Commission Implementing Regulation (EU) 2024/1287 of 13 May 2024 extending the definitive anti-dumping duty imposed by Implementing Regulation (EU) 2021/1930 on imports of birch plywood originating in Russia to imports of birch plywood consigned from Türkiye and Kazakhstan, whether declared as originating in Türkiye and Kazakhstan or not

• (129) Furthermore, Semipalatinsk did not provide complete questionnaire replies for its related companies RKD LLP and RKD Latvia in a timely manner. The submission of questionnaire replies of these related companies was requested both in the questionnaire and in the subsequent deficiency letters as well as with an email on 27 November 2023, prior to the verification visit. During the verification visit, Semipalatinsk submitted only partial data for RKD LLP while for RKD Latvia some partial data were submitted after the verification visit. In both cases, the non-timely submission of data for its related companies prevented the Commission officials from doing a complete and appropriate verification on-spot.

• (130) In addition to the above, on the last day of the verification visit the Commission officials were unable to perform the final checks such as verifying contacts with suppliers, customers and related companies.

• (131) Even though requested, Semipalatinsk did not provide the Commission services with a comprehensive overview of the communications with its main supplier. A specific email account that was used for communication with Semipalatinsk’s suppliers and customers was not disclosed during the verification visit. Nevertheless, the Commission officials found communications that cast doubts on the reliability of the claims of Semipalatinsk about its commercial links and relations.

• (132) The investigation revealed that the RKD LLP and Semipalatinsk’s warehouses were in the same premises. The labelling of products was manual, and its labels did not contain batch identification information nor QR/bar code that would enable the tracing back to the production. Furthermore, next to Semipalatinsk’s warehouse there were warehouses and external storage space for Russian birch plywood purchased by RKD LLP for resale. Thus, the Commission officials could not get the needed assurance concerning RKD LLP’s activities in the movement of traded Russian birch plywood. Also, in another warehouse the Commission was unable to verify the movements of the goods since there were no supporting documents nor IT systems in place on site.

• (133) During the verification visit, Semipalatinsk explained that Kazakhstan does not have enough birch wood that would make economically sound production of all-Kazakh birch plywood. Therefore, Semipalatinsk was buying Russian ‘pressed wood in the form of slabs’ as input materials while inserting as top layer own-produced birch veneers from Kazakh logs. This input material was the main input material during the IP. However, the Commission was unable to trace any stock of this input material. Semipalatinsk claimed that during the verification visits there were no new orders and hence no stocks of the input materials in the warehouses. However, this contradicted Semipalatinsk’s statements on the importance of the specific input material in their business model.

• (134) On the basis of the above, the Commission informed Semipalatinsk of its intention to apply Article 18(1) of the basic Regulation and base its findings on best facts available within the meaning of this Article.

• (135) In response to the Article 18 letter Semipalatinsk claimed that the procurement of input material pressed wood slabs was carried out via Kazakh suppliers and that there were no legal obligations for them to provide documentation on the origin. Furthermore, Semipalatinsk emphasized that the information on the origin of input material was not requested earlier by the Commission and that the further processing of this input material amounted to the value added to the costs of manufacturing of 47 % to obtain the final product.

• (136) Semipalatinsk claimed that it disclosed during the verification visit the contacts that had taken place with one of its suppliers. Also, the company maintained that the tables of the questionnaire provided reliable information and included all employees including those who are paid in cash. Furthermore, Semipalatinsk argued that they had provided sufficient information about the related companies RKD LLP and RKD Latvia. Finally, Semipalatinsk claimed that RKD LLP and Semipalatinsk have different warehouses since they have different employees and separate lease agreements and loading facilities.

• (137) The Commission rejected the above claims. The origin of the input materials was requested by the Commission both in the questionnaire and in the deficiency letters that were sent subsequently. Although Semipalatinsk made an effort to find proof of origin of the input material the Commission could not obtain timely and reliable information on origin for the major proportion of input material. Furthermore, the Commission officials re-calculated value added to the parts brought in, during the assembly or completion operation, and it was less than 1 % of the manufacturing cost.

• (138) The Commission also rejected the claim that during the verification visit it was informed of the email account from which the communications with certain suppliers were done. Semipalatinsk informed the Commission officials on the existence of this email account only at the end of the verification visit. Thus, the needed checks could not be performed, on top of the non-availability of IT staff to solve the technical problems that were encountered at the end of the verification visit.

• (139) Furthermore, the Commission rejected the claims of Semipalatinsk that it submitted timely and complete questionnaires for RKD LLP and RKD Latvia. For the former, Semipalatinsk submitted some fragmented data during the verification visit, and for the latter it submitted some fragmented data after the verification visit. This was not timely and not complete, and far too late to verify this information. The fact that RKD Latvia also had other unrelated stakeholders was not relevant, because RKD Latvia was a related company and, hence, had to provide the requested information. On 27 November 2023, i.e. one week before the start of the verification visit in a so-called pre-verification letter, the Commission informed Semipalatinsk that it could not submit new information during the verification visit. In this letter, it was also explained that any change to its reported data, which would be provided after this date may give rise to the application of Article 18. The Commission rejected the claim that Semipalatinsk provided reliable information on labour costs. Although the Commission acknowledges that the reported labour costs provided in the table ‘Annex 2 – Cost consumption information request’ included all employees, because of a part of it being cash-based, it was not possible to verify labour costs in the financial accounts of Semipalatinsk.

• (140) Finally, the Commission rejected as immaterial the claims of Semipalatinsk that the two companies have different warehouses and employees. The Commission reiterated that, although the warehouses of the two companies may have separate lease agreements, loading facilities and employees, it could not get the needed assurance concerning RKD LLP’s activities in the movement of traded Russian birch plywood.

