Commission Implementing Regulation (EU) 2020/705 of 26 May 2020 imposing a provisional anti-dumping duty on imports of certain heavyweight 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 10 October 2019, the European Commission initiated an anti-dumping investigation with regard to imports into the Union of certain heavyweight thermal paper originating in the Republic of Korea (‘Korea’ or ‘the country concerned’) on the basis of Article 5 of ‘the basic Regulation’. The Notice of Initiation (‘NoI’) was published in the Official Journal of the European Union (2).

(2) The Commission initiated the investigation following a complaint lodged on 26 August 2019 by the European Thermal Paper Association (‘the complainant’) on behalf of producers representing more than 25 % of the total Union production of certain heavyweight thermal paper (‘HWTP’ or ‘the product concerned’). The complaint contained evidence of dumping and of resulting material injury that was sufficient to justify the initiation of the investigation.

(3) Pursuant to Article 14(5a) of the basic Regulation, the Commission should register imports subject to an anti-dumping investigation during the period of pre-disclosure unless it has sufficient evidence that certain requirements are not met. One of these requirements, as mentioned in Article 10(4)(d) of the basic Regulation, is that there is a further substantial rise in imports in addition to the level of imports which caused injury during the investigation period. The imports of HWTP from Korea showed a sharp decrease by 81 % in the four months following initiation as compared to the same period during the investigation period. The data following initiation was based upon the TARIC codes created for the product concerned at initiation. This was compared to the average imports from the sole Korean exporter during four months in the IP. Therefore, the conditions to register in accordance with Article 14(5a) of the basic Regulation were not met. The Commission did not make imports of the product concerned subject to registration under Article 14(5a) of the basic Regulation, as the condition of Article 10(4)(d), i.e. a further substantial rise in imports, was not met.

(4) 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, known Union producers, the known (exporting) producers and the authorities of the Republic of Korea, known importers, users and associations known to be concerned, about the initiation of the investigation and invited them to participate.

(5) 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.

(6) Two hearings were held with the Commission. During the hearing held on 5 December 2019 upon request of the cooperating exporting producer, the Hansol group, its related importer in the Union, a number of users and representatives of the Korean government raised issues related to the Union HWTP market, injury, causation, legal matters and/or Union interest. During the hearing held on 7 January 2020 upon request of the complainant, the latter and some of its members developed issues related to injury, causation and Union interest. The claims made during these hearings are included in this Regulation.

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

(8) In the Notice of Initiation, the Commission stated that it had decided to limit to a reasonable number the Union producers that would be investigated by applying sampling and that it had provisionally selected a sample of Union producers. The Commission selected the provisional sample on the basis of the production and Union sales volume reported by the Union producers in the context of the pre-initiation standing analysis. The provisional sample thus established consisted of three Union producers in two different Member States that accounted for 58,2 % of estimated total Union production and 57,5 % of total Union sales according to the information available. The Commission made details of this provisional sample available in the file for inspection by interested parties and invited interested parties to comment.

(9) Two interested parties submitted comments with regard to the provisional sample. The complainant fully supported the proposed sample. The exporting producer Hansol Paper Co., Ltd. submitted that the proposed sample was not representative as it included two related companies located in the same country. Hansol Paper Co., Ltd. further claimed that the provisional sample did not ensure a proper geographical spread and proposed to include Ricoh, based in France, in the sample.

(10) The Commission considered that the two producers located in Germany were the largest producers of the like product in the European Union (together they represented circa 47 % of the total production and 44 % of the total sales of the like product in the Union in the investigation period) and that Germany had the highest production and the largest concentration of producers of the like product. Furthermore, Ricoh had indicated that, although it supported the complaint, it was unable to cooperate in the investigation.

(11) The provisional sample consisting of three Union producers was thus confirmed. The final sample, made up of Kanzan Spezialpapiere GmbH and Mitsubishi HiTec Paper Europe GmbH in Germany and Jujo Thermal Ltd. in Finland, was considered representative of the Union industry.

(12) 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.

(13) Two unrelated importers provided the requested information and agreed to be included in the sample. In view of the low number of replies received, the Commission decided that sampling was not necessary. No comments were made to this decision.

(14) The Commission invited the three sampled Union producers, the two unrelated importers that replied to the sampling form and the known exporting producer in Korea, the Hansol group, to fill in the relevant questionnaires made available online.

(15) On 20 October 2019, the exporting producer requested an exemption for three related converters to fill in the annex I to the main questionnaire. In light of the information provided, on 24 October 2019 the Commission provisionally agreed to the request.

(16) Questionnaire replies were received from the three sampled Union producers, one unrelated importer, Ritrama S.p.A., the exporting producer Hansol Paper Co., Ltd (‘Hansol Paper’) and its related importer Hansol Europe B.V. (‘Hansol Europe’). Moreover, two users sent a reply.

(18) Given the limited number of parties that submitted some data, some of the figures presented below are in the form of ranges for reasons of confidentiality (3).

(19) The investigation of dumping and injury covered the period from 1 July 2018 to 30 June 2019 (‘the investigation period’ or ‘IP’). The examination of trends relevant for the assessment of injury covered the period from 1 January 2016 to the end of the investigation period (‘the period considered’).

(20) The product concerned is certain heavyweight thermal paper, defined as thermal paper which weighs more than 65 g/m2; which is sold on rolls of a width of 20 cm or more, weighing 50 kg or more (including paper) and with a diameter of 40 cm or more (jumbo rolls); with or without base coat on one or both sides; coated with a thermo-sensitive substance (i.e. a mixture of dye and a developer that reacts and forms an image when heat is applied) on one or both sides; and with or without top coat originating in the Republic of Korea, currently falling under CN codes ex 4809 90 00, ex 4811 59 00 and ex 4811 90 00 (TARIC codes 4809900020, 4811590020 and 4811900020) (‘the product concerned’).

