Commission Implementing Regulation (EU) 2023/1648 of 21 August 2023 imposing a definitive anti-dumping duty on imports of certain coated fine paper 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

22.8.2023	EN	Official Journal of the European Union	L 207/41

THE EUROPEAN COMMISSION,

Having regard to the Treaty on the Functioning of the European Union,

Having regard to Regulation (EU) 2016/1036 of the European Parliament and of the Council of 8 June 2016 on protection against dumped imports from countries not members of the European Union ¹, and in particular Article 11(2) thereof,

Whereas:

1. PROCEDURE

1.1.   Previous investigations and measures in force

• (1) By Implementing Regulation (EU) No 451/2011 ², the Council imposed anti-dumping duties on imports of certain coated fine paper originating in the People's Republic of China (‘the PRC’ or ‘country concerned’) (‘the original measures’). The investigation that led to the imposition of the original measures will hereinafter be referred to as ‘the original investigation’.

• (2) Following an anti-subsidy investigation, by Implementing Regulation (EU) No 452/2011 ³, the Council also imposed a definitive countervailing duty on imports of certain coated fine paper originating in the PRC.

• (3) The anti-dumping measures took the form of an ad valorem duty rate ranging from 8 % to 35,1 % for imports from individually named exporters, with a country-wide residual duty rate of 27,1 % for all other exporters.

• (4) Following an expiry review pursuant to Article 11(2) of Regulation (EU) 2016/1036 of the European Parliament and the Council of 8 June 2016 on protection against dumped imports from countries not members of the European Union ⁴ ('the basic Regulation'), on 3 July 2017, the Council re-imposed the definitive anti-dumping measures on imports of certain coated fine paper originating in the PRC by Regulation (EU) No 2017/1188 ⁵, (the ‘previous expiry review’).

• (5) The anti-dumping duties currently in force are at rates ranging between 8 % and 35,1 % on imports from the sampled exporting producers, and a duty rate of 27,1 % on all other companies from the PRC.

1.2.   Request for an expiry review

• (6) Following the publication of a notice of impending expiry ⁶ of the anti-dumping measures in force on the imports of certain coated fine paper originating in the PRC, the European Commission ('the Commission') received a request for a review pursuant to Article 11(2) of the basic Regulation. The request for review was submitted on 31 March 2022 by Arctic Paper Grycksbo AB, Burgo Group SpA, Fedrigoni SpA, Lecta Group and Sappi Europe SA (‘the applicants’) on behalf of the Union industry of certain coated fine paper in the sense of Article 5(4) of the basic Regulation.

• (7) 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 continuation or recurrence of injury to the Union industry.

1.3.   Initiation of an expiry review

• (8) 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 30 June 2022, an expiry review with regard to imports to the Union of certain coated fine paper originating in the PRC, on the basis of Article 11(2) of the basic Regulation. It published a Notice of Initiation in the Official Journal of the European Union ⁷ (‘the Notice of Initiation’).

1.4.   Separate anti-subsidy investigation

• (9) By a notice published in the Official Journal of the European Union on 30 June 2022, the Commission also announced the initiation of an expiry review pursuant to Article 18 of Council Regulation (EC) No 597/2009 ⁸ of the definitive countervailing measures in force with regard to imports into the Union of certain coated fine paper originating in the People's Republic of China.

1.5.   Review investigation period and period considered

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

1.6.   Interested parties

• (11) 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 applicants, other known Union producers, exporting producers, importers and users in the Union known to be concerned, as well as the Chinese authorities about the initiation of the expiry review and invited them to participate.

• (12) 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.

1.7.   Sampling

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

(a) Sampling of Union producers

• (14) In the Notice of Initiation of the expiry review investigation, the Commission stated that it had provisionally selected a sample of Union producers. In accordance with Article 17(1) of the basic Regulation, the Commission selected the sample based on the representativity in terms of volume of production and sales of the like product in the EU between 1 January and 31 December 2021. This sample consisted of 3 Union producers. The sampled Union producers accounted for approximately 41 % of the estimated total volume of production and 37 % of the estimated sales of the like product in the Union. 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, and the provisional sample was therefore confirmed. The sample is representative of the Union industry.

(b) Sampling of unrelated importers

• (15) 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 of the expiry review investigation.

• (16) No unrelated importers came forward and provided the requested information.

(c) Sampling of exporting producers in the PRC

• (17) In the Notice of Initiation of the expiry review investigation, the Commission stated that it might sample exporting producers in accordance with Article 17(2) of the basic Regulation.

• (18) To decide whether sampling was necessary and if so, to select a sample, the Commission asked all known exporting producers in the PRC to provide information specified in the Notice of Initiation. No exporting producer, however, came forward and provided the requested information.

• (19) In addition, the Commission asked the Mission of the PRC to the European Union to identify and/or contact other exporting producers, if any, that might be interested in participating in the investigation. However, no response was provided.

1.8.   Questionnaires, replies to the questionnaires

• (20) The Commission sent a questionnaire concerning the existence of significant distortions in the PRC within the meaning of Article 2(6a) (b) of the basic Regulation to the Government of the People’s Republic of China (‘GOC’). No questionnaire reply was received.

• (21) The Commission sent questionnaires to the three sampled Union producers. At the day of initiation, the same questionnaires were made available online on DG Trade’s website ⁹. In addition, the Commission sent a questionnaire to the applicants concerning macroeconomic data. Questionnaires were also made available to unrelated importers and users on the same DG Trade’s website ¹⁰.

• (22) Questionnaire replies were received from the three sampled Union producers. In addition, the applicants provided the Commission with macroeconomic data. The exporting producers did not provide a questionnaire reply. No reply was received from any of the unrelated importers. None of the users provided replies to the questionnaires.

• (23) Because there was no cooperation from the Chinese exporting producers or the GOC, the findings regarding dumping and injury were made on the basis of facts available pursuant to Article 18 of the basic Regulation. The Mission of the People’s Republic of China to the European Union was informed accordingly. No comments were received.

