Commission Implementing Regulation (EU) 2020/1524 of 19 October 2020 imposing a definitive anti-dumping duty and definitively collecting the provisional duty imposed on imports of certain heavyweight thermal paper originating in the Republic of Korea

THE EUROPEAN COMMISSION,

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

Having regard to Regulation (EU) 2016/1036 of the European Parliament and of the Council of 8 June 2016 on protection against dumped imports from countries not members of the European Union (1) (‘the basic Regulation’) and in particular Article 9(4) thereof,

Whereas:

(1) On 10 October 2019, the European Commission initiated an anti-dumping investigation with regard to imports into the Union of certain heavyweight thermal paper (‘HWTP’ or ‘the product concerned’) originating in the Republic of Korea (‘Korea’ or ‘the country concerned’) on the basis of Article 5 of the basic Regulation. The Notice of Initiation (‘NoI’) was published in the Official Journal of the European Union (2).

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

(3) Since the conditions laid down in Article 14(5a) of the basic Regulation were not met, imports of the product concerned were not made subject to registration. No party made any comments on this point.

(4) In accordance with Article 19a of the basic Regulation, on 6 May 2020, the Commission provided parties with a summary of the proposed duties and details about the calculation of the dumping margin and the margin adequate to remove the injury to the Union industry. Interested parties were invited to comment on the accuracy of the calculations within three working days. Comments were received from the complainant and the cooperating exporting producer.

(5) On 27 May 2020, the Commission imposed a provisional anti-dumping duty on imports into the Union of HWTP originating in Korea by Commission Implementing Regulation (EU) 2020/705 (3) (‘the provisional Regulation’).

(6) Following the disclosure of the essential facts and considerations on the basis of which a provisional anti-dumping duty was imposed (‘provisional disclosure’), the complainant and the cooperating exporting producer made written submissions making their views known on the provisional findings.

(7) The parties who so requested were granted an opportunity to be heard. Hearings took place with the complainant and the cooperating exporting producer. Additionally, further to the request of the cooperating exporting producer, a hearing with the Hearing Officer in trade proceedings was held. The recommendations of the Hearing Officer made during that hearing are reflected in this regulation. In the course of June 2020, the Commission sent to the exporting producer three additional disclosures containing more details on the undercutting and underselling calculations.

(8) When reaching its definitive findings, the Commission considered the comments submitted by interested parties and revised its provisional conclusions where appropriate.

(9) The Commission continued seeking and verifying all information it deemed necessary for its final findings. The Commission cross-checked the questionnaire reply of the sole cooperating unrelated importer, Ritrama SpA, in a telephone call with the company.

(10) The Commission informed all interested parties of the essential facts and considerations on the basis of which it intended to impose a definitive anti-dumping duty on imports into the Union of certain heavyweight thermal paper (‘final disclosure’). All parties were granted a period within which they could make comments on the final disclosure. Comments were received from the cooperating exporting producer and the complainant.

(11) Following the comments of the exporting producer, the Commission provided Hansol an additional disclosure on the calculation of the post-importation costs and the increase in imports during the pre-disclosure period, to which Hansol submitted comments.

(12) The exporting producer was afforded a hearing with the Commission services.

(13) The comments submitted by the interested parties were considered and taken into account where appropriate in this regulation.

(14) In the absence of comments concerning sampling, recitals 7 to 13 of the provisional Regulation were confirmed.

(15) As stated in recital 19 of the provisional Regulation, the investigation of dumping and injury covered the period from 1 July 2018 to 30 June 2019 (‘the investigation period’ or ‘IP’) and the examination of trends relevant for the assessment of injury covered the period from 1 January 2016 to the end of the investigation period (‘the period considered’).

(16) The cooperating exporting producer alleged that the Commission had deviated from its established case practice and claimed that the investigation period should end on 30 September 2019, i.e. a date closer to the date of initiation. According to the cooperating exporting producer, the IP chosen by the Commission did not allow taking into consideration recent developments such as the merger of two sampled EU producers in March 2019, the alleged reduction of raw material costs since mid-2019 and the fact that the Union industry changed to BPA free HWTP only in mid-2019. This claim was rejected. The Commission enjoys discretion in this choice, provided it complies with Article 6 of the basic Regulation that establishes that an investigation period shall, normally, cover a period of no less than six months immediately prior to the initiation of proceedings, which is the case for this investigation. Moreover, Hansol has provided no evidence that these developments would have impacted the injury or causality analysis and in any case, both the cost of raw material and the issue of BPA free supplies were taken into consideration in the provisional regulation under recitals 103 to 110 respectively 111 to 115.

(17) In the absence of any other comments concerning the investigation period and period considered, recital 19 of the provisional Regulation was confirmed.

(18) In the absence of any comments with respect to the product concerned, the Commission confirmed the conclusions set out in recitals 20 to 22 of the provisional Regulation.

(19) In the absence of any comments with respect to the like product, the Commission confirmed the conclusions set out in recitals 23 and 24 of the provisional Regulation.

