Commission Implementing Regulation (EU) 2022/433 of 15 March 2022 imposing definitive countervailing duties on imports of stainless steel cold-rolled flat products originating in India and Indonesia and amending Implementing Regulation (EU) 2021/2012 imposing a definitive anti-dumping duty and definitively collecting the provisional duty imposed on imports of stainless steel cold-rolled flat products originating in India and Indonesia

• (832) Pursuant to Articles 28 and 33, paragraph 3 of the Constitution of the Republic of Indonesia and to the Basic Agrarian Law, private persons are entitled to hold a ownership in the form of freehold over a plot of land (Hak milik). Moreover, a number of minor property rights exists, such as the exploitation right (Hak guna usaha – ‘HGU’), the use right (Hak pakai, also translated as cultivation right) or the building use right (Hak guna bangunan – ‘HGB’, also translated as building right). The latter includes the right to use and to build over a plot of land. While the ownership is reserved only to Indonesian persons, HGU and HGB are available also to foreign-owned companies incorporated in Indonesia. However, in practice these formal rights still coexist with customary land claims. This is due to the fact that not all plots of land in Indonesia are officially registered because members of the customary communities (Ulaiat) are not obliged to register their plots of land, and that the proof of the rights over a plot of land is provided by a corresponding certificate (Sertifikat) granted only on plots of land already registered. Certificates are different depending on the right they acknowledge, namely: Sertifikat hak milik – ‘SHM’ for the ownership; Sertifikat hak guna usaha – ‘SHGU’ for the exploitation right; and Sertifikat hak guna bangunan –‘SHGB’ for the building use right.

• (833) As explained in the relevant section above, the Morowali Park is an industrial park incorporated in Indonesia under the special qualification of an industrial estate. Therefore, in tracing back the legal basis that regulates the land where the Morowali Park was established, account has to be taken not only of the laws concerning land ownership and spatial planning, but also of specific regulations concerning industrial estates.

• (834) With regard to land ownership and spatial planning, laws that regulate the territory where IMIP is located include:

• — The Basic Agrarian Law, which repealed land regulations in force before the independence of Indonesia and established the current arrangement of property rights. Similar to the land use right in the People’s Republic of China, HGB can only be acquired for a limited period. In Indonesia this period corresponds to maximum 30 years, which can be further extended by 20 years;

• — Government Regulation No. 40 of 1996, which regulates the transfer of HGUs, use rights and HGBs;

• — Government Regulation No. 24 of 1997 on Land Registration, which lays the foundations of the current procedures of land registration and certification;

• — Government Regulation No. 26 of 2007 on Spatial Management;

• — Government Regulation No. 26 of 2008 on the National Spatial Plan;

• — Morowali Regency Regulation No. 10 of 2012 on the Spatial Plan of the Morowali Regency for the Period 2012-2032, which stipulates the spatial plan for the Morowali Regency, i.e., the sub-provincial entity where IMIP is located;

• — Presidential Regulation No. 17 of 2015 on the National Land Agency (Badan Pertanahan Nasional – ‘BPN’), an agency within the Ministry of Agrarian Affairs and Spatial Planning, which determines the role of the BPN and of its local branches in the procedures of land registration and certification;

• — Government Regulation No. 13 of 2017 on the Amendment of Government Regulation No. 26 of 2008 concerning the National Spatial Plan;

• — Head of the BPN Regulation No. 1 of 2018 on Guidance for the Development of Regional Spatial Plan for Provincial, Regency and Municipal Level, which stipulates the general provisions for the development of the spatial plan at the level of provinces, regencies and local districts;

• — Morowali Regency Regulation No. 7 of 2019 on the Spatial Plan of the Morowali Regency for the Period 2019-2039; and

• — Articles 34 to 47 of Government Regulation No. 18 of 2021, which recently complemented in relation to HGB the Basic Agrarian Law and Government Regulation No. 24 of 1997 on Land Registration, prolonging the duration of HGB to 35 years, which can be further extended by 20 years.

• (835) In addition, there are two laws relevant as background but not directly applicable to the Morowali Park:

• — Law No. 2 of 2012 on Land Procurement for Development in the Public Interest, which was meant to address the difficulty in land purchase, originated by the complex system of property rights, for projects of public interest. Both IMIP and the GOID separately confirmed that the law did not apply to the Morowali Park since it applies only to 24 business sectors which do not encompass IMIP’s activities. Law No. 2 of 2012 was subsequently and partially amended by Law No. 11 of 2020 on Job Creation (‘Omnibus Law’). Law No. 2 of 2012 was implemented by Presidential Regulation No. 71 of 2012 on the Implementation of Land Procurement for Development in the Public Interest, which was in turn subject to three major amendments, the latter of which operated by Presidential Regulation No. 30 of 2015 on the Third Amendment to Presidential Regulation No. 71 of 2012; and

• — Presidential Regulation No. 56 of 2017 on Social Impact Handling in Land Acquisition Process for National Strategic Projects, whose application to IMIP was denied by the GOID, since the law applies only to land procurement for national strategic projects on land over which individuals living there cannot prove customary or property rights. Thus, the law is meant to mitigate the effects of their displacement. Instead, individuals living on the land purchased by IMIP were able to prove their customary rights, which entitled them to compensation.

• (836) With regard to the rules on industrial estates regulation, the following are relevant:

• — Government Regulation No. 24 of 2009 on Industrial Estate, in force at the time of the establishment of IMIP. Among its provisions, Article 3, para. 4 stated that ‘Development of Industrial Estates in the regency […] area is carried out in accordance with the Regency […] Spatial Planning’. Moreover, Article 4 added that ‘The Ministers, related ministers, and governors and regents/mayors in accordance with their respective duties and authorities are responsible for achieving the objective of Industrial Estate development’. In particular, according to Article 5, paragraph 2, point (d), ‘The power [of the Minister] are exercised by: […] (d) setting a benchmark price for selling or leasing plots and/or industrial buildings in the Industrial Estates at the suggestion of the National Team [Industrial Estates]’ (Timnas-KI), whereas, according to Article 6, point (b), ‘[…] governors o regents/mayor provide: […] (b) easiness in acquiring/acquiring land in the area designated for the development of Industrial Estate’. Furthermore, Article 10 provides that the area of an Industrial Estate must be at least 50 ha and Articles 13 and 14 that each Industrial Estate must apply for an Industrial Estate Business Licence, once they have obtained a Principle Approval. Finally, Article 18 allows Industrial Estate companies holding an Industrial Estate Business Licence to obtain a HGB on the land purchased and developed, and to divide this HGB up between the plots of land resold to the companies in the Industrial Estate;

• — Agreement between the GOID and the GOC on Indonesia-China Integrated Industrial Parks, signed in Jakarta on 2 October 2013 (see recital (605));

