Commission Implementing Regulation (EU) 2022/1924 of 10 October 2022 imposing a definitive anti-dumping duty on imports of sodium cyclamate originating in the People’s Republic of China and Indonesia following an expiry review pursuant to Article 11(2) of Regulation (EU) 2016/1036 of the European Parliament and of 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) On 19 December 2002, following a complaint logged by the Union industry, the European Commission (‘the Commission’) initiated an anti-dumping proceeding concerning imports of sodium cyclamate originating in the People’s Republic of China (‘the PRC’ or ‘China’) and Indonesia (‘the original investigation’) (2). By Regulation (EC) No 435/2004 (3), the Council imposed anti-dumping duties on imports of sodium cyclamate, originating in the PRC and Indonesia (‘the original measures’).

(2) The original measures were subsequently subject to two expiry reviews (4) pursuant to Article 11(2) of the basic Regulation (‘the previous expiry reviews’) and to a partial interim review (5) pursuant to Article 11(3) of the basic Regulation.

(3) The original measures applied to all imports of sodium cyclamate originating in the PRC and Indonesia, with the exception of imports of sodium cyclamate produced by Chinese exporting producers Fang Da Food Additive (Shen Zhen) Limited and Fang Da Food Additive (Yang Quan) Limited (the companies belong to the same group and are further referred to as ‘Fang Da’). A zero duty rate was originally determined for these companies as no dumping was found (6).

(4) In line with the WTO Appellate Body report in case Mexico – Definitive Anti-dumping Measures on Beef and Rice (7), Fang Da was not examined in the previous expiry reviews of the measures as imposed by Regulation (EC) No 435/2004 and was not subject to the measures in force following these reviews.

(5) On 12 August 2015, following a complaint lodged by the Union industry, the Commission initiated an anti-dumping investigation concerning imports into the Union of sodium cyclamate originating in the PRC, limited to the Fang Da group (8). By Regulation (EU) 2016/1159 (9), the Commission imposed anti-dumping duties on imports of sodium cyclamate originating in the PRC and produced by Fang Da.

(6) As a result, the rate of the duty applicable for Indonesia ranged from 0,24 EUR/kg to 0,27 EUR/kg and for the PRC from 0,23 EUR/kg to 1,17 EUR/kg (‘the measures in force’).

(7) Following the publication of a notice of impending expiry (10) the Commission received a request for a review pursuant to Article 11(2) of the basic Regulation.

(8) The request for a review was lodged on 14 April 2021 by Productos Aditivos S.A. (‘the applicant’), the sole manufacturer of sodium cyclamate in the Union and thus representing 100 % of the total Union production of sodium cyclamate. The request for the review was based on the grounds that the expiry of the measures would be likely to result in continuation of dumping from the PRC and recurrence of dumping from Indonesia as well as continuation of injury to the Union industry (11) caused by imports from the PRC and likelihood of recurrence of injury from Indonesia.

(9) The applicant requests the expiry review of the measures imposed under both, Regulation (EU) 2016/1159 and Regulation (EU) 2016/1160 (12).

(10) Having determined, after consulting the Committee established by Article 15(1) of the basic Regulation, that sufficient evidence existed for the initiation of the expiry review, on 16 July 2021 the Commission initiated the expiry review with regard to imports into the Union of sodium cyclamate originating in the PRC and Indonesia (‘the countries 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 (13) (‘the Notice of Initiation’).

(11) The investigation of continuation or recurrence of dumping covered the period from 1 July 2020 to 30 June 2021 (‘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’).

(12) In the Notice of Initiation, interested parties were invited to contact the Commission in order to participate in the investigation. In addition, the Commission specifically informed the applicant, the known producers in the countries concerned and the authorities of the countries concerned, known importers and users about the initiation of the expiry review and invited them to participate.

(13) 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. Parties did not request a hearing.

(14) The Commission received comments on initiation from the Government of Indonesia (‘GOI’). The GOI claimed that as the anti-dumping duties have been in force since 2004, any injury caused by the imports of the product under review has been fully remedied. Furthermore, it was stated that in case the Union industry was still injured, other factors than imports of the product under review injured the Union industry, including self-inflicted injury, such as mismanagement or consumer preference, which could determine users to prefer imported rather than domestic product and the Commission should investigate these factors.

(15) The Commission notes that the GOI did not submit any evidence in support of its claim and therefore it was rejected as being unsubstantiated. Thus, the Commission considered that the request provided sufficient evidence that the expiry of the measures would likely result in a continuation and recurrence of dumping and continuation and recurrence of injury, thereby satisfying the requirements set out in Article 11(2) of the basic Regulation. Furthermore, the claims put forward by the GOI, whilst unsubstantiated, were examined in detail in the course of the investigation and are further addressed below.

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

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

(18) Since only one unrelated importer came forward with the requested information, it was not necessary to sample unrelated importers.

