Commission Implementing Regulation (EU) 2016/2005 of 16 November 2016 imposing a provisional anti-dumping duty on imports of certain lightweight thermal paper originating in the Republic of Korea

THE EUROPEAN COMMISSION,

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

Having regard to Regulation (EU) 2016/1036 of the European Parliament and of the Council of 8 June 2016 on protection against dumped imports from countries not members of the European Union (1) (‘the basic Regulation’), and in particular Article 7 thereof,

After consulting the Member States,

Whereas:

(1) On 18 February 2016, the European Commission (‘the Commission’) initiated an anti-dumping investigation with regard to imports into the Union of certain lightweight thermal paper originating in the Republic of Korea (‘the country concerned’) on the basis of Article 5 of Council Regulation (EC) No 1225/2009 (2). It published a Notice of Initiation in the Official Journal of the European Union (3) (‘the Notice of Initiation’).

(2) The Commission initiated the investigation following a complaint lodged on 4 January 2016 by the European Thermal Paper Association (ETPA) (‘the complainant’) on behalf of producers representing more than 25 % of the total Union production of certain lightweight thermal paper. 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 known Union producers, the known exporting producers and the Korean authorities, known importers, users and traders 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 (‘the Hearing Officer’).

(5) Two hearings were held with the Hearing Officer upon request of the Hansol group, to which the two related cooperating exporting producers belong. During the first hearing in March 2016, exemption from replying to the questionnaire was requested for a number of related converters. Following the hearing and a verification visit to one of the related converters to ascertain the arguments underlying the exemption request, the Commission maintained that the questionnaire needed to be completed by one of the related converters and granted exemption to three other related converters. At the second hearing in September 2016, the two cooperating exporting producers, a number of unrelated importers and users, and representatives of the Korean government raised a number of claims as regards the definition of the product concerned, the complaint, injury, the causal link and Union interest.

(6) In the Notice of Initiation, the Commission also stated that it might sample the interested parties in accordance with Article 17 of the basic Regulation.

Sampling of Union producers

(7) In its Notice of Initiation, the Commission stated that it had provisionally selected a sample of Union producers. The Commission selected the sample on the basis of the highest representative sales volume while ensuring a geographical spread. This sample consisted of three Union producers in two different Member States. The sampled Union producers accounted for between 75 % and 95 % (4) of the sales volumes to unrelated customers in the Union of the companies that came forward in the standing exercise and of the estimated total sales volume to unrelated customers in the Union. The Commission invited the interested parties to comment on the provisional sample. No parties made comments on the provisional sample, thus the provisional sample was confirmed. The sample is representative of the Union industry.

Sampling of importers

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

(9) One unrelated converter with importing activities provided the requested information and agreed to be included in the sample. In view of the low number of replies, the Commission decided that the sampling was not necessary. No comments were made.

(10) The Commission sent questionnaires to two related exporting producers, namely Hansol Paper Co., Ltd (‘Hansol Paper’) and Hansol Artone Paper Co., Ltd (‘Artone’), both belonging to the Hansol group as well as to their related trader Hansol Europe B.V. (‘Hansol Europe’) and related converter Schades Ltd (‘Schades’). Questionnaires were also sent to the three sampled Union producers, and around 50 parties (26 users, 21 intermediaries, two associations and one unrelated importer) who expressed an interest in the investigation.

(11) Questionnaire replies were received from the two exporting producers and their related trader and converter, the three sampled Union producers, nine unrelated converters, two traders at different levels, one unrelated converter with importing activities and one association. Moreover, eleven parties responded with free format submissions.

(13) Given the limited number of parties that submitted some data, some of the figures presented below are in the form of ranges.

(14) The investigation of dumping and injury covered the period from 1 January 2015 to 31 December 2015 (‘the investigation period’). The examination of trends relevant for the assessment of injury covered the period from 1 January 2012 to the end of the investigation period (‘the period considered’).

(15) The product concerned is lightweight thermal paper (‘LWTP’) weighing 65 gr/m2 or less; in rolls of a width of 20 cm or more, a weight of the roll (including the paper) of 50 kg or more and a diameter of the roll (including the paper) of 40 cm or more (‘jumbo rolls’); with or without a base coat on one or both sides; coated with a thermo-sensitive substance (that is a mixture of dye and a developer that react and form an image when heat is applied) on one or both sides; and with or without a top coat, originating in the Republic of Korea, currently falling within CN codes ex 4809 90 00, ex 4811 90 00, ex 4816 90 00 and ex 4823 90 85 (‘the product concerned’).

(16) LWTP can be produced with several types of developers: with developers containing bisphenol A and bisphenol S (LWTP containing phenol), or with developers that do not contain any phenol (phenol-free LWTP). Both types of LWTP are concerned by the present investigation.

