Commission Implementing Regulation (EU) 2023/2659 of 27 November 2023 imposing a provisional anti-dumping duty on imports of certain polyethylene terephthalate originating in 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 7 thereof,

After consulting the Member States,

Whereas:

(1) On 30 March 2023, the European Commission (‘the Commission’) initiated an anti-dumping investigation with regard to imports of polyethylene terephthalate (‘PET’) originating in the People’s Republic of China (‘the country concerned’ or ‘the PRC’) on the basis of Article 5 of 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 14 February 2023 by PET Europe (‘the complainant’). The complaint was made on behalf of the Union industry of PET in the sense of Article 5(4) of the basic Regulation. The complaint contained evidence of dumping and of resulting threat of injury that was sufficient to justify the initiation of the investigation.

(4) Pursuant to Article 14(5a) of the basic Regulation, the Commission should register imports subject to an anti-dumping investigation during the period of pre-disclosure unless it has sufficient evidence within the meaning of Article 5 that the requirements either under point (c) or (d) of Article 10(4) are not met. Since no increase in imports took place, as set out above, the Commission decided not to register imports of PET originating in the PRC during the period of pre-disclosure.

(5) In the Notice of Initiation, the Commission invited interested parties to contact it in order to participate in the investigation. In addition, the Commission specifically informed the complainant, other known Union producers, the known exporting producers and the Chinese authorities, known importers, and users about the initiation of the investigation and invited them to participate.

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

(7) Following initiation, comments were received from the Chinese association China Petroleum and Chemical Industry Federation (‘CPCIF’), the user association Union of European Soft Drinks Associations (‘UNESDA’), and an unrelated importer (Svepol). The complainant submitted responses to these comments.

(8) Both associations claimed that the complainant failed to provide meaningful non-confidential summaries of specific information, especially regarding an ICIS report on the price evolution of paraxylene, one of the raw materials for the production of PET, and regarding the closures and idling of Union production sites. UNESDA additionally claimed that some annexes were missing.

(9) The open version of the complaint set out the conclusions of the ICIS report on the price evolution of paraxylene in paragraph 141, explaining that the price of paraxylene increased significantly over the course of 2022, affecting the import price of PET from all import destinations. The summary of the relevant open annex to the complaint indicated that this annex contained information on the idling and closures of certain Union producers during the period considered and investigation period of this complaint. UNESDA did not indicate which specific annexes were missing. Therefore, the Commission considered that the complaint included a meaningful non-confidential summary of all the information contained in the complaint and the claim was rejected.

(10) Furthermore, both associations argued that the complaint was inconsistent and incorrect with regard the number of PET producers in the Union, claiming in part of the complaint that there are 12 producers and elsewhere in the complaint that there are around 40 producers.

(11) As explained by complainant, this inconsistency was caused by a typographical error. The complainant clarified that the Union industry is made up by 12 companies that produce virgin PET (‘vPET’) and that in addition to those, there are around 40 smaller Union producers of recycled PET (‘rPET’) only. The companies known by the complainant have been included in an open annex to the complaint.

(12) UNESDA claimed that the economic indicators about the situation of the domestic industry are not presented in a uniform manner. Similar information refers to ‘complainants’; ‘EU producers’; ‘related parties’; ‘unrelated parties’ without explanation as to who is covered under each denomination making the information unintelligible. Estimated data is provided without explanation of the methodology used.

(13) Since UNESDA did not specify in which exact parts of the complaint the references to the different players on the Union market were unintelligible and which data was provided without explanation, the Commission could not assess this claim and rejected it.

(14) UNESDA argued that the information provided in the complaint to support the allegation of threat of injury did not include data about the rPET industry which when taken into account would change the conclusions on basic injury factors.

(15) The complaint did include estimated data on the rPET industry in its threat of injury assessment. This information was based on detailed capacity figures per rPET producer which was obtained by market intelligence of PET Europe and the complaining producers, and which was extrapolated for the other injury indicators (such as production and sales). The complainant represented 11 producers, which mainly produced vPET. Pursuant to Article 5(2) of the basic Regulation, a complaint must contain information as is reasonably available to the complainant. The Commission therefore considered the estimated data on the rPET industry as sufficient evidence at the stage of the complaint.

