Commission Implementing Regulation (EU) 2020/776 of 12 June 2020 imposing definitive countervailing duties on imports of certain woven and/or stitched glass fibre fabrics originating in the People's Republic of China and Egypt and amending Commission Implementing Regulation (EU) 2020/492 imposing definitive anti-dumping duties on imports of certain woven and/or stitched glass fibre fabrics originating in the People's Republic of China and Egypt

COMMISSION IMPLEMENTING REGULATION (EU) 2020/776 of 12 June 2020 imposing definitive countervailing duties on imports of certain woven and/or stitched glass fibre fabrics originating in the People's Republic of China and Egypt and amending Commission Implementing Regulation (EU) 2020/492 imposing definitive anti-dumping duties on imports of certain woven and/or stitched glass fibre fabrics originating in the People's Republic of China and Egypt

THE EUROPEAN COMMISSION,

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

Having regard to Regulation (EU) 2016/1037 of the European Parliament and of the Council of 8 June 2016 on protection against subsidised imports from countries not members of the European Union (‘the basic Regulation’) (1), and in particular Articles 15 and 24(1) thereof,

Whereas:

(1) On 16 May 2019, based on Article 10 of the basic Regulation, the European Commission (‘the Commission’) initiated an anti-subsidy investigation with regard to imports into the Union of certain woven and/or stitched glass fibre fabrics (‘GFF’) originating in the People's Republic of China (the ‘PRC’) and Egypt (together referred to as ‘the countries concerned’). The Commission published a Notice of Initiation in the Official Journal of the European Union (‘Notice of Initiation’) (2) on 16 May 2019.

(2) The Commission initiated the investigation following a complaint lodged on 1 April 2019 by Tech-Fab Europe (‘the complainant’) on behalf of producers representing more than 25 % of the total Union production of certain woven and/or stitched glass fibre fabrics. The complaint contained evidence of subsidisation and of a resulting injury that was sufficient to justify the initiation of the investigation.

(3) Prior to the initiation of the anti-subsidy investigation, the Commission notified the Government of China (‘GOC’) (3) and the Government of Egypt (‘GOE’) (4) that it had received a properly documented complaint, and invited the GOC and the GOE for consultations in accordance with Article 10(7) of the basic Regulation. Consultations were held on 13 May 2019 with the GOC and with the GOE. However, no mutually agreed solution could be reached.

(4) On 21 February 2019, the Commission initiated a separate anti-dumping investigation of the same product originating in the PRC and Egypt (5) (‘the separate anti-dumping investigation’). On 7 April 2020, the Commission imposed definitive anti-dumping duties on imports of the product concerned originating in the PRC and Egypt (6) (‘the definitive anti-dumping Regulation’). The injury, causation and Union interest analyses performed in the present anti-subsidy investigation and the separate anti-dumping investigation are mutatis mutandis identical, since the definition of the Union industry, the sampled Union producers, the period considered and the investigation period are the same in both investigations.

(5) The GOC claimed that the investigation should not be initiated because the complaint did not satisfy the evidentiary requirements of Articles 11(2) and 11(3) of the WTO Agreement on Subsidies and Countervailing Measures (‘SCM Agreement’) and of Article 10(2) of the Basic Regulation. According to the GOC, there was insufficient evidence of countervailable subsidies, injury and a causal link between the subsidised imports and the injury.

(6) The Commission rejected that claim. The evidence submitted in the complaint constituted the information reasonably available to the complainant at that stage. As shown in the memorandum on sufficiency of evidence, which contains the Commission's assessment on all the evidence at the disposal of the Commission concerning the People's Republic of China and Egypt, and on the basis of which the Commission initiated the investigation, there was sufficient evidence at initiation stage that the alleged subsidies were countervailable in terms of their existence, amount and nature. The complaint also contained sufficient evidence of the existence of injury to the Union industry, which was caused by the subsidised imports.

(7) More specifically, during the pre-initiation consultations, the GOC indicated that the complainant's references to any Chinese plans, programmes, or recommendations were irrelevant as they are not binding and that the GFF industry is not mentioned in China’s 13th Five Year Plan nor in the 13th Five Year Plan for the Building Materials Industry (2016-2020). Following initiation, the GOC also stated that GFF is not covered by the document ‘Made in China 2025’. The Commission noted that the GOC does not dispute the existence of such plans, programmes, or recommendations but only the extent to which they are binding or to which they cover the GFF industry. The Commission further observed that the complainant provided evidence indicating that 'new materials' are mentioned in several government documents, while 'glass-based materials' are mentioned in the 13th Five Year Plan for the Building Materials Industry (2016-2020). The GOC failed to produce any evidence showing that those statements would not be applicable to the product concerned.

(8) The GOC also stated that neither the Chinese Export & Credit Insurance Corporation (‘Sinosure’) nor State-owned commercial banks are public bodies and that the GOC did not entrust or direct private banks. The Commission noted that this claim is connected to the claim already evoked above, and that the complaint among others mentioned the Bank Law in China, which the GOC does not dispute to belong to the Chinese legislation. The Commission also highlighted that recent EU anti-subsidy investigations had concluded differently on this matter (7).

(9) Furthermore, the GOC claimed that export buyers' credit are provided to foreign companies and hence do not benefit Chinese GFF producers. The Commission found however that benefits granted to foreign companies owned by Chinese GFF producers may benefit the latter.

(10) The GOC indicated that the tax scheme relating to accelerated depreciation of equipment used by High-Tech enterprises for High-Tech development and production, as well as some of the mentioned grants programmes had been terminated. The Commission took note of this comment, but highlighted that it does not apply to all programmes nor to the different levels of government authorities (i.e. national, regional or local) mentioned in the complaint. In addition, the tax scheme related to accelerated depreciation could still procure ongoing benefits such as depreciation over the lifespan of the relevant equipment, possibly covering the investigation period.

(11) Following initiation, the GOC further argued that the complainant did not establish the conditions for applying an out-of-country benchmark for loans and for land use rights. The Commission found, however, that the allegations contained in the complaint are supported by recent EU anti-subsidy investigations concluding on those matters the need for external benchmarks adjusted to the prevailing conditions in the PRC (8).

(12) In addition, the GOC stated that the complaint lacked sufficient evidence as it relied mostly on previous EU regulations, which concern different product scopes. The Commission however noted that the findings made in previous and recent anti-subsidy investigations relate to the same subsidy programmes alleged in the complaint. Following initiation, the GOC furthermore submitted that substantial changes and reforms had occurred in the financial sector in the years 2016 to 2018, and that the complaint could thus not rely on any pre-existing situation. However, the Commission noted that the complainant also provided additional evidence in the complaint of the continued existence of the subsidy programmes, without having been substantially altered. The Commission further recalled that the GOC failed to provide evidence rebutting the continuation of the relevant programmes. Thus, at the stage of initiation, the evidence available tended to show that there was no relevant change in the subsidy programmes at issue. Ultimately, this was also confirmed in this investigation.

(13) The GOC further claimed, in relation to various subsidies, that the applicant failed to provide evidence of benefit and specificity. The Commission is of the view that the complainant provided sufficient evidence of benefit and specificity as was reasonably available to it. In any event, the Commission examined the evidence in the complaint and provided its own assessment of all relevant elements in the memorandum of sufficiency of evidence, which was put on the open file upon initiation. The GOC reiterated its comments following initiation, but did not provide any further evidence.

(14) Therefore, the Commission concluded that there was sufficient evidence provided in the complaint tending to show the existence of the alleged subsidisation by the GOC.

(15) Finally, a particular element of this case is that the alleged subsidisation in Egypt concerns two companies in the China-Egypt Suez Economic and Trade Cooperation Zone ('SETC-Zone'), a special economic zone which was set up together by the PRC and Egypt, which are the two countries targeted by the complaint. The Commission stated its intention to investigate all subsidies received by these companies in the SETC-Zone, regardless of their source.

(16) During the pre-initiation consultations, the GOC indicated that the complainant had no legal basis to challenge the GOC via the product concerned originating in or exported from Egypt. The Commission noted the concerns of the GOC, but still considered that there was sufficient evidence to start an investigation into the alleged countervailable subsidies granted to the companies in the SETC-Zone, regardless of their source.

(17) Following initiation, the GOC argued that, when establishing the Union consumption, the adjustment made to the import data from the PRC was unfair when compared to the adjustment made to the import data from other third countries like Russia. The GOC further argued that these adjustments were not cross-checked by the Commission. The GOC also argued that there is no information on the record on what constitutes market information / intelligence used in adjustments made to import data.

(18) As also outlined in recital (937), further to the complainant’s import analysis on CN-basis, the imports were also assessed based on import statistics at TARIC level, cross-checked with other sources and adjusted where appropriate. With regards to Russia, the import data was cross-checked and adjusted based on the import data from GFF producers related to the Union producers that were the only known GFF producers in Russia. This methodology was found reasonable leading to an accurate estimate of the imports of the product concerned from Russia. In the same way, during the investigation, as explained in recital (937) below, the Commission cross-checked the Eurostat TARIC-level data with the data submitted by the known producers in the PRC, who came forward during the sampling exercise. The export volume of GFF reported by the cooperating Chinese exporting producers represented the totality of the imports recorded in Eurostat under the relevant TARIC codes and all exports were therefore considered to be the product concerned. Finally, by contrast to what was claimed by the GOC, the complaint explained how market information / intelligence was used to adjust import data. This claim was therefore rejected.

