Commission Implementing Regulation (EU) 2022/301 of 24 February 2022 extending the definitive countervailing duty imposed by Implementing Regulation (EU) 2020/776 on imports of certain woven and/or stitched glass fibre fabrics (‘GFF’) originating in the People’s Republic of China (‘the PRC’) to imports of GFF consigned from Morocco, whether declared as originating in Morocco or not, and terminating the investigation concerning possible circumvention of the countervailing measures imposed by Implementing Regulation (EU) 2020/776 on imports of GFF originating in Egypt by imports of GFF consigned from Morocco, whether declared as originating in Morocco or not

THE EUROPEAN COMMISSION,

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

Having regard to Regulation (EU) 2016/1037 of the European Parliament and of the Council of 8 June 2016 on protection against subsidised imports from countries not members of the European Union (1) (‘the basic Regulation’) and in particular Article 23 thereof,

Whereas:

(1) In June 2020, by Commission Implementing Regulation (EU) 2020/776 (2), the Commission imposed a definitive countervailing duty on imports of certain woven and/or stitched glass fibre fabrics (‘GFF’) originating in the PRC and in Egypt, respectively (‘the original anti-subsidy investigation’). The anti-subsidy measures took the form of an ad valorem duty ranging between 17 % and 30,7 % for imports originating in the PRC and an ad valorem duty of 10,9 % for imports originating in Egypt.

(2) The Commission received a request pursuant to Articles 23(4) and 24(5) of the basic Regulation to investigate the possible circumvention of the countervailing measures imposed on imports of GFF originating in the People’s Republic of China and Egypt and to make such imports subject to registration.

(3) The request was lodged on 19 May 2021 by TECH-FAB Europe e.V, an association of EU producers of GFF (‘the applicant’).

(4) The request contained sufficient evidence of a change in the pattern of trade involving exports from China, Egypt and Morocco to the Union that had taken place following the imposition of measures on GFF. The change in the pattern of trade appeared to stem from a practice, process or work for which there is insufficient due cause or economic justification other than the imposition of the duty.

(5) Furthermore, the request contained sufficient evidence showing that the practice, process or work were undermining the remedial effects of the existing countervailing measures in terms of quantity and prices. Significant volumes of imports of the product under investigation appeared to have entered the EU market. In addition, there was sufficient evidence that imports of GFF were made at injurious prices.

(6) Finally, the request contained sufficient evidence that the product under investigation and/or parts thereof still benefit from the subsidy. Indeed, the product under investigation and the parts thereof were produced by and exported to Morocco by companies in China and Egypt that were found to receive countervailable subsidies for the production and sale of the product under investigation under the existing measures.

(7) The product concerned is fabrics of woven, and/or stitched continuous filament glass fibre rovings and/or yarns with or without other elements, excluding products which are impregnated or pre-impregnated (pre-preg), and excluding open mesh fabrics with cells with a size of more than 1,8 mm in both length and width and weighing more than 35 g/m2, classified on the date of entry into force of Implementing Regulation (EU) 2020/776 under CN codes ex 7019 39 00, ex 7019 40 00, ex 7019 59 00 and ex 7019 90 00 (TARIC codes 7019390080, 7019400080, 7019590080 and 7019900080) and originating in the People’s Republic of China and Egypt (‘the product concerned’). This is the product to which the measures that are currently in force apply.

(8) The product under investigation is the same as that defined in the previous recital, currently falling under CN codes ex 7019 61 00, ex 7019 62 00, ex 7019 63 00, ex 7019 64 00, ex 7019 65 00, ex 7019 66 00, ex 7019 69 10, ex 7019 69 90, ex 7019 72 00, ex 7019 73 00, ex 7019 80 10, ex 7019 80 90, and ex 7019 90 00, but consigned from Morocco, whether declared as originating in Morocco or not (TARIC codes 7019 61 00 81, 7019 62 00 81, 7019 63 00 81, 7019 64 00 81, 7019 65 00 81, 7019 66 00 81, 7019 69 10 81, 7019 69 90 81, 7019 72 00 81, 7019 73 00 81, 7019 80 10 81, 7019 80 90 81, and 7019900081) (‘the product under investigation’) (3).

