Commission Implementing Regulation (EU) 2023/593 of 16 March 2023 re-imposing a definitive anti-dumping duty on imports of certain lightweight thermal paper originating in the Republic of Korea as regards the Hansol Group and amending the residual duty

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 Articles 9(4) and 14(1) thereof,

Whereas:

(1) Following an anti-dumping investigation in accordance with Article 5 of the basic Regulation, on 2 May 2017 the Commission adopted Implementing Regulation (EU) 2017/763 (2) imposing a definitive anti-dumping duty on imports into the Union of certain lightweight thermal paper (‘LWTP’) originating in the Republic of Korea (‘the country concerned’) (‘the Regulation at issue’). The measures took the form of fixed duty rates: EUR 104,46 per tonne net for both the Hansol group and for all other companies.

(2) The Hansol group (Hansol Paper Co. Ltd. and Hansol Artone Paper Co. Ltd.) (‘Hansol’) challenged the Regulation at issue before the General Court. On 2 April 2020, the General Court issued its judgment in Case T-383/17 annulling Implementing Regulation (EU) 2017/763 insofar as it concerned Hansol. On 11 June 2020, the Commission appealed the judgment of the General Court (Case C-260/20 P). On 12 May 2022, the Court of Justice rejected the appeal.

(3) The General Court found that the Commission had committed an error when establishing normal value for at least one product type sold by Hansol Artone Paper Co. Ltd. (‘Artone’). Absent domestic sales of that product type, the Commission had, pursuant to Article 2(3) of the basic Regulation, constructed normal value for Artone on the basis of Artone’s cost of production. As Hansol Paper Co. Ltd. (‘Hansol Paper’) had representative domestic sales in the ordinary course of trade of that product type, the General Court found that the Commission should have used the domestic sales price of that party as a normal value, pursuant to Article 2(1) of the basic Regulation.

(4) The General Court also found that the Commission had made a manifest error of assessment in the weighting of sales in the European Union of jumbo rolls to independent customers as compared with sales to related converters for conversion into small rolls. The Commission had applied such weighting to properly reflect Hansol’s overall dumping behaviour whereas Hansol, at its request, had been granted an exemption for three of its related converters to complete a questionnaire. The General Court found that, by not accounting for a certain resales volume of Schades Nordic, one of these three related converters in the Union, the Commission had underestimated the weight of Hansol’s sales of jumbo rolls to independent customers which had a significantly lower dumping margin than its sales to related converters for resale in the form of small rolls to independent traders. The Commission had therefore infringed Article 2(11) of the basic Regulation as the calculations made by the Commission did not reflect the full extent of dumping practiced by Hansol.

(5) The General Court finally found that the weighting error described under recital (4) also affected the calculation of the undercutting and injury margin, since the Commission had used the same weighting for those calculations. It therefore found that the Commission had infringed Article 3(2) and 3(3) of the basic Regulation.

(6) These findings were upheld by the Court of Justice (5).

(7) According to Article 266 of the Treaty on the Functioning of the European Union (‘TFEU’), the Union institutions are obliged to take the necessary steps to comply with the Union Courts’ judgments. In case of an annulment of an act adopted by the Union institutions in the context of an administrative procedure, such like the anti-dumping investigation in this case, compliance with the General Court’s judgment consists in the replacement of the annulled act by a new act, in which the illegality identified by the General Court is eliminated (6).

(8) According to the case-law of the General Court and the Court of Justice, the procedure for replacing an annulled act may be resumed at the very point at which the illegality occurred (7). That implies, in particular, that in a situation where an act concluding an administrative procedure is annulled, that annulment does not necessarily affect the preparatory acts, such as the initiation of the anti-dumping procedure. For instance, where a regulation imposing definitive anti-dumping measures is annulled, the proceeding remains open because it is only the act concluding the proceeding that has disappeared from the Union legal order (8), except in cases where the illegality occurred at the stage of initiation. The resumption of the administrative procedure with the re-imposition of anti-dumping duties on imports that were made during the period of application of the annulled regulation cannot be considered as contrary to the rule of non-retroactivity (9).

