Commission Implementing Regulation (EU) 2023/968 of 16 May 2023 imposing a definitive anti-dumping duty on imports of certain heavy plate of non-alloy or other alloy steel 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

17.5.2023	EN	Official Journal of the European Union	L 133/214

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,

Having regard to Regulation (EU) 2015/477 of the European Parliament and of the Council of 11 March 2015 on measures that the European Union may take in relation to the combined effect of anti-dumping or anti-subsidy measures with safeguard measures ², and in particular Article 1 thereof,

Whereas:

1. PROCEDURE

1.1.   Previous investigations and measures in force

• (1) By Implementing Regulation (EU) 2017/336 ³, the European Commission (‘the Commission’) imposed anti-dumping duties on imports of certain heavy plates of non-alloy or other alloy steel, originating in the People’s Republic of China, (‘the PRC’ or ‘China’ or ‘the country concerned’), (‘the original measures’). The investigation that led to the imposition of the original measures will be referred to hereinafter as ‘the original investigation’.

• (2) By Implementing Regulation (EU) 2019/1382 ⁴ (‘the safeguard Regulation’), the Commission amended certain Regulations imposing anti-dumping or anti-subsidy measures on certain steel products subject to safeguard measures.

• (3) The anti-dumping duties currently in force are at rates ranging between 65,1 % and 73,7 % on imports from the sampled exporting producers; at the rate of 70,6 % on imports from the non-sampled cooperating companies; and at the rate of 73,7 % on imports from all other companies from China.

1.2.   Request for an expiry review

• (4) Following the publication of a notice of impending expiry ⁵ the Commission ('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 26 November 2021 by the European Steel Association EUROFER (‘the applicant’) on behalf of the Union industry of certain heavy plates of non-alloy or other alloy steel in the sense of Article 5(4) of the basic Regulation.

• (6) The request for review was based on the grounds that the expiry of the measures would be likely to result in continuation or recurrence of dumping and of injury to the Union industry.

1.3.   Initiation of an expiry review

• (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 25 February 2022, an expiry review with regard to imports into the Union of certain heavy plates of non-alloy or other alloy steel originating in China 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’).

1.4.   Review investigation period and period considered

• (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’).

1.5.   Interested parties

• (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 and other known Union producers, 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 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) No parties requested to be heard.

1.6.   Comments on initiation

• (12) The Commission received comments on initiation from China Iron and Steel Association (‘CISA’) and Primex Steel Trading GmbH (‘Primex’). The applicant also provided comments in this regard.

• (13) Primex claimed that the request did not contain sufficient evidence of likelihood of recurrence or continuation of dumping. In particular, Primex claimed that the level of imports in the Union in case the measures are terminated will depend not only on the spare capacity in the PRC but also on the demand in the Union, price and cost relations as well as the intensity of competition on the world market, the existence of trade barriers on the world market and the development of exchange rates. Primex also claimed that the different sources for the spare capacity used by the applicant in the request raised doubt about the validity of this data. Primex stated that due to the change of the steel policy in China, including a reduction in certain export VAT refunds, there will be a moderate increase of imports into the Union in case measures were terminated. Primex also claimed that the Union market was not as attractive for the Chinese exporters as the applicant argued in the request for review.

• (14) The analysis of the request has shown that there was sufficient evidence at initiation stage pointing to a likelihood of continuation or recurrence of dumping should the anti-dumping measures applicable to imports from the PRC be allowed to lapse. The applicant based its analysis not only on the spare capacity in the PRC, but also on the attractiveness of the Union market due to its size and the established network of trading companies that the large Chinese heavy plate producers have in the Union, the trade defence measures imposed by third countries, and the unfair pricing behaviour of the PRC on third country markets. The legal standard of evidence required for an initiation (“sufficient evidence of dumping, injury and a causal link”) is lower than that required to reach a final determination ⁷. The requirement to provide sufficient evidence is limited to information which may be “reasonably available” to the requesting party ⁸. The information provided in the request is not required to constitute irrefutable evidence of the existence of the facts alleged ⁹. Therefore these claims were rejected.

• (15) Primex disagreed with the applicant’s selection for the representative country, i.e. Brazil. In particular, Primex claimed that: the Brazilian market was smaller than the Chinese market: the Brazilian company Usinas Siderúrgicas de Minas Gerais SA (‘Usiminas’), used by the applicant for the calculation of the selling, general and administrative (‘SG&A’) costs and the profit margin, was not appropriate as this company has a dominant market position on the domestic market; the Brazilian market is protected from international import competition by anti-dumping duties against imports from Ukraine, China, South Africa and South Korea ¹⁰; and there are minor imports from Brazil into the Union.

• (16) Based on the information provided by the applicant, the Commission analysed the proposed representative country and considered that Brazil met the statutory requirements to be used as a representative country for the purpose of initiation of the expiry review. In particular, Brazil has a level of economic development similar to China according to the World Bank, it is a significant producer of heavy plate, and it has readily available data for the corresponding costs of production and sale. Therefore, the Commission considered that Brazil was an appropriate choice as a representative country at the initiation stage.