(9) The investigation showed that GFF exported from China and Egypt to the Union and those consigned from Morocco, whether originating in Morocco or not, have the same basic physical and chemical characteristics, and are therefore considered as like products within the meaning of Article 2(c) of the basic Regulation.

(10) Having determined, after having informed the Member States, that sufficient evidence existed for the initiation of an investigation pursuant to Article 23 of the basic Regulation, the Commission initiated the investigation concerning a possible circumvention of the countervailing measures by Commission Implementing Regulation (EU) 2021/863 of 28 May 2021 (4) (‘the initiating Regulation’). Pursuant to Articles 23(4) and 24(5) of the basic Regulation, the Commission, by the initiating Regulation, also directed the customs authorities to register imports of GFF consigned from Morocco, whether declared as originating in Morocco or not.

(11) LM Wind Power, a wind blade manufacturer established in the Union, argued that the initiation of the investigation concerning the circumvention of countervailing measures was not justified due to a lack of sufficient evidence regarding the factors set out in paragraphs 1, 2 and 3 of Article 23 of the basic Regulation.

(13) LM Wind Power noted in particular that the request as referred to in recital (2) contained in particular allegations regarding assembly operations and transhipments, on which basis the Commission initiated the investigation. Its main argument was that the allegations of assembly operations taking place in Morocco were irrelevant to initiate an anti-subsidy circumvention investigation. According to this user, the second subparagraph of Article 23(3) of the basic Regulation, unlike the fourth subparagraph of Article 13(1) of the basic anti-dumping Regulation (5), does not list assembly operations as a practice, process or work that constitutes circumvention. Therefore, LM Wind Power requested that the Commission should terminate this investigation immediately.

(15) The Moroccan authorities requested the Commission to conclude that PGTEX Morocco SARL was not circumventing the measures imposed by the Union and to terminate the ongoing investigation. They stated that the establishment of PGTEX Morocco SARL in Morocco was the result of an authentic and long-term partnership, involving the PGTEX Group (6) and Morocco. They also stated that the production process of PGTEX Morocco SARL involved significant investments and extensive operations and contributed to the Moroccan economy. As a result, even if a change in the pattern of trade could be established, this would appear not to be caused by a practice of circumvention. Finally, the Moroccan authorities claimed that their official statistics refuted the allegation of the applicant that PGTEX Morocco SARL circumvented the measures in force by means of transhipment.

(16) With regard to the claims related to the initiation referred to above, the Commission recalled that the investigation was initiated on the basis of the evidence provided in the request. Whilst the investigation could not confirm the existence of transhipment without assembly operations, it did find evidence of assembly or completion operations. In this regard, the Commission recalled that the second subparagraph of Article 23(3) of the basic Regulation explicitly uses the wording ‘inter alia’, thus covering circumvention practices, such as assembly operations, which are not explicitly listed in the Article. The request provided sufficient evidence (7) of the existence of assembly operations and that these assembly operations were done using glass fibre rovings from the PRC and Egypt (8).

(17) The request also provided sufficient evidence regarding the lack of economic justification other than the duties, such as PGTEX China’s 2019 Annual Report. According to this report, the main purpose of the establishment of PGTEX Morocco SARL was “to actively respond to the EU’s anti-dumping investigation against China, further optimize and adjust its internationalization strategy, consolidate and increase the market share of products in Europe and the United States, meet customer demand, and protect customer supply” and in particular that PGTEX “decided to build a wholly-owned subsidiary in Morocco to break through the EU’s anti-dumping investigations, approach customers, meet market demand, and adapt to sustainable development”. (9). The separate anti-dumping investigation explicitly referred to was conducted in parallel with the anti-subsidy investigation, which led to the imposition of the countervailing duties. Thus, this statement shows an intention to circumvent the duties resulting from the Commission’s investigation.

(18) Therefore, the Commission rejected the claims put forward by LM Wind Power, and the Moroccan and Egyptian authorities that the request did not contain sufficient evidence to warrant the initiation of the investigation.

