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

(922) The Commission reviewed the evidence provided on the payment of the customs duties, and found that the GOE had initiated a verification at the premises of the exporting producer at the end of 2019, due to the Commission’s investigation. As a result of this verification, the GOE reclaimed a certain amount of customs duties on imported materials from the company, relating to the years 2017, 2018 and 2019. Based on the evidence provided, and given the impossibility to verify on spot this new evidence due to travelling restrictions linked to the COVID-19 pandemic, the Commission accepted the claim and deducted the amount of customs duties paid on imported materials relating to the investigation period in accordance with Article 15(1) of the basic Regulation.

(923) However, the Commission did not consider that these settlements put into question the findings on the subsidy scheme as such. In this respect, the Commission noted that the recovery of the customs duties was triggered by the Commission’s investigation activities, rather than by the GOE’s own monitoring and verification framework for the collection of customs duties. The GOE also did not dispute the fact that there was no such framework in place during the investigation period. Concerning the temporary nature of the lack of a monitoring and verification, the Commission noted that although Jushi Egypt only joined the SCZone in 2017, the last legislative change in the framework for the collection of the customs duties already happened in 2015, when the responsibility for collecting customs duties was transferred to the General Authority of the SCZone. In addition, the detailed report of the Customs Authority, provided by the GOE as Annex I of its comments on definitive disclosure, confirmed that the overall legislation for the collection of customs duties was already in place since 2006. The GOE thus had ample time to implement a functioning system for collecting customs duties.

(924) Concerning sales from Jushi Egypt to Hengshi Egypt, the Commission already noted in recitals (912) to (913) above that sales of inputs between companies located within the special zone were never subject to any taxes, thus showing that the SCZone was a special zone with several specific features that distinguish it from other zones. The fact that Hengshi Egypt only has export sales is in this sense irrelevant, and does not alter the Commission’s conclusions. The claims of the GOE and of the exporting producers concerning the validity of the Commission’s findings in general, and on the sales to Hengshi Egypt more specifically, were thus rejected.

(925) Concerning the import duties, the benefit conferred on the recipient is considered to be the difference between the amount of import duties due during the investigation period, and the actual amount of import duties paid during the investigation period.

(926) In order to determine the amount of import duties due, the Commission considered that the average consumption ratio for all types of finished goods is the same, since they all belong to the same general category of products. The Commission based the consumption ratio on the records of the exporting producers. Then, it first established the quantity of materials imported during the investigation period. Second, it calculated the ratio between the domestic sales in comparison with the total sales of the exporting producers. Third, the Commission applied this domestic sales ratio to the total volume of imported materials and it determined the quantity of imported materials for which import duties would be due.

(927) Finally, in order to establish the amount of benefit, the Commission calculated the amount of import duty payable for the quantities of materials used for the production of goods sold on the domestic market.

(928) Concerning the revenue foregone in the form of a de facto VAT exemption, the benefit was originally calculated by taking the full amount of VAT normally payable but not paid during the investigation period on the purchases of imported inputs.

(929) Following definitive disclosure, the Commission adapted the calculation methodology for the calculation of the benefit on the de facto VAT exemption, as mentioned in recital (895) above. As a result, the cash flow benefit on the VAT withheld was considered equivalent to the average interest rate on deposits in Egypt during the IP (12,32 %), applied to the VAT amounts, which were withheld for materials purchased since 2017, and calculated pro rata for VAT amounts, which were withheld during the IP. Since no information was available on the amount of the materials purchased before the IP, the Commission considered that this amount would be equivalent to the amounts found during the IP, adjusted by the difference in the cost of goods sold between the two periods.

(930) The amount of subsidy established with regard to this type of subsidies during the investigation period for the exporting producers was 0,95 %.

(931) Based on the information available at this point of the investigation, the Commission calculated the amount of countervailable subsidies in accordance with the provisions of the basic Regulation for the exporting producers by examining each subsidy or subsidy programme, and added these figures together to calculate a total amount of subsidisation for each exporting producer for the investigation period. To calculate the overall subsidisation below, the Commission first calculated the percentage subsidisation, being the subsidy amount as a percentage of the company's total turnover. This percentage was then used to calculate the subsidy allocated to exports of the product concerned to the Union during the investigation period. The subsidy amount per tonne of product concerned exported to the Union during the investigation period was then calculated, and the margins below calculated as a percentage of the Costs, Insurance and Freight (‘CIF’) value of the same exports per tonne.

(932) Given that Jushi & Hengshi Egypt are related companies, a single subsidy amount was established for these exporting producers. Following the definitive as well as the additional definitive disclosures, the CNBM Group raised the same arguments as those, which were raised for the Chinese entities of the Group in recitals (624) to (626) above, concerning the calculation methodology for establishing single subsidy amounts for related companies. This claim was rejected in line with the arguments developed for the Chinese part of the Group.

(933) The CNBM Group also specifically requested the Commission to highlight which cells in the calculation showed that a weighted average of the individual subsidy amounts of the two related exporting producers had been carried out. In this respect, the Commission referred to the information provided in the definitive and in the additional definitive disclosure. The Commission could not accept this claim, since it considered that the Excel sheets provided contain all necessary information, including the formulas used to calculate each cell, and thus allowed the company to follow the calculation methodology used.

(935) The like product was manufactured by 16 producers in the Union during the investigation period. They constitute the ‘Union industry’ within the meaning of Article 9(1) of the basic Regulation.

(936) The total Union production of GFF during the investigation period was established at almost 115,000 tonnes. The Commission established the figure based on the verified questionnaire reply of the complainant, cross-checked and, where appropriate, updated with the verified questionnaire replies of the sampled Union producers. As indicated in recital (83), the sample was made up of four Union producers representing more than 40 % of the total Union production of the like product.

(937) The Commission relied on adjusted Eurostat data in order to establish Union consumption and the import volumes, following the methodology suggested by the complainant. Based on the 10 digit-level (TARIC) data, small portion of inputs were removed from the import statistics used. The Commission checked and confirmed the estimations of the complainant regarding the proportion of the product concerned in volumes imported under the CN codes (200) mentioned in the Notice of Initiation (201) based on the information received from the cooperating exporting producers in the PRC and in Egypt.

(938) The volumes and value of imports from other third countries were established during the investigation based on direct knowledge of companies producing GFF in other third countries and importing into the Union. For all third countries, further to the figures mentioned in the complaint, the complainant provided updated market intelligence information for the investigation period.

(939) The Commission established the Union consumption on the basis of the sales volumes of the Union industry in the Union market plus imports from all third countries as recorded in the Comext database of Eurostat, adjusted as described in recitals (937) and (938) above.

(941) The Union consumption increased over the period considered from roughly 153 000 tonnes in 2015 to around 168 000 tonnes in the investigation period, namely by 9,8 %.

(942) In their comments on the final disclosure, one of the CNBM Group (China) exporting producers requested additional disclosure to clarify the underlying import and consumption data and the detailed methodology used to establish it. They argued that this was necessary, as the figures used in the complaint are different for the figures disclosed.

(943) The claim that relevant figures were not disclosed is wrong. The figures used in establishing the consumption of GFF in the Union were disclosed to all interested parties in the final disclosure of 27 February 2020. Differences to the figures used in the complaint are not a result of a methodology change but, on the one hand, of the different time periods between the complaint and the investigation as explained above and, on the other hand, the availability of more detailed data collected during the investigation. Whilst the complainant had to rely on market intelligence to remove imports under the relevant CN codes that were not GFF, the Commission has access to TARIC-level import data. As mentioned in recital (937), the Commission used this data to remove products that were imported under TARIC codes for other products. In addition to the difference in periods, the Commission had access to actual data of the sampled Union producers, which, in certain cases, the verification of this data lead to revisions of the figures reported.

(944) In their comments on the final disclosure, the GOC reiterated that the complainants’ adjustments to the import data likely led to the import volumes from Russia being vastly understated, while the methodology applied to the PRC was different and disadvantageous for the PRC.

(945) As outlined in recital (18), Russian import data were based on Eurostat data cross-checked with the imports from the two know GFF producers in Russia. The export volume of GFF reported by the cooperating Chinese exporting producers during the investigation represented the totality of the imports recorded in Eurostat under the relevant TARIC codes and all exports were therefore considered to be product concerned.

(946) The claim that the methodologies applied to determine import volumes lead to biased results, was therefore rejected.

(947) The Commission examined whether imports of GFF originating in the countries concerned should be assessed cumulatively, in accordance with Article 8(3) of the basic Regulation.

(949) The amount of countervailable subsidies established in relation to the imports from the PRC and Egypt were above the de minimis threshold laid down in Article 14(5) of the basic Regulation. The volume of imports was not negligible within the meaning of Article 10(9) of the basic Regulation. Indeed, the market shares in the investigation period were 22,3 % (37,558 tonnes) for imports from the PRC and 9,1 % (15,334 tonnes) for imports from Egypt.

