Commission Implementing Regulation (EU) 2024/2163 of 14 August 2024 imposing a provisional anti-dumping duty on imports of biodiesel originating in the People's Republic of China

Image omitted; see official source	Official Journal of the European Union	EN L series
---	---	---
	2024/2163	16.8.2024

THE EUROPEAN COMMISSION,

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, and in particular Article 7 thereof,

After consulting the Member States,

Whereas:

1. PROCEDURE

1.1.   Initiation

• (1) On 20 December 2023, the European Commission (‘the Commission’) initiated an anti-dumping investigation with regard to imports of biodiesel originating in the People’s Republic of China (‘the country concerned’, ‘PRC’ or ‘China’) on the basis of Article 5 of Regulation (EU) 2016/1036 of the European Parliament and of the Council (‘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 7 November 2023 by the European Biodiesel Board (‘the complainant’ or ‘EBB’). The complaint was made on behalf of the Union industry of biodiesel 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) Imports of biodiesel are currently subject to anti-dumping measures when originating in the United States of America (‘USA’) ³ and to countervailing measures when originating in Argentina ⁴, Indonesia ⁵, or the USA ⁶.

• (4) On 29 April 2024, the complainant requested registration of imports pursuant to Article 14(5) of the basic Regulation. The Commission did not register imports as the conditions for retroactive application described under Article 10(4) of the basic Regulation were deemed not to be met.

1.2.   Interested parties

• (5) 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, other known Union producers, the known exporting producers and the authorities of the PRC, known importers, suppliers and users, traders, as well as associations known to be concerned about the initiation of the investigation and invited them to participate.

• (6) 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. No party requested a hearing with the Hearing Officer. The Commission held hearings with the complainant (along with associations known to be concerned), the sampled exporting producer EcoCeres, and the related importer of Zhuoyue – Excelence New Energy BV.

1.3.   Sampling

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

1.3.1.   Sampling of Union producers

• (8) In its Notice of Initiation, the Commission stated that it had provisionally selected a sample of Union producers. The Commission selected a sample of three Union producers on the basis of the largest volume of production and sales of the like product in the Union between 1 October 2022 and 30 September 2023 reported at initiation stage. Account was also taken of the product mix. The three sampled Union producers accounted for approximately 12 % of the estimated total volume of production of the like product in the Union and 23 % of the EU production and sales of the producers that replied to the inquiry. The Commission invited interested parties to comment on the provisional sample. The complainant and the Chinese exporting producer EcoCeres provided comments.

• (9) EcoCeres requested the inclusion of the Union producer Neste in the sample. It claimed that the inclusion of Neste was warranted to ensure the overall representativity of the sample as it would be the largest Union producer, accounting for 15 % of the estimated total volume of biodiesel production in the Union, and without which the sample would not be representative in terms of the production or sales volume. It also found Neste’s inclusion in the sample warranted as it would be a large producer of the product types hydrotreated vegetable oil (‘HVO’), the main product type sold by EcoCeres on the Union market.

• (10) The Commission analysed EcoCeres’ claim. First, the Commission noted that the sample took account of the size of individual legal entities. In this respect, in view of clarifications with regard to Neste’s production volume provided by the complainant, the statement of EcoCeres regarding Neste’s respective production volumes in its different plants appeared to be overstated. Second, the information available on file showed that, in the investigation period, the Union production consisted predominantly of fatty acid methyl esters (‘FAME’); whereas production volumes of HVO ⁷ were clearly lower. Third, the provisional sample already took account of this product mix to the extent that it included Raffineria di Gela S.p.A., part of the Eni group, which manufactures HVO. EcoCeres’ claim to add Neste to the sample was therefore rejected.

• (11) In light of the feedstocks mix of Chinese producers (waste-based), EBB claimed that the sampled Union producer Saipol, which manufactures biodiesel from rapeseed oil, should be replaced by a producer manufacturing biodiesel from advanced feedstocks located in Germany. EBB argued that the Chinese biodiesel industry does not use rapeseed oil to manufacture biodiesel, as they mainly use used cooking oil (‘UCO’) which is domestically available. Accordingly, should Saipol be confirmed in the definitive sample of Union producers, almost half of the sample’s Union sales could not be directly compared with Chinese imports of waste-based biodiesel. EBB argued that Verbio SE would be an appropriate sampled EU producer for the present investigation because it is located in Germany and Verbio’s plants use advanced feedstocks while also using rapeseed oil to manufacture biodiesel.