(19) In its comments on initiation, the GOC argued that the market for GFF is segmented and each of the segments represent vastly different price bands. The GOC argued that the three main types of products woven rovings (‘WR’), knitted non-crimp fabrics (‘NCF’), and complex materials (‘CM’) have different composition and production steps/processes, and therefore also production costs and sales prices. Moreover, these three product types have different physical and technical characteristics, which in turn define their end uses. According to the GOC, the price comparison/undercutting assessment, as well as the assessment of the allegedly injurious impact of the Chinese imports as done in the complaint at an aggregate level is misleading and insufficient without actually assessing the extent of the presence, i.e. volume and market share, of the Chinese and the Union producers in each of the product segments.

(20) The Commission considered that the GOC failed to submit any evidence to support those claims. At initiation, the complainant provided sufficient evidence regarding costs and prices of the product under investigation. The fact that different types of products exist that may have different production processes, costs and sales prices does not automatically entail that there is a segmentation of the market. It is noted that in accordance with Article 10(2) of the basic Regulation the complainant must provide the information that is reasonably available to it. As costs and prices of products types produced in China are by nature confidential and not available to the complainant, the Commission considered that the complaint contained sufficient information that was reasonably available to the complainant to initiate the investigation.

(21) Furthermore, the information collected and received by the Commission during the investigation showed that the Union market for GFF is not segmented. The claim that the three product types – WR, NCF and CM – have different physical and technical characteristics, which in turn define their end uses, is factually incorrect. As explained in the complaint and in recitals (129) to (138), and as undisputed by the GOC, the product concerned is used to reinforce thermoplastic and thermoset resins in the composites industry. There are many overlaps in usage; the fabric type chosen will depend on the surface look, the resin flow, the tension to which the finished product will be subject and the application technique. Certain product types are particularly good for closed mould production techniques, or hand lay-up.

(22) The three product types have the following main and overlapping uses: WRs are used on thermoset applications, especially hand lay-up, for marine products (boat hulls and decks), vehicle body panels (e.g. trucks, trains), windmill blades, pipes and tanks. NCFs are used for the construction of marine products (boat hulls and decks), vehicle bodies and panels (e.g. trucks, trains), windmill blades and nacelles, skis and snowboards, pipes and tanks. CMs are used in closed mould applications for vehicle bodies and panels, marine products (boat hulls and decks), windmill nacelles and leisure vehicles.

(23) Finally, the Commission notes that it is not unusual for a product concerned to have product types that have different cost structure and prices. This is the very reason for which the Commission collects data on the basis of detailed product types classification. That classification, aside of fabric forms, distinguished between sales formats, types of glass used, area weight and density of rovings. The undercutting calculation was based on product type per product type comparison and thus all these characteristics were taken into consideration when imports from the PRC were being compared with GFF from Union producers. This argument was therefore rejected.

(24) In its comments on initiation, the GOC further argued that significant differences between import prices of GFF from different sources also makes clear that the Union market for the different product types is segmented and imports from different countries are for different market segments.

(25) As noted above, the information collected by the Commission throughout the investigation confirmed that the Union market for GFF is not segmented. Furthermore, the investigation has shown that Chinese exporting producers and Egyptian exporting producers do not export completely different forms of GFF. The matching between product sold by exporting producers in the PRC and Egypt was at around 90 %. This argument was therefore rejected.

(26) In its comments on initiation, the GOC further argued that the Chinese import price comparison and undercutting calculation in the complaint were based on un-comparable and cherry-picked data that was wrongly adjusted.

(27) As mentioned above, Article 10(2) of the basic Regulation sets the standard of the evidence to be provided by the complainant in the complaint. Thus, while the information has to be sufficient it must also be reasonably available to the complainant. Since cost and price information are by nature confidential, no precise data on costs and prices per product types exported by companies in third countries are reasonably available to the complainant at initiation stage. The information provided was nonetheless considered sufficient to initiate the investigation since it was based on Chinese import prices statistics from Eurostat.

(28) The Commission further noted that, as specified in recital (965), the undercutting calculation during the investigation was mainly based on actual detailed data of sampled Union producers and exporting producers, which confirmed the undercutting allegations contained in the complaint based on Eurostat statistics. This argument was therefore considered moot also with regard to the data used in the investigation.

(29) In its comments on initiation, the GOC argued that Chinese GFF imports did not cause price pressure. This statement was not substantiated by any evidence.

(30) In contrast, the complaint provided information on the effect of the subsidised imports on prices of the like product in the Union market and the consequent impact of the imports on the Union industry that was considered sufficient to initiate the investigation. The evidence provided in the complaint showed that Union prices were significantly undercut by both Egyptian and Chinese import prices.

(31) In addition, that statement is factually incorrect. As found by the Commission during the investigation and explained in recital (966), the sampled Chinese exporting producers significantly undercut Union industry’s prices during the IP. This argument was therefore rejected.

(32) In its comments on initiation, the GOC argued the cumulation of imports from China and Egypt for the purpose of the injury analysis is not justified in the present case. This is because the conditions of competition between the imports from these countries, and between the imports from these countries and the like product produced and sold by the Union industry on the Union market are vastly differ. The GOC argued that Chinese GFF is not in competition with Egyptian GFF as (i) Egyptian GFF imports were practically inexistent until 2017; (ii) GFF imports from China and Egypt followed completely opposite trends; (iii) Egyptian imports are differently priced; and (iv) the Egyptian imports are only of NCF according to the Complainant’s own calculations and therefore do not compete with the Union and Chinese GFF sales on the Union market.

(33) The Commission first observed that the complaint contained sufficient evidence tending to show that imports of the product concerned were being subsidised and imports volumes were significant and cause injury to the Union industry. It also contained a number of elements regarding the cumulative assessment of imports from the two countries concerned (in particular that for each country the estimated amounts of subsidisation are not de minimis (9), that for each country the import volumes are significant (10) and that the countries concerned are competing with each other, with the like product and third countries and that the products exported by these countries are sharing the same characteristics and end uses with the like product (11)), which were found to overcome their burden at initiation stage. This evidence was analysed further during the investigation and the Commission confirmed that the conditions for cumulation were met, as described in recitals (947) to (950) explained in detail.

(34) The GOC further argued that Chinese import volume decreased in the period considered and could not have injured the Union producers.

(35) As discussed above, the complaint contained sufficient evidence that Chinese and Egyptian imports of GFF should be assessed cumulatively. According to the evidence in the complaint, GFF imports from both countries are competing with each other and with the like product, as well as with imports from third countries. Imports from the PRC and Egypt have the same product characteristics and uses, and are sold to customers across the Union in direct competition with GFF produced by the Union industry and third countries.

(36) In its comments on initiation, the GOC argued that the complainant has failed to provide reliable data as regards the Union industry as a whole, as the data for non-complainants was unreliable. Furthermore, the complainant did not provide information on several injury indicators.

(37) The GOC did not explain in what way the data was unreliable. Again, confidential information on sales and production data of the non-complainant Union producers was not available to the complainant. The complainant therefore provided estimates that were considered reasonable and sufficiently accurate and in compliance with Article 10(2) of the basic Regulation. In order to provide sufficient evidence of injury, there is no obligation to provide data on all injury indicators mentioned in Article 8(4) of the basic Regulation; neither do all injury indicators have to show a downward trend.

(38) The Commission noted that the sample of Union producers selected during the investigation, included the biggest non-complainant, which gave the Commission an opportunity to cross-check macro data provide by the complainant. Furthermore, all relevant injury indicators were considered by the Commission in the investigation. This argument was therefore rejected.

(39) In its comments on initiation, the GOC argued that, the Union producers are not injured and particularly not on account of the Chinese imports. According to the GOC, between 2015 and the complaint IP, the Union industry was doing well and basically, all the injury indicators developed positively or remained stable.

(40) The data in the complaint clearly showed that the Union industry has been materially injured by heavily undercutting subsidised imports of GFF from the subject countries. The production, sales and market share of the Union industry have dropped substantially. The complainants were forced to reduce investment and employment. Stocks of Union producers supporting the complaint increased and their profitability dropped.

(41) The Commission noted that during the investigation the injury indicators established based on the actual verified data provided by sampled Union producers showed material injury that was caused by imports from the countries concerned. The GOC provided comments on these indicators, in its comments on the final disclosure (12). These comments are addressed in Section 5.4. of this Regulation.

(42) In its comments on initiation, the GOC argued that the Union industry suffered injury due to its related imports from third countries and the decline in demand on the Union market.

(43) The Commission disagreed. The complaint demonstrated that due to the low volumes of the related imports from third countries these could not have caused the material injury. The complainant’s analysis of the injury indicators further showed that the injury cannot be explained with the decline in demand on the Union market as their losses in market share demonstrate that its loss in sales went clearly beyond the consumption decline.

(44) The complainant provided sufficient evidence of causal link between imports from the countries concerned and injury. In addition, the complainant analysed other potential causes of injury such as the performance of Union producers, the export performance of Union producers and imports from other third countries.