• — Decree of the Minister of Industry on the Cooperation Team for the Indonesia-China Integrated Industrial Estate No. 432/M-IND/Kep/7/2014 of 22 July 2014 (see recital (638));

• — Government Regulation No. 14 of 2015 concerning the Master Plan of National Industry Development for 2015-2035, according to which one of the major infrastructure required by the Indonesian industry is the land for industrial estates. The provision of industrial land in Indonesia is carried out through the development of industrial areas, also translated as areas designated for industry or Industrial Designation Zone. Inside the industrial areas, land for industrial estates and non-industrial land are identified. The purposes of the model of the industrial estates are the following: developing the land in order to provide ready-to-use and/or ready-to-build land to industries, guaranteeing that land rights and permits can be easily obtained, and ensuring the availability of infrastructures and facilities needed by investors ²¹²;

• — Joint Statement on Strengthening Comprehensive Strategic Partnership between the People’s Republic of China and The Republic of Indonesia of March 2015 (see recitals (577) and (610)); and

• — Government Regulation No. 142 of 2015 (see recital (632)), which replaced the previous Regulation No. 24 of 2009, requires that an entity, in order to be eligible for applying to an Industrial Estate Business Licence, must have a land certificate (or relinquishment of rights of previous occupants) related to its plot of land. Among the several provisions of Regulation No. 142, Article 4(i) states: [The authorities of the Minister cover] ‘stipulation of guidelines on reference sales price or rent of Industrial blocks and/or buildings within an Industrial Estate based on Industrial Estate Committee proposals’ Article 45(1) stipulates that ‘The Government may initiate the development of Industrial Estates as Industrial infrastructure in the event the private sector is not interested in nor unable to develop an Industrial Estate; and/or to accelerate the spread and even distribution of Industrial development’. Article 48(1) reads: ‘The Government may conduct land procurement in accordance with land procurement laws and regulations’.

4.8.3.   Findings of the investigation

• (837) The GOID provided land for less than adequate remuneration to IMIP, and hence to IMIP’s related companies of the IRNC Group, as part of the bilateral cooperation with the GOC. The deal between the GOID and the GOC relied on Indonesia agreeing to establish a special Industrial Estate in the Morowali Park and confer the management to IMIP (see recitals (560) et seq.). Among the terms of the agreement between the governments, the GOID would facilitate the procurement and acquisition of land for the exporting producers established in the Morowali Park, in accordance namely with the Joint Statement of March 2015 and Regulation No. 142 of 2015.

• (838) The investigation found that the GOID facilitated the necessary land to IMIP starting from 2013. The land in question was the property of the Indonesian State. IMIP agreed with the local authorities, and with the assistance of the Bahodopi district authorities, on a single average payment per square meters, as a compensation, for the individuals using the land at the time.

• (839) The investigation also showed that the tenants in the Morowali Park, including the IRNC Group, were able to start building their plants before actually obtaining the legal certificate for the building use right because IMIP was considered by the GOID a National Strategic Project ²¹³. For some plots, a legal certificate was available during the IP, and corresponded to either a full ownership right or a HGB. The recognition of IMIP as National Strategic Project provided a formal legal assurance to the IRNC Group that it could start building on the land received even before acquiring definitive title to the land. In addition, it is generally recognised that it is risky to buy land in Indonesia due to difficulties in obtaining and showing ownership title. The removal of this risk grants a decisive advantage to an envisaged investment.

• (840) The GOID alleged that the transfer of the land to IMIP was a transaction between private parties. This is incorrect. As a matter of fact, the GOID was the owner of the land. The fact that there were villagers occupying the land and that IMIP paid the agreed compensation to the villagers to purchase the land does not make such a transaction a transaction between two private parties.

• (841) Therefore, the Commission concluded that the GOID provided a financial contribution directly to IMIP in the form of provision of State land within the meaning of Article 3.1(a)(iii) of the basic Regulation.

4.8.4.   Benefit

• (842) This financial contribution confers an advantage because IMIP simply paid a compensation pre-agreed with the local and district GOID’s officials for the giving up of the occupation of the land, which was unrelated to the actual value of the land or any market considerations. The actual owner of the rights to the land, i.e. the GOID, never charged anything to IMIP for the actual value of the land. There was also no document showing that the land was properly evaluated. In fact, there is evidence on file that the amount for the compensation paid to the villagers was unrelated to the actual market value of the land and its potential to be used as industrial land.

4.8.5.   Specificity

• (843) Similar to preferential financing, this scheme is both sectorally and regionally specific for the same legal reasons.

4.8.6.   Calculation of the subsidy amount

• (844) In order to measure the advantage received by the exporting producer, the Commission resorted to an in-country benchmark for land. The most appropriate approach at this stage was to compare the value of developed land ready to build a plant on. However, the Commission could not consider the compensation awarded as comparable to prices paid for land transactions on the market. Therefore, the Commission considered only the development costs incurred by IMIP to transform the land purchased as forest and plantation into land ready for industrial use. The Commission compared these costs with an independent evaluation report for industrial land prepared for Jindal Indonesia. Jindal Indonesia is located in the Gresik Regency in the province of East Java and the evaluation report, prepared every few years for accounting purposes and at the request of lending banks, assessed the value of the HGBs held by Jindal Indonesia, inter alia, through comparison to prices in transactions concerning HGBs over developed land in the area. The Gresik Regency in East Java is an area comparable to the Morowali Regency in Central Sulawesi because it has a similar GDP, because of the presence of an industrial park and because they are both far from the capital Jakarta, whose land prices are far different from the rest of the country. Moreover, the value in the Jindal Indonesia’s evaluation report is a conservative estimate, since they concern only HGBs, whereas, as mentioned, IRNC Group acquired from IMIP variably HGBs and full ownership rights, with a higher value compared to HGBs, on different plots of land.

• (845) In the calculation, first of all, the value of the evaluation report referred to 2020. Therefore, it was adjusted by the consumer price index (CPI) to obtain the value in each year in which each the IRNC Group had purchased a plot of land. The amount of benefit was established by deducting the compensation paid by IMIP from the benefit found.

• (846) Then, IMIP’s land development costs by square meter were compared to the value of the evaluation report adjusted to the corresponding year to obtain the benefit per square meter. This figure was then multiplied by the area of land that each of the companies in the IRNC Group was actually using, in order to allocate the total benefit for the group to each of the companies in the group.

• (847) After that, the benefit was apportioned to the IP by using the useful economic life of the land, i.e. 30 years. This corresponds to the duration of HGBs in Indonesia. The total benefit received was allocated on the basis of the actual usage per square meter by each company of the IRNC Group in the Morowali Park.

• (848) Only the IRNC Group benefited from this subsidy scheme. No benefit was found for Jindal Stainless Indonesia, as it had acquired an already existing plant when it started operations.