• (17) Primex also argued that the methodology for the dumping calculation in the request for review was not correct. In particular, Primex claimed that the investigation period (i.e. 1 January 2021 to 31 December 2021) was too short to establish a representative normal value and it was different than the period in the request for review. Primex also claimed that the prices of the main raw materials (iron ore, coking coal and scrap) were subject to strong fluctuations, especially the price of iron ore in 2021 and therefore 2021 could not be considered a representative year. Furthermore, Primex claimed that it was questionable whether the data of Union producer used by the applicant in the request for the consumption factors was representative for the whole market. Moreover, Primex claimed that the methodology used by the applicant in the request for review for the calculation of normal value for the PRC was not suitable as the applicant used only the data for labour costs, SG&A and profit from the Brazilian company Usiminas. Primex also claimed that the request for the review did not include evidence that the cost structure of the Union, Brazilian and Chinese producers were comparable with one another. Furthermore, Primex claimed that the request for review did not explain whether the price for the individual factors of production in Brazil are representative. Primex also argued that the applicant wrongly calculated the percentage of profit as a percentage of cost of sales when it should have been as a percentage of sales. Moreover Primex claimed that the representative profit margin should be calculated for a longer period of time and should include 2019 as well, as this year was not affected by the Covid-19 pandemic. Finally Primex claimed that the profit margin of 14 % used by the applicant in the request for review was not achievable under normal market conditions. Primex also claimed that the two methods used by the Applicant to calculate the export price in the request for review were not appropriate.

• (18) An expiry review shall be initiated where the request contains sufficient evidence that the expiry of the measures would likely result in a continuation or recurrence of dumping and injury. The applicant has provided sufficient evidence on the export price and normal value showing that the dumping margins would be significant if measures were allowed to lapse. The figures on which normal value and export price were based were supported by sufficient evidence as confirmed by the Commission services’ own analysis. In practice, the calculation of normal value as well as the export price were in accordance with the principles of Article 2 of the basic Regulation and showed that the request contained sufficient evidence of dumping of the product concerned in the Union market. In its statutory analysis, the Commission took into account only those elements for which evidence was adequate and accurate.

• (19) The Commission noted that there is no legal requirement in the basic Regulation regarding the period chosen by the applicant, nor any that the period chosen for the investigation had to be the same as the one chosen by the applicant. Pursuant to Article 6(1) of the basic Regulation, an investigation period shall be selected which in the case of dumping shall, normally, cover a period of no less than six months immediately prior to the initiation of proceeding. The period chosen by the applicant, i.e. 1 July 2020 until 30 June 2021, ended shortly before the submission of the expiry review request on 26 November 2021 and was therefore considered to be representative for the likelihood of continuation or recurrence of dumping and injury at the initiation stage.

• (20) In the original investigation, the Commission found that the product concerned and the product produced and sold in the Union by the Union industry are like products within the meaning of Article 1(4) of the basic Regulation. The expiry review request sets out that the production process of the Union industry, used by the applicant for the consumption factors, was similar to the production process in the PRC and in the representative country. The cost structure and the consumption factors used in the request were therefore considered representative. Pursuant to Article 2(6a) of the basic Regulation, the applicant constructed the normal value using the corresponding costs of production and sale in a representative country, i.e. Brazil. The costs in this country were applied to the consumption rates of the factors of production in order to calculate the costs of manufacturing, whereas SG&A and profit derived from publicly available financial statements of a producer in the representative country. It should be noted that even the comparison of the constructed costs of production, without any SG&A and profit of the producer in the representative country with Chinese export prices of the product under review to third countries showed dumping. Therefore, the claims of Primex on the profitability level are moot.

• (21) For the export price, the expiry review request used three methods, i.e. the average Chinese import price to the Union on a TARIC ¹¹ level, the published average Chinese export FOB price for one of the main product types to all third countries, and the average Chinese export price to all third countries. These three methods were found to be sufficiently substantiated to comply with the legal standard at the initiation stage.

• (22) CISA submitted that the request for review had an excessive use of confidentiality which precluded them from assessing the economic situation of the Union industry, as well as addressing the applicant’s claims in the request for review. This allegedly resulted in a breach of CISA’s rights of defence. For example, CISA referred particularly to Annex F1 (Capacity), Annex F2 (Exports), more specifically concerning Chinese exports of heavy plate from August 2020 until July 2021, and Annex N (undercutting and underselling calculations), more specifically in relation to Union industry sales and cost data to EU27 of the request for review.

• (23) The Commission notes that the non-confidential Annex F1 contained ranged data for Chinese heavy plate consumption, capacity and production. The non-confidential Annex F2 contained a comprehensive summary of the average Chinese export price and the Chinese total volume of exports to the rest of the world, as well as to the top five export destinations. The non-confidential Annex N contained the full undercutting and underselling calculations, as well as the aggregated data on the average price and cost of the Union Industry. The non-confidential Annex M contained all applicants’ injury indicators indexed per company and non-confidential Annex K contained aggregated values of all data required for the calculation of EU consumption, including sales, as well as indexed per company. The information provided in the non-confidential version of the request for review was therefore considered to have sufficient detail to permit a reasonable understanding of the substance of the information submitted in confidence.

• (24) Article 19 of the basic Regulation allows for the safeguarding of confidential information in circumstances where disclosure would be of significant competitive advantage to a competitor or would have a significant adverse effect upon a person providing the information or upon a person from whom that person has acquired the information. The information provided in the limited annexes to the request fell under these categories. The Commission considered that the version open for inspection by interested parties of the request contained all the essential evidence. The non-confidential summaries of data provided under confidential cover were sufficiently detailed to permit a reasonable understanding of the substance of information submitted in confidence in order for interested parties to exercise their rights of defense throughout the proceeding. Therefore, the claim was rejected.

• (25) CISA claimed that the request for review included contradictory information, in particular as regards the export price from the PRC to the Union which had an impact on the findings of dumping.

• (26) The request for review did not contain contradictory information. The applicant constructed the normal value of two product types (S235 and S355) and used the Chinese import price at TARIC level for grade S235, and the published average Chinese export price for grade S355. Therefore, the applicant calculated the dumping margins by comparing similar product types. Moreover, the applicant found dumping when comparing the average Chinese sales price of the product under review to all third countries with both constructed normal values. Therefore, the claim had to be rejected.