1.9.   Verification visits

• (24) The Commission sought and verified all the information deemed necessary for the determination of likelihood of continuation or recurrence of dumping and injury and of the Union interest.

• (25) Verification visits pursuant to Article 16 of the basic Regulation were carried out at the premises of the following companies:

• — Union producers

• — Sappi Europe SA, Brussels, Belgium for Sappi Gratkorn GmbH (Austria ¹¹)

• — Burgo Group S.p.A. (Italy)

• — Condat SAS (part of Lecta Group) (France)

1.10.   Disclosure

• (26) On 14 June 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.

• (27) 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.

2. PRODUCT UNDER REVIEW, PRODUCT CONCERNED AND LIKE PRODUCT

2.1.   Product under review

• (28) The product under review is the same as in the original investigation and in the previous expiry review, namely certain coated fine paper (‘CFP’), which is paper or paperboard coated on one or both sides (excluding kraft paper or kraft paperboard), in either sheet or rolls, and with a weight of 70 g/m2 or more but not exceeding 400 g/m2 and brightness of more than 84 (measured according to ISO 2470-1).

• (29) The product under review does not include:

• — Rolls suitable for use in web-fed presses. Rolls suitable for use in web-fed presses are defined as those rolls which, if tested according to the ISO test standard ISO 3783:2006 concerning the determination of resistance to picking — accelerated speed method using the IGT tester (electric model), give a result of less than 30 N/m when measuring in the cross-direction of the paper (CD) and a result of less than 50 N/m when measuring in the machine direction (MD).

• — Multi-ply paper and multi-ply paperboard.

2.2.   Product concerned

• (30) Product concerned by the expiry review investigation is the product under review originating in China currently falling under CN codes ex 4810 13 00, ex 4810 14 00, ex 4810 19 00, ex 4810 22 00, ex 4810 29 30, ex 4810 29 80, ex 4810 99 10 and ex 4810 99 80 (TARIC codes 4810130020, 4810140020, 4810190020, 4810220020, 4810293020, 4810298020, 4810991020 and 4810998020).

2.3.   Like product

• (31) As established in the original investigation as well as in the previous expiry review, 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 by the exporting producers on the domestic market of the PRC;

• — the product under review produced and sold by the selected producer in Brazil, which served as a representative country;

• — the product under review produced and sold by the exporting producers to the rest of the world; and

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

• (32) The Commission concluded that these products are therefore considered to be like products within the meaning of Article 1(4) of the basic Regulation.

3. LIKELIHOOD OF CONTINUATION OR RECURRENCE OF DUMPING

3.1.   Preliminary remarks

• (33) In accordance with Article 11(2) of the basic Regulation, the Commission examined whether the expiry of the measures in force would likely lead to a continuation or recurrence of dumping from the PRC.

• (34) As mentioned in recital (23), no exporter/producer from China cooperated in the expiry review investigation. Consequently, and thus, 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 the facts available, in particular information in the request for review and statistical data from Eurostat, Global Trade Atlas (‘GTA’) ¹², the Brazilian Institute of Geography and Statistics ¹³, the Brazilian Ministry of Mine and Energy ¹⁴ and publicly available information from the official website of the Brazilian company Sylvamo Ltda. ¹⁵.

3.2.   Dumping of imports during the review investigation period

• (35) During the review investigation period, the statistical data show that imports of CFP from the PRC into the Union were less than 200 tonnes. The Commission concluded that these quantities were not representative, as they represented less than 1% of the total imports of the product concerned into the Union. Therefore, no meaningful analysis of dumping based on the Chinese imports to the Union during the review investigation period could be made. The investigation therefore focused on the likelihood of recurrence of dumping.

3.3.   Normal value

3.3.1.   Procedure for the determination of the normal value under Article 2(6a) of the basic Regulation for the imports of the product under review originating in the PRC

• (36) With regard to the PRC, given the sufficient evidence available at the initiation of the expiry review investigation tending to show the existence of significant distortions within the meaning of Article 2(6a), point (b) of the basic Regulation, the Commission initiated the investigation on the basis of Article 2(6a) of the basic Regulation.

• (37) In order to obtain the necessary information for its investigation with regard to the alleged significant distortions, the Commission sent a questionnaire to the GOC. In addition, in the Notice of Initiation, the Commission invited all interested parties to make their views known, submit information and provide supporting evidence regarding the application of Article 2(6a) of the basic Regulation within 37 days of the date of publication of the Notice of Initiation in the Official Journal of the European Union. No questionnaire reply was received from the GOC and no submission from interested parties on the application of Article 2(6a) of the basic Regulation was received.

• (38) In point 5.3.2 of the Notice of Initiation, the Commission also specified that, in view of the evidence available, it had provisionally selected Indonesia as 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.. During the investigation period, Indonesia transitioned from an upper middle income country to a lower income country ¹⁶.Therefore Commission stated that it would examine other possibly appropriate countries in accordance with the criteria set out in the first indent of Article 2(6a) of the basic Regulation.

• (39) On 20 February 2023, the Commission informed the interested parties by a Note on the relevant sources it intended to use for the determination of the normal value, with Brazil as the representative country. It also informed the interested parties that it would establish selling, general and administrative costs (‘SG&A’) and profits based on available information for the company Sylvamo Ltda., a Brazilian producer in the representative country. Comments were received only from the applicants and are addressed in section 3.3.4 below.

• (40) 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 referred to hereinafter as ‘SG&A’).

• (41) As further explained below, the Commission concluded in the present investigation that, based on the evidence available, and in view of the lack of cooperation of the GOC and the exporting producers, the application of Article 2(6a) of the basic Regulation was appropriate.

