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

• — Internal discussions between Jushi Egypt’s staff only explain why Wadi Degla wanted to sell its land quickly. Wadi Degla wanted to sell its land quickly and was willing to accept a low price because it had not developed the land in line with its legal obligations. As a result, Wadi Degla was fined by the GOE for failing to respect its obligations. The GOE refunded the fine paid by Jushi Egypt because Jushi Egypt did develop the land. As Jushi Egypt respected its legal duty to develop the land, there was no reason to hand down a sanction. Therefore, Wadi Degla’s action of selling the land was a mere side effect resulting from the GOE fining Wadi Degla, which does not constitute entrustment or direction.

• (830) On the first point, according to the information available to the Commission on the company’s website ¹⁹³, Wadi Degla is a real estate developer with projects in various locations, including Ain Sokhna, not a producer of pipes and fittings.

• (831) On the second point, the Commission does not dispute that Wadi Degla purchased the land in question from the Egyptian Chinese Company. However, the transaction under consideration is a different one, namely the sale from Wadi Degla to Jushi Egypt. Furthermore, if the history of all transactions should be taken into account, it must be added that the Egyptian Chinese Company purchased the land from the GOE in the first place.

• (832) On the third and fourth points, the Commission acknowledged that Wadi Degla wanted to sell its land among other reasons because it had not developed it in line with its legal obligations. However, as stated in recital (825), the company could also have sold its land on the free market for a better price. The internal correspondence of Jushi management does not only explain why Wadi Degla wanted to sell its land, but also clearly indicates that the General Authority of the SCZone was involved in the negotiations for the sales transactions. More specifically, these e-mails state among others that Jushi Egypt “reached consensus” with Wadi Degla and the Chief legal counsel of the SCZone, that the contract “has already been approved by the Chairman of SCZone”, and that the SCZone would “submit a special application to the Office of the Prime Minister” for the reimbursement of the fine. Consequently, these claims were rejected.

4.5.2.2.   Rental of buildings by Hengshi Egypt

• (833) The Commission also found that Hengshi Egypt rents buildings from TEDA. As mentioned above, TEDA initially purchased the land for these buildings from a related company, which in turn bought it at a preferential price from the Egyptian authorities. The investigation revealed that even though TEDA is making profits on its rental contracts, the rental prices charged by TEDA are still less than half of the average price charged by competitors in the Suez Canal Economic Zone. Thus, as concluded in recitals (820) and (821), the Commission considered that the renting of buildings by TEDA for less than adequate remuneration to Hengshi Egypt is attributable to the GOE.

• (834) Following definitive disclosure, Hengshi Egypt stated that the Commission countervailed buildings rented out by Nile Group Plastic Industry to Hengshi Egypt (SN4 and 6 of Annex 2.3 sheet ‘Hengshi Egypt’) without establishing that Nile Group Plastic Industry is a public body or a private body entrusted or directed by the government of the exporting country. In addition, the price requested by Nile Group Plastic Industry was consistently lower than TEDA’s prices.

• (835) In fact, the transactions referred to by the company relate to buildings owned by TEDA and rented by TEDA to Nile Group Plastic Industry. These buildings were sublet for a short, temporary period of 2 months by Nile Group Plastic Industry to Hengshi Egypt according to a friendly agreement between the two companies. Indeed, Hengshi Egypt took over the rental from TEDA of the buildings initially occupied by Nile Group Plastic Industry, but moved into the premises slightly before the end of the rental contract between Nile Group Plastic Industry and TEDA. After this short transition period, Hengshi Egypt continued to rent the same space directly from TEDA. Furthermore, the rental price set between Nile Group Plastic Industry and Hengshi Egypt followed the price list set by TEDA for similar buildings in 2017. Since the transaction concerned a temporary arrangement, under which TEDA remained the owner of the buildings rented out, and since the rental prices remained within the rental price range set by TEDA, the Commission did not accept the company’s claim in this respect.

4.5.2.3.   Conclusion

• (836) The findings of this investigation show that prices for land provision and acquisition in the SCZone are determined by the Egyptian authorities, and that the pricing applicable in the SCZone is non-transparent. Land was awarded or rented at preferential terms by public bodies or by private bodies entrusted or directed by the State.

• (837) The provision of land for less than adequate remuneration by the GOE should therefore be considered a subsidy within the meaning of Article 3(1)(a)(iii) and Article 3(2) of the basic Regulation in the form of provision of goods, which confers a benefit upon the recipient companies.

• (838) The programme is specific within the meaning of Article 4(2)(a) of the basic Regulation, since the provision of land to companies in the SETC-Zone for less than adequate remuneration is reserved to certain companies in a particular geographical area.

4.5.2.4.   Calculation of the subsidy amount

• (839) The amount of countervailable subsidy is calculated in terms of the benefit conferred on the recipients, which is found to exist during the investigation period. The benefit conferred on the recipients is calculated by taking into consideration the difference between the amount actually paid by the exporting producer for land and the amount that should normally have been paid on the basis of a market-based benchmark. The benefit for the purchase of land by Jushi Egypt was calculated as follows:

• (840) As mentioned in recital (828) above, the GOE was not able to provide any information or statistics on purchase prices for land. The GOE they only provided information on transactions regarding land usufruct. Indeed, in 2016, a real estate valuation was performed by a committee of experts in order to establish a pricing map for the usufruct of land in the SCZone. Based on this study, the average yearly value of the land usufruct in the wider Suez Canal Economic Zone was determined. On the other hand, TEDA signed a land usufruct contract with the MDC in 2016 to further expand the existing SETC-Zone by 6 km². The Commission multiplied the average yearly value of the land usufruct in the SCZone by the duration of the land usufruct contract signed with TEDA for the expansion zone of 6 km². The Commission considered that this represented the total purchase value of undeveloped land for the developer.