(9) In the present case, the General Court annulled the Regulation at issue as regards Hansol on the grounds mentioned under recitals (3) to (5).

(10) Findings in the Regulation at issue, which were not contested, or which were contested but rejected by the General Court or not examined by the General Court, and therefore did not lead to the annulment of the Regulation at issue, remain fully valid (10).

(11) Following the Court of Justice’s judgment in Case C-260/20 P, the Commission decided to partially re-open the anti-dumping investigation concerning imports of certain lightweight thermal paper that lead to the adoption of the Regulation at issue and to resume the investigation at the point at which the irregularities occurred. A Notice (‘the re-opening Notice’) was published in the Official Journal of the European Union on 30 June 2022 (11). The re-opening was limited in scope to the implementation of the judgment of the Court of Justice with regard to Hansol.

(12) At the same time, the Commission decided to make imports of certain lightweight thermal paper originating in the Republic of Korea and produced by Hansol subject to registration and requested national customs authorities to await the publication of the relevant Commission Implementing Regulation re-imposing the duties before deciding on any claims for repayment and remission of anti-dumping duties insofar as imports concerning Hansol’s products were concerned (12) (‘the registration Regulation’).

(13) The Commission informed interested parties of the re-opening and invited them to comment.

(14) The Commission received comments from Hansol and the European Thermal Paper Association (‘ETPA’) and its members.

(15) Hansol noted that in the registration Regulation, the Commission had relied on the judgments of the General Court in Cases T-440/20 and T-441/20 (‘Jindal Saw’) (13) for concluding that registration was a tool so that measures may subsequently be applied against imports from the date of registration. Hansol submitted that these judgments were not yet final and that they did not apply to the present situation, as in Case T-383/17 the General Court had stated that the regulation was illegal whereas it had not stated so in Cases T-440/20 and T-441/20. It also argued that in Jindal Saw the company concerned, Jindal Saw, was one of several exporting producers and there were several countries concerned, whereas Hansol is the sole exporting producer in the case at hand which concerns only Korea. On that basis, Hansol submitted that the Commission may therefore not rely on the Jindal Saw judgments to retroactively collect the final liability for the payment of the anti-dumping duties on imports of the product concerned manufactured by Hansol.

(16) Concerning the fact that the Jindal Saw judgment could still be appealed, ETPA submitted that these judgments replicate long-established case-law. ETPA also disputed the differences alleged by Hansol between the judgments in Jindal Saw and that in T-383/17, as in the operative part of the judgments in T-300/16 and T-301/16 (the cases preceding T-440/20 and T-441/20 by which the original regulations in Jindal Saw were annulled), like in T-383/17, the General Court annulled the contested regulation in its entirety, in so far as it concerns the applicant. According to ETPA, the fact that the judgment annulled the Regulation at issue only for Hansol also entails that, contrary to Hansol’s claim, it still forms part of the legal order of the Union.

(17) In this respect, the Commission noted that the fact that the judgment in Case T-440/20 was still not final when the registration regulation was published does not imply that registration was not possible in this case. The General Court in that case endorsed the Commission practice of registering imports when implementing judgments, supporting the fact that the Commission can indeed register imports in such situations. The General Court stated that Article 14 of the basic Regulation, empowering the Commission to require national authorities to take appropriate measures to register imports, is of general application. In particular the General Court noted that ‘Article 14(5) of that regulation is not subject to any restriction as to the circumstances in which the Commission is empowered to require the national customs authorities to register goods’. The General Court further stated that ‘depriving the Commission of the right to resort to registration as part of proceedings for reimposing a definitive anti-dumping duty is liable to undermine the effectiveness of regulations that may lead to such a reimposition’. The judgment in any event became final in the meantime. The claim was therefore rejected.