3.3.2.   Existence of significant distortions

3.3.2.1.   Introduction

• (42) Article 2(6a)(b) of the basic Regulation stipulates that ‘significant distortions are those distortions which occur when reported prices or costs, including the costs of raw materials and energy, are not the result of free market forces as they are affected by substantial government intervention. In assessing the existence of significant distortions regard shall be had, inter alia, to the potential impact of one or more of the following elements:

• — the market in question being served to a significant extent by enterprises which operate under the ownership, control or policy supervision or guidance of the authorities of the exporting country;

• — state presence in firms allowing the state to interfere with respect to prices or costs;

• — public policies or measures discriminating in favour of domestic suppliers or otherwise influencing free market forces;

• — the lack, discriminatory application or inadequate enforcement of bankruptcy, corporate or property laws;

• — wage costs being distorted;

• — access to finance granted by institutions which implement public policy objectives or otherwise not acting independently of the state’.

• (43) 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 provide 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.

• (44) 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’.

• (45) Pursuant to this provision, the Commission has issued a country report concerning the PRC (‘the Report’) ¹⁷, 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). The Report was added to the investigation file at the initiation stage and interested parties were invited to rebut, comment, or supplement the evidence contained in the investigation file at the time of initiation.

• (46) The request, referencing the Report and its findings on market distortions, indicated that the Report’s observations about pricing and allocation of factors of production, such as land, energy, capital, and material inputs being influenced by the State in a very significant manner are particularly true for the Chinese sector of CFP.

• (47) 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 on the appropriateness of the application of Article 2(6a) of the basic Regulation in the case at hand, nor has the Commission received any comments from the Chinese exporting producers.

• (48) The Commission examined 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 Article 2(6a) point (b) 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 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.

3.3.2.2.   Significant distortions affecting the domestic prices and costs in the PRC

• (49) The Chinese economic system is based on the concept of a ‘socialist market economy’. That concept is enshrined in the Chinese Constitution and determines the economic governance of the PRC. The core principle is the ‘socialist public ownership of the means of production, namely, ownership by the whole people and collective ownership by the working people’. The State-owned economy is the ‘leading force of the national economy’ and the State has the mandate ‘to ensure its consolidation and growth’ ¹⁸. Consequently, the overall setup of the Chinese economy not only allows for substantial government interventions into the economy, but such interventions are expressly mandated. The notion of supremacy of public ownership over the private one permeates the entire legal system and is emphasized as a general principle in all central pieces of legislation. The Chinese property law is a prime example: it refers to the primary stage of socialism and entrusts the State with upholding the basic economic system under which the public ownership plays a dominant role. Other forms of ownership are tolerated, with the law permitting them to develop side by side with the State ownership ¹⁹.

• (50) In addition, under Chinese law, the socialist market economy is developed under the leadership of the Chinese Communist Party (‘CCP’). The structures of the Chinese State and of the CCP are intertwined at every level (legal, institutional, personal), forming a superstructure in which the roles of CCP and the State are indistinguishable. Following an amendment of the Chinese Constitution in March 2018, the leading role of the CCP was given an even greater prominence by being reaffirmed in the text of Article 1 of the Constitution. Following the already existing first sentence of the provision: ‘[t]he socialist system is the basic system of the People’s Republic of China’ a new second sentence was inserted which reads: ‘[t]he defining feature of socialism with Chinese characteristics is the leadership of the Communist Party of China.’ ²⁰ This illustrates the unquestioned and ever growing control of the CCP over the economic system of the PRC. This leadership and control is inherent to the Chinese system and goes well beyond the situation customary in other countries where the governments exercise general macroeconomic control within the boundaries of which free market forces are at play.

• (51) The Chinese State engages in an interventionist economic policy in pursuance of goals, which coincide with the political agenda set by the CCP rather than reflecting the prevailing economic conditions in a free market ²¹. The interventionist economic tools deployed by the Chinese authorities are manifold, including the system of industrial planning, the financial system, as well as the level of the regulatory environment.

• (52) First, on the level of overall administrative control, the direction of the Chinese economy is governed by a complex system of industrial planning which affects all economic activities within the country. The totality of these plans covers a comprehensive and complex matrix of sectors and crosscutting policies and is present on all levels of government. Plans at provincial level are detailed while national plans set broader targets. Plans also specify the means in order to support the relevant industries/sectors as well as the timeframes in which the objectives need to be achieved. Some plans still contain explicit output targets. Under the plans, individual industrial sectors and/or projects are being singled out as (positive or negative) priorities in line with the government priorities and specific development goals are attributed to them (industrial upgrade, international expansion etc.). The economic operators, private and State-owned alike, must effectively adjust their business activities according to the realities imposed by the planning system. This is not only because of the binding nature of the plans but also because the relevant Chinese authorities at all levels of government adhere to the system of plans and use their vested powers accordingly, thereby inducing the economic operators to comply with the priorities set out in the plans (see also section 3.3.2.5 below) ²².

• (53) Second, on the level of allocation of financial resources, the financial system of the PRC is dominated by the State-owned commercial and policy banks. Those banks, when setting up and implementing their lending policy need to align themselves with the government’s industrial policy objectives rather than primarily assessing the economic merits of a given project (see also section 3.3.2.8 below) ²³. The same applies to the other components of the Chinese financial system, such as the stock markets, bond markets, private equity markets etc. Also these parts of the financial sector are institutionally and operationally set up in a manner not geared towards maximizing the efficient functioning of the financial markets but towards ensuring control and allowing intervention by the State and the CCP ²⁴.

• (54) Third, on the level of regulatory environment, the interventions by the State into the economy take a number of forms. For instance, the public procurement rules are regularly used in pursuit of policy goals other than economic efficiency, thereby undermining market-based principles in the area. The applicable legislation specifically provides that public procurement shall be conducted in order to facilitate the achievement of goals designed by State policies. However, the nature of these goals remains undefined, thereby leaving broad margin of appreciation to the decision-making bodies ²⁵. Similarly, in the area of investment, the GOC maintains significant control and influence over destination and magnitude of both State and private investment. Investment screening as well as various incentives, restrictions, and prohibitions related to investment are used by authorities as an important tool for supporting industrial policy goals, such as maintaining State control over key sectors or bolstering domestic industry ²⁶.