(950) The conditions of competition between the subsidized imports from the PRC and Egypt and between those imports and the sales of the like product in the Union were similar. More specifically, the imported products competed with each other and with the GFF produced in the Union because they are sold through the same sales channels and to similar categories of customers. Regarding import prices, table 4 shows that although the overall price levels were different for each country concerned, the trends were largely the same, namely showing an overall decrease over the period considered, with stabilisation in 2017 and the investigation period, both significantly undercutting the Union industry’s sales prices on the Union market.

(951) In their comments to the final disclosure, the GOC re-iterated that the requirements for a cumulative assessment of the effects of the subsidised imports from the countries concerned was not met since it would contravene the practice of the Commission to require a similarity of the imports of the countries concerned in terms of their overall volume, market share and price, which according to GOC would not be given for the imports from the PRC and Egypt in the current case. In support of this assertion, the GOC referred to previous anti-dumping investigations (202) and the WTO panel in the Tubes and Pipes fitting case (203). The GOC further claimed that Chinese imports on their own did not cause any injury as they showed similar trends than the Union industry sales volumes.

(952) In their comments to the final disclosure, the GOC claimed further that, in the current investigation, Egyptian imports to the Union did not exist until 2017 and therefore for most of the investigation period did not compete with Chinese imports. Furthermore, the GOC argued that between 2015 and 2018 Egyptian and Chinese import volumes and market shares followed opposite trends. Finally, the GOC argued that Egyptian import prices were consistently lower than Chinese import prices. Therefore, the GOC concluded there were no similar conditions of competition between imports from China on the one hand and imports from Egypt on the other hand which should consequently not be cumulated.

(953) The Commission recalls that the analysis concerning the facts whether the conditions for a cumulative assessment are met in a specific case is taken on a case-by-case basis, taking into account the specificities and facts of each case.

(954) Contrary to what the GOC claimed, Art 8(3) of the basic Regulation does not stipulate a requirement for similarity of imports in terms of volume, market share and price but sets out that a cumulative assessment of the effects of imports is appropriate in the light of the conditions of competition between imported products and the condition of competition between imported products and the like product in the Union. This analysis may include elements such as the import volume, market share and import price, which does however not mean that those elements need to be similar in absolute terms.

(955) In the present case, and as already outlined in recital (33), between 2015 and 2017, China and Egypt showed both increasing import trends, while this increase was more pronounced for imports from Egypt, in particular between 2016 and 2017. However, this does not devaluate the conclusion that imports from both countries were competing with each other and with the sales of the Union industry on the Union market. The fact the Chinese imports were partly overtaken by Egyptian imports also showed that there were under similar conditions of competition. In addition, despite the decrease in import volume from China in the IP, the overall import levels remained significant throughout the period considered, and showed an overall increasing trend throughout the same period.

(956) Regarding import prices, likewise as already outlined in recital (950), in contrast to what is claimed by the GOC, despite the on average lower import prices from Egypt, the overall trends for both, China and Egypt were similar, i.e. they decreased during the entire period considered and consistently undercut the Union industry sales prices on the Union market.

(957) The Commission therefore rejected the GOC’s arguments against a cumulative assessment of the effects of the subsidised imports from the PRC and Egypt. Consequently, the argument raised by the GOC that Chinese imports on their own would not have caused injury is irrelevant.

(958) Taking into consideration the above, it was concluded that the criteria set out in Article 8(3) of the basic Regulation were met and imports from the PRC and Egypt were examined cumulatively for the purposes of the injury determination.

(959) As explained in recitals (937) and (938) above the Commission established import volumes and prices on the basis of adjusted Eurostat data. The market share of the imports was established by comparing the volume of imports with the Union consumption. In their comments to the final disclosure, and as mentioned in recital (944), the GOC submitted that the methodology to determine import volumes from China was biased. For the reasons set out in recital (945), the arguments provided in this regard were rejected.

(961) Imports of the countries concerned increased by 53 % during the period considered from nearly 35 000 tonnes in 2015 to almost 53 000 tonnes in the investigation period. The market share of the countries concerned increased thus from 22,6 % in 2015 to 31,4 % in the investigation period by nearly 9 percentage points. This increase was continuous throughout the period considered, both in absolute terms and in relative terms.

(962) As explained in recital (937), the Commission established the trends of import prices based on Eurostat data.

(964) Import prices of the countries concerned were always below the average sales price of the sampled Union producers, as shown in Table 8. The average import prices from the countries concerned decreased from 1,78 EUR/kg to 1,54 EUR/kg in the period considered, namely by nearly 14 %.

(966) The price comparison was made on a product type-by-type basis, duly adjusted where necessary, and after deduction of rebates and discounts. The Commission found it reasonable not to include the kits in the quantification of the undercutting. Given the unique combination of kits, a comparison would most likely result in comparing different kits. The result of the comparison was expressed as a percentage of the hypothetical turnover during the investigation period. It is obtained by multiplying the average Union industry sales price per product type by the quantities of the comparable product type exported to the Union. It showed significant undercutting ranging from 15,4 % to 55,8 % for the PRC and from 30,5 % to 54,9 % for Egypt, resulting in a weighted average margin of 32,3 % for the sampled co-operating exporting producers in the PRC and of 31,5 % for the cooperating exporting producers in Egypt.

(967) In their comments to the final disclosure, one of the CNBM Group (China) exporting producers made a general reference to their comments regarding the calculation of undercutting and underselling margins provided to the final disclosure in the separate anti-dumping investigation. They re-iterated those same comments in the present anti-subsidy investigation. These comments were, however, tailored to the specific aspects of an anti-dumping investigation and were referring to specific Articles in Regulation (EU) 2016/1036 of the European Parliament and of the Council on protection against dumped imports from countries not members of the European Union (205), and CNBM Group (China) did not further specify which comments precisely would be applicable to the current anti-subsidy investigation. The Commission addressed all comments provided in this regard in 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 (206) (‘Regulation (EU) 2020/492’). Therefore, only those comments that were specifically linked to the calculation of the undercutting margins are addressed in this Regulation.

(968) When it comes to the elements taken into account for calculation of undercutting (in particular the export price), the Commission has to identify the first point at which competition takes (or may take) place with Union industry in the Union market. This point is in fact the purchasing price of the first unrelated importer because that company has in principle the choice to source either from the Union industry or from overseas customers. By contrast, resale prices of related importers do not reflect the point where real competition takes place. This is only the point where the established sales structure of the exporter tries to find customers but it is already after the point where the decision to import had been taken. Indeed, once the exporting producer has established its system of related companies in the Union, they have already decided that the source of their merchandise will be from overseas. Hence, the point of comparison should be right after the good crosses the Union border, and not at a later stage in the distribution chain, e.g. when selling to the final user of the good.

(969) This approach also ensures coherence in cases where an exporting producer is selling the goods directly to an unrelated customer (whether importer or final user) because under this scenario, resale prices would not be used by definition. A different approach would lead to a discrimination between exporting producers based solely on the sales channel that they use.

(970) In this case, the import price cannot be taken at its face value because the exporting producer and the importer are related. Therefore, in order to establish a reliable import price at arm's length, such price has to be reconstructed by using the resale price of the related importer as a starting point.

(971) The Commission also notes that in this particular case the majority of sales on both the Union industry side and the exporting producers’ side are done directly (i.e. without traders or importers). These direct sales represent [more than 95 %] of sales of the Union industry and [more than 95 %] of sales of the exporting producers.

(972) Whilst the Commission stands by the reasoning outlined above, for the sake of completeness additional undercutting calculations were undertaken.

(973) The Commission took into consideration only the direct sales made by the Union industry and the exporting producers, which, as mentioned above, represent the vast majority of sales on both sides. Based on this calculation, the prices of the CNBM Group (China), CNBM Group (Egypt) and Yuntianhua Group were found to undercut Union industry’s prices by 45,4 %, 30,8 % and 14,7 %, respectively.

(974) In conclusion, undercutting margins do not differ significantly regardless of the way it is calculated. All claims in this regard were therefore rejected.

(975) Following the final disclosure, Yuntianhua Group requested additional disclosure concerning the detailed undercutting per product type, referring to their comments provided in the separate anti-dumping investigation in reply to the additional final disclosure provided in that latter investigation mentioned in recital (121). In this submission, Yuntianhua Group requested that sales quantities and prices of all product types sold by the Union industry should be disclosed to them, regardless how many sampled Union producers were selling a specific product type. They dismissed the Commission’s view that if sales data related to a certain product type pertained to only two or less Union producers, a third party would be able to track the data back to the individual Union producer. Since Yuntianhua Group would not have the relevant market knowledge to do so, they further claimed, there would be no reason to keep this data confidential. Alternatively, Yuntianhua Group argued that the Commission should at least provide a meaningful non-confidential summary of the calculations by providing ranges for sales data pertaining to product types tat were produced by two or less Union producers.