• (12) Following this claim, the Commission clarified that the criteria for selecting a sample of Union producers were the sales or production volume of the companies considered, as well as the product mix. The parties sampled on that basis were considered representative for the Union industry as a whole. Consequently, despite EBB’s comments, the Commission found no grounds to exclude Saipol from the sample of Union producers. Indeed, Saipol was amongst the largest biodiesel producers ⁸ in the Union, as noted by the complainant itself. Moreover, Saipol was deemed representative of the Union industry as it manufactured biodiesel starting from rapeseed oil, the dominant feedstock in the Union for producing biodiesel.

• (13) Furthermore, the inclusion of a Verbio plant in the sample would be unjustified because, as pointed out by EBB itself, the production volume of Masol Iberia Biodiesel S.L.U., one of the three companies proposed for the sample, was significantly higher. In addition, Masol Iberia Biodiesel S.L.U. would ensure that a comparison could be made between Union industry and exporting producers’ sales of biodiesel made from advanced feedstocks. Therefore, the request to include Verbio SE was rejected.

• (14) However, in view of the main feedstock use as reported by the sampled Chinese parties, the Commission considered it appropriate to enlarge the volume of UCO-based biodiesel in the sample of Union producers as that would improve the representativeness of the Union industry product mix vis-à-vis Chinese imports and facilitate the comparison between Union prices and Chinese import prices of biodiesel. The Commission therefore decided to add Chevron Renewable Energy Group, a biodiesel producer based in Germany using UCO as feedstock, to the sample.

• (15) The four sampled Union producers accounted for approximately 15 % of the estimated total volume of production of the like product in the Union and 28 % of the EU production and sales of the producers that replied to the inquiry.

• (16) The Commission invited the four sampled Union producers to reply to the questionnaire. It also invited interested parties to comment on the revised sample. EcoCeres provided comments.

• (17) EcoCeres stated that the sample decision was taken based on an erroneous factual basis. In particular, it claimed that Neste’s Rotterdam’s plant had a larger production capacity than the one of Saipol and that the Commission had underestimated the HVO production in the EU ⁹. EcoCeres therefore requested the inclusion of at least one Neste entity/plant in the sample, instead of or in addition to Raffineria di Gela.

• (18) The allegation that Neste’s Rotterdam’s plant had a HVO production capacity which was higher than Saipol’s biodiesel production does not prove that during the investigation period the relevant legal entity had actually a level of production or EU sales close to such production capacity. At the same time, as explained in recital (8) above, production and sales volumes rather than production capacity are determinant elements for a company to be included (or not) in the sample. As to the alleged underestimation of HVO production in the Union, the Commission noted that the party submitted contradictory information. The 5 million tonnes HVO production in the Union in 2022 alleged by EcoCeres were contradicted by another of its submissions ¹⁰ in which the capacity (i.e. a figure normally higher than actual production) in 2023 of stand-alone HVO production facilities in the Union was reported to amount to 3 million tonnes. In light of the above and in order not to unduly overrepresent HVO in the sample, EcoCeres’ request concerning the inclusion of at least one Neste entity/plant in the sample was rejected.

1.3.2.   Sampling of importers

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

• (20) Two unrelated importers provided the requested information and agreed to be included in the sample. In view of the low number of replies, the Commission decided that sampling was not necessary.

1.3.3.   Sampling of exporting producers in the PRC

• (21) To decide whether sampling is 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.

• (22) Sixty-three (63) exporting producers in the country concerned provided the requested information and agreed to be included in the sample. In accordance with Article 17(1) of the basic Regulation, the Commission selected a sample of three exporting producers/groups of exporting producers on the basis of the largest representative volume of exports to the Union which could reasonably be investigated within the time available. In accordance with Article 17(2) of the basic Regulation, all known exporting producers and the authorities of the country concerned were consulted on the selection of the sample.

• (23) The Commission received comments on the sample from one interested party. The exporting producer Henan Junheng Industrial Group Biotechnology Company., Ltd. (‘Henan Junheng’) argued that the Commission should increase the number of companies manufacturing hydrogenated vegetable oil (‘HVO’) in the sample to reflect the differences in costs and export prices resulting from different production processes of FAME and HVO.

• (24) The Commission recalled that the initial sample covered a substantial share of the imports (approximately 55 %). In addition, the producer of HVO included in the sample represented around one third of the sampled export volume. Therefore, the Commission considered that the sample sufficiently represented the Chinese exporting producers manufacturing both distinct subcategories of biodiesel. Consequently, the Commission rejected the claim and confirmed the initial sample of exporting producers.