• (55) In sum, the Chinese economic model is based on certain basic axioms, which provide for and encourage manifold government interventions. Such substantial government interventions are at odds with the free play of market forces, resulting in distorting the effective allocation of resources in line with market principles ²⁷.

3.3.2.3.   Significant distortions according to Article 2(6a)(b), first indent of the basic Regulation: the market in question being served to a significant extent by enterprises which operate under the ownership, control or policy supervision or guidance of the authorities of the exporting country

• (56) In the PRC, enterprises operating under the ownership, control and/or policy supervision or guidance by the State represent an essential part of the economy.

• (57) While in the coated paper industry, the degree of State ownership does not appear to be significant, the GOC maintains shareholding in a number of producers, such as in the largest papermaking enterprise in China, Shandong Chenming Paper Holding ²⁸. Indeed, Chenming Paper Holding is held by Chenming holdings (15,2%) in turn held (45,2%) by the fully state-owned entity Shandong Shouguang Jinxin Investment Development Holding Group Co., Ltd. ²⁹. In addition, given that CCP interventions into operational decision making have become the norm also in private companies ³⁰, with CCP claiming leadership over virtually every aspect of the country’s economy, the influence of the State by means of CCP structures within companies effectively results in economic operators being under control and policy supervision of the government, given how far the State and Party structures have grown together in the PRC.

• (58) This is apparent also at the level of the China Paper Association the sectoral industry association. According to Art. 3 of its Articles of Association, China Paper Association ‘adheres to the overall leadership of the Communist Party of China’ and ‘accepts the business guidance, supervision, management by the entities in charge of registration, and party building leadership and by the administrative departments in charge of industry’ ³¹.

• (59) Consequently, even privately owned producers in the sector of the product under review are prevented from operating under market conditions. Indeed, both public and privately owned enterprises in the sector are subject to policy supervision and guidance as also set out in section 3.3.2.5 below.

3.3.2.4.   Significant distortions according to Article 2(6a)(b), second indent of the basic Regulation: State presence in firms allowing the state to interfere with respect to prices or costs

• (60) Apart from exercising control over the economy by means of ownership of state-owned entreprises (“SOEs”) and other tools, the GOC is in position to interfere with prices and costs through State presence in firms. While the right to appoint and to remove key management personnel in SOEs by the relevant State authorities, as provided for in the Chinese legislation, can be considered to reflect the corresponding ownership rights, ³² CCP cells in enterprises, State-owned and private alike, represent another important channel through which the State can interfere with business decisions. According to the PRC’s company law, a CCP organisation is to be established in every company (with at least three CCP members as specified in the CCP Constitution ³³) and the company shall provide the necessary conditions for the activities of the party organisation. In the past, this requirement appears not to have always been followed or strictly enforced. However, since at least 2016 the CCP has been reinforcing its claims to control business decisions in companies as a matter of political principle ³⁴, including exercising pressure on private companies to put ‘patriotism’ first and to follow party discipline ³⁵. In 2017, it was reported that party cells existed in 70% of some 1.86 million privately owned companies, with growing pressure for the CCP organisations to have a final say over the business decisions within their respective companies ³⁶. These rules are of general application throughout the Chinese economy, across all sectors, including to the producers of the product under review and the suppliers of their inputs.

• (61) In addition, on 15 September 2020 a document titled General Office of CCP Central Committee’s Guidelines on stepping up the United Front work in the private sector for the new era (‘the Guidelines’) ³⁷ was released, which further expanded the role of the party committees in private enterprises. Section II.4 of the Guidelines state: ‘[w]e must raise the Party’s overall capacity to lead private-sector United Front work and effectively step up the work in this area’; and section III.6 states: ‘[w]e must further step up Party building in private enterprises and enable the Party cells to play their role effectively as a fortress and enable Party members to play their parts as vanguards and pioneers.’ The Guidelines thus emphasise and seek to increase the role of the CCP in companies and other private sector entities ³⁸.

• (62) The investigation has confirmed that overlaps between managerial positions and CCP membership / Party functions are commonplace in the coated paper industry. For example, the Chairman of the Board of Directors of Shandong Chenming Paper Group Co., Ltd. holds in parallel the position Secretary of the enterprise’s Party Committee. ³⁹ An article on the website of Shandong Chenming Paper further outlined the commitment of the group to implement the decisions taken during the 20th National Congress of the Communist Party of China and ‘[to] fully, accurately, and comprehensively implement the new development concept, focus on the main business, strengthen the industry, remain committed and determined, and reach new great achievements on the road to the Chinese-style modernization’. ⁴⁰ During a meeting with the Group‘s Chairman of the Board of Directors, the Secretary of the Municipal Party Committee reassured that ‘the Municipal Party Committee and the Municipal Government will keep optimizing the business environment, […] coordinate and solve the difficulties and problems in the production and operational processes of enterprises in a timely manner, and fully support Chenming in stabilizing and increasing production to achieve an even better development’. ⁴¹

• (63) The Group’s Chairman of the Board of Directors further ‘expressed his gratitude to the Municipal Party Committee and Municipal Government for their support to the company’s development’ and confirmed that ‘the company will seize opportunities and actively cooperate with the Municipal Party Committee and the Municipal Government as regards the layout and the development of the forest industry’. ⁴² Such an involvement can also be confirmed in other companies in the coated paper industry. The Chairman of the Board of Directors and General Manager of the Shandong Sun Paper Co., Ltd. for example, which is also the Secretary of the Party Committee, ⁴³ stated that ‘Without the Party's reform and opening up policy, there would be no development of Sun Paper; without the support of the Party and the government, there would be no glory of Sun Paper’. ⁴⁴

• (64) The State’s presence and intervention in the financial markets (see also 3.3.2.8 below) as well as in the provision of raw materials and inputs further have an additional distorting effect on the market ⁴⁵. Thus, the State presence in firms, in the coated paper and other industries (such as the financial and input industries) allow the GOC to interfere with respect to prices and costs.