• (849) The subsidy rate established with regard to this subsidy during the investigation period for the IRNC Group amounted to:

Provision of land for less than adequate remuneration

Company name	Subsidy rate
IRNC Group	0,83  %

4.8.7.   Comments on final disclosure

• (850) The GOID and IRNC Group claimed that the Commission did not put forward evidence that land was property of the Indonesian State and it recalled that the land had been purchased from private individuals. The GOID clarified that this was certified by the regional government since the land was not registered under land deed, but that this did not mean that the purchase was agreed with local authorities. The GOID asserted that the State is only responsible for administering the ownership rights of the land, including certifying the transfer of ownership, until the land is registered. This certification is just for land administration purposes. Both parties further claimed that the price was set and agreed between IMIP and the private land owners, and the GOID added that the transaction in question as a sale and purchase transaction, not a compensation.

• (851) In response, the Commission observed that the land of the territory where IMIP was established is State Land (‘Tanah Negara’) with the status of former Swapraja land. This term refers to the land which, before the independence of Indonesia, belonged to local sultanates or kingdoms benefitting from a certain degree of self-government. After the independence, these areas and the customary communities living there still retained a certain degree of semi-autonomy.

• (852) The Basic Agrarian Law, enacted in 1960, provided that Swapraja land could be converted into private land until 1980. Failure to convert it into private land resulted, after 1980, in the GOID acquiring the right to administer and manage the former Swapraja land, thus becoming effectively State Land. Since the customary communities are not obliged to register the land, this change in land status led to large areas of the country where plots of land are not registered. Absence of registration implies that members of the customary communities living there have no certificate to prove their rights on the land where they live. This situation does not prevent members of the customary communities from demonstrating their customary use of a plot of land.

• (853) However, the rights of customary communities, even when recognised, still coexist with the right to administer and manage the former Swapraja land falling upon the GOID. In fact, the land transferred to IMIP was clearly labelled as State Land (Tanah Negara). Indeed, Art. 1(3) of the Government Regulation of the Republic of Indonesia No 24 of 1997 regarding land registration clearly states: ‘State land (tanah negara) or land directly controlled by the State is land which is not possessed under a certain land right.’

• (854) As a consequence, the members of the customary communities can give up their customary use of the land and be compensated for it, but it is the GOID that retains the right to actually sell/transfer the land. As such, the GOID had to give its consent to the transaction.

• (855) In addition, Article 43 of the Agrarian Law of 1960 stipulates that: ‘As far it concerns land directly controlled by the State, the right of use may only be transferred to another party with the permission of the authorized official’. Based on this, the Commission concluded that it was up to the GOID to decide whether the land would be transferred to IMIP or not.

• (856) In the context of IMIP’s establishment, the GOID actively intervened in several ways to procure the land to IMIP in accordance with Article 48(1) and 45(1) of Regulation 142 of 2015.

• (857) First, the GOID amended the spatial planning of the Morowali Area, changing the purpose of the land from farmland to industrial land, more specifically linked to a nickel project. Indeed, Article 28 of Morowali Regency Regulation No. 10 of 2012 designated as nickel mining area the Bahodopi district, i.e., the sub-regency entity where IMIP is located. Moreover, Article 29 of the same Morowali Regency Regulation designated the Bahodopi district also as an Industrial Area ‘based on mining raw materials’. More generally, the Morowali Regency identified a ‘large industrial area in Bahodopi District’ as a ‘Regency strategic area from the point of utilization of natural resources’ (Article 37). Finally, Article 9 of the same Morowali Regency Regulation identified Bahodopi district as the area where a special mining port terminal is located. This change of use left the villagers with no choice but to relinquish their right to occupy and use their land as they could no longer use it for farming activities.

• (858) Second, IMIP contacted the local authorities in the area, i.e., the mayors of the villages located in the area, and agreed with them on a compensation to be provided to the people that the village heads identified as occupants of the plots of land in the area. In this process, three elements have to be highlighted: (i) IMIP agreed on the compensation with the village heads also with the assistance of GOID’s officials of the Bahodopi district, because the contracts show that they later witnessed the transaction and certified the use and the ensuing right to compensation of the villagers; (ii) the plots of land whose occupants were identified by the village heads have more or less all the same area (approx. 20 000 square metres each); and (iii) the compensations in the contracts is actually a single average price per square metre and it is not defined with the Indonesian word for ‘price’ (Harga), but with the Indonesian word for ‘compensation’ (Ganti rugi).

• (859) The evidence proved that the land purchase process undertaken by IMIP was actually a process where the State provides the land to the IMIP without any consideration, only with the requirement to pay the agreed compensation to the villagers. IMIP agreed with the local authorities, and with the assistance of the Bahodopi district authorities, on a single average compensation per square meters for the individuals owning the land. The right to compensation was acknowledged by local and district authority through the recognition of continued use of the land, absent a formal title.

• (860) On this basis, the claims of the GOID and of IRNC are rejected.

• (861) The GOID and IRNC Group also claimed that the benchmark employed referred to developed land, whereas the land acquired by IMIP consisted of forests and plantations.

• (862) The Commission indeed used a benchmark for developed land. However, on the side of IMIP, the Commission included in the calculation the original cost of the land plus the development costs for this land, as reported by IMIP itself. The Commission thus compared the cost of developed land for IMIP with the publicly available cost of developed land. Therefore, this claim was dismissed.

• (863) Finally, IRNC Group disputed the adjustment to the benchmark based on the CPI, since land is a capital good, not a consumption good, and thus the CPI does not include land prices.

• (864) The Commission disagreed with this statement. The CPI is a good indication of the general price inflation in the economy as a whole, including in relation to land prices. Indeed, the CPI contains among other factors rental prices, which provide a good indication of the evolution of land and real estate prices. This claim was thus rejected.

4.9.   Provision of stainless steel scraps for less than adequate remuneration

• (865) The investigation determined that the exporting producers did not purchase stainless steel scrap. Therefore, the Commission concluded that there was no need to further investigate this scheme.

4.10.   Provision of electricity for less than adequate remuneration

• (866) The investigation revealed that one exporting producer self-generated its electricity needs and the other one was buying it at market prices. Therefore, no subsidy relative to the provision of power was provided to them and there was no countervailable subsidisation of the provision of power.

4.11.   Provision of gas for less than adequate remuneration

• (867) The investigation revealed that one exporting producer did not buy gas while the other one was buying gas at market prices. Therefore, no subsidy relative to the provision of power was provided to them and there was no countervailable subsidisation of the provision of power.

4.12.   Government revenue foregone or not collected that is otherwise due

4.12.1.   Income tax holiday

• (868) The Complainant claims that the GOID provides tax holidays to corporate taxpayers that perform investment in so-called ‘pioneer industries’. The complainant argues that the respective regulation defines ‘pioneer industries’ as ‘industries characterised by large connectivity, creation of added-value and high externality, introduction of new technology, and of strategic value to the national economy’. Among other sectors, those ‘pioneer industries’ include steel and non-steel upstream base metal industries.

