Commission Implementing Regulation (EU) 2022/1221 of 14 July 2022 imposing a provisional anti-dumping duty on imports of certain aluminium road wheels originating in Morocco

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 7 thereof,

After consulting the Member States,

Whereas:

(1) On 17 November 2021, the European Commission (‘the Commission’) initiated an anti-dumping investigation with regard to imports of certain aluminium road wheels (‘ARW’) originating in Morocco (‘the country concerned’) on the basis of Article 5 of the basic Regulation. It published a Notice of Initiation in the Official Journal of the European Union (2) (‘the Notice of Initiation’).

(2) The Commission initiated the investigation following a complaint lodged on 4 October 2021 by the Association of European Wheel Manufacturers (‘the complainant’ or ‘EUWA’). The complaint was made on behalf of the Union industry in the sense of Article 5(4) of the basic Regulation. The complaint contained evidence of dumping and of resulting material injury that was sufficient to justify the initiation of the investigation.

(3) The Commission made imports of the product concerned subject to registration by Commission Implementing Regulation (EU) 2022/934 (3) (‘the registration Regulation’).

(4) In the Notice of Initiation, the Commission invited interested parties to contact it in order to participate in the investigation. The Commission specifically informed the complainant and known Union producers, the known exporting producers and the authorities of Morocco, known importers, users and associations known to be concerned, about the initiation of the investigation and invited them to participate.

(5) The complainants and two cooperating users requested that their names be kept confidential for fear that they could face retaliation by customers. The Commission took the view that there was indeed a serious risk of retaliation and accepted that the names of the complainants and the two cooperating users should not be disclosed. In order to effectively grant anonymity, the names of the other Union producers were also kept confidential, as to avoid that by deduction the names of the complainants could be identified.

(6) Interested parties had an opportunity to comment on the initiation of the investigation and to request a hearing with the Commission and/or the Hearing Officer in trade proceedings.

(7) Four parties requested a hearing with the Commission services and were heard: the European Automobile Manufacturers’ Association (‘ACEA’), EUWA, Dika Morocco Africa S.A.R.L (‘Dika’) and Hands 8 S.A. (‘Hands’).

(8) Dika and the Moroccan authorities claimed that the figures reported in the complaint were outdated, as there was a gap of almost 8 months between its investigation period and the date of initiation of the investigation. Moreover, the investigation period selected by the complainant precisely coincided with the peak of the COVID-19 pandemic. Furthermore, the period considered by the complainant exceeded by one year the usual Commission’s practice, as described in the relevant Guide (4). Dika considered that this decision could be considered unfair and partial and the use of outdated figures cannot constitute prima facie evidence of dumping, injury or causality as required under Article 5(4) of the basic Regulation.

(9) The Commission first noted that the Guide referred to by Dika explicitly indicates that it is meant to provide general advice but it is not a legally binding document and its contents are not compulsory (5). Furthermore, Article 5 of the basic Regulation does not contain any specific provision regarding the time lapsed between the complaint and the data provided. In any case, the investigation period of the complaint ended on 31 March 2021, while the complaint was lodged on 4 October 2021. Furthermore, the complainant also submitted additional injury data until 30 June 2021 (6). Consequently, the data provided by the complainant was up to date and as close as possible to the date of lodging of the complaint. Regarding the claim for the period considered and the investigation period, it is the Commission practice to select an investigation period of one year and previous three calendar years in order to examine the trends relevant for the assessment of injury covered. The fact that the complaint provided information for one additional year does not mean that outdated data was used which would render the assessment unfair or partial. Rather, it provided information regarding the most recent period available, that is until 31 March 2021. Consequently, the claim was rejected.

(10) Dika claimed that the complaint did not provide evidence justifying the use of a constructed normal value as requested by Article 5(2) of the basic Regulation. Moreover, the party claimed that constructed normal value calculation were flawed. Therefore, the Commission should have concluded that the complaint did not contain sufficient evidence of dumping and should have been rejected in accordance with Article 5 of the basic Regulation.

(11) Dika stated that the complainant did not use the Moroccan domestic sales price of ARW, although it could have known such prices in light of the fact that the Union industry itself exports ARW to Morocco. In addition, Dika alleged that the complainant used the exporting producers’ financial accounts from 2018 and 2019 to conclude that there were no sales in the ordinary course of trade, while these accounts were from a period before the investigation period selected in the complaint.

(12) The Commission disagreed. The complainant in this investigation is the EUWA and not its individual members. Since the complainant is not a producer nor an exporter, it had no access to such data. In addition, invoices are generally considered business confidential data. The complainant thus had to rely on public information regarding domestic sales prices in Morocco, which was not available at the time of the complaint. As for the use of the financial accounts of 2018 and 2019 for the Moroccan exporting producers, these were the only accounts available to the complainant at the time of lodging the complaint. The complainant could therefore only conclude that based on the information reasonably available, there were no domestic sales in the ordinary course of trade by the known Moroccan exporting producers. It was therefore justified in constructing the normal value. Accordingly, the claim was rejected.

