Commission Implementing Regulation (EU) 2024/842 of 11 March 2024 re-imposing safeguard measures with regard to imports of Indica rice originating in Cambodia and Myanmar/Burma

THE EUROPEAN COMMISSION,

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

Having regard to Regulation (EU) No 978/2012 of the European Parliament and of the Council of 25 October 2012 applying a scheme of generalised tariff preferences and repealing Council Regulation (EC) No 732/2008 (1) (hereinafter ‘the GSP-Regulation’), and in particular Article 26 thereof,

Whereas:

(1) Following a safeguard investigation pursuant to Article 22 of the GSP-Regulation, on 17 January 2019 the European Commission (‘the Commission’) published Commission Implementing Regulation (EU) 2019/67 (2) imposing safeguard measures with regard to imports of Indica rice originating in Cambodia and Myanmar/Burma falling under CN codes 1006 30 27, 1006 30 48, 1006 30 67 and 1006 30 98, by which the Commission reintroduced the Common Customs Tariff duties on imports of Indica rice for a period of one year followed by a progressive reduction in the rate of duty applicable for a period of two years (‘the Regulation at issue’).

(2) The Kingdom of Cambodia and the Cambodia Rice Federation challenged the Regulation at issue in the General Court of the European Union (‘the General Court’).

(3) By its judgment of 9 November 2022 in Case T-246/19 Kingdom of Cambodia and Cambodia Rice Federation v Commission (‘the Judgment’), the General Court annulled Implementing Regulation (EU) 2019/67 imposing safeguard measures with regard to imports of Indica rice originating in Cambodia and Myanmar/Burma.

(4) The General Court found that the Commission erred in law and made a manifest error of assessment by arbitrarily limiting the scope of its investigation concerning the injury caused to the Union industry solely to millers of milled or semi-milled Indica rice processed from paddy rice grown or harvested in the European Union. The incorrect definition of Union producers also vitiated the analysis of the existence of serious difficulties since the Commission excluded some of the Union producers from the injury assessment.

(5) The General Court also found that the Commission failed to provide evidence to the requisite standard with respect to the adjustments made in the context of the price undercutting analysis.

(6) Finally, the General Court found that the Commission infringed the applicants’ rights of defence and the obligation to disclose the essential facts and considerations or the details underlying them. In particular, the Commission failed to disclose information of the data underlying the consumption and injury indicators and of the price undercutting analysis and the adjustments made following the comments of the interested parties on the general disclosure document.

(7) Article 266 TFEU provides that the institutions must take the necessary measures to comply with the Union Courts’ judgments. In case of annulment of an act adopted by the institutions in the context of an administrative procedure, such as general safeguard investigations under the GSP Regulation, compliance with the Union Court’s judgment consists in the replacement of the annulled act by a new act, in which the illegality identified by the Court is eliminated (3).

(8) According to the case-law, the procedure for replacing the annulled act may be resumed at the very point at which the illegality occurred (4). That implies in particular that in a situation where an act concluding an administrative procedure is annulled, that annulment does not necessarily affect the preparatory acts, such as in this case the initiation of the safeguard procedure. In a situation where, for instance, a Regulation imposing general safeguard measures under the GSP-Regulation by which the European Commission reintroduced the Common Customs Tariff duties on imports for a period of three years is annulled, that means that, following to the annulment, the safeguard proceeding is still open, because the act concluding the safeguard proceeding has disappeared from the Union legal order (5), except if the illegality occurred at the stage of initiation.

(9) In the present case the General Court annulled the Regulation at issue on the grounds mentioned under recitals (4) to (6).

(10) Following the Judgment, on 19 January 2023, by means of a Notice (‘the reopening Notice’) (6) the Commission decided to reopen the investigation and to resume it at the point at which the irregularity occurred.

(11) As explained in the re-opening Notice, the purpose of reopening the original investigation was to fully address the errors identified by the General Court, and to assess whether the application of the rules as clarified by the General Court warrants the re-imposition of the measures, which would lead to the reintroduction of the Common Customs Tariff duties on imports of Indica rice originating in Cambodia falling under CN codes 1006 30 27, 1006 30 48, 1006 30 67 and 1006 30 98, followed by a progressive reduction in the rate of duty applicable, for the original period of 3 years, namely between 18 January 2019 and 18 January 2022.

(12) At the same time as the publication of the re-opening Notice, pursuant to Commission Implementing Regulation (EU) 2023/132 (7), the Commission instructed the national customs authorities to await the outcome of the re-examination before deciding on any repayment claim concerning the duties annulled by the General Court and to put on hold any claims for reimbursements of the annulled duties until the outcome of the re-examination was published in the Official Journal of the European Union.

(13) The Commission informed interested parties upon reopening.

(14) The Commission received comments from one interested party (8).

(15) Coceral welcomed the re-opening of the investigation on imports of Indica rice originating in Cambodia. At the same time, it reiterated the arguments made in the context of the original investigation leading to the Regulation at issue, and further stated that the Regulation at issue did not provide a complete overview of the rice trade market.

