Commission Implementing Regulation (EU) 2024/1267 of 6 May 2024 extending the definitive anti-dumping duty imposed by Implementing Regulation (EU) 2021/2012 on imports of stainless steel cold-rolled flat products originating in Indonesia to imports of stainless steel cold-rolled flat products consigned from Taiwan and Vietnam, whether declared as originating in Taiwan and Vietnam or not, and terminating the investigation concerning the possible circumvention of anti-dumping measures imposed by that Regulation by imports of stainless steel cold-rolled flat products consigned from Türkiye, whether declared as originating in Türkiye or not

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 AD Regulation’), and in particular Article 13 thereof,

Whereas:

(1) In 2021, by Implementing Regulation (EU) 2021/2012 (2), the European Commission imposed a definitive anti-dumping duty on imports of stainless steel cold-rolled flat products (‘SSCR’) originating in, inter alia, Indonesia following an anti-dumping investigation (‘the original anti-dumping investigation’). The measures took the form of an ad valorem duty ranging between 10,2 and 20,2 %, with a residual duty of 20,2 % for all non-cooperating Indonesian companies (‘the original measures’).

(2) In 2022, the European Commission imposed definitive countervailing duties ranging between 0 % and 21,4 % on imports of SSCR originating in, inter alia, Indonesia, by Implementing Regulation (EU) 2022/433 (3) (‘the subsidy regulation’). To avoid making SSCR from Indonesia subject to both anti-dumping and countervailing duties for the purpose of dealing with one and the same situation, the subsidy regulation reduced the dumping duties by the subsidy amounts found in relation to export contingent subsidies, in accordance with Article 24(1) of Regulation (EU) 2016/1037 of the European Parliament and of the Council (4) (‘the basic AS Regulation’). The original dumping measures were thus adjusted downwards and ranged from 9,3 % to 20,2 %, with a residual duty of 19,3 %.

(3) The Commission received a request pursuant to Articles 13(3) and 14(5) of the basic AD Regulation to investigate the possible circumvention of the anti-dumping measures imposed on imports of SSCR originating in Indonesia by imports of SSCR consigned from Taiwan, Türkiye and Vietnam, whether declared in Taiwan, Türkiye and Vietnam or not, and to make such imports subject to registration (‘the request’).

(4) The request was lodged on 3 July 2023 by the European Steel Association – ‘EUROFER’ (‘the applicant’.)

(5) The request contained sufficient evidence of a change in the pattern of trade involving exports from Indonesia, Taiwan, Türkiye and Vietnam to the Union that had taken place following the imposition of measures on SSCR from Indonesia. This change appeared to stem from the consignment of SSCR from Taiwan, Türkiye and Vietnam (‘the countries concerned’) to the Union after having undergone assembly/completion operations in these countries. The request also contained sufficient evidence showing that such assembly/completion operations constituted circumvention, as Indonesian parts accounted for more than 60 % of the total value of the assembled/completed product in the countries concerned, while the value added during the assembly/completion operation was lower than 25 % of the manufacturing cost.

(6) Furthermore, the request contained sufficient evidence that the practice described above was undermining the remedial effects of the existing anti-dumping measures in terms of quantities and prices. In addition, there was sufficient evidence that the prices of SSCR consigned from Taiwan, Türkiye and Vietnam were dumped in relation to the normal value established in the original anti-dumping investigation for SSCR.

(7) The product concerned by possible circumvention is flat-rolled products of stainless steel, not further worked than cold-rolled (cold-reduced), classified on the date of entry into force of Implementing Regulation (EU) 2021/2012 under CN codes 7219 31 00, 7219 32 10, 7219 32 90, 7219 33 10, 7219 33 90, 7219 34 10, 7219 34 90, 7219 35 10, 7219 35 90, 7219 90 20, 7219 90 80, 7220 20 21, 7220 20 29, 7220 20 41, 7220 20 49, 7220 20 81, 7220 20 89, 7220 90 20 and 7220 90 80 and originating in Indonesia (‘the product concerned’). This is the product to which the measures that are currently in force apply.