3.3.2.5.   Significant distortions according to Article 2(6a)(b), third indent of the basic Regulation: public policies or measures discriminating in favour of domestic suppliers or otherwise influencing free market forces

• (65) The direction of the Chinese economy is to a significant degree determined by an elaborate system of planning which sets out priorities and prescribes the goals the central and local governments must focus on. Relevant plans exist on all levels of government and cover virtually all economic sectors. The objectives set by the planning instruments are of binding nature and the authorities at each administrative level monitor the implementation of the plans by the corresponding lower level of government. Overall, the system of planning in the PRC results in resources being driven to sectors designated as strategic or otherwise politically important by the government, rather than being allocated in line with market forces ⁴⁶.

• (66) The Chinese authorities have enacted a number of policies guiding the functioning of the sector of the product under review. To start with, coated paper related technologies are listed among the encouraged industries in China’s 2019 Catalogue for Guiding Industry Restructuring ⁴⁷, which signals the authorities’ intentions to create a regulatory environment conducive to the sector’s development and which also potentially paves way to the industry’s access to finance. Additionally, the Catalogue also specifies key production targets, for example concerning various forms of wood pulp ⁴⁸, refers to the development of advanced pulping and papermaking equipment ⁴⁹ and mentions various paper and wood pulp production sectors to be eliminated if annual capacities are not met ⁵⁰. Moreover, the national 14th Five-Year Plan (“FYP”) ⁵¹, invites the industry to ‘accelerate the transformation and upgrading of enterprises in key industries such as chemical industry and papermaking’ ⁵². The 14th FYP on forestry and grass development ⁵³ emphasizes the objective to ‘[s]trengthen traditional industries [to p]romote the deep processing of wood […] support the green and digital transformation of economic sectors such as forests, wood and bamboo processing, forestry chemicals, pulp and paper’ ⁵⁴ and to ‘ accelerate the elimination of obsolete production capacities[…] promote technological transformation and improve the utilization rate of energy and raw materials’. ⁵⁵

• (67) In addition, the national level policies regarding the coated paper industry are implemented at sub-central levels through corresponding planning documents. The Shandong Province 14th FYP ⁵⁶ on building a strong manufacturing province mentions that ‘[b]y the end of the ‘14th Five-Year Plan’, […] the scale of the iron and steel, non-ferrous metals, home appliances, papermaking and other industries will rank among the top three in the country’ ⁵⁷ further asking for optimized fiscal and tax financial support ⁵⁸ and explicitly stating that ‘[t]he provincial, municipal, and county finance administration departments shall strengthen the coordination of funds, and comprehensively adopt methods such as equity investment, loan interest discounts, and ex-post rewards and subsidies to increase support for the manufacturing industry’ ⁵⁹. In the Shandong Province Action plan for a strong province in advanced manufacturing 2022-2025 ⁶⁰, the local government states that ‘[t]he Province’s Leading Small Group for the construction of a strong manufacturing province shall play a comprehensive and coordinating role, and relevant departments directly under the authority of the provincial government shall duly perform their duties. The main responsible comrades of the Party committees and governments at the city and county levels shall rely on research and deployment, and take the lead in promoting implementation.’ ⁶¹ The Jiangsu province’s carbon peak action plan applicable to Jiangsu’s industries and key sectors ⁶² also contains the instructions to ‘[a]ccelerate the transformation and upgrading of traditional industries […] such as […] papermaking’. ⁶³ Through these and other means, the Chinese authorities therefore direct and control virtually every aspect of the development and functioning of the sector.

• (68) In sum, the GOC has measures in place to induce operators to comply with the public policy objectives concerning the coated paper industry. Such measures impede market forces from operating freely.

3.3.2.6.   Significant distortions according to Article 2(6a)(b), fourth indent of the basic Regulation: the lack, discriminatory application or inadequate enforcement of bankruptcy, corporate or property laws

• (69) According to the information on file, the Chinese bankruptcy system delivers inadequately on its own main objectives such as to fairly settle claims and debts and to safeguard the lawful rights and interests of creditors and debtors. This appears to be rooted in the fact that while the Chinese bankruptcy law formally rests on principles that are similar to those applied in corresponding laws in countries other than the PRC, the Chinese system is characterised by systematic under-enforcement. The number of bankruptcies remains notoriously low in relation to the size of the country’s economy, not least because the insolvency proceedings suffer from a number of shortcomings, which effectively function as a disincentive for bankruptcy filings. Moreover, the role of the State in the insolvency proceedings remains strong and active, often having direct influence on the outcome of the proceedings ⁶⁴.

• (70) In addition, the shortcomings of the system of property rights are particularly obvious in relation to ownership of land and land-use rights in the PRC. ⁶⁵ All land is owned by the State (collectively owned rural land and State-owned urban land) and its allocation remains solely dependent on the State. There are legal provisions that aim at allocating land use rights in a transparent manner and at market prices, for instance by introducing bidding procedures. However, these provisions are regularly not respected, with certain buyers obtaining their land for free or below market rates ⁶⁶. Moreover, authorities often pursue specific political goals including the implementation of the economic plans when allocating land ⁶⁷.

• (71) Much like other sectors in the Chinese economy, the producers of the product under review are subject to the ordinary rules on Chinese bankruptcy, corporate, and property laws. That has the effect that these companies, too, are subject to the top-down distortions arising from the discriminatory application or inadequate enforcement of bankruptcy and property laws. Those considerations, based on the evidence available, appear to be fully applicable also in the forestry and wood production sector. The present investigation revealed nothing that would call those findings into question.

• (72) In light of the above, the Commission concluded that there was discriminatory application or inadequate enforcement of bankruptcy and property laws in the sector of the product under review.