1.4.   Individual examination

• (25) One exporting producer in the PRC requested individual examination under Article 17(3) of the basic Regulation. The examination of this request during the provisional stage of the investigation would have been unduly burdensome, in particular considering the complicated structure of the sampled exporting producers/groups of exporting producers (in total five production entities and several relevant related companies, such as suppliers or traders) and the corresponding duration of the on-spot verifications. In addition, the exporting producer requesting the individual examination sold biodiesel to the Union directly and via a related trader, i.e. individual examination of this company would require an investigation of at least two entities. The Commission will decide whether to grant individual examination at the definitive stage of the investigation.

1.5.   Questionnaire replies and verification visits

• (26) 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’).

• (27) The Commission sent questionnaires to sampled Union producers, two importers/traders, the complainant, and the exporting producers in the PRC. Except for the complainant’s one, the same questionnaires were made available online ¹¹ on the day of initiation.

• (28) The Commission sought and verified all the information deemed necessary for a provisional determination of dumping, resulting injury and Union interest. Verification visits pursuant to Article 16 of the basic Regulation were carried out at the premises of the following companies:

Union producers

• — Chevron, Amsterdam, the Netherlands,

• — Masol Iberia Biofuel, S.L.U., El Grao (Castellón) and Barcelona, Spain,

• — Raffineria di Gela, Gela and Rome, Italy,

• — Saipol, Paris, France;

Complainant

• — European Biodiesel Board (EBB), Brussels, Belgium

Exporting producers and their related companies in the PRC

• — EcoCeres Group (‘EcoCeres’):

• — ECO Biochemical Technology (Zhangjiagang) Co. Ltd., Zhangjiagang, Jiangsu Province, PRC (exporting producer)

• — EcoCeres Limited, Hong Kong (related trader)

• — Jiaao Group (‘Jiaao’):

• — Zhejiang EastRiver Energy S&T Co., Ltd., Tongxiang, Zhejiang Province, PRC (exporting producer)

• — Zhejiang Jiaao Enproenergy Co., Ltd., Tongxiang, Zhejiang Province, PRC (exporting producer)

• — Jiaao International Trading (SINGAPORE) PTE. Ltd., Singapore (related trader, verified in the headquarters in Tongxiang, Zhejiang Province, PRC)

• — Zhejiang Jiasui Import & Export Co Ltd, Tongxiang, Zhejiang Province, PRC (related trader)

• — Zhejiang Jiaao Enprotech Stock Co., Ltd., Tongxiang, Zhejiang Province, PRC (parent company)

• — Zhuoyue Group (‘Zhuoyue’):

• — Longyan Zhuoyue New Energy Co., Ltd., Longyan, Fujian Province, PRC (exporting producer)

• — Xiamen Zhuoyue Biomass Energy Co., Ltd., Xiamen, Fujian Province, PRC (exporting producer)

• — FuJian Zhishang Biomass Materials Co., Ltd., Longyan, Fujian Province, PRC (related user)

• — Xiamen Zhuoyue Biomass Energy Co., Ltd. – Tongan branch, Xiamen, Fujian Province, PRC (related supplier)

• — Excellence New Energy B.V., Rotterdam, the Netherlands (related importer)

1.6.   Investigation period and period considered

• (29) 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’).

