Commission Implementing Regulation (EU) 2023/1404 of 3 July 2023 imposing a definitive anti-dumping duty and definitively collecting the provisional duty imposed on imports of stainless steel refillable kegs originating in the People’s Republic of China

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 9(4) thereof,

Whereas:

(1) On 13 May 2022, the European Commission (‘the Commission’) initiated an anti-dumping investigation with regard to imports of stainless steel refillable kegs originating in the People’s Republic of China (‘China’ or ‘the country concerned’) on the basis of Article 5 of Regulation (EU) 2016/1036 of the European Parliament and of the Council (‘the basic Regulation’). It published a Notice of Initiation in the Official Journal of the European Union (2) (‘the Notice of Initiation’).

(2) The Commission initiated the investigation following a complaint lodged on 31 March 2022 by the European Kegs Committee (‘the complainant’). The complaint was made on behalf of the Union industry of stainless steel refillable kegs in the sense of Article 5(4) of the basic Regulation. The complaint contained evidence of dumping and of resulting material injury that was sufficient to justify the initiation of the investigation.

(3) In accordance with Article 19a of the basic Regulation, on 15 December 2022 the Commission provided parties with a summary of the proposed duties and details about the calculation of the dumping margins and the margins adequate to remove the injury to the Union industry. Interested parties were invited to comment on the accuracy of the calculations within three working days. Sampled exporting producers jointly submitted comments on pre-disclosure on 19 December 2022. They claimed (i) that the heading of a disclosure table contained a wrong unit of measure, (ii) that the target prices of certain product types did not reflect expected target prices according to their knowledge, and (iii) that certain product types were not included in the injury margin calculations.

(4) On 12 January 2023, the Commission imposed provisional anti-dumping duties on imports of stainless steel refillable kegs originating in the country concerned by Commission Implementing Regulation (EU) 2023/100 (3) (‘the provisional Regulation’).

(5) The Commission addressed the sampled exporting producers’ comments under points (i) and (iii) above in recital (259) of the provisional Regulation. Regarding the comment under (ii) above on target prices, the Commission concluded in recital (258) of the provisional Regulation that the comment did not concern the accuracy of the calculations and that it will examine the comment together with all other submissions after the publication of provisional measures (see recital (125)).

(6) Following the disclosure of the essential facts and considerations on the basis of which a provisional anti-dumping duty was imposed (‘the provisional disclosure’), the complainant, sampled exporting producers, the Government of the People’s Republic of China (‘GOC’), and one unrelated importer filed written submissions making their views known on the provisional findings within the deadline provided by Article 2(1) of the provisional Regulation.

(7) Interested parties had an opportunity to request a hearing with the Commission and/or the Hearing Officer in trade proceedings. No hearing was requested.

(8) The Commission continued to seek and verify all the information it deemed necessary for its final findings, particularly those highlighted in recitals (140) and (141) of the provisional Regulation, concerning import quantities of kegs from China. When reaching its definitive findings, the Commission considered the comments submitted by interested parties and revised its provisional conclusions where appropriate.

(9) On 4 May 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 stainless steel refillable kegs originating in the country concerned (‘final disclosure’). All parties were granted a period within which they could make comments on the final disclosure.

(10) On 25 May 2023, the Commission, taking into account certain claims received following final disclosure that had an impact on the outcome of the investigation, disclosed those additional facts and considerations that led the Commission to the modification of the final findings as disclosed previously. Interested parties were also granted a period within which they could make representations subsequent to this additional final disclosure.

(11) The comments submitted by the interested parties were considered and taken into account where appropriate in this Regulation.

(12) No comments were received concerning sampling. Therefore, the conclusions from recital (6) to (11) of provisional Regulation were confirmed.

(13) The investigation of dumping and injury covered the period from 1 January 2021 to 31 December 2021 (‘the investigation period’). The examination of trends relevant for the assessment of injury covered the period from 1 January 2018 to the end of the investigation period (‘the period considered’).

(14) The product under investigation is kegs, vessels, drums, tanks, casks and similar containers, refillable, of stainless steel, commonly known as ‘stainless steel refillable kegs’, with bodies approximately cylindrical in shape, with a wall thickness of 0,5 mm or more, of a kind used for material other than liquefied gas, crude oil, and petroleum products, of a capacity of 4,5 litres or more, regardless of the type of finish, gauge, or stainless steel grade, whether or not with additional components (extractors, necks, chimes or any other component), whether or not painted or coated with other materials (‘kegs’ or ‘the product under investigation’).