• (27) CISA claimed that the request did not contain sufficient evidence of likelihood of continuation or recurrence of injury. In particular, CISA claimed that there was no evidence in the request that demonstrated that the expiry of measures could lead to the continuation of injury. CISA also doubted the alleged fragile state of the Union Industry and claimed that if this state was valid, it could be attributed entirely to the decline of consumption and the contraction of demand. CISA also claimed that there was no indication of recurrence of injury because of the EU safeguard measures on certain steel products, among which heavy plate, and the fact that Chinese heavy plate exports were no longer eligible for VAT export refunds.

• (28) The Commission considered the evidence present in the request as sufficient for dumping, injury and a causal link, which was reasonably available to the applicant. The main injury indicators included in the request showed a negative trend for the reference period chosen by the applicant and the applicant therefore claimed that it continued to suffer material injury.

• (29) However, the applicant also acknowledged in its request for review that imports from the PRC had essentially stopped since the imposition of the original measures and the injurious situation of the Union industry as well as the decline of consumption was caused by other factors, such as the state of the general economy, especially in construction and pipeline projects, and the negative effect of the COVID-19 pandemic. It therefore also claimed the likelihood of recurrence of injury if measures were to lapse and provided sufficient evidence in this regard, showing that in the absence of measures imports from the PRC would likely increase at undercutting prices. The claim of CISA thus has to be rejected.

• (30) Primex claimed that the CIF import price as well as the Union sales price that the applicant used for undercutting and underselling calculations in the request for review were wrong, and no undercutting or underselling margins should be found. In addition, Primex claimed that the profit margin used for the underselling calculation has not been achieved, even with measures in force during the past years.

• (31) The Commission disagreed that the undercutting and underselling calculations in the request were incorrect. The applicant provided a comparison between the export price and the Union sales price for the most common product types, which is a comparison at a more granular level than the comparison of the average export price with the average Union industry’s sales price proposed by Primex. The applicant’s methodology is clearly explained in the expiry review request under point 3.6 and in Annex N, which contains a calculation for each representative product type, showing undercutting and underselling. Furthermore, regarding the profit margin used by the applicant for the underselling calculations, the Commission considered that this profit margin could be reasonably achieved under normal conditions of competition in the original investigation. It has to be noted that even if the applicant had not provided any underselling calculations, there was still sufficient evidence showing that injury caused by dumped imports from China would recur if measures were allowed to expire. Therefore, the claim was rejected.

• (32) CISA claimed that the Report relied on by the Commission failed to meet the standards of impartial and objective evidence and evidence of sufficient probative value, given in particular that it was prepared by the Commission with the specific purpose of facilitating Union industries to lodge a complaint in the area of trade measures. Furthermore, CISA claimed that since the Report was published in 2017, it could not reflect the alleged distortions for the investigation period covering the 2021 calendar year.

• (33) The Commission disagreed. The Commission noted that the Report is a comprehensive document based on extensive objective evidence, including legislation, regulations and other official policy documents published by the Government of the People’s Republic of China (‘GOC’), third party reports from international organisations, academic studies and articles by scholars, and other reliable independent sources. It was made publicly available since December 2017 so that any interested party would have had ample opportunity to rebut, supplement or comment on it and the evidence on which it is based, and neither the GOC nor other parties have submitted arguments or evidence rebutting the sources included in the Report. Likewise, regarding the argument that the Report was outdated, the Commission noted in particular that the main policy documents and evidence contained in the Report, including the relevant five-year plans and legislation applicable to the product under review were mostly still relevant during the RIP, and that no parties have proven that this was no longer the case. China only started publishing new five-year plans throughout year 2021 and a lot of those plans were only made public in the second half of the year. This was further confirmed through the case-specific research undertaken by the Commission, as summarised above.

• (34) Second, CISA submitted that the WTO Anti-Dumping Agreement (‘ADA’) does not recognize the concept of significant distortions in Article 2.2 of ADA. Instead, the provision allows the construction of the normal value in a limited number of specific conditions, which significant distortions not featuring among such conditions. Moreover, CISA submitted that Article 2.2 of ADA only permits using the cost of production in the country of origin plus a reasonable amount for administrative, selling and general costs and profits whereas Article 2(6a) of the basic Regulation allows the use of data from and appropriate representative country, thereby being WTO inconsistent. Furthermore, CISA claimed that any constructed value would need to be calculated in accordance with Article 2.2.1.1 of ADA and in line with the interpretation by WTO Appellate Body given in the EU – Biodiesel (DS 473) case, as well as by the WTO Panel in the EU – Cost Adjustment Methodologies II (Russia) (DS494) case, which do not mention the concept of significant distortions nor the possibility to disregard the exporting company’s data.

• (35) The Commission considered that the provisions of Article 2(6a) of the basic Regulation are fully consistent with the European Union's WTO obligations and the jurisprudence cited by CISA. First, the Commission considers concept of 'significant distortions’ to be compatible with the ADA. Furthermore, it is the Commission’s view that, in accordance with the decision of the WTO Panel and the Appellate Body in DS473, the provisions of the basic Regulation that apply generally with respect to all WTO Members, such as Article 2(5), second sub-paragraph, permit the use of data from a third country, duly adjusted when such adjustment is necessary and substantiated. The existence of significant distortions renders costs and prices in the exporting country inappropriate for the construction of normal value. In these circumstances, Article 2(6a) of the basic Regulation envisages the construction of costs of production and sale on the basis of undistorted prices or benchmarks, including those in an appropriate representative country with a similar level of development as the exporting country. In relation to the DS 494, the Panel Report in this dispute specifically considered the provisions in Article 2(6a) of the basic Regulation to be outside the scope of the dispute. Moreover, the Commission recalled that both the EU and the Russian Federation appealed the findings of the Panel, which are not final and therefore, according to standing WTO case-law, have no legal status in the WTO system, since they have not been endorsed by the Dispute Settlement Body through a decision by the WTO Members. Therefore, the Commission rejected this claim.