• (841) In order to take into account the cost for the developer of developing the land, TEDA’s investment cost per m² was then calculated based on publicly available information. According to this information ¹⁹⁴, an investment of 230 million USD was foreseen for the expansion area of 6 km². A profit for the developer was also added.

• (842) The resulting price per m² of developed land was applied to the area bought by Jushi Egypt, and compared with the purchase price actually paid by Jushi Egypt. For the plot of land bought in 2011, the 2016 purchase price was corrected for inflation and GDP evolution. This evolution was calculated on the basis of inflation rates and evolution of GDP per capita at current prices in USD for Egypt as published by the IMF for 2016. For the plot of land bought in 2016, a mark-up was made to take into account the convenient geographical location of the plot for the buyer (next to Jushi Egypt’s existing facilities).

• (843) In accordance with Article 7(3) of the basic Regulation on allocating subsidy amounts for assets, which are not depreciated, the subsidy amount has been allocated to the investigation period by applying to an interest-free loan a publicly available and appropriate lending interest rate in Egypt during the investigation period, as published by the World Bank ¹⁹⁵.

• (844) Following the definitive and the additional definitive disclosures, Jushi Egypt claimed that the Commission made several errors in determining the benchmark for the sale of land, namely:

• (1) The internal correspondence concerning the purchase of the plot of land from Wadi Degla shows that Jushi Egypt evaluated the price of the land at 1 000 to 1 200 EGP/m². This price should have been taken as a benchmark in the first place.

• (2) The value of an usufructus over the duration of an usufructus is not comparable to the full ownership of the land as an usufructus is by nature different from full ownership.

• (3) The hypothetical land valuation commissioned by the General Authority of the Suez Canal Economic Zone is not a comparable benchmark as it is a hypothetical price at which the General Authority of the Suez Canal Economic Zone has not managed to sell any parcel of land.

• (4) The full value of the usufructus right over a parcel of land is not the yearly rental price of the usufructus multiplied by the total duration of the usufructus, but the yearly rental price of the usufructus divided by the average return on investment. This is so because the initial yearly amount of the usufructus will lose value each year due to inflation. As a result, the Commission must divide the yearly price per square meter in USD by the average profit to be expected by TEDA for the land.

• (5) The investment cost of 230 million USD announced by TEDA Egypt consists of the price of the usufructus of the land as well as investment for building residential areas, services area and factories. The parcels of land purchased by Jushi Egypt contained none of these, as Jushi Egypt purchased bare land.

• (6) The Commission must use the exchange rate applicable at the time of sales to convert the benchmark in USD into EGP.

• (845) On the first point, the Commission could not use the price proposed by the CNBM Group, since it concerned a subjective internal assessment of the exporting producer in question, not corroborated by any supporting evidence based on market parameters, and could thus not be considered a reliable proxy for the value of the plot of land.

• (846) On the second point, the Commission acknowledges that full ownership is different from usufructus, but since the GOE was not able to provide any information or statistics on purchase prices for land, the Commission considered that this was the best available information to determine the benchmark.

• (847) On the third point, the Commission recalled that the valuation in question consisted of an independent study commissioned by the GOE, which provided the intrinsic value of the land, namely the price at which land should normally be sold. The fact that land parcels were not actually sold at this price by the GOE does not affect its intrinsic value.

• (848) On the fourth point, the Commission deemed that the value of a usufruct is normally determined as a percentage of the market value of the underlying asset (i.e. the value of the full ownership) depending on the duration of the usufruct, i.e. the longer the usufruct, the closer the value of the usufruct will be to the value of full ownership. Since full ownership of land is per definition indefinite in time, by multiplying the yearly usufruct rate by 50 years, the resulting benchmark calculated by the Commission would therefore always be below the actual value of the full ownerhip. In addition, the Commission noted that in the concrete example of the usufruct contract signed by TEDA in 2016, the full amount of the usufruct had to paid as a lump sum at the start date of the usufruct right. As there were no yearly rentals as such in practice, the claim thus becomes void.

• (849) On the fifth point, the Commission noted that Jushi Egypt indeed purchased land without buildings on it. However, this land already had access to all necessary utilities, roads, sewage treatment, public lighting, security, and other service facilities provided by TEDA. The price for a piece of land in a well-connected and developed zone cannot be compared with the price of a bare piece of desert. In addition, revenues of real estate developers, such as TEDA, normally stem from the sale of land and rental of the buildings and infrastructure provided within the zone. If the development cost was not factored into to the market price of the land, then there would be no incentive for developers to make any investment in the first place.

• (850) On the last point, the Commission noted that it adjusted the 2016 price based on the evolution of the Egyptian GDP in real terms since 2011. This means that inflation caused by the devaluation of the EGP compared to the USD was already factored into the GDP adjustment. Further adjustments for the exchange rate changes would thus result in double counting.

• (851) Based on the above arguments, the claims of the company were rejected. However, when reviewing the company’s claims, the Commission noted that it made a clerical error in the interest rate used for the benefit calculation. This was adjusted accordingly.

