Commission Implementing Regulation (EU) 2024/1959 of 17 July 2024 imposing a provisional anti-dumping duty on imports of erythritol originating in the People’s Republic of China

THE EUROPEAN COMMISSION,

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

Having regard to Regulation (EU) 2016/1036 of the European Parliament and of the Council of 8 June 2016 on protection against dumped imports from countries not members of the European Union (1) (‘the basic Regulation’), and in particular Article 7 thereof,

After consulting the Member States,

Whereas:

(1) On 21 November 2023, the European Commission (‘the Commission’) initiated an anti-dumping investigation with regard to imports of erythritol originating in the People’s Republic of China (‘the country concerned’ or ‘the PRC’) on the basis of Article 5 of the basic Regulation. It published a Notice of Initiation in the Official Journal of the European Union (2) (‘the Notice of Initiation’).

(2) The Commission initiated the investigation following a complaint lodged on 9 October 2023 by Jungbunzlauer S.A. (‘the complainant’). The complaint was made by the Union industry of erythritol in the sense of Article 5(4) of the basic Regulation. The complaint contained evidence of dumping and of resulting material injury that was sufficient to justify the initiation of the investigation.

(3) The Commission made imports of the product concerned subject to registration by Commission Implementing Regulation (EU) 2024/1608 (3) (‘the registration Regulation’).

(4) In the Notice of Initiation, the Commission invited interested parties to contact it in order to participate in the investigation. In addition, the Commission specifically informed the complainant, the known exporting producers and the authorities of the People’s Republic of China, known importers, traders and users about the initiation of the investigation and invited them to participate.

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

(6) Following initiation, the China Chamber of Commerce of Metals, Minerals and Chemical Importers and Exporters (‘CCCMC’), an organisation empowered by four exporting producers (4) to represent them in this investigation on injury, causality and Union interest aspects of the investigation, submitted comments related to the complaint and the initiation of the investigation, on material injury, on causality and on Union interest.

(7) CCCMC claimed that the complainant did not submit information as required by Article 5(2) of the basic Regulation and that the Commission failed to review properly the information in the complaint as required by Article 5(3) of the basic Regulation.

(8) In particular, CCCMC claimed that the complainant omitted to address properly productivity, wages to personnel, real factors affecting prices. Moreover, it argued that the complaint partly lacked data on employment (no breakdown of administrative staff and direct labour on the manufacturing of erythritol), return on investments, ability to raise capital or investments and actual and potential effect on cash flow.

(9) At the outset, the Commission noted that it carried out its examination of the complaint in accordance with Article 5 of the basic Regulation and came to the conclusion that the requirements for initiation of an investigation were met, i.e. that there was sufficient evidence to initiate the investigation.

(10) According to Article 5(2) of the basic Regulation, a complaint shall contain such information as is reasonably available to the complainant. The legal standard of evidence required for the purpose of initiating an investigation (‘sufficient’ evidence) is different from that which is necessary for the purpose of a preliminary or final determination of the existence of dumping, injury or of a causal link. Therefore, evidence which is insufficient in quantity or quality to justify a preliminary or final determination of dumping, injury or causation, may nevertheless be sufficient to justify the initiation of an investigation (5).

(11) The Commission noted that the non-confidential summary of the complaint did contain the relevant factors and indices having a bearing on the state of the industry, as required by Article 5(2) of the basic Regulation. Economic factors listed in Article 3(5) of the basic Regulation are referred to in Article 5(2)(d) of that Regulation by the way of an example (‘such as’). It follows that Article 5(2) does not require all these economic factors to be included at the stage of the complaint. Therefore, this claim was rejected.

(12) CCCMC also claimed that the Commission failed to examine and to consider publicly known challenge of the Union industry to procure main raw materials and energy in quantities for the production at competitive prices, as well as scientific findings that are likely to affect consumer’s choices and change consumption pattern in the EU.

(13) In this regard, the Commission noted that the claim of CCCMC goes beyond the requirements of Article 5(3) of the basic Regulation, as the Commission’s role at initiation stage is to examine the accuracy and adequacy of the evidence provided in the complainant to determine whether there was sufficient evidence to justify the initiation. As this was indeed performed by the Commission, the claim of CCCMC was rejected.

