Commission Implementing Regulation (EU) 2016/262 of 25 February 2016 imposing a provisional anti-dumping duty on imports of aspartame 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(4) thereof,

After consulting the Member States,

Whereas:

(1) On 30 May 2015, the European Commission (‘the Commission’) initiated an anti-dumping investigation with regard to imports into the Union of aspartame originating in the People's Republic of China (‘the country concerned’ or ‘the PRC’). The Commission initiated the investigation on the basis of Article 5 of the basic Regulation. It published a Notice of Initiation in the Official Journal of the European Union (2) (‘the Notice of Initiation’).

(2) The Commission initiated the investigation following a complaint lodged on 16 April 2015 by Ajinomoto Sweeteners Europe SAS (‘the complainant’). The complainant is the sole producer of aspartame in the Union. The complainant thus represents the total Union production of aspartame. The complaint contained evidence of dumping and of resulting material injury that was sufficient to justify the initiation of the investigation.

(3) 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 complainant, the known exporting producers and the Chinese authorities, the known importers, users, traders and distributors known to be concerned about the initiation of the investigation and invited them to participate.

(4) 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.

(5) In the context of the initiation of the investigation, none of the interested parties requested a hearing before the Commission services and/or with the Hearing Officer in trade proceedings.

(6) In the Notice of Initiation, the Commission informed interested parties that it envisaged Japan or South Korea as third market economy countries within the meaning of Article 2(7)(a) of the basic Regulation. Therefore, the Commission informed producers in Japan and South Korea about the initiation and invited them to participate. Interested parties had an opportunity to comment and to request a hearing with the Commission and/or the Hearing Officer in trade proceedings.

(7) In its Notice of Initiation, the Commission stated that it might sample exporting producers and importers of the product concerned in the Union in accordance with Article 17 of the basic Regulation.

(8) To decide whether sampling was necessary and, if so, to select a sample, the Commission asked all known importers to provide the information specified in the Notice of Initiation.

(9) None of the known importers contacted by the Commission replied to the questionnaire in the Notice of Initiation for the selection of a sample. Sampling was therefore not applicable in this investigation.

(10) Two distributors, namely traders who buy and resell aspartame solely produced by the Union producer, made themselves known and provided a reply to the questionnaire.

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

(12) Six exporting producers in the country concerned provided the requested information and agreed to be included in a sample. In accordance with Article 17(1) of the basic Regulation, the Commission selected a sample of three exporting producers on the basis of the largest representative volume of exports to the Union which could reasonably be investigated within the time available. On this basis, the three sampled Chinese exporting producers or groups that agreed to cooperate represent about 90 % of the total imports of aspartame originating in the PRC. In accordance with Article 17(2) of the basic Regulation, all known exporting producers concerned, and the authorities of the country concerned, were consulted on the selection of the sample. No comments were made.

(13) Three non-sampled exporting producers in the country concerned requested individual examination under Article 17(3) of the basic Regulation and were provided with the claim form. However, none of these three exporting producers provided the completed claim form within the given deadlines. Therefore, the Commission considers that the claims for individual examination made by the three non-sampled exporting producers are not valid.

(14) For the purposes of Article 2(7)(b) of the basic Regulation, the Commission sent MET claim forms to the six cooperating exporting producers in the country concerned that wished to apply for an individual dumping margin. Two of the six cooperating exporting producers submitted a completed MET claim form but one of them subsequently withdrew its request.

(15) The Commission sent questionnaires to the Union producer, the cooperating exporting producers in the country concerned, one producer in Japan, chosen as the analogue country as explained in recital 45 below, the known users and to the two distributors who made themselves known after the publication of the notice of initiation.

(16) Questionnaire replies were received from the Union producer, the three sampled exporting producers in the country concerned, one producer in Japan (‘the analogue country’), two distributors and five users.

(18) The investigation of dumping and injury covered the period from 1 April 2014 to 31 March 2015 (‘the investigation period’ or ‘IP’). The examination of trends relevant for the assessment of injury covered the period from January 2011 to the end of the investigation period (‘the period considered’).

(19) The product concerned, as defined in the Notice of Initiation, is aspartame (N-L-α-Aspartyl-L-phenylalanine-1-methyl ester, 3-amino-N-(α-carbomethoxy-phenethyl)-succinamic acid-N-methyl ester), CAS RN 22839-47-0, originating in the PRC, as well as aspartame originating in the PRC and contained in preparations and/or mixtures comprising also other sweeteners and/or water, currently falling within CN code(s) ex 2924 29 98, ex 2106 90 92, ex 2106 90 98, ex 3824 90 92 and ex 3824 90 93.