(a) Legal basis

• (869) The legal basis for this program is the Regulation of the Minister of Finance Number 150/PMK.010/2018 (MOF 150/2018) regarding the Administration of Corporate Income Tax Deduction Facility. In 2020, the program was renewed by the MOF No. 130/2020.

(b) Findings of the investigation

• (870) The Commission found that on 9 August 2019 the IRNC received a tax facility benefit from the Directorate General of Taxation, which allows reduction in net taxable income for ferronickel product of 100 % for 7 years and 50 % for the next 2 years.

• (871) The other entities parts of IRNC group that have a ferronickel plant did not avail of this scheme.

• (872) IRNC explained that this program was applicable to only one of its plants, i.e. ferronickel plant. The IRNC submitted the Decision of the Director General of Taxes NUMBER KEP-161/PJ/2020 regarding the determination on utilisation of corporate income tax deduction facility for its ferronickel plant.

• (873) This scheme is available to corporate taxpayers making new investments in ‘pioneer industries’. Pursuant to Article 1 of MOF 150/2018 the ‘pioneer industries’ are industries characterised by large connectivity, creation of added-value and high externality, introduction of new technology, and of strategic value to the national economy. Under MOF 150/2018 Pioneer Industry includes, among other things, the upstream basic metal industry: (i) steel; or (ii) not steel, with or without its integrated derivatives product processing facilities.

• (874) In order to benefit from the reduction of its income tax, the taxpayers must: (1) have the status of an Indonesian legal entity; (2) make an investment that is a new investment and that has not been given/has not been rejected to receive a reduction of the CIT; (3) the investment must be made in an industry that qualifies as ‘pioneer industry’; (4) the new investment is of minimum IDR 100 billion; and (5) the taxpayer satisfies the debt to equity ratio set out in the regulation.

(c) Conclusion

• (875) The Commission considered that this scheme is a subsidy under Article 3(1)(a)(ii) and Article 3(2) of the basic Regulation because there is a financial contribution in the form of revenue foregone by the GOID that confers a benefit to the company concerned. The benefit for the recipients is equal to the tax saving.

• (876) The scheme is specific because it is available only to certain companies active in certain sectors that are qualified as ‘pioneer industries’ in accordance with Articles 4(2)(a) of the basic Regulation.

(d) Calculation of the subsidy amount

• (877) The amount of countervailable subsidy was calculated in terms of the benefit conferred on the recipients during the investigation period. The benefit was calculated as the difference between the income taxes payable in the absence of the income tax deduction facility and the income taxes paid in the IP.

• (878) The subsidy rate established for this specific scheme amounted to 1,65 % for IRNC group.

4.12.2.   Income tax allowance facility

• (879) The Complainant claimed that this scheme grants income tax facilities for investments in certain business fields and or certain region to boost direct foreign and domestic investments in Indonesia.

(a) Legal basis

• (880) The scheme is based on Regulation of the Minister of Finance Number 89/PMK.010/2015 ²¹⁴ concerning procedures for the granting of income tax facilities for investment in certain business fields and/or in certain regions and transfer of assets and sanctions on domestic taxpayers given income tax facilities.

(b) Findings of the investigation

• (881) In order to benefit from the scheme, beneficiaries must submit an investment plan including the details of the investment and the total investment amount, subject to approval and monitoring by the GOID.

• (882) The investigation revealed that SMI, a related company to IRNC that provides raw materials to IRNC for the manufacturing of the SSCR, benefited from this scheme. On July 24, 2017 SMI has obtained tax allowance for specific capital investment and/or specific area facility based on Minister of Finance Decision Letter No. 170/KM.3/2017 for sales of stainless steel, since the Company commercially produced stainless steel on August 31, 2018. Based on that letter, the Company is eligible to, among others: (a) a. obtain reduction of net taxable income of 30 % from investment in tangible assets including land that are used for the Company’s main business and charge for 6 years of 5 % per annum calculated since the Company started its commercial production and (b) accelerated depreciation on tangible asset obtained in relation with new capital investment and/or expansion with useful life and depreciation tariff.

(c) Conclusion

• (883) The Commission considered that this scheme is a subsidy under Article 3(1)(a)(ii) and Article 3(2) of the basic Regulation because there is a financial contribution in the form of revenue foregone by the GOID that confers a benefit to the company concerned. The benefit for the recipients is equal to the tax saving.

• (884) In light of the above, the Commission therefore considered that this scheme confers a benefit to the exporting producer as it is placed in a better financial position than it would be absent the scheme. In fact, absent the scheme, it would have paid additional income tax.

• (885) The scheme is specific because it is available only to certain companies depending on their business activities in accordance with Articles 4(2)(a) of the basic Regulation.

(d) Calculation of the subsidy amount

• (886) The amount of countervailable subsidy was calculated in terms of the benefit conferred on the recipients during the investigation period. The benefit was calculated as the difference between the income taxes payable in the absence of the income tax deduction facility and the income taxes paid in the IP.

• (887) The subsidy rate established for this specific scheme amounted to 0,06 % for IRNC Group.

4.12.3.   Import duty exemption for machinery

4.12.3.1.   For the construction of production facilities

• (888) This programme provides an exemption from the import tariffs for imports of machinery and equipment used in the construction of production facilities.

(a) Legal basis

• (889) Regulation of the Finance Minister 176/PMK.011/2009 on the exemption from import duty on the imports of machines, goods and materials for the establishment or development of industry in the frame of investment as amended by MOF Regulation Number 76/PMK.011/2012 and MOF Regulation Number 188/PMK.010/2015.

• (890) According to Article 2(3) of Regulation 176/2009, the exemption can be granted for the purchase of machines, goods and materials which: are not produced domestically; are not produced domestically but do not meet the required specifications; or are produced domestically but in insufficient number.

(b) Findings of the investigation

• (891) The investigation revealed that IRNC and the four related companies (GCNS, ITSS, SMI and ITS) benefited from the import duty exemption for the imports of machinery during the phase of construction of the plants until they started the production. Consequently, import duties were not paid for machines imported during the respective construction periods of these plants.

• (892) To benefit from this exemption, the company needed to obtain a confirmation letter from the local authority responsible for the project, which needs to be submitted to the local customs authority.

• (893) According to Article 2 of Regulation 176/2009, the benefit is available only to companies producing goods, or services in certain sectors. For the industries producing services, the sectors are: tourism and culture, transportation, public health, mining, construction, telecommunications.

