Commission Regulation (EU) No 478/2010 of 1 June 2010 imposing a provisional anti-dumping duty on imports of high tenacity yarn of polyesters originating in the People’s Republic of China

THE EUROPEAN COMMISSION,

Having regard to the Treaty on the Functioning of the European Union,

Having regard to Council Regulation (EC) No 1225/2009 of 30 November 2009 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 8 September 2009, the Commission announced, by a notice published in the Official Journal of the European Union (2) (notice of initiation), the initiation of an anti-dumping proceeding with regard to imports into the Union of high tenacity yarn of polyesters originating in the People’s Republic of China (PRC), the Republic of Korea (Korea) and Taiwan (the countries concerned).

(2) The proceeding was initiated as a result of a complaint lodged on 27 July 2009 by CIRFS — European Man-made Fibres Association (the complainant) on behalf of producers of high tenacity yarn of polyesters representing a major proportion, in this case more than 60 % of the total Union production of high tenacity yarn of polyesters. The complaint contained prima facie evidence of dumping of the said product and of material injury resulting therefrom, which was considered sufficient to justify the initiation of an investigation.

(3) The Commission officially advised the complainant Union producers, other known Union producers, the exporting producers, importers, users, other parties known to be concerned, and representatives of the PRC, Korea and Taiwan 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, other Union producers, exporting producers in the PRC, Korea and Taiwan, importers and users 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 view of the apparent high number of exporting producers in the PRC and Korea and importers, sampling was envisaged in the notice of initiation, in accordance with Article 17 of the basic Regulation. In order to enable the Commission to decide whether sampling would be necessary and, if so, to select a sample, all known exporting producers in the PRC and Korea and Union importers were asked to make themselves known to the Commission and to provide, as specified in the notice of initiation, basic information on their activities related to the product concerned during the period from 1 July 2008 to 30 June 2009.

(6) As explained in recitals 22 to 27 below, eleven exporting producers in the PRC provided the requested information and agreed to be included in a sample. With regards to Korea, four exporting producers provided the requested information and agreed to be included in the sample.

(7) On the basis of the information received from the cooperating exporting producers, the Commission selected a sample of three exporting producers in the PRC or groups of related companies having the largest volume of exports to the Union. All exporting producers concerned, as well as their association and the authorities of the PRC, were consulted and agreed on the selection of the sample.

(8) In the case of Korea only four exporting producers provided the required information for the sampling exercise. In view of the low number of exporting producers which indicated their willingness to cooperate, it was decided that sampling was not necessary.

(9) 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 claim forms to the sampled exporting producers in the PRC and to the exporting producers that requested such forms with the intention to apply for individual examination pursuant to Article 17(3) of the basic Regulation.

(10) The Commission officially disclosed the results of the MET findings to the exporting producers concerned in the PRC, the authorities of the PRC and the complainants. They were also given an opportunity to make their views known in writing and to request a hearing if there were particular reasons to be heard.

(11) Two exporting producers which were not included in the sample because they did not meet the criteria set in Article 17(1) of the basic Regulation claimed an individual margin pursuant to Article 17(3) of the basic Regulation. It was considered however that individual examination of the exporting producers concerned, would have led to additional on-the-spot visits and specific analysis, and would have thus been unduly burdensome and would have prevented the timely completion of the investigation. Therefore, it was provisionally concluded that the request for an individual examination of the said exporting producers could not be accepted.

(12) 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, namely to four Union producers, ten importers and 68 users.

(13) Replies were received from the complainant Union producers and one additional Union producer which supported this investigation, two unrelated importers and 33 users.

(15) The investigation of dumping and injury covered the period from 1 July 2008 to 30 June 2009 (‘investigation period’ or ‘IP’). The examination of trends relevant for the assessment of injury covered the period from January 2005 to the end of the investigation period (period considered).

(16) The product concerned is high tenacity yarn of polyesters (other than sewing thread), not put up for retail sale, including monofilament of less than 67 decitex originating in the PRC, Korea and Taiwan (‘the product concerned’ or ‘HTY’) currently falling within CN code 5402 20 00 .

(17) The product concerned features outstanding properties and is used in a number of diverse applications such as tyre reinforcement, broad fabrics, conveyor belts, safety belt ropes, nets and geo-synthetic products.

(18) During the course of the investigation, certain parties claimed that the yarn used in the production of tyres, the so called ‘High Modulus Low Shrinkage’ (HMLS) yarn, should be excluded from the scope of the investigation. They claimed that HMLS has different characteristics and applications compared to other HTY.