(976) Data pertaining to only one or two Union producers cannot be disclosed for confidentiality reasons. The same treatment is afforded to exporting producers, which do not have their individual information make available, even on an anonymous basis. The investigation has shown that the GFF market is relatively transparent with large quantity users sourcing from a limited number of certified producers in the Union and China. It is therefore reasonable to assume that GFF producers in the Union and in the countries concerned often know who is providing a particular product type. Thus, by disclosing a data range would bear the high risk of disclosing business confidential data that the Commission seeks to protect. In any event, the Commission disclosed detailed calculations for all product types that were produced by three or more Union producers that covered around 70 % of the volume sold by Yuntianhua Group to the Union and more than 70 % of the volume of corresponding product types sold by the Union industry. Yuntianhua Group raised no issues with regard to these calculations. This claim was therefore rejected.

(977) In their comments to the final disclosure, Yuntianhua Group, claimed that undercutting calculations would not have been based on a price comparison at the same level of trade, referring in general terms to their submissions made in the separate anti-dumping investigation following the final and additional final disclosure in that investigation without, however specifying any further to which specific claims reference was made. A similar claim was also made by the GOC following the final disclosure.

(978) As mentioned in recital (971), [more than 95 %] of sales of the Union industry were direct sales. Furthermore, as noted in recitals (973), undercutting margins calculations based on sales to end users and only on direct sales all show undercutting margins for all exporting producers including Yuntianhua Group. This comment was therefore rejected.

(979) In their comments to the final disclosure, Yuntianhua Group also re-iterated its claim that a segment specific injury alanysis should have been performed. To substantiate this claim Yuntianhua Group referred as above, only in very general terms to the submissions provided in the separate anti-dumping investigation following the final and additional final disclosure in that investigation without, however specifying any further to which specific claims or arguments reference was made. Yuntianhua Group claimed in particular, that the sampled Union producers were specialising and producing GFF types specifically for a given user. They argued that these were OEM customer specific products for which no price undercutting was calculated. No measures should be imposed on those products.

(980) The exporting producer’s assumption is factually wrong. The investigation has shown that GFF was not produced on OEM basis. The Commission found that for most applications GFF are produced to order according to customers’ specifications and, as a result, the vast majority of sales (both of Union producers and exporting producers) are made directly to independent end-customers. Thus, sales according to customers’ specifications is a characteristic of the GFF market and in no way suggest the existence of a separate OEM segment. This is also visible from the data disclosed to Yuntianhua Group. Around 70 % of the product types exported by Yuntianhua Group to the Union were produced by 3 or 4 of the sampled Union producers. The Commission further notes that during the investigation period there was a 92 % matching between the sales of the Union industry and Yuntianhua Group. This also contradicts that there would be a particular specialisation in the market and that Union producers would produce one or several types for a given user. Furthermore, the statement that sales prices of those product types produced by only one or two Union producers were not undercutting the Union industry sales prices is incorrect. The Commission found undercutting for four out of the seven product types for which detailed calculation could not be disclosed because of confidentiality issues. That means that, out of the 18 matching product types, only four (accounting for a low percentage of Yuntianhua Group exports volumes) were found not to undercut the sales of the Union industry. Needless to say, the establishment of price undercutting at the level of product types is only an intermediary and preparatory step of the price comparison required by Article 8(2) of the basic Regulation, that is, the determination of the price undercutting in relation to the product concerned as a whole. On the basis of the above, the claim that a separate analysis based on different segments should have been carried out was rejected.

(981) In their comments to the final disclosure, Yuntianhua Group argued that the Commission included in the injury findings products that are not product concerned claiming that one of their product types was imported under a CN code that was not part of this investigation.

(982) As stated by the Commission in the Notice initiating this proceeding ‘[t]he CN and TARIC codes are given for information only’. They do not constitute the description of the product under investigation. Indeed, in this particular case it was already noted in Commission Implementing Regulation (EU) 2020/44 of 20 January 2020 making imports of certain woven and/or stitched glass fibre fabrics originating in the People’s Republic of China and Egypt subject to registration (207), that imports of the product under investigation, even after the initiation of the proceeding were widely misdeclared.

(983) Furthermore, during the investigation the sampled exporting producers were asked to report their exports to the Union of the product matching the description given in the Notice initiating the proceeding. In this framework, Yuntianhua Group reported the specific product type in question as a product concerned. In any case, it was verified and confirmed during on-site verification that all product types reported in the questionnaire were falling under the scope of the investigation. This claim was therefore rejected.

(984) In accordance with Article 8(5) of the basic Regulation, the examination of the impact of the subsidised imports on the Union industry included an evaluation of all economic indicators having a bearing on the state of the Union industry during the period considered.

(985) As mentioned in recital (83), sampling was used for the determination of possible injury suffered by the Union industry.

(986) The macroeconomic indicators are: production, production capacity, capacity utilisation, sales volume, market share, growth, employment, productivity and magnitude of the amount of the countervailable subsidies and recovery from past subsidisation.

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

(989) The total Union industry’s production fluctuated but decreased by 8 % over the period considered. As the production capacity was kept almost at the same level throughout the period considered, capacity utilisation went down from 63 % to 59 %.

(990) In their comments on the final disclosure, the GOC argued that the downturn in production and production capacity only occurred in the last year of the period considered and cannot be considered as an overall trend. A negative trend would thus only visible in the investigation period on the basis of which it cannot be concluded that the Union industry suffered material injury. The Commission’s analysis would thus undermine the purpose of selecting a three-year-period for the analysis of the injury trends.

(991) In contrast to what was claimed by the GOC, from 2016 until the investigation period, namely for three consecutive years, production, production capacity and capacity utilisation have consistently decreased, and therefore the decrease was not only observed in the last year of the period considered. The Commission considered that the fact that there has been an increase of production volume and production capacity between 2015 and 2016 does not put into question this overall downward trend. In any event, the periods prior to the investigation period serve as reference to which the investigation period is compared in order to assess whether or not the Union industry is materially injured in the present. There is no requirement that there is a consistent downward trend covering the whole period considered. In fact, it is usual that negative factors are more acute and concentrated, and therefore showing material injury, in the investigation period.

(992) This argument was therefore rejected.

(994) The sales volume of the Union industry decreased by 5 % over the period considered, while the imports from the PRC and Egypt accumulated increased by 53 %. Considering the increase in consumption, this translated in a decrease of market share from 73,7 % in 2015 to 63,4 % during the investigation period, namely a decrease of over 10 percentage points for the Union industry, while the PRC and Egypt increased their market share from 22,6 % in 2015 to 31,4 % during the investigation period, namely an increase of nearly 9 percentage points.

(995) In their comments on final disclosure, the GOC argued that the Union industry’s sales volumes on the Union market did not show a clear downward trend as it increased by 9 % between 2015 and 2017 and only decreased between 2017 and 2018. Additionally, the GOC argued that overall, the sales volumes of the Union industry decreased by only 5 % between 2015 and 2018, a decrease that mostly occurred in 2018, which did therefore not show a clear downward trend over the period considered.

(996) In contrast to the GOC’s claim, the Union industry’s sales volumes decreased consistently between 2016 to the investigation period, namely for three consecutive years. This is a clear downward trend despite the initial increase between 2015 and 2016. Furthermore, this trend should also be seen in the context of the overall increasing consumption over the period considered, as shown in recital (940) that translated in an even higher loss in the market share of the Union industry during the period considered.

(997) This claim was therefore rejected.

(998) In their comments on final disclosure, the GOC argued that the Union industry’s imports of GFF from its related companies India and Russia should be included in the Union industry’s sales and market share as these imports would reflect the Union industry’s deliberate decision to move production out of the Union.

(999) Sales volume of the Union industry on the Union market only includes products produced by the Union producers for sales on the Union market. Market share of the Union industry is based on the Union industry’s sales of its own produced like product on the Union market. Therefore, imports from the Union industry even if from companies related to Union producers should not be considered as sales by Union industry, but as imports from other third countries. Imports from other third countries are considered under the causation analysis, specifically in recitals (1044) to (1050).

(1000) This argument was therefore rejected.

(1001) The above figures in respect of production, sales, volume and market share demonstrate that the Union industry was not able to grow in a growing market, neither in absolute terms nor in relation to the consumption, over the period considered.

(1003) During the period considered, employment in the Union remained relatively stable with only a minor increase of 1 %. Indeed, the growth in consumption could not be matched with a similar growth in employment as sales and production volumes decreased. As production fell by 8 %, productivity of the Union industry fell by 9 % over the period considered.

(1004) In their comments to the final disclosure, the GOC argued that the stable employment showed that the Union industry would be confident that the decrease in production and sales volume from 2018 to the investigation period would be only temporary and did therefore not call for a decrease in the workforce. The GOC concluded that this would show that the Union industry did not suffer any material injury.