(16) Svepol claimed that the investigation was solely opened to eliminate competition and protecting the international PET investments of one of the complaining producers.

(17) The Commission considered this claim to be mere speculation for which the importer did not provide any substantive evidence. Therefore, it rejected the claim.

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

(19) In its 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 largest representative volume of sales and of production of the like product in the Union in the investigation period, which could reasonably be investigated within the time available. This sample consisted of three Union producers which accounted for 35 % of the estimated total production in the Union. The Commission invited interested parties to comment on the provisional sample.

(20) One of the users, Refresco, submitted that the selection only covered a small portion of PET production. The user further requested that the sample be extended by two more producers (JBF and Plastiverd), which have modern installations that should be able to produce economically, which are closer to users in France and Spain, and would thus cover a larger part of the European production and geographically a larger customer base served by the producers.

(21) By selecting the three largest Union producers and sellers in the investigation period, located in three different Member States, the Commission covered the largest representative volume of production and sales which could reasonably be investigated within the time available, in line with Article 17(1) of the basic Regulation. The companies selected account for 35 % of the estimated total production in the Union, hence a substantial and representative part of the Union production. The selection of producers located in three different Member States equally ensures wide geographical coverage. Moreover, Refresco did not provide any evidence that the companies selected did not have any modern facilities with the ability to make the product more economically nor did it explain how this would have been a relevant criterion in selecting a representative sample. Therefore, Refresco’s claim for revision of the sample was rejected.

(22) The Commission concluded that the sample of Union producers was therefore representative of the Union industry.

(23) 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.

(24) One unrelated importer provided the requested information and agreed to be included in the sample. Since only one company replied, the Commission decided that sampling was not necessary.

(25) To decide whether sampling is necessary and, if so, to select a sample, the Commission asked all exporting producers in the PRC to provide the information specified in the Notice of Initiation. In addition, the Commission asked the mission of the People’s Republic of China to the European Union to identify and/or contact other exporting producers, if any, that could be interested in participating in the investigation.

(26) Nine exporting producers in the country concerned provided the requested information and agreed to be included in the sample. In accordance with Article 17(1) of the basic Regulation, the Commission selected a sample of three company groups on the basis of the largest representative volume of exports to the Union which could reasonably be investigated within the time available. In accordance with Article 17(2) of the basic Regulation, all known exporting producers concerned and the authorities of the country concerned were consulted on the selection of the sample.

(27) One of the sampled exporting producers, Hainan Yisheng Petrochemical Co Ltd, withdrew its cooperation. Therefore, the Commission decided to replace this company in the sample with China Resources Chemical Innovative Materials Group, whose export quantities of the product under investigation to the Union as reported in the sampling questionnaire were the largest among the rest of the cooperating exporting producers. The final sample of exporting producers represented around 65 % of the exports reported by cooperating exporting producers from the PRC to the Union during the investigation period. In accordance with Article 17(2) of the basic Regulation, all known exporting producers concerned and the authorities of the country concerned were consulted on the selection of the final sample. No comments were received.

(28) Five exporting producers in the PRC requested individual examination under Article 17(3) of the basic Regulation. However, none of them provided a reply to the questionnaire.

(29) 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’).

(30) The Commission sent questionnaires to the sampled Union producers, the sampled exporting producers, the known importers and users. The same questionnaires were made available online (3) on the day of initiation.

(32) The investigation of dumping and injury covered the period from 1 January 2022 to 31 December 2022 (‘the investigation period’ or ‘the IP’). The examination of trends relevant for the assessment of injury covered the period from 1 January 2019 to the end of the investigation period (‘the period considered’).

(33) The product under investigation is polyethylene terephthalate (‘PET’), having a viscosity of 78 ml/g or higher, according to ISO Standard 1628-5, currently falling under CN code 3907 61 00 (‘the product under investigation’).

(34) PET is a chemical product normally used in the plastics industry to produce bottles and sheets. It belongs to the family of thermoplastics, i.e. the family of plastics that can be melted when heated and hardened when cooled. These characteristics are reversible. That is, it can be reheated, reshaped and frozen repeatedly, making it fully recyclable.