• (141) Based on the above, the Commission concluded that Semipalatinsk did not demonstrate that it was a producer not engaged in circumvention activities in the sense of Article 13(4) of the basic Regulation, and that therefore, the findings with regard to Semipalatinsk had to be based on facts available in the sense of Article 18 of the basic Regulation which was to apply the country-wide circumvention findings. The Commission therefore rejected its exemption request.

• (142) After disclosure, Semipalatinsk claimed that their production plant was operating since 2012, which was before the initiation of the original anti-dumping investigation on imports of birch plywood from Russia. Semipalatinsk also claimed that they demonstrated a high level of the cooperation with the Commission during the investigation, and that the Commission’s conclusion that they are not a genuine producer of birch plywood were erroneous and untrue.

• (143) The Commission considered that the alleged date of start of production did not affect the findings of the investigation with regard to Semipalatinsk. Furthermore, the Commission acknowledged that there was some cooperation from the staff of Semipalatinsk during the investigation and also during the verification, however the company has not provided the necessary information within the time limits provided for in the basic Regulation. Therefore, Semipalatinsk was found not to have demonstrated that it was a genuine producer not engaged in the established circumvention practice.

• (144) In view of the above, the Commission considered that in its submission after disclosure, Semipalatinsk did not submit any new substantiated claim and that all arguments raised by Semipalatinsk were addressed in detail in recitals (135) to recitals (140) above.

• (145) Since no new comments of substance were brought forward, the conclusion set out in recital (141) above was confirmed.

4.1.3.   Findings with regard to Severnyi Fanernyi Kombinat LLP

• (146) At the verification visit at Severnyi Fanernyi Kombinat LLP and its related companies (‘SFK’), the Commission found that SFK did not report its related company in Russia. The company was reported as an unrelated log supplier. SFK therefore did not provide a questionnaire reply for this company. During the verification visit, the Commission also found that a number of transactions selected as a sample for detailed verification, SFK misreported the origin of Russian logs (as being Kazakh) ²⁸. On this basis, the Commission considered that SFK significantly impeded the investigation by supplying false and misleading information. Furthermore, and since the information was to be used to establish the percentage of the input material purchased in Russia and calculate the value added, the Commission considered that it could not use the data of SFK to establish that it was not involved in circumvention practices. On this basis, the Commission services informed SFK that it intended to disregard its data and to apply Article 18 of the basic Regulation.

• (147) SFK disagreed. It argued that the Commission should have considered the major overall effort that SFK undertook in terms of cooperation, the fact it was a major employer in its region and the fact that it operated in a developing country. SFK further pointed out to its efforts to prepare a detailed questionnaire response, despite its limited staff and no audited financial statements, and it referred to all the information and reconciliations it had provided. Also, SFK argued that the Commission grossly exaggerated by alleging that the non-disclosure of the relation with its related company in Russia and the misdeclaration of origin for one of the sampled transactions meant that SFK supplied false or misleading information and significantly impeded the investigation. It considered that the Commission was legally and factually wrong, violated EU’s WTO obligations, was discriminatory and disregarded the hard work of the staff members of SFK Group. SFK also considered that throughout the different reconciliation, and as verified by the Commission during the on-the-spot verification, it demonstrated that it was not involved in any circumvention practices.

• (148) SFK considered that the Commission’s intent to disregard SFK’s data in its entirety was manifestly contrary to Article 6.8 and paragraph 3 of Annex II to the AD Agreement. It referred to the report of Appellate Body in US – Hot-Rolled Steel ²⁹, which specified that according to paragraph 3 of Annex II, investigating authorities are directed to use information if three conditions are satisfied, namely that such information is verifiable, appropriately submitted so that it can be used in the investigation without undue difficulties, and is supplied in a timely fashion. It argued that if these conditions were met, investigating authorities were not entitled to reject information submitted, when making a determination. In its opinion, such conditions were met in the present investigation since the Commission verified each and every timely submitted document that points to the absence of circumvention. SFK considered that the Commission conducted its analysis of the data submitted by SFK in wrong order, and it referred to US-Anti-Dumping and Countervailing Duties (Korea) ³⁰. The correct order would be considering first all the information in direct response to the Commission, and since the information provided satisfied the criteria under paragraph 3 of Annex II to the AD Agreement, the Commission had thus all the necessary information to accept the exemption request of SFK.

• (149) The Commission disagreed. Contrary to the allegations by SFK, it considered that the non-reporting of a related company in Russia and misreporting of the origin of purchased logs seriously impeded the investigation. In the RP, SFK purchased birch logs, veneer, resin, and as well birch plywood in Russia. In these circumstances, the Commission had to determine the exact percentage of the input material from Russia in order to establish if the Russian parts constitute 60 % or more of the total value of the parts of the assembled product and if the added value of the parts brought in was more than 25 % of the manufacturing cost. The information on the value and origin of the input material had thus a direct impact on the assessment of the exemption request. Because the questionnaire reply of the related Russian company could not be verified, and because the accounts of SFK with the related company showed financial transactions beyond the log purchases (that the company explained as ‘advance payments’), the Commission could not verify the quantities and values of the logs, and if other input material or the product concerned was purchased. Since the questionnaire reply of the related company was not submitted when requested at the start of the investigation but was only submitted at the very end of the verification visit, the Commission considered that the information on the financial and goods flows between SFK and its Russian related company could not be verified. Therefore, it could not be argued that it was appropriately submitted, in a timely fashion, and that the information was verifiable. Therefore, the conditions under paragraph 3 of Annex II to the AD Agreement were not met.

