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

• (718) The GOE’s third objection related to the significance of the ILC’s Articles on State Responsibility in this respect. In its view, there is no authority to rely on Article 11 of the ILC Articles since the Appellate Body in US – Anti-Dumping and Countervailing Duties (China) ¹⁷³ had only referred to Articles 4, 5 and 8 thereof. In a similar vein, the GOC argued that Article 11 of the ILC Articles and 1.1(a)(1) SCMA did not concern the same subject matter, as required by Article 31(3)(c) of the Vienna Convention on the Law of Treaties. Even assuming that the Article 11 of the ILC Articles was relevant, Article 1.1(a)(1) SCMA would be in any case lex specialis and prevail.

• (719) The Commission rejected this claim. There is no ground for the assertion that only certain principles of customary international law, as enshrined in Articles 4, 5 or 8 of the ILC Articles on State Responsibility, are relevant for the interpretation of WTO rules, but not others. The WTO Appellate Body has always applied the concepts of general customary law, which were relevant to assess the facts at issue. Next to the rules on attribution, the principles of estoppel or good faith are also part of the WTO legal order, for example. In the present case, the Government of Egypt has not contested the factual circumstances of having invited, acknowledged and facilitated the implementation of Chinese preferential financing to companies operating in Egypt. For this set of circumstances, interpretative guidance can be drawn from Article 11 of the ILC Articles, which has also been referred to in international investment jurisprudence ¹⁷⁴. Article 11 of the ILC Articles is hence a relevant rule of international law within the meaning of Article 31(3)(c) of the Vienna Convention on the Law of Treaties for interpreting the notion of “by the government” in the SCMA. It follows that there is also no room for applying the notion of “lex specialis”. This is a conflict rule, when two rules of international law contain conflicting normative answers governing the same facts. This is not the case here, as Article 11 of the ILC Articles does not say the opposite of Article 1.1(a)(1) of the SCM Agreement, but helps to draw a proper line when attributing conduct from one government to another one, which acknowledges and adopts such a conduct as its own.

• (720) According to the GOE’s fourth objection, Article 11 of the ILC Articles is not applicable to the facts at issue. Under this Article, a State may assume responsibility for conduct as a successor State following the acquisition of land. A government may also acknowledge private conduct of its citizens as its own. However, the Article does not foresee that a State adopts acts of a foreign sovereign as its own.

• (721) The Commission also rebutted this objection. The title of Article 11 of the ILC Articles is “conduct acknowledged and adopted by a State as its own”, with no qualification as to the author of the original act. Next to the UN General Assembly in Resolution 3314 (XXIX) of 1974 (see recital (714) above) also the International Court of Justice has affirmed the freedom of States to adopt foreign acts as their own ¹⁷⁵. International practice thus does not support Egypt’s view that attribution under Article 11 of the ILC Articles is confined to cases of territorial succession or the Government acknowledging and adopting private wrongful acts on the State’s own territory.

• (722) In its fifth objection, the GOE maintained that the financial contributions by the GOC to entities in Egypt were not specific. It referred to the basic Regulation, according to which, the recipient of the financial contribution must fall “within the jurisdiction of the granting authority”. In its view, the wording “granting authority” does not mean an “acknowledging and adopting authority”. In addition, in past investigations, the granting authority for Chinese entities was always the Chinese government. The GOE concluded that the financial contribution of the GOC cannot be specific “since enterprises located in Egypt are not within the jurisdiction of China”. Similarly, as part of its second objection, the GOC maintained that jurisdiction under Article 2.2 of the SCM Agreement should be assessed within the context of a State’s “territorial jurisdiction”.

• (723) The Commission reiterated that it considered the GOE as the granting authority by virtue of its adoption and acknowledgment of the Chinese preferential lending. As Jushi Egypt and Hengshi Egypt are operating in the Special Economic Zone, they fell also within the jurisdiction of the Government of Egypt. The receipt of this financial support was also specifically restricted to the companies operating in this zone, and therefore specific.

• (724) Even if it was necessary to show that the GOC had exercised jurisdiction over these companies before the GOE could adopt the Chinese conduct on its own, quod non, the result would not change. By signing Articles 1 and 4(1) of the Cooperation Agreement, the GOE had agreed that the companies operating in the Zone would be receiving “relevant policy support and facilitation provided by the Chinese government for overseas economic and trade cooperation zones” and that developing of the zone would be done in accordance with the laws of “both countries”. In addition to exercising its own territorial jurisdiction, the GOE therefore also allowed China to provide specific aid for companies only located in “overseas economic and trade cooperation zones”. Therefore, this claim is rejected.

• (725) In conclusion, the Commission reaffirmed its finding that the GoE acknowledged and adopted as its own the support for capital investment, the loans for Jushi Egypt and the provision of land by TEDA Egypt and thus provided specific subsidies within the meaning of Articles 2-4 of the basic Regulation.

4.3.   Preferential financing

4.3.1.   Loans from policy banks to Jushi Egypt

4.3.1.1.   State-owned banks acting as public bodies

• (726) In 2012 and 2016 respectively, CDB and EXIM granted two loans to Jushi Egypt for a total amount of 200 million USD. The first loan was used to finance the start-up of the plant and the second loan corresponded to an expansion project for an additional production line.

• (727) The Commission first ascertained whether these banks were public bodies within the meaning of Articles 3 and 2 (b) of the basic Regulation. The Commission thus sought information about State ownership as well as formal indicia of government control in the State-owned banks. The Commission also sought information about whether the GOC exercised meaningful control over the conduct of the State-owned banks with respect to their lending policies and assessment of risk. As mentioned in Sections 3.4.1.1 and 3.4.1.4 above, both EXIM and CDB are Chinese State-owned banks and there are formal indicia of control of the GOC over these banks. Furthermore, in Sections 3.4.1.3 and 3.4.1.5. above, the Commission concluded that the GOC has created a normative framework that had to be adhered to by the managers and supervisors, appointed by the GOC and accountable to the GOC. Therefore, the GOC relied on the normative framework in order to exercise control in a meaningful way over the conduct of the State-owned banks whenever it was providing loans to the GFF industry.

• (728) In addition to the general legal framework set out in Section 3.4.1.1 above, the following legal context applied to the loans provided by EXIM and CDB to Jushi Egypt.

• (729) China-Africa TEDA and EXIM signed a strategic cooperation MOU on 6 November 2009, putting forward a package plan with a total amount of up to 6 billion RMB to carry out overall strategic cooperation in overseas trade and economic cooperation zones.

• (730) On 7 November 2009, six African cooperation zones of economy and trade, among which the SETC-Zone, signed the Joint Meeting Pact between the Chinese Overseas (African) Economy and Trade Cooperation Zones and the China Africa Development Fund (‘CADF’), a subsidiary of CDB.