(19) To decide whether sampling was necessary and, if so, to select a sample, the Commission asked all known exporting producers in the PRC and Indonesia to provide the information specified in the Notice of Initiation. In addition, the Commission asked the Missions of the PRC and Indonesia to the European Union respectively to identify and/or contact other exporting producers, if any, that could be interested in participating in the investigation.

(20) None of the exporting producers in the countries concerned provided the requested information and agreed to be included in the sample.

(21) The Commission sent a questionnaire concerning the existence of significant distortions in the PRC, within the meaning of Article 2(6a)(b) of the basic Regulation, to the Government of the PRC (‘GOC’).

(22) The Commission sent links to the questionnaires to the sole Union producer and the unrelated importer that provided the information requested in the Notice of Initiation. The same questionnaires had also been made available online (14) on the day of initiation.

(23) Questionnaire replies were received from the sole Union producer, one unrelated importer and two Union users.

(24) The Commission sought and verified all the information it deemed necessary for the determination of likelihood of continuation and recurrence of dumping and injury and of the Union interest. Verification visits, pursuant to Article 16 of the basic Regulation, were carried out at the premises of the following companies:

Union producer

— Productos Aditivos S.A., Montcada i Reixac, Spain.

(25) The product under review is the same as in the original investigation and previous expiry reviews, namely sodium cyclamate, currently falling under CN code ex 2929 90 00 (TARIC code 2929900010) (‘the product under review’).

(26) Sodium cyclamate is a commodity product used as a food additive and is widely used as a sweetener by the food industry, as well as by the producers of low-caloric and dietetic table-top sweeteners. Small volumes are also used by the pharmaceutical industry.

(27) Sodium cyclamate is a chemically pure substance. However, as is the case for any pure chemical, it may contain a small proportion of impurities in amounts of mg/kg of the product. The content of the impurities, determined by the Union legislation, defines the quality of sodium cyclamate. Sodium cyclamate can be found in two different forms: hydrated (HC), with 15 % of moisture; and anhydrous (AC), with a content of up to 1 % of moisture. These two forms of sodium cyclamate have the same main characteristics and uses; they only vary in their degree of sweetness; the HC type is less sweet due to the water content. Prices vary due to the same reason. The AC type is more expensive than the HC form. Both forms should be therefore considered as one product for the purposes of this proceeding.

(28) Product concerned by this investigation is the product under review originating in the PRC and Indonesia.

(30) These products are therefore considered to be like products within the meaning of Article 1(4) of the basic Regulation.

(31) In accordance with Article 11(2) of the basic Regulation, the Commission examined whether the expiry of the measures in force would be likely to lead to a continuation or recurrence of dumping from the PRC.

(32) During the review investigation period, imports of sodium cyclamate from the PRC continued at high levels. According to Comext (15), imports of sodium cyclamate from the PRC accounted for [51 % – 66 %] of the Union market in the review investigation period compared to between 38 % and 45 % on the Union market during the previous expiry review, while for Indonesia between 0 % and 2 % of the Union market in the review investigation period compared to 0 % and 1 % of the Union market during the previous expiry review. In absolute terms, the volumes of dumped imports from the PRC (excluding the imports from the exporter Fang Da) and Indonesia were at similar levels in the current expiry review as compared to the previous expiry review.

(33) As mentioned in recital 23, none of the exporters/producers from the PRC cooperated in the investigation. Therefore, on 31 August 2021 the Commission informed the authorities of the PRC that due to the absence of cooperation, the Commission may apply Article 18 of the basic Regulation concerning the findings with regard to the PRC. The Commission did not receive any comments or requests for an intervention of the Hearing Officer in this regard.

(34) Consequently, in accordance with Article 18 of the basic Regulation, the findings in relation to the likelihood of continuation or recurrence of dumping from the PRC were based on facts available, in particular information in the request for review, information obtained from cooperating parties in the course of the investigation (namely, the applicant) and information from other publicly available sources, in particular the Global Trade Atlas (‘GTA’) (16).

(35) Given the sufficient evidence available at the initiation of the investigation tending to show, with regard to the PRC, the existence of significant distortions within the meaning of point (b) of Article 2(6a) of the basic Regulation, the Commission initiated the investigation on the basis of Article 2(6a) of the basic Regulation.

(36) In order to obtain information it deemed necessary for its investigation with regard to the alleged significant distortions, the Commission sent a questionnaire to the GOC. In addition, in point 5.3.2 of the Notice of Initiation, the Commission invited all interested parties to make their views known, submit information and provide supporting evidence regarding the application of Article 2(6a) of the basic Regulation within 37 days of the date of publication of the Notice of Initiation in the Official Journal of the European Union.

(37) No questionnaire reply was received from the GOC and no submission on the application of Article 2(6a) of the basic Regulation was received within the deadline. Subsequently, on 10 June 2022 the Commission informed the GOC that it would use facts available within the meaning of Article 18 of the basic Regulation for the determination of the existence of the significant distortions in the PRC.