• (852) The benefit for the rental of land by Hengshi Egypt was calculated by comparing the average rental price charged by competitors in the Suez Canal Economic Zone, based on a market study commissioned by TEDA in 2018, to the rental price actually paid by Hengshi Egypt in 2018.

• (853) Following the definitive and the additional definitive disclosures, the GOE and Hengshi Egypt argued that the Commission failed to establish that the leasing of buildings to Hengshi Egypt conferred a benefit because (i) the Commission did not compare TEDA’s rental prices to Hengshi Egypt with that of a competitor in the Suez Canal Economic Zone, as it used the prices of IDG “6th of October”, which is not located in the Suez Canal Economic Zone, but in a free zone in West Cairo (ii) the Commission relied on an internal indicative study; and (iii) the Commission failed to establish that TEDA Egypt’s prices are more advantageous than the market prices in the same geographical area, because other companies set up in the vicinity, but outside TEDA’s zone, decided not to rent from TEDA even if prices were low.

• (854) Concerning the first point, the Commission notes that the company erroneously thought that the Commission based the benchmark rental price on the price of IDG “6th of October”. As mentioned in recital (845) above, the Commission actually used the average rental price, i.e. 88 EGP/m², charged by several competitors in the Suez Canal Economic Zone during the year 2019, based on a market study commissioned by TEDA. This price was then adjusted by the annual price increase of 10 % mentioned in the same study to bring it back to the investigation period. The resulting benchmark of 80 EGP/m² happens to be equivalent to the price charged by IDG “6th of October”, but was not based on the price charged by IDG as such.

• (855) Concerning the comparability of the competitors in the study in terms of location, the Commission noted that according to its website, IDG has several projects located in various areas, of which one is indeed located in the West Cairo area. However, it also has a project in Port Said in the Suez Canal Economic Zone. On the other hand, another competitor mentioned in the study, SIDC, is 100 % located in the Suez Canal Economic Zone ¹⁹⁶. In the end, the Commission considered that all prices for all locations included in the study were comparable, as TEDA itself decided to compare its rental conditions with these companies/projects. In this sense, the Commission disagreed with the second point raised by Hengshi Egypt, namely that an internal study, used to decide on the yearly increase of rental prices, should not have been used to set a benchmark price. The Commission noted that the chapter under which the price comparison was made is called “market study”. TEDA thus considered that it was making a study of the market on which it operates. Furthermore, TEDA included its own rental data in the table, which was used by the Commission, thus showing that it was referencing itself compared to other developers. Finally, in the conclusions, TEDA mentioned that one of the positive points of raising its prices for the year 2019 was to “adapt with the market prices”. Based on this evidence, the Commission concluded that the internal study was a reliable proxy for comparable prices on the market from the perspective of TEDA, and that the claim should consequently be rejected.

• (856) With regards to the third point raised by the GOE and Hengshi Egypt, the Commission deemed that the fact that other companies in the vicinity decided not to rent from TEDA is not a reliable indicator of the lack of competitiveness of its rental prices. Indeed, no further evidence was provided on the ownership of the land used by these companies (purchase, usufruct, rental) or on the underlying reasons for their decision to set up outside the TEDA Zone. For example, Saint Gobain is a company located on large premises with a manufacturing activity that would probably have required more space and specific features that could not be offered by TEDA’s standard rental factories. In this respect, the Commission also wishes to highlight that all of the manufacturing entities in the zone managed by TEDA are either fully or partially owned by Chinese legal or natural persons, and that the mission of TEDA is to push forward Chinese enterprises going outside, as mentioned in recital (819) above. To the knowledge of the Commission, none of the companies in the vicinity mentioned by Hengshi Egypt is Chinese-owned.

• (857) Finally, Hengshi Egypt objected to the fact that the Commission had used the same rental price for factories and warehouses, as well as for contracts started before the investigation period. The Commission recalls that the market study made by TEDA only provided a price for “factories & warehouses” taken as a whole. As such, the Commission as well could not make a distinction between prices for factories and warehouses. Furthermore, the Commission noted that it used the prices actually charged by TEDA during 2018. The fact that TEDA had not adapted its rental prices in 2018 for certain contracts is in this sense irrelevant. These claims were thus rejected.

• (858) As a result, the final subsidy amount found for the provision of land for less than adequate remuneration amounted to 1,93 %.

4.6.   Revenue foregone

4.6.1.   Enterprise income tax privileges

(a) Legal basis:

• — The Income Tax Law as enacted by law 91 of 2005; and,

• — Ministry of Investment Decree No. 16 of 2017 adding an addendum (A) entitled ‘The effects of changes in currencies exchange rates’ to Egyptian Accounting Standard No. 13.

(b) Findings of the investigation

• (859) Jushi and Hengshi Egypt are subject to the normal Egyptian income tax of 22,5 %.

• (860) In 2016, the Egyptian government decided to change the fixed exchange rate of the Egyptian pound (‘EGP’) into a floating exchange rate, based on a recommendation from the International Monetary Fund. As a result, the Egyptian pound lost around half of its value against other major currencies such as the USD and the EUR within a month. In order to address this sudden currency fluctuation, the GOE issued a special accounting standard, as well as a special tax rule for treating foreign exchange differences. As a result, companies were allowed to deduct foreign exchange differences due to the devaluation of the EGP from their taxable income more extensively.