2. PRODUCT UNDER INVESTIGATION, PRODUCT CONCERNED AND LIKE PRODUCT

2.1.   Product under investigation

• (30) The product under investigation is fatty-acid mono-alkyl esters and/or paraffinic gasoils obtained from synthesis and/or hydro-treatment, of non-fossil origin, commonly known as ‘biodiesel’, in pure form or as included in a blend, currently falling under CN codes ex 1516 20 98 (TARIC codes 1516 20 98 21, 1516 20 98 22, 1516 20 98 23, 1516 20 98 29, 1516 20 98 31, 1516 20 98 32 and 1516 20 98 39), ex 1518 00 91 (TARIC codes 1518 00 91 21, 1518 00 91 22, 1518 00 91 23, 1518 00 91 29, 1518 00 91 31, 1518 00 91 32 and 1518 00 91 39), ex 1518 00 95 (TARIC code 1518 00 95 10, 1518 00 95 11 and 1518 00 95 19), ex 1518 00 99 (TARIC codes 1518 00 99 21, 1518 00 99 22, 1518 00 99 23, 1518 00 99 29, 1518 00 99 31, 1518 00 99 32 and 1518 00 99 39), ex 2710 19 43 (TARIC codes 2710 19 43 21, 2710 19 43 22, 2710 19 43 23, 2710 19 43 29, 2710 19 43 31, 2710 19 43 32 and 2710 19 43 39), ex 2710 19 46 (TARIC codes 2710 19 46 21, 2710 19 46 22, 2710 19 46 23, 2710 19 46 29, 2710 19 46 31, 2710 19 46 32 and 2710 19 46 39), ex 2710 19 47 (TARIC codes 2710 19 47 21, 2710 19 47 22, 2710 19 47 23, 2710 19 47 29, 2710 19 47 31, 2710 19 47 32 and 2710 19 47 39), 2710 20 11 , 2710 20 16 , ex 3824 99 92 (TARIC codes 3824 99 92 10, 3824 99 92 11, 3824 99 92 13, 3824 99 92 14, 3824 99 92 15, 3824 99 92 16, and 3824 99 92 19), 3826 00 10 and ex 3826 00 90 (TARIC codes 3826 00 90 11, 3826 00 90 12, 3826 00 90 13, 3826 00 90 19, 3826 00 90 31, 3826 00 90 32 and 3826 00 90 39) excluding sustainable aviation fuel meeting the requirements of ASTM D7566-22 Standard Specification for Aviation Turbine Fuel Containing Synthesized Hydrocarbons, currently falling under CN codes ex 2710 19 43 (TARIC additional code 89FT), ex 2710 19 46 (TARIC additional code 89FT), ex 2710 19 47 (TARIC additional code 89FT), ex 2710 20 11 (TARIC additional code 89FT) and ex 2710 20 16 (TARIC additional code 89FT), and originating in the People’s Republic of China (‘the product under investigation’).

• (31) The product under investigation can be produced through different processes, such the transesterification of oils and fats, a Fischer-Tropsch synthesis or the hydrotreatment of renewable feedstocks. It is a renewable fuel produced from a wide range of raw materials, including vegetable oils such as rapeseed oil, soybean oil or palm oil, used cooking oils (‘UCO’), animal fats or biomass.

• (32) Biodiesel is typically used in the transport sector, such as the road, rail, aviation and maritime sectors, mainly blended with fossil diesel but also in its pure form.

2.2.   Product concerned

• (33) The product concerned is the product under investigation originating in the PRC (‘the product concerned’).

2.3.   Like product

• (34) The investigation showed that the following products have the same basic physical, chemical and technical characteristics as well as the same basic uses:

• — the product concerned;

• — the product under investigation produced and sold on the domestic market of China; and

• — the product under investigation produced and sold in the Union by the Union industry.

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

2.4.   Claims regarding product scope

2.4.1.   Exclusion request based on feedstocks

• (36) The China Chamber of Commerce of Metals, Minerals & Chemicals Importers & Exporters (‘CCCMC’), empowered to represent 27 exporting producers ¹² in this investigation, submitted that biodiesel produced from feedstocks listed in Annex IX of the Renewable Energy Directive II (‘RED II’) ¹³ should be excluded from the scope of the present investigation on the grounds that in a recent investigation concerning fatty acid originating in Indonesia “the Commission found that fatty acids with DoS of at least 97 % produced from waste and certified by a voluntary scheme recognized by the Commission pursuant to Article 30(4) of the RED II or a national certification scheme established pursuant to Article 30(6) of the RED II, while sharing the same characteristics with other fatty acids, have different uses and are not in competition with the like product” ¹⁴. The Commission noted that, unlike in the fatty acid case quoted, in the present investigation all the product types are typically subject to RED II, in view of the fact that customers request biodiesel produced using feedstocks listed in Annex IX part A and B of the RED II. They also are, as further explained below in this section, in direct competition. The Commission rejected CCCMC’s claim.

2.4.2.   SAF

• (37) Within the product scope of this proceeding, three main product groups can be distinguished: FAME, HVO and Sustainable Aviation Fuel (‘SAF’).

• (38) EcoCeres requested SAF to be excluded from the scope of the investigation since it was never investigated before in trade defence investigations concerning biodiesel, it had different physical and technical characteristics, was destined for different end-use and subject to a different production process. It also pointed at the fact that it was not interchangeable with the other product groups FAME and HVO. EcoCeres added that that the imposition of duties on SAF, allegedly in short supply in the Union and in the global market, would be unreasonable and against strong policy initiatives put forward by the Commission itself.

• (39) As a first introductory remark, the Commission clarified that not all SAF is biodiesel and that several definitions and terminology may apply depending on the context and the regulatory environment. Article 3 of the ReFuelEU Avion Regulation ¹⁵ defines SAF as aviation fuels that are either: (a) synthetic aviation fuels; (b) aviation biofuels; or (c) recycled carbon aviation fuels. The present section concerns only fuels in section (b), i.e. relevant aviation biofuels.

