Commission Implementing Regulation (EU) 2023/112 of 18 January 2023 imposing a definitive anti-dumping duty on imports of certain aluminium road wheels originating in the People’s Republic of China 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 (‘the basic Regulation’) (1), and in particular Article 11(2) thereof,

Whereas:

(1) By Implementing Regulation (EU) No 964/2010 (2), the Council imposed anti-dumping duties on imports of certain aluminium wheels originating in People’s Republic of China (‘the PRC’ or ‘China’ or ‘country concerned’) (‘the original measures’). The investigation that led to the imposition of the original measures will hereinafter be referred to as ‘the original investigation’.

(2) Following an expiry review investigation pursuant to Article 11(2) of the basic Regulation, the European Commission (‘the Commission’) prolonged the original measures for another five years as from 25 January 2017 by Implementing Regulation (EU) 2017/109 (3) (‘previous expiry review investigation’).

(3) The measures in place are in the form of an ad valorem duty established at 22,3 % on imports from the PRC.

(4) Following the publication of a notice of impending expiry (4) 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 21 October 2021 by the Association of European Wheels Manufacturers (EUWA) (‘the applicant’) on behalf of the Union industry of certain aluminium wheels 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 likely result in continuation of dumping and continuation or recurrence of injury to the Union industry.

(6) The complainants 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 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.

(7) 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, the Commission initiated, on 20 January 2022, by a Notice published in the Official Journal of the European Union (5) (‘the Notice of Initiation’), an expiry review with regard to imports into the Union of certain aluminium wheels originating in China on the basis of Article 11(2) of the basic Regulation.

(8) The investigation of continuation of dumping covered the period from 1 October 2020 to 30 September 2021 (‘the review investigation period’). 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’).

(9) 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 applicants, other known Union producers, the known producers in the PRC and the authorities of the People’s Republic of China, known importers, users, traders, as well as associations known to be concerned about the initiation of the expiry review investigation and invited them to participate.

(10) 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. No comments were made and no requests for a hearing were received.

Sampling

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

Sampling of Union producers

(12) In the Notice of Initiation, the Commission stated that it had provisionally selected a sample of 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 of the known Union producers of the like product, and it ensures a good geographical spread. The Commission invited interested parties to comment on the provisional sample but no comments were received. The Commission thus confirmed the provisionally selected sample as the definitive sample.

Sampling of unrelated importers

(13) 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. No unrelated importers, however, came forward.

Sampling of exporting producers in the PRC

(14) To decide whether sampling was necessary and, if so, to select a sample, the Commission asked all known exporting producers in China to provide the information specified in the Notice of Initiation. In addition, the Commission asked the Mission of the People’s Republic of China to the European Union to identify and/or contact other exporting producers, if any, that could be interested in participating in the investigation.

(15) One exporting producer in the country concerned provided the requested information and agreed to be included in the sample. In view of the low number, the Commission decided that sampling was not necessary.

(16) 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 People’s Republic of China (‘GOC’).

(17) The Commission sent questionnaires to three Union producers, the complainant and one exporting producer. At the initiation the same questionnaires were made online on the day of initiation on DG Trade’s website (6).

(18) Questionnaire replies were received from the three sampled Union producers. The exporting producer that came forward during the sampling did not provide a questionnaire reply. No reply was received from any of the unrelated importers. None of the users provided a questionnaire or came forward during the investigation. The GOC did also not provide a questionnaire reply.

(19) Because there was no cooperation from the Chinese exporting producers or the GOC, the findings with regard to dumping and injury were made on the basis of facts available pursuant to Article 18 of the basic Regulation. The Mission of the People’s Republic of China to the European Union was informed accordingly. No comments were received.

(20) The Commission sought all the information deemed necessary for the investigation. In accordance with the Notice on the consequences of the COVID-19 outbreak on anti-dumping and anti-subsidy investigations, one sampled Union producer was verified through remote crosschecking (7).

(21) The Commission carried out verification visits pursuant to Article 16 of the basic Regulation in the premises of two sampled Union producers.

(22) On 18 November 2022, the Commission disclosed the essential facts and considerations on the basis of which it intended to maintain the anti-dumping duties in force. All parties were granted a period within which they could make comments on the disclosure.

(23) The comments made by interested parties were considered by the Commission and taken into account, where appropriate. The parties who so requested were granted a hearing.