(19) The investigation period covered the period from 1 January 2019 to 31 December 2020 (‘the investigation period’ or ‘IP’). Before 2019, there were no significant export volumes of GFF from Morocco to the Union. Data were collected for the IP to investigate, inter alia, the alleged change in the pattern of trade following the imposition of measures on the product concerned, and the existence of a practice, process or work for which there was insufficient due cause or economic justification other than the imposition of the duty. More detailed data were collected for the period from 1 January 2020 to 31 December 2020 (‘the reporting period’ or ‘RP’) in order to examine if imports were undermining the remedial effect of the measures in force in terms of prices and/or quantities and the existence of subsidisation.

(20) The Commission officially informed the authorities of China, Egypt and Morocco, the exporting producers in those countries, the Union industry and the President of the EU-Morocco Association Council of the initiation of the investigation.

(21) In addition, the Commission asked the Mission of Morocco to the European Union to provide it with the names and addresses of exporting producers and/or representative associations that could be interested in participating in the investigation other than PGTEX Morocco SARL, the only producer of the product under investigation according to the request. The Moroccan authorities submitted a reply, listing three other companies. Two of those companies did not come forward, the third one did but declared that it did not export GFF to the Union.

(22) Exemption claim forms for the producers/exporters in Morocco, questionnaires for the producers/exporters in China and Egypt, and for importers in the Union were made available on DG TRADE’s website.

(23) Only PGTEX Morocco SARL submitted an exemption claim form and also requested a hearing that took place on 21 June 2021. Moreover, as mentioned in recital (45), PGTEX Group requested and was invited to a hearing with the Commission on 10 January 2022, and a hearing with the Hearing Officer in Trade Proceedings on 12 January 2022.

(24) Interested parties were given the opportunity to make their views known in writing and to request a hearing within the time limit set in the initiating Regulation. All parties were informed that the non-submission of all relevant information or the submission of incomplete, false or misleading information might lead to the application of Article 28 of the basic Regulation and to findings being based on the facts available.

(25) On 20 December 2021 (the day of the disclosure), the Commission received a submission (dated 16 December 2021) from the Moroccan authorities, which was too late to be taken into consideration at disclosure stage. Following disclosure, the Moroccan authorities sent a second submission, summarizing its submission of 16 December 2021. In essence, the Moroccan authorities reiterated their request to terminate the investigation and put forward the following arguments.

(26) First, the Moroccan authorities claimed that GFF is manufactured by PGTEX Morocco SARL through activities that cannot be qualified as a completion or assembly operation. Second, they claimed that these products are “originating” in Morocco within the meaning of Article 29 (10) of the EU-Morocco Association Agreement (11) and further detailed under the list rules contained in Annex II of Protocol 4 of the EU-Morocco Association Agreement. In addition, pursuant to Article 9 of the EU-Morocco Association Agreement, “products originating in Morocco shall be imported into the Community free of customs duties and charges having equivalent effect” and that the EU – Morocco Association Agreement provides only for some exceptions. This preferential origin was also confirmed by the Moroccan CustomsAdministration, which issued preferential origin certificates (EUR.1) for PGTEX’s GFF exports to the EU pursuant to Article 17 of Protocol 4 of the EU-Morocco Association Agreement.

(27) The Commission rejected the claim that the processing in Morocco of imported glass fibre rovings into GFF could not be qualified as an assembly or completion operation. As referred to in recital (16), the legal standards contained in Article 13(2) of basic anti-dumping Regulation can by analogy be used in assessing the anti-subsidy case in the context of Article 23(3) of the basic Regulation. In this context, Article 13(2) of the basic anti-dumping Regulation does not only cover the assembly operations of (several) parts into a finished product, but also the completion/conversion operations of intermediary products into the product concerned. This follows, in particular from point (b) of Article 13(2) of the basic anti-dumping Regulation, which stipulates that ‘…the value added to the parts brought in, during the assembly or completion operation, is greater than ...’ In addition, the fact that the Moroccan custom authorities issued EUR.1 certificates to PGTEX Morocco SARL, confirming their preferential origin under the Association Agreement, is irrelevant, as the applicable legal basis for this anti-circumvention investigation is the basic Regulation, in particular Article 23 thereof. (12)

(28) Furthermore, following disclosure, the Moroccan authorities, supported by PGTEX Morocco SARL, claimed that the anti-circumvention investigation was not permitted pursuant to Article 24 of the EU-Morocco Association Agreement, as this Article only allows for the imposition of anti-dumping measures on Moroccan products if the conditions of Article VI of the General Agreement on Tariffs and Trade are met.

