Commission Implementing Regulation (EU) 2024/738 of 1 March 2024 withdrawing the acceptance of the undertaking for all exporting producers, amending Implementing Regulation (EU) 2021/607 and repealing the Implementing Decision (EU) 2015/87 accepting the undertakings offered in connection with the anti-dumping proceeding concerning imports of citric acid 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 8 thereof,

Informing the Member States,

Whereas:

(1) By Regulation (EC) No 1193/2008 (2), the Council imposed anti-dumping duties on imports of citric acid originating in the People’s Republic of China (‘PRC’, ‘China’ or the ‘country concerned’) (‘the original measures’). The investigation that led to the imposition of the original measures will be referred to as ‘the original investigation’. The measures took the form of an ad valorem duty ranging from 6,6 % to 42,7 %.

(2) By Decision 2008/899/EC (3), the European Commission (‘the Commission’), accepted price undertakings offered by six Chinese exporting producers (including a group of exporting producers) together with the China Chamber of Commerce of Metals, Minerals & Chemicals Importers & Exporters (‘CCCMC’). The producers were Anhui BBCA Biochemical Co., Ltd. (now COFCO Bio-Chemical Energy (Yushu) Co., Ltd.); Laiwu Taihe Biochemistry Co., Ltd.; RZBC Co., Ltd. and RZBC (Juxian) Co., Ltd.; TTCA Co., Ltd.; Weifang Ensign Industry Co., Ltd.; and Yixing Union Biochemical Co., Ltd. (now Jiangsu Guoxin Union Energy Co., Ltd.).

(3) By Decision 2012/501/EU (4), the Commission withdrew the undertaking offered by one exporting producer, i.e. Laiwu Taihe Biochemistry Co. Ltd. (‘Laiwu Taihe’).

(4) By Implementing Regulation (EU) 2015/82 (5), the Commission extended the definitive anti-dumping measures on imports of citric acid originating in the PRC for five years following an expiry review pursuant to Article 11(2) of Council Regulation (EC) No 1225/2009 (6) and revised the measures following a partial interim review pursuant to Article 11(3) of Regulation (EC) No 1225/2009.

(5) By Implementing Regulation (EU) 2016/32 (7), the Commission extended the anti-dumping measures on imports of citric acid originating in China to imports of citric acid consigned from Malaysia, whether declared as originating in Malaysia or not.

(6) By Implementing Regulation (EU) 2016/704 (8), the Commission withdrew undertakings of two additional Chinese exporting producers, i.e. Weifang Ensign Industry Co., Ltd (‘Weifang’) and TTCA Co., Ltd (‘TTCA’), because of breaches of the undertakings.

(7) By Implementing Regulation (EU) 2021/607 (9), the Commission extended the definitive anti-dumping measures on imports of citric acid originating in the PRC as extended to imports of citric acid consigned from Malaysia, whether declared as originating in Malaysia or not, for five years following an expiry review (the ‘previous expiry review’).

(8) By Implementing Regulation (EU) 2023/2180 (10), the Commission added a new exporter producer Seven Star Lemon Ltd. (‘Seven Star’) to the list of companies with individual duty rates (the ‘new exporter review’).

(9) The anti-dumping duties currently in force range from 15,3 % to 42,7 % on imports from the cooperating exporting producers, and a duty rate of 42,7 % applies to imports from all other companies.

(11) Each of these exporting producers offered jointly with the CCCMC undertakings where both the exporter and CCCMC committed to respect the obligations stipulated therefore.

(12) The undertakings offers were submitted in two versions: one sensitive, containing details on the MIP of the undertakings that were accessible only to the parties signing the undertakings, and another one non-confidential, without details on the minimum import price (MIP), accessible only to the interested parties registered in the relevant proceeding. Thus, the MIP information was regarded as strictly confidential and cannot be legally disclosed to other parties.

(13) The exporting producers concerned and CCCMC agreed, inter alia, to consult the Commission for any difficulties, questions, technical or otherwise, which may arise during the implementation and application of the undertakings.