• (36) Third, CISA argued that the practice of referring to past investigations as “evidence” of certain allegations, as done by the applicant in the request in the present investigation, would likely not withstand the Appellate Body’s approach on the burden of proof, as set out in the WTO Appellate Body’s ruling in the US – Definitive Antidumping and Countervailing Duties on Certain Products (China) (DS 379) case.

• (37) The Commission recalled that in DS 379 case, the Appellate Body’s ruling explicitly set out that cross referencing from one determination into another is allowed, where there is close temporal and substantive overlap between the two investigations. Such substantive overlap clearly exists between the present investigation and the GOES ('grain-oriented flat-rolled products of silicon-electrical steel') investigation referred to in the Request, as both investigations not only concern the steel sector in China but there was only a six months gap between the investigation period in GOES (1 July 2019 – 30 June 2020) and the RIP in the present investigation (1 January 2021 – 31 December 2021).

• (38) Fourth, CISA raised the issue of the 13^th Five-Year Plan ('five years plan (‘FYP'’)), pointing out that, on the one hand, the plan should not be considered binding law but rather a general policy document which exist also in the EU and that, on the other hand, the RIP falls outside of the period covered by the 13^th FYP. Further, CISA argues that the request continues referring to the 13^th FYP, indicating that there is nothing in the 14^th FYP that reduces State controls over the PRC economy in general or the steel sector in particular.

• (39) This argument could not be accepted. First of all, China operates a periodic five years planning cycle. In that cycle, individual planning documents for the following cycle are prepared already during the previous one while, at the same time, individual planning documents of following cycle may be formally issued with some delay after the expiry of the corresponding planning documents of the previous cycle. The fact that the formal end date of the 13^th FYP may not fall into the review investigation period or that the relevant 14^th FYPs were published following a certain time gap after the end of the previous planning period cannot alter the nature of Chinese planning system in which the authorities and business operators always find themselves being part of the planning cycle. The Commission further underlined that the FYPs published by the GOC are not merely general guidance documents, but are of a legally binding nature. In this respect, the Commission referred to the detailed analysis of the plans in Chapter 4 of the Report, with a section specifically dedicated to the binding nature of plans in Section 4.3.1. Both the 14^th FYP and the 13^th FYP explicitly remind all authorities to diligently implement the plans: “We will strengthen planning management systems such as catalogues and lists, compilation and archival, and alignment and coordination, develop lists and catalogs such as the “14th Five-Year” National-Level Special Plans, promote plan archival relying on the national planning integrated management information platform, and bring various plans under unified management. We will establish and improve planning alignment and coordination mechanisms, align plans approved by the [Chinese Communist Party (‘CCP’)] Central Committee and the State Council and provincial development plans with this plan before submission for approval, ensure that national-level spatial planning, special planning, regional planning, and other levels of planning are coordinated with this plan in terms of main goals, development directions, overall layout, major policies, major projects, and risk prevention and control.” ¹² Furthermore, the 14^th FYP on Developing the Raw Materials Industry stipulates that “all localities need to better themselves with this Plan, and include the main contents and major projects herein in their primary local tasks”, while “steel and other key sectors shall formulate specific implementation opinions based on the objectives and tasks of this Plan.” ¹³ The claim of CISA thus has to be rejected.

1.7.   Sampling

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

1.7.1.   Sampling of Union producers

• (41) In the Notice of Initiation, the Commission stated that it had provisionally selected a sample of Union producers. The Commission selected the sample on the basis of the provisions of Article 17 of the basic Regulation. The Commission selected the sample on the basis of production and sales of the like product in the Union during the review investigation period, namely from 1 January 2021 until 31 December 2021. This provisional sample consisted of three Union producers. The sampled Union producers accounted for more than 25 % of the estimated total volume of Union production and more than 31 % of the estimated total Union 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 comments were received.

• (42) In the Note of 8 March 2022, the Commission confirmed the provisionally selected sample as the definitive sample, which is deemed to be representative of the Union industry.

1.7.2.   Sampling of importers

• (43) 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.

• (44) No unrelated importers came forward.

1.7.3.   Sampling of exporting producers in the People’s Republic of China

• (45) To decide whether sampling was necessary and, if so, to select a sample, the Commission asked all known exporting producers in the People’s Republic of 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.

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

1.8.   Replies to the questionnaires

• (47) 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 GOC.

• (48) The Commission sent letters with a link to a questionnaire to the sampled Union producers:

• — AG der Dillinger Hüttenwerke, Dillingen, Germany;

• — Ilsenburger Grobblech GmbH, Ilsenburg, Germany;

• — ArcelorMittal España, S.A., Avilés, Spain.

• (49) The same questionnaire had also been made available in the file for inspection by interested parties and on DG Trade’s website online ¹⁴ on the day of initiation.

• (50) Questionnaire replies were received from the three sampled Union producers.

• (51) In the notice of initiation, the Commission also invited users and their representative associations, trade unions and representative consumer organisations to provide information on the Union interest and to fill in a specific questionnaire.

• (52) Replies to the questionnaire intended for users of the product under review were received from three companies:

• — Vestas Wind Systems A/S, Denmark (‘Vestas’);

• — Astilleros Gondán S.A., Spain;

• — Europipe GmbH, Germany.

1.9.   Verification

• (53) The Commission sought and verified all the information deemed necessary for the determination of the 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 following companies:

Union producers

• — AG der Dillinger Hüttenwerke, Dillingen, Germany;

• — Ilsenburger Grobblech GmbH, Ilsenburg, Germany;

• — ArcelorMittal España, S.A., Avilés, Spain.

