Commission Implementing Regulation (EU) 2023/752 of 12 April 2023 imposing a definitive anti-dumping duty on imports of sodium gluconate 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 (1), and in particular Article 11(2) thereof,

Whereas:

(1) By Council Implementing Regulation (EU) No 965/2010 (2), the Council imposed definitive anti-dumping duties on imports of sodium gluconate originating in the People’s Republic of China (‘the PRC’, ‘China’ or ‘the 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) By Commission Implementing Decision (EU) 2016/2229 (3), the Commission terminated the partial interim review, pursuant to Article 11(3) of Regulation (EU) 2016/1036 (‘the basic Regulation’) of the anti-dumping measures applicable to imports of sodium gluconate originating in the PRC, limited to one Chinese exporting producer Shandong Kaison Biochemical Co., Ltd (‘Shandong Kaison’) without amending the level of the anti-dumping measures in force.

(3) 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 by Commission Implementing Regulation (EU) 2017/94 (4) (‘the previous expiry review’).

(4) The anti-dumping duties currently in force are ad valorem duties established at 53,2 % with the exception of Shandong Kaison Biochemical Co., Ltd (5,6 %) and Quingdao Kehai Biochemistry Co., Ltd (27,1 %).

(5) Following the publication of a notice of impending expiry (5) the Commission received a request for a review pursuant to Article 11(2) of the basic Regulation.

(6) The request for review was submitted on 19 October 2021 by Jungbunzlauer S.A. (France) (‘the applicant’) on behalf of the European industry manufacturing sodium gluconate 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 and/or recurrence of dumping and recurrence of injury to the Union industry.

(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, on 18 January 2022 the Commission initiated an expiry review with regard to imports into the Union of sodium gluconate originating in the PRC 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 (6) (‘the Notice of Initiation’).

(8) The investigation of continuation or recurrence of dumping covered the period from 1 January 2021 to 31 December 2021 (‘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 applicant, the other known Union producer, the known producers in the PRC and the authorities of the PRC, 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.

(11) In view of the apparent large number of producers in the country concerned and unrelated importers in the Union, the Commission stated in the Notice of initiation that it might sample the exporting producers and unrelated importers in accordance with Article 17 of the basic Regulation.

Sampling of importers

(12) 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.

(13) No unrelated importer provided the requested information. In view of the absence of replies, the Commission decided that sampling was not necessary.

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 exporting producers in the PRC 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 identify and/or contact other producers, if any, that could be interested in participating in the investigation.

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

(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 letters with links to questionnaires to the two known Union producers and to known unrelated importers and users. The same questionnaires were also made available in the file for inspection by interested parties and on DG Trade’s website online (7) on the day of initiation.

(18) Questionnaire replies were received from the Union producer, Jungbunzlauer S.A. No unrelated importer and no user submitted a questionnaire reply.

(19) The Commission sought and verified all the information deemed necessary for the determination of likelihood of continuation or 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 applicant in France.

(20) The product under review is the same as in the original investigation and previous expiry review, namely dry sodium gluconate, with a Customs Union and Statistics (CUS) number 0023277-9 and a Chemical Abstracts Service (CAS) registry number 527-07-1 (‘the product under review’ or ‘sodium gluconate’), currently falling under CN code ex 2918 16 00 (TARIC code 2918160010).

(21) Sodium gluconate is used mainly in the construction industry as a set retarder and concrete plasticiser and in other industries as surface treatment for metals (removal of rust, oxides and fat) and for the cleaning of bottles and industrial equipment. The product can also be used in the food and pharmaceutical industries.

(22) The product concerned by this investigation is the product under review originating in the PRC.

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

(25) As mentioned in recital (15), none of the exporters/producers from the PRC cooperated in the investigation. Therefore, on 11 July 2022, 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. The Commission did not receive any comments or requests for an intervention of the Hearing Officer in this regard.

(26) Consequently, in accordance with Article 18 of the basic Regulation, the findings in relation to the likelihood of continuation 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 information from other publicly available sources, in particular the Global Trade Atlas (‘GTA’) (8).

(27) During the review investigation period, imports of sodium gluconate from the PRC continued albeit at lower levels than in the investigation period of the original investigation but slightly higher than in the review investigation period of the previous expiry review investigation. According to Eurostat import of sodium gluconate from the PRC accounted for [6 %-10 %] of the Union market in the review investigation period compared to 24,8 % market share in the original investigation and [3 %-15 %] during the previous expiry review.