• (150) SFK further considered that the Commission could not disregard all the information provided by SFK. It referred to Article 18(1) of the basic Regulation which stipulates that ‘where it is found that any interested party has supplied false or misleading information, that information shall be disregarded, and use may be made of facts available’. On that basis, it considered that the Commission could proceed in its investigation by applying facts available in this regard and thus by treating the Russian company as a related company, and to treat the logs that were wrongly declared as being from Russia. It argued that these facts available however had no bearing on the data that SFK otherwise submitted in the course of the investigation, which showed lack of any circumvention practices. SFK further considered that the Commission did not need the country where parts come from for the calculation of the added value. It considered that it did not matter whether the supplier was related or not, since even if transfer prices for an input had to be adjusted, it would equally affect the total cost of manufacturing, such that the value added would remain the same. Therefore, the Article 18 letter was based on a manifest error of assessment and contrary to Article 13(2) of the basic Regulation.

• (151) The Commission disagreed that in the case at hand the only consequence for the provision of false and misleading information should be to treat the Russian company as a related company, and to treat the logs from a sample transaction that were wrongly declared as coming from Russia. The false information on the logs and the fact that the Commission could not verify the Russian related supplier rendered the whole data set of SFK unreliable. SFK declared that it purchased between [6-10 %] from the related Russian supplier. The Commission could not verify the quantities of the logs and that SFK only purchased logs from the company and not the product concerned directly. The Commission noted that SFK had, at the end of 2023, an outstanding debt to the Russian company, which equalled half of the turnover it had with this company. Also, SFK bought in the RP product concerned from Russia, which was initially declared to the Commission as ‘unfinished goods’. Therefore, the fact that SFK did not provide the questionnaire reply to the Commission directly affected the outcome of the investigation.

• (152) Furthermore, the exact percentage of the input material within the manufacturing costs was relevant not only to establish the percentage of the input material from Russia (the 60 % test) but also applied on the value added (the 25 % test). The allegations of SFK that value added would be the same even if 100 % of the input material came from Russia was thus not correct.

• (153) Furthermore, SFK submitted that even assuming SFK’s cooperation with the investigation could be considered as less than ideal, the Commission was obliged to comply with Article 18(3) of the basic Regulation stating that ‘[w]here the information submitted by an interested party is not ideal in all respects, it shall nevertheless not be disregarded, provided that any deficiencies are not such as to cause undue difficulty in arriving at a reasonably accurate finding and that the information is appropriately submitted in good time and is verifiable, and that the party has acted to the best of its ability’. SFK considered that the two points raised by the Commission related to the accuracy of the information on the corporate structure and the origin of logs were not such as to cause undue difficulty in arriving at reasonably accurate findings on the lack of circumvention by means of either transshipment or assembly/completion operations. SFK thus argued that the information was submitted in good time, was verified and reflected SFK’s ability to cooperate, and must therefore not be disregarded.

• (154) The Commission reiterated that the information that was misdeclared and the fact that the questionnaire of the Russian related company was not submitted before the verification visit were issues that significantly prevented the Commission from reaching a reasonably accurate finding. The misdeclaration seriously impacted the investigation and, as a consequence, the data of SFK could not be used. The Commission thus rejected the claim.

• (155) SFK argued that it was SFK who first disclosed to the Commission the existence of affiliation with the Russian related company, and that it was not the Commission who brought this fact forward. It argued that nothing on the records suggested that the Commission was aware of the Russian related company being an affiliate, and as described in the mission report, the Commission asked SFK whether it had affiliates in Russia. And SFK explained that it had an affiliate in Russia that purchased logs and supplied them to SFK. SFK repeated the same argument after disclosure. It considered that the Commission misinterpreted the facts. SFK repeated that it was the first to bring forward the information on the Russian company provided the information about the related company, and that it did not deny its existence.

• (156) According to SFK, the fact that the owner mentioned that the Russian company was a dormant company and that SFK did not purchase logs as of 2020 was a mistake which was allegedly understandable, since it was not him who prepared the tables, and the person who prepared the tables did not know about the relationship, and as well because purchases of the logs from the Russian company constituted in the RP only between [6-10 %] of all the log purchases. SFK argued that it did not have enough staff and all the staff acted to the best of their ability, and that what is in essence a clerical mistake could not be classified as false and misleading information. Omission of the Russian company in corporate tables and its designation as unrelated in log purchase tables was unintended and was simply a misunderstanding or a clerical error. SFK repeated the same argument after disclosure. The Commission disagreed that it was SFK who brought forward the information on the existence of the unreported Russian company. To the contrary, it was the Commission that confronted the company with the information that it found with regard to the related company in Russia, a trader in timber products selling, amongst others, birch logs, which SFK initially denied. Once it acknowledged the relationship, initially SFK stated that this company was ‘dormant’ and that therefore it had ceased purchasing logs from this company a long time ago. However, the investigation revealed that this related company in Russia was an important provider to SFK of logs in the RP, and therefore, this contradicted the explanations by the company that there were no purchases of logs after 2020. The company then admitted that the last transaction it had with this related company took place in April 2023. It was not thus SFK that brought the information forward. Also, it considered that the mis-declaration of the company as unrelated could not be a clerical error by a person filling in tables, since the question was asked to the owner of SFK who was at the same time 100 % owner of the Russian company, and who finally acknowledged its existence. Therefore, the Commission disagreed that it was just a clerical error or omission by the person filling in the tables.

• (157) SFK also considered that it was incorrect to allege that the Russian company questionnaire reply could not be verified, and that the Commission made a legal mistake by suggesting that information provided during on-site verification could not be accepted by default. SFK also submitted that the questionnaire reply was submitted in time, was and remained verifiable and could have been crosschecked through the purchase table of SFK. Therefore, it submitted that the questionnaire response was verifiable and could have been verified, since it was submitted the last night before the last day of verification. The questionnaire also remained verifiable without a need for the actual verification.

