Commission Implementing Regulation (EU) 2022/1394 of 11 August 2022 imposing a definitive anti-dumping duty on imports of silicon originating in the People’s Republic of China, as extended to imports of silicon consigned from the Republic of Korea and from Taiwan, whether declared as originating in the Republic of Korea or Taiwan or not, following an expiry review pursuant to Article 11(2) of Regulation (EU) 2016/1036 of the European Parliament and the Council

THE EUROPEAN COMMISSION,

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

Having regard to Regulation (EU) 2016/1036 of the European Parliament and of the Council of 8 June 2016 on protection against dumped imports from countries not members of the European Union (1) ('the basic Regulation'), and in particular Article 11(2) thereof,

Whereas:

(1) The measures currently in force are a definitive anti-dumping duty on imports of silicon originating in the People’s Republic of China imposed by Commission Implementing Regulation (EU) 2016/1077 (2) following an expiry review pursuant to Article 11(2) and a partial interim review pursuant to Article 11(3) of Council Regulation (EC) No 1225/2009 (3) (‘the previous review investigation’). The measures are in the form of duties ranging between 16,3 % and 16,8 % of the value of the imported goods.

(2) The measures were extended to imports consigned from the Republic of Korea whether declared as originating in the Republic of Korea or not by Council Regulation (EC) No 42/2007 (4).

(3) The measures were further extended to imports consigned from Taiwan, whether declared as originating in Taiwan or not by Council Implementing Regulation (EU) No 311/2013 (5).

(4) Following the publication of a notice of impending expiry (6) the European Commission (‘the Commission’) received a request for a review pursuant to Article 11(2) of the basic Regulation.

(5) The request for review was submitted on 30 March 2021 by Euroalliages (‘the applicant’), an association that represents all three of the Union producers, which therefore represents more than 25 % of the total Union production of silicon, in the sense of Article 5(4) of the basic Regulation. The request for review was based on the grounds that the expiry of the measures would be likely to result in continuation of dumping and continuation of injury to the Union industry.

(6) Having determined, after consulting the Committee established by Article 15(1) of the basic Regulation, that sufficient evidence existed for the initiation of an expiry review, on 2 July 2021 the Commission initiated an expiry review with regard to imports into the Union of silicon originating in People’s Republic of China (‘China’ or ‘the country concerned’) on the basis of Article 11(2) of the basic Regulation. It published a Notice of Initiation in the Official Journal of the European Union (7) (‘the Notice of Initiation’).

(7) The investigation of continuation or recurrence of dumping covered the period from 1 July 2020 to 30 June 2021 (‘the review investigation period’ or ‘RIP’). The examination of trends relevant for the assessment of the likelihood of a continuation or recurrence of injury covered the period from 1 January 2018 to the end of the review investigation period (‘the period considered’).

(8) In the Notice of Initiation, interested parties were invited to contact the Commission in order to participate in the investigation. In addition, the Commission informed the three Union producers representing 100 % of the Union industry, the known producers in China and the authorities of the country concerned, the known importers, users, as well as associations known to be concerned about the initiation of the investigation and invited them to participate.

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

(10) Comments were received from EUSMET regarding the initiation of the expiry review.

(11) EUSMET claimed that the state of the non-confidential request for review did not comply with the requirements of Article 19(1) and 19(2) of the basic Regulation.

(12) This argument was rejected. Following the relevant comments from EUSMET, the applicant provided additional information to further facilitate the understanding of the facts presented in the request. This additional information has been included in the file for inspection by interested parties, thereby making it possible for EUSMET to have a reasonable understanding of the confidential information in accordance with Article 19(2) of the basic Regulation.

(13) The Commission therefore considered the information provided in the non-confidential version of the request to be sufficiently detailed for the interested parties to exercise their rights of defence throughout the proceeding.

(14) In their comments on initiation EUSMET requested that at disclosure stage the Commission should disclose information concerning the quantities of factors of production used to calculate the normal value; and the Commission should also disclose the AlloyConsult report referred to in the request for review.

(15) EUSMET reiterated these two requests in their comments after disclosure. As set out in recitals 178 to 181 and recital 191, both claims have been rejected.

(16) EUSMET claimed that the request for review did not contain sufficient evidence to initiate an expiry review and that it contained incorrect allegations concerning dumping, the continuation of dumping, injury, and the continuation of injury. EUSMET supported its allegations by the following arguments.

(17) First, EUSMET alleged there was a six-month gap between the end of the period used to present the data and the filing of the review request.

(18) With regard to this argument, the Commission pointed out that considering the time until the data from various sources become available and the time needed to compile them in a request, there is inherently a time gap, typically of several months until the request is lodged. In this case, acceptance of a 6-month difference is compliant with the established guidance the Commission provides to the complainants.

(19) Second, EUSMET claimed that the applicant excluded the imports made under the inward processing from China from the dumping and injury margin calculations.