(45) During the investigation, imports from third countries and the decline in demand on the Union market, were examined in Section 6.2. below. After final disclosure, no new arguments were provided in the GOC’s comments on initiation. This argument was therefore rejected.

(46) In its comments on initiation, the GOC argued that vertically integrated Union producers suffered injury due to costs related to “backward integration” and decreased ability to sell on the open market due to “downward integration”.

(47) At initiation, no information was available concerning an apparent competitive disadvantage from the Union industry. Furthermore, Union producers are predominantly not vertically integrated.

(48) In addition, the Commission noted that the investigation has not demonstrated abnormal costs due to vertical integration. Furthermore, all sampled Union producers sold primarily to unrelated customers. This argument was therefore rejected.

(49) In its comments on initiation, the GOC argued that the different sales trends of the complainant and non-complainant producers between 2015 and the complaint IP indicate that the two sets of producers compete for sales and customers. Thus, the loss of sales and market share by the complainant producers to the non-complainant producers was also a likely reason that the former suffered in terms of sales volumes and could not increase prices in the complaint IP.

(50) Competition amongst Union producers is a consequence of the free market and it is normally an assumption (unless e.g. there is evidence of the existence of anti-competitive practices, which is not the case), rather than a factor explaining the existence of injury. Thus, not only complainant and non-complainant Union producers compete with each other on the Union market, but also the complainant Union producers themselves compete with each other. This cannot be considered as attenuating the causal link between subsidised imports and the material injury suffered by the entire Union industry. The findings of material injury based on a valid sample rely on an assessment of the industry as a whole, including data from complainants and non-complainants (micro and macro data).

(51) During the investigation, as specified in the Note to the file for inspection by the interested party on the final sample of the Union producers of 21 June 2019, the sample of Union producers consisted of both, complainant and non-complainant Union producers. Furthermore, the injury determination was not limited to the complainant Union producers but to the entire Union industry as a whole. This claim was therefore rejected.

(52) Finally, in its comments following initiation, the GOC claimed that excessive confidentiality has been granted to key information such as the supporters of the complaint and the main injury-related data. The GOC asserted that this had prevented it from properly rebutting the injury claims made by the complainant.

(53) The Commission considered that the version open for inspection by interested parties of the complaint contained all the essential evidence and non-confidential summaries of data granted confidential treatment in order for interested parties to exercise their rights of defence throughout the proceeding. It is recalled that Article 29 of the basic Regulation allows for the safeguarding of confidential information in circumstances where disclosure would be of significant competitive advantage to a competitor or would have a significantly adverse effect upon a person supplying the information or upon a person from whom that person has acquired the information. The claims of the GOC in this regard were therefore rejected.

(54) The GOE claimed that the investigation should not be initiated because the complaint did not satisfy the evidentiary requirements of Articles 11(2) of the WTO Agreement on Subsidies and Countervailing Measures and of Article 10(2) of the Basic Regulation. According to the GOE, there was insufficient evidence of countervailable subsidies, injury and a causal link between the subsidised imports and the injury. The Commission rejected that claim for the same reasons as mentioned in recital (6) above.

(55) During the pre-initiation consultations, the GOE indicated that the complainant did not present evidence that the alleged preferential loans are granted by the Egyptian government. However, in view of the body of evidence brought forward in the complaint, and most notably the arrangements between China and Egypt, as well as the objectives of these arrangements, the Commission is of the view that the complainant provided sufficient evidence as was reasonably available to it showing that the conduct of granting subsidies through preferential lending could be attributed to the GOE.

(56) Furthermore, the GOE claimed that the alleged tax benefits were removed from the legislation in 2015 and that the complainant failed to provide evidence that they continue to apply for existing projects. The Commission however found that the complainant provided sufficient evidence of the grandfathering of such tax benefits as was reasonably available to it.

(57) The GOE also stated that the remission of import duties on raw materials is not a subsidy to the extent that these imported products are re-exported as such or as processed into a downstream product. The Commission acknowledged that only the excess remission of import duties on raw materials is a countervailable subsidy, and paid particular attention to this during the investigation. The Commission further noted that the GOE’s comment does not apply to production equipment.

(58) The GOE claimed that the complainant failed to provide evidence of benefit on the provision of land at less than adequate remuneration. The Commission however found that the complainant provided sufficient evidence of benefit as was reasonably available to it.

(59) Finally, the GOE indicated that the complainant failed to provide evidence of specificity concerning the provision of electricity at less than adequate remuneration, as there is no specificity when access to a subsidy is subject to objective conditions. The Commission noted that the GOE did not provide any evidence with respect to such objective conditions during the pre-initiation consultations.

(60) Therefore, the Commission concluded that there was sufficient evidence provided in the complaint to start an investigation into the alleged countervailable subsidies granted directly or indirectly by the GOE.

(61) Following definitive disclosure, Yuntianhua Group claimed that the replacement of factors of production performed in the separate anti-dumping investigation is inappropriate and requested the Commission to perform a dumping margin calculation for the exporting producers of the group without any recourse of Article 2(6a) of 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 (the ‘basic anti-dumping Regulation’) (13). According to Yuntianhua Group, the anti-subsidy investigation found no evidence that the inputs of GFF were provided for less than adequate remuneration. It similarly argued that the anti-subsidy investigation accepted that inputs of GFF were purchased at undistorted market values since the turnover of input and raw material suppliers were used for the calculation of the subsidy benefits.

(62) The Commission, firstly, noted that comments on the calculation and methodology used in the separate anti-dumping investigation are outside of the scope of this proceeding. Therefore, comments concerning the methodology used for the determination of the dumping should be provided in the context of the said investigation.

(63) Second, the investigation, as described in Section 3, showed that the key suppliers of the exporting producers benefited extensively from government subsidies. The Commission recalled that the use of the turnover of related companies supplying inputs and raw materials does not imply the acceptance of undistorted market values of those supplies. On the contrary, the turnover is the allocation key, which allows a sound apportionment of the established subsidies from which the exporting producers benefited.

(64) Finally, the Commission noted that the findings made under Article 2(6a) of the basic anti-dumping Regulation relate to significant distortions when prices or costs are affected by substantial government intervention. A variety of elements is examined in this context holistically. Accordingly, the fact that an anti-dumping investigation under Article 2(6a) does not rely on evidence concerning subsidisation of raw materials or of the product concerned is not a bar for the Commission to investigate separately and pursuant to the applicable rules in the basic Regulation whether there is subsidisation. The arguments of Yuntianhua Group were therefore rejected.

(65) Following the additional definitive disclosure, the Yuntianhua Group claimed that the disclosure contained new findings regarding: (i) the lack of GFF market segmentation; (ii) physical and technical product characteristics; (iii) cost and price structure; (iv) double counting resulting from the concurrent imposition of anti-dumping and anti-subsidy duties which affected the level of definitive anti-dumping duties imposed on 7 April 2020; and (v) the fact that the dumping margin found in the anti-dumping investigation for this party was incorrect and should be reduced by the entire amount of subsidization established in the PRC to avoid double-counting. These elements were not contained in the final disclosure of the parallel anti-dumping procedure, which would thereby not contain these essential findings and considerations. As a result, according to this party, the definitive anti-dumping Regulation (EU) 2020/492 would be manifestly unreasoned and illegal, and the dumping margin of 64,7 % appearing in the anti-dumping Regulation (EU) 2020/492 would be wrong.

(66) The Commission noted at the outset that the explanations contained in the additional definitive disclosure in this proceeding are a reaction to comments received by parties further to that disclosure, and thus contained more details to the findings made by the Commission. Accordingly, they do not constitute new findings but simply address the comments of the interested parties.

(67) Furthermore, with regard to points (i)-(iii) raised by this party i.e. the lack of GFF market segmentation, the product characteristics, and the cost and price structure, the Commission noted that the remarks in the additional disclosure concerning these three points were meant to address new claims raised by the parties. These new claims were submitted only in the context of this anti-subsidy proceeding. The only claim raised in the anti-dumping proceeding on segmentation was that Union producers would only produce OEM customer-specific products and no measures should be imposed on the OEM segment. These arguments were fully addressed in recital 409 of the anti-dumping Regulation (14). Therefore, the Commission could not possibly have addressed these new comments already in the context of the anti-dumping disclosure. The definitive anti-dumping regulation contained all the essential findings and considerations on the basis of which the Commission took its decision in relation to that procedure and fully addressed all the arguments that had been raised in the context of that proceeding. The findings in the anti-subsidy procedure do not affect the reasoning provided for in the definitive anti-dumping regulation.

(68) Moreover, from a substantive point of view, these points do not affect or alter in any way the findings of the investigation, either the anti-dumping or the anti-subsidy. Therefore, there is no impact whatsoever of these points in the situation of the party raising this claim or of other parties. Despite that, the Commission decided to give an additional opportunity for parties to comment on those points. Indeed, even though they did not introduce any changes themselves (and thus the Commission did not have in principle an obligation to address them in the additional disclosure but in the definitive regulation), they were included in the additional definitive disclosure. For all these reasons, these claims were rejected.

(69) In any event, there is no contradiction between the findings of the two investigations. The only difference is that parties had the opportunity to comment at a later stage and made additional comments in this proceedings. The Commission had the obligation to reply to these comments and have done so in this Regulation.