• (894) The scheme aims at facilitating the import of goods, and in particular machines which are not available domestically. As explained in the Master Plan for Acceleration and Expansion of Indonesia Economic Development 2011-2025 (‘MP3EI’), which aims at implementing the 2005-2025 Long-term National Development Plan, the main points for the country’s 2025 development goals include the following: 1) ‘increase value adding and expanding value chain for industrial production processes [and] increase the capability of the industry to access and utilize natural resources’, and 3) ‘to push for the strengthening of the national innovation system in the areas of production [and] process, […] towards an innovation-driven economy’ ²¹⁵.

• (895) The Master Plan further notes that, when it comes to the country’s challenges, ‘Indonesia’s current economic structure is primarily focused on agriculture and industries which extract and harvest natural resources. There are only limited industries which focus on products with added value’ ²¹⁶. According to the Plan, ‘to foster the economic growth in Indonesia, it will depend on the private sector participation which includes state-owned enterprises, and private domestic and foreign investors’ ²¹⁷.

• (896) The steel sector is one of the 22 main economic activities that compose the 8 major programs which are set to support the acceleration and expansion of economic development in Indonesia ²¹⁸. Moreover, the Plan explains that it is crucial for the country to further develop downstream manufacturing. According to the it, ‘without more downstream activities, Indonesia will miss the opportunity to increase employment and profit margins on the value chain because of the absence of downstream processing industries of iron ore and iron sand’ ²¹⁹.

• (897) Against this background, the duty exemption scheme should be considered targeted towards certain sectors of the economy because its conditions seek to provide support to a selected number of industries, in line with the goal of pursuing additional value added from natural resources. In particular, the combined effect of the requirements of the establishment of a new plant, together with the domestic unavailability of the imported machine, make the scheme applicable only to certain sectors, like the steel production and nickel transformation, in which the government policy is seeking to encourage additional downstream transformation of natural resources.

• (898) Therefore, taking into account the legal requirements referred to above, which make it only available to manufacturing companies or to companies providing services in certain selected sectors, the scheme is to be considered specific in accordance with Article 4(2)(a) of the basic Regulation.

• (899) Even considering that the legal conditions for eligibility under the duty exemption scheme could suggest the appearance of a scheme of general application, the scheme would still be considered de facto specific in accordance with Article 4(2)(c) of the basic Regulation because, as explained above, the scheme is designed to be in practice available only to a selected and limited number of enterprises, which are active in certain industrial sectors in line with the above mentioned objectives of Indonesia’s industrial and economic policy.

(c) Application of the provisions of Article 28(1) of the basic Regulation

• (900) IRNC and its related companies imported all the equipment from related companies from China. Furthermore, IRNC Group claimed that due to the Free Trade Agreement between Indonesia and China it did not need to pay import duty for this equipment. This claim was rejected as it was not substantiated.

• (901) Indeed, the investigation revealed that the related companies from which IRNC Group imported the equipment were not the actual manufacturers of the equipment. The company claimed that the origin of the equipment was China; however, it failed to submit any evidence in this regard. While it was clear that the equipment was shipped from China, IRNC refused to submit the invoices from the actual country of origin of the equipment.

• (902) Therefore, the Commission informed IRNC Group that it might have to resort to the use of facts available under Article 28(1) of the basic Regulation with regard to the subsidy scheme in question. The IRNC Group claimed that the Chinese related parties were not within the scope of the investigation as they were not within the territory nor the jurisdiction of the GOID and therefore were not obligated to provide the invoices from the original manufacturer or country of origin. Furthermore, it was stated that the proof of origin was the fact that on the Custom declaration it was stated China as the origin of goods.

• (903) During the RCC of the GOID, the GOID was asked to explain how the origin of the machinery imported by IRNC Group was established at the time of importation. The GOID explained that IRNC Group should have provided to the Commission the form BC2.3 and the formal letter declaring the origin of the equipment from the country of origin and asked the Commission to ask the IRNC Group to submit such information.

• (904) The IRNC group has not submitted any document indicating the origin of the equipment as well as the spare parts linked to this equipment apart from the Custom Declaration. Therefore, in the absence of the requested information the Commission considered that it did not receive crucial and necessary information relevant to this aspect of the investigation. Therefore, the Commission applied Article 28 of the basic Regulation and relied on facts available with respect to these points.

(d) Conclusion

• (905) Therefore, in the absence of any information in the file indicating that these equipment was indeed manufactured in China, the Commission concluded that an import duty was applicable, i.e. 5 % based on the HS code of the equipment.

• (906) This programme provides a financial contribution in the form of revenue forgone by the GOID within the meaning of Article 3(1)(a)(ii) as IRNC Group is relieved from payment of import 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.

• (907) The programme is specific because only the industries mentioned in the Annex to Regulation 176/2009 can benefit from it and only the goods that cannot be produced in Indonesia or not in sufficient quantities or with an adequate quality can be eligible for this programme.

(e) Calculation of the subsidy amount

• (908) 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 the amount of duties exempted on 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.

• (909) The amount of subsidy established for this specific scheme amounted to 0,16 % for IRNC Group.

4.12.3.2.   Building/Development of Industry/Service Industry

• (910) The investigation revealed that Jindal Indonesia could have possibly benefited from a partial exemption from import duties pursuant to Minister of Finance Decree No. 135/KMK.05/2000. Articles 2 and 3 of the Decree specify that if the import duty is higher than 5 %, a successful applicant for the import duty exemption will have to pay only a 5 % import duty. However, if the import duty is lower than 5 %, that duty will remain applicable.

• (911) The investigation revealed that such potential benefit was very low (0,02 %). In view of the fact that this was the only program that Jindal Indonesia benefited from during the investigation period, and in view of the low potential benefit, the Commission did not investigate this scheme further.

4.12.3.3.   Bonded Zone

• (912) Bonded zones are defined as areas within the customs territory of Indonesia where import duty for imported goods is suspended. The imported goods can be capital goods, raw materials and supporting material.

(a) Legal basis

• — Ministry of Finance Regulation 147/PML.04/2011 and further amended by the Ministry of Finance Regulations 255/PPMK.04/2011 and 120/PMK.04/2013

• — Regulation of the Ministry of Finance No. 131 of 2018, on bonded zones

(b) Findings of the investigation

• (913) The investigation revealed that IRNC and its related companies (GCNS, ITSS, SMI and TSI) have been operating in a bonded zone since September 2018 and have availed of this programme since then.

• (914) Within the Bonded Zone, the importation process of suspended until the companies sells the finished goods within the territory of Indonesia. IRNC and its related companies benefit from a full (100 %) suspension from the payment of import duties payable on goods imported into their bonded zone (machinery, spare parts and raw materials) as long as those goods (i) are used in the subsequent production activities of IRNC; and (ii) the final goods produced with them are destined for the export market.

• (915) If a product remains in the bonded zone (such as machinery) or is directly exported the import duty is never due.