(8) The product under investigation is the same as that defined in the previous recital, but consigned from Taiwan, Türkiye and Vietnam, whether declared as originating in Taiwan, Türkiye and Vietnam or not, currently falling under the same CN codes as the product concerned (TARIC codes 7219310010, 7219321010, 7219329010, 7219331010, 7219339010, 7219341010, 7219349010, 7219351010, 7219359010, 7219902010, 7219908010, 7220202110, 7220202910, 7220204110, 7220204910, 7220208110, 7220208910, 7220902010 and 7220908010) (‘the product under investigation’).

(9) The investigation showed that SSCR exported from Indonesia to the Union and SSCR consigned from Taiwan, Türkiye and Vietnam, whether originating in Taiwan, Türkiye and Vietnam or not, have the same basic physical and chemical characteristics and have the same uses, and are therefore to be considered as like products within the meaning of Article 1(4) of the basic AD Regulation.

(10) Having determined, after informing the Member States, that sufficient evidence existed for the initiation of an investigation pursuant to Article 13(3) of the basic AD Regulation, the Commission initiated an investigation by Commission Implementing Regulation (EU) 2023/1632 (5) (‘the initiating Regulation’) on 15 August 2023 and made imports of SSCR consigned from Taiwan, Türkiye and Vietnam, whether declared as originating in Taiwan, Türkiye and Vietnam or not, subject to registration, in accordance with Article 14(5) of the basic AD Regulation.

(11) After initiation, the Commission received comments from four interested parties: Posco Assan TST Celik Sanayi A.Ş. (‘Posco Assan’), Posco VST Co., Ltd (‘Posco VST’), Yongjin Metal Technology (Vietnam) Company Limited (‘Yongjin’) and the European Association of Non-Integrated Metal Importers & Distributors (‘EURANIMI’).

(12) Posco Assan, Posco VST and Yongjin provided general comments on initiation, as well as company specific comments in the context of this investigation. In view of the findings set out in section 4 below, these comments by Posco Assan and Posco VST have become moot and were therefore not addressed in this Regulation. The comments by Yongjin were addressed in section 5.2.3.

(13) Posco Assan, Posco VST and EURANIMI also commented on the change in the pattern of trade and the lack of evidence that the remedial effects of the original duties were being undermined. In addition, Posco Assan, Posco VST, Yongjin and EURANIMI all provided similar comments related to the application of the circumvention rules on assembly/completion operations applied to SSCR and the existence of sufficient due cause or economic justification. Finally, Posco Assan and Posco VST referred to the existing steel safeguard measures already restricting imports from the targeted countries.

(14) First, the companies argued that, in contrast to the allegations in the request, there was no change in the pattern of trade. To show this, the parties provided data from different periods. EURANIMI used data from July 2019 to June 2023, while Posco Assan and Posco VST used data from several longer or shorter periods, comparing either 2020, or the period July 2021-June 2022 to the reporting period, or comparing the first semester of 2022 to the first semester of 2023.

(15) However, the applicant based its request on the period 1 January 2019-31 December 2022. This period included the time before the initiation of the original anti-dumping investigation (on 30 September 2020) and after the imposition of the anti-dumping duties, both of which have to be analysed and compared in order to determine whether a ‘change in a pattern of trade […] which stems from a practice, process or work for which there is insufficient due cause or economic justification other than the imposition of the duty’ (6) occurred. The applicant showed that during that period, there was a change in the pattern of trade. That such conclusion may change depending on which periods one adds or removes from the analysis, does not detract from the fact that the applicant provided sufficient evidence that there was a change in the pattern of trade within the meaning of Article 13(1) of the basic AD Regulation (7).