• (731) Furthermore, in 2013, MOFCOM issued a ‘Notice on Aspects related to the China Development Bank support to the establishment and development of overseas economic and trade cooperation zones’. According to this Notice, MOFCOM and CDB will “provide policy support for investment and financing for enterprises and enterprises entering the zone in eligible cooperation zones”. CDB will “clarify the basic conditions for priority financing in the cooperation zone in accordance with the requirements of the Ministry of Commerce and the Ministry of Finance”, and CDB will “selectively support the projects under construction and cooperation projects that MOFCOM has paid close attention to with the host governments of the cooperation zone.”

• (732) Article 4 of the Cooperation Agreement between China and Egypt 2016 states that “the Chinese Government identifies the Cooperation Zone as China’s overseas economic and trade cooperation zone. The Cooperation Zone … is entitled to relevant policy support and facilitation provide by the Chinese Government for overseas economic and trade cooperation zones”. In addition, according to article 5, the Chinese Government shall also support the Cooperation Zone by “encouraging relevant financial institutions to provide financing facility for …investment projects located within the Cooperation Zone, provided that the lending conditions and the loan use requirements are met”.

• (733) Article 2(IV) of the ‘Cooperation Agreement on the Establishment of a Management Committee for China-Egypt Suez Economic and Trade Cooperation Zone’ implementing the above-mentioned agreement, further specifies that the Management Committee established between the relevant functional departments of Tianjin People’s Government and the General Authority for Suez Canal Economic Zone shall “try the utmost efforts to implement all incentive policies of the Chinese and Egyptian laws and regulations in a smooth manner” and article 2(V) adds that it shall “coordinate and facilitate relevant financial institutions, including but not limited to banking institutions, insurance institutions and various funds which provide credit support for the Cooperation Zone and residential enterprises, and help the Cooperation Zone and residential enterprises to explore more financing channels”.

• (734) The Commission established that all State-owned Chinese financial institutions, including EXIM and CDB, implemented the legal framework set out above in the exercise of governmental functions with respect to the GFF sector. Therefore, they were public bodies in the sense of Article 2(b) of the basic Regulation read in conjunction with Article 3(1)(a)(i) of the basic Regulation and in accordance with the relevant WTO case-law.

• (735) In addition, even if the State-owned financial institutions were not to be considered as public bodies, the Commission established that they would be considered entrusted or directed by the GOC to carry out functions normally vested in the government within the meaning of Article 3(1)(a)(iv) of the basic Regulation for the same reasons, as set out in Section 3.4.1.6 above.

4.3.1.2.   Benefit and calculation of the subsidy amount

• (736) As noted in recital (700), the Commission considered that, in principle, for the beneficiaries located in Egypt, it would be appropriate to inquire whether these recipients of the loans received better terms than they would have received on the Egyptian financial market. The Commission verified this point and confirmed that the amount of subsidisation would be higher when using comparable borrowing rates in Egypt (18,3 %) ¹⁷⁶). However, in view of the exceptional circumstances mentioned in recital (701), the Commission calculated the amount of the countervailable subsidy taking into account the fact that the recipients obtained the preferential financing in China. For this calculation, the Commission assessed the benefit conferred on the recipients during the investigation period. According to Article 6(b) of the basic Regulation, the benefit conferred on the recipients is the difference between the amount of interest that the company pays on the preferential loan and the amount that the company would pay for a comparable commercial loan obtainable on the market.

• (737) As mentioned in Section 3.4.2.4 above, the Commission decided to establish the market rates for the preferential loans of EXIM and CDB with respect to hypothetical benchmarks for Chinese market investors in accordance with Article 6(b) of the basic Regulation. At the verification visit at GOC, the Commission found that one of the banks extending the financing to Jushi Egypt specifically considered the country risk linked to the investment in Egypt in the pricing of the financing. Because of lack of cooperation, no further details were provided by this bank(s). Therefore, the Commission decided to use the same calculation methodology as for other loans denominated in foreign currencies, and issued by Chinese financial institutions in the PRC, and added the risk premium linked to the investment in Egypt as follows.

• (738) According to the calculation methodology described in Section 3.4.2.4 above, the Commission thus first established the credit rating of Jushi Egypt, reflecting the financial situation of the company. As mentioned in recital (306) above, the Commission considered that the overall financial situation of the Jushi Group corresponds to a BB rating, which is the highest rating that does no longer qualify as ‘investment grade’. This analysis was further refined in recitals (749) and (750) below. In view of the existence of revolving loans and debt forgiveness, the Commission concluded that the use of US B (instead of BB) corporate bonds would be more appropriate to determine the market-based benchmark.

• (739) In line with other loans denominated in foreign currencies and issued by Chinese financial institutions in the PRC, B rated corporate bonds issued in USD during the investigation period were thus used to determine an appropriate benchmark.

• (740) Indeed, all other loans provided by Chinese financial institutions were granted to Chinese companies located in the domestic Chinese market. Jushi Egypt on the contrary is located in a country which was subject to civil and political unrest, as well as various terrorist attacks at the time when the loans were granted, and thus has a credit risk different from Chinese companies related to the external conditions prevailing in the country itself. As a result, the Commission added a mark-up to the benchmark rate established for the Chinese sampled companies, in order to integrate the country risk into the market rate.

• (741) The premium related to country risk was determined based on the OECD classification of country risk for export credits, as well as the corresponding minimum premium rate set by the OECD ¹⁷⁷. The country risk for loans provided by EXIM bank was established at 2,37 % and 2,44 % for loans provided by CDB.

• (742) Following final disclosure, Jushi Egypt claimed that the Commission should have used two offers provided by an Egyptian bank in 2013 and 2016 to the company as a benchmark for calculating the benefit on loans. The Commission reviewed these offers, but decided that they were not representative of a comparable commercial loan, which the firm could actually obtain on the market.

• (743) The Commission found that the offers do not provide any description of the actual financial product offered to the company, but refer to an interest rate for the provision of “credit facilities” in general. As such, it is impossible for the Commission to determine whether the offer actually refers to a loan as such or to other financial products, such as e.g. the opening of a credit line, trade financing (letters of credit, bills of exchange, factoring, etc…). Even if the offer were considered to relate to a loan, other crucial information is missing, such as the duration of the alleged loan offered by the bank, and the extent of the credit facilities offered (i.e. the maximum amount that the bank would be willing to extend to the company). In this respect, the Commission noted that the loans provided by CDB and EXIM were long-term loans for major fixed assets projects, amounting to several hundreds of million USD. Therefore, the Commission considered that it could not use the proxy provided by Jushi Egypt.

• (744) Finally, the Commission observed that even if the Commission would take into account the benchmark provided by the company, it would not result in any significant change in the benefit calculation, since the proposed rate of the Egyptian bank was in line with the base rate established by the Commission for the benchmark, corresponding to a USD loan provided by a Chinese bank to a domestic (Chinese) BB-rated customer. Thus, if anything, those loans confirmed that Jushi Egypt indeed benefit from lower interest rates compared to market benchmarks. Therefore, the company’s claim was rejected.