(70) With regard specifically to the last two issues, (iv) and (v) in recital (67) above, of possible double counting and the dumping margin, the Commission noted the following. First, as already explained in reply to the parties’ comments to the definitive disclosure of this proceeding in particular at recital (1137), the Commission fully addressed the potential issue of double counting and gave ample opportunity to all parties to submit comments in the course of this proceeding. It could not possibly have done so in the context of the then ongoing anti-dumping proceeding. Second, the Commission notes that in the context of separate anti-dumping and anti-subsidy proceedings on the same product originating from the same country where the imposition of countervailing duties occurs later than the imposition of anti-dumping duties, there is no option other than amending the previously imposed anti-dumping duties. This must be done in order to take into account the new countervailing duties while at the same time preventing double counting and respecting the lesser duty rule if applicable and relevant. For this purpose, in these cases the legislative technique is to impose the relevant countervailing duties and then at the same time amend the relevant accplicable anti-dumping duties accordingly via the same Regulation. Therefore, contrary to what this party is arguing, the anti-dumping Regulation (EU) 2020/492 is not manifestly wrong and unreasoned. The relevant assessments and claims were fully addressed in this Regulation, which also constitutes the basis for amending the definitive anti-dumping regulation. As the relevant anti-dumping duty applicable to the Yuntianhua Group is also modified accordingly pursuant to this Regulation, as explained in details at Section 8, also the claim of this party that the level of its anti-dumping duty in Regulation (EU) 2020/492 is incorrect is both factually and legally wrong. For all these reasons, the claims by the Yuntianhua Group are rejected.

(71) On 31 July 2019, the complainant submitted a request for registration of imports of GFF originating in the countries concerned based on Article 24(5) of the basic Regulation. On 21 November 2019, the complainant re-submitted a request for registration pursuant to Article 24(5) of the basic Regulation, with updated import figures.

(72) Under Article 24(5) of the basic Regulation, imports of the product concerned are subject to registration for the purpose of ensuring that should the investigation result in findings leading to the imposition of definitive countervailing duties, those duties can, if the necessary conditions are fulfilled, be levied retroactively on the registered imports in accordance with the applicable legal provisions.

(73) Responding to the request for registration, interested parties submitted comments that the Commission addressed in the registration Regulation. The Commission had at its disposal sufficient evidence justifying the need to register imports.

(74) On 21 January 2020, the Commission published Implementing Regulation (EU) 2020/44 (‘the registration Regulation’) (15) making imports of GFF originating in the PRC and Egypt subject to registration as of 22 January 2020.

(75) During the investigation, it became apparent that some economic operators might not have come forward based on an incorrect understanding of the definition of the product under investigation. For that reason, on 18 September 2019, the Commission clarified the wording of the product scope description included in the Notice of Initiation by publishing a Notice (‘Clarification Notice’) (16). The Clarification Notice also gave the possibility for parties to come forward within a prescribed time limit to make themselves known and to request a questionnaire, if they wished so. No interested party submitted any comment on the Clarification Notice nor requested a questionnaire.

(76) After publication of the Clarification Notice and in the subsequent investigation, it was confirmed that no economic operators had failed to come forward due to the possible misunderstanding in the definition of the product concerned contained in the Notice of Initiation.

(77) The investigation of subsidisation and injury covered the period from 1 January 2018 to 31 December 2018 (‘the investigation period’ or ‘IP’). The examination of trends relevant for the assessment of injury covered the period from 1 January 2015 to the end of the investigation period (‘the period considered’).

(78) Both the current anti-subsidy investigation and the anti-dumping investigation mentioned in recital (4) have the same investigation period and the same period considered.

(79) 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 GOE, the GOC, other known Union producers, the known exporting producers, known importers and users about the initiation of the investigation and invited them to participate.

(80) 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 Yuntianhua Group requested an intervention from the Hearing Officer to raise concerns related to the deadline given to respond to a deficiency letter. The company argued that it had not noticed the deficiency letter because its IT server had mistakenly considered the Commission’s e-mail as junk mail, and requested an extension of 18 days. The Hearing Officer invited the Commission to extend the deadline by 6 days.

(81) As mentioned in Section 1.3, the Commission clarified the product scope during the investigation and gave interested parties concerned by the clarification, or who might not have made themselves known because they believed they were not concerned by the proceeding, the opportunity to make themselves known and request a questionnaire within a time limit. No additional parties came forward.

(82) In the Notice of Initiation, the Commission stated that it might sample the interested parties in accordance with Article 27 of the basic Regulation.

(83) In the Notice of Initiation, the Commission stated that it had decided to limit the investigation to a reasonable number of Union producers by applying sampling. It added that it had provisionally selected a sample of Union producers based on the reported production volume of the like product in the Union between October 2017 and September 2018 also taking into consideration the geographical spread. This sample consisted of four Union producers accounting for more than 40 % of the estimated total Union production of GFF. None of the interested parties provided comments and the provisional sample was therefore confirmed. The sample is representative of the Union industry.

(84) 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.

(85) Only one unrelated importer (Euroresins UK Ltd.) provided the requested information and agreed to be included in the sample. In view of the low number of cooperating importers, the Commission decided that sampling was not necessary.

(86) 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 People’s Republic of China to the European Union to identify and/or contact other exporting producers, if any, that could be interested in participating in the investigation.

(87) Eight exporting producers or groups of exporting producers in the PRC provided the requested information and agreed to be included in the sample. In accordance with Article 27(1) of the basic Regulation, the Commission selected a sample of two groups of exporting producers based on the largest representative volume of exports to the Union, which could reasonably be investigated within the time available. The sampled groups of exporting producers represented more than 79 % of the reported exports of GFF from the PRC to the Union during the investigation period.

(89) In accordance with Article 27(2) of the basic Regulation, all known exporting producers concerned, and the authorities of the PRC were consulted on the selection of the sample.

(90) Comments on the selection of the sample were received from two sampled exporting producers, Jushi and Hengshi, belonging to the CNBM Group. While Jushi and Hengshi did not dispute the fact that they were related companies, they claimed that they were not related to Taishan. Jushi claimed that the Commission could not mechanically rely on Article 127(1)(d) or (f) of Commission Implementing Regulation (EU) 2015/2447 of 24 November 2015 (17) (the ‘Union Customs Code Implementing Act’) to treat Hengshi, Jushi and Taishan as a single entity. In support of that claim, Jushi referred to the WTO Panel in Korea – Certain Paper (18) and the Guidelines for related transactions of listed companies of Shanghai Stock Exchange.

(91) They highlighted that (i) they had no common direct shareholding, (ii) there was no overlap in the members of their boards, (iii) there were no related transactions between Hengshi/Jushi and Taishan, and (iv) they were competitors on the market.

(92) After the sampling exercise, on 13 November 2019, a hearing took place with Taishan, in which the above-mentioned arguments were again raised.

(93) The investigation revealed that China National Building Material (‘CNBM’) is a Chinese state-owned enterprise owned directly and indirectly as to 41,27 % by CNBM Parent, which is in turn wholly owned by the State-owned Assets Supervision and Administration Commission of the State Council (‘SASAC’). CNBM owns 26,97 % stake in China Jushi Co., Ltd. (‘China Jushi’), which is the sole shareholder of Jushi (19).

(94) In September 2017, CNBM entered into a Merger Agreement (20) with Sinoma that was finalised in May 2018. Sinoma, through its subsidiary Sinoma Science & Technology Co. was the owner of Taishan. After the merger, Sinoma was merged into and absorbed by CNBM. As a consequence, CNBM holds 26,97 % stake in China Jushi (the sole shareholder of Jushi) and 60,24 % in Sinoma Science & Technology Co., Ltd. (sole shareholder of Taishan).

(95) Article 127(1)(d) of the Customs Code Implementing Act establishes that two persons shall be deemed to be related if: a third party directly or indirectly owns, controls or holds 5 % or more of the outstanding voting stock or shares of both of them. CNBM holds 26,97 % stake in China Jushi (the sole shareholder of Jushi) and 60,24 % in Sinoma Science & Technology Co., Ltd. (sole shareholder of Taishan). Therefore, the companies were found to be related.

(96) Furthermore, according to a company report by the Chinese brokerage company Guotai Junan Securities from 2019 (21), CNBM has been reorganising its operating entities in order to enhance regional coordination and eliminate horizontal competition among listed subsidiaries since 2017. Furthermore, CNBM intends to resolve horizontal competition issues by 2020. According to the publicly available information in the report, CNBM planned to start this process by consolidating its glass fibre business by asset injections between China Jushi and Sinoma Science & Technology (Taishan’s sole shareholder). Thus, the evidence collected during the investigation does not support the companies’ argument that the common shareholding has no practical implication and that the companies operate independently. To the contrary, that evidence suggests that beyond the mere shareholding (which alone could be determinant for the conclusion that the companies are related), the three companies are also able to significantly influence each other’s business decisions, and that their controlling company (CNBM) aims to at least coordinate, if not to integrate, their operations (‘resolve the horizontal competition issues’). This means that the subsidies received by any of those companies may be used to the advantage of the product concerned indistinctly. Therefore, the Commission rejected the claim that its conclusion to consider the three companies as related disregarded factual and economic realities.