(38) In point 5.3.2 of the Notice of Initiation, the Commission also specified that, in view of the evidence available, Thailand could be a possible appropriate representative country pursuant to Article 2(6a)(a) of the basic Regulation for the purpose of determining the normal value based on undistorted prices or benchmarks. The Commission further stated that it would examine other possibly appropriate countries in accordance with the criteria set out in first indent of Article 2(6a)(a) of the basic Regulation.

(39) On 8 March 2022, the Commission informed by a note (‘the First Note’) interested parties on the relevant sources it intended to use for the determination of the normal value. In that note, the Commission provided a list of all factors of production such as raw materials, labour and energy used in the production of sodium cyclamate. In addition, based on the criteria guiding the choice of undistorted prices or benchmarks, the Commission identified Argentina, Malaysia and Thailand as possible appropriate representative countries. The Commission received no comments on the First Note.

(40) On 5 May 2022, the Commission informed by a second note (‘the Second Note’) interested parties on the relevant sources it intended to use for the determination of the normal value. In the Second note, the Commission identified Malaysia as the appropriate representative country and it also informed interested parties that it would establish selling, general and administrative costs (‘SG&A’) and profits based on data of the company Ajinomoto (Malaysia) Berhad (‘Ajinomoto Malaysia’), a manufacturer of food, seasoning and synthetic sweeteners in Malaysia. No comments were received.

(41) According to Article 2(1) of the basic Regulation, ‘the normal value shall normally be based on the prices paid or payable, in the ordinary course of trade, by independent customers in the exporting country’.

(42) However, according to Article 2(6a)(a) of the basic Regulation, ‘in case it is determined […] that it is not appropriate to use domestic prices and costs in the exporting country due to the existence in that country of significant distortions within the meaning of point (b), the normal value shall be constructed exclusively on the basis of costs of production and sale reflecting undistorted prices or benchmarks’, and ‘shall include an undistorted and reasonable amount of administrative, selling and general costs and for profits’.

(43) As further explained below, the Commission concluded in the present investigation that, based on the evidence available, and in view of the lack of cooperation of the GOC and the Chinese producers, the application of Article 2(6a) of the basic Regulation was appropriate.

(44) In the recent investigation concerning acesulfame potassium (17) originating in the PRC, the Commission found that significant distortions in the sense of Article 2(6a)(b) of the basic Regulation were present in the chemical and petrochemical sectors in the PRC. The Commission concluded in that investigation that, based on the evidence available, the application of Article 2(6a) of the basic Regulation was also appropriate.

(45) In that investigation, the Commission found that there is substantial government intervention in the PRC resulting in a distortion of the effective allocation of resources in line with market principles (18).

(46) In particular, in the acesulfame potassium investigation the Commission concluded that a substantial degree of ownership by the GOC persisted in the sense of Article 2(6a)(b), first indent of the basic Regulation (19).

(47) Furthermore, the Commission established that the GOC was also in a position to interfere with prices and costs through State presence in firms in the sense of Article 2(6a)(b), second indent of the basic Regulation (20).

(48) The Commission further found that the State’s presence and intervention in the financial markets, as well as in the provision of raw materials and inputs, have an additional distorting effect on the market. The system of planning in the PRC also results in resources being concentrated in sectors designated as strategic or otherwise politically important by the GOC, rather than being allocated in line with market forces (21).

(49) Moreover, the Commission concluded that the Chinese bankruptcy and property laws do not work properly in the sense of Article 2(6a)(b), fourth indent of the basic Regulation, thus generating distortions in particular when maintaining insolvent firms afloat and when allocating land use rights in the PRC (22).

(50) In the same vein, the Commission found distortions of wage costs in the chemical sector in the sense of Article 2(6a)(b), fifth indent of the basic Regulation (23), as well as distortions in the financial markets in the sense of Article 2(6a)(b), sixth indent of the basic Regulation, in particular concerning access to capital for companies in the PRC (24).

(51) As in previous investigations concerning the chemical sector in the PRC, the Commission examined in the present investigation whether it was appropriate or not to use domestic prices and costs in the PRC, due to the existence of significant distortions within the meaning of point (b) of Article 2(6a) of the basic Regulation. That analysis covered the examination of the substantial government interventions in the PRC’s economy in general, but also the specific market situation in the relevant sector including the product under review.

(52) The Commission carried out the analysis on the basis of the evidence available on the file, including the evidence contained in the request, as well as in the Commission’s report on significant distortions in China (25) (‘Report’), which relies on publicly available sources.

(53) The request in this case referred to the Report, in particular to Chapter 16 describing the Chinese chemical sector.

(54) The Commission further supplemented the information contained in the request with its own research on the various criteria relevant to confirm the existence of significant distortions in the PRC as also found by its previous investigations in this respect.