(14) Regarding significant market distortions in China, the CCCMC firstly claimed that the complaint relied on the Commission Staff Working Document of 2017 which is relevance is doubtful as it was published around 5 years prior to the initiation of the proceeding and that because the report has been prepared with the specific purpose of facilitating Union industries to lodge a request in the area of trade measures, it is partial and not objective. Secondly, CCCMC claimed that the references and analogies from other investigations is not legally sound as it consists of a substitution of facts for the product concerned with findings of other products such as citric acid, sulphanilic acid or monosodium glutamate.

(15) The Commission noted that, as shown in section 3.2. below, the fact that the Commission Staff Working Document was issued in December 2017 does not undermine its value in identifying the market distorting factors that continue to be relevant for the product concerned. Regarding the use of findings of other investigations, again the findings on closely related markets and industries can be relevant for the production and sales of the product concerned in China, as shown in section 3.1. below. These claims of CCCMC were therefore rejected.

(17) On the above claims the Commission noted that as the Union industry consists of a single producer it is understandable that injury factors were given in ranges and in indexed form in the complaint. The examination of the allegations of CCCMC has shown that these indexes and ranges allowed for an understanding of the trends and levels of the data on the various injury indices submitted by the applicant in confidence. Also, regarding the non-disclosure of sources, as the actual data is now provided in section 4.3. below, this issue is remedied.

(18) Other specific comments on normal value, injury, causation and Union interest which were not directly linked to the initiation are dealt with in the relevant sections below (Sections 3, 4 and 5).

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

Sampling of Union producers

(20) Given the limited number of Union producers of erythritol, the Commission announced in the Notice of Initiation that it would make available questionnaires to the known Union producer, namely Jungbunzlauer S.A. This Union producer provided a questionnaire reply and no other Union producers made themselves known following the publication of the Notice of Initiation. Thus, the Commission did not have to resort to sampling.

Sampling of importers

(21) To decide whether sampling would be necessary and, if so, to select a sample, the Commission asked unrelated importers to provide the information specified in the Notice of Initiation.

(22) No unrelated importers provided the requested information.

Sampling of exporting producers in the PRC

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

(24) Four exporting producers in the country concerned provided the requested information and agreed to be included in the sample.

(25) In accordance with Article 17(1) of the basic Regulation, the Commission selected a sample of three exporting producers on the basis of the largest representative volume of exports to the Union which could reasonably be investigated within the time available.

(26) In accordance with Article 17(2) of the basic Regulation, all known exporting producers concerned and the authorities of the country concerned were consulted on the selection of the sample. No comments were received as regards sample selected.

(27) One exporting producer in the PRC requested individual examination under Article 17(3) of the basic Regulation. However, this exporting producer did not submit a questionnaire reply to the Commission.

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

(29) The Commission sent a questionnaire concerning the existence of significant distortions in the PRC within the meaning of Article 2(6a)(b) of the basic Regulation to the Government of the People’s Republic of China (‘GOC’).

(30) Questionnaire replies were received from the sole Union producer, three Chinese exporting producers and two users. No questionnaire replies were received from the GOC.

(33) The investigation of dumping and injury covered the period from 1 October 2022 to 30 September 2023 (‘the investigation period’). The examination of trends relevant for the assessment of injury covered the period from 1 January 2020 to the end of the investigation period (‘the period considered’).

(34) The product under investigation is erythritol, a four-carbon sugar alcohol (polyol) sweetener made from sugar or glucose, in its pure form or contained in blends containing less than 10 % of other products by weight (‘the product under investigation’).

(35) The Chemical Abstracts Service (CAS) registry number for erythritol in its pure form is 149-32-6.

(36) Erythritol is a natural, zero-calorie sweetener with zero glycaemic index. It is used mainly as sugar replacer in food and beverage products, either in its pure form or blended with other ingredients, such as the natural high intensity sweetener stevia. The main segment is tabletop sweeteners, followed by beverages, confectionery, bakery, sports nutrition and other food categories.

(37) The product concerned is the product under investigation originating in the PRC, currently falling under CN code ex 2905 49 00 for erythritol in its pure form and CN codes ex 2106 90 92 and ex 2106 90 98 for blended products (TARIC codes 2905490015, 2106909265, and 2106909815) (‘the product concerned’).