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

(25) The product concerned is sold in the Union via two distribution channels: to the original equipment manufacturers (‘OEM’) segment and to the aftermarket (AM) segment. In the OEM segment, car manufacturers organise tender procedures for ARWs and are often involved in the process of developing a new wheel which is associated with their brand. Both Union producers and Chinese exporters can compete in the same tenders. In the AM sector, ARWs are usually designed, developed and branded by ARW producers to be then sold to wholesalers, retailers, tuning companies, car repair shops, etc.

(26) As in the original investigation, it was established that although OEM and AM aluminium wheels have different distribution channels they share the same physical and technical characteristics and are interchangeable. They are therefore considered to form one single product.

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

(29) The Commission did not receive any claim regarding the product scope.

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

(31) As mentioned in recital 19, no exporter/producer from China cooperated in the investigation. Therefore, the Commission informed the authorities of the PRC that due to the absence of cooperation, the Commission might apply Article 18 of the basic Regulation concerning the findings with regard to the PRC. No reply was received, and therefore the Commission decided to apply Article 18.

(32) Consequently, in accordance with Article 18 of the basic Regulation, the findings in relation to the likelihood of continuation or recurrence of dumping were based on facts available, in particular information in the request for review, and information obtained from cooperating parties in the course of the review investigation (namely, the applicant and the sampled Union producers).

(33) During the review investigation period, imports of certain aluminium wheels from China continued albeit at lower levels than in the investigation period of the original investigation. According to Eurostat imports of certain aluminium wheels from China accounted for about 3,4 % of the Union market in the review investigation period compared to 12,4 % market share during the original investigation, and 3,2 % during the previous expiry review.

(34) 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.

(35) 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 the Notice of Initiation, the had 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. 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.

(36) In the Notice of Initiation, the Commission also specified that, in view of the evidence available, it may need to select an 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) of the Basic regulation.

(37) On 12 May 2022, the Commission informed interested parties by a Note the relevant sources it intended to use for the determination of the normal value, with Brazil as the representative country. It also informed interested parties that it would establish selling, general and administrative costs (‘SG&A’) and profits based on available information for the companies Iochpe Maxion S.A. and Neo Rodas S.A, producers in the representative country. No comments were received.

(38) 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’.

(39) 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’ (‘administrative, selling and general costs’ is refereed hereinafter as ‘SG&A’).

(40) 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 exporting producers, the application of Article 2(6a) of the basic Regulation was appropriate.

(41) In recent investigations concerning the aluminium sector in the PRC (8), the Commission found that significant distortions in the sense of Article 2(6a)(b) of the basic Regulation were present.

(42) In those investigations, 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 (9). In particular, the Commission concluded that in the aluminium sector not only does a substantial degree of ownership by the GOC persists in the sense of Article 2(6a)(b), first indent of the basic Regulation (10) but the GOC is 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 (11). 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. Indeed, overall, the system of planning in the PRC 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 (12). 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 (13). In the same vein, the Commission found distortions of wage costs in the aluminium sector in the sense of Article 2(6a)(b), fifth indent of the basic Regulation (14), 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 corporate actors in the PRC (15).

(43) Like in previous investigations concerning the aluminium 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. The Commission did so on the basis of the evidence available on the file, including the evidence contained in the request, as well as in the Commission Staff Working document on significant distortions in the economy of the People’s Republic of China for the purposes of trade defence investigations (16) (‘the Report’), which relies on publicly available sources. 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. The Commission further supplemented these evidentiary elements 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.

(44) The request in this case referred to the Report, in particular to the sections concerning the aluminium sector and state-owned enterprises, a VAT policy and an export tax impacting exports, as well as to previous Commission investigations of aluminium and downstream products (17). Moreover, the request referred independent studies which conclude that the Chinese aluminium market is distorted, such as the Report on overcapacities in China issued by the European Union Chamber of commerce in Beijing, and the 2019 OECD study ‘Measuring distortions in international markets: the aluminium value chain’ (18). These studies were placed in the investigation file at the initiation stage. No comments on the studies were provided by any interested party.

(45) In the aluminium sector, a substantial degree of ownership and control by the GOC persists in the sense of Article 2(6a)(b), first indent of the basic Regulation. Many of the largest producers are owned by the State. Since there was no cooperation from Chinese exporters of the product under review, the exact ratio of the private and state owned producers could not be determined. However, the investigation confirmed that in the aluminium wheels sector, a number of large producers are SOEs, including the CITIC Dicastal Wheel Manufacturing (the world’s largest manufacturer of aluminium wheels according to the company’s website (19)) and Dongfeng Motors Group (including two subsidiaries producing aluminium wheels: Dongfeng Automotive Wheel Suizhou and Dongfeng Maxion Wheels Suizhou).