4.3.2.   Loans from policy banks to Jushi Egypt via the parent company Jushi in China

• (745) Over the period 2014-2018, Jushi (China) provided a series of inter-company loans to Jushi Egypt for a total amount of 260 million USD.

• (746) The Commission found, however, that Jushi (China) had itself financed these intercompany loans via external financing from Chinese financial institutions. In other words, rather than Jushi Egypt getting the loans directly from the Chinese banks, Jushi (China) obtained the preferential financing from these institutions and then allocated the benefit of those loans to its manufacturing activities in Egypt (Jushi Egypt). This is confirmed by Jushi China’s income tax statement, where the interest income from Jushi Egypt’s loan under the heading “overseas income” is set off against the interest paid by Jushi (China) on its external financing. Moreover, the official documents relating to the start-up and expansion projects in Egypt, such as for example the government approvals from the National Development and Reform Commission (‘NDRC’) and MOFCOM and the various feasibility studies, indicate that two thirds of the Egyptian project are financed via external financing (as opposed to self-generating revenue by the company). The loans provided directly by EXIM and CDB mentioned in Section 4.3.1.1 above, are not in themselves sufficient to provide the total amount of external financing needed to develop the manufacturing activities in the STEC-Zone. Thus, the additional indirect financing through inter-company loans was needed. The Commission could not find a specific bank loan directly linked to the project in Egypt. However, in 2014, Jushi (China) issued a bond to replace various bank loans in order to improve its debt structure. This bond, which makes various references to the capital needs for the project in Egypt, confirms that Jushi (China) was in need of external financial assistance to assist its manufacturing activities in Egypt. Therefore, the Commission considered that the underlying preferential loans channelled through Jushi (China) are also attributable to the GOE in the same way as the direct loans provided to Jushi Egypt by the Chinese financial institutions.

• (747) Since all of these loans can in essence be assimilated to loans provided by the GOC to a Chinese company, which then allocates the benefits to its manufacturing activities elsewhere, the Commission decided to treat these loans as any other domestic Chinese loan to a Chinese GFF producer. In this context, as mentioned in recital (266) above, the Commission found that all State-owned Chinese financial institutions that provided loans to Jushi (China) and Jushi Egypt were public bodies in the sense of Article 2(b) of the basic Regulation read in conjunction with Article 3(1)(a)(i) of the basic Regulation and in accordance with the relevant WTO case-law.

• (748) The Commission then calculated the amount of the countervailable subsidy. In this respect, the Commission noted that the nominal interest rate charged by Jushi (China) to Jushi Egypt was 7,5 %. However, none of the financing provided to Jushi (China) had such a high interest rate. In fact, the average interest rate charged to Jushi (China) during the IP amounted to 4,4 %. This is again confirmed by Jushi (China’s) income tax statement, in which the financing cost deducted from the taxable income corresponded to an interest rate of 4,3 %. The Commission thus compared the average interest rate that Jushi (China) pays on the outstanding amount of the intercompany loan during the IP with the rate that the company would have to pay for a comparable commercial loan obtainable on the market, in line with the calculation methodology developed in Section 3.4.2.4 above.

• (749) The Commission furthermore found that during the investigation period, Jushi Egypt did not honour its debt repayment schedule to the parent company. Indeed, 91 million USD, which was supposed to have been repaid to Jushi (China) during 2018, was still outstanding at the end of the investigation period. In addition, the Commission found several instances in which the funds received via Jushi (China) were provided to repay the outstanding capital on the loans with EXIM and CDB.

• (750) In order to take into account the increased risk exposure of the banks highlighted by the existence of revolving loans and debt forgiveness, the Commission thus decided to moved down one notch in the risk rating scale and to use US B (instead of BB) corporate bonds to determine the market–based benchmark, in line with recital (339) above.

• (751) All the elements concerning this financing described above in this section clearly show that Jushi (China) allocated all the benefits from the preferential financing received from the Chinese financial institutions to Jushi Egypt. In addition, after Jushi Egypt did not honour the debt repayment schedule towards Jushi (China), this latter company did not adjust the interest rate accordingly and did not take any measures to reflect the real risk of the intercompany loan, whose amount kept increasing over the years. For all these reasons, the benefit thus calculated was attributed to Jushi Egypt ¹⁷⁸.

• (752) Following definitive disclosure, Jushi Egypt claimed that, contrary to what was stated in the footnote in the preceding recital, the Commission countervailed the loans attributed to Jushi Egypt both in Jushi (China) and in Jushi Egypt. This is factually incorrect, since the benefit calculated on the intercompany loan allocated to Egypt was deducted from the benefit on loans calculated for Jushi (China), as can be seen in Annex 2.3 of the specific disclosure provided to the Chinese company. Therefore, the claim was rejected.

• (753) Jushi Egypt also argued that the Commission should not have downgraded Jushi Egypt’s credit rating from AA to B based on the fact that Jushi Egypt did not honour its repayment schedule to its parent company or that, in some instances, Jushi Egypt’s parent company repaid loans on its behalf. The fact that Jushi Egypt’s corporate group decided that it was better for another entity in the group to bear the costs so as to preserve cash flow in another entity does not indicate that this other entity would not have honoured its obligation had this obligation been towards a banking institution. In addition, Jushi Egypt argued that the Commission downgraded Jushi Egypt by four notches, from AA to B, even though recital (750) above stated that Jushi Egypt would only be moved down one notch in the risk rating scale.

• (754) First, the Commission noted that it did not find any credit rating awarded by any external party to Jushi Egypt, and that Jushi Egypt did not provide any evidence to this end either. Jushi Egypt therefore never had an “AA” credit rating as a starting point. The Commission thus had to determine Jushi Egypt’s credit rating using the facts available in the case. In view of the significant amount of the intercompany loans from the parent company, as well as the fact that Jushi Group had operated as a guarantor for the loans from CDB and EXIM, the Commission determined that Jushi Egypt’s credit rating was closely linked to the rating of its parent company, which had been set at “BB”, as mentioned in recital (306) above. This BB credit rating was thus the starting point for the Commission.

• (755) Second, as explained in recital (750) above, the Commission decided to move down one notch in the rating scale, i.e. from BB to B, in view of the lack of repayment of its liabilities over the years. Indeed, the Commission noted that although the loans to CDB and EXIM were repaid according to schedule, the total liabilities of the company actually increased over the years. As such, Jushi Egypt replaced external debt by intragroup debt, but did not actually honour its liabilities towards the banking institutions itself. Contrary to the statements of Jushi Egypt, there are also indications that the company would not have been able to honour its obligations if all of its creditors had been external banking institutions. For example, although the company was loss-making in the years 2015 and 2016, and had a negative equity in 2016, it still made large capital repayments to CDB, totalling 54 million USD (around 546 million EGP) in these years. The company would thus not have been in a position to honour its external obligations without financial support from the parent company.

• (756) In view of the above considerations, the Commission rejected these claims.