• (916) In accordance with Articles 3, 4, 16 and 20 of Regulation 131/2018, the following requirements apply: (1) to be an Indonesian company; (2) to be established in an industrial bonded zone in Indonesia; (3) to perform production activities in the bonded zone or to be a power plant in the bonded zone; (4) to import raw materials or (semi)finished goods in order to further process them; (5) to export the final goods produced with the imported goods.

• (917) During the RCC the GOID explained that there were no pre-defined areas of the territory of Indonesia identified as bonded zones, rather companies can apply and if the application is accepted their premises become a bonded zone. Furthermore, it was stated that there were approximatively 1 300 bonded zones. The GOID explained that Morowali Park was not a bonded zone, as the status of the bonded zone was not granted to an industrial park. Each company located in an industrial park has to apply separately for the status of a bonded zone. Furthermore, it was explained that in order to avail of this programme, more than 50 % of total yearly production must be exported outside of Indonesia.

• (918) IRNC Group is export oriented. Nevertheless, small volumes of products were sold as well on the domestic market. The investigation revealed that the companies were paying import duties for dome of the imported raw materials used to manufacture products that were sold on the domestic market. The companies submitted the payment of these amounts. However, the companies did not have in place a proper system to check the correctness of the content of the imported raw materials in the value of the products sold on the domestic market. For example IRNC submitted an excel file for the calculation of the custom duties due but was unable to explain the percentages of each raw materials used in the manufacturing process. It was stated that it was based on its own calculations, and the customs authorities had to judge whether the calculations made sense. In addition, the GOID explained that there were not guidelines for such calculations.

• (919) Furthermore, the related companied were selling products between themselves which incorporated imported raw materials but did not report to the purchasing entity the value of the custom duties.

• (920) The investigation also revealed that TSI, paid import duties for imported machinery used for power generation. During the RCC the GOID explained that the bonded zone is linked to the industrial business licence and that the company had two business license, one for its steel activity, and the other one for the power generation, with the bonded zone applying only to the first one. During the RCC TSI showed a document indicating the boundaries of the bonded zone and it confirmed that it only applied to machinery imported for ferronickel and not for the power generation.

• (921) It was further explained that this scheme was available only for the companies that imported good into Indonesia for further processing. Hence, mere importers cannot apply to obtain a bonded zone status.

(c) Conclusion

• (922) Based on the above, the Commission therefore concluded that the granting of the above-mentioned exemption is entirely at the discretion of the GOID.

• (923) Furthermore, the Commission considered that the import duty exemption on inputs granted by the bonded zones scheme constitutes a financial contribution by the GOID to the exporting producers in the form of revenue forgone.

• (924) Therefore, the Commission concluded that the exemption of import duties on inputs amounts to revenue foregone or not collected in sense of Article 3(1)(ii) of the basic Regulation.

• (925) In light of the above, the Commission therefore considered that this scheme confers a benefit to the exporting producers as they are placed in a better financial position than they would be absent the scheme.

• (926) The scheme is specific because it is available only to certain companies depending on their export performance and location in specific geographic areas within the jurisdiction of the granting authority, in accordance with Articles 4(2)(a) and 4(3) of the basic Regulation.

(d) Comments on final disclosure

• (927) The IRNC Group claimed that no benefit should be calculated for inputs imported from China, Australia and Vietnam because of the existence of Free Trade Agreements of Indonesia with these countries.

• (928) This claim was found to be justified for Australia and Vietnam, and therefore the Commission revised the amount of subsidisation of the respective subsidy scheme. However, the Commission did not accept the claim with respect to spare parts imported from China. Indeed, the Commission noted that the vast majority of items imported from China were spare parts purchased from related companies. As highlighted in recitals (899) and (903), these spare parts concerned machinery for which the Commission contested the origin and for which the Commission concluded that an import duty was applicable, i.e. 5 % based on the HS code of the equipment. Mutatis mutandis, this also applies to the spare parts which are linked to this equipment.

• (929) IRNC Group argued that the bonded zone scheme is an export subsidy, and should thus be calculated based on export turnover, and subsequently deducted from the combined dumping and subsidy duties.

• (930) This claim was found to be justified as far as it relates to raw materials, which are used in the production of exported finished goods. Therefore, the Commission recalculated the respective subsidy margin.

(e) Calculation of the subsidy amount

• (931) The benefit was calculated as 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. The amount of subsidy established for this specific scheme for the IRNC Group amounted to 0,28 % for spare parts and 0,90 % for raw materials.

4.12.4.   VAT exemption for machinery

• (932) The Complainant alleged that the exporting producers benefited from VAT exemption for the imports of machinery. The investigation determined that the Indonesian tax administration timely paid the VAT refunds submitted by the companies during the IP for the excess amount of VAT paid. Therefore, the Commission concluded that there was no countervailable subsidisation related to these VAT exemptions.

4.12.5.   Land and building tax (‘PBB’) on mining industry

• (933) The Complainant alleged that the GOID reduced the taxable value of the land and buildings belonging to the mining industry and its downstream industry. However, the Commission did not find any evidence of subsidisation for these schemes.

4.12.6.   Conclusion on subsidisation

• (934) The Commission calculated the amount of countervailable subsidies for the cooperating companies in accordance with the provisions of the basic Regulation by examining each subsidy or subsidy programme, and added these figures together to calculate a total amount of subsidisation for each of the exporting producers for the investigation period. To calculate the overall subsidisation the Commission first calculated the percentage of subsidisation: 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 rates below calculated as a percentage of the Costs, Insurance and Freight (‘CIF’) value of the same exports per tonne.

• (935) Following final disclosure, the complainant noted that the Commission’s findings revealed that a large majority of the subsidies identified for the integrated exporting producers affect the upstream stages of the production process of SSCR. According to the complainant, this means that the non-integrated Indonesian producer of SSCR – Jindal Indonesia – might have also benefited from subsidies conferred to Indian and/or Indonesian upstream producers. This could happen in case of domestic sales of upstream products from IRNC Group to Jindal Indonesia or in case of Jindal Indonesia’s purchases of subsidized upstream products of Indian origin.

• (936) The Jindal Group and Jindal Indonesia responded that there is no legal basis for such a pass-through to Jindal Indonesia, and that in any case there is no such a pass-through.

• (937) On the basis of the analysis of Jindal Indonesia’s production process and the company’s raw material purchases in the IP, the Commission concluded that the company could not have benefited from the purchases of subsidized upstream products of Indonesian origin.

• (938) Jindal Indonesia however purchased upstream products, namely hot rolled coils, from a related company in India, which may have benefited from the GOI provision of chromium ore for less than adequate remuneration (see Section 3.3.2). In this regard, the Commission could not make any findings since there was insufficient information on file on this matter. Therefore, the claim of the complainant was rejected.

