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

• (138) Import quantities from other third countries held a market share of 26,2 % in 2018 and 25,5 % in the investigation period. The quantity of these imports decreased during the period considered by 19 % and their market share followed partially the same trend with a decrease of 3 %. The average import price of these imports increased by 1 % and was higher compared to the Union industry’s average price (+ 12 %) and significantly higher compared with the average import price from the country concerned (+ 26 %). The sole country that increased its market share in the period considered from 10,3 % to 13,0 % was Turkey. However, Turkish average prices were slightly higher compared to the Union industry’s (+ 1,0 %) and significantly higher compared with import prices from the country concerned (+ 14 %).

• (139) Therefore, the Commission provisionally concluded that imports from other third countries have not contributed to the injury suffered by the Union industry.

5.2.2.   The COVID-19 pandemic

• (140) In 2020, the car industry production went down by around 4,2 million vehicles due to the COVID-19 pandemic and thus with a direct impact on upstream suppliers. Accordingly, the sales of the ARW decreased by 14 million in 2020 compared with 2019. The drop in production was particularly significant in the 2^nd quarter 2020, but the market rebounded in the following months. The market recovered 5 million wheels: from 60 million in 2020 to 65 million during the investigation period. The consumption however, did, not reach the level of 2019, mainly due to the shortage of semi-conductors used by car makers. The increase of demand in the investigation period did not benefit the Union industry, but mostly the Moroccan imports (2,6 million of imports in the investigation period and 4 % of market share). Aside of taking over sales quantities, Moroccan imports exerted downward pressure on prices and impeded the Union producers from passing on the increase of their costs to their customers, leading to a substantially reduced turn-over and even more losses compared with 2020.

• (141) In this respect, indeed, the COVID-19 pandemic had a negative impact on Union industry, especially in 2020 when production sites of the Union industry had to close temporarily. However, when the market rebounded post-COVID, the Union industry did not benefit due to the increased imports from the country concerned at dumped prices.

• (142) Therefore, the Commission provisionally concluded that the COVID-19 pandemic did not attenuate the causal link between the dumped imports from the country concerned and the material injury suffered by the Union industry.

5.2.3.   Export performance of the Union industry

• (143) The quantity of exports of the sampled Union producers developed over the period considered as follows:

Table 12

Export performance of the sampled Union producers

• (144) Export sales to unrelated customers represented 5,6 % of the total Union industry production in the investigation period. During the period considered, the export quantities fluctuated – they first decreased between 2018 and 2020 by 38 % and then increased in the investigation period. Overall, export sales decreased in the period considered by 21 %. The export price per item was significantly higher compared with the Union prices over the period considered.

• (145) In the investigation period, the Union industry sold more than 95 % of its production on the Union market. Therefore, although the decline in export performance could have contributed to the injury suffered by the Union industry, the Commission provisionally concluded that, considering the high share of Union sales compared to export sales, this evolution did not attenuate the causal link between the dumped imports from the country concerned and the injury suffered by the Union industry.

5.2.4.   Effect of multi-year contracts and evolution of the cost of production

• (146) Sales of the Union industry of the like product in the Union market were based on multi-year contracts with car manufacturer’s customers that fix the prices for the duration of the production of a certain type of car. The Union industry has a minimal margin to increase sales prices in the context of increasing raw material prices during the application of the yearly contract. In principle, the Union industry should however be able to increase its sales prices when it negotiates the contracts for the following year. As explained in Section 4.4.3.1 above, while the average cost of production of the Union industry increased by 9 % between 2018 and the investigation period the average sales price of the Union industry on the Union market remained stable.

• (147) As illustrated in table 7 above, the Union industry did not have difficulties, despite the yearly contracts, to sell at prices which covered its cost of production in 2018 and 2019 when imports from Morocco were not existing. However, when imports started coming in in 2020 and increased significantly in the investigation period, due to price pressure they exercised, the Union industry was no longer able to sufficiently adapt its sales prices in the latest yearly contracts in order to cover the increasing costs of production. As a result, the Union industry only achieved very low profits in 2020 and became loss making during the investigation period.

• (148) Consequently, the time lag between the increase of raw materials cost and the increase of the sales prices due to the yearly contracts did not appear to prevent the Union industry from adapting its sales prices to the increasing cost of production over the period considered. As a result, the Commission provisionally concluded that fixing the sales prices in yearly contracts did not attenuate the causal link between the dumped imports and the injury found.

5.2.5.   Consumption

• (149) Users claimed that the contraction of the Union ARW market caused injury to the Union industry.