(21) HWTP is a specialty paper. It has a thermal active coating which reacts to form an image when heat is applied by printers with thermal printheads. HWTP is mainly used for self-adhesive labels for e-commerce packaging, tickets and tags.

(22) HWTP can be produced with several types of developers: with developers containing (bis)phenolic substances such as bisphenol A and bisphenol S (HWTP containing (bis)phenol), or with developers that do not contain any phenol (phenol-free HWTP). All types are concerned by the present investigation. The Commission notes however that since 2 January 2020 HWTP with bisphenol A is banned in the Union (4).

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

(25) Hansol Paper appeared to be the only exporting producer of the product concerned in the country concerned during the investigation period.

(26) The Commission first examined whether Hansol Paper’s total volume of domestic sales 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 represent 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 of Hansol Paper of the like product on the domestic market were representative.

(27) The Commission subsequently identified the product types sold domestically by Hansol Paper that were identical or comparable with the product types sold for export to the Union with representative domestic sales.

(28) The Commission then examined whether the domestic sales of Hansol Paper on its domestic market for each product type that is identical or comparable with the 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 one product type (representing 25-45 % of the total domestic sales of Hansol Paper on its domestic market) was sold at volumes less than 5 % of the total volume of export sales to the Union. For this product type, the normal value was constructed as explained in recitals 33 to 34 below.

(29) The Commission next defined the proportion of profitable sales to independent customers on the domestic market for the product type in question 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 60 to 80 % (5) of all domestic sales of the product type that is identical or comparable with the product type sold for export to the Union 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 profitable sales only.

(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) Hansol Paper exported to the Union either directly to independent customers or indirectly through Hansol Europe, a related importer in the Union

(37) 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.

(38) For sales of the product concerned to the Union through Hansol Europe 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. 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 transport costs.

(39) With respect to the profit margin used, in line with established case-law of Union courts (6), the Commission did not use the profit margin of the related company as it is considered unreliable. Only one party had filled in a questionnaire intended for unrelated importers in the Union and agreed to disclose the profit margin it achieved on its activities related to the product concerned. The profit of Hansol Europe was therefore provisionally replaced by the profit margin of that party.

(40) The Commission compared the normal value and the export price on an ex-works basis.

(41) 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. The normal value was adjusted for transport, packing expenses and credit costs. The export price for handling, loading and ancillary costs, transport, insurance, packing expenses, credit costs, bank charges, commission and year-end rebates when they were found to be reasonable, accurate and supported by verified evidence.

(42) The Commission compared the weighted average normal value of the respective 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.

(43) On that basis, the provisional weighted average dumping margin expressed as a percentage of the CIF Union frontier price, duty unpaid, amounts to 22,3 % for the sole cooperating exporting producer.

(44) For all other exporting producers in the Republic of Korea, should there be any, 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.

(45) The level of cooperation in this case is high because Hansol Paper’s exports constituted 100 % of the total exports from the country concerned to the Union during the investigation period. On this basis, the Commission decided to set the residual dumping margin at the same level as that of the cooperating exporting producer.

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

(48) The total Union production during the investigation period was established at 214 227 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 recitals (8) and (11), three Union producers were selected in the sample representing 58,2 % of the total Union production of the like product.

(49) The Commission established the Union consumption on the basis of sales in the Union by the Union industry, the complainant’s estimates of HWTP imports from other countries and the sales in the Union of the sole Korean exporting producer, as provided in its questionnaire reply.

(51) During the period considered, the Union consumption slightly increased by 1 %. It increased by 5 % in the period between 2016 and 2018 and then decreased by 4 % in the investigation period.

(52) The Commission established the volume of imports on the basis of the questionnaire reply submitted by the sole Korean exporting producer. The market share of the imports was established by comparing the volume of imports with the Union consumption.

(54) Overall, the Korean imports increased by 83 % during the period considered. After a decrease by 31 % in 2017, imports from the Republic of Korea increased significantly by 165 % from 2017 to the investigation period. Overall, their market share increased by 80 % during the whole period and the most significant increase took place between 2017 and the investigation period (+ 165 %).

(55) The Commission established the prices of imports on the basis of the questionnaire reply submitted by the exporting producer.

(57) Import prices from the country concerned increased suddenly in 2018 by 17 percentage points compared to the year before, and by an overall 34 % over the period considered.

(59) The price comparison was made on a type-by-type basis for transactions at the same level of trade, duly adjusted where necessary, and after deduction of rebates and discounts. The result of the comparison was expressed as a percentage of the sampled Union producers’ hypothetical turnover during the investigation period. It showed a weighted average undercutting margin of 11,1 % for imports from the country concerned. Some 99,4 % of the import volumes were found to be undercutting.

(60) In accordance with Article 3(5) of the basic Regulation, the examination of the impact of the dumped imports on the Union industry included an evaluation of all economic indicators having a bearing on the state of the Union industry during the period considered.

(61) As mentioned in recital 11, sampling was used for the determination of possible injury suffered by the Union industry.

(62) For the injury determination, the Commission distinguished between macroeconomic and microeconomic injury indicators. The Commission evaluated the macroeconomic indicators on the basis of data contained in the questionnaire reply from the complainant. These data related to all Union producers. The Commission evaluated the microeconomic indicators on the basis of data contained in the questionnaire replies from the sampled Union producers. Both sets of data were found to be representative of the economic situation of the Union industry.

(63) The macroeconomic indicators are production, production capacity, capacity utilisation, sales volume, market share, growth, employment, productivity, and magnitude of the dumping margin.

(64) The microeconomic indicators are average unit prices, unit costs, labour costs, inventories, profitability, cash flow, investments, return on investments, and ability to raise capital.