(14) According to Article 8(9) of the basic Regulation, any breach of the undertakings by any party shall lead to the withdrawal of the acceptance of the undertakings.

(15) The undertakings stipulate that acceptance of the undertakings is based on trust and that any action which would harm the relationship of trust established with the European Commission shall justify the withdrawal of the acceptance.

(16) Moreover, the undertakings stipulate that the Commission may withdraw the acceptance of the undertakings at any time during its period of application if monitoring and enforcement prove to be impracticable.

(17) In the last new exporter review, the producer Seven Star, together with the CCCMC, submitted a price undertaking offer which referred exactly to the same MIP applicable to other three undertakings in force. During the investigation, neither Seven Star nor CCCMC at any stage of the proceeding, requested beforehand from the Commission any information regarding the MIP level (11). As indicated in recital (12), the details on the MIP of the previously accepted undertakings are confidential information accessible only to the parties signing the undertakings. CCCMC was a party to the original undertakings agreements as a co-signatory with the respective exporting producers, given its role and engagements in the implementation and monitoring. By contrast, Seven Star was neither a party to these undertakings, nor was it an interested party in the previous proceedings.

(18) The CCCMC never informed the Commission that it had received Seven Star’s undertakings offer with the same MIP as for other exporters nor did they contact the Commission about the possible disclosure of the confidential information. The circumstance that the MIP was no longer confidential to an external party such as Seven Star MIP is a major issue which the CCCMC should have brought to the Commission’s attention under its consultation obligation mentioned under recital 13 above. Instead, CCCMC co-signed the offer that was submitted during the new exporter review investigation.

(19) The CCCMC was already aware that the MIP level and its adjustment mechanism are confidential as any other sensitive information submitted during the investigation, as reminded by the Commission with the letter sent on 1 March 2021, and this confidentiality should be respected by both the CCCMC and the companies (12).

(20) The Commission assessed this finding and concluded that failure to immediately inform the Commission of the leak of sensitive information regarding the MIP is a breach of the consultation obligation.

(21) The Commission also assessed the breach of trust in the light of the role of the CCCMC in the implementing and monitoring of the undertaking. As it has been noted in the Commission Implementing Decision (EU) 2015/87 (13), the undertakings offered have been accepted due to joining the CCCMC to the companies offering undertakings and its active role in facilitating the monitoring of the undertakings. The CCCMC directly or indirectly confirming the accuracy of the MIP to the third party not only breached its consultation obligation, but also harmed the trust on which the undertakings have been based. Therefore, the Commission may no longer rely on the CCCMC’s support in the monitoring of the undertakings.

(22) As a consequence of CCCMC’s aforementioned actions regarding the undertakings in force, producers not subject to the undertakings having information about the MIP level and its adjustment mechanism may adjust their prices accordingly. However, only companies subject to the undertakings must fulfil strict commitments, including the reporting obligation and the obligation to be subject to periodical verification. Thus, the knowledge of the MIP without formal commitment to comply with undertakings provisions may create an advantageous position on the market.

(23) The Commission assessed the above findings and concluded that the MIP applicable for the exporting producers concerned is not enforceable anymore and that undertakings for all exporters have become impractical.

(24) The findings of breaches of the undertakings that harmed the relationship of trust established with the Commission and its further impracticability justify the withdrawal of the acceptance of the undertakings for all exporting producers pursuant to Articles 8(7) and 8(9) of the basic Regulation and pursuant to the terms of the undertakings.

(25) Interested parties were granted the opportunity to be heard and to comment pursuant to Article 8(9) of the basic Regulation.

(26) The Commission within the prescribed deadline received comments from CCCMC and three Chinese exporting producers. One Union producer after the deadline submitted its statement supporting the termination of the undertakings that according to this producer do not provide adequate protection against dumped imports of citric acid from China. CCCMC and the three Chinese exporting producers were heard by the Commission.