• (150) As mentioned in recital 139, the Union consumption decreased by 13 million items, that is by 17 %, the period considered. Union sales figures reflected the trend of the Union consumption. However, when consumption rebounded in the investigation period and increased by 8 % compared to 2020, the Union industry could not benefit from it due to the imports from Morocco. Indeed, the market share of the Union industry decreased by 2,9 percentage points, from 71,7 % in 2020 to 68,8 % in the investigation period, while the market share of the imports from Morocco increased by 129 %, from 1,7 % in 2020 to 3,9 % in the investigation period. It was thus the price suppression exerted by the low-priced dumped imports rather than a loss of quantities due to falling consumption that was the cause of injury to the Union industry.

• (151) Therefore, the Commission provisionally concluded that the contraction of the market demand by 17 % could not be considered as a cause of injury attenuating the causal link between the dumped imports and the injury found.

5.3.   Conclusion on causation

• (152) The deterioration of the Union industry’s financial situation coincided in time with increasing quantities of imports of ARWs from the country concerned, which were made at dumped prices.

• (153) The Commission distinguished and separated the effects of all known factors on the situation of the Union industry from the injurious effects of the dumped imports. The effect of imports from other third countries, the COVID-19 pandemic and the decrease of demand, the evolution of the cost of production, the export performance of the Union industry and multi-year contracts were considered.

• (154) On the basis of the above, the Commission provisionally concluded that the dumped imports from the country concerned caused material injury to the Union industry and that the other factors, either individually or collectively, did not attenuate the causal link between the dumped imports and the material injury.

6. LEVEL OF MEASURES

• (155) To determine the level of the measures, the Commission examined whether a duty lower than the margin of dumping would be sufficient to remove the injury caused by dumped imports to the Union industry.

6.1.   Injury margin

• (156) The injury would be removed if the Union Industry were able to obtain a target profit by selling at a target price in the sense of Articles 7(2c) and 7(2d) of the basic regulation.

• (157) In accordance with Article 7(2c) of the basic Regulation, for establishing the target profit, the Commission took into account the following factors: the level of profitability before the increase of imports from the country concerned, the level of profitability needed to cover full costs and investments, research and development (R & D) and innovation, and the level of profitability to be expected under normal conditions of competition. Such profit margin should not be lower than 6 %.

• (158) As a first step, the Commission established a basic profit covering full costs under normal conditions of competition. The Commission took the profits achieved by the sampled Union producers before unfair imports from Morocco accelerated and started injuring the Union industry. Such profit margin was established at 7,9 % which corresponds to the average of the profit achieved by the Union industry in the years 2018-2019.

• (159) The Union industry provided evidence that its level of investments, research and development (R & D) and innovation during the period considered would have been higher under normal conditions of competition. Indeed, the claims of the Union industry were found to be warranted. To reflect this in the target profit, the Commission calculated the difference between investments, R & D and innovation (‘IRI’) expenses under normal conditions of competition as provided by the Union industry and verified by the Commission with actual IRI expenses over the period considered. Such difference, expressed as a percentage of turnover, was 0,4 %.

• (160) Such percentage of 0,4 % was added to the basic profit of 7,9 % mentioned in the recital 158, leading to a target profit of 8,3 %.

• (161) In accordance with article 7(2d) of the basic Regulation, as a final step, the Commission assessed the future costs resulting from Multilateral Environmental Agreements, and protocols thereunder, to which the Union is a party, and of ILO Conventions listed in Annex Ia that the Union industry will incur during the period of the application of the measure pursuant to Article 11(2). Based on the evidence available, the Commission established an additional cost of 0,5 EUR/item. This additional cost was added to the non-injurious price mentioned in the above recital.

• (162) On this basis, the Commission calculated a weighted average non-injurious price of 55,9 EUR/item for the like product of the Union industry by applying the above-mentioned target profit margin to the cost of production of the sampled Union producers during the investigation period and then adding the adjustments under Article 7(2d) on a type-by-type basis.

• (163) The Commission then determined the injury margin level on the basis of a comparison of the weighted average import price of the sampled cooperating exporting producers in Morocco, as established for the price undercutting calculations, with the weighted average non-injurious price of the like product sold by the sampled Union producers on the Union market during the investigation period. Any difference resulting from this comparison was expressed as a percentage of the weighted average import CIF value.

• (164) The injury elimination level for ‘all other companies’ is defined in the same manner as the dumping margin for these companies (see recital 73).