(17) Lightweight thermal paper is used in point-of-sale (POS) applications such as the receipts issued by retail.

(19) The Commission decided at this stage that those products are therefore like products within the meaning of Article 1(4) of the basic Regulation.

(20) The cooperating exporting producer requested the exclusion of phenol-free LWTP from the product scope on the grounds that phenol-free LWTP is neither produced nor exported from the Republic of Korea and that it is different from LWTP containing phenol, because of its chemical composition, consumer perception, production processes, end-uses and market price. The same party also requested the exclusion of LWTP weighing less than 44 gr/m2.

(21) In this respect, the investigation showed that there are several types of LWTP — including those with or without phenol and those of less than 44 gr/m2 — and that all form one single product, because they all share similar basic characteristics, similar production processes, identical end-uses and are interchangeable from the point of view of users and consumers. Indeed, the investigation showed that all product types consist of a base paper with a thermo-sensitive coating and that in essence all products are the result of similar production processes. Furthermore, all types of LWTP have similar properties and are used for printing with a thermal printer. Therefore, from the point of view of the user and the consumer, they all have similar end-results.

(22) In addition, it should be noted that the request for exclusion of the LWTP weighting less than 44 gr/m2 was in any event not substantiated with evidence.

(23) Although the exporting producer claimed that there might be different consumer perception between LWTP containing phenol or not, no substantiate evidence was put forward to justify that claim and the investigation confirmed that the vast majority of consumers is not aware of the particular composition of LWTP and therefore do not make any difference between LWTP containing phenol or not. In addition, market prices do not significantly differ between LWTP containing phenol or phenol-free LWTP. Therefore, it is provisionally concluded that all types of LWTP compete between each other, albeit with some price differences. The price competition amongst product types is further developed in section 5.2.4.

(24) For the reasons above, products weighing less than 44 gr/m2 and phenol-free LWTP cannot be excluded from the definition of the like product at this stage. Both claims were thus provisionally rejected.

(25) In the investigation period, the Hansol group sold between 15 and 25 % of its total Union sales volume of the product concerned either directly to unrelated parties or indirectly for re-sales via related parties; the bulk of its Union sales (between 75 % and 85 %) were sales to related parties destined for conversion into small rolls. The ranges are given for reasons of confidentiality. In order to arrive at a representative calculation of dumping, both sales channels have been included in that calculation and given the appropriate weight.

(26) The Commission first examined whether the total volume of domestic sales for the cooperating exporting producers was representative, in accordance with Article 2(2) of the basic Regulation. The domestic sales are representative if the total domestic sales volume of the like product to independent customers on the domestic market per exporting producer represented at least 5 % of its total export sales volume of the product concerned to the Union during the investigation period. On this basis, the total sales by the exporting producers of the like product on the domestic market were representative.

(27) The Commission subsequently identified the product types sold domestically that were identical or closely resembling the product types sold for export to the Union for the exporting producers with representative domestic sales.

(28) The Commission then examined whether the domestic sales by the exporting producers on its domestic market for each product type that is identical or comparable with a product type sold for export to the Union were representative, in accordance with Article 2(2) of the basic Regulation. The domestic sales of a product type are representative if the total volume of domestic sales of that product type to independent customers during the investigation period represents at least 5 % of the total volume of export sales of the identical or comparable product type to the Union. The Commission established that three products were sold at volumes less than 5 % of the total volume of export sales to the Union. These product types were considered to be comparable product types to those sold in the domestic market, the only differences being the weight of the paper and in one instance, the type of phenol used. For these product types, the normal value was constructed.

(29) The Commission next defined the proportion of profitable sales to independent customers on the domestic market for each product type during the investigation period in order to decide whether to use actual domestic sales for the calculation of the normal value, in accordance with Article 2(4) of the basic Regulation.

(31) In this case, the normal value is the weighted average of the prices of all domestic sales of that product type during the investigation period.

(33) The analysis of domestic sales showed that most of the domestic sales were profitable and that the weighted average sales price was higher than the cost of production. Accordingly, the normal value was calculated as a weighted average of the prices of all domestic sales during the investigation period.

(34) For those product types with no or insufficient sales of the like product in representative quantities on the domestic market, the Commission constructed the normal value in accordance with Article 2(3) and (6) of the basic Regulation.

(36) For the product types not sold in representative quantities on the domestic market, the average SG&A expenses and profit of transactions made in the ordinary course of trade on the domestic market for those types were added. For the product types not sold at all on the domestic market, the weighted average SG&A expenses and profit of all transactions made in the ordinary course of trade on the domestic market were added.