• (939) The complainant further argued that the massive exports from Indonesia are not an incidental consequence of its policy in the stainless steel industry, but rather its very purpose. This would make many schemes de facto contingent on exports, in particular the provision of nickel ore for LTAR and the financial support granted in the context of the bilateral cooperation between the GOID and the GOC. The complainant urged the Commission to assess the de facto contingency on exports of these schemes and to countervail them based on the turnover of exports rather than the total turnover of the exporting producer.

• (940) As highlighted in recital (929) above, the Commission agreed with this claim for the scheme relating to the imports of raw materials in the bonded zone. However, the Commission disagreed with the claim for the other schemes. Provision of nickel ore for LTAR is a production subsidy, and there is no link with export sales of the finished product.

• (941) Concerning financial support, the situation is different from the Tyres case cited by the complainant. In that case, a subsidy was awarded by the Chinese government to a company located in China with the specific commitment to increase its export sales from China to the EU, via the acquisition of the global assets (most importantly its technical know-how and distribution channels in the EU) of a foreign-owned company under the umbrella of the BRI. Translating this into the current context would correspond to a subsidy provided by the GOC to Tsingshan Group’s parent company in China with the commitment to increase its exports from China to Indonesia. Clearly, this was not the case here. On the other hand, in a context similar to the one at hand, as was the case in the GFF anti-subsidy investigation, financing support awarded under the bilateral cooperation between China and Egypt was not considered to be export contingent. This claim was thus rejected.

• (942) Since the subsidy amount for Jindal Indonesia is below the de minimis threshold, no duties will be imposed on this company.

• (943) A subsidy amount also had to be established for the sole cooperating non-sampled exporting producer in Indonesia. In view of the specific circumstances of the case, this could not be done according to the usual methodology, based on the weighted average amount of countervailing subsidies established for the cooperating exporting producers in the sample. Indeed, as mentioned above, the final subsidy amount for Jindal Indonesia was below the de minimis amount. Since there was only one remaining exporting producer, the Commission decided to apply the duty rate of this exporting producer to the sole cooperating non-sampled exporting producer, with the exclusion of the scheme related to preferential financing, for which there was no evidence on file that the company in question could have benefited from. Indeed, the company in question has no links with China, and could thus not have benefited from the preferential financing as provided to the IRNC Group.

• (944) Given the fact that the Commission only calculated a duty rate for one exporting producer, and in view of the fact that cooperating non-sampled exporting producers benefit from a lower rate, as explained in the preceding recital, the Commission exceptionally decided to set the level of the duty for ‘all other companies’ at the level of the IRNC Group.

Company	Overall subsidy amount
IRNC Group	21,4  %
Jindal Indonesia	0,02  % (below de minimis)
Other cooperating companies	13,5  %
Residual	21,4  %

5. INJURY

5.1.   Definition of the Union industry and Union production

• (945) The like product was manufactured by 13 known producers in the Union during the investigation period. They constituted the ‘Union industry’ within the meaning of Article 9(1) of the basic Regulation.

• (946) Following final disclosure the consortium of importers and distributors and one unrelated importer requested the disclosure of the identity of the 13 Union producers that made up the Union industry during the IP. Aside from the three sampled producers and the companies supporting the complaint (i.e. Acerinox, Outokumpu Nirosta GmbH, Outokumpu Stainless AB), these are Marcegaglia, Acroni, Arinox, Otelinox, and three re-rollers based in Germany (i.e. SAP Precision Metal, BWS, and Waelzholz).

• (947) The total Union production during the investigation period was established at around 3,1 million tonnes. The Commission established this figure on the basis of all the available information concerning the Union industry, namely the verified questionnaire reply received from Eurofer and remotely cross-checked questionnaire replies of the sampled Union producers.

• (948) As indicated in recital (25), three Union producers were selected in the sample, representing over 60 % of total Union production of the like product. They are all vertically integrated producers.

5.2.   Union consumption

• (949) The Commission established the Union consumption on the basis of: (a) the verified Eurofer data concerning Union industry’s sales of the like product to unrelated customers, whether direct or indirect sales, partially cross-checked with the sampled Union producers, as further set out in recital (976) below; and (b) imports of the product under investigation from all third countries as reported by Eurostat.

• (950) The Union consumption over the period considered developed as follows:

Table 4

Union consumption (tonnes)

	2017	2018	2019	IP
Union consumption	3 873 092	3 717 114	3 442 541	3 206 766
Index	100	96	89	83
Source: Eurofer, sampled Union producers and Eurostat	Source: Eurofer, sampled Union producers and Eurostat	Source: Eurofer, sampled Union producers and Eurostat	Source: Eurofer, sampled Union producers and Eurostat	Source: Eurofer, sampled Union producers and Eurostat

• (951) During the period considered, the Union consumption decreased by 17 %.

5.3.   Imports from the countries concerned

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

• (952) The Commission examined whether imports of SSCR originating in the countries concerned should be assessed cumulatively, in accordance with Article 8(3) of the basic Regulation.

• (953) That provision stipulates that the imports from more than one country shall 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 more than de minimis as defined in Article 14(5), 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 light of the conditions of competition between imported products and the like Union product.

• (954) The amount of countervailable subsidies established in relation to the imports from each of the two countries concerned are summarised under recitals (302) and (933). They are all, but for Jindal Indonesia, above the de minimis threshold laid down in Article 14(5) of the basic Regulation.

• (955) The volume of imports from each of the two countries concerned was not negligible. Imports market shares in the investigation period were 3,4 % for India and 2,8 % for Indonesia.

• (956) The conditions of competition between the subsidised imports from each of the two countries concerned and between them and the Union like product were similar. Indeed, SSCR originating in India and Indonesia competed with each other when imported for sale on the Union market, and with the like product produced by the Union industry, as all of them are sold to similar categories of customers.

• (957) The consortium of importers and distributors and one unrelated importer contested the cumulative assessment of the effects of the Indian and Indonesian imports on the Union industry’s situation. The interested parties argued that the import volumes from both countries are low compared to the market share of the Union industry, the imports from India remained stable and were limited by the safeguard measures, and no proper analysis of the conditions of competition between imported products and between the imported products and the like Union products was conducted as requested by Article 8(3) of the basic Regulation.

• (958) The consortium and one unrelated importer requested the disclosure of the theoretical models used to assess the conditions of competition in the Union market of the product under investigation and the countries concerned, and the confirmation that the competition and economic analysis services of the Commission have been consulted on these conditions of competition.