(15) The following products do not fall under the scope of this investigation when imported separately from the product under investigation: necks, spears, couplers or taps, collars, valves and other components of the product under investigation such as extractors, necks and chimes.

(16) The product concerned is the product under investigation originating in China, currently falling under CN codes ex 7310 10 00 and ex 7310 29 90 (TARIC codes 7310100010 and 7310299010) (‘the product concerned’).

(18) In the absence of comments to this Section, the Commission confirmed that those products are therefore like products within the meaning of Article 1(4) of the basic Regulation.

(19) Following provisional disclosure, GOC and two sampled exporting producers commented on the provisional dumping findings.

(20) Following the publication of the provisional measures, the GOC submitted a number of observations on the application of Article 2(6a) of the basic Regulation in the current investigation.

(21) First, the GOC pointed out that the Report (4) is, in its view, factually and legally flawed and that decisions based on it, lack legitimacy. On the factual side, the Report is, according to the GOC, misrepresentative, one-sided and out of touch with reality. Moreover, the GOC considered that the fact that the Commission issued country reports for a few selected countries raises concerns about most favoured nation (‘MFN’) treatment. Further, relying by the Commission on the evidence in the Report is, in the GOC’s view, not in line with the spirit of fair and just law, as it provides unfair advantages to the Union industry and as it effectively amounts to judging the case before trial.

(22) 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 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 the facts 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. Rather than the Commission not acting in the spirit of fairness and justice, it was therefore the GOC which failed to make use of the procedural rights available to it. Indeed, as noted in recital (24) of the provisional Regulation, the GOC did not reply to the questionnaire on the alleged significant distortions and thus decided not to cooperate with the investigation in this regard. In view of this non-cooperation, 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. The Commission invited the GOC to submit its comment on the application of Article 18 of the basic Regulation. No comments were received.

(23) Concerning the GOC’s claim regarding the violation of the MFN treatment, the Commission recalled that, as provided for by Article 2(6a)(c) of the basic Regulation, a country report shall be produced for any country only where the Commission has well-founded indications of the possible existence of significant distortions in a specific country or sector in that country. Upon the entry into force of the provisions of Article 2(6a) of the basic Regulation in 2017, the Commission had such indications of significant distortions for China. The Commission also published a report on distortions in Russia in 2020, and, where appropriate, other reports may follow. Furthermore, the Commission recalled that the reports are not mandatory for the application of Article 2(6a) of the basic Regulation. Article 2(6a)(c) of the basic Regulation describes the conditions for the Commission to issue country reports, and according to Article 2(6a)(d) of the basic Regulation the complainants are not obliged to use the report, nor is the existence of a country report a condition to initiate an investigation under Article 2(6a) of the basic Regulation. According to Article 2(6a)(e) of the basic Regulation, sufficient evidence proving significant distortions in any country brought by complainants fulfilling the criteria of Article 2(6a)(b) of the basic Regulation is sufficient to initiate the investigation on that basis. Therefore, the rules concerning country-specific significant distortions apply to all countries without any distinction, and irrespective of the existence of a country report. As a result, by definition the rules concerning country distortions do not violate the most favoured nation treatment.

(24) 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 investigation were still relevant during (at least part of) the investigation period, and that no parties have proven that this was no longer the case. In any event, once China started publishing new five-year plans throughout year 2021, of which many were only made public in the second half of the year, the Commission took them into account in its analysis, as summarised above. Consequently, the GOC’s claim could not be accepted.

(25) Second, the GOC argued that constructing the normal value in accordance with Article 2(6a) of the basic Regulation is inconsistent with the Anti-Dumping Agreement (‘ADA’), in particular with Article 2.2. of the ADA which provides an exhaustive list of situations where the normal value can be constructed, the “significant distortions” not being listed among such situations. Moreover, using data from an appropriate representative country is, according to the GOC, inconsistent with GATT Article VI.1(b) and Article 2.2.1.1. of the ADA which require using the cost of production in the country of origin plus a reasonable amount for administrative, selling and general costs and for profits when constructing the normal value.