• (40) The investigation showed limited variances in the production process and the basic physical, chemical and technical characteristics of SAF versus HVO. However, at present, HVO and FAME cannot be used for aviation engines. Thus, the Commission found SAF to have different use and concluded it cannot be deemed to be interchangeable or in competition with HVO/FAME.

• (41) Based on these considerations, the Commission decided to provisionally accept the exclusion of SAF from the scope of the present investigation.

2.4.3.   HVO exclusion request

• (42) CCCMC requested HVO to be excluded from the scope of the investigation on the grounds that FAME and HVO are fundamentally different products in terms of consumer preferences and standards, physical and chemical properties, end-uses, production processes and interchangeability.

• (43) EcoCeres requested HVO to be excluded from the scope of the investigation and be considered as different products from FAME biodiesel on the grounds that HVO was never a focus of EU trade defence investigations into biodiesel and have, as compared to FAME, allegedly different market perception, different legal treatment in the EU as compared to other authorities like the United Kingdom and the United States of America with different customs classification and different product standards; different physical and chemical characteristics; different end uses; different production process; and different environmental impact.

• (44) Firstly, the Commission noted that in defining the product scope, the Commission may take account of a number of factors, such as, inter alia, the physical, technical and chemical characteristics of the products, their use, interchangeability, consumer perception, distribution channels, manufacturing process, costs of production and quality. Accordingly, the differences in production process and product standards alone are not decisive for the determination as to whether product types constitute a single product.

• (45) Secondly, as to the claim that HVO was never a focus of EU trade defence investigations into biodiesel, this seems in contradiction with EcoCeres’ own statements ¹⁶. Indeed, the Commission noted that in past and ongoing EU investigations on biodiesel, the product scope encompassed gasoils obtained from synthesis and/or hydrotreatment of non-fossil origin. In an investigation concluded in 2021, it already received and addressed an HVO product exclusion request, which was rejected on several grounds. ¹⁷

• (46) The below recitals address the other arguments summarised in recitals (42) and (43).

2.4.3.1.   Basic physical and chemical characteristics

• (47) As to the alleged different basic physical and chemical characteristics, in previous investigations the Commission acknowledged the existence of some differences in physical characteristics between FAME and HVO in previous investigations, but such differences were not of the kind to justify a product exclusion ¹⁸.

• (48) The parties noted that the physical and chemical characteristics of HVO are closer to conventional diesel than those of FAME and that the typical cold filter plugging point (‘CFPP’) level and other characteristics (such as density or viscosity) of HVO and FAME differ.

• (49) However, this does not render HVO a different product for the purpose of this investigation. Both HVO and FAME have several product types with distinct CFPP, density and viscosity levels. Indeed, there are FAME product types with the same CFPP level as certain HVO product types ¹⁹. CCCMC pointed at the good storage stability of HVO as compared to FAME, but that does not render HVO a different product either.

• (50) EcoCeres stated that the feedstocks for FAME are food and crop-based and differ from the feedstocks used to produce second generation biodiesel, which makes the latter a fundamentally different product.

• (51) The Commission disagreed and noted that the current usage of feedstocks is the result of legislative choices that are evolving over time. Furthermore, some FAME types are made out of “waste”, such as UCOME, whereas nothing in the abstract precludes from using non-waste feedstocks to produce HVO.

2.4.3.2.   Use

• (52) As to any alleged different end-uses, in a recent investigation concerning the same product scope the Commission already rejected a HVO product exclusion request as it had found that the product end-use of HVO and FAME is the same. ²⁰ In the current investigation, the Commission found that HVO produced in China is in competition with any biodiesel produced in the Union. HVO can be used throughout the Union throughout the year, either pure or mixed with other biodiesels before use, in the same way as for instance RME, a type of FAME made from rapeseed oil which is widely produced in the Union. HVO is therefore interchangeable with biodiesel made in the Union.

• (53) CCCMC submitted that only HVO is used pure. However, both FAME and HVO are used in a pure form in engines, which runs counter to that statement ²¹. Also, both FAME and HVO can be blended with fossil diesel (and other biodiesel types) with a view to reach the optimum fuel for the specific transport mode and/or period of the year.

• (54) The investigation revealed that FAME and HVO from any origin are generic products (in physical properties/specifications) that are comparable from an importer and trader perspective. ²²

• (55) Finally, with regard to end-use, CCCMC also alleged that automotive manufacturers commonly prefer HVO over FAME. However, this claim was unsubstantiated and nothing on the file could confirm it.