7. UNION INTEREST

7.1.   Interest of the Union industry

• (165) The effect of anti-dumping measures will be positive for the Union producers, as measures will allow the Union industry to adapt its sales prices to cover the increased cost of production. Therefore, the Union industry would return to a sustainable situation, allowing it to make future investments, in particular to comply with environmental and social requirements.

• (166) In the absence of measures, the Union industry will continue suffering from material injury and its financial situation, in particular in terms of profitability, return on investments and cash flow, is expected to worsen further, in particular in view of the increase of dumped imports from the country concerned which continued after the investigation period, thus threatening its viability.

7.2.   Interest of unrelated importers and users

• (167) Upon initiation, importers were contacted. However, none cooperated with the investigation.

• (168) Regarding the users, two car manufacturers and their association, i.e. the car manufacturers (‘ACEA’) cooperated.

• (169) The car manufacturers are the customers of the Union ARW industry. They already source approximately 70 % of their ARW needs from the Union industry. Imports from the country concerned had a 3,9 % market share on the Union market in the investigation period and imports from other third countries held a market share of 25,5 % with higher price levels of those of the Union industry. Accordingly, car manufacturers have, in addition to the Union industry and Morocco, also other sources of supply. This was also confirmed by the fact that the purchases of ARW from Morocco represented around 30 % of the two users’ total ARW purchases during the investigation period. Moreover, based on the data of the two users which provided questionnaire replies, ARW represented approximately 0,5 % of their cost of production. Consequently, the Commission provisionally concluded that the impact of measures on ARW is limited for car manufacturers.

• (170) ACEA claimed that imports from Morocco addressed the strategic needs of the Union car manufacturers that the Union ARW producers cannot satisfy as the latter deliberately choose not to increase their production capacities. Therefore, the car manufacturers have no choice but to diversify their supply, including relying on various sources of imports.

• (171) As mentioned in recital 40, the Union ARW industry is a supplier of the car manufacturers and their activity depends on the tenders granted by these large companies. The nomination of the ARW suppliers and thus the actual deliveries of wheels takes place years in advance of the car production which should give time to the ARW industry to adjust its industrial output. If needed, the Union ARW industry could increase its capacity at relatively short notice as the requested investment does not concern the furnaces or the painting booths, but rather casting machines which can be installed easily. Therefore, if the Union ARW producers did not invest in additional production capacity, it was rather due to a lack of sufficient future contracts from the car manufacturers. Thus, the Union industry did not have sufficient incentive to invest in additional capacity in the absence of foreseeable increase in demand of its production. In addition, the Union consumption was 64,31 million items in the investigation period. The total Union industry capacity was 61,29 million items, while the total Union production was 48,75 million items in the investigation period and exports of the Union industry were 2,71 million items. Consequently, the Union industry has already sufficient production capacity to cover almost the total Union demand of ARW. Consequently, the claim was rejected.

• (172) ACEA claimed that the Union ARW industry did not satisfy the requirements of spare capacity set by the car manufacturers (the Union industry reported a high level of capacity utilization above 95 %) and obliged the car manufacturers to diversify its sourcing, in particular from Morocco.

• (173) The Commission noted that no evidence was provided demonstrating that the Union ARW industry lost tenders due to an issue regarding its production capacity or that the Union ARW industry failed to deliver ARW following car manufacturers commercial orders. In addition, the capacity utilisation established for the investigation period was 80 %. Therefore, the claim was rejected.

• (174) ACEA claimed that the effects of the COVID-19 pandemic have disrupted the supply chains and the car manufacturers were fully hit by the COVID-19 pandemic with a total loss of 4,2 million vehicles, representing 22,9 % of the Union production in 2019. The profitability of car manufacturers was pushed down. This affected similarly the automotive suppliers.

• (175) The Commission noted that most of car manufacturers reported profits for the financial year 2021 which exceeded the usual percentage reported during the previous years ²¹.

• (176) There is no other information on file showing that measures would have a significant negative impact on the users outweighing the positive impact of the measures on the Union industry.

7.3.   Conclusion on Union interest

• (177) On the basis of the above, the Commission provisionally concluded that there were no compelling reasons that it was not in the Union interest to impose measures on imports of aluminium road wheels originating in Morocco at this stage of the investigation.

8. PROVISIONAL ANTI-DUMPING MEASURES

• (178) On the basis of the conclusions reached by the Commission on dumping, injury, causation, level of measures and Union interest, provisional measures should be imposed to prevent further injury being caused to the Union industry by the dumped imports.