(37) As explained in recital 25, the Union sales of the Hansol group during the investigation period consisted of jumbo rolls sold to unrelated parties as well as jumbo rolls sold to related parties for re-sales, but the vast majority of the sales to the Union were sales of the product concerned to related companies for conversion into small rolls that were subsequently resold to unrelated customers.

(38) For sales of 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.

(39) For sales of the product concerned to the Union through related companies acting as an importer/trader and/or as a converter, the export price was established on the basis of the price at which the imported product or imported and converted product was first resold to independent customers in the Union, in accordance with Article 2(9) of the basic Regulation. The sales price by the related party to unrelated customers was adjusted backwards to an ex-works price by deducting the SG&A of the related party, a reasonable amount of profit and other allowances whenever applicable. If the sale concerned a small roll, the reported and verified conversion costs were deducted in addition.

(40) With respect to the profit margin used, in line with established case-law of Union courts, the Commission did not use profit margins of the related companies as they are considered unreliable. One unrelated importer cooperated but its profitability was confidential and cannot be disclosed. Therefore, in the absence of any other information, a reasonable profit margin used in a previous proceeding concerning another paper product (coated fine paper) manufactured by a similar industry was used (5). As both products and industries are very similar (both are capital intensive industries, and in addition some producers of LWTP also produce coated fine paper), this method for determining a reasonable profit margin was found to be reasonable. The profit margin used, in the absence of any other available information, is 4,5 %.

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

(42) 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.

(43) As the origin of the jumbo rolls used for the production and sales of the small rolls was untraceable, the export price of jumbo rolls sold to related parties for conversion into small rolls has been compared to a normal value established at an aggregate level, i.e. based, for each product type, on an average domestic sales price and cost of production for both Hansol Paper and Artone.

(44) The dumping margin for the export prices for direct sales of jumbo rolls to unrelated parties and sales of jumbo rolls via related parties was established by comparing the Hansol Paper export price per product type with the Hansol Paper normal value per product type and the Artone export price per product type with the Artone normal value per product type.

(45) The dumping margin thus calculated is 10 %-15 % for sales of jumbo rolls which are subsequently converted into small rolls for sales to unrelated parties and 0,5-5 % for sales of jumbo rolls to unrelated parties and related parties.

(46) As explained in recital 25, 15 %-25 % of the Hansol group's exports to the Union were (direct or indirect) sales of jumbo rolls during the investigation period, whereas the remaining sales were sales of jumbo rolls to related parties that were converted and resold as small rolls. The above dumping margins have been weighted accordingly. This was done by applying the share of the jumbo rolls sales for direct or indirect sales to unrelated parties (i.e. 15 %-25 %) to the dumping margin calculated for jumbo rolls (0,5 %-5 %) and by applying the share of the jumbo rolls sales to related parties for conversion into and subsequent resale as small rolls to unrelated parties (i.e. 75 %-85 %) to the dumping margin calculated for jumbo rolls converted into small rolls (10 %-15 %).

(47) For the cooperating exporting producers, the Commission compared the weighted average normal value of each type of the like product with the weighted average export price of the corresponding type of the product concerned, in accordance with Article 2(11) and (12) of the basic Regulation.

(49) For all other exporting producers in the Republic of Korea, the Commission established the dumping margin on the basis of the facts available, in accordance with Article 18 of the basic Regulation. To this end, the Commission determined the level of cooperation of the exporting producers. The level of cooperation is the volume of exports of the cooperating exporting producers to the Union expressed as proportion of the total export volume — as reported in Eurostat import statistics — from the country concerned to the Union.

(50) The level of cooperation in this case is high because the imports of the cooperating exporting producers constituted the total exports to the Union during the investigation period. On this basis, the Commission decided to base the residual dumping margin at the level of the cooperating company.

(51) The like product was manufactured by five producers in the Union during the investigation period. They constitute the ‘Union industry’ within the meaning of Article 4(1) of the basic Regulation.

(52) The total Union production during the investigation period was established at around 372 645 tonnes. The Commission established the figure on the basis of the questionnaire reply submitted by the complainant, cross-checked against the individual questionnaire replies of the sampled Union producers. As indicated in recital 7, three Union producers were selected in the sample representing between 75 and 95 % of the total Union production of the like product.

(53) The Commission established the Union consumption on the basis of sales to unrelated customers in the Union by the Union industry (source: questionnaire reply submitted by the complainant and verified individual questionnaire replies of the sampled Union producers), the complainant's estimates of LWTP imports from the United States of America (USA) and the People's Republic of China (PRC) and the sales in the Union of the exporting producer (source: dumping questionnaire).