(26) The Commission considered that the provisions of Article 2(6a) of the basic Regulation are fully consistent with the European Union's WTO obligations. It is the Commission’s view that, in accordance with the relevant WTO jurisprudence, the provisions of the basic Regulation that apply generally with respect to all WTO Members 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. Therefore, the Commission rejected this claim.

(27) Third, the GOC argued that the Commission’s investigating practices under Article 2(6a) of the basic Regulation are inconsistent with WTO rules insofar as the Commission, in violation of Article 2.2.1.1. of the ADA, disregarded records of the Chinese producers without determining whether those records are in accordance with the generally accepted accounting principles in China and whether they reasonably reflect the costs associated with the production and sales. The GOC recalled in this connection that the Appellate Body in EU – Biodiesel (‘DS473’) and the Panel Report in European Union – Cost Adjustment Methodologies II (Russia) (‘DS494’) asserted that according to Article 2.2.1.1 of the ADA, as long as the records kept by the exporter or producer under investigation correspond – within acceptable limits – in an accurate and reliable manner, to all the actual costs incurred by the particular producer or exporter for the product under consideration, they can be deemed to “reasonably reflect the costs associated with the production and sale of the product under consideration” and the investigating authority should use such records to determine the cost of production of the investigated producers. Moreover, by using the data from the appropriate representative country, the Commission has, in GOC’s view, disregarded its obligation to arrive at the cost of production in the country of origin.

(28) As explained in recitals (32) to (58) of the provisional Regulation, the Commission concluded that it is appropriate to apply Article 2(6a) of the basic Regulation given the existence of significant distortions within the meaning of point (b) of that Article. The exporting producers were given the opportunity to comment on the appropriateness of the application of the Article 2(6a), but provided no comments. Therefore whether the Chinese companies records were kept in accordance with the generally accepted accounting principles of China, or whether the records reasonably reflected the costs associated with the production and sale of the product under investigation in China, does not affect the conclusion concerning the application of the methodology under Article 2(6a) of the basic Regulation. The Commission reiterated in this connection that the WTO Appellate Body explicitly clarified in DS473 that WTO law permits the use of data from a third country, duly adjusted when such adjustment is necessary and substantiated. In addition, with respect to DS494, 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 adopted by the Dispute Settlement Body. In any event, the Panel Report in that dispute specifically considered the provisions in Article 2(6a) of the basic Regulation to be outside the scope of that dispute. The Commission therefore rejected the claim.

(29) Fourth, the GOC submitted that the Commission should be consistent and fully examine whether there are market distortions in the representative country. Readily accepting the representative country’s data without such evaluation represents “double standards”. The GOC pointed out that under the EU law, the Commission is obliged to use undistorted prices to construct normal values. Therefore, the Commission should, in GOC’s view, take the initiative to investigate and prove the existence or non-existence of distortions in the representative countries, rather than passively waiting for the parties involved in the case to submit evidence. The GOC further submitted that the Commission should examine whether there are market distortions in the EU domestic market, not least because there are allegedly widespread situations within the EU that may raise concerns for the so-called "market distortions".

(30) In response to this argument, the Commission recalled that, in accordance with Article 2(6a)(a) of the basic Regulation, it proceeds to construct the normal value on the basis of chosen data other than domestic prices and costs in the exporting country only where it establishes that such data is the most appropriate to reflect undistorted prices and costs. In this process, the Commission is bound to use only undistorted data. In that respect, far from waiting passively, the Commission invites interested parties to comment on the proposed sources for the determination of the normal value in the early stages of the investigation. The Commission’s ultimate decision as to which undistorted data should be used to calculate the normal value takes full account of those comments. As to the GOC’s request for the Commission to evaluate possible distortions in the EU’s internal market, the Commission failed to see the relevance of this point in the context of assessing the existence of significant distortions in accordance with Article 2(6a) of the basic Regulation. Accordingly, the Commission rejected these arguments.

(31) In the provisional Regulation, the Commission selected Brazil as the representative country and used the financial data of one company, Metalurgica Mococa SA, for the constructed normal value in accordance with Article 2(6a)(a) of the basic Regulation. The details on the methodology used for the selection were set out in the First and Second note made available to parties in the open file on 20 July 2022 and 19 September 2022 (‘First Note’ and ‘Second Note’), and in recitals (59) to (95) of the provisional Regulation.

(33) In comparison, these parties claimed that Malaysian market was less distorted by the protective measures and had a lower share of Chinese imports.