• (861) Although this legislation was generally applicable to all companies in Egypt and was meant to offset the negative effects of the devaluation of the Egyptian currency, it de facto created a substantial benefit for a limited number of companies in Egypt, i.e. companies that are export oriented and operate their business almost entirely in foreign currencies such as USD or EUR. This particular category of companies did not incur any actual loss as a consequence of the devaluation of the EGP, but could benefit from the special accounting standard issued by the GOE for tax purposes. As a consequence, companies operating their business in a foreign currency appear to be loss making for tax purposes even though their financial situation can show healthy profits. On the contrary, Egyptian companies operating their business in EGP have suffered actual losses that had a real impact on their business, which was addressed by the special tax rule issued by the GOE.

• (862) Jushi and Hengshi Egypt benefitted from this measure, since the investigation showed that they operate their business almost exclusively in USD or EUR and have almost no transactions in Egyptian pounds. Indeed, they are almost exclusively export-oriented, import almost all of their equipment, and their loans as well as a major part of their material purchases are denominated in foreign currencies. Indeed, as a result, the losses registered by Jushi and Hengshi Egypt because of the devaluation of the EGP, in particular because of the significant foreign currency loans, are not actual and are only used for tax purposes to decrease the taxable income.

• (863) In addition, the tax deduction was supposed to be a temporary measure, applicable only to transactions affected at the time of the devaluation. Nevertheless, in the investigation period, Jushi and Hengshi Egypt still deducted substantial amounts from its taxable income under realized and unrealized foreign exchange differences. As a result, they were less profitable or even loss-making according to their income tax statements, even though their financial statements showed a healthy and sustainable profit.

(c) Conclusion

• (864) In light of the above considerations, the Commission concluded that these tax benefits constitute revenue foregone by the GOE in the sense of Article 3(1)(a)(ii) of the basic Regulation and provided a benefit under Article 3(2) of the basic Regulation.

• (865) In addition, they are de facto specific to the exporting producers Jushi and Hengshi Egypt, in accordance with Article 4(2)(c) of the basic Regulation, as they are used predominantly by a limited group of companies operating almost exclusively in foreign currencies.

• (866) Following final disclosure, the GOE and the exporting producers noted that the 2016 special tax rule for treating foreign exchange losses as a tax loss cannot constitute a subsidy, as it does not confer a benefit and is not specific. First, as this tax rule was adopted to offset a loss caused by the government, no benefit is conferred. Second, as all entities similarly affected by the loss caused by the government could have recourse to this tax treatment, this scheme cannot be considered to be specific

• (867) The Commission acknowledged in recital (861) above that this legislation was generally applicable to all companies in Egypt and was meant to offset the negative effects of the devaluation of the Egyptian currency. However, the Commission also stated that companies that are mainly export oriented and operate their business almost entirely in foreign currencies such as USD or EUR benefited disproportionately from this legislation. Indeed, these companies did not incur any significant actual losses as a consequence of the devaluation of the EGP, since the exchange rate losses suffered on their purchases/liabilities in USD could be offset by the exchange rate gains on their sales in USD. As a result, instead of offsetting a loss caused by the government, the legislation actually created a tax benefit, which specifically applied to this type of companies. The claim was therefore rejected.

(d) Calculation of the subsidy amount

• (868) The benefit to the exporting producers was established on the basis of the information contained in the 2018 income tax declaration. Firstly, the amount deducted from the taxable income under the provision mentioned above was established. Secondly, the generally applicable tax rate of 22,5 % was applied to this deducted amount. Finally, this amount was expressed as a percentage of the total turnover of the exporting producers in the investigation period.

• (869) The subsidy amount found for this tax programme is 1,43 %.

4.6.2.   VAT exemptions and import tariff rebates for imported equipment

• (870) This programme provides an exemption from VAT and import tariffs for imports of equipment used in the production process of the companies located in the SCZone.

(a) Legal basis

• (871) 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’);

• — 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:

• — VAT Law as Enacted by Law No. 67 of 2016;

• — Executive Regulations of the VAT Law, Decree of the Ministry of Finance No. 66/2017.

(b) Findings of the investigation

• (872) According to Article 22 of Law 83/2002, as amended by Law 27/2015, the SCZone is part of a separate customs area by virtue of a decree issued by the Minister of Finance. This separate customs area functions under the supervision of a supreme customs committee, established by the Chairman of the Authority of the zone.

• (873) Furthermore, according to article 42 of Law 83/2002, imported equipment, tools, or apparatus shall be exempted from taxes and duties as long as they are allocated to produced goods or services for the licensed activity within the SCZone. On the other hand, as the SCZone is not an export only zone, all taxes and duties need to be paid for any products released into the domestic market outside of the SCZone.

• (874) Finally, according to the relevant laws, companies located outside of the SCZone pay import VAT upfront and net it against the VAT on their domestic salesor, if applicable, apply for a refund when finished goods are exported. For companies located in the SCZone, VAT is withheld and is thus initially not charged in accordance with the letter of understanding on this point between the Ministry of Finance and the General Authority of the SCZone.

• (875) The Commission found that VAT and import duties on imported equipment had indeed been withheld in the sampled companies since 2017 and throughout the investigation period. Before 2017, the companies actually paid their import duties and VAT/general sales tax (‘GST’) on imported equipment, since they had not yet adhered to the SCZone regime. However, through the 2017 opt-in of the company to the SCZone’s tax and administrative regime, the exporting producers benefited from the preferential tax treatments within the zone, including the VAT and tariff exemptions.

