Commission Regulation (EU) No 812/2010 of 15 September 2010 imposing a provisional anti-dumping duty on imports of certain continuous filament glass fibre products 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 17 December 2009, the Commission announced, by a notice published in the Official Journal of the European Union (2), the initiation of an anti-dumping proceeding with regard to imports of certain continuous filament glass fibre products originating in the People's Republic of China (‘PRC’ or the ‘country concerned’).

(2) The proceeding was initiated as a result of a complaint lodged on 3 November 2009 by APFE - European Glass Fiber Producers Association (‘the complainant’) on behalf of producers representing a major proportion, in this case more than 50 %, of the total Union production of certain continuous filament glass fibre products. 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, other known Union producers, the exporting producers and the representatives of the PRC, importers, suppliers and users known to be concerned, as well as their associations, 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) 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, importers and Union producers, sampling was envisaged in the notice of initiation for the determination of dumping and injury, 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 exporting producers, importers and Union producers 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 investigation period (1 October 2008 – 30 September 2009).

(6) Eight Chinese exporting producers or groups of exporting producers and seven Union producers or groups of producers provided the requested information and agreed to be included in the sample. After examination of the information submitted, and given the high number of exporting producers and Union producers which indicated their willingness to cooperate, it was decided that sampling was necessary with regard to these producers (see recitals (12) and (13) below).

(7) With regard to unrelated importers, at the sampling stage of the investigation, only three importers provided the requested information within the deadlines set out in the notice of initiation. It was therefore decided not to apply sampling and to send questionnaires to all importers that had come forward.

(8) In order to allow the sampled 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. All sampled (groups of) 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.

(9) 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 complainant. 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.

(10) The Commission sent questionnaires to the sampled exporting producers, sampled Union producers, to importers, and to all known users and user associations. Full questionnaire replies were received from the sampled exporting producers in the PRC, from all sampled Union producers, two importers and 13 users.

(12) Out of the eight Chinese exporting producers or groups of exporting producers which came forward, the Commission selected, in accordance with Article 17 of the basic Regulation, a sample based on the largest representative volume of exports which could reasonably be investigated within the time available. The sample selected consists of three (groups of related) companies, representing over 70 % of the export volume of the co-operating parties from the PRC to the EU. In accordance with Article 17(2) of the basic Regulation, the parties concerned were consulted and raised no objection.

(13) With regard to Union producers, seven producers provided the requested information and agreed to be included in the sample. On the basis of the information received from these cooperating Union producers, the Commission selected a sample of the three biggest in terms of sales and production (groups of) Union producers representing 64 % of the sales by all cooperating Union producers.

(14) The investigation of dumping and injury covered the period from 1 October 2008 to 30 September 2009 (‘investigation period’ or ‘IP’). The examination of trends relevant for the assessment of injury covered the period from 2006 to the end of the investigation period (‘period considered’).

(15) The product concerned as described in the Notice of initiation is chopped glass fibre strands, of a length of not more than 50 mm; glass fibre rovings; slivers and yarns of glass fibre filaments; and mats made of glass fibre filaments excluding mats of glass wool and currently falling within CN codes 7019 11 00 , 7019 12 00 , 7019 19 10 and ex 7019 31 00 (‘the product concerned’).

(16) The product concerned is the raw material most often used to reinforce thermoplastic and thermoset resins in the composites industry. The resulting composite materials (glass fibre reinforced plastics) are used in a large number of industries: automotive industry, electric/electronics, wind mill blades, building/construction, tanks/pipes, consumer goods, aerospace/military, etc.

(17) There are four basic types of continuous filament glass fibre products covered by this proceeding – i.e. chopped strands, rovings, mats (other than of glass wool) and yarns. The investigation has shown that, despite differences in appearance and possible differences in final applications of various types, almost all the different types of the product concerned share the same basic physical, chemical and technical characteristics and are basically used for the same purposes. It was however found that slivers do not share the same basic chemical, physical and technical characteristics since they are not continuous filament glass fibres, but discontinuous strands of irregular length. The investigation also showed that certain very specific types of rovings and certain very specific types of yarns that are currently covered by CN Codes 7019 12 00 and 7019 19 10 respectively should be excluded since these types are specially treated by coating and impregnating and have a loss on ignition of more than 3 %, giving them different physical and chemical characteristics.

(18) Several downstream users of yarns have claimed that the latter should be excluded completely from the product scope of the proceeding, given the almost non-existing production base in the Union as well as lack of substitutability between yarns and other product types.

(19) However, the investigation has shown that at least one way demand substitutability exists (i.e. the yarn can be used in a number of applications instead of other types even if – given a relatively higher price of yarns - this would not always be an economically viable option) and the limited production base of a certain product type cannot per se be a reason for excluding such type from the product scope, as long as it shares the same basic physical, chemical and technical characteristics and uses with other types. Given that continuous glass fibre filament yarns have the same essential characteristics as other continuous glass fibre filament products and they are interchangeable to a certain extent, it was provisionally concluded that there were no grounds to exclude yarns from the product definition. It is however noted that special attention will be given to the further assessment of this claim.

(20) The product concerned and the continuous glass fibre filament products produced and sold on the domestic market of the PRC, and on the domestic market of Turkey, which served provisionally as an analogue country, as well as the continuous glass fibre filament products produced and sold in the Union by the Union industry were found to have the same basic physical, chemical and technical characteristics and uses. Therefore, these products are provisionally considered to be alike within the meaning of Article 1(4) of the basic Regulation.

(21) 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 producers which were found to meet the criteria laid down in Article 2(7)(c) of the basic Regulation.

(24) For all the above mentioned sampled exporting producers or groups, the Commission sought all information deemed necessary and verified the information submitted in the MET claim forms and all other information deemed necessary at the premises of the companies in question.

