Commission Implementing Regulation (EU) No 1195/2014 of 29 October 2014 imposing a provisional countervailing duty on imports of certain rainbow trout originating in Turkey

THE EUROPEAN COMMISSION,

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

Having regard to Council Regulation (EC) No 597/2009 of 11 June 2009 on protection against subsidised imports from countries not members of the European Community (1), and in particular Article 12 thereof,

After consulting the Member States,

Whereas:

(1) On 15 February 2014, the European Commission (the Commission) announced the initiation of an anti-subsidy proceeding with regard to imports into the Union of certain rainbow trout originating in Turkey (the country concerned) on the basis of Article 10 of the Regulation (EC) No 597/2009 (the basic Regulation) by a notice published in the Official Journal of the European Union (2) (the Notice of Initiation). A corrigendum to the Notice of Initiation was published in the Official Journal on 4 September 2014 (3).

(2) The Commission initiated the investigation following a complaint lodged on 3 January 2014 by the Danish Aquaculture Association (the complainant) on behalf of producers representing more than 25 % of the total Union production of certain rainbow trout. The complaint contained prima facie evidence of subsidisation of certain rainbow trout and of material injury caused by it, which the Commission considered sufficient to justify the initiation of an investigation.

(3) In accordance with Article 10(7) of the basic Regulation, the Commission notified the Government of Turkey (GOT) prior to the initiation of the proceeding that it had received a properly documented complaint alleging that subsidised imports of certain rainbow trout originating in Turkey were causing material injury to the Union industry. The Commission invited the GOT for consultations with the aim of clarifying the situation as regards the contents of the complaint and arriving at a mutually agreed solution.

(4) The GOT accepted consultations and they were subsequently held. During the consultations, no mutually agreed solution could be found. Following the consultations, a submission was received from the GOT. The Commission took due note of the comments.

(5) On 15 February 2014, the Commission also announced the initiation of an anti-dumping investigation concerning imports into the Union of the same product originating in Turkey by a notice published in the Official Journal of the European Union (4).

(6) The injury analyses performed in the present anti-subsidy and the parallel anti-dumping investigations are based on the same definition of the Union industry, the same representative Union producers and the same investigation period and led to identical conclusions unless otherwise specified. This was considered appropriate in order to streamline the injury analysis and to reach consistent findings. For this reason, comments on injury aspects put forward in any one of these proceedings were taken into account in both investigations.

(7) In the Notice of Initiation, the Commission invited interested parties to contact it in order to participate in the investigation. In addition, the Commission specifically informed the complainants, other known Union producers, users and importers, exporting producers in Turkey and the Turkish authorities as well as associations known to be concerned about the initiation of the investigation and invited them to participate.

(8) All interested parties had an opportunity to comment on the initiation of the investigation and to request a hearing with the Commission and/or the Hearing Officer in trade proceedings. No comments were made.

(9) The Commission announced in the Notice of Initiation that it might sample the interested parties, in particular the Union producers, the unrelated importers and the exporting producers in Turkey in accordance with Article 27 of the basic Regulation.

(10) In its Notice of Initiation, the Commission stated that it had provisionally selected a sample of Union producers. In accordance with Article 27(1) of the basic Regulation and in view of the Union industry being highly fragmented with more than 700 small and medium enterprises producers (SMEs), the Commission selected the sample on the basis of the largest representative volume of production which could reasonably be investigated within the time available, considering also the geographical spread and sufficient coverage of different steps and types of production (production of live, fresh, frozen, fillets and smoked trout). This sample consisted of nine Union producers. The sampled Union producers accounted for more than 12 % of the total Union production, based on complaint data. The Commission invited interested parties to comment on the provisional sample. No comments were received within the deadline and the provisional sample was thus confirmed. The sample is representative of the Union industry.

(11) To decide whether sampling is necessary and, if so, to select a sample, the Commission asked unrelated importers to provide the information specified in the Notice of Initiation.

(12) Three unrelated importers provided the requested information and agreed to be included in the sample. In view of the low number, the Commission decided that sampling was not necessary.

(13) To decide whether sampling is necessary and, if so, to select a sample, the Commission asked all exporting producers in Turkey to provide the information specified in the Notice of Initiation. In addition, the Commission asked the Mission of the Republic of Turkey to the European Union to identify and/or contact other exporting producers, if any, that could be interested in participating in the investigation.

(14) Eighteen groups of exporting producers in Turkey provided the requested information and agreed to be included in the sample. The total declared export volume to the Union by these companies of the certain rainbow trout during 2013 accounts for the totality of exports from Turkey to the Union.

(15) In accordance with Article 27(1) of the basic Regulation, the Commission selected a sample of four groups of exporting producers on the basis of the largest representative volume of exports to the Union which could reasonably be investigated within the time available, considering also the geographical spread. The sampled group of companies account for almost 64 % of the declared export sales to the Union, and are located in two different regions.