• (757) The subsidy amounts found for preferential financing through loans from Chinese policy banks, directly or via the parent company Jushi (China), are thus confirmed, and amounted to 4,87 % for Jushi Egypt.

4.3.3.   Support for capital investment

• (758) In addition to the direct loans and intercompany loans, Jushi Egypt needed to cover its financial needs also by increasing its capital.

• (759) Previous investigations found that substantial subsidies were received at the level of the parent companies of Chinese groups to support foreign investment under the Belt & Road Initiative, in the form of grants, preferential financing and equity injections. This was notably the case in the recently concluded anti-subsidy investigation on Tyres (‘the Tyres case’) ¹⁷⁹.

(a) Legal basis

• (1) 13^th Five-Year Plan for the Development of Foreign Trade, issued by the Ministry of Commerce (‘MOFCOM’), 26 December 2016;

• (2) Guiding Opinions of the State Council on the Promotion of International Production Capacity and Equipment Manufacturing Cooperation, issued in 2015 (‘Guiding Opinions’);

• (3) Building Materials Industry Development Plan 2016-2020, Ministry of Industry and Information Technology, GXBG [2016] No. 315

• (4) The 13^th Five-Year Plan for Fibre and Composite Materials Industry

• (5) Made in China 2025, State Council, July 7, 2015

(b) Findings of the investigation

• (760) During the investigation period, Jushi Egypt benefited from grants channelled by CNBM, a State-controlled entity, through equity injections, specifically via paid-in capital.

• (761) In 2012, there was a significant shareholders’ contribution of 42,6 million USD for the founding of Jushi Egypt. Since then, the capital of Jushi Egypt significantly increased up to 162 million USD until the investigation period. At the end of the IP, the capital of Jushi Egypt was approximately four times larger than in 2012.

• (762) Jushi Egypt is fully owned by Jushi Group, which is fully owned by China Jushi. The principal shareholder of China Jushi is CNBM holding, which continuously held more than 25 % of its shares since 2010

• (763) In parallel to the increase of capital in Jushi Egypt, the participation of CNBM in the capital structure of China Jushi has increased in a similar order of magnitude. Specifically, CNBM increased sixfold its paid-in capital contribution into China Jushi from 2010 to the end of 2018, i.e. during the IP, from 154 million RMB (23,3 million USD) in 2010 to 944 million RMB (142,8 million USD) in 2018.

• (764) This similar trend and magnitude in the increase of capital in both Jushi Egypt and China Jushi strongly suggests that CNBM raised funds in order to increase the capital of Jushi Egypt through China Jushi up to the IP.

• (765) In addition to the paid-in capital increases, there have been substantive amounts of funds transferred from CNBM to China Jushi and Jushi Group through other types of capital accounts.

• (766) In order to determine the nature of the transfers and the circumstances in which the ownership capital within the companies concerned evolved, the Commission sought to have access to the relevant information originated in CNBM. However, as explained in Section 3.2.2, CNBM did not cooperate with the investigation. In the absence of any reply from CNBM, and following the application of the provisions of Article 28 of the basic Regulation, the Commission had to rely partially on facts available for its findings concerning CNBM. In particular, the Commission had to use facts available in order to identify the source of financing of the capital provided by CNBM to Jushi Egypt inter alia via China Jushi.

• (767) To reach this conclusion, the Commission established the existence of a clear commitment from CNBM to invest overseas in encouraged industries. In this respect, CNBM advertises itself as an “active practitioner of the Belt & Road Initiative” in its annual report, on its website, and on site in the plants. For example, it “undertook 312 cement projects in 75 countries and regions globally, more than 60 fiberglass projects, the implementation of 33 investment projects, the construction of 5 overseas warehouses, operated 14 overseas building materials supermarket chains, and managed more than 30 factories globally” ¹⁸⁰.

• (768) More specifically, within the context of GFF, CNBM established Jushi Egypt in 2012, a vertically integrated producer of GFF in Egypt, and a subsidiary of the Chinese exporting producer Jushi. In the subsequent years, several important investment projects were undertaken to expand the production capacity of Jushi Egypt. Furthermore, in 2015, CNBM established Hengshi Egypt, a subsidiary of the Chinese exporting producer Hengshi. This non-vertically integrated producer of GFF in Egypt sources its main raw materials from its related company, Jushi Egypt. In addition, according to publicly available information, contracts have been signed to establish a new company related to Taishan (another one of the exporting producers in the CNBM Group) in Egypt in the near future.

• (769) Furthermore, China Jushi has established a number of overseas production and trading subsidiaries in South Africa, South Korea, Italy, Spain, France, Canada, India, Singapore, Japan, USA and Hong Kong. In 2016, the CNBM Group raised over 5 billion RMB (USD 747,38 million) for its globalization strategy in the 13th five years plan (2016 to 2020), among which the Egyptian projects mentioned above, as well as a USD 300 million investment in a factory in the USA, for production starting in 2018 ¹⁸¹. In India, the plan is to put up a manufacturing facility with a capacity of 100 000 tonnes by mid-2020. Further plans for a GFF facility in Turkey were also well underway during the investigation period.

• (770) All of these overseas projects fit within the wider context of China’s “going out” policy. In this respect, Song Zhiping, the Chairman of CNBM, stated for example: “The signing of the Jushi US project is a milestone in the strategic development of China Jushi’s globalization, and in the meantime a critical step forward in its pursuit for higher goals. It also has a referential significance for the globalization of CNBM and even of China’s building materials industry as a whole”.

• (771) Furthermore, as mentioned in recital (148) above, the Made in China 2025 Roadmap ¹⁸² identifies 10 strategic sectors, which include GFF. For these key industries, the plan ‘Made in China 2025’ explicitly mentions in its Chapter 3.9 that China will:

• (a) ‘Support enterprises to perform mergers, equity investment and venture capital investment overseas.

• (b) Actively participate in and promote international industrial cooperation and implement major strategic plans like the Silk Road Economic Belt and the 21st-Century Maritime Silk Road to accelerate building interconnected infrastructure with surrounding countries and deep industrial cooperation.

• (c) Make use of “opening up” along borders and build a number of overseas manufacturing cooperation parks in eligible countries.

• (d) Encourage the overseas transfer of high-end equipment, advanced technology and strong industry’.

• (772) In another interview, Song Zhiping mentioned that from the enterprise point of view, CNBM paid special attention to the national ‘Belt and Road’ related policies, and that ‘Belt and Road’“is really a once-in-a-lifetime opportunity for China's building materials group”. He also pointed out that “going out” is linked to financial cooperation, it only works when ‘we combine finance, sovereign fund cooperation, buyer's credit, financial leasing and other ways, have a mutual cooperation “going out”’. Along the same line, Song Zhiping further stated that ‘International capacity cooperation must be combined with the “Belt and Road” national policy, especially the country's financial policy. We used to make simple investments, borrowing money and lending investments, and that's not going to be massive. I would like to adopt a model similar to that of China's Guoxin Holdings, where companies contribute 10 per cent and the state foreign exchange reserves contributes 90 per cent. We need to change our old reliance on loans and look for new financing business models and organizational models. I think we should give full play to the country's current strong financial advantages, raise the establishment of building materials investment funds, mobilize more capital to participate in investment, to support building materials enterprises to “go out”’.

