Commission Implementing Regulation (EU) 2021/1805 of 12 October 2021 imposing a definitive anti-dumping duty on imports of wire rod originating in the People’s Republic of China following an expiry review pursuant to Article 11(2) of Regulation (EU) 2016/1036 of the European Parliament and of the Council

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 11(2) thereof,

Whereas:

(1) By Regulation (EC) No 703/2009 (2) the Council imposed a definitive anti-dumping duty on imports of wire rod originating in the People’s Republic of China (‘the original measures’). The investigation that led to the imposition of the original measures will hereinafter be referred to as ‘the original investigation’.

(2) By Implementing Regulation (EU) 2015/1846 (3), the European Commission re-imposed the definitive anti-dumping measures on imports of wire rod originating in the People’s Republic of China following an expiry review (the ‘previous expiry review’).

(3) The measures imposed took the form of a country wide ad valorem duty rate at 24 % while one group of companies (‘Valin Group’) received an individual duty rate of 7,9 %.

(4) Following the publication of a notice of impending expiry (4), the European Commission (‘the Commission’) received a request for a review pursuant to Article 11(2) of the basic Regulation.

(5) The request for review was lodged on 14 July 2020 by the European Steel Association (‘EUROFER’) (‘the applicant’), on behalf of Union producers representing around 60 % of the total Union production of wire rod. The request for review was based on the grounds that the expiry of the measures would likely result in recurrence of dumping and injury to the Union industry.

(6) Having determined, after consulting the Committee established by Article 15(1) of the basic Regulation, that sufficient evidence existed for the initiation of an expiry review, the Commission initiated, on 14 October 2020, an expiry review with regard to imports of wire rod originating in the People’s Republic of China (‘the PRC’ or ‘the country concerned’) on the basis of Article 11(2) of the basic Regulation. It published a Notice of Initiation in the Official Journal of the European Union (5) (‘the Notice of Initiation’).

(7) The review investigation period (‘RIP’) covered the period from 1 July 2019 to 30 June 2020. The examination of trends relevant for the assessment of the likelihood of a continuation or recurrence of injury covered the period from 1 January 2017 to the end of the review investigation period (‘the period considered’).

(8) In the Notice of Initiation, interested parties were invited to contact the Commission in order to participate in the investigation. In addition, the Commission specifically informed the applicant, other known Union producers, the known producers in the PRC and the authorities of the PRC, known importers, users and traders known to be concerned about the initiation of the expiry review investigation and invited them to participate.

(9) Interested parties had an opportunity to comment on the initiation of the expiry review and to request a hearing with the Commission and/or the Hearing Officer in trade proceedings. No interested party came forward with comments or requested a hearing.

(10) In the Notice of Initiation, the Commission stated that it might sample interested parties in accordance with Article 17 of the basic Regulation.

(11) On 14 October 2020, the Commission informed interested parties that it had provisionally selected a sample of Union producers. It had selected the sample on the basis of the size of the production of the like product in the review investigation period. This sample consisted of 4 Union producers. The sampled Union producers accounted for almost 25 % of the estimated total production volumes of the like product in the Union and it also ensured a good geographical spread. In accordance with Article 17(2) of the basic Regulation, the Commission invited interested parties to comment on the provisional sample. No comments were received within the deadline of 7 days of the notification of the provisional sample and thus the provisional sample was confirmed. The sample is representative of the Union industry.

(12) In order to decide whether sampling was necessary and, if so, to select a sample, the Commission asked unrelated importers to provide the information specified in the Notice of Initiation.

(13) None of the known importers that were contacted came forward and replied to the sampling form.

(14) In order to decide whether sampling was necessary and, if so, to select a sample, the Commission asked all known producers of the product under review in the PRC to provide the information specified in the Notice of Initiation. In addition, the Commission asked the Mission of the People’s Republic of China to the European Union to identify and/or contact other producers, if any, that could be interested in participating in the investigation.

(15) No company from the PRC came forward within the time limit. Consequently, the Commission informed the authorities of the PRC by Note Verbale of 29 October 2020 that it intended to resort to the use of facts available under Article 18 of the basic Regulation when examining the continuation and/or recurrence of dumping. The authorities of the PRC did not respond.

(16) The Commission sent a questionnaire to the government of the PRC (‘GOC’). The GOC did not provide any reply to the questionnaire.

(17) Without prejudice to the application of Article 18 of the basic Regulation, the Commission verified all information it deemed necessary for a determination of the likelihood of continuation or recurrence of dumping and injury, and of the Union interest.

(18) It also sent questionnaires to the sampled Union producers and one user that came forward. The same questionnaires had also been made available online on the day of initiation.

(19) The Commission received questionnaire replies from the four sampled Union producers, the Union producers’ association and one user.

(20) In view of the outbreak of COVID-19 and the confinement measures put in place by various Member States as well as by various third countries, the Commission could not carry out verification visits pursuant to Article 16 of the basic Regulation at the premises of the following cooperating legal entities.