(97) In relation to the argument that the Commission could not treat Hengshi, Jushi and Taishan as a single group for the purpose of calculating the amount of subsidisation conferred on the product concerned, the Commission recalled that in order to ensure that measures can be enforced effectively, particularly to avoid channelling exports through a related company with the lowest duty, it is the Commission's practice to establish the relationship between exporting producers through the criteria laid down in Article 127 of the Union Customs Code Implementing Act. This was clearly communicated to all parties in the Notice of initiation at the start of the proceeding. In addition, reference to Article 127 of the Union Customs Code Implementing Act is explicitly contained in Article 2(1) of the basic Anti-dumping Regulation (22) and the Commission should have the same treatment of parties in both anti-dumping and anti-subsidy cases (23). Moreover, pursuant to Article 7(1) of the basic Regulation, the calculation of the amount of subsidisation is made per unit of the subsidised product exported to the Union. The calculation of the amount of countervailable subsidies on the basis of the product concerned exported into the Union implies that, when companies are related, since money is fungible, they can use those benefits for the product concerned indistinctly, and thus, regardless of the exporting producer in particular. In this case, since Henghsi, Jushi and Taishan make and export the product concerned, the amount of countervailable subsidies granted upon them should take into account the fact that, because of their relationship, they are capable of channelling those benefits to the product concerned exported to the Union as they see fit. Consequently, the benefits granted to those exporting producers with respect to the product concerned should result in one single amount for the group.

(98) Finally, the WTO case (24) referred to by Jushi in recital (90) does not support the company’s claim. In fact, contrary to what Jushi tries to infer, the WTO Panel in that case confirmed that, for the purpose of dumping determinations in anti-dumping investigations, the rule in Article 6.10 of the WTO Anti-Dumping Agreement (where a dumping margin should be calculated per exporting producer) did not necessarily preclude treating distinct legal entities as a single exporter or producer. The Panel noted that this treatment would be permitted “where the structural and commercial relationship between the companies in question is sufficiently close to be considered as a single exporter” (25). Applying this consideration, the Panel did not establish the criteria that investigating authorities must apply to assess whether companies are related. The Panel merely looked into the specific elements (such as shareholding, board of directors, sales channels) which where before the investigating authority in that case. The Appellate Body in EC – Fasteners confirmed the possibility of treating a number of exporters as a single entity, listing also elements which may be relevant, such as the existence of corporate and structural links between the exporters, such as (i) common control, shareholding and management; (ii) the existence of corporate and structural links between the State and the exporters, such as (i) common control, shareholding and management; and (iii) control or material influence by the State in respect of pricing and output (26). In that respect, from the legal and factual elements of this case, the existence of corporate links between Jushi, Hengshi and Taishan cannot be disputed.

(99) Based on the above, the Commission concluded that they were related companies for the purpose of this investigation and all claims in this regard were thus rejected.

(100) Following definitive disclosure, Taishan objected to the application of a countervailing duty combined with Hengshi/Jushi. This interested party claimed that the common ultimate shareholder CNBM had only very limited control on the business and operation decisions of Jushi or Hengshi. They reiterated that Taishan and Hengshi/Jushi were competitors on the market and noted that they had previously submitted evidence in support of these claims. Taishan offered a written commitment that would effectively cut any commercial link between Taishan and Hengshi/Jushi and thus it would not allow the channelling of any exports of GFF to the Union from Hengshi/Jushi via Taishan.

(101) As described in recital (96), the investigation revealed that through their common shareholders the three companies are able to significantly influence each other’s business decisions. The evidence on file showed that the companies are in the process of consolidating and coordinating glass fiber operations. No new information or evidence was provided that could invalidate these findings. In fact, Taishan did not contest the plans of its main shareholder to consolidate its glass fibre business. Such plans are in clear contradiction with any commitment to cut commercial links between Taishan and Hengshi/Jushi. Besides, and without taking a position on whether the Commission could accept such a commitment, the company is clearly not in the position to enter into any kind of commitment without the endorsement of its ultimate controllers. Therefore, Taishan’s claims and commitment request were rejected.

(102) Following definitive disclosure, the CNBM Group argued that the subsidies received by the related trader Jushi Hong Kong Co. Ltd. could not be countervailed, since the company was based in Hong Kong and not in China. Hong Kong is an independent member of the WTO and is therefore considered an independent jurisdiction under WTO law and for the purposes of the Union trade defence investigations. Since the current anti-subsidy proceedings were not initiated against Hong Kong, any subsidies allegedly received by Jushi Hong Kong should not be taken into account. The Commission noted that the CNBM Group did not dispute the Commission’s findings regarding subsidisation for this related trader. Irrespective of the status of Hong Kong in this investigation, the real center of activities and control of the company Jushi Hong Kong was actually located in Mainland China. As stated by the company itself, “In fact, Jushi Hong Kong is a paper company, with no dedicated employee, no land, no physical office and benefit, neither tax programmes nor grants”. The accounting records were located in Jushi Group Co. Ltd., relevant personnel for the verification was also located there, and the subsidies received and benefiting the product concerned were granted by Chinese entities. Moreover, as confirmed by the Appellate Body in United States - Anti-Dumping and Countervailing Measures on Large Residential Washers from Korea, subsidies bestowed on the recipient in countries other than the subsidising Member may be relevant in order to calculate the amount of ad valorem subsidisation (27). The company’s claim was therefore rejected.

(103) Following definitive disclosure, Yuntianhua Group claimed that its subsidy margin has been inflated by adding subsidies granted to companies that did not supply inputs used in the production of the product concerned, and, therefore, requested that subsidies of these companies should not be taken into consideration for the calculation of the countervailing duty.

(104) Article 1 of the basic Regulation provides that a countervailing duty may be imposed to offset any subsidy granted, directly or indirectly, for the manufacture, production, export or transport of any product whose release for free circulation in the Union causes injury. The Commission has evidence that the companies included in the investigation and whose subsidy benefits have contributed to the duty of the group, have participated directly or indirectly, providing inputs, services, materials, or assets that used in the production of the product concerned as describes in the Article 1 of the basic Regulation. In this respect, the comments made by the Yuntianhua Group were not supported by concrete evidence.

(105) The Commission, nonetheless, observed that one of the related companies, whose subsidies have been countervailed, was originally requested to participate in the investigation since it leased machinery to one of the exporting producers. However, following the comments received, the Commission revised the allocation key relating to the leasing activities of the company that were linked to the product concerned. Since the benefits that could be allocated through the leasing activities were considered negligible, the Commission decided not to take them into account.

(106) Five of the Chinese exporting producers that returned the sampling form informed the Commission of their intention to request individual examination under Article 27(3) of the basic Regulation. The Commission made the questionnaire available online on the day of the initiation. Moreover, the Commission informed the non-sampled exporting producers that they were required to provide a questionnaire reply if they wished to be examined individually. However, none of the companies provided a questionnaire reply. As a result, no individual examinations were possible.

(108) The questionnaires for the Union producers, importers, users, and exporting producers in the PRC and in Egypt were made available online (28) on the day of initiation.

(109) The Commission received questionnaire replies from the two sampled Chinese exporting producer groups, the two Egyptian exporting producers, from the four sampled Union producers, five users and one unrelated importer. None of the non-sampled Chinese exporting producers sent a reply to the questionnaires.

(110) The Commission also sent a questionnaire to the GOC and to the GOE. The questionnaire for the GOC included specific questionnaires for the China Development Bank ('CDB'), Export Import Bank of China (‘EXIM’), and Sinosure. Those financial institutions had been specifically referred to in the complaint as public bodies or bodies directed or entrusted granting subsidies. In addition, the GOC was asked to forward the specific questionnaire for financial institutions to any other financial institution that provided loans or export credits to the sampled companies, or to the customers of the sampled companies. The GOC was also asked for administrative convenience to gather any responses provided by these financial institutions and to send them directly to the Commission.

(111) The questionnaire to the GOE included specific questionnaires for the National Bank of Egypt, Ahli Bank and Bank Misr. Those financial institutions had been specifically referred to in the complaint as public bodies or bodies directed or entrusted granting subsidies. In addition, for administrative convenience the GOE was asked to forward the specific questionnaire for financial institutions to any other financial institution that provided loans or export credits to the sampled companies. Furthermore, the questionnaire to the GOE included specific questionnaires for Egypt-TEDA Investment Company (‘Egypt TEDA’) and for the Egyptian Chinese JV Company for Investment (‘ECCI’), which had been identified in the complaint as state-owned entities operating in the SETC-Zone. The GOE was asked to gather any responses provided by these financial institutions and other entities, and to send them directly to the Commission.

(112) The Commission received questionnaire replies from the GOC, which included replies to the specific questionnaire from EXIM and Sinosure, as well as from the GOE, which included replies to the specific questionnaire from the National Bank of Egypt, Bank Misr and Egypt TEDA.

(113) Without prejudice to the application of Article 28 of the basic Regulation, the Commission sought and verified all information deemed necessary and made available by the parties in a timely manner for the determination of subsidy, injury and Union interest. A verification visit took place at the premises of the Chinese Ministry of Commerce, during which officials from other relevant ministries also participated. Moreover, representatives from EXIM, CDB and Sinosure were present during this verification visit.