(35) The product concerned is PET, originating in the People’s Republic of China (‘the product concerned’).

(37) The Commission decided at this stage that those products are therefore like products within the meaning of Article 1(4) of the basic Regulation.

(38) A claim concerning the product scope of the investigation was received from Jiangsu Ceville New Materials Technology Co., Ltd. (‘Ceville’), an exporting producer which recycles post-consumed PET for the production of PET pellets for direct food contact. In its submission, Ceville requested the exclusion of rPET from the product under investigation arguing that the physical and chemical characteristics, usage, raw materials, production process, and producers of rPET are vastly different from vPET.

(39) First, it is noted that, depending on the quality of the recycling process, rPET and vPET can have exactly the same physical, technical and chemical characteristics and are interchangeable for the same end uses. Second, PET (be it vPET or rPET) is ultimately the same compound molecule, and the production process is immaterial as both types of PET have the same physical and chemical characteristics. Third, while the producers of rPET might be different from vPET producers and while imports of rPET from the PRC might have been limited, the Commission found that a number of cooperating Chinese exporting producers did have both vPET and rPET production capacity and were able to and in some cases did export rPET to the Union during the IP. Fourth, vPET and rPET are substitutable and compete with each other. Furthermore, any change in the price of vPET affects the price of rPET and vice versa. Ceville’s claim was therefore rejected.

(40) In view of the sufficient evidence available at the initiation of the investigation pointing to the existence of significant distortions within the meaning of point (b) of Article 2(6a) of the basic Regulation with regard to the PRC, the Commission considered it appropriate to initiate the investigation with regard to the exporting producers from this country having regard to Article 2(6a) of the basic Regulation.

(41) Consequently, in order to collect the necessary data for the eventual application of Article 2(6a) of the basic Regulation, in the Notice of Initiation the Commission invited all exporting producers in the PRC to provide information regarding the inputs used for producing PET. Ten exporting producers submitted the relevant information.

(42) In order to obtain information it deemed necessary for its investigation with regard to the alleged significant distortions, the Commission sent a questionnaire to the GOC. No 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. 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 comments were received.

(43) In 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.

(44) On 12 May 2023, the Commission informed by a note (‘the First Note’) interested parties on the relevant sources it intended to use for the determination of the normal value.

(45) In that note, the Commission provided a list of all factors of production such as raw materials, labour and energy used in the production of PET. In addition, based on the criteria guiding the choice of undistorted prices or benchmarks, the Commission identified two possible representative countries, namely Türkiye and Malaysia. The Commission received comments on the First Note from the Chinese producers’ association CPCIF, the unrelated importer Svepol, the exporting producer Wankai Group and the complainant.

(46) On 27 July 2023, the Commission addressed the comments received from interested parties on the First Note by a second note (‘the Second Note’) and informed interested parties on the relevant sources it intended to use for the determination of the normal value, with Malaysia as the representative country. It also informed interested parties that it would establish selling, general and administrative costs (‘SG&A’) and profits based on available information for the company MPI Polyester Industries Sdn. Bhd. (‘MPI’), a producer in the representative country.

(47) The Commission received comments on the Second Note from one unrelated importer (Svepol JSC), a Chinese producers’ association (CPCIF) and two sampled exporting producers (Wankai Group and Sanfame Group).

(48) After having analysed the comments and information received, the Commission concluded that Malaysia was an appropriate representative country from which undistorted prices and costs would be sourced for the determination of the normal value. The underlying reasons for that choice are further described in detail in Section 3.2.2 below.

(49) 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’.

(50) However, according to Article 2(6a)(a) of the basic Regulation, ‘in case it is determined […] that it is not appropriate to use domestic prices and costs in the exporting country due to the existence in that country of significant distortions within the meaning of point (b), the normal value shall be constructed exclusively on the basis of costs of production and sale reflecting undistorted prices or benchmarks’, and ‘shall include an undistorted and reasonable amount of administrative, selling and general costs and for profits’ (‘administrative, selling and general costs’ is referred hereinafter as ‘SG&A’).

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