(13) Dika also provided arguments concerning alleged fundamental flaws in the determination of the normal value. These arguments concern the choice of wheel size, the use of prices for aluminium ingots based on imports from China, the use of the Union producer cost structure, the exclusion of certain cost factors in the calculation and the application of a 6 % profit rate.

(14) The Commission disagreed with these arguments. The assumptions which the complainant made in order to construct the normal value were based on the market experience and knowledge of the complainant as well as publicly available information. The fact that the interested party disagrees with such assumptions does not invalidate them for the purpose of constructing the normal value in the complaint. The figures on which the normal value was based were supported by sufficient evidence and confirmed by the Commission’s analysis of that evidence. Even when making certain adjustments as suggested by the interested party, which the Commission did when assessing the complaint, there remained sufficient evidence of dumping.

(15) Dika and the Moroccan Authorities claimed that the complainant omitted from its injury analysis that the market is segmented between Original Equipment Manufacturers (‘OEM’) and aftermarkets (‘AM’), and within each market the different types of wheels, i.e. lower and higher-end segments.

(16) The Commission observed that whilst OEM and AM aluminium wheels have different distribution sales channels they share the same physical and technical characteristics and are interchangeable. OEM and AM should therefore be considered as different sales channels rather than different segments.

(17) As far as the two sales channels are concerned, the complainant estimated that Moroccan exports were probably almost exclusively delivered to OEM’s clients. The subsequent analysis by the Commission of the information at its disposal confirmed this. This was also the case of the sampled Union producers who almost exclusively sold to OEM clients (around 99,6 %).

(18) Regarding the different types of wheels, the Commission noted that while the complaint did not contain a full injury analysis per different type of ARW, it provided undercutting and underselling calculations for ten representative types of wheels.

(19) Consequently, the claim was rejected.

(20) Dika, Hands and the Moroccan authorities claimed that the evolution of Moroccan imports cannot cause or threaten to cause injury to the Union industry as they represented only 2,8 % of the Union market during the period from 1 April 2020 to 31 March 2021 and do not cause price depression or price suppression.

(21) The specific injury analysis of the complaint showed that there was sufficient evidence pointing to increased penetration of the Union market (both in absolute and relative terms) by imports from Morocco at prices which undercut and substantially undersell the Union industry’s own prices. This appears to have caused material injury to the Union industry, shown for example by the decrease of its sales and market share, by a deterioration of financial results or by the level of prices charged by the Union industry. Consequently, the claim was rejected.

(22) Dika claimed that certain injury indicators, such as production capacity, Union prices and Union consumption, contained in the complaint did not support a finding of injury during the investigation period. Moreover, the full capacity utilization is not an option for ARW producer, given the ‘just-in-time’ supply chain models implemented by car manufacturers in the European Union, which requires ARW producers to be flexible and to have capacities available to respond to last-minute needs.

(23) The Commission recalls that the finding of material injury necessary for the initiation of an investigation requires an examination, inter alia, of the relevant factors as described in the basic Regulation. However, it is not specifically required by Article 5 of the basic Regulation that all injury factors mentioned in Article 3(5) show deterioration in order for material injury to be sufficiently substantiated for the purpose of the initiation of an investigation. Indeed, the wording of Article 5(2) of the basic Regulation states that the complaint shall contain the information on changes in the quantity of the allegedly dumped imports, the effect of those imports on prices of the like product on the Union market and the consequent impact of the imports on the Union industry, as demonstrated by relevant (not necessarily all) factors. The complaint contained this information, which pointed to the existence of injury. Accordingly, the Commission considered that the complaint contained sufficient evidence of injury and rejected the claim.

(24) Dika and Hands argued that the imposition of anti-dumping measures cannot be in the Union interest.

(25) Regarding the latter, Union interest is not a relevant criterion for assessing whether a complaint justifies the initiation of an anti-dumping proceeding under Article 5 of the basic Regulation. Therefore, those comments were not considered in relation to claims regarding the initiation of the proceedings.

(26) Dika, Hands and the Moroccan authorities claimed that the complainant did not consider other factors as the alleged lack of competition between Union ARW and Moroccan ARW due to markets segmentation; imports from third countries; the consequences caused by the COVID-19 pandemic.

(27) The Commission’s analysis of the complaint confirmed that the elements mentioned, were either unsubstantiated, factually incorrect or insufficient to call into question the conclusion that the complaint contained sufficient evidence tending to show that imports of the product concerned were entering the Union at dumped prices and appeared to be causing material injury to the Union producers. These aspects had been established on the basis of the best evidence available to the complainant at the time and were sufficiently representative and reliable. Furthermore, the claims put forward by Dika, the Moroccan authorities and ACEA were examined in detail in the course of the investigation and are further addressed below.