(20) Before initiation, the Commission analysed both imports with and without inward processing and in both cases it made the necessary adjustments to compare the normal value and the export prices. The Commission noted that the methodology used by the applicant, as well as the methodology where the inward processing would be included, both result in findings of significant dumping. The methodology chosen by the applicant thus could not render the initiation of this expiry review unlawful. Consequently, the argument must be rejected.

(21) Third, EUSMET claimed that the use of Article 2(6a) of the basic Regulation and the selection of a representative country is WTO-inconsistent, as country-wide distortions are incompatible with the concept of dumping, which applies to individual companies. Furthermore, EUSMET submitted that distortion of the domestic input costs is not one of the factors that permits the construction of normal value under Article 2.2 of the WTO Anti-dumping Agreement (‘ADA’). Moreover, by imposing an obligation to use only undistorted input costs reflecting costs/prices from ‘sources’ not affected by any distortions, Article 2(6a) precludes the calculation of the cost of production for an exporter or producer based on its records even if they are GAAP-consistent and reflect the recorded input costs. Finally, EUSMET claimed that the applicant did not provide sufficient evidence of the existence of distortions in the silicon metal sector.

(22) EUSMET’s arguments concerning the application of Article 2(6a) of the basic Regulation could not be accepted. With respect to the argument that the existence of distortions should not be assessed on a country-wide basis but individually for each exporting producer, the Commission recalls that once it is determined that, due to the existence of significant distortions for the exporting country in accordance with Article 2(6a)(b) of the basic Regulation, it is not appropriate to use domestic prices and costs in the exporting country, the normal value may be constructed using undistorted prices or benchmarks in an appropriate representative country, for each exporting producer, according to Article 2(6a)(a) of the basic Regulation. In this context, and also in response to EUSMET’s argument on the use of only undistorted input costs reflecting costs/prices from a representative country not affected by any distortions, the Commission notes that Article 2(6a)(a) of the basic Regulation explicitly allows the use of domestic costs, if they are positively established not to be distorted. The Commission examined this during the investigation. However, since none of the exporting producers cooperated, the costs of production and sale of silicon could not be established as undistorted considering the evidence available.

(23) As to EUSMET’s argument on the concept of distortions not being among the factors that permit the construction of normal value under Article 2.2 of the WTO Anti-dumping Agreement, the Commission points out that domestic law does not need to use the exact same terms as the covered Agreements in order to be compliant with those Agreements. Consequently, the Commission considers Article 2(6a) of the basic Regulation to be fully compliant with the relevant rules of the ADA, including the possibilities to construct normal value provided in Article 2.2 of the ADA. Moreover, the Commission recalls that the WTO law, as interpreted by WTO panels and the Appellate Body, allows the use of data from a third country, duly adjusted when such adjustment is necessary and substantiated. The existence of significant distortions renders costs and prices in the exporting country inappropriate for the construction of normal value. In these circumstances, Article 2(6a) of the basic Regulation envisages the construction of costs of production and sale based on undistorted prices or benchmarks, including those in an appropriate representative country with a similar level of development as the exporting country.

(24) As for the argument on evidence of the existence of distortions in the silicon metal sector, the Commission found that the applicant provided sufficient evidence of distortions in the silicon metal sector, based on the Commission’s Report on distortions in China (8), as well as on a more specific independent study of 2018 commissioned by Euroalliages. Although the applicant referred specifically to distortions on raw materials and on electricity in the narrative of the request, they also provided the more detailed reports as an annex. These reports contain ample evidence on all aspects of significant distortions in the sense of Article 2(6a)(b) of the basic Regulation.

(25) Fourth, EUSMET alleged that the dumping margin calculation was inflated, since the applicant ‘cherry-picked’ the time periods to calculate the constructed normal value.

(26) The methodology proposed by the applicant is reasonable, as it was based on data available to the applicant and covering the period used for the dumping calculation (i.e. October 2019 to June 2020). This claim was thus rejected.

(27) Fifth, concerning the likelihood of continuation of dumping, EUSMET noted that the evidence provided by the applicant was based solely on the analysis of Chinese export prices to India, South Korea and Japan, which were in any case inaccurate.

(28) The Commission noted that the applicant did not only take into consideration Chinese export prices to other countries, but also referred to the more detailed analysis in chapter VI of the expiry review request, concerning the likelihood of recurrence of injury. This chapter concerns spare capacities in China, as well as Chinese export volumes to the EU and to third countries, which is also relevant for the likelihood of continuation of dumping. Therefore, the Commission considered that the information provided by the applicant was sufficient to satisfy the legal standard for initiation under Article 11(2) of the basic Regulation in respect to the likelihood of continuation of dumping. The applicant also provided a reasonable comparison between the normal value and the export prices to third counties. The adjustments proposed by EUSMET would not have led to a different conclusion, as the Chinese export prices would still have been significantly lower than the normal value. This claim was therefore dismissed.

(29) Sixth, as concerns the volume of Chinese imports of silicon into the Union, EUSMET claimed that between 2017 and 2020 these have decreased faster than the Union consumption of silicon. In other words, the Chinese exporters could not have taken sales or market share from the Union producers.