(20) In the absence of any comments regarding the normal value, recitals 25 to 35 of the provisional Regulation were confirmed.

(21) The details for the calculation of the export price are set out in recitals 36 to 39 of the provisional Regulation.

(22) The Commission received no comments with regard to the calculation of the export price in case of Hansol’s direct sales to independent customers. The export price for those sales, established in accordance with Article 2(8) of the basic Regulation, is thus confirmed.

(23) After provisional disclosure, Hansol contested two elements in the calculation of the export price for Hansol’s sales of the product concerned to the Union through Hansol Europe B.V., acting as an importer. In accordance with Article 2(9) of the basic Regulation, those prices were established on the basis of the price at which the imported product was first resold to independent customers, adjusted backwards to an ex-works price by deducting, inter alia, the relevant selling, general and administrative costs (‘SG&A’) costs of the related party and a reasonable amount of profit.

(24) Firstly, Hansol claimed that the Commission should have allocated certain SG&A costs items of Hansol Europe BV differently to the product concerned. Subsequent to the claim, the Commission examined again the verified information in this regard and it accepted the claim, changing the allocation key.

(25) Secondly, Hansol claimed that the profit margin used by the Commission was not that of an importer of the product concerned but that of a user, and that it was therefore not appropriate to use for this purpose. Hansol submitted that the Commission should instead revert to the unrelated importer’s profit rate used in the anti-dumping investigation concerning imports of certain lightweight thermal paper from the Republic of Korea (4). The Commission contacted the company concerned to analyse Hansol’s claim. The company concerned, which was the sole party that had completed an importer’s questionnaire in this investigation, confirmed that it was indeed rather a user, converting HWTP into a downstream product, and not an importer of the product concerned. Hansol’s claim was consequently accepted. In the absence of any alternative data on file, the Commission therefore replaced the profit margin provisionally used by the profit margin used in the aforementioned lightweight thermal paper case.

(26) In the absence of any comments, recitals 40 and 41 of the provisional Regulation were confirmed.

(27) As detailed in recitals 22 to 24 above, following claims which were accepted by the Commission, certain elements of the export price were revised.

(29) In the absence of any comments with respect to this section, the Commission confirmed its conclusions set out in recitals 47 and 48 of the provisional Regulation.

(30) In the absence of any comments with respect to the Union consumption, the Commission confirmed its conclusions set out in recitals 49 to 51 of the provisional Regulation.

(31) Following provisional disclosure, the exporting producer made a number of comments concerning the Commission’s provisional findings related to the analysis of prices of the imports, and more specifically regarding the price comparison between the EU and the dumped prices.

(32) First, Hansol contested the methodology used by the Commission to ensure a fair comparison between the product types exported to the Union and the product types sold by the Union industry. To that end, the Commission had identified different basic characteristics, which were communicated to interested parties in the questionnaires published on the website of DG TRADE on the date of initiation. Amongst different elements, the Commission identified by the ‘so-called’ surface weight of the product, expressed in (full) grams per square meter (‘the grammage’), as one of these basic characteristics.

(33) In order to ensure a fair comparison, each product type was then attributed a specific Product Control Number (‘PCN’) depending on its own specific basic characteristics. However, to ensure a representative level of matching between exported HWTP and HWTP sold by the Union industry, the Commission adjusted the original PCN structure by grouping grammages in various ranges. Such ranges could extend, for instance, from 66 to 68 grams, or from 73 to 76 grams.

(35) These claims were rejected. In the current case, unit prices were calculated per weight (tonnes), and therefore the effect of grammage on prices and costs has already been taken into account by the calculation method chosen by the Commission.

(36) Moreover, both Article 2, and 2.6 in particular, of the WTO Anti-Dumping Agreement and Article 1(4) of the basic Regulation require to compare like with like, but they do not define any specific methodology to do this. It is established case practice of the Commission in trade defence investigations to use PCNs to identify different basic characteristics at the beginning of an investigation, but the Commission is not bound to them and may decide to modify the structure of the PCN during the course of the investigation to the extent it ensures a fair comparison. In this specific case, the Commission considered that grouping the PCNs was necessary to have a representative level of matching between exported HWTP and HWTP sold by the Union industry and thus ensure a fair comparison, and that the grouping is adequate since the industry itself – both in the Union and in Korea – operates with certain tolerances, i.e. a deviation from the standard grammage by 5 to 10 grams. In this light, the groupings applied by the Commission, as explained in recital 31, therefore followed a conservative approach.

(37) Following final disclosure, Hansol asked for a clarification whether the sales used to determine the undercutting and underselling margins included the top-coated product of one of the sampled Union producers.