(28) Given that sufficient evidence had been 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.

(29) 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. 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 11 July 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.

(30) In point 5.3.2. of 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 and suggested Colombia in this regard. 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.

(31) On 22 September 2022, the Commission informed interested parties by a Note about the relevant sources it intended to use for the determination of the normal value (‘the Note’), with Colombia as a 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 company Sucroal S.A. (‘Sucroal SA’), a producer of products in the same category and/or sector of the product under review, as sodium gluconate was only produced in the European Union, the PRC, and the United States of America (‘United States’).

(32) In their comments to the Note the applicant claimed that the Commission should take into account also other factors of productions used in the manufacturing of sodium gluconate such as filter aid, other auxiliary chemicals, steam, utilities, maintenance and consumables.

(33) In the Note the Commission presented the main factors of production. In addition to those factors of production the Commission also added overheads as explained in recital (84). Furthermore, considering that the current investigation is an expiry review pursuant to Article 11(2) on the basic Regulation, which does not require a precise dumping margin calculation, but rather to establish the likelihood of continuation or recurrence of dumping, the Commission considered that in this case it could exceptionally focus on the main factors of production for the calculation of the normal value and therefore the dumping margin. As stated in recital (92), calculating the normal value by using only the main factors of production showed significant dumping. Including additional factors of productions for the calculation of the normal value would increase the dumping margin even more.

(34) 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’.

(35) 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’).

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

(37) Even though the Commission did not specifically investigate exports of sodium gluconate in the context of Article 2(6a) in the past, in the recent investigations into other chemical compounds, notably the food additives acesulfame potassium (9), sodium cyclamate (10) and aspartame (11), 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 these investigations that, based on the evidence available, the application of Article 2(6a) of the basic Regulation was also appropriate.

(38) In these 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 (12).

(39) In particular, the Commission concluded that in the sectors of acesulfame potassium, sodium cyclamate and aspartame, not only does a substantial degree of ownership by the GOC persist in the sense of Article 2(6a)(b), first indent of the basic Regulation (13), 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 (14).

(40) 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 (15). 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 (16).

(41) In the same vein, the Commission found distortions of wage costs in the acesulfame potassium, sodium cyclamate and aspartame sectors in the sense of Article 2(6a)(b), fifth indent of the basic Regulation (17), 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 (18).

(42) Like in the previous investigations concerning acesulfame potassium, sodium cyclamate and aspartame, 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 review request, as well as in the Report (19), 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.

(43) The review request in this case referred to the Report, mentioning distortions regarding the key factors of production, such as land, energy, capital, raw materials and labour. Moreover, with regard to the sodium gluconate sector in particular, the request underlined that the producers in China are closely interconnected with the Chinese State, listing Xiwang Sugar, the third largest sodium gluconate producer as an example. The request provided instances of the close relations of the Xiwang Sugar with the State, mentioning various titles awarded to the company, as listed on company’s website: ‘national key leading enterprise in agricultural industrialization’, ‘national environment-friendly enterprise’ and ‘key high-tech enterprise in the national Torch Plan’. It has won the titles of ‘national advanced grass-roots party organization’, ‘first place in the national starch sugar industry’, ‘top 10 enterprises in China’s light industry fermentation industry’, ‘top 100 enterprises in China’s food industry.’ In addition, the request lists a number of Chinese Communist Party (‘CCP’) members present among the management of the company (20).

(44) Furthermore, the request stated that Zhucheng City is a major shareholder in the holding company of Xingmao Corn Developing, the second largest Chinese sodium gluconate producer. This enterprise was also granted various awards and it participated to a number of national projects, including: ‘national high-tech enterprises and China Patent Shandong star enterprise, the company has finished more than 10 projects, such as a national “fifteen”, “eleven five”, “863”, the state transformation, the State Torch Program, Spark Program, the national scientific research plan of Shandong Province (21).’

(45) Furthermore, the request explained that several companies are so-called high-tech enterprises with the corresponding privileges, such as the largest sodium gluconate producer, Shandong Fuyang Biotechnology, the second largest producer Zhucheng Xingmao Corn Developing Co., Ltd, and the third largest producer Shandong Xiwang Sugar.