(19) The investigation, however, showed that, although HMLS yarn has some distinctive characteristics compared to other HTY, (e.g., modulus, shrinkage, tensile strength and fatigue resistance), the different types of the product concerned all share the same basic physical and chemical characteristics. They are therefore considered to constitute one single product.

(20) The product exported to the Union from the PRC, Korea and Taiwan, and the product produced and sold domestically in Korea and Taiwan as well as in the PRC by the Chinese exporting producer which was granted MET and also the one manufactured and sold in the Union by the Union producers were found to have the same basic physical and technical characteristics as well as the same uses. They are therefore provisionally considered as alike within the meaning of Article 1(4) of the basic Regulation.

(21) In view of the large number of importers identified from the complaint, sampling was envisaged for importers in the notice of initiation in accordance with Article 17(1) of the basic Regulation. However, after examination of the information submitted and given the low number of importers which indicated their willingness to cooperate, it was decided that sampling was not necessary.

(22) In view of the large number of exporting producers in the PRC, sampling was envisaged in the notice of initiation for the determination of dumping, in accordance with Article 17(1) of the basic Regulation.

(23) In order to enable the Commission to decide whether sampling would be necessary and, if so, to select a sample, exporting producers in the PRC were requested to make themselves known within 15 days from the date of the initiation of the investigation and to provide basic information on their export and domestic sales, their precise activities with regard to the production of the product concerned and the names and activities of all their related companies involved in the production and/or selling of the product concerned.

(24) The authorities of the PRC and the producers association, i.e. the China Chamber of Commerce for Import and Export of Textiles, were also consulted for the selection of a representative sample.

(25) In total, eleven exporting producers, including groups of related companies in the PRC, came forward and provided the requested information within the given deadline set in the notice of initiation. All of them reported exports of the product concerned to the Union during the IP and expressed a wish to participate in the sample. Thus, these eleven exporting producers were considered to be cooperating in the present investigation (cooperating exporting producers).

(26) Exporting producers which did not make themselves known within the aforesaid deadline or did not provide the requested information in due time, were considered as non-cooperating with the investigation. The comparison between Eurostat import data and the volume of exports to the Union of the product concerned reported for the IP by the companies mentioned in recital 25 suggests that the cooperation of Chinese exporting producers was very high as mentioned in recital 73 below.

(27) In accordance with Article 17(1) of the basic Regulation, the Commission selected a sample based on the largest representative volume of exports of HTY to the Union which could reasonably be investigated within the time available. The sample selected consists of three companies or groups of related companies, representing more than 65 % of the total volume of exports to the Union of the product concerned. In accordance with Article 17(2) of the basic Regulation, all exporting producers concerned, as well as their association and the authorities of the PRC, were consulted and agreed on the selection of the sample.

(28) Two exporting producers which were not included in the sample because they did not meet the criteria set in Article 17(1) of the basic Regulation requested that an individual margin of dumping be established pursuant to Article 17(3) of the basic Regulation.

(29) As mentioned in recital 27 above, the sample was limited to a reasonable number of companies which could be investigated within the time available. The companies investigated for the purpose of the investigation of dumping for the countries concerned are listed in recital 14 above. In view of the number of verification visits to be carried out at the premises of these companies, which in the case of the PRC entailed the verification of MET claims and anti-dumping questionnaire replies, it was considered that individual examinations would be unduly burdensome and would have prevented the timely completion of the investigation.

(30) Therefore, it was provisionally concluded that the two requests for an individual examination could not be accepted.

(31) The general methodology set out hereinafter has been applied to all exporting producers in Korea, Taiwan, the exporting producer in the PRC granted MET and, taking into account the concept of an analogue country, also for the other two sampled exporting producer in the PRC not granted MET. The presentation of the findings on dumping for each of the countries concerned by this investigation therefore only describes what is specific for each exporting country.

(32) In accordance with Article 2(2) of the basic Regulation, the Commission first examined whether the domestic sales of the like product to independent customers by each exporting producer were representative, i.e. whether the total volume of such sales was equal to or greater than 5 % of the total volume of the corresponding export sales to the Union.

(33) The Commission subsequently identified those product types sold domestically by the companies having overall representative sales which were identical or directly comparable with the types sold for export to the Union.

(34) For each product type sold by the exporting producers concerned on the domestic market, which was found to be directly comparable with the type sold for export to the Union, 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 product type were considered as sufficiently representative when the volume of that product type sold on the domestic market to independent customers during the IP represented 5 % or more of the total volume of the comparable product type sold for export to the Union.