• (158) After disclosure, SFK reiterated the same argument. It argued that the questionnaire reply was not untimely submitted, and that, since it was part of the exhibits, it should be considered by the Commission in full. It further argued that submitting a questionnaire during the verification was also considered as timely by a WTO panel in US – Anti-Dumping and Countervailing Duties (Korea) ³¹ which mentions that the questionnaire was also provided ‘within the deadlines established by the USDOC, or upon the USDOC’s request at verification’. After disclosure, SFK further argued that the questionnaire response was provided timely and was verifiable. It referred to the Appellate Body Report in United States – Anti-Dumping Measures on Certain Hot-Rolled Steel Products from Japan which states that: ‘In considering whether information is submitted within a reasonable period of time, investigating authorities should consider, in the context of a particular case, factors such as: (i) the nature and quantity of the information submitted; (ii) the difficulties encountered by an investigated exporter in obtaining the information; (iii) the verifiability of the information and the ease with which it can be used by the investigating authorities in making their determination; (iv) whether other interested parties are likely to be prejudiced if the information is used; (v) whether acceptance of the information would compromise the ability of the investigating authorities to conduct the investigation expeditiously; and (vi) the numbers of days by which the investigated exporter missed the applicable time-limit ³²’. SFK considered that in case of its related company, these criteria were fulfilled. It argued, amongst others, that it provided the questionnaire reply two days after it was alerted on the issue.

• (159) The Commission disagreed. The verification planning was based on the number of companies it had to verify, and as well based on the information the companies submitted in advance. The information that companies could not submit new information during the verification and that the company could only correct clerical errors one week before the start of the verification at the latest was communicated to SFK in a so-called pre-verification letter. At the same time, the letter informed companies that any change to reply to the questionnaires, which would be provided after the date may give rise to the application of Article 18. The existence of a Russian related company was only revealed at the start of the verification and could not be considered as a clerical error but an important fact that had an important bearing on the investigation. The fact that it was not reported prevented the Commission from verifying the completeness of the reply.

• (160) The Commission also disagreed that the questionnaire reply could be verified because it was submitted electronically after the verification of SFK. The following (and last) day of the verification of the SFK Group was the on-the-spot verification of the related domestic trader of SFK, and if the Commission were to verify remotely the Russian related company, it would have had to skip entirely or partially the verification of the related trader. The Commission thus disagreed that it could verify the questionnaire reply, and that because it was named as an exhibit, this meant that it had been verified. Furthermore, the Commission considered that the findings in the cited Panel Report, US – Anti-Dumping and Countervailing Duties (Korea), according to which a questionnaire reply submitted upon the investigating authority’s request during the verification can be accepted, are not pertinent in the case at hand. As noted in recital (159) above, the Commission did inform SFK of the fact that it could not accept during the verification substantial changes to information previously submitted. In any event, the questionnaire reply of the related company was not submitted during the verification but was provided as an exhibit together with other exhibits at the closure of the verification. The Commission recalled that this type of questionnaires of related companies was already requested at initiation and should have been provided within 37 days after initiation, i.e. by 5 October 2023 at the latest. Therefore, it was not provided two days late, as claimed by SFK, but two months late in the context of an investigation that is limited in time to 9 months.

• (161) In relation to the above-mentioned Appellate Body Report, United States – Anti-Dumping Measures on Certain Hot-Rolled Steel Products from Japan, the Commission referred to its detailed explanations in recital (149) as to why the information about a related company in the country subject to measures, i.e. Russia that supplied input material to SFK in Kazakhstan, is, by its nature, crucial in verifying whether SFK was involved or not in the circumvention practices.

• (162) SFK also argued that the financial transactions in the RP between SFK and the Russian related company were of a lesser magnitude than what the Commission alleged, and that they made perfect sense. It maintained that it was a dormant company which was confirmed by information reported in various tables and because the last transaction took place in April 2023.

• (163) The Commission considered that the argument that the company was dormant was not supported by the facts. Although SFK claimed that it had no business with the company anymore, and that the last purchase took place in April 2023, the receivable accounts of SFK showed a significant outstanding debt with that company which, in terms of value, was significative, compared to the purchase value of the logs the IP. Since SFK explained that these were advance payments for input material to be delivered, it contradicted the claim that it stopped the business with this company.

• (164) With regard to the logs, SFK argued that the Commission’s allegations were based on a manifest error of assessment and that they were totally misplaced. It argued that the Commission reviewed six invoices, and not only three, and that out of the six invoices, five were correct. Second, the volume of the logs where the origin was not reported correctly was very minor (of [50-100] m³), and this could not affect the correctness of the remaining 99,9 % of purchases. SFK also argued that it had explained that to provide the information in the questionnaire, it primarily relied on the country of registration of the supplier, so if the supplier was registered in Kazakhstan, SFK assumed that the logs were of the Kazakh origin which was in its view a reasonably accurate method. Therefore, SFK did not mislead the Commission or provided any false information. Establishing the origin based on transaction-to-transaction basis would not be possible given a significant volume of purchase. SFK repeated the same arguments after disclosure.

• (165) The Commission disagreed. During the on-the-spot verification, it indeed collected altogether six invoices with evidence on the log origin. There were two additional transactions (invoices) from the same supplier that were misreported. Therefore, out of the eight invoices, only five were correct. The Commission also disagreed that the value of the misreported invoices was minor. The correctness of the data could not be expressed on the total value of transactions (that could be thousands in some cases) but on the value of the sample. In the case at hand, the incorrect transactions represented more than 18 % of the sampled logs. The Commission also considered that the fact that the rest of the sample was not reported based on verification of the log certificate but on the place where the supplier was registered put even more doubts on the reliability of the data.

• (166) After disclosure, SFK further argued that the Commission exaggerated the importance of the misreported logs, and that 93 % of the selected sample, by volume, confirmed the correct origin. SFK also pointed to the fact that the Article 18 letter mentioned that the misreported transactions concerned one of the three invoices, whereas in its findings in the General Disclosure Document, the Commission mentioned eight invoices. Therefore, in its view, the Commission came with new facts and it should have provided SFK with a right to comment. It also repeated that the Commission sampled six invoices, and not eight.