(116) Due to the threat of the COVID-19 transmission and the consequent measures taken to deal with the outbreak (30), the Commission was unable to verify the data submitted by a number of companies belonging to the group of one of the exporting producers located in the PRC. Given that this unforeseen situation occurred at a very late stage of the proceeding and that no other solution was possible, the Commission exceptionally used the information submitted by these companies for the subsidy calculation, which was verified based on available information.

(117) On 24 January 2020, pursuant to Article 29(a)(2) of the basic Regulation, the Commission informed interested parties that it intended not to impose provisional measures and continue with the investigation.

(118) The Commission continued seeking and verifying all information it deemed necessary for its definitive findings.

(119) On 27 February 2020, the Commission informed all parties of the essential facts and considerations on the basis of which it intended to impose a definitive anti-subsidy duty on imports of the product concerned into the Union (‘definitive disclosure’).

(120) All parties were granted a 15 days period within which they could make comments on the definitive disclosure. Several interested parties requested an extension of the deadline. The Commission granted until 20 March and 23 March 2020 for submitting comments to those parties. 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.

(121) In the separate anti-dumping investigation parties received, on 19 December 2019 a final disclosure of the essential facts and considerations on the basis of which it intended to impose a definitive anti-dumping duty on imports of the product concerned into the Union. Furthermore, interested parties received an additional disclosure on 10 February 2020.

(122) The Commission addressed in this regulation comments submitted during the anti-subsidy procedure. Comments submitted in the context of the separate anti-dumping investigation were not addressed in this regulation unless the parties explicitly indicated that the comments submitted covered both procedures.

(123) Following definitive disclosure, no party requested a hearing with the hearing officer.

(124) Furthermore, interested parties received an additional definitive disclosure on 17 April 2020 and were granted until 22 April 2020 for submitting comments (‘additional definitive disclosure’).

(125) Moreover, interested parties received a second additional definitive disclosure on 24 April 2020 and were granted until 27 April 2020 for submitting comments (‘second additional definitive disclosure’).

(126) The Commission had hearings with the Union industry, with the exporting producers Jushi/Hengshi China, and with the Egyptian exporting producers Jushi/Hengshi Egypt as well as with the GOE.

(127) The product concerned (31) is fabrics of woven and/or stitched continuous filament glass fibre rovings and/or yarns with or without other elements, excluding products which are impregnated or pre-impregnated (pre-preg), and excluding open mesh fabrics with cells with a size of more than 1,8 mm in both length and width and weighing more than 35 g/m2 (‘GFF’), originating in the PRC and Egypt, currently falling under CN codes ex 7019 39 00, ex 7019 40 00, ex 7019 59 00 and ex 7019 90 00 (TARIC codes 7019390080, 7019400080, 7019590080 and 7019900080) (‘the product concerned’).

(128) GFF is used in a wide range of applications, for example for the production of blades for wind turbines, in the boat, truck and sport equipment production, as well as in pipe rehabilitation systems.

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

(131) One exporting producer and the Ministry of Trade of the Arab Republic of Egypt claimed that pre-cut GFF kits should not be covered by the scope of the investigation. They argued that pre-cut GFF kits would be a downstream product requiring additional production steps and with differences in physical characteristics, having a much smaller size. It would come in different forms and packaging, consisting of several smaller pieces of fabrics quilted together. It was further argued that there would be no circumvention risk by excluding kits as the process of cutting would be irreversible and that the product is not interchangeable with the uncut GFF.

(132) The complainant argued that pre-cut GFF kits and non-cut GFF have the same basic characteristics and end uses. As GFF are reinforcement materials, the cutting to shape is necessary to fit the form of the product that needs to be reinforced, but does not change its basic characteristics as such. The cutting process can be carried out by the GFF producer, an independent industrial cutter or the customer itself. It is a very simple and low-cost operation. The complainant further argued that users do not perceive pre-cut GFF differently from other GFF, as GFF are generally produced to user specifications. If the cutting process would change the characteristics of the GFF, that would render them unusable for the specific customer.

(133) The investigation showed that pre-cutting and kitting processes do not change the basic physical, technical or chemical characteristics of GFF or their basic end uses. Customers of both products are largely the same and both are sold via the same distribution channels.

(134) The investigation also confirmed that for most applications GFF are produced to order according to customers’ specifications. Pre-cut GFF kits constitute merely an additional specification in the customer order. That pre-cut GFF kits receive a different packaging does also not change the characteristics. Since GFF is ordered increasingly in the form of pre-cut GFF kits and the services of external kitters are used increasingly, there would be a high circumvention risk, if pre-cut GFF would be excluded from the scope of the investigation. Therefore, the Commission concluded that it would not be appropriate to exclude pre-cut GFF from the scope of the investigation.

(135) Another exporting producer argued that glass fibre yarns should be deemed to be excluded from the scope of the investigation. This exporting producer argued that glass fibre yarn was not to be mentioned explicitly in the questionnaire, the complaint or in the Notice of Initiation, which would indicate that they are not covered by the product scope. It further argued that GFF from yarn could not be classified under the characteristics of the product control number (‘PCN’), that GFF from yarn would be imported under different CN codes than the ones mentioned in the complaint and that glass fibre yarns would also not be covered by the measures against glass fibre rovings in other proceedings.

(136) The complainant and another Union producer (not party to the complaint) argued that only GFF from non-twisted or zero-twisted glass fibre yarns should be covered by the investigation, whereas twisted yarns could be excluded from the scope of the investigation. The complainant argued that non-twisted or zero-twisted glass fibre yarns share the characteristics of glass fibre rovings to consist of a bundle of untwisted filaments or strands and are also used for the same purposes as rovings and are typically 13-24 micrometres in diameter and are 300-4 800 tex.

(137) Regarding the inclusion of GFF from glass fibre yarns, the Notice of Initiation defined the product under investigation as “fabrics of woven, and/or stitched continuous filament glass fibre rovings and/or yarn, […]” (32). The investigation has shown that non-twisted or zero-twisted glass fibre yarns share the same basic characteristics as glass fibre rovings, i.e. to consist of a bundle of untwisted filaments or strands, and are also used for the same purposes. Both are typically 13-24 micrometres in diameter and are 300-4 800 tex. Thus, it would not be appropriate to exclude these product types from the scope of the investigation.

(138) In relation to GFF made mainly from twisted glass fibre yarn, the Commission notes that this product, which has different basic characteristics and is also subject to different end uses, e.g. printed circuit boards, was never part of the product concerned. The Commission explicitly clarified this point in the Clarification Notice.

(139) Before analysing the alleged subsidisation in the form of subsidies or subsidy programmes, the Commission assessed government plans, projects and other documents, which were relevant for more than one of the subsidies or subsidy programmes. It found that all subsidies or subsidy programmes under assessment form part of the implementation of the GOC's central planning to encourage the GFF industry for the following reasons.

(140) The 12th Five-Year Plan for National Economic and Social Development of the PRC (‘the 12th Five-Year Plan’) highlighted the importance of the new materials industry, which includes GFF, as a “strategic emerging industry” and stipulates that it should be developed into a “leading pillar industry” through comprehensive policy support and guidance (33). Furthermore, the 13th Five-Year Plan for National Economic and Social Development of the PRC (‘the 13th Five-Year Plan’), which covers the period 2016-2020, aims to develop further new materials industries by strengthening research and development and enhancing the innovation capability of the manufacturing industry (34).

(141) The 13th Five-Year Plan highlights the strategic vision of the GOC for improvement and promotion of key industries. It emphasizes the role of technological innovation in the economic development of the PRC, as well as the continued importance of “green” development principles. According to its Chapter 5, one of the main development lines is to promote the upgrading of the traditional industrial structure, as was already the case in the 12th Five-Year Plan. Chapter 22 further elaborates this idea explaining the strategy to modernize the traditional industry in the PRC by promoting its technological conversion. In this respect, the 13th Five-Year Plan states that companies will be supported to “comprehensively improve in areas such as product technology, industrial equipment, environmental protection and energy efficiency”.

(142) The 13th Five-Year Plan mentions the new materials in a couple of instances: “we will move faster to make breakthroughs in core technologies in fields such as next generation information and communications, new energy, new materials […]” (35). The plan furthermore envisages that there will be projects carried out related to key new materials research, development and application (36).

(143) Following definitive disclosure, the GOC reiterated its basic position on China's Five Year Plans, claiming that they are not mandatory or legally binding but are simply guidance documents because they do not contain actual legal provisions, sanctions or any rules on applicability. The GOC further stated that the 12th Five-Year Plan is not applicable anymore and even if the 13th Five-Year Plan would be legally binding, quod non, it does not mention GFF. Additionally, while the plan refers to “new materials”, it does not define this term. Finally, the 13th Five-Year Plan is not specific to the GFF industry or to the “new materials industry” but covers nearly the entire economy

(144) The Commission disagreed with this position. Chapter 17 of the 13th Five-Year Plan states: “the national development strategy and plan will come into play with a leading and constraining role.” Thus, rather than making only general statements of encouragement, this plan uses language which points to its binding nature.