(16) Second, with regard to the undermining of the remedial effect of the duties, Posco Assan and Posco VST claimed that this did not exist since there was no change in the pattern of trade, nor a massive or rapid increase of imports from the countries concerned. In addition, the companies pointed towards China as a possible cause for injury or undermining of the remedial effects, as Chinese imports into the Union had increased much more than the imports from the three countries concerned. EURANIMI, as well as Trinox after disclosure, claimed that there was no undermining of the remedial effects since the Union industry had made significant profits in 2021 and 2022.

(17) The basic AD Regulation provides that for circumvention to exist, there must be (inter alia) ‘evidence of injury or that the remedial effects of the duty are being undermined in terms of prices and/or quantities of the like product’. The applicant had demonstrated in its request, that there was a significant increase in imports from the three countries concerned at low prices, representing a non-negligible share of Union consumption (8). The fact that even more imports are coming in from China, or that the Union industry was profitable during the past few years, does not alter this conclusion. The Commission therefore rejected these claims.

(18) Third, all four parties commented on the concept of assembly operations, as set out in Article 13(2) of the basic AD Regulation, and argued that this concept did not apply to the operations in the countries concerned regarding the production of SSCR. According to the parties, the transformation of slabs or stainless steel hot-rolled coils (‘SSHR’) into SSCR are not assembly operations since there are no parts which are assembled, and the resulting transformation is irreversible. In addition, the production of SSCR cannot be seen as a finishing or completion operation as this is something which should take place at the end of the manufacturing process, such as polishing, skin pass or slitting. The parties argued that the main stages of SSCR production such as the actual cold-rolling or cold annealing and pickling cannot fall under such a definition. It was also argued that assembly operations are not the same as completion operations, since the latter takes place only after the product has already been assembled. According to Posco Assan and Posco VST, the concept of completion operations is only concerned when calculating the added value under Article 13(2)(b) and can therefore not be considered a ‘practice, process or work’ as intended by Article 13(1)(d).

(19) The Commission rejected these claims. The practice described in the request under section 5.3.2 was confirmed to be a completion operation falling within the concept of assembly operations under Article 13(2) of the basic AD Regulation. In addition, the Commission has drawn the same conclusion for similar situations in previous investigations (9).

(20) The basic AD Regulation does not define the terms ‘assembly operation’ or ‘completion operation’. However, a ‘completion operation’ is explicitly mentioned in Article 13(2)(b). It follows that ‘assembly operation’ within the meaning of Article 13(2) is meant to cover not only operations that consist of assembling parts of a composite article, but may also involve all those instances in which semi-finished inputs are further processed into a finished product.

(21) After disclosure, Yongjin argued that SSHR cannot be considered a semi-finished product, but rather a finished product which does not need to be necessarily processed into SSCR. In support of this argument, Yongjin referred to the wording of the Legal Notes of Chapter 72 of the Harmonised System which excludes that SSHR presented in coils can constitute a semi-finished material. However, the Commission considered the processing of SSHR into SSCR as one of the steps necessary to process slabs into the finished product – SSCR. For this purpose, both slabs and SSHR were considered input materials, whether semi-processed, semi-finished or not, which necessitated further processing or completion in order to obtain the finished product – SSCR.

(22) In addition, Yongjin consistently referred to SSHR as a ‘raw material’ throughout its submission. However, the Harmonised System classifies raw materials as even less worked or manufactured than semi-finished materials: ‘As a general rule, goods are arranged in order of their degree of manufacture: raw materials, unworked products, semi-finished products, finished products’ (10). The wording used by Yongjin therefore clearly indicates that, despite the official classification of SSHR in coils as not semi-finished inputs, the company itself considers it as a product which is not finished and necessitates further processing.

(23) The Commission therefore rejected this argument.