(16) The Commission noted that some of Coceral’s claims referred to the out-of-date analysis made in the Regulation at issue and were no longer relevant or had already been addressed in the Regulation at issue by the Commission. Findings in the Regulation at issue, which were not contested, or which were contested but rejected by the General Court or not examined by the General Court and not tainted by the errors found in the Judgment, remain fully valid (9).

(17) On 20 December 2023 the Commission informed all interested parties of the above essential facts and consideration on the basis of which it intended to propose to re-impose safeguard measures on Indica rice originating in Cambodia and Myanmar/Burma for the period 18 January 2019 to 18 January 2022.

(18) All parties were granted a period within which they could make comments on the final disclosure. Comments to the final disclosure were received from the Cambodia Rice Federation (‘CRF’).

(19) Subsequently, on 11 January 2024 a further clarification was provided to CRF on how the volume of total Union sales was calculated. No further comments were provided by CRF on the clarification.

(20) The comments submitted by CRF were considered and taken into account if and where appropriate in this regulation.

(21) The General Court found (10) that milled or semi-milled Indica rice from paddy rice, whether imported into the European Union or produced within the Union, shares identical physical, technical, and chemical characteristics. Both are used for the same purposes, processed by the same operators, distributed through similar channels, and compete with each other. Moreover, consumers generally do not distinguish between Union and imported products, emphasising the equivalence of Union-produced and imported rice. The interchangeability of these rice types, acknowledged by millers, highlights their identical nature regardless of origin. Consequently, according to the General Court, irrespective of the origin of the raw material from which it was processed, milled or semi-milled Indica rice produced in the European Union must be classified as a like or directly competing product of milled or semi-milled Indica rice originating in Cambodia.

(22) Thus, in view of that finding, the Commission determined that the Indica milled or semi-milled rice produced in the Union is like or directly competing with the product concerned irrespective of the origin of the raw material from which it was processed.

(23) In accordance with the Judgment, the Commission confirmed that both the Union-produced and the imported Indica milled or semi-milled rice have indeed the same basic physical, technical and chemical characteristics. They have the same uses and are sold via similar or identical sales channels, to the same type of customers. These customers are either retailers or processors in the Union. The product concerned and the like and directly competing product together are referred to as the product under consideration.

(24) The General Court found that the Commission made a manifest error of assessment by arbitrarily limiting the scope of its investigation concerning the injury caused to the Union Industry solely to millers of milled or semi-milled indica rice processed from paddy rice grown or harvested in the European Union (11).

(25) In its reassessment, and in light of the General Court’s findings, the Commission therefore considered that the Union industry consists of all Union rice millers of Indica rice, irrespective of the origin of the raw material from which it was processed.

(26) In short, for the purposes of this investigation the Commission defined the Union industry as the Union millers milling or processing Indica paddy or husked rice.

(27) In light of the changed definition of the Union industry as explained in recital (25) and in order to obtain the additional information deemed necessary to carry out an in-depth re-assessment of the economic and/or financial situation of the Union industry, the Commission launched a new sampling exercise for the Union producers (‘rice millers’).

(28) The Commission invited directly or indirectly (through the millers’ association) all known Union rice millers to participate in the sampling exercise, including those that had been excluded from the sample in the Regulation at issue because they were only processing imported paddy or husked rice of non-EU origin.

(29) No additional Union producers replied to the sampling exercise within the time limit. The Commission therefore confirmed the original sample which comprised the following companies: Herba Riceamills, S.L. Ebro Foods; Riso Scotti SPA; Riso Viazzo and Riso Ticino. No parties made any comments on the note confirming the sample (12). In 2017 the four producers in the Union which cooperated fully in the investigation produced around 165 000 tonnes of milled and semi-milled Indica rice, which represents 17,5 % of the total estimated Union production of Indica rice (around 944 000 tonnes). Accordingly, the Commission considered this sample as representative.

(30) To gather the missing data about the non-EU origin raw material (paddy or husked rice), the Commission issued a revised questionnaire to the sampled rice millers. While some rice millers responded by submitting the updated questionnaire, others confirmed the information previously provided during the initial investigation.

(31) Following final disclosure, the CRF claimed that the Commission failed to adequately implement the Judgment of the General Court with respect to establishing a representative sample of the Union producers, in particular that it did not make sufficient effort to contact Union producers. Therefore, according to the CRF, the Commission’s entire assessment of the economic and/or financial situation of the Union industry, in so far as it relates to microeconomic data and findings relating to the sampled Union producers, remained vitiated.

(32) The Commission rejected these claims. In line with the General Court ruling the Union industry consisted of all Union millers of indica rice irrespective of the origin of the raw material from which it was processed. In its re-opening notice, the Commission made clear that the original investigation resumed at the point at which the irregularity occurred and invited all interested parties to come forward, make their views known, submit information and provide supporting evidence on issues pertaining to the re-opening of the investigation.