3.3.2.7.   Significant distortions according to Article 2(6a)(b), fifth indent of the basic Regulation: wage costs being distorted

• (73) A system of market-based wages cannot fully develop in the PRC as workers and employers are impeded in their rights to collective organisation. The PRC has not ratified a number of essential conventions of the International Labour Organisation (‘ILO’), in particular those on freedom of association and on collective bargaining ⁶⁸. Under national law, only one trade union organisation is active. However, this organisation lacks independence from the State authorities and its engagement in collective bargaining and protection of workers’ rights remains rudimentary ⁶⁹. Moreover, the mobility of the Chinese workforce is restricted by the household registration system, which limits access to the full range of social security and other benefits to local residents of a given administrative area. This typically results in workers who are not in possession of the local residence registration finding themselves in a vulnerable employment position and receiving lower income than the holders of the residence registration. ⁷⁰ Those findings lead to the distortion of wage costs in the PRC.

• (74) No evidence was submitted to the effect that the coated paper industry would not be subject to the Chinese labour law system described. The sector is thus affected by the distortions of wage costs both directly (when making the product concerned or the main raw material for its production), as well as indirectly (when having access to capital or inputs from companies subject to the same labour system in the PRC).

3.3.2.8.   Significant distortions according to Article 2(6a)(b), sixth indent of the basic Regulation: access to finance granted by institutions which implement public policy objectives or otherwise not acting independently of the State

• (75) Access to capital for corporate actors in the PRC is subject to various distortions. Firstly, the Chinese financial system is characterised by the strong position of State-owned banks ⁷¹, which, when granting access to finance, take into consideration criteria other than the economic viability of a project. Similarly, to non-financial SOEs, the banks remain connected to the State not only through ownership but also via personal relations (the top executives of large State-owned financial institutions are ultimately appointed by the CCP) ⁷² and, again just like non-financial SOEs, the banks regularly implement public policies designed by the GOC. In doing so, the banks comply with an explicit legal obligation to conduct their business in accordance with the needs of the national economic and social development and under the guidance of the industrial policies of the State ⁷³. This is compounded by additional existing rules, which direct finances into sectors designated by the government as encouraged or otherwise important ⁷⁴.

• (76) While it is acknowledged that various legal provisions refer to the need to respect normal banking behaviour and prudential rules such as the need to examine the creditworthiness of the borrower, the overwhelming evidence, including findings made in trade defence investigations ⁷⁵, suggests that these provisions play only a secondary role in the application of the various legal instruments.

• (77) For example, the GOC has clarified that even private commercial banking decisions must be overseen by the CCP and remain in line with national policies. One of the State’s three overarching goals in relation to banking governance is now to strengthen the Party’s leadership in the banking and insurance sector, including in relation to operational and management issues ⁷⁶. Also, the performance evaluation criteria of commercial banks have now to, notably, take into account how entities ‘serve the national development objectives and the real economy’, and in particular how they ‘serve strategic and emerging industries’. ⁷⁷

• (78) Furthermore, bond and credit ratings are often distorted for a variety of reasons including the fact that the risk assessment is influenced by the firm's strategic importance to the GOC and the strength of any implicit guarantee by the government. Estimates strongly suggest that Chinese credit ratings systematically correspond to lower international ratings ⁷⁸.

• (79) This is compounded by additional existing rules, which direct finances into sectors designated by the government as encouraged or otherwise important ⁷⁹. This results in a bias in favour of lending to SOEs, large well-connected private firms and firms in key industrial sectors, which implies that the availability and cost of capital is not equal for all players on the market.

• (80) Secondly, borrowing costs have been kept artificially low to stimulate investment growth. This has led to the excessive use of capital investment with ever lower returns on investment. This is illustrated by the growth in corporate leverage in the State sector despite a sharp fall in profitability, which suggests that the mechanisms at work in the banking system do not follow normal commercial responses.

• (81) Thirdly, although nominal interest rate liberalisation was achieved in October 2015, price signals are still not the result of free market forces but are influenced by government-induced distortions. The share of lending at or below the benchmark rate still represented at least one-third of all lending as of the end of 2018 ⁸⁰. Official media in the PRC have recently reported that the CCP called for ‘guiding the loan market interest rate downwards. ⁸¹ Artificially low interest rates result in under-pricing, and consequently, the excessive utilization of capital.

• (82) Overall credit growth in the PRC indicates a worsening efficiency of capital allocation without any signs of credit tightening that would be expected in an undistorted market environment. As a result, non-performing loans have increased rapidly, with the GOC a number of times opting to either avoid defaults, thus creating so called ‘zombie’ companies, or to transfer the ownership of the debt (e.g., via mergers or debt-to-equity swaps), without necessarily removing the overall debt problem or addressing its root causes.

• (83) In essence, despite the steps that have been taken to liberalize the market, the corporate credit system in the PRC is affected by significant distortions resulting from the continuing pervasive role of the state in the capital markets. Therefore, the substantial government intervention in the financial system leads to the market conditions being severely affected at all levels.

• (84) In the present investigation, the Commission found that, apart from the above public policies supporting the coated paper industry, the GOC supports financially companies in the sector. In the Shandong Chenming Paper Holding 2022 annual report, the company lists a number of government grants for 2022, distributed among the following four projects:

• — Huanggang Forestry, Pulp and Paper Integration Project;

• — Zhanjiang Forestry, Pulp and Paper Integration Project;

• — Financial subsidies for technical upgrading project;

• — Environmental Protection Fund Grant ⁸².

• — Similarly, Nanning Sun, a wholly owned subsidiary of Shandong Sun Paper Co., Ltd., also benefitted from ‘strong support of various preferential investment policies of the local government’ for the set-up of a Forest-Pulp-Paper Integration and Supporting Industrial Park Project in Nanning, as outlined on Shandong Sun Papers 2021 annual report. ⁸³

• — In sum, the sector of the product under review is affected by the government intervention in the financial system in the sense of Article 2(6a) (b), sixth indent of the basic Regulation. Therefore, the substantial government intervention in the financial system leads to the market conditions being severely affected at all levels.