(28) On the basis of the above, the Commission confirmed that the complainant provided sufficient evidence of dumping, injury and a causal link, thereby satisfying the requirements set out in Article 5(2) of the basic Regulation.

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

(30) In its Notice of Initiation, the Commission stated that it had provisionally selected a sample of Union producers. The Commission selected a definitive sample of three Union producers. Pursuant to Article 17 of the basic Regulation, the criterion used for the selection of the sample was the largest representative quantities of production of the like product in the Union during the investigation period, i.e. 1 October 2020 – 30 September 2021. This provisional sample consisted of three Union producers, located in three different Member States. The sample accounted for almost 20 % of the total production quantity in the Union of the like product, and it ensures a good geographical spread. The Commission invited interested parties to comment on the provisional sample and no comments were received.

(31) To decide whether sampling is necessary and, if so, to select a sample, the Commission asked unrelated importers to provide the information specified in the Notice of Initiation.

(32) None of the known unrelated importers provided the requested information and agreed to be included in the sample.

(33) To decide whether sampling is necessary and, if so, to select a sample, the Commission asked all exporting producers in Morocco to provide the information specified in the Notice of Initiation. In addition, the Commission asked the Mission of the Kingdom of Morocco to identify and/or contact other exporting producers, if any, that could be interested in participating in the investigation.

(34) Only two exporting producers in the country concerned, accounting for virtually all imports of ARW from Morocco, provided the requested information. The Commission therefore decided that sampling was not necessary.

(35) The Commission sent questionnaires to three Union producers, the complainant, and two known users, and two exporting producers in the country concerned. The same questionnaires were made available online (7) on the day of initiation.

(37) In addition, in line with its Notice on the consequences of the COVID-19 outbreak on anti-dumping and anti-subsidy investigations (9), the Commission carried out remote cross-checks in respect of Dika’s related company CITIC Dicastal Co., Ltd (‘CITIC’) and one Union producer.

(38) The investigation of dumping and injury covered the period from 1 October 2020 to 30 September 2021 (‘the investigation period’). The examination of trends relevant for the assessment of injury covered the period from 1 January 2018 to the end of the investigation period (‘the period considered’).

(39) The product concerned is aluminium road wheels of the motor vehicles of HS headings 8701 to 8705 whether or not with their accessories and whether or not fitted with tyres, originating in Morocco, currently falling under CN codes ex 8708 70 10 and ex 8708 70 50 (TARIC codes: 8708701015, 8708701050, 8708705015 and 8708705050) (‘the product concerned’).

(40) Aluminium road wheels are traditionally sold in the Union via two distribution sales channels: to the OEM, which are mainly car manufacturers, and to the aftermarket, which includes for example distributors, retailers, repair shops, etcetera. The product concerned from Morocco was exclusively sold through the OEM channel during the period considered. In the OEM distribution channel, car manufacturers organise tender procedures for ARW and are often involved in the process of developing a new wheel, which is associated with their brand. Both Union producers and Moroccan exporters can compete in the same tenders.

(42) The Commission decided at this stage that those products are therefore like products within the meaning of Article 1(4) of the basic Regulation.

(43) As set out in recital 34 above, two Moroccan exporting producers, Dika and Hands, came forward in the investigation and provided questionnaire replies. Dika has a related company, CITIC, which is a Chinese ARW producer. CITIC buys ARW from Dika and sells it to the Union, Morocco and other third countries. During the RCC with CITIC, a number of errors were discovered which cast serious doubts on the reliability of the domestic and EU sales listings. These errors mainly concerned differences between the prices recorded in the sales listings, the prices on the invoices and the amounts actually paid.

(44) On 1 April 2022, during the on-spot verification at Dika, after the RCC with CITIC had been concluded, the company provided a revised version of the sales listings, including an explanation for the discrepancies that had been found. At that point in time there remained no opportunity to verify or cross-check the revised sales listings. In addition, a preliminary check of the newly submitted data revealed that the revisions made by the company did not rectify all discrepancies mentioned during the RCC, while the total number of revisions was much higher than expected based on the RCC. The nature and number of the mistakes, some of which persisted following the revision, was such that the Commission could not rely on the accuracy of the sales listings. Therefore, the Commission was unable to verify the information necessary to establish a dumping margin for the company.

(45) In accordance with Article 18(4) of the basic Regulation, by letter of 5 May 2022, Dika and its related company were informed of the reasons of the Commission’s intention to disregard the information provided and they were granted the opportunity to provide further explanations (‘the Article 18 letter’).