2.4.3.3.   Market perception

• (56) As to the alleged different market perception of HVO as compared to FAME, the Commission found that FAME and HVO belong to a same general category, i.e. a sustainable substitute of fossil diesel fuel used mainly in the transport sector. The market perceives FAME and HVO as sustainable alternative fuels for diesel engines in transport sector. EcoCeres submitted that the websites of the complainant and several producers called HVO “renewable diesel”. The Commission noted that the information on such websites had descriptive purposes and distinguished between different product types, but it did not support the conclusion that HVO was a different product for the purpose of this investigation.

2.4.4.   Conclusion on the exclusion claims

• (57) In light of all the above, the Commission provisionally excluded SAF from the scope of the investigation and dismissed all other claims regarding the product scope. All types of Union-made biodiesel covered by this investigation were found to be in direct competition with China-made biodiesel. Moreover, despite possible differences in terms of raw material used for the production, or variances in the production process, they all have the same or very similar basic physical, chemical and technical characteristics and are used for the same purposes. The possible variations in the product under investigation do not alter its basic definition, its characteristics or the perception that various parties have of it. In particular, from the perspective of the end-user of diesel fuel, it makes no difference if the blend available contains biodiesel made from one particular feedstock or via a specific production process. All types of biodiesel and biodiesel blends covered by this investigation are part of a legislative package concerning energy efficiency and renewable energy and alternative fuels. The Union biodiesel industry produces all biodiesel types covered by this investigation.

3. DUMPING

3.1.   Procedure for the determination of the normal value under Article 2(6a) of the basic Regulation

• (58) 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.

• (59) 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 biodiesel. Forty-two (42) exporting producers submitted the relevant information.

• (60) 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.

• (61) No questionnaire reply was received from the GOC. 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.

• (62) The GOC, CCCMC, and Zhuoyue made submission on the application of Article 2(6a) of the basic Regulation. These comments are addressed in section 3.2.1.8.

• (63) In point 5.3.2. of the Notice of Initiation the Commission also specified that, in view of the evidence available, Brazil was a possible 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. The Commission further stated that it would examine other possibly appropriate representative countries in accordance with the criteria set out in 2(6a)(a) first indent of the basic Regulation.

• (64) On 7 March 2024, the Commission informed by a note to the file (‘the First Note’) interested parties on the relevant sources it intended to use for the determination of the normal value. 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 biodiesel. In addition, based on the criteria guiding the choice of undistorted prices or benchmarks, the Commission identified possible representative countries, namely Brazil, Colombia, Malaysia, and Thailand. The Commission also addressed the information concerning the selection of a representative country submitted by EcoCeres at the initiation of the investigation under point 5.3.2. of the Notice of Initiation.

• (65) The Commission received comments on the First Note from the complainant and all three sampled exporting producers.

• (66) On 7 June 2024, the Commission issued a second note (‘the Second Note’), where it addressed the comments on the First Note detailed in sections 3.2.2.2 to 3.2.2.4 below and as appropriate, took them into consideration in further analysis and the selection of the representative country.

• (67) In the Second Note, the Commission informed the interested parties on the relevant sources it intended to use for the determination of the normal value, with Malaysia as the representative country. It also informed interested parties that it would establish selling, general and administrative costs (‘SG&A’) and profit based on financial information of seven biodiesel producers in the representative country.

• (68) The Commission received comments on the Second Note from EBB, Jiao, and Zhuoyue. The comments are addressed in sections 3.2.2.2 to 3.2.2.4 below.

3.2.   Normal value

• (69) 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”.

• (70) 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’).

• (71) As further explained below, the Commission concluded in the present investigation that, based on the evidence available, and in view of the lack of cooperation of the GOC and the exporting producers, the application of Article 2(6a) of the basic Regulation was appropriate.

3.2.1.   Existence of significant distortions

• (72) Article 2(6a)(b) of the basic Regulation states that “significant distortions are those distortions which occur when reported prices or costs, including the costs of raw materials and energy, are not the result of free market forces as they are affected by substantial government intervention. In assessing the existence of significant distortions regard shall be had, inter alia, to the potential impact of one or more of the following elements:

• — the market in question being served to a significant extent by enterprises which operate under the ownership, control or policy supervision or guidance of the authorities of the exporting country;

• — state presence in firms allowing the state to interfere with respect to prices or costs;

• — public policies or measures discriminating in favour of domestic suppliers or otherwise influencing free market forces;

• — the lack, discriminatory application or inadequate enforcement of bankruptcy, corporate or property laws;

• — wage costs being distorted;

• — access to finance granted by institutions which implement public policy objectives or otherwise not acting independently of the state. ”

• (73) 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.