• (876) As a general rule in Egypt, companies buying machines subject to the 5 % VAT rate should utilize the amounts as a credit against future payments ¹⁹⁷. However, where the credit balance is retained for more than 6 consecutive tax periods (months), which is the case of companies heavily engaging in exports that cannot offset any input VAT as a credit against future payments, the registered person shall apply in writing, showing the amount of the credit balance. The Egyptian Tax Authority should check the correctness of the balance and refund within 45 days of the date of submitting the application.

• (877) However, the investigation revealed that in practice, the GOE does not reimburse the VAT paid upfront so that the tax constitutes an actual cost for such companies. Indeed, an analysis of the GST/VAT credits of Jushi Egypt listed in the 2016 - 2018 Annual Reports showed that amounts due by the GOE to Jushi Egypt were still outstanding after several years ¹⁹⁸ and Jushi Egypt confirmed that it did not expect to receive the reimbursements ¹⁹⁹. In the case of Hengshi Egypt, the company applied for a refund of VAT/GST on equipment and materials. A refund was finally received for equipment purchased up to 3 years earlier, but the amounts reimbursed did not cover the amounts requested, and no evidence was provided on the reasons for reimbursing some items, but not others. This shows that reimbursement of VAT by the GOE is at best received with a significant delay, and in any case arbitrary and not transparent.

• (878) It also needs to be considered that since equipment used in the manufacturing of products, including the product under investigation, will in all likelihood be used for its entire useful life within the Egyptian territory without being re-exported or sold domestically, there is no rationale for granting an exemption from customs duties and VAT on its purchase, other than benefiting the companies located in the SCZone. This therefore constitutes revenue foregone in the form of customs duties and VAT not payable without any justification, as this equipment is used for the local production of the product under investigation on which customs duty and VAT are normally due for producers located outside of the SCZone.

• (879) Therefore, since the exporting producers became subject to the preferential treatment under the legal regime of the SCZone in 2017, they benefitted from a de facto VAT exemption on the import of machinery. This exemption constitutes revenue foregone because, as stated in the preceding paragraphs, even though VAT should eventually be refunded, in essence there is no evidence that the GOE reimbursed Jushi Egypt the VAT paid on machinery in the past. The evidence available indeed showed that Jushi Egypt was not obtaining those refunds when it was located outside the zone.

• (880) Companies located in the SCZone, which do not have to pay VAT upfront, receive a de facto VAT exemption that saves them from incurring an actual cost in addition to saving the administrative burden of having to claim VAT reimbursements or offsetting VAT credits. The same conclusion applies even more clearly with respect to the exemption of paying import tariffs on imported equipment.

• (881) Following final disclosure, the GOE and the exporting producers raised various issues. First, it is not because Jushi Egypt and Hengshi Egypt did not always receive full timely VAT reimbursements from the GOE in the past (when they were not within the Suez Canal Economic Zone) that there is now a revenue forgone with respect to the tax treatment that applies to them under the Suez Canal Economic Zone.

• (882) Second, the Commission compared the challenged tax treatment with a hypothetical tax treatment extrapolated from Jushi Egypt and Hengshi Egypt’s situation before theyentered the Suez Canal Economic Zone, instead of comparing the challenged tax treatment with Egypt’s VAT rules on the importation of equipment and raw materials.

• (883) Third, the Commission did not raise any question to, or discuss with, the GOE regarding the administration of VAT in Egypt during the verification visit.

• (884) Fourth, the GOE recalled that Article 27 of the SCM Agreement calls for a special and differential treatment of developing country Members of the WTO. The fact that the GOE did not always have the resources to pay back the due amount of VAT credit in time should thus not be punished by the Commission.

• (885) Fifth, the Commission itself recognized that Jushi Egypt and Hengshi Egypt eventually received from the GOE part of the VAT paid before joining the Suez Canal Economic Zone. Therefore, the full amount of VAT normally payable could not constitute the benefit. Furthermore, as Jushi Egypt’s VAT credit balance is now decreasing since Jushi Egypt receives more VAT receivable, the full amount of VAT normally payable would have been partially offset against this VAT receivable. Finally, in early 2020, the amounts due for VAT on imports by Jushi Egypt for the period 2017-2018 have been settled and offset against Jushi Egypt’s VAT credit by the GOE. As a result, there is no more benefit.

• (886) Sixth, the VAT credit incurred by the exporting producers concerned VAT for machinery and not for raw materials. Due to their large initial investment for fixed assets, the GOE was not in a position to fully reimburse them the VAT incurred on machinery in a timely fashion. However, this was not the case for raw materials so that the VAT exemptions on raw materials did not constitute a subsidy.

• (887) Finally, since the Commission correctly considered that no import duties should have been paid with regard to inputs for exported products, the Commission should have applied the same reasoning with regard to VAT on inputs for exported products. It follows that the Commission must, in order to calculate the benefit, allocate the amount of VAT due during the investigation period to the quantities of materials used for the production of goods sold on the domestic market only.

• (888) In response to these claims, the Commission would like to clarify that its aim is not to punish the GOE for a lack of resources or to criticize the VAT system in Egypt as such. At the same time, the Commission noted that Article 27 of the SCM Agreement does not play a role in the claim by the GOE in this context. The most relevant provision applicable in countervailing duty proceedings is paragraph (10) of Article 27, which only deals with certain de minimis thresholds, whereas the other provisions of Article 27 mainly deal with export subsidies of developing countries. In this case, the GOE is relying on Article 27 to justify the lack of repayment of VAT credits to taxpayers, for which this provision is irrelevant.