(16) In accordance with Article 27(2) of the basic Regulation, all known exporting producers concerned, and the Turkish authorities were consulted on the selection of the sample. One company contested the selection of sampled companies and claimed that it should be included in the sample. It argued that it exclusively produces, processes and sells trout (that is to say it does not have any other activities), and has been doing so since 1971, making it the first producer of the product concerned in Turkey. It further claimed that it has substantial sales on the domestic market and finally, that it was the biggest producer in the Marmara region.

(17) The Commission recalls that the selection of sampled companies was made on the basis of the largest quantities of volumes in accordance with Article 27(1) of the basic Regulation taking into account the number of producers that could reasonably be investigated within the time available. As the proposed sample represents 64 % of the exports of the product concerned to the Union, such a sample is representative of the situation of the Turkish industry. Furthermore, the sampled companies are situated in two different regions (out of three represented) which is considered sufficient for the purpose of the investigation. Therefore, the Commission maintains that the sampled companies correspond to the largest representative volumes of imports which could be reasonably investigated within the time available.

(18) Eleven companies or groups of companies requested individual examination under Article 27(3) of the basic Regulation. At this stage of the investigation, the Commission has not taken any decision about the request for individual examination. The Commission will decide whether to grant individual examination at the definitive stage of the investigation.

(19) The Commission sent questionnaires to the GOT, to all sampled companies in the Union, three importers and to the sampled groups of exporting producers in Turkey.

(20) Three companies within a group of Turkish exporting producers requested an exemption from the obligation to provide a questionnaire reply. One of these companies argued that it was mainly active in production of seabass and seabream and it only produces a small volume of product concerned. One company is running a small supermarket and is only marginally involved with the product concerned, and one company was a related importer who did not have important sales of the product concerned in the investigation period. The Commission decided to exempt the company running the small supermarket from the obligation to fill in the questionnaire response. However, it maintained its position that the company mainly active in production of seabass and seabream had to fill in the questionnaire as well as the related importer since the volumes produced (in case of the exporting producer) or traded (in case of the related importer) were still important.

(21) Questionnaire replies were received from the GOT and all of the other sampled groups of exporting producers in Turkey and the companies asking for individual examination.

(23) The investigation of subsidy and injury covered the period from 1 January 2013 to 31 December 2013 (the investigation period). The examination of trends relevant for the assessment of injury covered the period from 1 January 2010 to the end of the investigation period (the period considered).

(25) As already mentioned in recital 1, the definition of the product concerned was subject to a corrigendum. The correction was purely editorial and the scope was not affected.

(26) The investigation showed that the product produced and sold on the Turkish domestic market and/or exported to the Union and the product produced and sold in the Union by the Union industry have the same basic physical, technical and chemical characteristics and the same basic uses.

(27) The Commission decided at this stage that those products are therefore like products within the meaning of Article 2(c) of the basic Regulation.

(28) Some interested parties claimed that smoked trout should be excluded from the product scope. According to these parties there were differences in the production process and differences in physical, technical and chemical characteristics when compared to non-smoked trout. Furthermore, the Turkish authorities claimed that the cost structure of smoked fillets producers was significantly different from the cost structure of other producers which would indicate that smoked and non-smoked products were not a single product. Finally, these parties referred to two prior anti-dumping investigations concerning similar products (large rainbow trout and salmon) concluded in 2004 (5) and 2005 (6) respectively where smoked products were outside the product scope. The parties referred in particular to recital 9 of Council Regulation (EC) No 437/2004 (7) where it would be acknowledged that the process of smoking would alter the basic characteristics of the product in question. On this basis smoked trout should be excluded from the product scope in the current investigation.

(29) The investigation showed that the various presentations — ‘ive’, ‘chilled’, ‘frozen’ or ‘smoked’ — covered by the definition of the product concerned share the same basic physical, technical and chemical characteristics. In particular, all trout had the same intrinsic qualities (chemical, nutritional or other) and the processing did not deprive the fish therefrom, but resulted only in different presentations which were merely different means of preserving the fish before further processing, preparation, cooking or consumption. Therefore, it was concluded that conservation by smoking does not materially alter the basic physical, technical and chemical characteristics of the product.

(30) Regarding different production processes and different cost structures, the parties did not explain how this could have had an impact on the conclusion that smoked and non-smoked products were a single product. In any event, any possible difference in production processes has as such no impact on the definition of the product scope. Furthermore, in this specific case, the production process and cost structure of smoked fillets were in fact not significantly different from the production process and cost structure of other presentations of trout. The main cost element of each presentation was farming cost, consisting essentially of feed (fishmeal and fish oil), energy cost and the cost of eggs or juveniles. The claims made in this regard should therefore be rejected.