(30) The Commission considered the evidence present in the request as sufficient evidence reasonably available to the applicant. According to the evidence provided in the request and analysed by the Commission, the import volumes from China that would penetrate the Union market in the absence of measures would be likely to increase due to the existence of unused capacity in the country concerned. The effect of such volumes at prices that would in all likelihood continue to undercut the Union industry’s prices would be likely to result in continuation of injury to the Union industry. Furthermore, the existence of other factors which may have an impact on the situation of the Union industry does not necessarily imply that the effect of dumped Chinese imports on the Union industry would not be material, in particular in the case of a prospective analysis where the focus lies on what would happen should measures be repealed. Therefore, EUSMET’s argument must be rejected.

(31) Seventh, EUSMET claimed that the price effects analysis and the price undercutting and underselling calculations in the review requests were unrepresentative as they did not take into account the prices of the imports under inward processing. Moreover, EUSMET claimed that the undercutting calculations were wrong because (i) the Chinese import prices of aluminium grade silicon were compared to the EU sales of all silicon metal, which also include the chemical grade, (ii) the post-importation costs have not been added to the Chinese import prices, (iii) no level of trade adjustment was made to the Chinese imports, although these are made via traders to the EU, whereas EU sales are normally made from the Union producers to the end users. Finally, EUSMET claimed that the price underselling calculations were wrong for the same reasons as in the case of the undercutting calculation, in addition to which they were also based on artificially high production costs linked to, inter alia, a 15 % target profit, without any legal basis.

(32) The analysis presented by the applicant was based on the basis of the best evidence available to the applicant at the time and the Commission considered it sufficiently representative and reliable and containing sufficient evidence which justified initiation of the investigation.

(33) Eighth, EUSMET claimed that the Union industry did not face any negative effects on account of the Chinese imports. EUSMET alleged that chemical and aluminium grade silicon are different and that whilst the Union industry’s sales are mostly related to chemical grade silicon, imports from China under the normal regime are rather low-quality imports for the secondary aluminium market. Therefore, EUSMET requested the Commission to carry out a segmented injury analysis for the chemical and aluminium silicon grades. Such a request was reiterated in EUSMET’s comments after disclosure, but this argument must be rejected. The Commission refers in this respect to section 2.3 below which analyses product homogeneity.

(34) Ninth, EUSMET submitted that the Union consumption declined between 2018 and 2020, for both cyclical reasons and due to the COVID-19 pandemic outbreak. EUSMET therefore claimed that Chinese imports had no impact on the decrease of the Union consumption.

(35) Even if the Commission agreed with EUSMET’s analysis on the development of the Union consumption, it did not consider that the decrease of the consumption linked to other markets invalidated the allegation in the request, which covered both continuation and recurrence of injury, leading to the initiation of this expiry review. Nevertheless, even if the Union consumption decreased for reasons that are independent from the Chinese imports, the Commission shall still analyse in an expiry review what would be the consequences if measures were allowed to lapse, in terms of sales and market shares.

(36) Tenth, EUSMET claimed that the fall in the Union Industry’s production volumes and capacity cannot be attributed to the Chinese imports but rather to the decision of one Union producer to temporarily shut down production in certain plants. In the same vein, EUSMET claimed that the decline in the Union industry’s sale volumes is not linked to the Chinese imports, which declined between 2017 and Q3 of 2020, but rather to a decline in the demand and an increase of imports from third countries. EUSMET claimed further in this context that, despite Chinese imports, Union sales prices remained stable over the 2017-2019 period and fell in the first three quarters of 2020, in coincidence with a global fall of silicon demand. In other words, in a context of falling demand, the Union producers would not be able to increase prices, irrespective of the Chinese silicon imports. For the same reasons, profitability fall cannot be imputable to Chinese imports.

(37) These arguments cannot be accepted. The Commission recalls that the existence of measures is often associated with a reduction of imports from the country concerned and that existing anti-dumping measures often have a positive effect on the state of the Union industry. In an expiry review investigation the Commission carries out an analysis on what would happen should measures be allowed to lapse. The fact that Chinese imports might not the main cause of the negative development of certain injury indicators cannot therefore impede the initiation of the investigation.

(38) Eleventh, EUSMET listed some allegedly key factors affecting the Union industry which, in EUSMET’s view, were overlooked or misinterpreted in the review. Those factors include the production strategy of the Union industry and its costs, development in the silicon demand, increase in third country imports and the impact of Brexit. EUSMET required the Commission to consider them in the review.

(39) The Commission considered the way the applicant interpreted the factors in the request sufficient to initiate the expiry review. In any event the Commission considered all those factors in the framework of its analysis in the Injury and Union interest sections of this Regulation.

(40) Twelfth, EUSMET claimed that the applicant underestimated the silicon demand outlook, overestimated the Chinese production and capacity and exaggerated the price effects of Chinese imports.

(41) However, EUSMET did not bring any information that would call into question the estimates presented in the review request. Therefore, the argument could not be accepted.

(42) In view of the above, the Commission considered that the request provided sufficient evidence to initiate the review investigation.