• (167) The Commission indeed reviewed the number of the selected invoices, after comments submitted by SFK on the Article 18 letter. The Commission confirmed the eight invoices, as mentioned in the General Disclosure Document, because there were two additional invoices from the same supplier of the logs of Russian origin. This correction did by no means affect the conclusions reached in the Article 18 letter. In addition, the number of eight invoices was mentioned in the General Disclosure Document, which was sent to all parties for comments. The Commission thus disagreed that SFK was not given the right to comment.

• (168) Similarly to arguments by Favorit (see recital (121)), SFK submitted that based on consistent Commission’s practice, non-cooperation with the anti-circumvention did not automatically lead to either the finding of circumvention by default or to the total disregard of the data submitted and it referred to investigations on Glass Fiber Fabric from Morocco, and on Coumarin from India. Therefore, it considered that the intention of the Commission to apply facts available and its intention to reject its data was a violation of the principle of non-discrimination that obliges to treat similar situations in the same manner. SFK further argued that in any event the Commission acknowledged that the related Russian supplier was not involved with the production or sales of the product concerned and its affiliation had no impact on the outcome of the investigation.

• (169) The Commission reiterated that findings were made on a case-by-case basis, and due consideration was made as to whether the entire data set could not be used or only a specific information, as to whether the missing information had a substantial impact on the outcome of the investigation, and as to whether without the information the Commission could arrive to a reasonable finding. Furthermore, the facts and figures of the cases mentioned by SFK were completely different in many respects. In particular, in the other cases the business model of the concerned companies was different and there was no issue with misreporting of the origin of input material. Therefore, the Commission did not agree that because the data were not entirely rejected in the above cases, the same approach had to be taken at the case at hand. It thus found the claim unsubstantiated. Also, the Commission disagreed that there was verified evidence that SFK did not circumvent – the absence of reliable and verifiable data did not allow the company to demonstrate the absence of circumvention practices.

• (170) SFK further argued that regardless of any alleged non-cooperation by SFK, in light of the findings of the Court of Justice in Maxcom and consistent with Commission Implementing Regulation (EU) 2018/28 ³³, no findings of circumvention by SFK can be found by reference to the country-wide circumvention, and that SFK’s company’s data precludes the finding of company-specific circumvention practices. In that context, whether there is country-wide circumvention by means of imports from Kazakhstan was irrelevant since such evidence was not capable of overriding specific, verified evidence provided by SFK that is not involved in any circumvention practices.

• (171) The Commission considered that the facts of this case are different. In the case mentioned in the previous recital there was no issue with hiding links or misreporting information with regard to the country subject to measures. The Commission was not able to come to the conclusion that there was verified evidence that SFK did not circumvent. It found thus the claim unsubstantiated.

• (172) Similarly to Favorit, SFK also considered that any attempt to draw adverse inferences from the alleged non-cooperation was illegal under Article 6.8 of the AD Agreement. It argued that in line with the ruling in Mexico-Anti-dumping Measures on Rice, and Panel Report, China-GOES, the Commission must find ‘best information available’ which has to be not simply correct or useful per se but ‘the most fitting’ or ‘most appropriate’, and that the non-cooperation does not justify the drawing of adverse consequences.

• (173) The Commission reiterated its conclusion that the data of SFK could not be used as a basis for its findings. Accordingly, the Commission concluded that SFK had not demonstrated that it was a producer not engaged in circumvention activities. In those circumstances, in line with its past practice, the Commission had no choice but to base itself on country-wide circumvention findings. Also, Article 18(6) of the basic Regulation provides that when a party has failed to cooperate partially or entirely, the result ‘may be less favourable ... than if it had cooperated’. Accordingly, the fact that the application on SFK of the country-wide findings were to be less favourable for SFK was the only option and the consequence of the fact that its data could not be used.

• (174) SFK further argued that the Commission in the context of the ongoing anti-circumvention investigation (or otherwise) has no jurisdiction to enforce sanctions and to establish that SFK or for that purpose any other party has circumvented the sanctions. The investigation was solely a possibility to extend a 15,8 % duty on imports from Kazakhstan and not any sanctions violations.

• (175) SFK therefore suggested that the Commission should accept SFK’ price undertaking offer, and terminate an anti-circumvention investigation with regard to SFK, in line with Article 8.5 of the basic Regulation and, in addition, any Commission decision accepting SFK’s price undertaking should specify that the acceptance of the price undertaking should not be taken to mean that SFK is facilitating infringements of the prohibition against circumvention of the provisions of this Regulation, or of Council Regulations relating to sanctions on the Russian federation.

• (176) The Commission considered that in general, undertakings in circumvention investigations could not be considered. The Commission has discretion in accepting undertakings; in this case, the Commission could not accept an undertaking offer from a company that could not demonstrate not to be involved in circumvention practices and for which findings had to be based on facts available. In any event, undertakings were also refused in the original investigation for the non-compliance with criteria specified in Article 8(2) of the basic Regulation ³⁴.

• (177) Based on the above, the Commission concluded that SFK did not demonstrate that it was a producer not engaged in circumvention activities in the sense of Article 13(4) of the basic Regulation, and that therefore, the findings with regard to SFK had to be based on facts available in the sense of Article 18 of the basic Regulation which was to apply the country-wide circumvention findings. The Commission therefore rejected its exemption request.

• (178) After disclosure, SFK submitted that it disagreed with the findings disclosed to SFK in the General Disclosure Document. It repeated that the Commission’s findings were in breach with AD Agreement and that the Commission illegally applied the facts available. SFK repeated that it did not refuse access to and did not otherwise fail to provide necessary information within a reasonable period, nor did it significantly impede the investigation. According to SFK, contrary to paragraph 3 of Annex II to the AD Agreement, the Commission failed to take into account for the purpose of its determinations all information which was verifiable and appropriately submitted, so that it could have been used in the investigation without undue difficulties, and which was supplied in a timely fashion.