• (773) This vision is supported by the Chinese government, as can be seen in a speech given by Xiao Yaqing, director of the State Council's SASAC at a conference organized by CNBM: ‘central enterprises are the backbone of the national economy, and should be closely integrated with the “Belt and Road” national strategy, making use of advantageous production capacity, highlighting key areas, and promoting international production capacity and equipment cooperation. They take the lead in creating a new business card for the “going out” of the country”…. In recent years, China Building Materials and China Materials Group have accelerated the pace of “going out”, they have achieved outstanding results, and restructuring of the group to lead the internationalization of China's building materials industry is of great significance…. After the reorganization, the new company's initial planned investment projects in countries along the Belt and Road, will amount to an investment of more than 90 billion yuan’ ¹⁸³.

• (774) As explained in recital (93) the investigation revealed that CNBM Building is a Chinese State-owned enterprise owned directly and indirectly by CNBM Parent, which is in turn wholly owned by SASAC. SASAC is the key vehicle through which the Chinese government controls in several ways State-owned enterprises as a means to implement its government policies and plans rather than to follow a market logic in its business operations ¹⁸⁴. Without prejudice to the conclusion on the public body nature of CNBM within the meaning of Article 3 of the basic Regulation, on the basis of all of the above evidence it can be concluded that CNBM and the Jushi Group at large pursue industrial and governmental policies including with regard to the ‘Belt and Road’ initiative and the ‘going out’ policies in the production and export of the product concerned.

• (775) It is in this context that CNBM received a financial contribution from the government in order to implement these policies, including to fund its investment in Egypt for the production of the product concerned. Due to the complete non-cooperation of the CNBM and of the GOC on this point, the Commission was unable to identify the actual source of financing and substantiate in detail whether this financial contribution was made by SASAC or by the Silk Road Fund (‘SRF’) as the vehicle to implement the ‘Belt and Road’ strategy. However, on the basis of the facts available pursuant to Article 28 of the basic Regulation the Commission concluded that both SASAC ¹⁸⁵ and the SRF ¹⁸⁶ are considered public bodies within the meaning of Articles 3 and 2(b) of the basic Regulation when providing the financial contribution to CNBM. In any event, even if they would not constitute public bodies, both SASAC and the SRF would be considered as entrusted or directed by the government to carry out governmental policies and functions in accordance with Article 3(1)(iv) of the basic Regulation ¹⁸⁷.

• (776) Likewise due to the lack of cooperation, based on all the above evidence on the funding under the ‘Belt and Road’ initiative of projects outside of China including Egypt, as well as on the findings in the Tyres case, the Commission concluded that CNBM received a financial contribution in the form of grants that were then used for successive capital contributions to increase the capital available to Jushi Egypt for its operations in Egypt.

• (777) In the absence of further evidence provided by CNBM, and based on the publicly available evidence, the Commission decided to countervail the successive capital increases of Jushi Egypt as equity injections supported by the State, with the aim of setting up and expanding the production facilities of CNBM in Egypt. Such support would equally fall under the items agreed upon between China and Egypt in the Cooperation Agreement to set up the SETC-Zone, attributed to Egypt for the same reasons explained in recital (706) above and can thus be allocated to the products exported from Egypt.

(c) Benefit

• (778) The Commission then analysed whether the financial contribution provided by GOC via SASAC and/or the SRF conferred a benefit to Jushi Egypt. Once again, due to the non-cooperation of CNBM the Commission had to base its findings on the provisions of facts available according to Article 28 of the basic Regulation.

• (779) The body of evidence in subsection (b) above has shown that the mandate and objective of both SASAC and the SRF is to implement governmental policies and plans, including by providing financial support and funding for the encouraged sectors among which GFF in order to enact the going-out strategy. SASAC and the SRF do not follow market principles and behaviour when providing funding, but operate to implement the respective government policies. A notable example of their operations delinked from a market perspective was found in the Tyres case, where the SRF had provided a grant to the group parent company for an acquisition of a subsidiary in the EU. Furthermore, in the Tyres case the Commission established that such projects followed a similar pattern ¹⁸⁸. It is thus reasonable to assume that CNBM, as a major central SOE, would follow the same pattern and would benefit from similar subsidies.

• (780) The Commission further noted that the amount of successive parallel capital increases of Jushi Egypt received via China Jushi corresponded approximately to the amount of the funding gap for the investment project in Egypt left after the funding via the preferential financing as described at Section 4.3 above. As explained above in recitals (763) to (766), the successive magnitude and scale of capital increases of CNBM into Jushi Group and China Jushi substantially mirrored the capital increases into Jushi Egypt precisely to close this funding gap. This was fully coherent with the purpose of the functioning and funding of SASAC and the SRF, as also explicitly stated by CNBM representatives and SASAC and SRF officials.

• (781) Based on the evidence on file and in accordance with Article 28 of the basic Regulation, the Commission concluded that the financial contribution provided by SASAC and/or the SRF conferred a benefit within the meaning of Article 3(2) of the basic Regulation.

(d) Calculation of the subsidy amount

• (782) As explained in recitals (207) to (217) above, the parent company of CNBM failed to provide a response to the questionnaire reply. Therefore, it was impossible to verify the subsidies received at the level of the parent company in connection with the group’s foreign investments related to the product concerned, and to determine an accurate benefit amount.

• (783) The Commission therefore resorted to facts available in application of Article 28 of the basic Regulation to the determine the subsidy amount conferred by the financial contribution by SASAC or the SRF in the form of grants. As explained above, the Commission found parallel capital increases in the various group companies in China and ultimately channelled to Jushi Egypt in the same magnitude and over the same period. Because CNBM received these funds from SASAC and/or SFR earmarked for the investment in Egypt under the Belt and Road Initiative and the going out policy, it was used simply to channel those funds all the way down to Jushi Egypt without keeping any benefit to itself, as this would be inconsistent with the earmarking. The fact that the amount of the funding gap in the Egyptian investment of Jushi Egypt by and large corresponded to the amount of the capital increases further confirms this.

• (784) In order to determine the amount of funds channelled by CNBM to Jushi Egypt as equity injections, the Commission analysed and traced the successive increases in equity in the companies concerned, namely Jushi Egypt, Jushi Group and China Jushi of which CNBM is the main shareholder.