(1005) The statement of the GOC was not supported by any supporting evidence. The alleged strategy of the Union industry with regard to its employment figures was therefore considered as purely speculative. In addition, the facts of the investigation did not support such assumption as the Union industry suffered material injury as explained throughout this section. This argument was therefore rejected.

(1006) The subsidy amounts found were significantly above the de minimis level. The impact of the magnitude of the actual amounts of subsidisation on the Union industry was substantial, given the volume and prices of imports from the PRC and Egypt.

(1008) Whereas the Union industry’s cost of production increased by 3 % over the period considered, mainly due to the loss of high volume contracts from the wind turbine industry, the Union industry's average unit sales price to unrelated customers in the Union decreased by 7 % during the investigation period. This demonstrates the severe price suppression caused by the significantly increasing volume of imports of the product concerned. As explained in recitals (1016) and (1030), this had a significant impact on the financial situation of the Union industry, which became loss making during the investigation period.

(1009) In their comment to the final disclosure, the GOC argued that there was no relation between the imports from the countries concerned and the increase in production cost as these would only reflect an increase in labour costs.

(1010) While the increase in labour costs contributed to the increased production costs, the increase in the production cost was to a large part due to the loss of production and sales volume of the Union industry as a consequence of the subsidised low priced imports. The reduction in production volume led to an increase in the unit cost of production as fixed costs were distributed to less production volume. In addition, smaller orders are more work intensive for machine adjustments and require more man-hours, which had an impact on the unit labour cost.

(1011) This argument was therefore rejected.

(1013) Between 2015 and the investigation period, the average labour costs per employee of the sampled Union producers increased by 6 %.

(1015) Despite the fact that under normal market conditions, GFF is produced mostly to order and not on stock, there was a sharp increase in stock over the period considered of 26 %. This is explained by the fact that the Union industry was forced to compensate for the loss of high volume orders to its competitors from the countries concerned. In an attempt to maintain average unit cost at lower levels, the Union industry kept downtimes for machines at a minimum and produced GFF that could not be sold immediately to the customers.

(1017) The Commission established the profitability of the sampled Union producers by expressing the pre-tax net profit of the sales of the like product to unrelated customers in the Union as a percentage of the turnover of those sales. Profitability followed a decreasing trend over the period considered and became negative during the investigation period.

(1018) The net cash flow is the ability of the Union producers to self-finance their activities. The trend in net cash flow developed negatively over the period considered. It shows a constant deterioration, in particular at the end of the investigation period.

(1019) Investments increased slightly by 10 % over the period considered, but show changing trends within the period considered. Most of the investment concerned production line maintenance. There was no investment in new GFF capacity, which reflects the decreasing market share.

(1020) The return on investments is the profit expressed as a percentage of the net book value of investments. It developed negatively over the period considered resulting in a negative value in the investigation period.

(1021) In their comments to the final disclosure, CNBM Group (China) asked the Commission to explain the discrepancy between profitability and sales prices of the Union industry in the complaint and in the final disclosure.

(1022) The findings of the Commission, which were disclosed to the parties, are based on precise micro-economic data of the sampled Union producers, verified on spot by the Commission. The complaint, on the other hand, as noted by the exporting producer in the comments on the final disclosure, indeed “does not cover the [investigation period] nor is it subject to the same level of evidentiary and disclosure obligations”. Other elements that likely lead to the difference are revisions of the sales data following the verification visits, and the inclusion into the sample of Union producers of a company that did not participate in the preparation of the complaint.

(1023) In their comments on the final disclosure, the GOC noted that, while profitability, cash flow, and return on investments have diminished between 2015 and 2018, this decrease is mostly due to the decline in 2018.

(1024) As explained in recital (1017), profitability showed a clearly decreasing trend over the entire period considered. This trend was particularly pronounced from 2018 to the investigation period. The observation of the GOC do not put into question this analysis. The same is true for return on investments. The observation of the GOC does not put into question the analysis of the Commission set out in recital (1020).

(1025) Regarding cash flow, the statement of the GOC is, however, factually incorrect. Cash flow showed already a significant decrease between 2015 and 2016 and not only between 2018 and the investigation period. This statement was therefore rejected.

(1026) Finally, the GOC argued that investments have increased between 2018 and the investigation period, while at the same time profitability, cash flow, and return on investment decreased. The GOC argued, considering the stable employment during the same period, this would indicate that the Union industry has not suffered material injury, but is confident in the future.

(1027) As above in recitals (1004) and (1005), this statement was not supported by any evidence and it was therefore considered purely speculative. As mentioned in recital (1019) most of the investment concerned production line maintenance and there was no investment in new GFF capacity, which reflects the decreasing market share.

(1028) On the basis of the above, all arguments related to profitability, cash flow, investments and return on investments were therefore rejected.

(1029) All main injury indicators showed a negative trend during the period considered. Production volume and sales volume decreased by some 8 % and 5 %, respectively. Considering the increase in consumption, the loss in sales volume translated in a decrease of market share from 73,7 % in 2015 to 63,4 % during the investigation period, namely a decrease of over 10 percentage points.

(1030) Likewise, the main financial indicators also showed a negative trend which reflects the significant price suppression on the Union market as reflected in Table 8. Thus, over the period considered, unit sales prices decreased by 7 %, while at the same time the unit cost of production of the Union industry increased by 3 %. The increase in the average unit cost was due to the decrease in production volume as especially high volume purchases from the wind turbine industry were lost to Chinese and Egyptian producers. As a result, the profitability of the Union industry turned from a profit of 2,5 % in 2015 to a loss of -3,4 % in the investigation period. Similar negative effects are seen in cash flow and return on investment.

(1031) Following the final disclosure the GOC argued that the acquisition of the glass fibre enforcement business (i.e. the GFF production) of one of the sampled Union producers, namely Ahlstrom-Munksjö by the Vitrulan Group in November 2019, would require a revaluation of that Union producer’s submissions made during the investigation. The GOC argued that that the new owner’s apparent intentions would be to use the GFF production for captive use only and that these products will therefore not compete anymore with the production of the remaining Union producers on the Union market. The GOC also argued that the new owner has reported the acquisition as being expected to bring significant growth to its group, which would be in contradiction to the Commission’s findings of the Union industry having suffered material injury.

(1032) The acquisition of the GFF business of one of the sampled Union producers in question occurred after the investigation period and therefore, as such, did not have an impact of the data provided by this Union producer (and verified by the Commission) which pertained to the investigation period and the period considered. Since the scope of the investigation is limited to the analysis of the development of the situation of the Union industry is during the period considered, any development after the investigation period cannot be taken into consideration and this argument was rejected.

(1033) The public statement of the purchaser that the acquisition is expected to bring significant growth to its company that was not further substantiated with any evidence, cannot put into question the detailed analysis of the Commission of all injury indicators for the entire Union industry during the period considered. This analysis has clearly shown that the Union industry suffered material injury and this conclusion cannot be put into question by such unsubstantiated comment. This argument was therefore rejected.

(1034) In their comments on the final disclosure, the GOC argued that the Commission mainly based its findings on injury on the last year of the period considered (i.e. trends from 2018 to the investigation period), ignoring the previous years of the period considered that showed either positive or stable trends and in some cases less pronounced negative trends. The GOC claimed that on this basis, the Commission erred in concluding that the Union industry suffered material injury.

(1035) These comments were addressed in recitals (991), (996) and (1023) to (1028). As outlines in these recitals, this claim was unfounded and therefore rejected.

(1036) Finally, in its comments on the final disclosure the GOC claimed that it is unlikely that the Union industry will suffer material injury in the future.

(1037) Trends of the injury indicators mentioned in Article 8(4) of the basic Regulation were established during the period considered of the current investigation. Data of the Union industry were collected and verified pertaining to this period and clear downward trends showing material injury were established on that basis. There is no requirement to extend the investigation beyond this fixed period. In fact, Article 11(1) of the basic Regulation (last paragraph) provides that as a rule information relating to a period subsequent to the investigation period should not be taken into account. The GOC did not provide any information or any other evidence that would put into question the Commission’s findings or justify a departure from the general rule of Article 11(1). The claim was therefore considered speculative and rejected.

(1038) On that basis, the Commission concluded that the Union industry clearly suffered material injury.

(1039) In accordance with Article 8(5) of the basic Regulation, the Commission examined whether the subsidised imports from the PRC and Egypt caused material injury to the Union industry. In accordance with Article 8(6) of the basic Regulation, the Commission also examined whether other known factors could at the same time have injured the Union industry. The Commission ensured that any possible injury caused by factors other than the subsidised imports from the PRC and Egypt was not attributed to the subsidised imports. These factors were imports from other third countries, decrease in demand of GFF in the period 2017 to 2018, the development of raw material costs, a self-inflicted injury due to a lack of supply flexibility, and a decrease in installation of wind turbines between 2017 and 2018.