(31) In the previous investigations to which the interested parties referred to, and in contrast to the current investigation, smoked products were not included in the complaint leading to the initiation of these cases. Therefore, they were not within the scope of these investigations and consequently not investigated. Recital 9 of Regulation (EC) No 437/2004 addressed a claim by an interested party that frozen whole fish and fillets should be excluded from the proceeding. However, the investigation did not find or specifically conclude that smoked products should be excluded from the product scope. On the basis that the current investigation found that all presentations of trout have the same basic physical, technical and chemical characteristics, this argument should be rejected.

(32) For the reasons above the claim that the smoked products should be excluded from the scope of the product scope was at this stage rejected.

(33) The complainant alleged that the GOT is subsidising its aquaculture sector. The complaint contained prima facie evidence for several subsidy practices included in both legislation and a number of policy documents which are the basis for the state support of the sector.

(34) The Commission reviewed and analysed the documents provided in the complaint as well as additional documents submitted by the GOT and by sampled exporting producers in the course of the investigation and found that all of these documents show that the aquaculture sector in the Republic of Turkey receives preferential treatment in many areas.

(35) The decision by the Turkish authorities to subsidize specifically the aquaculture sector dates back to 2003 and has resulted in large amounts of public money being transferred to Turkish producers and exporters over the last 10 years.

(36) In the framework of the pre-initiation consultations between the GOT and the Commission, as mentioned in recitals 3 and 4 above, the GOT did not challenge the existence of any of the investigated schemes.

(39) The following legal provisions provide for state support to investments in the aquaculture sector: Turkish Decree No 2012/3305 published on 19 June 2012 concerning State Support for Investments and Communique No 2012/1 published on 20 June 2012 on the Implementation of the Decree concerning State support for Investments in the Official Gazettes No 28328 and 28329 respectively.

(40) Even though the Turkish Decree No 2012/3305 is the relevant support scheme for the investigation period, similar provisions had been in place since 2006 and even before. This fact is relevant as subsidies linked to the purchase of fixed assets, such as investment subsidies, may be allocated to the investigation period even if they were granted before the investigation period.

(41) The investigation confirmed the existence of the various state support schemes. Aquaculture production is expressly listed in Annex 2/A of Decree No 2012/3305 among the sectors which may benefit from incentives like value added tax (VAT) exemption, customs duty exemption, tax reduction, contributions to investment, social security premium support (employers' contribution, land allocation, interest rate support, income tax support and social security premium support (employees' contribution). Based on the level of economic development of the six regions determined by the Decree No 2012/3305 the aid intensity can vary.

(42) Even though the existence of ‘Regional investment’ programmes was confirmed by the investigation, none of the sampled companies benefited from all schemes. A few of them benefited from VAT and customs duty exemptions that apply equally to all six regions in Turkey. However, as the sampled companies purchased machinery and equipment from Union companies within the EU-Turkey Customs Union, the customs duty was not due. Moreover, as Turkey applies an input and output VAT system, the benefits obtained during the investigation period consisted only of a time gain of two months until the companies were refunded their VAT by the tax authorities. The actual benefit would be the interest payable to a commercial bank for the period until the VAT is refunded. This benefit is negligible and was not further analysed.

(43) One sampled company benefited from a tax reduction because of the purchase of machinery made in the framework of the abovementioned regulation of state support to investments. Instead of the generally applicable corporate tax rate of 20 % it only paid 4 %.

(44) The same sampled company also benefited from the Social Security Premium Support Programme. As a holder of an investment encouragement certificate it benefited from the social security premium support for employers' and employees' contribution. After having completed its investment, the company's social security premium employers' and employees' shares corresponding to the minimum wage were exempted by the Social Security Institution for newly created employment. The Ministry of Economy funded the scheme.

(45) The state support to investments is provisionally considered a subsidy within the meaning of Article 3(1)(a)(ii) and Article 3(2) of the basic Regulation, when the state support takes the form of a tax incentive, i.e. when government revenue is otherwise due but in fact forgone or not collected.

(46) The subsidy is specific and countervailable since the benefit of the subsidy is specifically limited to a list of economic sectors. The access to the subsidy is further limited to certain enterprises operating in certain sectors. In addition, the subsidy does not meet the non-specificity requirements of Article 4(2)(b) of the basic Regulation, given that the number and quality of the restrictions applicable to certain sectors, most notably those restricting to either certain types of enterprises or completely excluding certain sectors.

(47) Aquaculture is expressly designated in Annex 2A of the Decree as one of the activities which may benefit from this type of tax exemptions. Annex 4 to the decree lists the sectors which may not benefit from any incentive under this scheme.

(48) Consequently, according to Article 3(2) of the basic Regulation the above mentioned subsidies are considered a financial contribution of the government that confer a benefit to the recipients.

(49) One company availed of benefits under the abovementioned schemes. However, the benefit to the company was found to be negligible.

(50) Direct subsidies per kg of trout produced are the main subsidy scheme benefiting the product concerned. These subsidies are revised each year as part of the yearly review of agricultural subsidies.