Commission Implementing Regulation (EU) 2023/934 of 11 May 2023 imposing a definitive anti-dumping duty on imports of high tenacity yarns of polyesters originating in the People’s Republic of China following an expiry review pursuant to Article 11(2) and a partial interim review pursuant to Article 11(3) 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) and Article 11(3) thereof,

Whereas:

(1) Anti-dumping measures on imports of high tenacity yarns of polyesters (‘HTYP’) originating in the People’s Republic of China (‘China’ or ‘country concerned’) were originally imposed by Regulation (EU) No 1105/2010 (2) (‘the original measures’)

(2) The original measures imposed took the form of an ad valorem duty and ranged from 5,1 % to 9,8 %.

(3) The original measures applied to all imports of HTYP originating in China, with the exception of imports of HTYP produced by the Chinese exporting producers Zhejiang Hailide New Material Co. Ltd. (‘Hailide’) and Hangzhou Huachun Chemical Fiber Co. Ltd. (‘Huachun’). No duty was imposed on these companies (Regulation (EU) No 1105/2010), as no dumping was found.

(4) Following the first expiry review pursuant to Article 11(2) of 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 (3) (the ‘basic Regulation’), the Commission, by Commission Implementing Regulation (EU) 2017/325 (4), as amended notably by Commission Implementing Regulation (EU) 2017/1159 (5) maintained the original measures. In line with the WTO Appellate Body report in case Mexico – Definitive Anti-dumping Measures on Beef and Rice (6) (‘the WTO Appellate Body report’), Hailide and Huachun were not examined in the said expiry review.

(5) On 30 June 2022, the Commission also initiated an investigation under Article 5 of the basic Regulation with regard to imports of HTYP manufactured and exported to the Union by Hailide (‘the parallel Article 5 investigation’) (7). Imports from Hailide are not subject to the present expiry review and interim review investigations. Huachun, the other exporting producer which also received no duty in the investigation that led to the imposition of the original anti-dumping measures, ceased to exist in 2021. Therefore, Huachun is no longer considered an exporting producer of HTYP.

(6) Following the publication of a Notice of impending expiry (8) of the anti-dumping measures in force on the imports of high tenacity yarns of polyesters originating in China, a request for a review pursuant to Article 11(2) of the basic Regulation was submitted to the Commission on 24 November 2021 (hereinafter referred to as the ‘expiry review’).

(7) In addition, a request for a partial interim review pursuant to Article 11(3) of the basic Regulation was lodged on 1 April 2022 (hereinafter referred to as the ‘partial interim review’). The scope of the request was limited to dumping. Thus, the injury analysis in this regulation relates exclusively to the expiry review.

(8) Both requests were lodged by the CIRFS – European Manmade Fibres Association (‘CIRFS’ or ‘the applicant’) on behalf of the Union industry of high tenacity yarn of polyesters in the sense of Article 5(4) of the basic Regulation.

(9) The expiry review request 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.

(10) The partial interim review request was based on sufficient evidence provided by the applicant that, as far as dumping is concerned, the circumstances on the basis of which the existing measures were imposed have changed and that these changes are of a lasting nature.

(11) 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 pursuant to Article 11(2) and an interim review pursuant to Article 11(3) of the basic Regulation, the Commission published notices of initiation of these reviews in the Official Journal of the European Union (9) on 23 February 2022 and 30 June 2022 respectively.

(12) A user association commented on the initiation of both procedures, emphasising the importance of supply stability for the users. Further it claimed that European producers have increased their HTYP exports to China and cannot at the same time claim to be damaged by Chinese imports. The user association further claims that the damage to the European producers has not been proven. The Commission has analysed all claims regarding the Union interest in section 3.10 below. The general claim that the injury of the Union industry has not been proven in the review request, was not substantiated and therefore rejected.

(13) The Commission decided to conclude on the two separate investigations in the present legal act, setting out (in order in which the investigations were initiated) first the assessment in the expiry review investigation, followed by the findings from the partial interim review investigation.