(145) Even if the 12th Five-Year Plan is not applicable anymore, it is the predecessor that highlighted the importance of the new materials industry as a “strategic emerging industry” that the 13th Five-Year Plan further developed. As demonstrated in recitals (148) and (149), the new materials industry includes the GFF industry. As mentioned in recital (141), the 13th Five-Year Plan highlights the strategic vision of the GOC for improvement and promotion of key industries; therefore, it prioritise certain sectors and technologies, including GFF.

(146) Therefore, the claims of the GOC in this respect were rejected.

(147) The new materials industry is also an encouraged industry under the Made in China 2025 initiative (37), and thereby eligible to benefit from considerable State funding. A number of funds had been created to support the Made in China 2025 initiative and hence indirectly the GFF industry such as the National Integrated Circuit fund, the Advanced Manufacturing Fund and the Emerging Industries Investment Fund (38).

(148) Furthermore, GFF is often referred to under the umbrella of ‘new materials’. The Made in China 2025 Roadmap (39) 10 strategic sectors, which are the key industries for the GOC. It describes in Sector 9 ‘new materials’ and its subcategories, including advanced fundamental materials (point 9.1), key strategic materials (point 9.2) including high performance fibres and composite materials, new energy materials (40). New materials thus benefit from the advantages stemming from the support mechanisms listed in the document, including, among others, Financial Support Policies, Fiscal & Taxation Policy, State Council Oversight and Support (41).

(149) Additionally, further to the Made in China 2025 Roadmap, in November 2016, the list of 10 strategic sectors was refined into a Catalogue of Four Essentials published by the National Manufacturing Strategy Advisory Committee (NMSAC), an advisory group to the National Leading Small Group on Building a National Manufacturing Power. In this catalogue, each of the 10 strategic sectors is split into four chapters: (i) core essential spare parts, (ii) key essential materials, (iii) advanced essential processes/technologies and (iv) industry technology platforms. Glass fibre can be found in sector 7: electrical equipment, point II key essential material: subpoint 16 glass fibre insulation boards and sector 9: new materials, point II key essential materials, subpoints 10. High-performance fibre, monomer and composite materials and 24. Glass-based materials.

(150) Following definitive disclosure, the GOC claimed that GFF is not mentioned in the Made in China 2025 initiative which is broadly available throughout the economy and that Made in China 2025 is not mandatory but is a mere guideline.

(151) In this respect, the Commission reiterates that the Made in China 2025 initiative clearly targets the new material industries, which include the GFF industry as already demonstrated. It provides for strategic support and guarantee through, inter alia, improved financial support policy and increased support of fiscal taxation policy. For instance, it clearly provides to “increase the support to the new generation of information technology, high-end equipment, new materials, etc.”

(152) The Made in China 2025 initiative states that it is “the program of actions in the first ten years of implementing the strategy of manufacturing power” and it sets clear strategic policies and targets. The Made in China 2025 initiative also provides that “various regions shall work out specific implementation program and refine the policy measures to ensure various tasks to be implemented” and further states that “the Ministry of Industry and Information shall strengthen the tracking analysis, supervision and direction jointly with relevant departments, and report major events to the State Council in a timely manner”. Furthermore, the Made in China 2025 initiative is supported by implementing measures such as the Made in China 2025 Roadmap and the ‘Notice of the General Office of the Ministry of Industry and Information Technology on the release of the 2017 Industrial Transformation and Upgrade (Made in China 2025) Funding Guide’ (42), which provided for funds that benefitted certain cooperating GFF exporting producers. In addition, the Building Materials Industry Development Plan (2016-2020) mentioned in recital (153) “is prepared based on the Outline of the 13th Five-Year Plan for National Economy and Social Development of the People’s Republic of China and the Made in China 2025 Strategy”. Considering the above-mentioned, the Made in China 2025 initiative does not appear to be a mere guideline; on the contrary, it appears to have a de facto mandatory effect and is largely implemented. Therefore, the claims of the GOC were rejected.

(153) Furthermore, the Building Materials Industry Development Plan (2016-2020) also promotes the GFF industry. This plan calls for optimizing industrial structure by, inter alia, expanding emerging industries such as glass-based materials, industrial ceramics, intraocular lens, high-performance fibres and composites, and graphene and modified materials. This is to be achieved through government funding, taxation, financial, pricing, energy, and environmental protection policies, and support for capital to participate in the mergers, acquisitions and restructuring of building materials enterprises through various means including lending (43).

(154) Following definitive disclosure, the GOC claimed that the Building Materials Industry Development Plan applies to all building materials and is thus also broadly available throughout the economy. Furthermore, this plan only concerns general information about government policy.

(155) The Building Materials Industry Development Plan provides for specific measures targeting the building materials industry, to which the GFF industry belongs as explained in recital (166). Therefore, the Commission disagrees with the GOC’s statement that it is available through the economy.

(156) Although the Building Materials Industry Development Plan might appear merely as a guidance document, as mentioned in recital (152), it is an implementation of the 13th Five-Year Plan and the Made in China 2025 Strategy. It aims at “promoting transformation and upgrading of the building materials industry, facilitating the transition of the building materials industry from a large industry to a powerful one and achieving the sustainable development during the “13th Five-Year Plan” period” and sets clear tasks and projects in order to achieve the fixed objectives during a defined concrete five-year period (44). Therefore, its purely guidance character is disputable, and more so when examining in its broader context.

(157) The GFF industry is also covered by the Intelligent Manufacturing Development Plan (2016-2020) published by the Chinese Ministry of Industry and Information Technology (the ‘MIIT’), which sets up 10 key tasks that aim at shortening the product development cycle, improving production efficiency, product quality, reducing operating cost, resources and energy consumption, and accelerating the development of intelligent manufacturing. In 2018, the State Council announced China’s plans to expand its program for smart manufacturing by adding about 100 pilot projects that same year, and according to publicly available information, one of the cooperating exporting producers, Taishan Fiberglass, Inc. was listed in 2015 among ‘The Intelligent Manufacturing Plants’ by the MIIT (45).

(158) According to the GOC, the Intelligent Manufacturing Development Plan (2016-2020) is irrelevant, since this is not specific to the GFF industry but concerns the entire manufacturing industry. Additionally, the GOC claimed that the plan is not a mandatory document but a mere guideline.

(159) The Intelligent Manufacturing Development Plan (2016-2020) is “prepared in accordance with the Outline of the 13th Five-Year Plan for National Economy and Social Development of the People’s Republic of China, the Made in China 2025 Strategy” (46). Therefore, it implements the strategy laid down in these documents. As already explained before, the 13th Five-Year Plan and the Made in China 2025 Strategy target specifically certain industries, among which is the GFF industry as part of the new materials industries. In addition, at many instances, the Intelligent Manufacturing Development Plan refers to the ten key fields of Made in China 2025 Strategy. In particular, the ‘Special Column 6 Intelligent transformation emphasis of key field’ provides that “for the new generation of information technologies, (…) new material, (…) building material (…), the deep application of intelligent and digital technologies in the research and development and design, manufacturing, logistics and warehousing, operation and management, after-sales service and other key links of enterprises is promoted”. Therefore, the Intelligent Manufacturing Development Plan (2016-2020) is specific to the key industries laid down by the Made in China 2025 Strategy and covers, inter alia, the new materials and the building materials sectors to which the GFF industry belongs.

(160) The Commission also notes that the language used in the Intelligent Manufacturing Development Plan (2016-2020) suggests a mandatory character of the document. In particular, Section II (III) ‘Development objectives’ provides that “Before 2025, “Two-Step” strategy shall be implemented to promote intelligent manufacturing development: Step one, by 2020, the intelligent manufacturing development foundation and supporting capacity will be obviously enhanced, the digital manufacturing will be basically realized in the key field of traditional manufacturing industry, and the intelligent transformation of key industry with conditions and foundation will make obvious progress; Step two, by 2025, the intelligent manufacturing support system is basically established, and the intelligent transformation is initially realized in the key industry”. Furthermore, Section V ‘Organization and implementation’ provides that “the Ministry of Industry and Information Technology and Ministry of Finance are responsible for organizing and implementing the Plan, strengthening the leadership, carefully organizing, timely solving the problems met in the implementation process of the Plan, and promoting the implementation of various tasks and measures” and that “the competent departments of industry and information technology and of finance in various regions shall quickly formulate the implementation scheme connected with the Plan, implement relevant supporting policies, and complete the information feedback work according to the assignment of responsibility”. Therefore, the Commission concluded that the Intelligent Manufacturing Development Plan has clearly defined objectives that are mandatory for the companies involved.

(161) In light of the above findings, the claims of the GOC were rejected.