• (54) The Commission intended to carry out a verification visit at the premises of the main independent user (Vestas) but the company did not offer sufficient cooperation to allow such visit to take place.

1.10.   Disclosure

• (55) On 28 February 2023, the Commission informed all interested parties of the essential facts and considerations on the basis of which it intended to impose a definitive anti-dumping duty on imports of heavy plates originating in the PRC (‘final disclosure’). All parties were granted a period within which they could make comments on the final disclosure. The Commission received comments from the applicant and from CISA.

• (56) Following final disclosure, interested parties were granted an opportunity to be heard according to the provisions stipulated under point 5.8 of the Notice of Initiation. A hearing on final disclosure took place with CISA.

2. PRODUCT UNDER REVIEW, PRODUCT CONCERNED AND LIKE PRODUCT

2.1.   Product under review

• (57) The product under review is the same as in the original investigation, namely flat products of non-alloy or alloy steel (excluding stainless steel, silicon-electrical steel, tool steel and high-speed steel), hot-rolled, not clad, plated or coated, not in coils, of a thickness exceeding 10 mm and of a width of 600 mm or more or of a thickness of 4,75 mm or more but not exceeding 10 mm and of a width of 2 050 mm or more, (‘the product under review’ or ‘heavy plate’).

• (58) Heavy plates are used in the manufacture of construction, mining and logging equipment; pressure vessels; oil and gas pipelines; shipbuilding and bridges and buildings.

2.2.   Product concerned

• (59) The product concerned by this investigation is the product under review originating in China currently falling under CN codes ex 7208 51 20, ex 7208 51 91, ex 7208 51 98, ex 7208 52 91, ex 7208 90 20, ex 7208 90 80, 7225 40 40, ex 7225 40 60 and ex 7225 99 00 (TARIC codes: 7208512010, 7208519110, 7208519810, 7208529110, 7208902010, 7208908020, 7225406010 and 7225990045). The CN and TARIC codes are given for information only, without prejudice to a subsequent change in the tariff classification.

2.3.   Like product

• (60) As established in the original investigation, this expiry review investigation confirmed that the following products have the same basic physical and technical characteristics as well as the same basic uses:

• — the product concerned when exported to the Union;

• — the product under review produced and sold on the domestic market of China; and

• — the product under review produced and sold in the Union by the Union industry.

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

3. DUMPING

Preliminary remarks

• (62) During the review investigation period, heavy plates from the PRC were imported in negligible volume, which could not form the basis for a determination of continuation of dumping. The Commission therefore analysed the likelihood of recurrence of dumping in the next section.

4. LIKELIHOOD OF RECURRENCE OF DUMPING

• (63) The Commission investigated, in accordance with Article 11(2) of the basic Regulation, the likelihood of recurrence of dumping, should the measures be repealed. The following elements were analysed: the production capacity and spare capacity in the PRC, attractiveness of the Union market and export prices to third country markets, as well as possible absorption capacity of third country markets.

• (64) As mentioned in recital (46), none of the producers from the PRC cooperated in the investigation. Therefore, 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 exporting producers in the PRC. The Commission did not receive any comments or requests for an intervention of the Hearing Officer in this regard.

• (65) Consequently, in accordance with Article 18 of the basic Regulation, the findings in relation to the likelihood of recurrence of dumping were based on facts available, in particular information in the request for review duly updated if available, information obtained from the applicant) and information from other publicly available sources, in particular the Global Trade Atlas (‘GTA’) ¹⁵.

4.1.   Production capacity and spare capacity in the PRC

• (66) According to information provided by the applicant in the request for review, heavy plates production capacity in the PRC in the RIP was based on two sources of information, such as CRU ¹⁶ and MCI ¹⁷. According to the CRU report, China had a heavy plate production capacity of 94 million tonnes in 2021 with actual production of 86 million tonnes, leaving a spare capacity of at least 8 million tonnes. According to MCI, China had a heavy plate production capacity of 113 million tonnes in 2021 with actual production of 99 million tonnes, leaving a spare capacity of at least 14 million tonnes.

• (67) Therefore, it follows that the spare capacity in China is between 8 and 14 million tonnes, which is sufficient to cover the entire Union consumption in the RIP, which was 8,2 million tonnes as indicated in Table 2 in recital (177). The applicant considered that, given such a large spare capacity, imports to the Union from China could increase to over 1 million tonnes per year, as they did in the investigation period (2015) of the original investigation ¹⁸.

• (68) As indicated in recital (13), Primex argued that the Chinese capacity for heavy plates was indicated very differently according to the source, that the origin of the original data was not stated and that the decline in spare capacity between 2018 and 2021 suggested that potential Chinese exports to the Union have become smaller in recent years.

• (69) The applicant clarified that the capacity estimates were based on two detailed reports provided by independent third parties, i.e. CRU and MCI, based on the data of substantial numbers of Chinese companies. In addition, the applicant argued that the decline in spare capacity was associated with an increase in apparent Chinese consumption until 2020, followed by a decline in consumption from 2021 and a forecast of continuing weakness in the Chinese economy. The Chinese consumption of heavy plates was at around 85 million tonnes in 2021. The applicant also stated that the International Monetary Fund reported that growth in China had weakened significantly since the start of 2022 ¹⁹. Furthermore, according to the OECD, the slowdown in steel consumption started in July 2021 when the construction sector experienced a deceleration ²⁰. According to one of the Union producers’ market knowledge, it is expected that China will register a negative heavy plate demand growth in the medium term.

• (70) Therefore, the applicant argued that Chinese consumption of heavy plate would likely decline further, resulting in a continuing increase in spare capacity resulting in greater pressure for Chinese producers to find third country markets for their excess steel capacity.