(1040) Volume of imports from the PRC and Egypt and their accumulated market share increased by 53 % and 39 %, respectively, over the period considered. This increase exceeds substantially the increase of consumption during the same period, which was nearly 9 %. At the same time, the Union industry lost over 5 % of their sales volume and over 10 percentage points of market share. Furthermore, the prices of imports from the PRC and Egypt fell on average by nearly 14 % during the period considered, and undercut Union industry prices, during the investigation period, by between 15,4 % and 55,8 % and by 32,3 % on average. These low prices of imports from the PRC and Egypt exercised significant price pressure during the investigation period, which did not allow the Union industry to increase their prices above the average cost of production. To the contrary, prices of the Union industry decreased by nearly 7 % during the period considered. Consequently, the profitability of the Union industry was constantly declining and reached -3,4 % losses during the investigation period.

(1041) The analysis of the injury indicators in recitals (935) to (1038) shows that the economic situation of the Union industry worsened during the period considered and this coincided with an increase of subsidised imports from the PRC and Egypt, which were found to undercut Union industry prices during the investigation period.

(1042) One user claimed that there is no coincidence in time between the material injury suffered by the Union industry and the increase of imports from the countries concerned. That user argued that when the situation of the Union industry worsened between 2017 and the investigation period, the volume of imports from the countries concerned and their market share had in fact decreased.

(1043) However, as shown in Table 3 in recital (960), imports from the countries concerned increased from 50 370 tonnes to 52 892 tonnes and their market share from 27,8 % to 31,4 % from 2017 to the investigation period. That claim was therefore rejected.

(1045) Imports from other third countries were mainly from two countries, namely India and Russia. These two countries had individually a market share above 1 % during the investigation period, while the imports of the remaining third countries each represented less than 1 % market share and together accounted for 1,9 %.

(1046) The Indian exporters are related to the Union industry. The market share of Indian imports gradually increased throughout the period considered from 0,7 % to 1,8 %; however, these intra-company sales did not put any pressure on Union prices as they were made at transfer price level. The imports in question are semi-finished products that are used in the manufacturing of the final product, based on a technology of a specific European producer and are not sold in the open market. Therefore, the Commission concluded that these imports have not contributed to the injury suffered by the Union industry.

(1047) The market share of Russian imports stayed stable over the period considered and even decreased between 2015 and 2017, before reaching similar levels in the investigation period as in 2015. Even though the prices of the imports from Russia were on average undercutting the Union producers’ prices, considering the overall market share and the trend, it is unlikely that they had any impact on the injury suffered. Rather, the prices were a reaction to the price pressure from the PRC and Egypt. Therefore, Russian imports have not contributed to the loss of market shares by the Union industry throughout the period considered. In addition, the investigation found that the Russian exporters are Union industry's related companies and, therefore, these imports put no pressure on Union prices, as these were intra-company sales made at transfer prices.

(1048) Therefore, the Commission concluded that imports from other third countries were not the source of injury described in recitals (984) to (1038) above.

(1049) In their comments on the final disclosure, the GOC argued that by outsourcing production to Russia and India the Union industry would self-inflict the injury. However, the GOC did not address the Commission’s analysis in recitals (1046) and (1047) of this regulation, which clearly concluded that imports from India and Russia were not a cause of injury to the Union industry.

(1050) The Commission found that imports from India were in fact of a semi-finished product, which were used for the production of the like product by a Union producer. Likewise, imports from Russia, although on average cheaper than the Union industry product, have been stable during the period considered and found not to be a cause of injury to the Union industry. As a result, imports from these two countries cannot be considered self-inflicted injury. Therefore, this claim was rejected.

(1051) One user claimed that the injury of the Union industry was caused by the decrease in consumption between 2017 and the investigation period and another user claimed that the injury was caused by the decrease of the installations of wind turbines during this same period. The decrease of consumption from 2017 to 2018 of -7,3 % does not explain the sales volume loss of the Union producers of -13,3 % in the same period, especially taking into account that imports from the countries concerned increased by 5 % from 50 370 tonnes to 52 892 tonnes and their market share went from 27,8 % to 31,4 % in the same period between 2017 and the investigation period.

(1052) That the injury was not caused by a decrease of consumption in 2018 gets even clearer looking at the entire period considered and not just comparing the last two years. The consumption in the Union increased during the period considered, while the market share of the Union industry continuously decreased during the same period and market shares of the countries concerned continuously increased. The Union industry could not benefit from the overall increase in consumption because of the subsidised imports from the countries concerned that were consistently and substantially undercutting the Union industry’s sales prices. While the Union industry became lossmaking only in the investigation period, the other years already showed a continuous decrease in their profits over the years from 2015-2017 as shown in recital (1016).

(1053) Those claims were therefore rejected.

(1054) In their comments on the final disclosure, the GOC argued that the situation of the Union industry depended on the development of the Union consumption rather than imports from third countries. The GOC argued that this would be demonstrated by the fact that during the increase of consumption between 2015 and 2016 the Union industry benefited most by increasing their sales volume by roughly 12 000 tonnes. Furthermore, the GOC argued that the Commission disregarded the correlation between the decrease in the Union industry’s sales volume and the decrease in demand in the Union by concluding that the decrease in the Union industry’s sales volumes exceeded the decrease in the Union consumption between 2017 and 2018.

(1055) While a decrease in consumption should have an equal effect on the Union industry and the imports from the countries concerned, the investigation has shown that despite the decrease in consumption between 2018 and the investigation period, imports from the countries concerned managed to increase their import volume by 8 % and their market share by 3,6 percentage points from 27,8 % to 31,4 %, while the Union industry lost sales volume and market share. It is recalled that the investigation established that imports from the countries concerned were subsidised and entering the Union market at prices that were significantly undercutting the Union industry sales prices on the Union market. Likewise, between 2015 and 2016, when consumption increased, imports from the countries concerned increased by 24 % and market share 1,8 percentage points, while the Union industry’s sales volume increased by only 11 % in comparison and market share even decreased by by 2,6 percentage points. The assertion that the Union industry mostly benefitted from such increase in consumption is therefore incorrect.

(1056) In their comments on the final disclosure, the GOC also argued that there has been a significant increase in wind turbine installations in 2019, an increase that is to be expected to continue in future. Since the wind industry is the main driver of the GFF consumption, that would have a positive impact on the Union industry. In support of its claim, the GOC referred to a publication of Wind Europe showing statistics concerning the development of wind turbine installations up to 2019 and including some prognosis for the future development of wind turbine installations.

(1057) As mentioned above, a positive development of the Union consumption of GFF does not necessarily have a positive impact on the Union industry’s situation. As shown in recital (1055), the increase in consumption between 2015 and 2016 lead to an increase in import volume and market share from the countries concerned, while the Union industry could not fully benefit from such increase and even lost market share during this period. While the statistics of Wind Europa indeed showed a positive trend in wind turbine installations in 2019, they also revealed that the installations in 2019 remained still lower than those in 2017. In 2017, consumption showed already a decreasing trend and the situation of the Union industry deteriorated. In conclusion, the mere fact that wind turbine installations increased in 2019 does not allow any conclusion as to the development of the import volume of the countries concerned and the situation of the Union industry during that year.

(1058) All above arguments had therefore to be rejected.

(1059) Both cooperating users argued that the increase of the cost of the main raw material (GFR) imported from the PRC by imposing definitive countervailing duties on these products as well as the increase in energy cost was the cause for the injury. Average unit cost of the Union industry increased only slightly by 3 % over the period considered, while import prices from the countries concerned decreased by nearly 14 % and undercut the Union prices by 32,3 %. Therefore, the injury suffered cannot be attributed to the increase in cost but to the pressure exercised by the subsidised imports, which prevented the Union industry from increasing its prices in view of the increased costs.

(1060) Those claims were therefore rejected.

(1061) Users argued that the Union industry has a lack of flexibility and would only provide large quantities upon long-term commitments, which bear, however, significant financial risks to the users (wind industry) that chose other suppliers instead. However, the investigation found that the wind industry has a policy of diversifying its supply and always integrates Union GFF producers in its supply chain. The investigation has also shown that it is possible for a wind energy producer to have a multi-sourcing strategy only with Union GFF producers. This demonstrates that there are Union GFF producers that provide the wind industry with the product quality under the condition the wind industry requires as further elaborated in recital (1081).

(1062) These arguments were therefore rejected.

(1063) In their comments on the final disclosure, the GOC argued that the Chinese producers have a legitimate competitive advantage by providing the integrated kitting service, whereas the Union industry failed to adequately change their business strategy to meet this demand.

(1064) As demonstrated in recital (1107) the Union industry has specialized kitting companies, which fulfil this function. Thereby the users are able to receive the same kind of kits from Union sourcing than from Chinese producers. While the Chinese producers might have a logistic advantage of one less transport between GFF production and kitting, the GOC has not demonstrated how this could have a major effect in a market, which is driven by price competition and product quality.

(1065) This claim was therefore rejected.

(1066) In their comments on the final disclosure, the GOC argued that the Union industry failed to adequately adjust their business strategy to their reduced sales by reducing employment levels and that the Union industry even increased investments.