• (889) As for the claim concerning information requests on the VAT system, the Commission requested information on the working of the VAT system in Egypt from the start of the investigation, through the questionnaire as well as during the deficiency process. Furthermore, general questions on the amount of taxes collected from the exporting producers were raised during the verification visit. The Commission therefore deemed that it had received sufficient information during the investigation on the VAT framework as such.

• (890) However, the Commission noted that the VAT treatment is different for companies in the SCZone. Indeed, companies in the SCZone do not have to pay VAT upfront (‘scenario 1’). In contrast, comparably situated tax payers, namely companies outside the SCZone, do have to pay VAT upfront (‘scenario 2’). Whether this VAT is eventually due or has to be refunded is at that point in time irrelevant. What is important is that no revenue will initially be collected by the GOE in scenario 1, whereas revenue will initially be collected to the GOE in all cases in scenario 2.

• (891) According to the relevant normative framework in Egypt, at the settlement date, the final settlement amount would be due by the companies in scenario 1, whereas part of the revenue collected by the GOE would revert back to the companies in scenario 2 (in case VAT has to be refunded). If this settlement process is swift and reliable, then the benefit of not having to pay upfront under scenario 1 would be equal to the cash-flow advantage for all the time that it would have taken for the repayment. The Commission noted in this respect that, as already mentioned in recital (876) above, the statutory deadline for such a settlement is 6 months from the date a credit is created.

• (892) However, the Commission found that in practice the settlement and the corresponding refund for companies operating under scenario 2 in Egypt occurred at best with very significant delays, and that the criteria for obtaining a refund were unclear. The Commission noted in this respect that the GOE did not dispute this fact as such. The cash-flow benefit for the companies within the SCZone thus stems from the fact that no VAT revenue is collected by the GOE at all from companies within the SCZone until the final settlement, the date of which is uncertain (scenario 1), in contrast to companies outside the SCZone, where revenue is collected immediately and refunded at a much later, uncertain date in time (scenario 2). As a result, companies within the SCZone benefit from a preferential VAT treatment compared to companies outside the SCZone. The amount not collected by the GOE with respect to companies within the SCZone amount to revenue foregone or not collected in the sense of Article 3(1)(a)(ii) of the basic Regulation.

• (893) To further illustrate this, in addition to the relevant VAT framework in Egypt, the Commission looked at the situation of the exporting producers before and after adhering to the SCZone. Indeed, before adhering to the SCZone, their situation was comparable to companies outside the SCZone during the investigation period as per scenario 2. In this respect, the GOE did not dispute the fact that Jushi Egypt had accumulated a very significant VAT credit before it adhered to the SCZone, and that the GOE was not in a position to reimburse this credit. The VAT credit situation of Jushi Egypt, which was created before it adhered to the SCZone, thus shows that the situation described in the previous recital corresponds to reality for companies outside the SCZone during the IP.

• (894) Concerning the fifth point raised by the GOE and the exporting producers, the final destination of the goods on which VAT is applied and the fact that Jushi Egypt could offset some VAT payables against its original VAT credit over time does not alter the findings of the Commission, as they do not affect the initial difference in treatment between companies in and outside of the zone, and in any event these offsets are not linked to a proactive refund by the GOE but rather to a VAT liability which happened to have been incurred by these companies.

• (895) At the same time, the Commission also acknowledged that one of the two exporting producers did receive once a tax refund concerning some of its equipment purchases, albeit outside the IP and after a delay of several years. In addition, the Commission took note that the new VAT law in Egypt was only enacted shortly before the investigation period, and that the implementing legislation was not fully in place yet during the investigation period. In view of this transitional phase, the Commission understood the GOE’s argument that the settlement period for VAT reimbursements may be significantly delayed, given that the GOE is a developing country with a sub-optimal number of administration personnel in charge of the new system and with possible budgetary shortfalls that make it difficult to issue VAT reimbursements within the prescribed times. Therefore, taking into account these exceptional and hopefully temporary circumstances in Egypt, the Commission decided to take into account only the cash flow advantage to the exporting producers for the calculation of the benefit on VAT exemptions. The calculation methodology for calculating the benefit, as described in recital (899) below, was adapted accordingly.

• (896) On the sixth point, the Commission noted that although Hengshi Egypt did receive at some point in time a refund of VAT paid upfront on machinery, it never received any refund for the VAT paid on materials, even though the company applied for it. The findings for VAT on machinery thus apply a fortiori to the VAT on materials. This claim was thus rejected.

(c) Conclusion

• (897) In light of the above, the Commission concluded that this programme provides a financial contribution in the form of revenue forgone by the GOE within the meaning of Article 3(1)(a)(ii) as eligible enterprises are relieved from payment of VAT and/or tariffs, which would be otherwise due. It also confers a benefit on the recipient companies in the sense of Article 3(2) of the basic Regulation, since they are placed in a better financial position than they would be absent the scheme. In fact, without the scheme they would have paid the VAT and import tariffs upon importation of the equipment.

• (898) The programme is specific within the meaning of Article 4(2)(a) of the basic Regulation, as it is not generally applicable in Egypt, and applies only to the companies located in Economic Zones of a Special Nature, such as the SCZone. The legislation pursuant to which the granting authority operates limits its access to enterprises that are located within the SCZone.