• (71) The applicant further argued that a sharp increase in imports of Chinese slab (CN code 7207 12 10) into the Union in the period June to August 2022 demonstrates large Chinese spare capacity and their ability to move very large amounts of steel into the Union in a very short timeframe.

• (72) The Commission considered that the information provided in the request, as clarified by the applicant, as well as the evidence they provided with regard to an anticipated reduction in consumption in China and the recent increase in slab imports, suggested that spare capacity of heavy plates in China is substantial and unlikely to decrease in the medium term. The Commission therefore, rejected the arguments put forward by Primex.

• (73) Therefore, the Commission found that there was substantial spare capacity to increase exports to the Union in substantial quantities, if measures were allowed to expire.

4.2.   Attractiveness of the Union market and export prices to third countries

• (74) According to the information provided by the applicant in the request for the review, the Union heavy plate market is amongst the largest markets in the world. In addition, the capacity of Chinese producers as stated in recital (66) exceeds the Chinese consumption stated in recital (69) by at least 9 million tonnes, so Chinese producers are searching for export markets to absorb their excess capacity.

• (75) The applicant indicated in the request for review that large Chinese heavy plate producers, like Baoshan Iron & Steel Co., Ltd. (“Baosteel”) and Wuhan Iron & Steel Co., Ltd. (“WISCO”), have established trading companies in the Union to facilitate their imports into the Union. This was confirmed in the Commission Implementing Regulation imposing a definitive anti-dumping duty on imports of certain GOES originating, among other countries, in the PRC ²¹.

• (76) As mentioned in recital (67), imports of heavy plate from China reached over 1 million tonnes in 2015, before the imposition of anti-dumping duties. Therefore, it is likely that if the measures are allowed to lapse, Chinese exporters would once again be attracted to export in substantial volumes to the Union market.

• (77) Primex argued that the safeguard measures applied to heavy plates (adjusted by Commission Implementing Regulation (EU) 2022/434 ²²) limited imports into the Union until 30 June 2024. They argued that imports from China fall under the quota for other countries and imports in that category in 2021 were around 370 000 tonnes. They argued that as other countries will not stop exporting to the Union, China will not have access to the full quota allotted to other countries.

• (78) The applicant also commented in the request for review that the current EU safeguard measures on imports of certain steel products do not meaningfully restrict the import volumes for heavy plate.

• (79) However, for the period 1 July 2022 until 30 June 2023 the total tariff-rate quota for non-alloy and other alloy quarto plates was set at more than 3,2 million tonnes, out of which around 2,2 million tonnes of this amount was allocated to “other countries”, including China. Furthermore, for the period 1 July 2023 to 30 June 2024 the quota was set at about 3,4 million tonnes, out of which around 2,3 million tonnes were allocated to “other countries”, including China as well ²³. Imports of heavy plates from countries classified as “other countries” (i.e. excluding Ukraine) totalled less than 0,8 million tonnes during the RIP as indicated in tables 3 and 5, so there is scope for China to increase imports to more than 1 million tonnes without being affected by the safeguard measures.

• (80) The Commission considers that the quota available to imports from China is therefore, substantial and the existence of the quota would not detract from the attractiveness of the Union market, if the anti-dumping duties were allowed to expire, while imports within the substantial quota were still available.

• (81) Furthermore, in order to have an indication of the likely pricing behaviour to the Union in the absence of measures, the Commission also compared the Chinese export price to third countries with the Chinese normal value.

• (82) In the absence of cooperation from the Chinese exporting producers and the GOC, the Commission determined normal value based on the information provided in the request for the expiry review and other readily available information as explained in the following section.

4.2.1.   Procedure for the determination of the normal value under Article 2(6a) of the basic Regulation for the imports of heavy plates originating in the PRC

• (83) 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.

• (84) 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. 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 the PRC.

• (85) 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 Brazil 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.

• (86) On 16 December 2022 , the Commission informed by a Note to interested parties of the relevant sources that it intended to use for the determination of the normal value (the Note), with Brazil as a representative country. It also informed interested parties that it would establish SG&A costs and profits based on available information for the company Usinas Siderúrgicas de Minas Gerais (‘Usiminas’) and Gerdau S/A (‘Gerdau’), producers of the product under review in the representative country.

• (87) In their comments to the Note the applicant claimed that the Commission should take into account also other factors of production used in the manufacturing of heavy plates such as wire of non-alloy aluminium, aluminium waste and scrap, ferro-alloy, ferro-silicon, water, heavy oils, acetylene etc.

• (88) In the Note the Commission presented the main factors of production. In addition to those factors of production the Commission also added consumables and overheads as explained in recitals (139) and (149). 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. Furthermore, as specified in recitals (184) and (185), there were negligible imports of product concerned from the PRC during the review investigation period. Therefore, the constructed normal value will be used only for comparison with the Chinese export price to third countries.

4.2.2.   Normal value

• (89) 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”.

• (90) 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”.

• (91) As further explained below, the Commission concluded in the present investigation that, based on the evidence available the application of Article 2(6a) of the basic Regulation was appropriate.

4.2.2.1.   Existence of significant distortions

• (92) In recent investigations concerning the steel sector in the PRC ²⁴, the Commission found that significant distortions in the sense of Article 2(6a)(b) of the basic Regulation were present.

• (93) 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 ²⁵. In particular, the Commission concluded that in the steel sector, which is the main raw material to produce the product under review, 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 ²⁶, 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 ²⁷. 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 ²⁸. 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 ²⁹. In the same vein, the Commission found distortions of wage costs in the steel sector in the sense of Article 2(6a)(b), fifth indent of the basic Regulation ³⁰, 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 ³¹.

• (94) Like in previous investigations concerning the steel 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 including the Commission Staff Working Document on Significant Distortions in the Economy of the People’s Republic of China for the Purposes of Trade Defense Investigations ³² (‘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.