• (179) The Commission considered that all the arguments raised by SFK were already addressed in detail in recitals (146) to (176) above. Since no new comments of substance were brought forward, the Commission confirmed the conclusion set out in recital (177) above.

4.1.4.   Additional claims by Favorit and SFK after disclosure

• (180) After disclosure, Favorit and SFK further argued that the Commission failed to determine their individual dumping margins, contrary to Article 6.9 of the AD Agreement.

• (181) The Commission considered that Article 13(1) of the basic Regulation does not have any corresponding provision in the AD Agreement and requires the Commission to find evidence of dumping in relation to the normal values previously established for the like product. The Commission complied with this obligation. In any event, the Commission noted that, in view of the unreliable and unverifiable nature of the data provided by SFK and Favorit, the findings with regard to these two companies had to be based on facts available in the sense of Article 18 of the basic Regulation, which was to apply the country-wide circumvention findings. SFK and Favorit therefore failed in their applications under Article 13(4) and cannot be exempted from the duties.

• (182) After disclosure, Favorit reiterated that Kazakhstan was a developing country and that the Commission should have applied Article 15 of the AD Agreement and accept constructive remedies such as price undertakings, which it submitted.

• (183) The Commission considered Article 15 of the AD Agreement as not relevant in the case at hand since it applies ‘when considering the application of anti-dumping measures under [that] Agreement’. Since, as explained above in recital (13), the AD Agreement does not provide for a specific anti-circumvention provision, Article 15 of the AD Agreement is not pertinent. Furthermore, as mentioned in Section 4.1.2 above, undertakings in circumvention investigations could not be considered, and the Commission could not accept an undertaking offer from companies that failed to demonstrate that they were not involved in the circumvention practices found for the country as a whole and for which findings had to be based on facts available.

• (184) Favorit and SFK further argued that the Commission failed to inform them of the reasons not to accept the evidence or information they supplied. They also claimed that they were deprived of an opportunity to provide further explanations within a reasonable period. In their view, the allegations that they were engaged in circumvention activities was based on a pure speculation, and the Commission had no facts, either based on ‘facts available’ or otherwise, to allege that they were engaged in such activities.

• (185) The Commission disagreed that it did not inform Favorit and SFK of the reasons not to accept evidence or information and that both companies did not have opportunity to provide further explanations within the reasonable period. To the contrary, the Commission informed both companies of the reasons for the rejection of their exemption requests in Article 18 letters. The Commission further provided very detailed explanations in the General Disclosure Document and the individual disclosure to Favorit, to which both both Favorit and SFK had an opportunity to provide comments. The Commission also disagreed that its decision not to exempt Favorit and SFK from the extended duties was based on a speculation. Indeed, as explained in recital (118), it is for each individual producer-exporter to show that its particular situation justifies an exemption pursuant to Article 13(4) of the basic Regulation, and the Commission concluded that neither Favorit nor SFK had demonstrated that they were genuine producers not engaged in circumvention activities.

• (186) Both Favorit and SFK pointed to the cover letter accompanying the General Disclosure Document which mentioned that the Commission intended to ‘impose’ anti-dumping duties on imports consigned from Kazakhstan, and on this basis, they both considered that General Disclosure Document was illegal and contrary to EU’s WTO obligations.

• (187) The Commission considered that the fact the cover letter contained a clerical mistake and mentioned ‘impose’ instead of ‘extend’ did not put in question the legality of the General Disclosure document and of the investigation. The legal basis and the proposed conclusions were explained in great level of detail, and it could not be interpreted beyond its scope, which was defined in the initiating Regulation. There could not be any doubt or misinterpretation about the fact that the findings concerned an extension of the definitive anti-dumping duty imposed by Implementing Regulation (EU) 2021/1930 on imports of birch plywood originating in Russia to imports of birch plywood consigned from Türkiye and Kazakhstan, whether declared as originating in Türkiye and Kazakhstan or not, and that was based on Article 13 of the basic Regulation. The Commission thus dismissed the claim.

4.1.5.   Comments by the Kazakh authorities after disclosure

• (188) The Ministry of Trade and Integration of the Republic of Kazakhstan (‘the Ministry’) claimed that the Commission ignored domestic sales prices and cost of production in Kazakhstan, which is contrary to Articles 2(1), 2(2), 2(3) and 2(4) of the AD Agreement. According to the Ministry, the General Disclosure Document did not contain determination of likeness between birch plywood exported from Kazakhstan to the EU and the one sold in the domestic market, which is contrary to Articles 2(1), 2(2) and 2(6) of the AD Agreement.

• (189) These Commission rebutted these claims in recital (82) above.

• (190) Following disclosure, the Ministry claimed that the initiation of the investigation was contrary to Article 5.2 of the AD Agreement because there was no complaint coming from the domestic industry meeting the requirements of Article 5(2) of the AD Agreement. Furthermore, contrary to Article 5.3 of the AD Agreement, the Commission failed in its duty to examine the accuracy and adequacy of the evidence provided in the application to determine whether there is sufficient evidence to justify the initiation of an investigation.

• (191) The Commission rebutted this claim in recital (13) above.

• (192) According to the Ministry, the General Disclosure Document contained no determination of material injury or threat thereof which is contrary to Articles 3(1), 3(2), 3(4) and 3(5) of the AD Agreement.

• (193) As explained in recital (13), Article 13 of the basic Regulation does not strictly require an analysis of injury or causal link. Therefore, the Commission rejected this claim.

• (194) According to the Ministry, several Kazakhstani producers did not refuse access to, and did not otherwise fail to provide, necessary information within a reasonable period. Nor did they significantly impede the investigation such that the Commission’s decision to apply facts available instead of their actual data on the cost of production and sales prices is contrary to Article 6(8) of the AD Agreement.