• (179) On the basis of the above, the provisional anti-dumping duty rates, expressed on the CIF Union border price, customs duty unpaid, should be as follows:

• (180) The individual company anti-dumping duty rate specified in this Regulation was established on the basis of the findings of this investigation. Therefore, it reflects the situation found during this investigation with respect to this company. This duty rate is exclusively applicable to imports of the product concerned originating in the country concerned and produced by the named legal entity. Imports of the product concerned produced by any other company not specifically mentioned in the operative part of this Regulation, including entities related to that specifically mentioned, should be subject to the duty rate applicable to ‘all other companies’. They should not be subject to any of the individual anti-dumping duty rates.

• (181) To ensure a proper enforcement of the anti-dumping duties, the anti-dumping duty for all other companies should apply not only to the non-cooperating exporting producers in this investigation, but to the producers which did not have exports to the Union during the investigation period.

• (182) To minimise the risks of circumvention due to the difference in duty rates, special measures are needed to ensure the application of the individual anti-dumping duties. The companies with individual anti-dumping duties must present a valid commercial invoice to the customs authorities of the Member States. The invoice must conform to the requirements set out in Article 1(3) of this regulation. Imports not accompanied by that invoice should be subject to the anti-dumping duty applicable to ‘all other companies’.

• (183) While presentation of this invoice is necessary for the customs authorities of the Member States to apply the individual rates of anti-dumping duty to imports, it is not the only element to be taken into account by the customs authorities. Indeed, even if presented with an invoice meeting all the requirements set out in Article 1(3) of this regulation, the customs authorities of Member States must carry out their usual checks and may, like in all other cases, require additional documents (shipping documents, etc.) for the purpose of verifying the accuracy of the particulars contained in the declaration and ensure that the subsequent application of the lower rate of duty is justified, in compliance with customs law.

• (184) Should the exports by one of the companies benefiting from lower individual duty rates increase significantly in quantity after the imposition of the measures concerned, such an increase in quantity could be considered as constituting in itself a change in the pattern of trade due to the imposition of measures within the meaning of Article 13(1) of the basic Regulation. In such circumstances and provided the conditions are met an anti-circumvention investigation may be initiated. This investigation may, inter alia, examine the need for the removal of individual duty rate(s) and the consequent imposition of a country-wide duty.

• (185) Statistics of aluminium road wheels are frequently expressed in number of items. However, no such supplementary unit is defined for aluminium road wheels in the Combined Nomenclature laid down in Annex I to Council Regulation (EEC) No 2658/87 ²² on the tariff and statistical nomenclature and on the Common Customs Tariff. It is therefore necessary to provide that not only the weight in kilogram or tonnes but also the number of items for the imports of the product concerned must be entered in the declaration for release for free circulation.

9. REGISTRATION

• (186) As mentioned in recital 3, the Commission made imports of the product concerned subject to registration. Registration took place with a view to possibly collecting duties retroactively under Article 10(4) of the basic Regulation.

• (187) In view of the findings at provisional stage, the registration of imports should be discontinued.

• (188) No decision on a possible retroactive application of anti-dumping measures has been taken at this stage of the proceeding.

10. INFORMATION AT PROVISIONAL STAGE

• (189) In accordance with Article 19a of the basic Regulation, the Commission informed interested parties about the planned imposition of provisional duties. This information was also made available to the general public via DG TRADE’s website. Interested parties were given three working days to provide comments on the accuracy of the calculations specifically disclosed to them. No such comments were received. Comments following pre-disclosure with respect to other aspects of the investigation, not related to the accuracy of the calculations, will be considered at the definitive stage of the investigation.

11. FINAL PROVISION

• (190) In the interests of sound administration, the Commission will invite the interested parties to submit written comments and/or to request a hearing with the Commission within a fixed deadline. Interested parties may also request a hearing with the Hearing Officer in trade proceedings.

• (191) The findings concerning the imposition of provisional duties are provisional and may be amended at the definitive stage of the investigation,

HAS ADOPTED THIS REGULATION:

Article 1

Article 2

Article 3

Article 4

This Regulation shall enter into force on the day following that of its publication in the Official Journal of the European Union.

Article 1 shall apply for a period of six months.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels, 14 July 2022.

For the Commission

The President

Ursula VON DER LEYEN

L’automobile: une filière marocaine stratégique, leader du secteur en Afrique ’, Policy Center for the New South, Policy Paper 20/34, November 2020 (available at https://www.policycenter.ma/sites/default/files/2021-01/PP%20-%2020-34%20%28Henri-louis%20Vedie%29_0.pdf).