(1067) The Commission noted that letting employees go might result in higher costs in short term and the fact that the Union industry would have to focus on smaller orders, which are more labour intensive due to more frequent machine adjustments. With regards to the investments, as mentioned in recital (1019), the verifications have shown that these were related mainly to necessary maintenance and replacements and not to production capacity increase.

(1068) This claim is therefore rejected.

(1069) The Commission concluded that there was a clear coincidence in time between the substantial increase of imports from the countries concerned and the deterioration of the situation of the Union industry.

(1070) The Commission has also investigated other factors of injury and has not found at this stage of the proceedings any other factors, which contributed to the material injury suffered by the Union industry. In fact, none of the other factors, either individually or collectively, put into question that there is a genuine and substantial relationship between the subsidised imports from the PRC and Egypt and the material injury suffered by the Union industry.

(1071) In their comments to the final disclosure, the GOC claimed that the Commission failed to take into consideration that other factors such as the decrease in consumption had contributed to the material injury. In this context, the GOC referred to the WTO Appellate Body Ruling in US – Hot Rolled Steel claiming that the Commission should have separated and distinguished the injurious effect from other factors from the injurious effect of the subsidised imports. As set out in recitals (1044) to (1068), and in view of the conclusions reached in recital (1070) that none of the other factors was found to have contributed to the injury suffered by the Union industry, this claim was rejected.

(1072) In accordance with Article 31 of the basic Regulation, the Commission examined whether it could clearly conclude that it was not in the Union interest to adopt countervailing measures corresponding to the total amount of countervailable subsidies in this case, despite the determination of injurious subsidisation. The determination of the Union interest was based on an appreciation of all various interests involved, including those of the Union industry, importers, users, suppliers and ancillary industry namely cutters/kitters.

(1073) The investigation has shown that the Union industry is suffering material injury because of the effects of subsidised imports, which undercut Union’s prices and exercise price pressure causing significant loss of market share and leading to losses during the investigation period, as elaborated in recitals (984) to (1069) above.

(1074) The Union industry will benefit from measures, which would likely prevent a further surge of imports from the PRC and Egypt at very low prices. Without measures, Chinese and Egyptian producers will continue to export GFF on the Union market at subsidised levels and exert further price pressure, preventing the Union industry from selling GFF at an adequate profit and thus causing further material injury to the Union industry.

(1075) Wind turbine producers are the biggest users of GFF accounting for around 60-70 % of the GFF demand in the Union. The other users include boat (around 11 %), truck (around 8 %) and sport equipment (around 2 %) producers, as well as pipe rehabilitation system providers (around 8 %).

(1076) Upon initiation, 25 known users in the Union were contacted and invited to cooperate. Two wind turbine producers came forward opposing potential measures on GFF. Three wind turbine producers came forward but did not express their views, despite being invited to do so in the notice of investigation and in the users’ questionnaires, they replied to. The two wind turbine producers opposing measures were supported by an association representing the European wind energy industry However, one of its members, a French wind energy association explicitly expressed to remain neutral about potential duties. Five wind turbine producers, including Vestas and SGRE, provided a questionnaire reply. One wind turbine producer declared to source GFF exclusively from various Union producers. Various ski equipment producers and various kitting companies came forward in support of the potential measures.

(1077) Two main types of wind turbines are (i) off-shore, which are generally bigger and meant to operate off coastal lines, and (ii) on-shore, which are meant to operate on land.

(1078) Wind park projects in the Union are traditionally carried out by project developers, who are either energy companies or investors, and not by the wind turbine producers themselves. Whereas originally Member States guaranteed a feed-in price for the produced energy from wind parks, as of 2014 the support has moved to tender based projects, in which various project developers compete, most recently on energy-neutral basis (namely wind can compete with solar energy).

(1079) Vestas and SGRE are among the biggest wind turbine producers in the Union, together consuming above 20 % of the entire Union demand of GFF. They together import above 30 % of all imports from the countries concerned. Both companies put forward several claims, namely (i) the loss of supply stability; (ii) the loss competitiveness of the wind energy industry; (iii) risk of relocation part of their production, and (iv) the compatibility with the Union renewable energy goals, in case measures are imposed.

(1080) Vestas and SGRE argued that the GFF used in turbine blades undergo a sophisticated certification process, with intense and lengthy testing phases. They further argued that only the Chinese GFF producers can supply high volumes of homogeneous quality on short notice due to their vertical integration. They also argued that the production volume of the Union producers is insufficient as it is below total Union consumption. According to the users, for these reasons, the wind turbine industry cannot quickly switch suppliers and even if it could, there is not enough GFF being produced in the Union.

(1081) Whilst the majority of Union producers are not vertically integrated, the investigation has shown that, to prevent supply difficulties, the wind turbine producers usually have a multi-sourcing strategy, regularly purchasing the same kind of GFF from a Union producer and a Chinese or Egyptian producer. However, the Commission also received data from a third wind turbine producer, which multi-sources exclusively from Union producers. The fact that the multi-sourcing of a specific GFF includes regularly Union producers, both vertically integrated and non-integrated, demonstrates that non-integrated producers can equally provide the required GFF for the wind turbine production.

(1082) With regard to the production capacity in the Union, as shown in Table 5, whilst the Union production is currently lower than consumption as shown in Table 2, the total Union production capacity exceeds it. The investigation has shown that there is currently a high spare capacity available of over 40 %, which is due to the increase of subsidised and low priced imports from the PRC and Egypt that have taken over market share from the Union industry. That spare capacity is spread between 16 Union producers, rendering the Union a competitive market with varied internal sources of supply. Furthermore, additional capacity can be easily built, as only low investments would be required. The Union industry is already suppling the wind turbine industry and is therefore already a certified supplier; it can therefore easily increase its supply under fair market conditions.

(1083) Moreover, in medium to long term, wind turbine producers would be able to certify additional GFF producers either from the Union or from other non-subsidised sources. As mentioned in recital (1076) one of the wind turbine producers developed a multi-sourcing strategy based on several Union producers. Furthermore, there is sufficient spare capacity in the Union to do so at a scale needed by large wind turbine producers.

(1084) Those claims were therefore rejected.

(1085) The cooperating wind turbine producers argued that any price increase of GFF would severely affect their competiveness. They claimed that the proportion of GFF costs has to be assessed at the level of the production of blade and not an entire wind park. They further argued that the increase in costs due to the potential duties could not be passed on to the wind park developers due to the long-time lap between making an offer for a wind park project and the actual implementation. According to the wind turbine producers, the cost increase due to the duties will affect the long-term technological survival of the entire wind industry in the Union, since important research and development investments are essential to staying in the lead for the most efficient technology.

(1086) The investigation has shown that turbine blades are not sold separately, but as a part of a wind turbine. Further to this, the project developers for wind parks regularly purchase additional wind park infrastructure from the wind turbine producers. Therefore, regarding the competitiveness of the wind turbine producers the cost for GFF should be set in relation to either the entire wind turbine or to the full wind park technology sold by the wind turbine producers and not just in relation to the manufacturing of blades as claimed, as this would not reflect the realities of the market.

(1087) GFF together with epoxy raisin are the two main components used in the production of blades for wind turbines. Thus, GFF represents [10 %-35 %] of the raw material costs of a blade depending on the proportion of GFF on the one hand and other materials on the other hand used. However, the investigation has also shown that blade manufacturing is labour intensive and therefore the proportion of GFF in the total manufacturing costs of a blade is significantly lower and represents only [4 %-14 %]. This proportion further drops to between [0,1 %-2 %] in the total cost of a wind turbine and in the total costs of building of an entire wind park.

(1088) Given the only minor part of GFF in the cost of a wind park [0,1 % to 2 %], the impact of the definitive duties on the GFF in the total cost of a wind park is considered to be negligible, especially since a large part of the GFF is sourced in the Union. The investigation has shown that the Union wind turbine producers also have considerable bargaining power to pass on the additional cost to wind park developers since collectively they are the main wind turbine suppliers on the Union market. Taking the minor part of GFF in the cost of a wind park, the profitability should stay at a level to maintain the level of research and development investments, which are essential to staying in the lead for the most efficient technology.

(1089) Even though it cannot be excluded that the competitive nature of indirectly participating in the tendering process may make such pass-on difficult, it should be taken into consideration that unlike GFF producers, the cooperating wind turbine producers are in healthy financial condition with profit margins where the small impact of the duties would be easily absorbed. Furthermore, both cooperating wind turbine producers are not only selling the wind turbines but also associated follow-up maintenance services to wind park developers. These contracts are very lucrative. The attractiveness of the service part of the business is also reflected by the recent acquisition of the service department of an insolvent competitor (208) by one of the cooperating users.