(18) Concerning Hansol’s claim that the Regulation at issue no longer stands as Hansol, for which it was annulled, was the only exporting producer concerned by that Regulation, the Commission noted that, without entering into the legal relevance of the claim, the claim is factually incorrect. Indeed, the fact that no other producers from the Republic of Korea exporting to the Union in the investigation period had been identified does not mean that Implementing Regulation (EU) 2017/763 only applies to Hansol. Indeed, in the Regulation at issue, the Commission also imposed duties on other exporting producers via the residual duty. (14) Moreover, the General Court annulled the contested Regulation only ‘in so far as it concerns Hansol Paper Co. Ltd.’. The claim was therefore rejected.

(19) Hansol further indicated a concern that the Commission would possibly not correctly understand how to correct the issue of the weighting. Hansol claimed that, according to the judgment of the General Court, the percentage representing the resales of jumbo rolls by Schades Ltd. in the total sales of Jumbo rolls by Hansol Paper, Artone, and its related trader Hansol Europe to its related trader Schades Ltd., should be applied to the quantity of sales of jumbo rolls to its related converters (Schades Nordic, Heipa and R+S) for resales. The resulting quantity should be added to the quantity of sales of jumbo rolls (direct and indirect) used for the dumping margin calculation and deducted from the quantity of sales of jumbo rolls to Schades Nordic, Heipa and R+S for conversion. On that basis, Hansol provided a recalculation of the weighting between the direct and indirect sales of jumbo rolls to independent customers versus the sales to related converters for resales in the form of small rolls to independent customers. ETPA underlined that during the investigation, in addition to Schades Ltd., the only converter related to Hansol that also resold jumbo rolls was Schades Nordic and that therefore only for that reason already such an approach would not be in line with the evidence available to the Commission. It also emphasized that, while the General Court identified certain errors in the approach adopted by the Commission in the original investigation, it did not impose an approach for a revised weighting calculation and clarified that it is up to the Commission to decide what measures are appropriate to ensure compliance with the judgment.

(20) With regard to this issue, the Commission noted that the method proposed by Hansol is fundamentally different from the method used by the Commission in its dumping calculation for the Regulation at issue. In that calculation establishing Hansol’s margins, the Commission quantified the total direct and indirect sales of jumbo rolls to unrelated customers made by the Hansol group as a whole as reported in the questionnaire replies of the different group entities in their sales tables. On that basis the Commission established the weight of such sales as compared to the weight of jumbo rolls for conversion into small rolls. Hansol’s proposal to apply the calculated share of jumbo rolls resales by Schades Ltd. as compared to Schades Ltd’s total purchase volumes to the other three related converters is a fundamentally different and less accurate method, in view of the jumbo roll resales volumes of the three related converters which did not reply to the questionnaire, as reported by Hansol during the proceeding.

(21) The Commission further clarified that, whereas the General Court found that the Commission had erred by not including in the calculation the jumbo rolls resales volumes reported in the proceeding by Schades Nordic (15), it had not disqualified the Commission’s methodology as such. The Commission therefore strictly adhered to the General Court’s ruling by keeping the methodology for establishing the respective weight unchanged, except for the fact that it now added the volumes of jumbo rolls sold by Schades Nordic, Heipa and R+S, as required by the General Court. That calculation was further explained in the limited company-specific disclosure.

(22) For two product types exported to the Union by Artone, the Commission had, in its calculating of dumping, constructed normal value in the absence of representative domestic sales of that party. In paragraph 148 and paragraphs 152-158 of the judgment in Case T-383/17 and paragraphs 79 and 85 of the judgment in Case C-260/20 P, the Union Courts found that, according to both the wording and the structure of the first subparagraph of Article 2(1) of the basic Regulation, it was the price actually paid or payable in the ordinary course of trade which must, as a matter of priority, be taken into consideration to establish the normal value. When the exporter does not sell the like product domestically, the normal value is to be established on the basis of prices of other sellers or producers as a matter of priority, and not on the basis of the production costs of the company concerned.