• (95) The applicant submitted in the request that the prices and costs of steel products in the PRC, including the product under review, are not the result of free market forces. The request alleged that all factors of production – land, energy, capital, raw materials and labour – are equally distorted. To support its position, the request referred to a number of publicly available information sources, such as the Report, the conclusions reached by the U.S. Department of Commerce ³³, the Commission’s recent investigations of the Chinese steel sector ³⁴, the 13^th FYP for National Economic and Social Development of the PRC as well as the 14^th FYP for National Economic and Social Development of the PRC.

• (96) On this basis, the request emphasized that:

• — The steel sector is considered a pillar industry in China, in which the GOC controls virtually every aspect of the steel sector’s development and functioning by utilizing a range of policies and directives, such as the five-year-plans, to influence market composition and restricting raw materials, investment, capacity elimination, product range, relocation, upgrading, etc.

• — Baoshan Iron & Steel Co., Ltd. (‘Baosteel’), one of the main Chinese Heavy Plates producers, is a major State-owned enterprise and is part of the China Baowu Steel Group Co. Ltd. (‘Baowu’), which includes Wuhan Iron / Steel Co., Ltd. (‘WISCO’). Both Baosteel and WISCO have several party building activities, have party members in the company management and emphasize their association with the CCP.

• — The costs of raw-materials, such as steel and iron ore, and energy in the PRC are not the result of free market forces as the production of these raw materials is subject to State support in the PRC; significant systemic distortions exist also with respect to access to capital, land and labour.

• (97) The GOC did not comment or provide evidence supporting or rebutting 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 appropriateness of the application of Article 2(6a) of the basic Regulation in the case at hand.

• (98) Specifically in the sector of the product under review, i.e. the steel sector, a substantial degree of ownership by the GOC persists in the sense of Article 2(6a)(b), first indent of the basic Regulation. 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 the two largest producers in the steel sector, namely Angang Steel Group (‘Ansteel’) and Baowu are either fully state-owned or the State holds a controlling stake. In any event, even when specific information may not be available for the product under review, the sector represents a sub-sector of the steel industry and the findings concerning the steel sector are therefore deemed indicative also for the product under review.

• (99) Both public and privately owned enterprises in the steel sector are subject to policy supervision and guidance. The latest Chinese policy documents concerning the steel sector confirm the continued importance which GOC attributes to the sector, including the intention to intervene in the sector in order to shape it in line with the government policies. This is exemplified by the Ministry of Industry and Information Technology’s draft Guiding Opinion on Fostering a High Quality Development of Steel Industry which calls for further consolidation of the industrial foundation and significant improvement in the modernization level of the industrial chain ³⁵, by the 14^th FYP on Developing the Raw Material Industry according to which the sector will “adhere to the combination of market leadership and government promotion” and will “cultivate a group of leading companies with ecological leadership and core competitiveness” ³⁶or also by the 14^th FYP on Developing Scrap Steel Industry whose key objectives is to “continuously increase the application ratio of scrap steel, and by the end of the 14^th FYP, the comprehensive scrap ratio of national steelmaking will reach 30%.” ³⁷

• (100) Similar examples of the intention by the Chinese authorities to supervise and guide the developments of the sector can be seen at the provincial level, such as in Hebei which plans to “steadily implement the group development of organizations, accelerate the reform of mixed ownership of state-owned enterprises, focus on promoting the cross-regional merger and reorganization of private iron and steel enterprises, and strive to establish 1-2 world-class large groups, 3-5 large groups with domestic influence as the support” and to “further expand the recycling and circulation channels of scrap steel, strengthen the screening and classification of scrap steel.” ³⁸ Similarly, the Henan Implementation Plan for the Transformation and Upgrade of the Steel Industry during the 14^th FYP foresees the “construction of characteristic steel production bases […], build 6 characteristic steel production bases in Anyang, Jiyuan, Pingdingshan, Xinyang, Shangqiu, Zhouou, etc., and improve the scale, intensification, specialisation and distinction of the industry. Among them, by 2025, the production capacity of pig iron in Anyang will be controlled within 14 million tons, and the production capacity of crude steel will be controlled within 15 million tons.” ³⁹ Further industrial policy objectives can also be seen in the planning documents of other provinces, such as Jiangsu ⁴⁰, Shandong ⁴¹, Shanxi ⁴², Liaoning Dalian ⁴³ or Zhejiang ⁴⁴.

• (101) As to the GOC being 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, due to the lack of cooperation from the side of the exporting producers, it was impossible to systematically establish existence of personal connections between producers of the product under review and the CCP. However, given that the product under review represents a subsector of the steel sector, information available with respect to steel producers is relevant also to the product under review.

• (102) For instance, Ansteel’s Chairman serves at the same time as the Secretary of the Party Committee. Similarly, the Director and General Manager of Ansteel occupies the position of the Party Committee’s Deputy Secretary ⁴⁵. In the case of Baowu, the Chairman of Baosteel, which is a subsidiary held at 100 % by Baowu, holds at the same time the position of Secretary of the Party Committee, whereas the Managing Director serves also as the Deputy Secretary of the Party Committee and the Deputy General Manager serves as a Member of the Standing Committee of the Party Committee ⁴⁶.