(14) The examination of dumping and the likelihood of continuation or recurrence of dumping and injury covered the period from 1 January 2021 to 31 December 2021 (the ‘review investigation period’ or ‘RIP’).

(15) The examination of the trends relevant for the assessment of the likelihood of continuation or recurrence of injury covered the period from 1 January 2018 to the end of the review investigation period (‘the period considered’).

(16) The product subject to the reviews is high tenacity yarn of polyesters not put up for retail sale, including monofilament of less than 67 decitex, (excluding sewing thread and ‘Z’-twisted multiple (folded) or cabled yarn, intended for the production of sewing thread, ready for dyeing and for receiving a finishing treatment, loosely wound on a plastic perforated tube), currently falling under CN Code ex 5402 20 00 (TARIC code 5402200010) (‘the product under review’). The CN and TARIC codes are given for information only without prejudice to a subsequent change in the tariff classification.

(17) HTYP are used in a number of diverse applications such as tyre reinforcement, broad fabrics, seatbelts, airbags, ropes, nets and a number of industrial applications.

(18) Product concerned by the expiry review and partial interim review investigations is the product under review originating in China.

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

(21) In the Notice of Initiation of the expiry review investigation, the Commission invited interested parties to contact it in order to participate in the investigation. In addition, the Commission specifically informed the applicant, known Union producers, producers in China, importers and users in the Union known to be concerned, and the Chinese authorities of the initiation of the expiry review investigation and invited them to participate in the investigation.

(22) All interested parties had the opportunity to comment on the initiation of the investigation and to request a hearing with the Commission and/or the Hearing Officer in trade proceedings.

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

(24) In the Notice of Initiation of the expiry review investigation, the Commission stated that it had provisionally selected a sample of Union producers. The Commission selected the sample based on production and sales volumes, taking into account their geographical location. This sample consisted of 3 Union producers. The sampled Union producers accounted for more than 50 % of the estimated total EU production and EU sales volume of the like product. In accordance with Article 17(2) of the basic Regulation, the Commission invited interested parties to comment on the provisional sample. No interested party submitted comments on the provisional sample, which was confirmed as the definitive sample. The sample is representative of the Union industry.

(25) In order to enable the Commission to decide whether sampling would be necessary in respect of the exporting producers in China and of the unrelated importers in the Union, those parties were requested to make themselves known and to provide the Commission with the information requested in the Notice of Initiation. In addition, the Commission requested the Mission of China to the Union to identify and/or contact other exporting producers, if any, that could be interested in participating in the investigation. No exporting producer came forward. One unrelated importer came forward as an interested party, but did not provide the requested sampling information. Therefore, sampling was not necessary neither for the exporting producers nor the unrelated importers. Since there was no cooperation from the Chinese producers, the findings with regard to the imports from China in relation to the expiry review were made on the basis of the facts available pursuant to Article 18 of the basic Regulation.

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

(27) The Commission sent questionnaires to the sampled Union producers and to the users. The same questionnaires had also been made available online on the day of initiation.

(28) The Commission received questionnaire replies from the three sampled Union producers and 2 users.

(30) On 20 February 2023, 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.

(31) 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.

(32) As mentioned in recital (25), none of the exporters/producers cooperated in the expiry review investigation. Therefore, the Commission informed the GOC that due to the absence of cooperation, the Commission might apply Article 18 of the basic Regulation concerning the findings with regard to China.

(33) 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.

(34) The evidence available at the initiation of the expiry review investigation pointed to the existence of significant distortions in China within the meaning of Article 2(6a), point (b) of the basic Regulation. The Commission therefore considered it appropriate to initiate the investigation having regard to Article 2(6a) of the basic Regulation.

(35) To collect the necessary data for a possible application of Article 2(6a) of the basic Regulation, the Commission invited all exporting producers in the country concerned to provide information regarding the inputs used for producing HTYP. No relevant information was provided in the context of the expiry review investigation.

(36) In addition, 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 respective Notice of Initiation in the Official Journal of the European Union.