(25) The investigation established that two sampled exporting producers/groups 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.

(26) In particular, one exporting producer/group could not demonstrate that its business decisions were sufficiently free from State interference. The majority of the directors on its Board of Directors were appointed by a majority State owned company. Consequently the State could successfully stop any decision from being taken. It is thus clear that the State plays a major role in the decision making process of the company. In addition, the company could not demonstrate that it has a clear set of accounting records that is independently audited and in line with international accounting standards as the taxable income of the company was not correctly disclosed in the financial statements.

(27) The other sampled exporting producer/group also could not demonstrate that its business decisions were sufficiently free from State interference. Two traders of the group are State owned enterprises. The State can also significantly interfere in the decision making of one exporting producer of the group due to the implicit veto power via the director representing the State owned parent company. This producer is in turn the mother company and major shareholder of two other exporting producers in the group and thus the State can also significantly interfere in their decision making. Moreover, three exporting producers from the group could not show that they fulfil criterion 2 as in the case of two of them the tax preferential treatment was not mentioned in the financial statements while as for the third one, the audit did not appear to be independent. In addition, five companies in the group failed to meet criterion 3 (mainly due to non-market oriented prices for the land use rights).

(28) One sampled exporting producer, consisting of a group of two related companies, demonstrated that they fulfilled all the criteria of Article 2(7)(c) and could be granted MET.

(29) Following disclosure of the MET findings, comments were received from the Union industry and two sampled exporting producers/groups, which were proposed not to be granted MET. However, none of the comments received was of a nature as to change the findings in this regard.

(31) The two above mentioned sampled companies/group of companies, which were denied MET, also claimed IT in the event that they would not be granted MET.

(32) On the basis of the information available, it was found that both companies/group of companies concerned failed to demonstrate that they cumulatively met all the requirements for IT as set forth in Article 9(5) of the basic Regulation. Namely, it was established that the companies failed to meet the criterion stipulated in Article 9(5)(c) of the basic Regulation that the majority of the shares belong to private persons or are sufficiently independent from the State, since as explained in recitals (26) and (27), all companies were found to be ultimately majority State owned or controlled. Also, as mentioned above, it was found that both these (groups of) companies failed to demonstrate that they fulfil the criterion set forth in Article 9(5)(e), namely that their decision making is free from significant State interference permitting circumvention of measures if the companies were given different rates of duty. Consequently, their claims for IT had to be rejected.

(33) It was therefore concluded that IT should not be granted to any of the sampled exporting producers/groups, which were denied MET.

(34) In accordance with Article 2(2) of the basic Regulation, the Commission first established for that exporting producer, whether its total domestic sales of continuous fibre glass products were representative, i.e. whether the total volume of such sales represented at least 5 % of its total volume of export sales of the product concerned to the Union. The investigation established that the domestic sales of the like product were representative.

(35) The Commission subsequently identified those product types sold domestically by the companies having overall representative domestic sales that were identical or closely resembling with the types sold for export to the Union.

(36) For each type sold by the exporting producer on their domestic market and found to be comparable with the type of continuous fibre glass products 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 sufficiently representative when the volume of that product type sold on the domestic market to independent customers during the IP represented around 5 % of the total volume of the comparable product type sold for export to the Union. The investigation established that for all but four product types there were representative domestic sales.

(37) The Commission subsequently examined whether each type of the product concerned sold domestically in representative quantities could be considered as being sold 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 sales to independent customers on the domestic market during the investigation period.

(38) 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.

(39) 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.

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

(41) The investigation established that the profitable sales of all but one comparable product type were more than 80 % of total domestic sales and, thus, all domestic sales were used in calculating the average price for normal value. For one product type only the profitable sales were used. For sales of the four product types which were not sold in representative quantities on the domestic market, the Commission used for normal value representative domestic prices of closely resembling types, duly adjusted.

(42) In accordance with Article 2(7) of the basic Regulation, normal value for companies to which MET could not be granted was established on the basis of the prices or constructed value in an analogue country.

(43) In the notice of initiation, the Commission indicated its intention to use Turkey as an appropriate analogue country for the purpose of establishing normal value for the PRC and invited interested parties to comment on this.

(44) Two interested parties came forward and stated that Turkey would not be an appropriate analogue country, without however substantiating this further. Another interested party commented on the choice of analogue country and suggested that India should be used instead as India would be at a comparable level of development as the PRC, the markets would be comparable as in both markets the wind power applications would be very important and comparable types would be produced in a similar manner. Moreover, the Indian market was described as open market with significant imports. Lastly, it was mentioned that access to raw materials would be comparable in both countries.

(45) The Commission sought the co-operation of the like product producers in Turkey, Canada, USA, the Republic of Korea and India. However, only the sole Turkish producer expressed its willingness to co-operate and provided a questionnaire reply.

(46) It is recognised that Turkey is a representative analogue country in terms of domestic sales volume. However, the normal value for one type of the like product which is not produced in Turkey would need to be constructed. It is also noted that the ongoing Turkish anti-dumping investigation for imports of continuous glass fibre products points to possible price depression on the domestic Turkish market. However, given that Turkey was the only country that agreed to co-operate in this investigation, it is provisionally concluded that Turkey should be used as an analogue country.

(47) 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 the verified information received from the producer in the analogue country, in accordance with the general methodology set out above for the group of companies granted MET. Where product types in the domestic market of the analogue country were all sold at a loss or where no resembling types were sold, the normal value was constructed pursuant to Article 2(3) and 2(6) of the basic Regulation.

(48) In the majority of cases the product concerned was exported to independent customers in the Union, and therefore, 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.