Union producers

— Saarstahl AG, Germany

— Riva Acier S.A.S., France

— Moravia Steel a.s., Czech Republic

— Ferriere Nord S.p.A., Italy

User

— AGRATI France S.A.S., France

(21) The Commission hence considered the information properly submitted by the parties (such as questionnaire replies or replies to deficiency letters) in line with the Notice of 16 March 2020 on the consequences of the COVID-19 outbreak on anti-dumping and anti-subsidy investigations (6).

(22) The product under review is the same as in in the original investigation and the previous expiry review namely bars and rods, hot-rolled, in irregularly wound coils, of iron, non-alloy steel or alloy steel other than of stainless steel originating in the People’s Republic of China, currently falling under CN codes 7213 10 00, 7213 20 00, 7213 91 10, 7213 91 20, 7213 91 41, 7213 91 49, 7213 91 70, 7213 91 90, 7213 99 10, 7213 99 90, 7227 10 00, 7227 20 00, 7227 90 10, 7227 90 50 and 7227 90 95 (‘the product under review’).

(24) These products are therefore considered to be like products within the meaning of Article 1(4) of the basic Regulation.

(25) On 17 June 2021, the Commission disclosed the essential facts and considerations on the basis of which it intended to maintain the anti-dumping duties in force. All parties were granted a period within which they could make comments on the disclosure.

(26) Only Eurofer submitted comments. It agreed with the conclusions reached by the Commission.

(27) In accordance with Article 11(2) of the basic Regulation the Commission examined whether the expiry of the measures in force would likely lead to a continuation or recurrence of dumping from the PRC.

(28) Given the sufficient evidence available at the initiation of the investigation pointing to the existence of significant distortions within the meaning of point (b) of Article 2(6a) of the basic Regulation, the Commission initiated the investigation on the basis of Article 2(6a) of the basic Regulation.

(29) Consequently, in order to collect the necessary data for the eventual application of Article 2(6a) of the basic Regulation, in the Notice of Initiation the Commission invited producers of the PRC to provide information regarding the inputs used for producing the product under review. No producers submitted the information requested in Annex III to the Notice of Initiation.

(30) In order to obtain information it deemed necessary for its investigation with regard to the alleged significant distortions, the Commission also sent a questionnaire to the GOC. In addition, in point 5.3.2 of the Notice of Initiation, the Commission invited all interested parties to make their views known, submit information and provide supporting evidence regarding the application of Article 2(6a) of the basic Regulation within 37 days of the date of publication of the Notice of Initiation in the Official Journal of the European Union. No questionnaire reply was received from the GOC and no submission on the application of Article 2(6a) of the basic Regulation was received within the deadline.

(31) In the Notice of Initiation, the Commission also specified that, in view of the evidence available, it might need to select an appropriate representative country pursuant to Article 2(6a)(a) of the basic Regulation for the purpose of determining the normal value based on undistorted prices or benchmarks.

(32) On 25 November 2020, the Commission issued a first note for the file (‘the first FoP Note’) seeking the views of the interested parties on the relevant sources that the Commission may use for the determination of the normal value, in accordance with Article 2(6a)(e) second indent of the basic Regulation. In that note, the Commission provided a list of all factors of production such as materials, energy and labour used in the production of the product under review by the exporting producers. In addition, based on the criteria guiding the choice of undistorted prices or benchmarks, the Commission identified three possible representative countries: Thailand, Turkey and Peru.

(33) The Commission invited interested parties to submit comments. Comments were received from the applicant only, who provided arguments against the use of Turkey as representative country. The applicant also submitted that Peru would be the best choice for representative country.

(34) The Commission addressed these comments in its second note for the file of 7 January 2021 (7) (‘the second FoP Note’). The Commission also established the list of factors of production and concluded that, at that stage, Peru was the most appropriate representative country under Article 2(6a)(a), first indent of the basic Regulation. It also informed interested parties that it would establish selling, general and administrative costs (‘SG&A’) and profits based on available information for the company Corporación Aceros Arequipa S.A. (‘Aceros Arequipa’), a producer in the representative country. The Commission invited the interested parties to comment. The Commission did not receive any comments objecting to the choice of Peru as the representative country.

(35) As mentioned in recital (15), no Chinese exporting producer cooperated in the investigation.

(36) The GOC also did not cooperate with the Commission in this investigation. Notably, it did not provide any questionnaire reply nor did it address the evidence on the case file provided by the applicant, including the ‘Commission Staff Working Document on Significant Distortions in the Economy of the People’s Republic of China for the Purposes of Trade Defence Investigations’ (‘the Report’) (8). Indeed, pursuant to Article 2(6a)(c) of the basic Regulation, the Commission has issued the Report collecting information about the existence of substantial government intervention at many levels of the economy, including specific distortions in many key factors of production (such as land, energy, capital, raw materials and labour) as well as in specific sectors (such as steel and chemicals). The Report was placed in the investigation file at the initiation stage. The review request also contained some relevant evidence complementing the Report. Interested parties were invited to rebut, comment or supplement the evidence contained in the investigation file at the time of initiation.