• (103) Moreover, Ansteel’s Party Committee issued a report on the study and implementation of the spirit of General Secretary Xi Jinping’s “July 1” important speech on 22 July 2022: “We must work hard to implement the spirit of General Secretary Xi Jinping’s “July 1” important speech, carefully compare the arrangements and arrangements of the Ansteel Group Party Committee, study and formulate “optional actions”, closely contact the actual situation of promoting Ansteel Group’s “14^th Five-Year” development strategy, and conduct in-depth investigations research, do practical things well, and open new affairs well.” ⁴⁷ On 2 April 2021, their affiliation to the party was emphasized in a trade union meeting of the Ansteel Group that “trade union organizations at all levels of Ansteel Group should adhere to the leadership of the party, reflect the political responsibility of trade unions, and consciously serve the overall high-quality development of Ansteel Group.” ⁴⁸

• (104) Furthermore, as reported on Baowu’s website: “Baowu fully implements the requirements of the “Opinion on Strengthening the Party’s Leadership in the Improvement of Corporate Governance by Central Enterprises”, systematically optimizes the major decision-making system, and forms the implementation measures for the “three important and one big” decision-making system, the list of decision-making powers and responsibilities for major matters, and the board of directors.” ⁴⁹

• (105) Further, policies discriminating in favour of domestic producers or otherwise influencing the market in the sense of Article 2(6a)(b), third indent of the basic Regulation are in place in the sector of the product under review. Even though no policy documents guiding specifically the development of the heavy plates industry as such could be identified during the investigation, the industry benefits from governmental guidance and intervention into the steel sector, given that the product under review represents one of its subsectors.

• (106) The steel industry keeps being regarded as a key industry by the GOC ⁵⁰. This is confirmed in the numerous plans, directives and other documents focused on steel, which are issued at national, regional and municipal level. Under the 14^th Five Years Plan adopted in March 2021, the GOC earmarked the steel industry for transformation and upgrade, as well as optimization and structural adjustment ⁵¹. Similarly, the 14^th Five Years Plan on Developing the Raw Materials Industry, applicable also to the steel industry, lists the sector as the “bedrock of the real economy” and “a key field that shapes China’s international competitive edge” and sets a number of objectives and working methods which would drive the development of the steel sector in the time period 2021-2025, such a technological upgrade, improving the structure of the sector (not least by means of further corporate concentrations) or digital transformation ⁵².

• (107) The other important raw material used for the production of heavy plates is iron ore. Iron ore is also mentioned in the 14^th FYP on Developing the Raw Materials Industry, in which the State plans to “rationally develop domestic mineral resources. Strengthen the exploration of iron ore […], implement preferential tax policies, encourage the adoption of advanced technology and equipment to reduce the generation of mining solid waste.” ⁵³ In provinces, such as Hebei, the authorities foresee the following for the sector: “new project investment discount subsidy; explore and guide financial institutions to provide low-interest loans for iron and steel enterprises to switch to new industries, and at the same time, the government will provide discount subsidies.” ⁵⁴ In sum, the GOC has measures in place to induce operators to comply with the public policy objectives of supporting encouraged industries, including the production of the main raw materials used in the manufacturing of the product under review. Such measures impede market forces from operating freely.

• (108) The present investigation has not revealed any evidence that the discriminatory application or inadequate enforcement of bankruptcy and property laws according to Article 2(6a)(b), fourth indent of the basic Regulation in the heavy plates sector referred to above in recital (93) would not affect the manufacturers of the product under review.

• (109) The heavy plates sector is also affected by the distortions of wage costs in the sense of Article 2(6a)(b), fifth indent of the basic Regulation, as also referred to above in recital (93). Those distortions affect the sector both directly (when producing the product under review or the main inputs), as well as indirectly (when having access to inputs from companies subject to the same labour system in the PRC) ⁵⁵.

• (110) Moreover, no evidence was submitted in the present investigation demonstrating that the sector of the product under review is not affected by the government intervention in the financial system in the sense of Article 2(6a)(b), sixth indent of the basic Regulation, as also referred to above in recital (93). Therefore, the substantial government intervention in the financial system leads to the market conditions being severely affected at all levels.

• (111) Finally, the Commission recalls that in order to produce the product under review, a number of inputs is needed. When the producers of heavy plates purchase/contract these inputs, the prices they pay (and which are recorded as their costs) are clearly exposed to the same systemic distortions mentioned before. For instance, suppliers of inputs employ labour that is subject to the distortions. They may borrow money that is subject to the distortions on the financial sector/capital allocation. In addition, they are subject to the planning system that applies across all levels of government and sectors.

• (112) As a consequence, not only the domestic sales prices of heavy plates are not appropriate for use within the meaning of Article 2(6a)(a) of the basic Regulation, but all the input costs (including raw materials, energy, land, financing, labour, etc.) are also affected because their price formation is affected by substantial government intervention, as described in Parts I and II of the Report. Indeed, the government interventions described in relation to the allocation of capital, land, labour, energy and raw materials are present throughout the PRC. This means, for instance, that an input that in itself was produced in the PRC by combining a range of factors of production is exposed to significant distortions. The same applies for the input to the input and so forth.

• (113) In its comments on the Note, CISA reiterated the comments it had in reaction to the initiation of the investigation (see recitals (32) to (39)). Furthermore, it added that according to Article 2(6a)(a) of the basic Regulation the assessment concerning the existence of significant distortions should be done for each exporting producer separately. Therefore, the Commission had the obligation to analyse the situation of each Chinese producer and decide whether any of the factors of costs of production and sales are distorted for each of them. CISA claimed that while there was an absence of cooperation from individual Chinese producers in this case, “country-wide” or “industry-wide” findings should not be allowed.

• (114) The Commission noted that once it is determined that, due to the existence of significant distortions in the exporting country in accordance with Article 2(6a)(b), it is not appropriate to use domestic prices and costs in the exporting country, the Commission may construct normal value using undistorted prices or benchmarks in an appropriate representative country for each exporting producer according to Article 2(6a)(a). Article 2(6a) of the basic Regulation provides that domestic costs of each producer can be used if they are positively established not to be distorted, on the basis of accurate and appropriate evidence. However, no costs of production and sale of the product under review could be established as undistorted in light of the evidence available on the factors of production of individual exporting producers. Therefore this claim was dismissed.