• (959) The Commission did perform an analysis in which it compared the product types sold on the Union market by the exporting producers and the product sold by the Union producers, on the basis of the product control numbers (PCNs) given by the sampled companies. This analysis showed a high level of matching. The level of matching between each of the exporting producers and the sales by the Union industry is provided to the sampled exporting producers in their specific disclosure. Furthermore, the Commission also found a significant level of similarity in the product types sold by the exporting producers from Indonesia compared to the product types sold by the exporting producers from India. Therefore, the Commission concluded that the imported products from the countries concerned and the Union products were in clear competition with each other and a cumulative assessment of the effects of the imports to be appropriate. The consortium and unrelated importer did not provide any substantiated evidence why the analysis done by the Commission would be incorrect or insufficient. The fact that India has a country-specific quota within the safeguard measures does not affect this analysis in light of the conditions listed in Article 8(3). The claim was therefore rejected.

• (960) Therefore, all criteria set out in Article 8(3) of the basic Regulation were met and imports from the countries concerned were examined cumulatively for the purposes of injury determination.

5.3.2.   Volume and market share of subsidised imports from the countries concerned

• (961) The Commission established the volume of subsidised imports on the basis of Eurostat data and the data of the exporting producers. Since the Commission found the exports of Jindal Indonesia to be subsidised below the de minimis level, they were taken out of the import figures. The market share of imports was thus established by comparing the volume of subsidised imports with the Union consumption.

• (962) Given the limited number of parties that submitted some data, some of the figures presented below are in the form of ranges for reasons of confidentiality ²²⁰.

• (963) Imports from the countries concerned over the period concerned developed as follows:

Table 5

Import volumes (tonnes) and market share

	2017	2018	2019	IP
India	114 865	120 729	105 359	108 885
Index	100	105	92	95
Market share	3,0  %	3,2  %	3,1  %	3,4  %
Index	100	110	103	114
Indonesia	[0 -100 ]	[10 000 – 14 000 ]	[48 000 - 52 000 ]	[68 000 – 72 000 ]
Index	0	100	[400 – 450 ]	[550 – 600 ]
Market share	[0,0 - 0,1 ] %	[0,3 - 0,5 ] %	[1,4 - 1,7 ] %	[2,1 - 2,4 ] %
Index	0	100	[400 – 450 ]	[650 – 700 ]
Total countries concerned	[114 865 – 114 965 ]	[130 729 – 134 729 ]	[153 359 – 157 359 ]	[176 885 – 180 885 ]
Index	100	[115 – 117 ]	[136 – 138 ]	[154 – 156 ]
Market share	[3,0 - 3,1 ] %	[3,5 - 3,7 ] %	[4,5 - 4,8 ] %	[5,5 - 5,8 ] %
Index	100	[120 - 122 ]	[152 - 154 ]	[186 - 188 ]
Source: Eurostat, data of the exporting producers	Source: Eurostat, data of the exporting producers	Source: Eurostat, data of the exporting producers	Source: Eurostat, data of the exporting producers	Source: Eurostat, data of the exporting producers

• (964) Imports from the countries concerned increased by around 55 % over the period considered, which allowed them to increase their joint market share from [3,0-3,1] % in 2017 to [5,5 - 5,8] % in the IP. This increase, both in volume of imports and in market share, can be attributed to the imports coming from Indonesia, which increased its import volumes almost 6 times in the period considered and its market share increased from practically zero to [2,1 - 2,4] %. The imports from India increased from 2017 to 2018, but showed a drop afterwards. This resulted in an overall drop in absolute terms during the period considered. On 1 February 2019, the Commission published a Regulation imposing definitive safeguard measures against imports of certain steel products ²²¹. India received a country-specific tariff quota for the product under investigation, limiting imports subject to the in-quota duty during the IP to a lower level than the 2018 level. As Indonesia was not subject to a country-specific tariff quota, but to the quota for all other countries, its imports were not as restricted as the Indian ones. However, the drop in Indian imports was less severe as the overall drop in Union consumption and thus India’s market share still increased slightly from 3 % in 2017 to 3,4 % in the IP.

5.3.3.   Prices of the imports from the countries concerned and price undercutting

• (965) The Commission established the prices of imports on the basis of Eurostat data. The weighted average price of imports from the countries concerned during the period concerned developed as follows:

Table 6

Prices of the imports from the countries concerned (EUR/tonne)

	2017	2018	2019	IP
India	2 080	2 173	2 075	2 073
Index	100	104	100	100
Indonesia	N/A	[1 450 – 1 650 ]	[1 800 – 2 000 ]	[1 800 – 2 000 ]
Index	0	100	123 - 128	123 - 128
Average of the countries concerned	2 080	[2 000 – 2 150 ]	[1 900 – 2 050 ]	[1 900 – 2 050 ]
Index	100	100 - 102	96 - 98	96 - 98
Source: Eurostat, data of the exporting producers	Source: Eurostat, data of the exporting producers	Source: Eurostat, data of the exporting producers	Source: Eurostat, data of the exporting producers	Source: Eurostat, data of the exporting producers

• (966) In case of India, the average import prices went up from 2017 to 2018 by 4 %, but remained stable in the overall period considered, while for Indonesia they increased by 28 % (imports in 2017 were negligible). Nevertheless, throughout the whole period considered, the average import prices from both countries concerned were consistently lower than Union producers’ prices (see Table 10).

• (967) The Commission determined price undercutting during the investigation period by comparing:

• (a) the weighted average sales prices per product type of the three sampled Union producers charged to unrelated customers on the Union market, adjusted to an ex-works level; and

• (b) the corresponding weighted average prices per product type of imports from the cooperating exporting producers in the countries concerned to the first independent customer on the Union market, established on a cost, insurance, freight (CIF) basis, with appropriate adjustments for post-importation costs.

• (968) The price comparison was made on a type-by-type basis for transactions at the same level of trade, duly adjusted where necessary, and after deduction of rebates and discounts. The result of the comparison was expressed as a percentage of the sampled Union producers’ turnover during the investigation period. It showed undercutting margins of 5,8 % and 13,4 % for the Indian exporting producers and 12,4 % for the Indonesian exporting producer.

• (969) Following final disclosure, the consortium of importers and distributors and one unrelated requested the Commission to disclose the data and criteria used to determine both the import prices of the product concerned and to calculate the undercutting margin.

• (970) The prices of the imports from the countries concerned, as given in Table 6 above, are based on Eurostat. This information is publicly available. As explained in recitals (966) and (967) above, the undercutting margin was based on a comparison between the sales prices of the sampled Union producers charged to unrelated customers on the Union market and the corresponding prices of the sampled exporting producers to the first independent customer on the Union market, differentiated per product type and adjusted to be at equal sales terms. As the detailed sales prices per company is by definition business confidential, it was only provided to the companies concerned in their respective specific disclosures.

5.4.   Economic situation of the Union industry

5.4.1.   General remarks

• (971) In accordance with Article 8(4) of the basic Regulation, the examination of the impact of the subsidised imports on the Union industry included an evaluation of all economic indicators having a bearing on the state of the Union industry during the period considered.

• (972) As mentioned in recital (25), sampling was used for the determination of possible injury suffered by the Union industry.