(1090) Therefore, the Commission established that any cost increase due to countervailing duties that could not be passed on to wind park developers could be easily absorbed by the wind turbine producers. In addition, as stated in recital (1083), wind turbine producers should also be able to change their suppliers to a GFF source not affected by subsidisation, be it in the Union or elsewhere.

(1091) Given the above, all claims with regard to the competiveness of the wind turbine producers were rejected.

(1092) The cooperating users further claimed that any increase in the production cost of blades would lead to the re-location of this production step outside the Union with thousands of job losses in the Union.

(1093) As far as on-shore blade production is concerned, the investigation has shown that the relocation of this production is already taking place without the application of measures on GFF. This is due to the market growth of wind park projects outside the Union, combined with a decline of new wind park project development in the Union, and hitting, for instance, a 20-year low in Germany. Another reason is the high cost of labour involved in the production of blades. The investigation has shown that the production of blades is labour intensive and that labour costs exceed the cost of GFF by [300 %-700 %]. Lower labour costs in third countries are therefore a high incentive to relocate the blade production. The imposition of duties on GFF would play a minor role, if any at all.

(1094) The investigation revealed further that for offshore blades transport costs play a more important role than the raw material costs of the blades, such as GFF. Offshore blades are longer and heavier than onshore blades, which makes transport more complex and expensive. Relocating production of offshore blade is therefore not likely to be caused by countervailing duties on the product concerned.

(1095) Therefore, the claims with regard to the relocation of the blades production to other third countries was rejected.

(1096) One user argued that the imposition of measures would contradict the objectives set by the Union in its renewable energy policies, as it would increase significantly the production costs of wind turbines. It referred in support to the Commission’s European Industrial Initiative on wind energy, which includes the objective to reduce the manufacturing costs of wind turbines and their components by 20 % by 2020.

(1097) As shown in recitals (1085) to (1090), the investigation does not support this claim, as it found that any countervailing measures would only have a negligible impact on the costs of wind turbine producers. In addition, that user also failed to demonstrate how countervailing measures on GFF, representing only a fraction of the costs of wind park technology, would prevent the steadily growing proportion of wind energy in Europe or prevent reaching the 2020 goal. That claim was therefore rejected.

(1098) Several users from the skiing industry argued that the existence of GFF producers in the Union was essential to their supply stability, as they required a local partner for close cooperation and tailor-made GFF in lower volumes currently not produced outside the Union. Furthermore, they emphasised that the GFF industry in the Union was an essential partner in the improvement of their products and the development of new solutions. The research and development cooperation with the GFF producers in recent years has led to several efficiency gains, improved product performances and the development of new and more environmentally friendly products. Those users argued that Union ski producers cannot enter into the same level of cooperation with Chinese or Egyptian suppliers of GFF, as they would lose the ability to stay at the forefront of (green and sustainable) innovations and would themselves become more exposed to unfairly competing imports.

(1099) The Commission found the arguments put forward compelling, especially as far as research and development is concerned in an R&D driven industry. No counter arguments on the points raised were received from the exporting producers. However, the Commission also noted that ski producers are less voluminous GFF users than the wind turbine producers.

(1100) Other Union users did not come forward in the investigation.

(1101) Therefore, the Commission concluded that there were no compelling reasons from the users not to impose countervailing measures, but rather that the survival of the Union GFF industry is important for several groups of users.

(1102) Two Union producers of GFR, the main input for GFF, as well as an association representing the Union GFR producers came forward and argued in favour of the imposition of countervailing measures. They claimed that it would be detrimental for the Union GFR producers to lose their main customers as this would threaten their own survival in the Union.

(1103) Therefore, the Commission concluded that the imposition of measures is clearly in the interest of the Union GFR producers as suppliers for the GFF producers.

(1104) As mentioned in recital (85), only one independent importer came forward, but that imported only negligible volumes below 25 tonnes of GFF from the PRC. Since most high volume users require specific GFF made to order, it is not a product that is regularly imported in high volumes by independent traders.

(1105) Therefore, the Commission concluded that there were no compelling reasons from unrelated importers not to impose measures as they only import negligible volumes of GFF.

(1106) Increasingly users, especially the wind turbine industry, demand GFF in form of kits, which are cut to shape and put together by sewing various layers of GFF, thereby enabling a faster production of the downstream industry. Over the last years, this has created a market for service providers in the Union. One cutting company came forward and argued in favour of the imposition of countervailing measures. Since Chinese and Egyptian exporting producers increasingly integrate these additional services, as opposed to the Union industry, the service providers would lose a substantial part of their business, if the Union producers would disappear from the market. According to estimates from cutters, the Union cutting industry employs more than 2 000 people.

(1107) Therefore, the Commission concluded that the imposition of measures is clearly in the interest of the Union kitting and cutting service providers for the GFF producers.

(1108) In their comments on the final disclosure, the GOE recalled that the European Union has helped Egypt to foster development under the Association Agreement and the Neighbourhood Policy and that measures would run counter this policy. The Commission noted that this is not a consideration that can be addressed under the analysis of the Union interest in accordance with Article 31 of the basic Regulation. In any event, the investigation did not put in question the efforts of Egypt to develop, modernize and support the income growth and the levels of employment.

(1109) The Commission found that the imposition of measures is clearly in the interest of the Union GFF industry, whose survival is threatened by the subsidised imports of the product concerned. The survival of the Union GFF industry is important for the supply stability of their customers in the Union, especially for users who depend on a close local cooperation and require lower volumes of specific GFF, which cannot be purchased from the PRC or Egypt. For some users it is also essential to maintain the development of new GFF in the Union so that they themselves are not put in a disadvantageous position when competing with imports from outside the Union. Further, the survival of the Union GFF industry is also essential for the survival of their Union GFR suppliers and Union service providers for cutting and kitting.

(1110) However, the imposition of measures, as shown in recitals (1077) to (1097) above would not have significant adverse effects for the wind turbine producers.

(1111) On that basis, the Commission concluded that there were no compelling reasons that it was not in the Union interest to impose countervailing measures on imports of GFF originating in the PRC and Egypt.

(1112) In view of the conclusions reached with regard to subsidisation, injury, causation and Union interest, and in accordance with Article 15 of the basic Regulation, a definitive countervailing duty should be imposed.

(1113) Article 15(1), third subparagraph of the basic Regulation provides that the amount of the definitive countervailing duty shall not exceed the amount of countervailable subsidies established.

(1114) Article 15(1), fourth subparagraph states that “where the Commission, on the basis of all the information submitted, can clearly conclude that it is not in the Union’s interest to determine the amount of measures in accordance with the third subparagraph, the amount of the countervailing duty shall be less if such lesser duty would be adequate to remove the injury to the Union industry”.

(1115) No such information has been submitted to the Commission, and therefore the level of the countervailing measures will be set with reference to Article 15(1), third subparagraph.

(1117) The anti-subsidy investigation was carried out in parallel with a separate anti-dumping investigation concerning the same product concerned originating from the PRC and Egypt, in which the Commission imposed anti-dumping measures limited to the injury elimination level. The Commission made sure that the imposition of a cumulated duty reflecting the level of subsidisation and the full level of dumping would not result in offsetting the effects of subsidisation twice (‘double-counting’) in accordance with Article 24(1) and Article 15(2) of the basic Regulation, as well as the relevant applicable jurisprudence.

(1118) In the case of the PRC, the normal value was constructed in accordance with 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 (209) with reference to undistorted costs and profits in an appropriate external representative country. Consequently, in accordance with Article 15(2) of the basic Regulation and in order to avoid double counting, the Commission first imposed the definitive countervailing duty at the level of the established definitive amount of subsidisation and then imposed the remaining definitive anti-dumping duty, which corresponds to the relevant dumping margin reduced by the amount of the countervailing duty and up to the relevant injury elimination level established in the separate anti-dumping investigation. Since the Commission reduced the dumping margin found with the entire amount of subsidisation established in the PRC, there was no double counting issue within the meaning of Article 24(1) of the basic Regulation.

(1119) In the case of Egypt, the Commission considered whether some of the subsidy schemes are export contingent subsidies, which have the effect to reduce export prices and thus increase accordingly the dumping margins, in order to decide whether it needs to reduce the dumping margin by the subsidy amounts found in relation to export contingent subsidies in accordance with Article 24(1) of the basic Regulation. Consequently, since the Commission did not countervail any export contingent subsidy schemes, it imposed the definitive countervailing duty at the level of the established definitive amount of subsidisation in addition to the anti-dumping duty established by Regulation (EU) 2020/492.

(1120) Given the high rate of cooperation of Chinese and Egyptian exporting producers, the Commission found that the level of the highest duty imposed on the sampled companies would be representative as the ‘all other companies’. The ‘all other companies’ duty will be applied to those companies, which did not cooperate in this investigation.