(24) Furthermore, the Commission did not agree with the parties’ argument that while polishing, skin pass or slitting could be seen as finishing operations, the cold-rolling process itself would not. These actions all form part of the same process of transforming the semi-processed material (slabs or SSHR) into SSCR. It would be illogical to describe part of this process as completion, and part as assembly operations. As explained in recital 48 below, companies which perform minor operations such as cutting and slitting were not considered producers in their own right. They were confirmed as being service centres, which do not qualify for an exemption of the extension of measures in an anti-circumvention investigation. This is consistent with the notion that such minor operations cannot be seen as completion operations, since the SSCR supplied to these service centres is necessarily already a finished or completed product.

(25) The parties’ arguments as to the irreversibility of the transformation process had to be rejected. First, such argument is not based on legal authority. In other words, there is no reason why reversibility should be a precondition for a process to be considered as assembly or finishing. Second, the parties themselves have argued that a completion operation includes, for example, slitting – which is also an irreversible operation. Slitting is basically cutting a large coil into a narrower coil, where width is one of the essential characteristics of the product. Welding the slit pieces back together will not result in the original coil, due to material loss during slitting and the addition of welding material. To reverse a slitting operation completely and invisibly, the slitted parts of steel would have to be melted together again, which in itself causes changes to the material not to mention that it necessitates all previous steps in the process including the cold rolling.

(26) After disclosure, EURANIMI, Yongjin and the trader Gerber Steel GmbH (‘Gerber’) provided further arguments against the application of the notion of assembly operations in this investigation. All three parties referred to the fact that the cold-rolling process changes all the essential physical, mechanical and metallurgical properties of the product. In particular, the parties referred to a previous investigation on certain stainless steel seamless pipes and tubes (11). In that investigation, the Commission had found that ‘the cold forming performed in India substantially transforms the product and irreversibly alters its essential characteristics. During the process the product changes its dimensions and its physical, mechanical and metallurgical properties’ (12).

(27) However, that finding, which is arguably different for the process, input materials and final product in that investigation (cold forming of pipes and tubes) than for the cold rolling of SSCR, was not the reason for terminating that investigation. The Commission, in the terminating Regulation (13), clearly stated that ‘In its assessment, the Commission noted that the finding of non-circumvention under Article 13(1) of the basic Regulation was based in this case on the existence of a sufficient due cause and economic justification for the processing activities carried out in India’. As confirmed by EURANIMI in paragraph 8 of its submission after disclosure, ‘The Commission terminated that investigation, without reaching any conclusion that cold forming would constitute an assembly or completion operation’.

(28) Moreover, the Commission disagreed that the essential properties of the product are changed during the cold-rolling process. While some properties may undergo changes, others (equally or more essential) are already determined at the input material stage. This was confirmed by EUROFER in their submission after disclosure, ‘the essential characteristics of stainless steel products are determined at the first stage of production, during which the slab is molten and poured, by the selection and quantity of raw materials such as nickel and chromium. The raw inputs and their chemical composition determine the essential characteristics of the later stainless steel product such as its resistance against oxidation. In particular, the chemical composition of the product will not change during further processing such as cold rolling.’

(29) The Commission therefore dismissed the arguments regarding the changes in the properties of the product.

(30) According to EURANIMI, interpreting the term assembly operation in an overly broad manner would deprive the rest of the provisions of the basic AD Regulation of their intended effect. Instead, the Commission should, in a case such as the current investigation, open a new anti-dumping/anti-subsidy investigation. However, it is well documented that the Court of Justice has favoured a broad interpretation of Article 13 of the basic AD Regulation, in view of its context and the need to preserve its effectiveness (14). The purpose of investigations conducted in accordance with Article 13 of the basic AD Regulation is to ensure the effectiveness of anti-dumping duties and to prevent their circumvention. Consequently, the purpose of Article 13(2) of the basic AD Regulation is to capture the practices, processes or works that use predominantly parts from the country that is subject to the measures and assemble or finish them by adding limited value to these parts. Because the starting point and objective of anti-circumvention investigations are fundamentally different from those of new anti-dumping/anti-subsidy investigations, one cannot be used as a substitute for the other.