(27) First, CCCMC and Guoxin Union argued that CCCMC had not breached the undertaking and that none of the situations listed in the provisions of the undertaking that are considered as a breach of the undertaking may refer to the behaviour of CCCMC described above. Despite confirming that it received the letter mentioned in recital (19) with information that the MIP is confidential, CCCMC is of the opinion that providing or confirming the existing MIP to another producer offering the undertaking does not constitute a ground for withdrawal of the undertaking for any exporter already subject to the undertaking. The Parties also claimed that the MIP shall not be considered as confidential information.

(28) Although the situation that has been described in Section 3 of this Regulation is not explicitly mentioned in the list of potential breaches of the undertaking, the Commission noted that the clause consisting of the list of potential breaches is not exhaustive, as underlined in the wording of the clause (14). Moreover, CCCMC in its comments itself refers to one of the clauses of the undertaking that establishes the obligation to consult with the European Commission regarding any difficulties or questions, technical or otherwise, which may arise during the implementation and application of the undertaking (15). Therefore, CCCMC itself, in its comments, refers to the provisions of the undertaking that are applicable to the circumstances based on which the undertaking has been withdrawn, namely due to the breach in the consultation obligation and harm to the relations of trust.

(29) As it is presented in recital (18), CCCMC omitted to consult with the Commission according to this principle. Therefore, CCCMC has infringed the clauses of the undertaking (16), which constitutes a breach of the undertaking (17). According to the undertaking provisions, in that situation the Commission shall immediately withdraw the acceptance of the undertaking (18).

(30) The Commission recalled the argumentation presented in recital (12) that the undertaking offer had been submitted in two versions. The limited version of the undertaking, which includes the MIP and calculation method, refers to Article 19 of the basic Regulation regarding confidentiality. Had the MIP not been confidential, then it would have been included in the open version of the undertaking ‘available for all parties of the investigation’. However, it was the opposite (it was marked as confidential). Therefore, any arguments presented by the parties that the MIP is not confidential shall be rejected.

(31) Further, following the provision of the undertaking regarding the scope and main elements of the undertaking, CCCMC and the Chinese exporters subject to the undertaking committed to respect all other obligations so that the European Commission can effectively monitor the undertaking (19). The monitoring rules were specified in the undertaking (20), which includes clauses based on which the Commission may give further instructions which are considered necessary for correct the functioning of the undertaking (21). Thus, CCCMC incorrectly claimed that the instructions, including the letter dated 1 March 2021, were merely technical and cannot constitute a ground for the withdrawal in case of breach of the obligation stipulated there. The Commission reiterated that the MIP is confidential from the moment the undertaking is offered, and the information on the confidentiality of the MIP contained in the letter of 1 March 2021 was merely a reminder of such provision. Therefore, CCCMC was obliged to respect the confidentiality of the MIP and consult the Commission when it received a new undertaking offer containing confidential information from a third party that was neither authorised nor supposed to have them. As this has not occurred, CCCMC violated the consultation obligation.

(32) Exporters claimed also that the MIP could be disclosed by the exporting producers mentioned in recitals (3) and (6) who are no longer subject to the undertaking due to withdrawal of the acceptance by the Commission. RZBC, moreover, claimed that Seven Star is even entitled to obtain the information about the MIP because all parties to the undertaking know the MIP, and Seven Star should have the same rights as all other companies subject to measures in light of equal treatment and non-discrimination. In RZBC’s opinion, as Seven Star was entitled to know the MIP, any procedural error in obtaining it should not be considered as a breach, and if so, then only as a purely technical breach.

(33) It must be noted that although Seven Star was not a party to this proceeding, according to the comments submitted by CCCMC (22), it has provided CCCMC with information regarding the investigation in the new exporter review. Despite that, none of the parties, including CCCMC, submitted any evidence supporting the argumentation that Seven Star has obtained the MIP from one of the exporters that was in the past subject to the undertaking. Parties have not presented any evidence that Seven Star requested the MIP from CCCMC or the Commission. The Commission also did not possess any communication from Seven Star or CCCMC in this regard.