(37) By Notes Verbales of 29 October 2020 and of 23 November 2020, the Commission informed the GOC that, due to the absence of any cooperation from exporters/producers in the PRC and the absence of a questionnaire reply or comments from the GOC, it intended to base its findings on facts available in accordance with Article 18 of the basic Regulation. The Commission also stressed that a finding based on facts available may be less favourable to the party concerned and invited the GOC to comment. No comments were provided.

(38) Therefore, in accordance with Article 18(1) of the basic Regulation, the findings in relation to the likelihood of continuation or recurrence of dumping set out below were based on facts available. In particular, the Commission relied on the information contained in the request for review and the submissions by interested parties, combined with other sources of information such as trade statistics on imports and exports (e.g. from Eurostat and Global Trade Atlas (‘GTA’) (9)), as well as databases such as Dun and Bradstreet (10) and Orbis Bureau van Dijk (11).

(39) In recent investigations concerning the steel sector in the PRC (12), the Commission found that significant distortions in the sense of Article 2(6a)(b) of the basic Regulation were present. The Commission concluded in this investigation that, based on the evidence available, the application of Article 2(6a) of the basic Regulation was also appropriate.

(40) In those investigations, the Commission found that there is substantial government intervention in the PRC resulting in a distortion of the effective allocation of resources in line with market principles (13). In particular, the Commission concluded that in the steel sector, which is the main raw material to produce the product under review, not only does a substantial degree of ownership by the GOC persist in the sense of Article 2(6a)(b), first indent of the basic Regulation (14), but the GOC is also in a position to interfere with prices and costs through State presence in firms in the sense of Article 2(6a)(b), second indent of the basic Regulation (15). The Commission further found that the State’s presence and intervention in the financial markets, as well as in the provision of raw materials and inputs have an additional distorting effect on the market. Indeed, overall, the system of planning in the PRC results in resources being concentrated in sectors designated as strategic or otherwise politically important by the GOC, rather than being allocated in line with market forces (16). Moreover, the Commission concluded that the Chinese bankruptcy and property laws do not work properly in the sense of Article 2(6a)(b), fourth indent of the basic Regulation, thus generating distortions in particular when maintaining insolvent firms afloat and when allocating land use rights in the PRC (17). In the same vein, the Commission found distortions of wage costs in the steel sector in the sense of Article 2(6a)(b), fifth indent of the basic Regulation (18), as well as distortions in the financial markets in the sense of Article 2(6a)(b), sixth indent of the basic Regulation, in particular concerning access to capital for corporate actors in the PRC (19).

(41) Like in previous investigations concerning the steel sector in the PRC, the Commission examined in the present investigation whether it was appropriate or not to use domestic prices and costs in the PRC, due to the existence of significant distortions within the meaning of point (b) of Article 2(6a) of the basic Regulation. The Commission did so on the basis of the evidence available on the file, including the evidence contained in the request, as well as in the Report, which relies on publicly available sources. That analysis covered the examination of the substantial government interventions in the PRC’s economy in general, but also the specific market situation in the relevant sector including the product under review. The Commission further supplemented these evidentiary elements with its own research on the various criteria relevant to confirm the existence of significant distortions in the PRC as also found by its previous investigations in this respect.

(42) The request contained information on the distortive effects of the 13th Five-Year Steel Plan on the steel industry. Furthermore, it mentioned the findings by the US Department of Commerce concerning the steel industry (20). In addition, it underlined the role of the CCP in the SOEs (21) and the distortive effects of subsidies, as reported in the IMF Country Report No 17/248 and three documents by the EU Chamber of Commerce: the 2016/2017 Annual Report, the China Manufacturing 2025 and the European Business in China Position Paper 2016/2017. The request further asserted that the inputs used to make wire rod are essentially the same as those used to make hot-rolled flat (‘HRF’) carbon steel. Therefore, the request quoted the findings made by the Commission in Regulation (EU) 2017/969 (22) concerning the subsidies for HRF producers. The request added that the findings on distortive subsidies were also confirmed by a ThinkDesk Report (23). The request listed in particular distortions concerning Land Use Rights, energy (electricity), preferential loans and other financial support and labour. Furthermore, it listed distortions in the market for coke and coking coal, iron ore and scrap and ferro-alloys. Finally, the request mentioned the distortive effects of the fiscal support for the steel industry and low environmental standards in China.

(43) As indicated in recital (37), the GOC did not comment or provide evidence supporting or rebutting the existing evidence on the case file, including the Report and the additional evidence provided by the complainant, on the existence of significant distortions and/or on the appropriateness of the application of Article 2(6a) of the basic Regulation in the case at hand.