• (195) The Commission addressed this comment in detail in Section 2.1 and in Section 4.1.2 above.

• (196) The Ministry claimed that, contrary to paragraph 1 of Annex II to the AD Agreement, in case of one Kazakhstani exporting producer, the Commission failed after the initiation to specify in detail the information required and the manner in which that information should be structured in its response.

• (197) The Commission addressed this comment in Section 2.1. All exporting producers were informed of the information that had to be provided, in which format and the applicable deadlines. Deadlines were extended where warranted, and replies to any procedural and practical questions that were raised, were provided by the Commission services.

• (198) The Ministry claimed that contrary to paragraph 3 of Annex II to the AD Agreement, the Commission failed to take into account all information which was verifiable and appropriately submitted so that it could have been used in the investigation without undue difficulties and which was supplied in timely fashion. Furthermore, according to the Ministry, the Commission failed to respect paragraph 5 of Annex II to the AD Agreement as it wrongfully disregarded data of cooperating Kazakhstani exporters, while it is undisputed that they acted to the best of their ability. The Ministry also claimed that the Commission failed to inform Kazakhstani exporters of the reasons not to accept evidence or information supplied by them, thus depriving them of an opportunity to provide further explanations within a reasonable period, which is not in line with paragraph 6 of Annex II to the AD Agreement. Finally, the Ministry claimed that the Commission failed to take into account difficulties experienced by Kazakhstani exporters being small companies in supplying information requested and to provide practicable assistance which is not in line with Article 6(13) of the AD Agreement.

• (199) The Commission addressed these comments in great level of detail in Section 2.1 and in Section 4.1.2 above.

• (200) According to the Ministry, the Commission drew adverse inferences and claimed that Kazakhstani producers are engaged in circumvention practices while Commission is obliged to base its findings on information from secondary source with special circumspection. The Ministry claimed that the Commission’s allegations were based on a pure speculation and in breach of paragraph 7 of Annex II and Article 6(8) of the AD Agreement.

• (201) The Commission considered that, while it is true that the burden of proof of circumvention practices of anti-dumping measures at country-wide level lies on the Commission, it is for each and every individual exporting producer to show that their particular situation justifies an exemption pursuant to Article 13(4) of the basic Regulation. As set out in Sections 2.1 and 4.1.2 above, the exporting producers failed to do so as they did not demonstrate that they were genuine producers not engaged in circumvention practices. The Commission addressed in great level of detail the conclusion that the conditions in Article 13(1) of the basic Regulation were considered to be met. Accordingly, such a conclusion was by no means based on speculation. Furthermore, the Commission rebutted similar comments in recital (118) above. Therefore, this claim was rejected.

• (202) The Ministry stated that the Commission failed to provide information on individual dumping margin for cooperating Kazakhstani exporters, which is contrary to Article 6.9 of the AD Agreement.

• (203) The Commission rebutted this claim in recital (181) above.

• (204) The Ministry claimed that the Commission failed to explore possibilities of constructive remedies before applying anti-dumping duties where they would affect the interests of Kazakhstan as a developing country, which is not in line with Article 15 of the AD Agreement. In that context, the Ministry expressed readiness to discuss with the Commission a proper monitoring system for the undertakings that would exclude a possibility for the Kazakhstani exporting producers to tranship birch plywood originating in Russia. In order for this scheme to be possible and in line with Article 8 of the basic Regulation, Commission’s definitive Regulation should foresee the possibility to offer (and accept) price undertakings after the deadline for the imposition of definitive anti-dumping measures.

• (205) This comment was addressed in recital (176) and in recital (183). In view the above, the Commission concluded, after careful consideration, that the comments brought forward by the Kazach authorities did not lead to a change in the conclusions as set out in the General Disclosure Document.

4.2.   Türkiye

4.2.1.   Findings on Intur Construction Tourism and Forest (‘Intur’)

• (206) Intur claimed that there was due cause and an economic justification for its establishment in March 2020. After several decades in the wood industry with a focus on African wood, and after having detected inefficiencies of a family led business, the company for plywood production was established. Its primary objective was the procurement of input materials for plywood production, both domestically and internationally, followed by processing and transforming these materials into finished plywood products for distribution in both domestic and international markets. The investigation revealed that Intur started production at the end of 2019, which was before the initiation of the original anti-dumping investigation on imports of birch plywood from Russia.

• (207) The investigation revealed that Intur substantially increased its export sales to the Union and input materials purchases from Russia in 2021, after the anti-dumping investigation was initiated. Therefore, the Commission concluded that the operation substantially increased since, or just prior to, the initiation of the anti-dumping investigation and the parts concerned are from the country subject to measures, as required by Article 13(2)(a) of the basic Regulation.

• (208) The main input material to produce birch plywood for Intur are birch veneers, which were all purchased from Russia. According to the submitted and verified information by Intur, over 75 % of the total value of the input materials purchases were from Russia. The Commission therefore concluded that the 60 % criterion set out in Article 13(2)(b) of the basic Regulation was met.

• (209) The Commission concluded that the value added to the parts brought in, during the assembly or completion operation, was less than 25 % of the manufacturing cost, as required by Article 13(2)(b) of the basic Regulation for these operations to constitute circumvention.

• (210) With a communication on 30 January 2024, Intur requested the Commission to take into account two further revisions, concerning the exchange rates impacting the depreciation of machinery as well as the allocation of certain labour costs.

• (211) The Commission informed the company, that it was not possible to revise the cost elements after the verification visit as such claims could no longer be verified.

• (212) Based on the submitted and verified tables by Intur, there was no export in 2019 while in the RP it exported [2 000-3 000] m³. Regarding prices, the Commission compared the average non-injurious price as established in the original investigation, adjusted to reflect the cost increase, with the weighted average export CIF prices determined on the basis of the information provided by Intur, duly adjusted to include post clearance costs. This price comparison showed that the imports from Intur undersold the Union prices by more than 37 %.