(29) The Commission rejected this claim as Article 24 of the EU-Morocco Association Agreement does not preclude any anti-circumvention investigation, also given the fact that this Article also refers to the related internal legislation. When Morocco and the EU ratified the Association Agreement in 2000, the applicable basic Regulation already contained anti-circumvention provisions.

(30) Finally, the Moroccan authorities, as well as PGTEX Morocco SARL, claimed that the Commission’s anti-circumvention investigation was not permitted under the WTO – rules, in particular pursuant to Article VI of the GATT and the Agreement on Implementation of Article VI.

(31) The Commission rejected the claim and referred to paragraph 18 of the preamble of the basic Regulation (13)which sets out the approach of the Commission in this respect. On this basis, like many other WTO members, the Union legislation contains provisions to tackle circumvention practices.

(34) Following disclosure, the PGTEX Group claimed that there was no basis to apply “by analogy” the standard in Article 13(2) of the basic anti-dumping Regulation to assess whether circumvention took place within the meaning of Article 23(3) of the basic Regulation. It argued in particular that had the legislator intended for the practice, process or work referred to in the first subparagraph of Article 23(3) of the basic Regulation to cover assembly operations, it would have expressly mentioned so, as it did in Article 13(1) of the basic anti-dumping Regulation. Furthermore, with regard to the objective of the rules to which Article 23(3) of the basic Regulation is part, it seeks to “…offset any subsidy granted, directly or indirectly, for the manufacture, production, export or transport of any product whose release for free circulation in the Union causes injury (14)”. Article 2(a) of the basic Regulation is clear in that a product is to be considered as subsidised only if a subsidy has been granted “by the government of the country of origin of the imported product, or by the government of an intermediate country from which the product is exported to the Union”. In this respect, the PGTEX Group considered that Morocco is both the country of origin and export.

(35) The Commission rejected this claim. As already referred to in recital (16), the Commission acknowledged that the second subparagraph of Article 23(3) of the basic Regulation does not list assembly operations specifically as a practice, process or work that constitutes circumvention, but explicitly uses the wording “inter alia”. Absent any explicit limitation, Article 23(3) of the basic Regulation should cover other circumvention practices, which are not explicitly listed in the Article in question, such as assembly operations. Indeed, otherwise, countervailing duties could be circumvented easily.

(36) Only PGTEX Morocco SARL submitted a request for exemption in accordance with Article 23(6) of the basic Regulation. PGTEX Morocco SARL belongs to the Chinese Group PGTEX and is located in a Free Trade Zone in Tanger, Morocco.

(39) Therefore, in accordance with Article 28(4) of the basic Regulation the Commission informed the PGTEX Group, on 5 October 2021, of the fact that the non-exhaustive list of elements described in the previous recital might lead to the application of Article 28 of the basic Regulation and to the use of facts available. It also invited the PGTEX Group to comment on the possible application of Article 28 of the basic Regulation.

(41) The Commission analysed the information and documents that the PGTEX Group submitted with its letter of 12 October 2021. It concluded that neither satisfactory replies nor convincing supporting documentation were provided on most elements that were raised in its letter of 5 October 2021.

(42) Accordingly, the Commission considered that the information provided by the PGTEX Group was partially incomplete and contradictory and thus could not be fully relied on by the Commission. Nevertheless, the data submitted by the PGTEX Group were not wholly disregarded, and the Commission used both the sales and cost data submitted by the PGTEX Group as a starting point of its analysis.

(43) In accordance with Article 28(1) first sentence and Article 28(5) of the basic Regulation, the information provided by the PGTEX Group was complemented by data extracted from databases such as the Global Trade Atlas (‘GTA’) (15), and Eurostat, as further detailed in section 2.3. below. Import data were extracted from Eurostat, and GTA was used for the determination of export volumes of glass fibre rovings from the PRC and Egypt into Morocco.