(38) For the calculation of the undercutting and underselling margins the Commission compared the sales to the Union of the exporting producer to the sales of the like product sold by the sampled Union producers, as disclosed to Hansol and the complainant. In this calculation, the Commission did not make a differentiation between the three sampled Union producers. Indeed, as the product mix sold by these three sampled Union producers differs, certain product types sold by Hansol could not be compared to all the three sampled companies. Due to confidentiality reasons, the Commission cannot further specify which sampled Union producers sold which product types. In any event, the Commission confirmed that it matched Hansol’s exports of top-coated product types with top-coated product types sold by the Union industry.

(39) Secondly, the exporting producer contested the Commission’s calculation of post-importation costs. In its calculations, the Commission adjusted the values of Hansol’s export transactions where appropriate, for post-importation costs and customs duty. 1 % of the CIF value was deemed reasonable to cover post-importation cost, i.e. cost for handling, port dues and customs clearance fees. Hansol disagreed, arguing that the Commission did not calculate the post-importation costs as 1 % of Hansol’s CIF value, but as 1 % of Hansol’s ‘CIF EU border Export Value’. Hansol requested that the Commission calculates post-importation costs as 1 % of its CIF value.

(40) The Commission rejected this claim. Hansol’s ‘CIF EU border Export Value’ is based on Hansol’s export price including the adjustments done in accordance with Article 2(9) of the basic Regulation for the sales through its related trader. Post-importation costs have to be added or applied to this price to arrive at a ‘landed’ export price at the EU border that is comparable to the EU Industry’s price and target price. This comparison is then expressed as a percentage of Hansol’s declared CIF value in underselling calculations because any forthcoming anti-dumping duty would also be applied on such actual CIF-Union frontier values.

(41) However, the Commission re-examined post-importation costs based on Hansol’s actual data instead of using 1 %. On this basis, post-importation costs amounted to a level of around [3-6] EUR/tonne. As this amount is based on a limited number of invoices, the Commission cross-checked it against the findings used in the anti-dumping investigation concerning imports of certain lightweight thermal paper from the Republic of Korea. Since both amounts are in the same range, the Commission considered using Hansol’s data for this investigation appropriate.

(42) Following final disclosure, Hansol claimed that the post-importation costs, as calculated by the Commission, were underestimated and should have included not only the costs for customs clearance, but also the costs for handling, storage and documentary charges incurred at the port of entry. It provided an alternative calculation, resulting in a post-importation cost ranging between 10 and 40 EUR/tonne.

(43) The calculation provided by Hansol after final disclosure included other costs than those the Commission had used, such as storage, warehousing, and administrative costs. The claim of Hansol that these additional costs should fall under the post-importation costs because of the specificities of its sales process, and not under standard services provided after the importation of the goods, is not substantiated with evidence on the file and cannot be verified in view of the late stage of the investigation. Therefore, the Commission decided to reject this claim.

(44) Finally, the exporting producer contested that the adjustment made under Article 2(9) of the basic Regulation for establishing the export price can be used for the calculation of the undercutting (and injury elimination level), basing itself on the Judgment of the General Court in Case T-383/17 (6).

(45) The Commission rejected this claim. Firstly, this judgment is under appeal before the Court of Justice. (7) Therefore, the findings of the judgment regarding the issue subject to the claim made by Hansol are not final.

(46) Secondly, as far as undercutting is concerned, the basic Regulation does not provide any specific methodology for such calculations. The Commission therefore enjoys a wide margin of discretion in assessing this injury factor. That discretion is limited by the need to base conclusions on positive evidence and to make an objective examination, as requested by Article 3(2) of the basic Regulation.

(47) When it comes to the elements taken into account for calculation of undercutting (in particular the export price), the Commission has to identify the first point at which competition takes (or may take) place with Union producers in the Union market. This point is in fact the purchasing price of the first unrelated importer because that company has in principle the choice to source either from the Union industry or from overseas customers. Indeed, once the exporting producer has established its system of related companies in the Union, they have already decided that the source of their merchandise will be from overseas. Hence, the point of comparison should be right after the good crosses the Union border, and not at a later stage in the distribution chain, e.g. when selling to the final user of the good. This approach also ensures coherence in cases where an exporting producer is selling the goods directly to an unrelated customer (whether importer or final user) because under this scenario, resale prices would not be used by definition. A different approach would lead to discrimination between exporting producers based solely on the sales channel that they use.

(48) In this case, the import price for some of the exports sales cannot be taken at face value because the exporting producer and the importer are related. Therefore, in order to establish a reliable import price at arm’s length basis, such price has to be constructed by using the resale price of the related importer to the first independent customer as a starting point. In order to carry out this reconstruction, the rules on the construction of the export price as contained in Article 2(9) of the basic anti-dumping Regulation are pertinent, and are applied by analogy, just as they are pertinent for the determination of the export price for dumping purposes. The application by analogy of Article 2(9) of the basic anti-dumping Regulation allows arriving at a price that is fully comparable to the price that is used when examining sales made to unrelated customers and also comparable to the sales price of the Union industry.

(49) Therefore, in order to allow for a fair comparison, a deduction of SG&A and profit from the resale price to unrelated customers made by the related importer is warranted in order to arrive to a reliable price.