• (785) When following the trail of funds, the Commission examined not only the increases in paid-in capital, but also the increases in other equity instruments. Specifically, substantive amount of funds were discovered in the form of capital surpluses in the intermediate companies China Jushi and Jushi Group. With regard specifically to these intermediate companies, the Commission noticed that in certain equity increases the amount of funds transferred to these companies were larger than the amounts the company would later register under paid-in capital. The company would therefore have access to these funds without the expected change on the share of company’s ownership. By taking into consideration the equity injections via paid-in capital and the amounts found under other type of capital accounts, such as capital surplus, the Commission could determine that more than 87 % of the equity of Jushi Egypt could have been imputable to CNBM. The total amount of the benefit to the recipient using this approach would therefore be 142,8 million USD.

• (786) However, due to the limited access to more detailed information, the Commission could not determine the exact origin of all these funds, and it thus could not establish with a sufficient standard of likelihood that the all amounts contained in other capital accounts of Jushi Egypt, were channelled and transferred by CNBM.

• (787) Therefore, the Commission adopted a more prudent approach, focusing exclusively on the evolution of the paid-in capital amounts that matched the standard of likelihood as to their source from CNBM. More specifically, the Commission simply took into consideration the increase of paid-in capital of CNBM in China Jushi since 2010 and parallel development of capital increases into Jushi Egypt since 2012. As a result, the Commission considered that 51 % of the equity in Jushi Egypt (or 82,7 Million USD) was provided by CNBM through the financial contribution received from SASAC or the SRF.

• (788) Once the full amount of the grants were established, the Commission proceeded to calculate the benefit conferred to Jushi Egypt during the investigation period according to Articles 6 and 7 of the basic Regulation. The benefit of the grants via equity increases should be allocated to the IP considering the amortization period of equity, which is not a fixed asset and therefore would normally be subject to the allocation provisions under Article 7(4) of the basic Regulation.

• (789) Due to the absence of cooperation from CNBM, the Commission did not have any further information on any specific agreement concerning the use of the grant linked to the equity investments with SASAC or the SRF. In the tyres case, the Commission amortised the grant amount over a period of seven years because this was in line with the average investment duration of SRF investment and with another concurring loan taken out for that transaction ¹⁸⁹. However, in the absence of cooperation and specific shareholders agreement in this case, the Commission decided to follow a conservative approach and decided to use the average useful life of the assets of Jushi Egypt on the assumption that the funding was used to fill the gap for the investment project in line with Article 7(3) in conjunction with Article 7(4) of the basic Regulation, which provides that a different amortisation period can be used if the circumstances so justify. On this basis, the Commission used an amortization period of twelve years. This resulted in a subsidisation amount of 1,65 %.

(e) Comments on the support for capital investment

• (790) Following definitive disclosure the CNBM group claimed that the Commission failed to demonstrate that the equity is attributable to CNBM and more specifically, that it did not originate from China Jushi or Jushi Group’s profits. In this line the company also claimed that the Commission failed to explain why funds were given by CNBM every year to China Jushi since 2010 but that funds only passed on to Jushi Group and Jushi Egypt during some of those years. Similarly, it argued that the Commission failed to establish that the support for capital investment is attributable to any public body and, as a result, it cannot constitute a subsidy. Finally, CNBM Group requested that, should the Commission maintain its approach, it must disclose how it considers that there is any pattern between the support for capital from CNBM to China Jushi and that between Jushi Group and Jushi Egypt.

• (791) Firstly, concerning the origin of the funds, the Commission noted that the company did not provide any additional evidence to substantiate the claim. The Commission nonetheless, has analysed further the accounts of the concerned companies to identify whether increases in equity were sourced by their profits. The Commission observed that none of the increases in equity were originated from the profits or retained earnings accounts. The Commission, nonetheless, has identified that certain equity increases of China Jushi taking place in the years 2012 and 2016 could be attributed to capital reserves. However, the company has not provided information on the origin of the funds of the capital reserve accounts. Furthermore, the investigation established that one of the companies of the CNBM Group had received and booked government subsidies under the capital reserves account. The Commission therefore concluded that undistributed profit or retained earnings are not the attributable source of the funds used for the equity increases in Jushi Egypt since 2012.

• (792) Secondly, concerning the moment when the funds were transferred to Jushi Group and Jushi Egypt, the Commission noted that the CNBM Group has not provided any further evidence to substantiate or explain its equity increases scheduling. Similarly, the Commission noted that in addition to the time lags on equity transfers from company to company, equity increases also respond to the different capital requirements in Jushi Egypt linked to the investments over the period analysed.

• (793) Thirdly, concerning whether the origin of the funds supporting the capital increase can be attributable to a public body, the Commission noted in recital (775), that, even if they would not constitute public bodies, both SASAC and the SRF would be considered as entrusted or directed by the government to carry out governmental policies and functions in accordance with Article 3(1)(iv) of the basic Regulation

• (794) Finally, regarding the disclosure on the establishment of the pattern between the support for capital from CNBM to China Jushi and between Jushi Group and Jushi Egypt, the Commission noted that this information was provided. Recitals (758) to (789) explained in detail the findings and the methodology used to calculate the subsidy amount. Similarly, in the specific disclosure, the company was provided with complete information concerning the evidence at the Commission’s disposal and its analysis regarding the capital support from CNBM to China Jushi and for Jushi Group to Jushi Egypt.

• (795) Following all the above-mentioned arguments, the Commission rejected these claims.

• (796) CNBM Group also claimed that the Commission failed to establish the amount of the benefit and must demonstrate why each provision of equity capital is not in line with the usual investment practice.

• (797) The Commission recalled that during the investigation the case team sought to have access to the relevant information in CNBM. However, as explained in Section 3.2.2, CNBM did not cooperate with the investigation and the Commission had to rely on facts available for its findings concerning CNBM. Moreover, recitals (778) to (781) described how the benefit is established. In essence, it explains that SASAC and SRF did not follow market principles when providing funding, but operated to implement the respective government policies. The Commission therefore rejected the claim.

• (798) CNBM Group further argued that it cannot be considered that all funds provided by CNBM originated from public bodies. As a result, the Commission cannot conclude that the entirety of the alleged capital support from CNBM to China Jushi constitutes a subsidy. Therefore, the company argued that the benefit cannot be higher than the subsidy rate found for CNBM in China, multiplied by the amount of capital support. CNBM Group also claimed that the Commission failed to calculate the benefit as it did not consider that the support for capital investment from CNBM came in exchange of shares and, thus, dividends.

• (799) First, the Commission noted that the company has not provided any additional evidence to substantiate the claim. Similarly, the Commission recalls that CNBM did not cooperate with the investigation and the Commission had to rely on facts available for its findings concerning CNBM. In this respect, The Commission recalled that the subsidy rate found for CNBM in Sections 3.4 and 3.8 above was based on loans and grants visible in the publicly available audit report of CNBM, and thus it limited its findings in a very prudent manner only to certain subsidies within specific subsidy schemes, which could be easily identified and which are not related to the subsidy scheme at hand. Therefore, if anything the Commission erred on the side of caution.