• (74) However, any conclusion on significant distortions within the meaning of Article 2(6a)(a) of the basic Regulation must be made on the basis of all the evidence at hand. The overall assessment on the existence of distortions may also take into account the general context and situation in the exporting country, in particular where the fundamental elements of the exporting country’s economic and administrative set-up provide the government with substantial powers to intervene in the economy in such a way that prices and costs are not the result of the free development of market forces.

• (75) Article 2(6a)(c) of the basic Regulation provides that “[w]here the Commission has well-founded indications of the possible existence of significant distortions as referred to in point (b) in a certain country or a certain sector in that country, and where appropriate for the effective application of this Regulation, the Commission shall produce, make public and regularly update a report describing the market circumstances referred to in point (b) in that country or sector”.

• (76) Pursuant to this provision, the Commission issued a country report concerning China (‘the Report’) ²³, which contains evidence of the existence of substantial government intervention at many levels of the economy, including specific distortions in many key factors of production (such as land, energy, capital, raw materials and labour) as well as selected sectors (such as the chemical sector). Interested parties were invited to rebut, comment or supplement the evidence contained in the investigation file at the time of initiation. The Report concerning China was placed in the investigation file at the initiation stage.

• (77) The complainant referred to the evidence contained in the Report, as well as to Commission findings in recent investigations ²⁴, to stress the relevance of the below-mentioned distortions in the context of EU anti-dumping proceedings.

• (78) The complainant also complemented the Report with additional relevant evidence, such as reports by authorities in other jurisdictions. For instance, the complainant pointed out that in 2023, the US Department of Agriculture showed that “policy-driven directives made by the PRC also allowed the country’s biofuels sector to be partially isolated from the global market and less responsive to market forces” ²⁵.

• (79) Furthermore, the complainant recalled the following elements resulting in significant distortions.

• (80) First, the biodiesel sector is being served to a significant extent by enterprises that operate under the ownership, control or policy supervision or guidance of state authorities. For instance, one of the major biodiesel producers in China, Beijing Haixin Energy Technology Co., Ltd, is controlled by SOEs, namely Beijing Haixinzhi Low Carbon Technology Development and Beijing Haidian District State-owned Assets Investment Management Co., Ltd, who own 35,22 % of the company’s shares ²⁶. In 2022, the company’s production of biodiesel “entered the stage of mass production, and the production, sales and safety stock amount increased significantly year-on-year” ²⁷.

• (81) The GOC supervises and guides also privately owned biodiesel producers, as apparent from the following elements:

• — The Strategic Action Plan for Energy Development (2014-2020) aimed to “actively develop transportation fuel substitution” and to “focus on the development of new generation of non-grain fuel ethanol and biodiesel”.

• — The 14th Five-Year-Plan (‘FYP’) for Renewable Energy Development (2021-2025) promoting the use of advanced technology and equipment in biodiesel and jet fuel.

• — In 2021, the Chinese National Energy Administration (‘NEA’) published on its website a statement indicating that “the State actively supports the development of the biodiesel industry” and that the “Renewable Energy Law clearly stipulates that petroleum sales enterprises should incorporate bio-liquid fuels that meet national standards into their fuel sales system”. The goals are “to guide pilot cities to promote biodiesel, strengthen the construction and supervision of ‘gutter oil’ collection, storage and transportation systems, prevent ‘gutter oil’ from flowing back to the table and polluting the environment, stabilize the supply of raw materials for biodiesel enterprises, and promote the industry” ²⁸.

• (82) National goals are indeed pursued by the private industry: for instance, Longyan Zhuoyue New Energy Co., Ltd. (‘Zhuoyue’), another major Chinese biodiesel producer, claims on its website to have “successfully undertaken several important programs, including National Key New Product Plan, National Torch Plan, National Tenth Five-Year Science and Technology Research Plan, National Eleventh Five-Year Science and Technology Supporting Program, National Twelfth Five-Year Science and Technology Research Program”.

• (83) Second, state presence in biodiesel firms also allows the authorities to interfere with prices and/or costs. Indeed, the complainant found overlaps between managerial positions and Chinese Communist Party (‘CCP’) membership / Party functions in companies involved in the biodiesel production: for instance, the General Manager of Sanju Environmental Protection is a member of the CCP, while several members of the Board of Directors of Haixin Energy Technology, along with its General Manager and Director, are affiliated and adhere to the CCP. The General Manager and Chairman of Zhejiang Jiaao Enprotech Stock Co. Ltd. is a member of the Chinese People’s Political Consultative Conference.