3.3.2.9.   Systemic nature of the distortions described

• (85) The Commission noted that the distortions described in the Report are characteristic for the Chinese economy. The evidence available shows that the facts and features of the Chinese system as described above in Sections 3.3.2.2 - 3.3.2.5 as well as in Part I of the Report apply throughout the country and across the sectors of the economy. The same holds true for the description of the factors of production as set out above in Sections 3.3.2.6 - 3.3.2.8 and in Part II of the Report.

• (86) The Commission recalls that, in order to produce the product under review, certain inputs are needed. When the producers of coated paper 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.

• (87) As a consequence, not only the domestic sales prices of the product under review 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. No evidence or argument to the contrary has been adduced by the GOC or the exporting producers in the present investigation.

3.3.2.10.   Conclusion

• (88) The analysis set out in sections 3.3.2.1. to 3.3.2.9., which includes an examination of all the available evidence relating to the PRC’s intervention in its economy in general as well as in the sector of the product under review, showed that prices or costs of the product under review, including the costs of raw materials, energy and labour, are not the result of free market forces because they are affected by substantial government intervention within the meaning of Article 2(6a)(b) of the basic Regulation, as shown by the actual or potential impact of one or more of the relevant elements listed therein. On that basis, and in the absence of any cooperation from the GOC, the Commission concluded that it is not appropriate to use domestic prices and costs to establish normal value in this case.

• (89) Consequently, the Commission proceeded to construct the normal value exclusively on the basis of costs of production and sale reflecting undistorted prices or benchmarks, that is, in this case, on the basis of corresponding costs of production and sale in an appropriate representative country, in accordance with Article 2(6a) (a) of the basic Regulation, as described in the following section.

3.3.3.   Representative country

3.3.3.1.   General remarks

• (90) The choice of the representative country should be based on the following criteria pursuant to Article 2(6a) of the basic Regulation:

• — a level of economic development similar to the People's Republic of China. For this purpose, the Commission gives preference to countries with a gross national income similar to China, on the basis of the database of the World Bank; ⁸⁴

• — production of the product under review in that country ⁸⁵;

• — availability of relevant public data;

• — where there is more than one such country, preference shall be given, where appropriate, to countries with an adequate level of social and environmental protection.

• (91) As explained in recital (39), the Commission issued a Note on the sources for the determination of the normal value, on 20 February 2023. This note described the facts and evidence underlying the relevant criteria, as well as informed the interested parties of the Commission’s intention to consider Brazil as an appropriate representative country in the present case if the existence of significant distortions pursuant to Article 2(6a) of the basic Regulation would be confirmed.

• (92) In line with the criteria listed under Article 2(6a) of the basic Regulation, the Commission identified Brazil as a country with similar level of economic development as the PRC. Brazil is classified by the World Bank as ‘upper-middle income’ country on a gross national income basis. Furthermore, Brazil was identified as a country where the product under review is being produced with relevant public data being readily available.

• (93) Finally, given the absence of cooperation and having established that Brazil was an appropriate representative country, and based on all the above elements, there was no need to carry out an assessment of the level of social and environmental protection in accordance with the last sentence of the first indent of Article 2(6a)(a) of the basic Regulation.

3.3.3.2.   Conclusion

• (94) In the absence of cooperation and given that Brazil met the criteria laid down in the first indent of Article 2(6a)(a)of the basic Regulation, the Commission selected Brazil as the appropriate representative country.

3.3.4.   Sources used to establish undistorted costs

• (95) In the Note on relevant sources for the determination of the normal value, the Commission listed the factors of production such as materials, energy and labour used in the production of the product under review, as given by the applicant in the request for the expiry review. The Commission also stated that, in order to construct the normal value in accordance with Article 2(6a)(a) of the basic Regulation, it would use GTA to establish the undistorted cost of most factors of production, notably raw materials. In addition, the Commission stated that it would use information from the ILOSTAT ⁸⁶ for establishing undistorted costs of labour in the manufacturing sector, and public tariffs from electricity and gas from the Brazilian Ministry of Mines and Energy ⁸⁷. Subsequently, as explained in recital (98) below, the Commission decided to use Instituto Brasileiro de Geografia e Estatística ⁸⁸ as a source for establishing labour costs.

• (96) Finally, the Commission stated that to establish SG&A costs and profit, at a reasonable level, it would use the financial data from only one Brazilian producer of the product under review, Sylvamo Ltda., as set out in recital (100) below. No comments were received concerning the representative country identified. However, comments were received from the applicants on a number of points discussed in the above-mentioned note, as described below.

• (97) The applicants first argued that the Commission did not take into account certain raw materials without HS codes (Fillers, Pigments-Other, Binders-Other, Additives, Others). However, the fact that these raw materials do not appear in the table of raw materials of the Note on relevant sources for the determination of the normal value, does not mean that they were ignored. These raw materials were indeed taken into account in the Commission’s calculations as consumables. More in detail, in the context of an expiry review the Commission only needs to establish whether there is a likelihood of continuation or recurrence of dumping. Given the finding made in recital (122) below of (significant) price difference during the review investigation period between the constructed normal value for sales to the rest of the world and the subsequent conclusion on likelihood of recurrence of dumping, the Commission was not required to carry out price dumping determination in the present investigation. In addition, the raw materials in questions represented a small percentage of the total cost of production. Consequently, they were taken into account as consumables, using the cost percentages provided by the applicant (totalling around 7%).