(37) In point 5.3.2 of the Notice of Initiation the Commission informed interested parties that based on the information available at that stage possible appropriate representative countries pursuant to Article 2(6a)(a) of the basic Regulation was Türkiye.

(38) The Commission also stated that it would examine other possibly appropriate representative countries in accordance with the criteria set out in 2(6a)(a) first indent of the basic Regulation.

(39) On 19 July 2022, the Commission issued a First note on the sources for the determination of the normal value (the ‘First Note’) by which it informed interested parties on the relevant sources it intended to use for the determination of the normal value.

(40) In the First Note, the Commission provided a preliminary list of all known factors of production (‘FOP’) such as raw materials, labour and energy, used in the production of HTYP. In addition, the Commission identified Türkiye, Brazil and Thailand as possible appropriate representative countries. The Commission gave all interested parties opportunity to comment. The Commission received comments from the applicant in support of Türkiye as the representative country.

(41) After having analysed the comments and information received, the Commission concluded that Türkiye was an appropriate representative country from which undistorted prices and costs would be sourced for the determination of the normal value. The underlying reasons for that choice are further described in detail in Section 3.4.4.2 below.

(42) 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. No questionnaire reply was received from the GOC. Subsequently, 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 China.

(43) 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”.

(44) 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’).

(45) As further explained below, the Commission concluded that, based on the evidence available and given the lack of cooperation of the GOC, the application of Article 2(6a) of the basic Regulation was appropriate.

(47) As the list in Article 2(6a)(b) of the basic Regulation is non-cumulative, not all the elements need to be given regard to for a finding of significant distortions. Moreover, the same factual circumstances may be used to demonstrate the existence of one or more of the elements of the list. However, any conclusion on significant distortions within the meaning of Article 2(6a)(a) must be made on the basis of all the evidence at hand. The overall assessment on the existence of distortions may also take into account the general context and situation in the exporting country, in particular where the fundamental elements of the exporting country’s economic and administrative set-up provides the government with substantial powers to intervene in the economy in such a way that prices and costs are not the result of the free development of market forces.

(48) Article 2(6a)(c) of the basic Regulation provides that ‘[w]here the Commission has well-founded indications of the possible existence of significant distortions as referred to in point (b) in a certain country or a certain sector in that country, and where appropriate for the effective application of this Regulation, the Commission shall produce, make public and regularly update a report describing the market circumstances referred to in point (b) in that country or sector’.

(49) Pursuant to this provision, the Commission has issued a country report concerning China (hereinafter ‘the Report’) (10), showing the existence of substantial government intervention at many levels of the economy, including specific distortions in many key factors of production (such as land, energy, capital, raw materials and labour) as well as in specific sectors (such as steel and chemicals). Interested parties were invited to rebut, comment or supplement the evidence contained in the investigation file at the time of initiation. The Report was placed in the investigation file at the initiation stage.

(50) More specifically, the interim review request alleged that the factors of production, including the main raw materials and energy to produce HTYP are heavily distorted. The request referred to the Report and the distortions identified therein with respect to the chemical sector, including the monoethylene glycol (‘MEG’) and purified terephthalic acid (‘PTA’) industry. Moreover, the request pointed – with reference to the Report – to existing distortions with respect to energy costs. The request also observed that Chinese authorities support implementing preferential fiscal and financial policies for the chemical industry, not least in line with the Chemical Fiber Industry 13th Five-Year Directive Opinion. The request further noted the State interference with respect to the labour market and the land-use rights.

(51) As indicated in recital (42), the GOC did not comment or provide evidence supporting or contradicting the existing evidence on the case file, including the Report and the additional evidence provided by the applicant, on the existence of significant distortions and/or on the appropriateness of the application of Article 2(6a) of the basic Regulation in the case at hand.

(52) The Commission examined whether it was appropriate or not to use domestic prices and costs in China, 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 Report, which relies on publicly available sources. That analysis covered the examination of the substantial government interventions in China’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 China.