• (800) Finally, the Commission noted that the investigation does not discuss whether the funds transferred from CNBM were done in exchange of shares. On the contrary, the investigation established that CNBM received financial contributions from the government in order to implement its policies, and that these financial contributions were received in the form of grants that were then used for capital contributions to finance the operations of Jushi Egypt.

• (801) Following all the above-mentioned arguments, the Commission rejected the claim.

• (802) The CNBM Group further asserted that the Commission failed to take into account the value of the EGP at the time when the support for capital investment took place. As the EGP substantially devaluated in late 2016, this, in turn, artificially inflated Jushi Egypt’s benefit under this scheme. The Commission acknowledged that the EGP substantially devaluated in 2016. It also noted that the successive capital increases were indeed recorded in Jushi Egypt’s financial statements during the IP at the historical exchange rates. Following the methodology used in Jushi Egypt’s financial statements, the Commission therefore adapted the exchange rate for the provision of capital accordingly.

• (803) Finally, the CNBM Group claimed that the benefit of the support for capital investment should not be allocated over time. The company argued that there is no evidence that links the capital investments received by Jushi with the acquisition of fixed assets.

• (804) The Commission noted that no further evidence has been provided to support the claim. In addition, the Commission recalled that the set-up of a new production plant involves the acquisition of fixed assets. Furthermore, the investigation collected substantive evidence that since the establishment of Jushi Egypt, the company has engaged in the acquisition and construction of fixed assets. The Commission therefore rejected the claim.

4.4.   Export credit insurance

• (805) During the investigation period, Jushi Egypt also benefited from an export credit insurance with Sinosure in the framework of an agreement signed by Jushi China, which covered also exports made by Jushi Egypt. The premium to be paid for exports from Egypt did not differ from the premium requested for exports from the PRC.

• (806) As mentioned in Section 3.5 above, Sinosure is owned by the Chinese Government, which exercises meaningful control and hence constitutes a public body. In any event, it is entrusted or directed by the GOC. Furthermore, Section 3.5 above already established that the premiums paid by the GFF producers in China were based on preferential terms. The fact that the premium requested for exports from Egypt does not differ from the premium for exports from China clearly shows that country risk was not taken into account by Sinosure when determining its price for the export credit insurance, and that the findings applicable to the exports from Jushi China also apply to Jushi Egypt.

• (807) Consequently, the Commission concluded that Sinosure was a public body in the sense of Article 2(b) of the basic Regulation read in conjunction with Article 3(1)(a)(i) of the basic Regulation and in accordance with the relevant WTO case-law or was entrusted or directed by the GOC. Furthermore, a benefit was provided to the Jushi Egypt, since the insurance was provided at rates below the minimum fee needed for Sinosure to cover its operational costs.

• (808) The Commission also determined that the subsidies provided under the export insurance programme are specific, because they could not be obtained without exporting and are thus export contingent within the meaning of Article 4(4)(a) of the basic Regulation.

• (809) However, without prejudice to a finding of countervailability of this programme, given that the potential resulting countervailable benefit would be insignificant, the Commission decided not to assess this programme further.

4.5.   Provision of goods for less than adequate remuneration

4.5.1.   Provision of power for less than adequate remuneration

• (810) No benefit was found for the provision of electricity for less than adequate remuneration since electricity rates are set at national level in Egypt, and the exporting producers pay the usual rate for industrial users within a certain voltage range.

• (811) No benefit was found for the provision of gas for less than adequate remuneration. Rates for gas are set for certain industrial sectors, but the exporting producers fall within the residual category of industrial users, which does not benefit from the lowest rate. Hence, there is no specificity, and no benefit.

4.5.2.   Provision of land for less than adequate remuneration

4.5.2.1.   Purchase of land by Jushi Egypt

(a) Legal basis

• (812) The legal bases of this programme are:

• — Law No. 83/2002 on Economic Zones of a Special Nature (‘Law 83/2002’)

• — Decree of the President of the Arab Republic of Egypt on Law No. 27/2015 Amending some Provisions of Law of Economic Zone of Special Nature issued by Law No. 83/2002 (‘Law 27/2015’)

• — Law No. 8 of 1997 On Investment Guarantees and Incentives (‘Law 8/1997’)

• — Investment Law as Enacted by Law No. 72 of 2017

• — The Prime Minister's Draft Resolution No. (2310) of 2017 Concerning issuing the Executive Regulations of Investment Law Issued by virtue of Law No. 72 of 2017.

(b) Findings of the investigation

• (813) According to Article 5 of the Law 83/2002, as amended in 2015, in the SCZone, “the ownership of land shall be vested in the Authority within the zone”. Since 2015, it is not possible anymore to purchase the full ownership of land from the General Authority. Currently, the General Authority only provides usufruct rights of the land to the Main Development Company (‘MDC’), an Egyptian developer. The MDC then puts the usufruct of the land up for bidding to sub-developers such as TEDA. These sub-developers subsequently rent out the land to the companies located in the zone.

• (814) However, when Jushi Egypt started to build its plant in 2011, it was still possible to acquire full ownership of land from the Egyptian authorities. At the time, Jushi Egypt bought a plot of land from TEDA. TEDA in turn bought this plot in 1998 through its predecessor, the Egypt China Joint Venture Company, from the Suez Governorate at an extremely low price (less than 1 USD/m²), and without any bidding procedure. Following the initial purchase in 1998, TEDA invested in basic infrastructure to make the undeveloped desert land viable for industrial projects.

• (815) In this respect, the Commission ascertained whether the ECJV and TEDA were public bodies within the meaning of Articles 3 and 2(b) of the basic Regulation. The Commission thus sought information about State ownership as well as formal indicia of government control in these entities. It also analysed whether control had been exercised in a meaningful way.

• (816) First, the Commission found that ECJV and TEDA were related entities, and that they were both fully State-owned. Indeed, as mentioned in recital (649) above, Tianjin TEDA is an SOE under the Tianjin Municipal Government, which formed a joint venture with the Egyptian Suez Canal Administration, the National Bank of Egypt, and four more Egyptian State-owned enterprises to create the ECJV, in order to develop and construct the economic zone. The Chinese side held 10 % of the shares of the ECJV, and the Egyptian side 90 % ¹⁹⁰. Furthermore, as mentioned in recital (651) above, in October 2008, Tianjin TEDA established a joint venture with the China-Africa Development Fund, a subsidiary of the CDB, to set up China-Africa TEDA Investment Co., Ltd. (‘China-Africa TEDA’), as the main Chinese investment entity in the cooperation zone. China-Africa TEDA united with the ECJV to create a new company, TEDA, in order to drive the development of the SETC-Zone in Egypt. This time, the Chinese side held 80 % of the shares, and the Egyptian side (represented by the ECJV) 20 %.

• (817) The Commission further established the existence of formal indicia of control by the State of those investors. Since both entities are fully State-owned, the Chinese and Egyptian governments formally have full control over them. In particular, in the absence of specific information indicating otherwise, the Commission considered that managers and supervisors in the entities at issue are assumed to be appointed by and accountable to the State as is the case for State-owned companies in those countries.