(33) Following the re-opening, the Commission on 15 February 2023 invited the sampled millers of the original investigation to revise their questionnaire replies and submit the relevant data of their production of the product concerned regardless of whether the indica rice used was imported or grown in the EU (t23.000906). The Commission noted that, as a direct consequence of the reopening, the questionnaire submitted previously needed to be updated taking into account ‘Indica rice produced on the basis of rice regardless of whether the rice used was imported or grown in the EU’.

(34) In addition, the Commission tried to reach all known and unknown millers producing from indica rice. In particular, the Commission directly contacted the known millers located in the United Kingdom and Germany (mainly processing the imported paddy/husked rice), national millers’ associations of Italy, Spain and Portugal and the Federation of European Rice Millers asking the associations to inform their members of the new sampling exercise and to encourage them to participate. It has to be recalled, as mentioned in the cover letter of 17 February 2023 (t23.000887) sent to the potentially interested parties, that the purpose of the Commission was to correct the mistake found by the General Court (limiting the scope of the investigation solely to millers of milled or semi-milled Indica rice processed from paddy rice grown or harvested in the EU) and thus enlarge the sample of the Union producers, and not to just replace the sampled companies that had already been selected in the original investigation.

(35) Given all the Commission’s actions as described above, the Commission rejected the claim of CRF that it did not make sufficient efforts to reach Union millers.

(36) CRF further claimed that companies no longer had reliable records, especially not of the specific data requested by the Commission, to be able to accurately respond to the questionnaire and that this concern implied that the existing sampled Union producers’ updated data can hardly be deemed reliable.

(37) The Commission rejected this claim as unfunded. None of the Union producers invoked difficulties in providing additional data due to the lapse of time between the time of the request and the period considered by the questionnaire. Furthermore, as can be seen from the non-confidential file, the sampled millers were able to resubmit a revised questionnaire, as needed, including data concerning the volumes produced from imported husked and paddy rice.

(38) CRF claimed that the Union industry was non-cooperative, as only 17,5 % of the Union industry cooperated, and that the Commission should have drawn the appropriate conclusion and terminate the investigation.

(39) In reply to this claim, the Commission stated that, in the context of a fragmented industry, it considered that a sample consisting 17,5 % of the total Union production of the product concerned was considered sufficiently representative to draw conclusions as far as the micro financial indicators of the Union industry were concerned. Furthermore, there is no provision in the GSP Regulation or in the Commission Delegated Regulation (EU) No 1083/2013 (13) on the procedural rules setting a specific level of representativity of the sample. Moreover, three out of the four sampled millers processed paddy/husked rice of non-EU origin. The volume of production of the non-EU origin rice increased over time with a peak of 40 % of the total sample. Thus, the Commission rejected this claim.

(40) CRF claimed that the sequence by which the Commission contacted the interested parties when carrying out its sampling exercise made the excise biased towards the companies that were already included in the sample of the original investigation and thus rendered the new sampling exercise invalid.

(41) The Commission rejected these allegations. First, the re-opening notice invited all interested parties to make their views known and provide information to the Commission. Second, the sequence of the sending of letters had no relevance on the decision on sampling of Union producers. This is emphasised by the fact that the letters that were sent were standard letters inviting parties to cooperate and to submit data. Third, the decision on the sample of Union producers took place on 8 March 2023, well after potential Union producers and their associations were contacted and requested to cooperate. In this sense, the sampling decision was taken once all potentially interested parties had been made aware of the re-opening and had been given opportunities to express their intention to cooperate in the investigation.

(42) On the basis of the above, the Commission rejected the claims of CRF concerning the sample of the Union millers of indica rice.

(43) Pursuant to Article 23 of the GSP Regulation, the presence of serious difficulties should be determined when Union producers experience a deterioration in their economic and/or financial conditions. In examining whether such deterioration exists, the Commission shall take account, inter alia, of the factors mentioned in Article 23 of the GSP Regulation, where such information is available. Accordingly, the Commission examined the relevant factors in order to determine whether the rice millers suffered serious difficulties.

(44) The Commission determined the Union consumption using data obtained from Member States and import statistics available through Eurostat. Recognising the high fragmentation of the Union industry and the absence of aggregated EU-wide data on milled rice consumption, the Commission opted for the ‘balance sheet methodology’ (14). This methodology has been employed for several years by the Directorate-General for Agricultural and Rural Development to estimate Union consumption not only for rice but for all cereals and oilseeds.

(46) The consumption of the product under consideration in the Union fluctuated somewhat during the investigation period. The consumption peaked in MY2015 when it was 8 % higher than at the beginning of the period. Consumption decreased by 4 % between MY2015 and MY2016. Despite this fluctuation consumption grew overall by 4 % during the investigation period.

(48) Import volumes from Cambodia increased during the investigation period from around 164 000 tonnes to around 254 000 tonnes. They increased significantly until MY2015 and then slightly decreased coinciding with a decrease in consumption in MY2016. Despite the decrease, imports from Cambodia remained 55 % higher than in MY2012.