(23) One of the two product types referred to in recital (22) was indeed sold on the domestic market in representative quantities and in the ordinary course of trade by the related company Hansol Paper and, therefore, the General Court found that the Commission had infringed Article 2(1) of the basic Regulation in the context of the calculation of the normal value of Artone.

(24) Thus, the Commission revised the calculation of the normal value for that product type by replacing Artone’s constructed normal value by the normal value of Hansol Paper as regards that product type.

(25) The other product type exported by Artone for which normal value was constructed did not have representative domestic sales by Hansol Paper either. Indeed, Hansol Paper’s domestic sales volumes fell well below the 5 % threshold of Article 2(2) of the basic Regulation. Consequently, and pursuant to Article 2(3) of the basic Regulation, the normal value of that product type had also been constructed for Hansol Paper. In the absence of representative sales prices in the ordinary course of trade of other sellers or producers in the exporting country, the construction of Artone’s normal value for this product type was therefore maintained.

(26) In the investigation leading to the Regulation at issue, the Commission had received questionnaire replies from Hansol, Artone, Hansol Europe (a related trader in the Union) and Schades UK Ltd., a related trader/converter located in the Union. Three converters located in the Union and related to the Hansol Group, i.e. Schades Nordic, Heipa and R+S, had requested an exemption to complete the questionnaire for companies related to the exporting producer (Annex I to the questionnaire). These parties converted the product concerned for resale, in small rolls, to independent customers. The Commission accepted their exemption request, which was based on the absence or limited volume of sales of the product concerned by these parties.

(27) As per Article 2(11) of the basic Regulation, the Commission is obliged to take into account all of the export transactions to the Union when calculating the dumping margin. In order to include in its calculation of dumping the significant volume of sales by the Hansol Group to the related converters which had been exempted from completing a questionnaire, the Commission had extended the results of the dumping calculation by applying a weighting of the dumping margins calculated on the basis of the verified questionnaire replies of Hansol Paper, Artone, Hansol Europe and Schades UK Ltd. For that purpose, the Commission attributed a weight of between 15 % and 25 % to the dumping margin established for direct sales and sales of the product concerned through related companies and a weight of between 75 % and 85 % to the dumping margin established for sales to related converters for resale as small rolls to unrelated parties (16).

(28) The General Court and the Court of Justice found that the Commission had infringed Article 2(11) and 9(4) of the basic Regulation. They found that the weighting used was vitiated by a manifest error as a certain volume of product concerned resold by Schades Nordic had been neglected. The volume of direct and indirect sales of the product concerned had thus been understated in the calculation of the weighting and the full extent of the dumping had consequently not been reflected in the calculations (17).

(29) In light of the findings of the Union Courts as summarized in recital (28), the Commission reviewed the weighting calculation. It did so by adding to the volume of direct and indirect sales of the product concerned used for that computation, the volume of Hansol jumbo rolls resales through Schades Nordic as reported by Hansol during the investigation. The weight of Hansol’s direct and indirect sales of the product concerned as compared to its total sales to the Union consequently increased by 0,7 percentage points, whereas the weight of its sales to related converters for resale as small rolls to unrelated parties decreased by the same percentage.

(30) The Commission recalculated the dumping margin for Hansol, by replacing the constructed normal value of one product type sold by Artone by a normal value based on the domestic sales price of that product type achieved by Hansol Paper, as explained in recital (24), and by revising the weighting of the established dumping margins for the two kinds of sale, as explained in recital (29).

(31) On that basis, the revised definitive weighted average dumping margin of the Hansol Group, expressed as a percentage of the CIF Union frontier price, duty unpaid, was lowered from 10,3 % to 10,2 %.