(162) Moreover, the China High-Tech Export Products Catalogue issued by the Ministry of Science and Technology, the Ministry of Foreign Trade and the General Administration of customs lists 1900 high-tech products in 8 categories, which are targeted for preferential export policies by the GOC. One of the categories is the ‘New Materials’ category, which includes GFF (47). In addition, the China High-Tech Products Catalogue issued by the Ministry of Science and Technology, the Ministry of Finance and State Administration of Taxation refers to 11 areas, among which the ‘new materials category’. Furthermore, according to the Law of the PRC on Science and Technology Progress, the high-tech enterprises established in High-tech Development Zones can benefit from a list of preferential policies, which include: (i) an Enterprise Income Tax rate of 15 %, instead of the normal rate of 25 %; (ii) if the output value of export products reaches 70 % of the total value for that year, the EIT rate is further reduced to 10 %; (iii) newly-established high-tech enterprises are exempt from EIT tax for the first two years from the date production begins; (iv) newly-established high-tech enterprises are exempt from construction tax; (v) for new technology development and production and operation houses, R&D land is tax-free; (vi) equipment used by high-tech enterprises for high-tech production and development is subject to accelerated depreciation; (vii) export products produced by high-tech enterprises are exempt from export tariffs except those restricted by the State or concerning specific products, etc (48).

(163) Following definitive disclosure, the GOC claimed that the China High-Tech Products Catalogue, read in conjunction with the Law of the PRC on Science and Technology Progress is not specific to a certain industries because these documents set out objective criteria for eligibility, which are applied automatically.

(164) In this respect, as already mentioned in recital (162), the China High-Tech Export Products Catalogue high-tech products in 8 categories, including ‘new materials’. The Commission further notes that the China High-Tech Products Catalogue refers to 11 areas, among which “6. New material”. Considering that both catalogues are limited to a certain number of areas, it cannot be concluded that they applies to all industries. Therefore, the claim of the GOC is rejected.

(165) The Temporary Provisions on Promoting Industrial Structure Adjustment (Decision No. 40 2005 of the State Council) (‘Decision No 40’), Chapter III refers to ‘The Guiding Catalogue for Industry Restructuring’ which is composed of three kinds of contents, namely encouraged project contents, limited projects content and eliminated projects content. According to Article XVII of the Decision, if “the investment project belongs to the encouragement content shall be examined and approved and put on records according to the relevant national regulations on investment; all financial institutions shall provide credit support according to the credit principles; the self-using equipment imported in the total amount of investment, with the exception of commodities in the Non-exempt Imported Commodities Content of Domestic Invested Projects (amended in 2000) issued by the Ministry of Finance, can be exempt from import duty and import links value-added tax, unless there are new regulations on the non-exempt investment projects content. Other favorite policies on the encouraged industrial projects shall be implemented according to relevant national Regulations ”.

(167) According to the GOC, Decision No. 40 is not specific to an enterprise or industry, as required by Article 2.1 of the SCM Agreement but to certain encouraged projects. Moreover, Decision No. 40 is not mandatory. The GOC affirmed that the Guiding Catalogue for Industry Restructuring referred to by the Commission is irrelevant because the Commission refers to the 2011 version of this catalogue, which has already expired. According to the GOC, the new version of this catalogue does not mention GFF.

(169) Second, the Commission disagrees that Decision No. 40 has no mandatory effect. Indeed, Decision No. 40 lays down the temporary regulations promoting the industrial restructuring and it refers to ‘The Guiding Catalogue for Industry Restructuring’, which defines three kinds of content: encouraged projects content, limited projects content and eliminated projects content. However, Article XVII of Decision No. 40 establishes the treatment of investment projects belonging to the encouraged content in a mandatory manner, e.g. ‘all financial institutions shall provide credit support according to the credit principles’, ‘other favourite policies on the encouraged industrial projects shall be implemented according to relevant national Regulations’. Furthermore, Article XXI sets that ‘the relevant preferential policies implemented according to The Content of Industries, Products and Technologies Currently Especially Encouraged by the State (amended in 2000) shall be adjusted to be implemented according to the encouragement content of The Guiding Catalogue for Industry Restructuring’. Therefore, Decision No. 40 has a mandatory effect in this respect. The Guiding Catalogue for Industry Restructuring, ‘Category I Encouragement’ lists a certain number of projects under a certain number of industries. As explained in recital (166), it includes the building materials industry and specific projects related to the GFF industry. Consequently, Decision No. 40 read together with The Guiding Catalogue for Industry Restructuring provides for specific treatment of certain projects within certain encouraged industries. Therefore, although these documents refer to specific projects, they first establish the specific industries that are encouraged and then certain projects in these industries that could benefit from the preferential treatment provided for in Decision No. 40. Therefore, the Commission rejected the claims of the GOC.

(170) Furthermore, GFF is covered by the Building Materials Industry Development Plan 2016-2020 (51), which envisages, among others, the transition of the construction material industry from a large industry to a strong industry. It also envisages an optimisation of the construction sector's structures, improvement of the security of supply of key materials, increase in the level of concentration in the industry as well as enhancement of the international competitiveness. The plan provides for quantitative development targets, governmental control over production capacity, detailed production targets, geographical distribution of industries among provinces in the PRC, security of supply, development of specific industries, government control and influence over enterprises and industry support measures (52). This demonstrates the strong presence and intervention of the State in the fibreglass industry.

(171) The 13th Five-Year Plan for Fibre and Composite Materials Industry (53) is a plan targeting specifically the fibre material industry. It clearly guides the development of the sector, for example Section III.3 sets the goal to:

(172) ‘Actively integrate and upgrade the upstream and downstream ends of the industry chain to maintain the healthy and stable development of the fibre and composite materials industry: Encourage large-scale pond and kiln enterprises to steadily implement the “go global” development strategy, implement global production capacity patterns. On this basis: - keep the control over the domestic glass fibre production volume growth rate at a relatively low level; - at the same time, reduce the export ratio of domestic glass fibre and products; -actively adjust product structures; […] - actively adjust product structure and guide enterprises to implement differentiated development, vigorously develop deep processing of glass fibre products, expand the market size of fibre and composite materials products in mid-to-high-end application fields, and improve product quality and added value. Ensure that the annual growth rate of the main business revenue of the fibre and composite materials industry is higher than the national GDP growth rate by about 5 to 6 percentage points, that is, as of 2020, the total revenue of enterprises above designated size will reach 500 billion yuan, i.e. doubling compared to the situation prevailing at the end of the 12th Five-Year Plan.’ (54)

(173) Furthermore, Section IV.3.4 of that plan sets basis for governmental guidance of the enterprises and the entire industry:

(174) ‘Guide various types of enterprises to get involved in differentiated operations taking into account their individual advantages and specific market segments. In particular, it is necessary to guide small and medium-sized enterprises to follow the growth path consisting in filling up specific gaps, in having small enterprises being complementary to big ones, in considering specialisation as the way to success. Thanks to differentiated operations, scale-competition between large enterprises is avoided, and the competition between similar enterprises is avoided, thus eliminating the low-cost competition market. At the same time, with specialized production, small and medium-sized enterprises can also win the respect and attention of large enterprises, establish close cooperative relationships with large enterprises, and effectively support and promote the development of large enterprises.’

(177) Following definitive disclosure, the GOC claimed that the 13th Five-Year Plan for Fiber and Composite Materials Industry and the Jiujiang City 13th Five-Year Plan both only concerns general information about government policy, with no direct connection to any of the alleged subsidy programs at issue and are thus not “sufficient evidence” of specificity.

(178) The Commission disagreed with this claim. As explained in recitals (171) and (172), the 13th Five-Year Plan for Fibre and Composite Materials Industry targets specifically the fibre material industry and it clearly guides the development of the sector. Even if this document might have no direct connection to the alleged subsidy programs as claimed by the GOC, it points to specific measures encouraging the fibre and composite materials industry. Furthermore, as mentioned in recital (176), the Jiujiang City 13th Five-Year Plan for the economic and social development specifically targets Jushi Group, which is one of the cooperating exporting producers. Therefore, these documents demonstrate that the Chinese authorities target specifically a given industry, which includes the GFF industry, and certain companies in this industry. Consequently, the claims of the GOC were rejected.

(179) Considering the above-mentioned, the GFF industry is thus regarded as a key/strategic industry, whose development is actively pursued by the GOC as a policy objective.

(180) Following definitive disclosure, the GOC objected to the Commission’s assessment that the GFF industry is an encouraged industry and that the Commission's allegation that the GFF industry is encouraged in China does not show that the measures at issue are specific within the meaning of Article 2 of the SCM Agreement.

(181) The Commission disagreed with the COG’s statement. The findings demonstrated in recitals (140) to (178) show that the GFF industry, as part of the ‘building materials’ and the ‘new materials’ industries, is particularly targeted and encouraged through various policy and regulatory tools and listed in catalogues of encouraged industries. The fact that these documents provide for specific measures with respect to certain industries, including the GFF industry, is sufficient to demonstrate that they are specific within the meaning of Article 2 of the SCM Agreement.

(182) For administrative convenience, the Commission requested the GOC to forward specific questionnaires to the two specific state-owned banks mentioned in the complaint, to Sinosure, as well as to any other financial institution that provided loans or export credits to the sampled companies.

(183) The GOC indeed forwarded the specific questionnaires to the banks. 15 bank branches confirmed their outstanding loans with the sampled companies during the IP, but without providing a reply to the questionnaire as such. Only the in-house bank of one of the exporting producers (CNBM Finance) and one state-owned bank (Export-Import Bank of China) actually responded to the questions in the questionnaire. Furthermore, the CDB did not respond to the questionnaire, but was available for questions during the verification visit.

(184) According to the GOC, it had no authority to demand information from the state-owned banks that did not reply to the questionnaire, as they operate independently from the GOC.