(34) As regards the allegation on unequal treatment and discrimination, it must be stressed that only parties to the undertaking whose offers were accepted are entitled to possess the information about the MIP, not all exporting producers of the product concerned. Seven Star, although subject to the measures in the form of duties, has never been accepted as a party of the undertaking. In the new exporter review the undertaking offer submitted by Seven Star was not accepted due to other reasons, namely, it was inconsistent with its specific situation resulting from the investigation. This confirms that each case should be assessed separately according to the circumstances. It must be underlined that it is not the exporting producer or CCCMC who may decide who is or not entitled to the MIP. It is in the discretion of the Commission to accept or not the undertaking offer based on the criteria stipulated in Article 8 of the basic Regulation. Furthermore, Seven Star was not required to submit an offer with a calculation mechanism for the MIP identical with the three undertaking offers already accepted. Rather, Seven Star should have proposed an approach for the determination of the MIP and its future indexation, including the calculation components and benchmarks to be used, taking into account the specific circumstances of this company. Seven Star used the same MIP methodology as for other exporting producers, which was not appropriate for it, causing that its offer could not be accepted. Therefore, any allegation regarding discrimination or non-equal treatment are groundless.

(35) As mentioned above, an undertaking should be adequate to remove the effects of injurious dumping and, therefore, the MIP and the methodology for its determination must reflect the circumstances applicable to the exporter. Consequently, both the MIP and the methodology are based on an analysis and assessment of all facts available, to be finalised in close cooperation with the Commission. Thus, the disclosure of a MIP agreed in undertakings already accepted cannot be reduced to a simple act of providing an isolated piece of information which would have been made available to Seven Star in any event, rendering this disclosure a merely ‘technical’ infringement. This reasoning is incorrect for the reasons already set out in the previous recitals.

(36) Nevertheless, the Commission recalled that the action that harmed the relations of trust was the fact that CCCMC did not consult the Commission before confirming the MIP to the new exporter.

(37) Second, CCCMC and the exporting producers referred to the past practice in accepting an undertaking offered by new exporting producers. To demonstrate this, CCCMC and Guoxin Union have referred to Commission Decision dated 23 March 2010 (23) (‘castings case’) where three exporters, following the new exporting producer treatment (‘NEPT’), submitted identical undertaking offers to the one that had been already accepted in the original investigation.

(38) Another exporter submitted a separate undertaking offer which was rejected by the Commission, as its monitoring was considered impractical since it was not the same as the one already accepted. Based on this practice, CCCMC and Guoxin Union came to the conclusion that new exporters may have no possibility to join existing undertakings as in any case the offer may be rejected – either as in the castings case because it was different than the already accepted one, or as in Seven Star due to the breach of confidentiality.

(39) The Commission reiterated that it has wide discretion in taking decisions on undertaking offers. Moreover, undertakings provide for an exemption to the collection of the duties. Therefore, they must be interpreted strictly and assessed on case-by-case basis. It is impossible to anticipate any practice or legitimate expectation based on only one case and, more importantly, based on the different circumstances.

(40) It must be recalled that, in the present case, undertakings were initially accepted for five exporters with the same MIP and for one additional exporter with a different MIP based on its dumping margin (24). Therefore, the argument that different undertakings with different MIPs may not be accepted is invalid. Moreover, no analogy can be drawn with the castings case. In that case, the undertaking was a joint liability undertaking of 20 companies and CCCME, where violation of the undertaking agreement by any party entailed a breach of all signatories (25). In the current case, there is no joint undertaking in force: each exporter jointly only with CCCMC offered separate undertakings. As a consequence, any actions conducted by CCCMC has an impact on all the separate undertakings in force. Furthermore, in the casting case, the legal representative of CCCME consulted the Commission before submitting the complete offer by new exporters following NEPT procedures. This was not followed by CCCMC in the current case. Thus, the argument was rejected.