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

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

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

(42) In order to obtain information it deemed necessary for its investigation with regard to the alleged significant distortions, the Commission sent a questionnaire to the GOC. In addition, in point 5.3.2. of the Notice of Initiation, the Commission invited all interested parties to make their views known, submit information and provide supporting evidence regarding the application of Article 2(6a) of the basic Regulation within 37 days of the date of publication of the Notice of Initiation in the Official Journal of the European Union.

(43) No questionnaire reply was received from the GOC and no submission on the application of Article 2(6a) of the basic Regulation was received within the deadline. Subsequently, the Commission informed the GOC that it would use facts available within the meaning of Article 18 of the basic Regulation for the determination of the existence of the significant distortions in the PRC.

(44) In the Notice of Initiation, the Commission also specified that, in view of the evidence available, it may need to select an appropriate representative country pursuant to Article 2(6a)(a) of the basic Regulation for the purpose of determining the normal value based on undistorted prices or benchmarks.

(45) On 21 December 2023, the Commission informed by a note to the file interested parties on the relevant sources it intended to use for the determination of the normal value (‘the First Note’).

(46) In that note, the Commission provided a list of all factors of production such as raw materials, labour and energy used in the production of erythritol. In addition, based on the criteria guiding the choice of undistorted prices or benchmarks, the Commission identified possible representative countries, namely Brazil, Colombia and Thailand.

(47) On the basis of the information collected during the investigation, apart from in the Union and the PRC, erythritol is produced, in industrial quantities, only in a country with a different level of economic development than the PRC, namely the USA.

(48) Consequently, the Commission endeavoured to identify, in a representative country with a similar level of economic development as the PRC, a product in the same general category and/or sector of the product under investigation with (mostly) the same factors of production as erythritol.

(49) The Commission first analysed sweeteners other than erythritol. However, the Commission found no sweeteners commercially produced by the same or similar production processes as/to erythritol. Erythritol is commercially produced via ‘natural’ fermentation of carbohydrates. However, artificial sweeteners such as sucralose, saccharin, aspartame, or Acesulfame-K are manufactured via an artificial chemical synthesis/process.

(50) The Commission then analysed citric acid, a product in the same general category and/or sector of the product under investigation suggested by the complainant. Like erythritol, citric acid is an organic chemical product produced by fermentation of agricultural carbohydrates.

(51) Both citric acid and erythritol are produced by a fermentation process with regulated steps followed by a crystallisation phase and the drying of the crystals. Even if the fermentation processes of both products differ in terms of microorganisms and yeast, there are common auxiliary materials, such as a defoamer, corn steep liquor or perlite. Thus, citric acid and erythritol have the same core input raw materials, relevant consumables in common and very similar production processes.

(52) The Commission concluded that citric acid was an appropriate product in the same general category and/or sector as the product under investigation with a view to identifying an undistorted value in a representative country with a similar level of economic development as the PRC for the factors of production used in the production of erythritol.

(53) The Commission received comments on the First Note from one of the sampled exporting producers (Dongxiao Biotechnology Co., Ltd.) as well as from the complainant.

(54) On 11 April 2024, the Commission addressed the comments received from interested parties on the First Note in a Second Note to the file and informed parties in that note also on the relevant sources it intended to use for the determination of the normal value, with Colombia as the representative country. It further informed interested parties that it would establish selling, general and administrative costs (‘SG&A’) and profits based on Sucroal S.A, a producer of citric acid in the representative country (‘the Second Note’).

(55) The Commission received comments to the Second Note from the Union Industry and from Dongxiao Biotechnology Co., Ltd. These have been addressed under respective heading under Section 3.3.3. below.

(56) After having analysed the comments and information received, the Commission concluded that Colombia was an appropriate representative country from which undistorted prices and costs would be sourced for the determination of the normal value. The underlying reasons for that choice are further described in detail in Section 3.3. below.

(57) According to Article 2(1) of the basic Regulation, ‘the normal value shall normally be based on the prices paid or payable, in the ordinary course of trade, by independent customers in the exporting country’.

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

(59) As further explained below, the Commission concluded in the present investigation that, based on the evidence available, the application of Article 2(6a) of the basic Regulation was appropriate.

(61) As the list in Article 2(6a)(b) of the basic Regulation is non-cumulative, not all the elements need to be given for a finding of significant distortions. Moreover, the same factual circumstances may be used to demonstrate the existence of one or more of the elements of the list.