(20) Aspartame is a sweetening ingredient produced in the form of white, odourless crystals of various sizes with a taste profile similar to sugar but with an increased sweetness potency and considerably smaller caloric value. For this reason it is mainly used as a sugar substitute in the soft drink, food and dairy industries.

(21) The investigation showed that preparations and/or mixtures containing aspartame originating in the PRC were in fact not imported into the Union market during the investigation period. The Commission concluded that due to the lack of imports, preparations and mixtures should not be included in the definition of the product scope. This clarification of the product definition has no bearing on the findings of dumping, injury, causation and Union interest.

(22) The definition of the product concerned should therefore be clarified as referring only to aspartame (N-L-α-Aspartyl-L-phenylalanine-1-methyl ester, 3-amino-N-(α-carbomethoxy-phenethyl)-succinamic acid-N-methyl ester), CAS RN 22839-47-0, originating in the PRC, currently falling within CN code ex 2924 29 98 (‘the product concerned’, or ‘aspartame’).

(24) For the determination whether the criteria in Article 2(7)(c) of the basic Regulation are met, the Commission sought the necessary information by asking the exporting producers to fill in the MET claim form. One sampled exporting producer claimed MET and submitted the MET claim form within the deadline.

(25) The Commission verified the submitted information at the premises of the company concerned.

(26) The verification showed that the exporting producer did not comply with the criteria set forth in Article 2(7)(c) of the basic Regulation and therefore could not be granted MET, in particular shortcomings were found with regard to criteria 2 and 3.

(27) The Commission disclosed the detailed findings to the exporting producer concerned, to the authorities of the country concerned and to the Union industry. The company contested the findings of the Commission and provided written comments on the disclosure. The main substantial comments received are addressed below.

(28) Regarding criterion 2, the exporting producer reiterated that it has one clear set of independently audited accounting records, complying with the Hong Kong financial reporting standards.

(29) Regarding criterion 3, the exporting producer claimed that the benefits obtained from preferential tax regime(s), grants or purchase of the land-use rights should be considered as similar to a subsidy and therefore should not be assessed in the framework of a MET investigation.

(30) Moreover, the exporting producer claimed that the current assessment of the criteria 2 and 3 contradicts the conclusion of the two previous investigations in which the company requested MET, and in which it was concluded that criteria 2 and 3 were met.

(31) The Commission recalls that for each investigation the MET decision is made independently, on the basis of the specific circumstances relevant to the investigation and by referring to the current practice. All investigations need to be conducted on a case-by-case basis.

(32) Concerning the assessment of the preferential tax regime(s) and grants in the framework of the criterion 3, the Commission considers that the purpose of the MET assessment and the anti-subsidy investigation are different in so far as the MET assessment establishes whether a company operates under market-economy conditions, while the anti-subsidy investigation establishes whether a company benefits from countervailable subsidies. These two issues have to be dealt with separately, also because the relevant aspect in criterion 3 is whether production costs and financial situation of firms are not subject to significant distortions carried over from the former non-market economy system and not whether a company benefits from countervailable subsidies (3).

(33) Regarding the land-use rights transfer price, the Commission considers that the comments received do not change its conclusion that the land-use right was not obtained at market price value.

(34) Moreover, the exporting producer requested a hearing chaired by the Hearing Officer. This hearing was held on 6 January 2016 and the company could develop all the reasons why it considers that it fulfils the requirements of criteria 2 and 3 of the MET.

(35) However, it was considered after the hearing that the applicant still failed to demonstrate that it fulfilled the requirements of the second and third indents of Article 2(7)(c) of the basic Regulation. In particular, the applicant failed to demonstrate that it was not subject to significant distortions carried over from the non-market economy system. Indeed, the investigation revealed that the company benefited from preferential tax regime(s), grants and preferential land-use right transfer price and therefore did not fulfil the requirements of criterion 3 of the MET assessment.

(36) Given the seriousness of the findings made for criterion 3 it is not considered necessary to further develop the shortcomings found for criterion 2 at this stage of the investigation.

(37) The Commission informed the exporting producer of the final MET determination.

(38) According to Article 2(7)(a) of the basic Regulation normal value was determined on the basis of the price or constructed value in a market economy third country for the exporting producers not granted MET. For this purpose, a market economy third country had to be selected (‘the analogue country’).

(39) In the Notice of Initiation, the Commission informed interested parties that it envisaged Japan or South Korea as an appropriate analogue country and invited interested parties to comment.

(40) Comments were received from the China Chamber of International Commerce, from the China Chamber of Commerce of Metals, Minerals & Chemicals Importers & Exporters, as well as from Chinese exporting producers, which all contested the use of Japan as an analogue country. It was claimed that South Korea was a more appropriate analogue country because, among other reasons, the domestic South Korean market was more competitive than that of Japan.