• (213) The Commission also examined whether there was evidence of dumping in relation to the normal values previously established for the like product. To this end, export prices of Intur on an ex-works basis were compared to the normal values established during the original investigation, duly adjusted for inflation. The comparison of normal values and export prices showed evidence of dumping during the reporting period.

• (214) Based on the above, the Commission concluded that Intur was found to be engaged in circumvention practices within the meaning of Article 13(2) of the basic Regulation. The Commission therefore rejected its exemption request.

4.3.   Conclusion

• (215) The Commission thus concluded that none of the exemption requests could be accepted.

5. DISCLOSURE

• (216) On 1 March 2024, the Commission disclosed to all interested parties the essential facts and considerations leading to the above conclusions and invited them to comment. Comments received from interested parties were addressed above. Further comments that were received from the Woodstock Consortium, the European Panel Federation and Orlimex CZ were addressed in Section 6 below.

6. ADDITIONAL COMMENTS AFTER DISCLOSURE

• (217) The Woodstock consortium provided additional comments on several points confirming circumvention practices at country-wide level. It also stressed the importance of strict monitoring and follow-up measures on imports in the future.

• (218) The European Panel Federation endorsed the findings of the Commission and requested the Commission to promptly proceed to making it a binding Regulation and to continue monitoring closely to stop any attempts of circumventing.

• (219) After disclosure, Orlimex CZ, an unrelated importer, claimed that the logistical and administrative expenses associated with transiting from Russia to Kazakhstan and then to the EU far exceed the savings from avoiding the 16 % duty. Therefore, it was deemed to be economically irrational.

• (220) The Commission considered that anti-dumping measures may be extended to third countries when circumvention of the measures in force is taking place. As explained in this Regulation, the Commission established that circumvention practices took place. The question to which extent such practices are beneficial was not relevant and went beyond the scope of this investigation.

• (221) According to Orlimex CZ the Commission’s determination failed to account for the significant impact of sanctions imposed on Russia, which Orlimex CZ believe is the actual cause of the reduced imports from Russia to the Union, not the imposition of anti-dumping duties. The legal prohibitions implemented from April 2022 already fundamentally altered the trade landscape, making it impossible to continue business with Russia, irrespective of any anti-dumping duties. The sanctions, not the anti-dumping measures, created a market void that producers from Kazakhstan, Türkiye, and other regions sought to fill.

• (222) The Commission rebutted this claim in recital (61). In addition, the Commission considered that Orlimex CZ explanation according to which the producers from Kazakhstan and Türkiye sought to fill an alleged market void that occurred in the Union, was irrelevant in view of the fact that none of the producers could actually demonstrate that it was entitled to benefit from an exemption pursuant to Article 13(4) od the basic Regulation.

• (223) Orlimex CZ also argued that the SFK was a producer long established on the Kazakhstani market well before the imposition of sanctions or anti-dumping duties, primarily serving the domestic demand. Following the imposition of sanctions, Russian producers entered the Kazakhstani market with products they could no longer sell in the Union due to the sanctions, leading to a price drop locally. In contrast, prices for birch plywood in the Union surged. It was therefore entirely logical for a manufacturer to redirect its output to fill the gap in the Union market. In addition, Orlimex CZ claimed that the Commission’s generalization unfairly grouped all exporters, ignoring clear differences between legitimate business operations and those violating sanctions.

• (224) The findings regarding SFK were elaborated in Section 4.1.3 above. In addition, the Commission assessed the situation of each and every exporting producer that came forward individually and on the basis of its merits, so no generalization or grouping took place, neither during the investigation nor in the conclusions.

• (225) Orlimex CZ also commented that in case of SFK the Commission inverted the burden of proof. According to Orlimex CZ, this reversal of the burden of proof undermined legal certainty and confidence in the integrity of the investigative process.

• (226) This claim was addressed in recital (118). It is for each individual exporting producer to show that its particular situation justifies an exemption pursuant to Article 13(4) of the basic Regulation. In general, in case an exporting producer has its own production facility with a capacity to, at least, produce what it actually exports, does not have multiple links with the country subject to measures in terms of related companies and/or supplies, and can be held accountable, it is neither unduly burdensome nor difficult to show that such producer is not engaged in the circumvention practice. In view of the above, the claims brought forward by Orlimex CZ were rejected.

7. CONCLUSION

• (227) Based on the above, the Commission maintained that the definitive anti-dumping duty against imports of birch plywood from Russia, imposed by Implementing Regulation (EU) 2021/1930, has to be extended to imports of birch plywood consigned from Kazakhstan and Türkiye, whether declared as originating in Kazakhstan and Türkiye or not. The Commission also maintained that the exemption requests that were made, should be rejected.

• (228) The measures provided for in this Regulation are in accordance with the opinion of the Committee established by Article 15(1) of Regulation (EU) 2016/1036,

HAS ADOPTED THIS REGULATION:

Article 1

Article 2

Customs authorities are directed to cease the registration of imports established in accordance with Article 2 of Implementing Regulation (EU) 2023/1649.

Article 3

The exemption requests submitted by Favorit LLP, QazFanCom LLP, Semipalatinsk Wood Processing LLP, Severnyi Fanernyi Kombinat LLP, VFP LLP, Intur Construction Tourism and Forest, Murat Şahin Orman Ürünleri, Petek Kontrplak San ve Tic A.Ş and Saglamlar Orman Tarim Urunleri San. Ve. Tic. AS are rejected.

Article 4

European Commission
Directorate-General for Trade
Directorate G Office:
CHAR 04/39
1049 Bruxelles/Brussel
BELGIQUE/BELGIË.

This Regulation shall enter into force on the day following that of its publication in the Official Journal of the European Union.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels, 13 May 2024.

For the Commission

The President

Ursula VON DER LEYEN