(1121) In accordance with Article 15(3) of the basic Regulation, the total subsidy amount for the cooperating exporting producers not included in the sample was calculated on the basis of the total weighted average amount of countervailing subsidies established for the cooperating exporting producers in the sample with the exclusion of negligible amounts as well as the amount of subsidies established for items, which are subject to the provisions of Article 28(1) of the basic Regulation. However, the Commission did not disregard findings based partially on facts available to determine those amounts. Indeed, the Commission considered that the facts available and used in those cases did not affect substantially the information needed to determine the amount of subsidisation in a fair manner, so that exporters who were not asked to cooperate in the investigation will not be prejudiced by using this approach.

(1123) In accordance with the methodology set out above in this section, in the case of CNBM Group and all other non-cooperating companies, the relevant dumping margin reduced by the definitive amount of subsidisation was lower than the injury elimination level established in the anti-dumping investigation. Therefore, the definitive countervailing duty was established at the level of the established definitive amount of subsidisation and a definitive anti-dumping duty was imposed at the level of the relevant dumping margin reduced by the amount of the countervailing duty. In the case of Yuntianhua Group, the definitive countervailing duty was established at the level of the established definitive amount of subsidisation and a definitive anti-dumping duty was imposed at the injury elimination level because this was lower than the relevant dumping margin reduced by the amount of the countervailing duty. With regard to Egypt, as clarified above at recital (1119) there was no potential issue of double counting.

(1124) The individual company countervailing duty rate specified in this Regulation was established on the basis of the findings of the present investigation. Therefore, it reflects the situation found during the investigation with respect to the company concerned. This duty rate (as opposed to the countrywide duty applicable to ‘all other companies’) is thus exclusively applicable to imports of products originating in the country concerned and produced by the company mentioned. Imported products produced by any other company not specifically mentioned in the operative part of this Regulation, including entities related to those specifically mentioned, cannot benefit from these rates and shall be subject to the duty rate applicable to ‘all other companies’.

(1125) A company may request the application of these individual duty rates if it changes subsequently the name of its entity. The request must be addressed to the Commission. The request must contain all the relevant information enabling to demonstrate that the change does not affect the right of the company to benefit from the duty rate, which applies to it. If the change of name of the company does not affect its right to benefit from the duty rate, which applies to it, a notice informing about the change of name will be published in the Official Journal of the European Union.

(1126) Further to the definitive disclosure, the complainant marked its overall agreement with the findings. At the same time, it noted that that disclosure did not address the interaction of the countervailing duties with the anti-dumping duties in the parallel proceeding. The complainant pointed out that there is no legal basis nor economic justification for simply limiting the overall level of combined anti-dumping and anti-subsidy measures, and that if the non-application of the lesser duty rule in the anti-subsidy proceeding has any meaning the fully countervailing duty must be imposed regardless of the application of the lesser duty rule in the anti-dumping proceeding. As for the Chinese exporting producers, the complainant submitted that anti-subsidy and anti-dumping duties can be cumulated even if the normal value is established in a representative country as explained at recital (1118), apart from the instances of export subsidies. In this respect, it argued that there is no necessary relation between degree of dumping and amount of government support and subsidies, if at all, and that subsidisation has major effects going beyond the impact on costs of production. The calculation of normal value based on a representative country cannot address the full impact of subsidisation and the distortions in the Chinese economy as a whole, and merely puts Chinese exporting producers on par with the other countries where this methodology does not apply and cumulation is allowed.

(1127) The complainant added that there is no legal basis for a presumption that all costs and prices in the representative country are free of company-specific subsidies, and that it thus makes no sense in these cases to carry out anti-subsidy and anti-dumping investigations. In this context it referred to the relevant jurisprudence of the World Trade Organisation (‘WTO’), namely the dispute WT/DS 379 United States – Definitive Anti-dumping and Countervailing Duties on Certain Products from China (210) (‘DS 379’) where the WTO Appellate Body held that the offsetting of the same subsidisation twice by the concurrent imposition of anti-dumping duties calculated on the basis of an external representative country and countervailing duties was inconsistent with Article 19(3) of the WTO Agreement on Subsidies and Countervailing Measures. The complainant highlighted that the WTO Appellate Body also found that double counting would not “necessarily result in every instance of such concurrent application of duties”, but this would rather depend on whether and to what extent it is established that domestic subsidies have lowered the export price of a product in a particular case (211).

(1128) Furthermore, the complainant referred to the situation concerning the PRC where the applicable anti-dumping duty is based on the injury margin because it is lower than the dumping margin, that is the case of Yuntianhua Group. In addition to all the arguments explained in the previous recitals, it argued that there is simply no possibility of double counting in this case, as an anti-dumping duty based on the injury margin is set entirely without reference to the normal value established on the basis of an external representative country. As a result, the issue of double counting does not even arise, and also the WTO jurisprudence in DS 379 is not applicable. The complainant concluded that since the repeal of the lesser duty rule in anti-subsidy proceedings, the combined anti-dumping and countervailing duties could no longer be limited by the injury margin.

(1129) Following definitive disclosure, Yuntianhua Group claimed that the Commission failed to perform a double counting analysis to determine whether or to what degree the same subsidies would be offset twice by imposing anti-dumping measure and countervailing duties. The absence of the analysis would be in breach of the company’s rights of defence.

(1130) With regard to possible double counting, the Yuntianhua Group also referred to the WTO case DS 379 similar to the complainant. It highlighted that according to that ruling among the factors taken into account to establish the appropriate amount of anti-subsidy duty, an investigating authority must consider evidence of whether and to what degree the same subsidies are being offset twice when anti-dumping and anti-subsidy duties are simultaneously imposed. This party referred to the Commission’s acknowledgment of the issue of double counting in recital (747) of the General Disclosure Document to infer that the facts in DS 379 are no different than those in this proceeding. On this basis, it concluded that the burden of proof to demonstrate the absence of double counting is on the Commission and that so far it has failed to disclose such analysis, thereby rendering deficient and incomplete the disclosure.

(1131) According to Yuntianhua Group, the obligation to carry out a double counting analysis is not affected by the application of the lesser duty rule in the parallel anti-dumping proceeding, to the extent that the dumping margin completely overlaps with the subsidy margin. In this respect, this party argued that there is only one injury elimination level for both proceedings, meaning that the usual approach of combining first countervailing and then the anti-dumping duty reduced by the injury margin should apply. Therefore, if the Commission would impose the countervailing duty in full and only reduce the anti-dumping duty by the injury elimination level margin, that will be contrary to the basic anti-dumping Regulation and to the Commission’s findings in the parallel anti-dumping case, which concluded that a duty at the level of the injury elimination level is sufficient to eliminate the injury to the Union industry.

(1132) The GOC also submitted comments on potential double counting to rebut the comments made by the complainant as set out at recitals (1126) to (1128) above. The GOC also relied on the WTO DS 379 ruling (212) to conclude that double remedies are inconsistent with the relevant WTO rules and corresponding provisions of the basic Regulation referred to at recital (1127). With regard to this proceeding, the GOC argued that double counting would arise if the Commission would not cap the total countervailing and anti-dumping duty by the injury elimination level, because the same subsidisation would be addressed first via the dumping margin, and then again via the subsidy margin. The GOC highlighted that as concerns the CNBM Group the construction of normal value in the anti-dumping proceeding is based on undistorted numbers not affected by macro and micro subsidisation, and thus it already addresses the subsidisation in the PRC. With regard to the Yuntianhua Group, since their anti-dumping duty is based on the injury elimination level, if the countervailing duty would reflect the full amount of subsidisation, there would also be double counting because both investigations cover the same exports and the same alleged material injury, and the logic of domestic subsidies is that they equally affect the domestic and export sales. On the latter point, the GOC reasoned that the export price used as the basis for the injury margin calculation is lower to the extent of the amount of subsidisation found for the domestic subsidies. Thus, the alleged amount of subsidisation would be accounted for twice, that is also indirectly via the injury margin in the imposition of the anti-dumping duty. The GOC finally noted that the injury margins so established may also be inflated to the extent the Commission did not take into account the difference in the level of trade between the sales of the Chinese exporting producers and the EU industry. With respect to this last claim, the Commission noted that it has been addressed at recitals (977) and (978).

(1133) As for the claims by the complainant, the Yuntianhua Group and the GOC concerning the breach of their right of defence due to the failure to disclose the analysis on the interaction of the anti-dumping and countervailing duties and on potential double counting, the Commission noted at the outset that it did not do so because at the time of disclosure in this proceeding the anti-dumping proceeding was still ongoing and there were no anti-dumping measures formally in force. Therefore, such an analysis would have pre-judged the outcome of the anti-dumping proceeding, and would in any event have been based on hypothetical levels of measures still subject to comments and analysis. The Commission could not possibly have performed the analysis requested by the parties in time for the disclosure of this proceeding, but did raise the attention of all parties and commit to looking into this issue as per recital (747) of the General Disclosure Document. In any event, the Commission noted that this section fully addresses these issues and all the comments raised by the parties so far, and that this section has been disclosed to the parties to afford in full their right of defence. Therefore, the claims of all parties on this issue were rejected.