• (818) The initial allocation of the land to the ECJV for a purchase price of less than 1 USD/m² in accordance with the applicable legal framework thus certainly involved a financial contribution by the GOE ¹⁹¹. The subsequent transfer of land between the ECJV and TEDA was in fact a transaction between related companies, based on a transfer price involving the same actors on both sides of the transaction.

• (819) Finally, concerning the sale of the land by TEDA to Jushi Egypt, the Commission noted that the majority shareholder of TEDA, owning 75 % of the shares, is the China Africa TEDA Investment Company, who also holds the majority of the seats on the Board of Directors of TEDA. The ultimate controller of the China Africa TEDA Investment Company is the CDB, which has already been designated as a public body in recital (257) above. Furthermore, according to the information provided by TEDA in the questionnaire reply, the business activity of the China Africa TEDA Investment Company consists of “investments in various projects within and outside the country (i.e. China)…Such projects are subject to approval in accordance with the law and may be subject to business activities after the approval of the relevant departments”. This wording refers to the approvals required from MOFCOM and the NDRC for any Chinese outward investment, and shows that the China Africa TEDA Investment Company carries out the GOC’s industrial policies by investing in industrial projects approved and encouraged by the GOC. TEDA itself describes its vision and mission as follows: “Vision: becoming an investment and operation player of an international industrial park supporting China, starting from Egypt, and facing Africa and even the whole world. Mission: pushing forward Chinese enterprises going outside, then pushing forward the internalization process of Chinese enterprises” ¹⁹² . TEDA also extensively refers in its publications to the attention, motivation and support from MOFCOM and Tianjin Municipal Government in the execution of its activities.

• (820) In light of the above considerations, the Commission established that the state controlled entities that provided land to Jushi Egypt are public bodies within the meaning of Article 2(b) read in conjunction with Article 3(1)(a)(i) of the basic Regulation. Indeed, the actions taken by TEDA under the direct control of the GOC and in the context of the GOE-GOC close cooperation can be attributed to the GOE as explained before in Section 4.2.3.1 as part of the set of preferential support to the GFF producers in Egypt.

• (821) In addition, even if the State-controlled entities were not to be considered as public bodies, on the basis of the evidence in recitals (815) to (820) as well as the evidence relating to the close cooperation between the GOC and the GOE, the Commission established that they would be considered entrusted or directed by the GOC and the GOE to carry out functions normally vested in the government within the meaning of Article 3(1)(a)(iv) of the basic Regulation. Thus, their conduct would be attributed to the GOE in any event.

• (822) Following definitive disclosure, both the GOE and the exporting producers stated that the Commission cannot consider that conducts of Chinese public bodies or private bodies entrusted or directed by the GOC constitute subsidies under the basic Regulation, as these conducts are not attributable to the government of the country of origin or export.

• (823) However, as already mentioned in recitals (816) to (820) above, the Commission considered that TEDA is not solely a Chinese public body, but a public body jointly controlled by the GOC and the GOE, and that actions under direct control of the GOC can be attributed to the GOE as well in view of the close cooperation of the GOC and the GOE. In this respect, the Commission noted that the shareholders of TEDA also include state-owned Egyptian public bodies, such as the the Egyptian Suez Canal Administration and the National Bank of Egypt, which are represented in the Board of Directors of TEDA. This shows that the GOE was in a position to acknowledge and adopt actions of TEDA. Finally, as mentioned in recital (821) above, even if TEDA were not to be considered a public body, the Commission considered that it would be entrusted or directed by the GOC and the GOE.

• (824) In addition to the provision of the land in 2011, Jushi Egypt purchased an adjacent plot of land from an Egyptian development company in 2016. This Egyptian developer in turn also had bought this land from the same plot of land of land awarded to the Egypt China Joint Venture Company in 1998. The Commission analysed whether the Egyptian developer had been entrusted or directed by the GOE to grant land to Jushi Egypt at preferential terms within the meaning of Article 3(1)(a)(iv) of the basic Regulation.

• (825) In this respect, the Commission noted that there was a clear involvement of the authorities of the SCZone in the sales transaction to Jushi Egypt. Indeed, the Egyptian developer needed to sell its plot because it did not have sufficient means to develop the land according to the industrial development clauses of its initial purchase contract with the GOE. The internal correspondence of Jushi Egypt shows that the sale of the plot of land was negotiated with and approved by the General Authority of the SCZone. The management of Jushi Egypt also assessed in this correspondence that the Egyptian developer would probably have gotten a better price for its land if it had been allowed to offer it freely on the market. This is particularly relevant given the fact that the plot owned by the Egyptian developer was adjacent to the plot already owned by Jushi Egypt, and thus would allow Jushi Egypt to expand its production activities within a single location. In this context, article 3 of the purchase contract states that if the contract “is not approved by the General Authority for Suez Canal Special Economic Zone within six months, Party B (Jushi Egypt) shall have the right to consider Party A’s (the developer) breach of this Contract and then this Contract shall be automatically cancelled”. Furthermore, according to article 7 “Party B shall submit a written application to the General Authority for Suez Canal Special Economic Zone for the establishment of an industrial project by Party B on behalf of Party A and obtain approvals…The General Authority for Suez Canal Special Economic Zone agrees to conduct land registration in the name of Party B, examine and approve the final land sales contract, and apply for land certificate in the notary office in the name of Party B.”

• (826) In addition, Jushi Egypt offered to pay any penalties, which were due by the Egyptian developer to the General Authority of the SCZone. However, this penalty fee was reimbursed to Jushi Egypt by the General Authority afterwards.

• (827) The GOE thus used a private body as a vehicle to carry out a financial contribution whereby the private body had no choice but to sell the land to Jushi Egypt and at the price and other conditions stipulated by the GOE. Therefore, the Commission concluded that, the Egyptian developer had been entrusted or directed by the State in the sense of Article 3(1)(a)(iv), first indent of the basic Regulation to pursue governmental policies also enshrined in the Cooperation Agreement and provide land at a preferential price to Jushi Egypt.

• (828) The Commission requested the GOE to provide statistics on land prices applicable in the SCZone, as well as the tender procedures relating to the purchase transactions by the developers. However, the GOE could not provide any statistics or any tender procedures relating to the period or the transactions considered. The GOE was only able to provide information relating to the tender procedures for the award of usufruct to TEDA of another piece of land in 2016.

• (829) Following final disclosure, the GOE and the exporting producers claimed that the Commission relied on incorrect facts in order to conclude that Wadi Degla was entrusted or directed by the GOE. More specifically, they claimed that:

• — Wadi Degla is not a developer, but a producer of polyethylene pipes and fittings;

• — Wadi Degla did not purchase the land in question from the GOE, but from the Egyptian Chinese Company;

• — The General Authority of the Suez Canal Economic Zone did not participate in the negotiations between Jushi Egypt and Wadi Degla but, simply, approved the sale of land and put its stamp on it;