(35) The Commission subsequently examined whether the domestic sales of each company could be considered as being made in the ordinary course of trade pursuant to Article 2(4) of the basic Regulation. This was done by establishing for each product type the proportion of profitable domestic sales to independent customers.

(36) Where the sales volume of a product type, sold at a net sales price equal to or above the calculated cost of production, represented more than 80 % of the total sales volume of that type, and where the weighted average sales price was equal to or higher than the unit cost, normal value, by product type, was calculated as the weighted average of all domestic sales prices of the type in question.

(37) Where the volume of profitable sales of a product type represented 80 %, or less of the total sales volume of that product type, or where the weighted average price of that type was below the unit cots, normal value was based on the actual domestic price, which was calculated as the weighted average price of only the profitable domestic sales of the type in question.

(38) Where the product types were all sold at a loss, it was considered that they were not sold in the ordinary course of trade.

(39) For sales of product types not made in the ordinary course of trade, as well as for product types which were not sold in representative quantities on the domestic market, the Commission used constructed normal value, in accordance with Article 2(3) of the basic Regulation.

(40) To construct normal value pursuant to Article 2(3) of the basic Regulation, the selling, general and administrative (SG&A) expenses incurred and the weighted average profit realised by each of the cooperating exporting producers concerned on domestic sales of the like product, in the ordinary course of trade, during the investigation period, was added to their own average cost of production during the investigation period. Where necessary, the costs of production and SG&A expenses reported were adjusted, before being used in the ordinary course of trade test and in constructing normal values.

(41) In all cases where the product concerned was exported to independent customers in the Union, the export price was established in accordance with Article 2(8) of the basic Regulation, namely on the basis of export prices actually paid or payable.

(42) In cases where sales were made via a related importer, the export price was established in accordance with Article 2(9) of the basic Regulation on the basis of the price at which the imported products were first resold to independent customers. In these cases, adjustments were made for all costs incurred between importation and resale, including duties and taxes, as well as a reasonable margin for SG&A and profits. The related importer’s own SG&A costs were used and a reasonable profit margin was established on the basis of the one found in the investigation to have been attained by the independent importer of the product concerned.

(43) The comparison between normal value and export price was made on an ex-works basis.

(44) For the purpose of ensuring a fair comparison between the normal value and the export price, due allowance in the form of adjustments was made for differences affecting prices and price comparability in accordance with Article 2(10) of the basic Regulation. Appropriate adjustments were granted in all cases where they were found to be reasonable, accurate and supported by verified evidence.

(45) According to Article 2(11) of the basic Regulation, the dumping margin for each cooperating exporting producer was established on the basis of a comparison between the weighted average normal value with the weighted average export price.

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

(48) All sampled companies requested MET and replied to the MET claim form within the given deadlines. The Commission sought and verified the information provided in the claim forms and all other information deemed necessary at the premises of the companies in question.

(49) The verification established that two sampled exporting producers in the PRC did not meet the requirements of the criteria set forth in Article 2(7)(c) of the basic Regulation to be granted MET.

(50) In particular, one sampled exporting producer did not meet the requirements of criteria 1 to 3. Firstly, it could not demonstrate that its decisions were made in response to market signals and without significant State interference because restrictions in its selling activities, such as the obligation to sell a certain volume of the product concerned on the domestic market, were found to exist. Secondly, it did not demonstrate that its accounting records were audited in line with IAS. The investigation pointed to a number of inconsistencies and shortcomings in the accounts of the applicant, and identified certain breaches of IAS principles. Finally, distortions carried over from the non-market economy system were observed in the form of improper land-use right evaluations.

(51) The other sampled exporting producer could not demonstrate that it met criteria 1 and 3. It could not demonstrate that its decisions were made in response to market signals and without significant State interference because restrictions in its selling activities, similar to those identified in recital 50 above, were found to exist and also despite the existence of a State certification part of its capital was found not to have been contributed. Distortions carried over from the non-market economy system were also observed in the form of improper land use right evaluations.

(52) One sampled exporting producer demonstrated that it fulfilled all the criteria of Article 2(7)(c) of the basic Regulation and could be granted MET.

(53) Pursuant to Article 2(7)(a) of the basic Regulation, a countrywide duty, if any, is established for countries falling under that Article, except in those cases where companies are able to demonstrate that they meet all criteria set out in Article 9(5) of the basic Regulation to be granted IT.

(55) The sampled exporting producers which did not meet the MET criteria had also claimed IT in the event that they were not granted MET.