(d) Calculation of the subsidy amount

• (899) The amount of countervailable subsidy is calculated in terms of the benefit conferred on the recipients, which is found to exist during the investigation period. The benefit conferred on the recipients is considered to be:

• (1) the amount of customs duties exempted on the imported equipment. In order to ensure that the countervailable amount only covered the investigation period the benefit received was amortized over the useful life of the equipment according the company's normal accounting procedures, except for one of the asset categories, where the amortization period was adapted to better reflect the actual useful life, as verified by the Commission services.

• (2) Concerning the revenue foregone in the form of a de facto VAT exemption, the benefit was initially calculated by taking the full amount of VAT normally payable but not paid during the investigation period on the purchases of imported equipment (during the IP). However, as mentioned in recital (895) above, following the comment on the final disclosure, the Commission decided to take into account only the cash flow advantage to the exporting producers for the calculation of the benefit on VAT exemptions. The calculation methodology for calculating the benefit was adapted accordingly, As a result, the cash flow benefit on the VAT withheld was considered to be equivalent to the average interest rate on deposits in Egypt during the IP (12,32 %), applied to the VAT amounts which were withheld for goods purchased since 2017.

• (900) Following definitive disclosure, Jushi Egypt stated that the Commission applied a customs duty of 5 % on imports of bushing in 2018, although they were subject to a 2 % customs duty in 2018. The company also argued that the Commission should have allocated the VAT on imports of machinery based on depreciation during the investigation period in accordance with Article 7.3 of the basic Regulation. The Commission accepted these claims and adapted the calculation of the subsidy amount accordingly.

• (901) The amount of subsidy established with regard to this type of subsidies during the investigation period for the exporting producers was 0,13 %.

4.6.3.   VAT exemptions and import tariff rebates for imported materials

• (902) Pursuant to Law 83/2002, entities operating in a Special Economic Zone are allowed to import raw materials without paying any customs duties, sales taxes or any other taxes or duties, which would otherwise be due, to the extent that these imported products are re-exported as such or as processed into a downstream product which is then exported.

(a) Legal basis

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

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

• — Prime Ministerial Decree No. 1625 of 2002 Issuing The Executive Regulations for the Law of Economic Zones of a Special Nature

• — 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’)

• — 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

• — VAT Law as Enacted by Law No. 67 of 2016;

• — Executive Regulations of the VAT Law, Decree of the Ministry of Finance No. 66/2017.

(b) Findings of the investigation

• (904) As mentioned in recital (872) above, the SCZone is part of a separate customs area. According to article 42 of Law 83/2002, imported raw materials, supplies, spare parts, and any other material or components imported from overseas shall be exempted from taxes and duties as long as they are allocated to produced goods or services for the licensed activity within the SCZone. On the other hand, all taxes and duties need to be paid for any products released into the domestic market outside of the SCZone.

• (905) During the investigation, the Commission found that, in line with the provisions of the above-mentioned article of Law 83/2002, both exporting producers had received waivers of VAT and import duties on imports of input materials used in the production of exported finished goods (and in particular, the product concerned).

• (906) Concerning the waiver for import duties, such a setup corresponds to a duty drawback scheme as described in Annex I(i) of the basic Regulation. Pursuant to point (i) of Annex I, substitution drawback systems can constitute an export subsidy to the extent that they result in an excess drawback of the import charges levied initially on the imported inputs for which drawback is being claimed.

• (907) In order to determine whether such excess remission existed, in accordance with Annex III, point II of the basic Regulation, the Commission requested additional information from the GOE on the duty drawback scheme in general, and more specifically on the existence and effective application of the accompanying monitoring and verification procedures.

• (908) Based on the information initially received, it appeared that the GOE had put a legislative framework in place for monitoring the duty drawback system, including where applicable the refund of import duties paid. However, during the verification visits at the exporting producers, it was found that this framework was not effectively applied in practice. None of the exporting producers paid any import duties or VAT on any of their material purchases in the investigation period, be they used for domestic or for export sales of goods. Normally, a deposit needs to be made on a blocked account of the customs authorities, from which duties can be paid periodically. However, during the investigation period, no deposit was made, and no amounts were collected by the authorities.

• (909) After the investigation period, Jushi Egypt made a small deposit to the Egyptian authorities, allegedly to cover excess remission for domestic sales. However, no evidence was provided that this payment was indeed made for excess remission of domestic sales, or related to domestic sales made during the investigation period. Yet, there was also evidence that Jushi Egypt received reimbursement of import duties paid in previous periods, before obtaining a waiver for import duties.

• (910) After further exchanges with the GOE, the Commission received additional information, showing that in fact the monitoring and verification framework for the collection of customs duties in the SCZone was still being set up during the investigation period. For example, the Committee for the Adjustment of Import Duties Balances was only established in 2019 according to the Decree of the Head of Customs Authority No. 158, the setup of a customs inspection committee was still ongoing in 2019, and executive procedures had not been issued yet. Thus, the Commission concluded that there was no effective and proper duty drawback system in place.

• (911) In addition, as mentioned in recital (876) above, VAT on imported goods is withheld instead of being paid upfront in the SCZone. Tax authorities only retain a right to reclaim VAT afterwards.