(41) In order to investigate all possibilities for selecting an appropriate analogue country, the Commission invited all known unrelated importers, the sampled Chinese exporting producers, the China Chamber of International Commerce, and the China Chamber of Commerce of Metals, Minerals & Chemicals Importers & Exporters to provide all relevant information of any potential market economy third countries other than Japan and South Korea.

(42) Based on the information available to the Commission, it was confirmed that aspartame was produced in a limited number of countries, namely in the PRC, in Japan, in South Korea and in the Union.

(43) Based on the comments received, the Commission contacted a producer known to produce aspartame in South Korea, which however did not agree to cooperate with the investigation.

(44) A Japanese producer was contacted and it provisionally agreed to cooperate with the investigation.

(45) The Commission concluded at this stage that Japan is an appropriate analogue country under Article 2(7)(a) of the basic Regulation.

(46) The information received from the cooperating producer in the analogue country was used as a basis for the determination of the normal value for the exporting producers not granted MET, pursuant to Article 2(7)(a) of the basic Regulation.

(47) Firstly, the Commission examined whether, in accordance with Article 2(2) of the basic Regulation, the total volume of the sales of the like product to independent customers in Japan was representative. To this end, this total sales volume was compared to the total volume of the product concerned exported by each of the sampled Chinese exporting producers to the Union. On that basis, it was found that the like product was sold in representative quantities on the Japanese market.

(48) Secondly, the Commission identified the product types sold domestically by the producer in the analogue country that were identical or directly comparable with the types sold for export to the Union by the sampled Chinese exporting producers. It compared on a product type basis the sales volume in Japan with the exports to the Union by each sampled exporting producer. This comparison showed that all product types were sold in representative quantities in Japan.

(49) The Commission subsequently examined for the analogue country producer whether each type of the like product sold domestically could be considered as being sold in the ordinary course of trade pursuant to Article 2(4) of the basic Regulation. The normal value is based on the actual domestic price per product type, irrespective of whether those sales are profitable or not, if the volume sold at a net sales price equal to or above the calculated cost of production, represents more than 80 % of the total sales volume of that type, and where the weighted average sales price of that product type is equal to or higher than the unit cost of production. For all product types compared, the normal value could be based on the weighted average of the prices of all domestic sales of that product type during the investigation period.

(50) Finally, the Commission identified the product types exported from the PRC to the Union and not sold in Japan and constructed normal value based on Article 2(3) and (6) of the basic Regulation. To construct normal value for these types, the Commission took the average cost of production of the closest product types produced by the analogue country producer and added a reasonable amount for selling, general and administrative (‘SG&A’) expenses and profit corresponding to the weighted average amounts realised by the analogue country producer on domestic sales of the like product, in the ordinary course of trade during the investigation period.

(51) The three sampled exporting producers exported to the Union either directly to independent customers or through related companies acting as an importer.

(52) If the exporting producers export the product concerned directly to independent customers in the Union, the export price was the price actually paid or payable for the product concerned when sold for export to the Union, in accordance with Article 2(8) of the basic Regulation.

(53) If the exporting producers export the product concerned to the Union through related companies acting as an importer, the export price was established on the basis of the price at which the imported product was first resold to independent customers in the Union, in accordance with Article 2(9) of the basic Regulation. In this case, adjustments to the price were made for all costs incurred between importation and resale, including SG&A expenses, and for a reasonable margin of profit.

(54) The Commission compared the normal value and the export price of the sampled exporting producers on an ex-works basis.

(55) Where justified by the need to ensure a fair comparison, the Commission adjusted the normal value and/or the export price for differences affecting prices and price comparability, in accordance with Article 2(10) of the basic Regulation.

(56) As regards export prices of the sampled exporting producers, adjustments were made for transport, insurance, handling, credit cost, bank charges and commissions. Concerning domestic prices of the analogue country producer, adjustments were made for domestic transportation costs, credit costs and handling.

(57) One exporter requested a currency conversion adjustment to the export price on the basis of Article 2(10)(j) of the basic Regulation. This exporting producer entered into forward foreign exchange settlement agreements in order to neutralise the appreciation of its currency vis-à-vis the currencies normally applied to the export sales, namely the euro and the US dollar. However, the investigation showed that there was no direct link between foreign exchange contracts and commercial export sales contract. Therefore, the request was not accepted.

(58) One sampled exporting producer in the PRC claimed that a series of factors should have been examined in order to determine whether an adjustment was warranted in order to ensure a fair comparison between the export price of the sampled Chinese exporters and the normal value established in Japan. These factors concerned the level of trade, the quantity of the sales, physical quality and branding differences, and differences in costs such as research and development, raw material, fixed costs and tax schemes.