• (98) Second, the applicant, requested tailor-made benchmarks for the different types of labour costs distinguishing between different types of employees. However, the applicant did not provide such labour cost data for Brazil to differentiate between different types of labour. Furthermore, had the Commission carried out such a differentiation in the labour benchmarks and given the relative share of labour cost in the total manufacturing cost, the change in the difference between the constructed normal value and the export price to third countries would be marginal. In addition, in the context of an expiry review the Commission is not obliged to calculate a precise dumping margin but rather to establish whether there is likelihood of either continuation or recurrence of dumping. Nevertheless, in order to reflect better the salaries in the manufacturing sector for the review investigation period, the Commission decided to use instead of ILOSTAT (as announced in the Note on the sources for the determination of the normal value), the Instituto Brasileiro de Geografia e Estatística ⁸⁹ as a source for the monthly wages of employees in the manufacturing sector on average weekly hours worked in Brazil for 2021.

• (99) Third, the applicant requested to take into account also manufacturing overheads (machine depreciation, indirect labour, packing costs). However, as explained in recital (109) below, the Commission had already taken into account these costs in the calculations, using the cost percentages provided in the expiry review request.

• (100) Fourth, the applicant took issue with the fact that the Commission did not use in its calculations the profit and SG&A of the biggest coated fine paper producer in Brazil called Suzano S.A. and that it only took into account another producer of products similar to the product under review, Sylvamo Ltda. On this issue, the Commission deemed the combined profit and SG&A of Suzano S.A. not representative of what the coated fine paper industry would achieve under normal market conditions and thus not reasonable. Consequently, it decided to keep its initial choice to only use Sylvamo Ltda. for the calculation of a reasonable SG&A and profit percentage. Using the data of Suzano S.A. would have only increased further the difference established between the constructed normal value and export price to third countries described in recital (122). As explained in recital (98) above, the Commission is not obliged to calculate a precise dumping margin but rather to establish whether there is likelihood of either continuation or recurrence of dumping. Consequently, it rejected the claim.

3.4.   Undistorted costs and benchmarks

3.4.1.   Factors of production

• (101) Considering all the information based on the request and subsequent information collected during the procedure and after analysing the comments from the interested parties, the following factors of production and their sources have been identified in order to determine the normal value in accordance with Article 2(6a)(a) of the basic Regulation:

Table 1

Factors of production of certain coated fine paper

Factor of Production	Commodity Code in Brazil	Value (RMB)	Unit of measurement	Source of information
Raw materials	Raw materials	Raw materials	Raw materials
Softwood pulp	47032100	5,84	kg	GTA90
Hardwood pulp	47032900	4,64	kg	GTA
Activated carbon (other)	38021000	21,90	kg	GTA
Starches	35051010	19,31	kg	GTA
Hydrocarb HydroPlex CalPlex Covercarb	25174100	0,51	kg	GTA
Wheat starch	11081100	3,33	kg	GTA
Poly(vinyl alcohol)	39053000	23,37	kg	GTA
Carboxymethylcellulose and its salts	39123100	23,40	kg	GTA
Latex	40021100	11,46	kg	GTA
Consumables	Consumables	Consumables	Consumables
Labour	Labour	Labour	Labour
Labour Cost in manufacturing industries	N/A	59,57	hour	Instituto Brasileiro de Geografia e Estatística91
Energy	Energy	Energy	Energy
Electricity	N/A	919,96	MWh	Brazilian Ministry of Mines and Energy (Boletim mensal de energia 2021)92
Gas	N/A	344,29	MWh	Brazilian Ministry of Mines and Energy (Boletim mensal de energia 2021)

3.4.1.1.   Raw materials

• (102) In order to establish the undistorted price of raw materials in the representative country, the Commission used as a basis the weighted average import price to the representative country as reported in the GTA, to which import duties were added. An import price in the representative country was determined as a weighted average of unit prices of imports from all third countries excluding the PRC and countries which are not members of the WTO, listed in Annex 1 of Regulation (EU) 2015/755 of the European Parliament and the Council. ⁹³

• (103) The Commission decided to exclude imports from the PRC into the representative country, as it concluded in the above recital that it is not appropriate to use domestic prices and costs in the PRC due to the existence of significant distortions in accordance with Article 2(6a)(b) of the basic Regulation. Given that there is no evidence showing that the same distortions do not equally affect products intended for export, the Commission considered that the same distortions affected export prices. After excluding imports from the PRC into the representative country, the volume of imports from other third countries remained representative.

• (104) Normally, domestic transport prices should also be added to these import prices. However, considering the absence of cooperation as well as the nature of an expiry review investigation, which is focused on finding whether dumping continued during the review investigation period or could reoccur, rather than finding its exact magnitude, the Commission decided that adjustments for domestic transport were unnecessary. Such adjustments would only result in increasing the normal value and hence the dumping margin.

3.4.1.2.   Labour

• (105) For direct and indirect labour, cost statistics from the Instituto Brasileiro de Geografia e Estatística ⁹⁴ were used to determine wages in Brazil. The Commission used the monthly wages of employees in the manufacturing sector and the average weekly hours worked in Brazil for 2021. On this basis, an hourly rate was calculated at 59,57 RMB/hour

3.4.1.3.   Electricity

• (106) The price of electricity in Brazil is published by the Brazilian Ministry of Mines and Energy ⁹⁵. The Commission used the 2021 data of the industrial electricity prices and established a price at the level of 919,96 RMB/MWh (covering the review investigation period).

3.4.1.4.   Natural gas

• (107) To establish the benchmark for gas cost the Commission used statistics from the Brazilian Ministry of Mines and Energy ⁹⁶. The price used is the 2021 average gas unit price for industrial users in Brazil established at the level of 344,29 RMB/MWh (covering the review investigation period).

3.4.1.5.   Manufacturing overhead costs, SG&A, profits and depreciation

• (108) According to Article 2(6a)(a) of the basic Regulation, ‘the constructed normal value shall include an undistorted and reasonable amount for administrative, selling and general costs and for profits’. In addition, a value for manufacturing overhead costs needs to be established to cover costs not included in the factors of production referred to above.