission for sales via a trader in the PRC, given that the trader was an integral part of the group. It was, however, established that the trading company did indeed perform the function of an independent trader, and that the economic result of the relationship of the two companies is that of a principal and an agent. It was established that the trader was not only trading products produced by related companies, but also products produced by independent producers. Moreover, the company in question did also sell directly to non-related customers. Therefore, the claim was rejected, and pursuant to Article 2(10)(i) of the basic Regulation, an allowance based on SG & A and profit of unrelated importers was deducted.

(30) In its comments to the provisional Regulation, one exporting producer claimed that cost for currency conversion should not be taken into account, as pursuant to Article 2(10)(j) of the basic Regulation, exporters shall be granted 60 days to reflect a sustained movement in exchange rates during the investigation period. This claim could be accepted, and the dumping margin of the exporting producer was adjusted accordingly.

(31) In the provisional Regulation, a deduction to the export price was made in respect of non-refundable VAT charged on export sales, pursuant to Article 2(10)(b) of the basic Regulation. One exporting producer claimed in its comments to the provisional Regulation that no such adjustment to the export price should have been made, as Article 2(10)(b) of the basic Regulation would only relate to normal value. It is acknowledged that the adjustment provided for under Article 2(10)(b) of the basic Regulation only refers to the calculation of the normal value. In fact the above mentioned deduction to the export price is due and should be done pursuant to Article 2(10)(k) of the basic Regulation. While examining this claim, it was found that a clerical error had been made in calculating the adjustment for the company in question, and that the same error had been made in respect of other companies. These inaccuracies were rectified and have led to slight downward corrections in the dumping margins previously calculated for these companies.

(32) In examining the claim referred to in recital 31, it was found that the necessary adjustment had not been made in the case of one company which was granted individual treatment. This has been rectified and results in a slight increase in the dumping margin for that company.

(33) In the absence of any other comments in respect of comparison, and apart from the changes indicated in recitals 30, 31 and 32 above, recitals 48 to 50 of the provisional Regulation are hereby definitively confirmed.

(34) In the case of the two companies which were further investigated for the reasons explained in recital 11 above, the dumping margin was established by following the same methodology explained in recital 51 of the provisional Regulation. In the case of the one company which did not submit a questionnaire reply and was not further investigated, as explained in recital 11 above, this company is considered as non-cooperating and findings are based on facts available in accordance with Article 18(1) of the basic Regulation. In this case, considering the high level of cooperation mentioned in recital 19 of the provisional Regulation, the company has been attributed the highest dumping margin found in respect of all other companies.

(35) The dumping margins of all the companies which had already been individually investigated at the provisional stage were recalculated, to correct the inaccuracies referred to in recitals 30, 31 and 32. This recalculation has led to slight corrections of the dumping margins.

(36) In the absence of any new element, the conclusions in recital 53 of the provisional Regulation, which relates to the level of cooperation, are hereby definitively confirmed.

(38) Some interested parties claimed that SA Citrique Belge NV ceased production after the IP and was only trading the product concerned imported from its related company in China (DSM Citric Acid (Wuxi) Ltd) arguing, thus, that SA Citrique Belge NV should not constitute part of the Community industry. This claim was however not substantiated by any evidence and from the data submitted by SA Citrique Belge NV, it follows that the company continued production.