• (912) The investigation also revealed that for certain inputs that Jushi Egypt used in the production process from Egyptian based suppliers, VAT was charged at the standard rate regardless of the fact that the company was based in the special zone where VAT was not normally due. These transactions did give rise to a VAT credit for Jushi Egypt. Conversely, sales of inputs between companies located within the special zone were not subject to domestic VAT regardless of whether the goods produced with such inputs would be exported or sold domestically.

• (913) All these elements show that this special zone is not a classical export-processing zone, and is also different from other special free zones existing within Egypt, but it is a unique and hybrid kind of special zone with several specific features that distinguish it from other zones. The applicable laws and regulations do not appear to be applied in practice in the zone, so the Commission based its findings on its understanding of how operations in the zone work in practice.

• (914) In addition and importantly, the absence of administrative authorities in charge of the administration, monitoring and enforcement of the tax system and any of the tax obligations relating to the special tax system applicable in the zone make it a unique area where the companies established therein are entirely free to follow or disregard the tax rules without any possible consequence whatsoever. Therefore, in view of the special circumstances of this zone, and on the basis of the information available, the Commission decided to consider the VAT exemptions on imported inputs as a de facto exemption to pay such VAT, regardless of whether the inputs are later on incorporated into finished products exported or sold domestically.

(c) Conclusion

• (915) The Commission thus concluded that the GOE's duty drawback monitoring system was not effectively applied and could not be qualified as such for all the reasons explained in the previous section and summarised at recital (913). In fact, as explained in recitals (908) to (914), the investigation showed that the GOE had not even set up an authority in charge of administering and enforcing any tax obligation for entities located in the zone, including customs duties and VAT due on imported materials.

• (916) Furthermore, the Commission determined that the purported duty drawback system for inputs used in exported finished goods led to revenue forgone, which constitute a countervailable subsidy within the meaning of Article 3(1)(a)(ii) of the basic Regulation, as it results in an excess drawback of the import charges levied initially on the imported inputs for which drawback is being claimed. The GOE did not provide a further examination of the transactions at issue either.

• (917) These excess remissions are also specific within the meaning of Article 4(2)(a) of the basic Regulation as they are not generally applicable in Egypt, and apply only to the companies located in the SCZone.

• (918) Furthermore, the de facto VAT exemption on imported materials constitutes a financial contribution in the form of revenue forgone by the GOE within the meaning of Article 3(1)(a)(ii) of the basic Regulation as eligible enterprises are relieved from payment of VAT, which would be otherwise due. It also confers a benefit on the recipient companies in the sense of Article 3(2) of the basic Regulation. The programme is specific within the meaning of Article 4(2)(a) of the basic Regulation, since the legislation limits the VAT exemption only to enterprises that are located within the SCZone.

• (919) Following definitive disclosure, the GOE and the exporting producers argued that Jushi Egypt had paid a deposit for customs duties at the start of 2019. They also provided additional evidence, according to which all customs duties for the years 2017 and 2018 had now been settled and paid. Furthermore, they claimed that even if the amounts due for customs duties had not been settled in 2020, the Commission could not request a perfect tax administration from a developing country, such as Egypt. In this regard, the GOE showed particular diligence in setting up the duty drawback system for Jushi Egypt as consumption reports were already established and monitored by the GOE within a few months after Jushi Egypt entered the Suez Canal Economic Zone. Three years later, the GOE recovered all customs duties and VAT due from Jushi Egypt and Hengshi Egypt. As a result, the GOE submitted that it had a proper duty drawback system in place so that no excess remission occurred.

• (920) Furthermore, according to the GOE, pursuant to Article 377 of the Egyptian Civil Code and the ruling of the Monetary Court No. 915/43, the GOE has 5 years to recover import duties. As a result, there could be no revenue forgone from the GOE as long as this period had not expired, as the GOE was still entitled to and did recover the customs duties due on time.

• (921) Finally, Jushi Egypt argued that sales to Hengshi Egypt are treated under Egyptian law in the same way as export sales in respect of import duties on raw materials, because Hengshi Egypt is located in the Suez Canal Economic Zone. Furthermore, Hengshi Egypt had no domestic sales at all as it exported all of its production. As a result, had Jushi Egypt not been exempted for import duties on raw materials, it would still not have incurred import duties on raw materials for domestic sales to Hengshi Egypt. Jushi Egypt reiterated this argument following the additional definitive disclosure.

• (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.

(d) Calculation of the subsidy amount

• (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 %.

4.7.   Conclusion on subsidisation

• (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.

• (934) Furthermore, since the cooperating Egyptian exporting producers are the sole producers of GFF in Egypt, the Commission set the amount for ‘all other companies’ at the level of the highest amount established for the cooperating exporting producers:

5. INJURY

5.1.   Definition of the Union industry

• (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.

5.2.   Union consumption

• (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.

• (940) The Union consumption developed as follows:

Table 2

Union consumption (in tonnes)

• (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.

5.3.   Imports from the countries concerned

5.3.1.   Cumulative assessment of the effects of imports from the countries concerned

• (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.

• (948) The provision stipulates that the imports from more than one country must be cumulatively assessed only if it is determined that:

• (a) the amount of countervailable subsidies established in relation to the imports from each country is above the de minimis threshold laid down in Article 14(5) of the basic Regulation and the volume of imports from each country is not negligible; and

• (b) a cumulative assessment of the effects of the imports is appropriate in the light of the conditions of competition between the imported products and the conditions of competition between imported products and the like product in the Union.

• (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.