• (84) Third, the GOC pursues public policies or measures discriminating in favour of domestic suppliers or otherwise influencing free market forces, especially at provincial level. For instance, Shanghai has put in place measures to promote production and use of biodiesel made from waste kitchen oil and fats:

• — The Shanghai Municipal Development and Reform Commission published in 2021 the Shanghai Administrative Measures for Supporting the Promotion and Application of Biodiesel Made from Waste Kitchen Grease (‘Shanghai Measures’), whose Article 1 states “From the collection, transportation, disposal and promotion and application of waste kitchen oil and grease in gas stations, this city follows the principle of ‘closed-loop management, market-oriented operation, and supported application’ to form a closed-loop management of the entire industry chain of resource utilization of waste kitchen oil and grease in this city”. According to Article 3, “[e]nterprises that generate waste kitchen grease in this city should set up special waste kitchen grease collection containers (catering service enterprises should install oil-water separators as required) and deliver the collected waste kitchen grease to the enterprises for transportation. The collection and transportation enterprise shall collect and transport the waste kitchen oil and grease produced by the enterprises within its jurisdiction in accordance with the service scope determined by the bidding, process it into raw oil with an oil content of not less than 95 %, and then hand it over to the disposal enterprise. The disposal enterprise shall, in accordance with the requirements of the disposal service agreement, produce biodiesel for diesel fuel blending (BD100 biodiesel) that meets product standards from the raw oil delivered by the collection and transportation enterprise”.

• — In its 2021 Policy Interpretation of the Shanghai Administrative Measures for Supporting the Promotion and Application of Biodiesel Made from Waste Kitchen Grease (‘the Policy Interpretation’), the Shanghai Municipal Development and Reform Commission specified that such measures were needed because “the promotion and application work has also encountered some difficulties: First, the price of raw oil collection remains high, and the production cost of biodiesel is high. Second, the promotion and application of B5 biodiesel has encountered a bottleneck period and mainly relies on oil price concessions. Third, the recognition of biodiesel is not high”.

• — Not only, the Policy Interpretation clarified that biodiesel benefits from a preferential price. While “the price of raw oil remains market-based (the Municipal Greening and City Appearance Bureau coordinates the purchase price based on market prices), BD100 biodiesel is purchased at the wholesale price of 0# diesel, and B5 biodiesel is promoted at a discount and 80 % is subsidized by municipal fiscal funds. The preferential part (if the preferential amount cannot be provided, a quantitative subsidy of 0,15 CNY/litre will be provided) and the emergency subsidy mechanism (when the wholesale price of diesel oil is lower than 6 000 CNY/tonne, municipal financial funds will provide emergency subsidies for those lower than 6 000 CNY/tonne). Part of it is given to the disposal enterprise)”. The Policy Interpretation confirmed that such subsidy programme was implemented for a 2-year period, i.e. covering the investigation period.

• (85) The complainant further observed that distortions in prices and costs are also present in the energy sector: the main source of energy in China is coal, and, consequently, it is likely that the energy used to manufacture biodiesel in China is also derived from coal. As described in the Report, the prices of coal, and of electricity as well, are controlled by the State ²⁹.

• (86) The complainant has also found that the sector of the product concerned benefits from numerous tax policies. Indeed, China has introduced a VAT refund policy which allows biodiesel producers to enjoy a 70 % VAT rebate if biodiesel is made from used animal and vegetable oils. For example, in 2023, Zhejiang Dongjiang Energy Technology Co. received, for the period from December 2022 to March 2023, approximately 12 million CNY (1,54 million EUR) as a result of the tax rebate. The company reported that “the above-mentioned amount exceeds 10 % of the audited net profit of the company in the latest fiscal year” ³⁰.

• (87) Moreover, Chinese biodiesel producers benefit from a 90 % discount on taxable income from relevant products.

• (88) Fourth, much like in any other sector in the Chinese economy, the biodiesel sector is subject to the distortions resulting from the discriminatory application or inadequate enforcement of Chinese bankruptcy, corporate and property rules. The complainant referred to the Report ³¹ and to recent Commission investigations, observing, moreover, that in the bankruptcy sector the GOC intervenes in the reorganization of listed companies, preventing the adequate implementation of bankruptcy laws ³².

• (89) Fifth, wage costs are distorted in the sector of the product concerned, as shown by the Commission in previous trade defence investigations ³³. Indeed, a system of market-based wages cannot fully develop in China as workers and employers are impeded in their rights to collective organization.

• (90) Sixth, biodiesel producers have access to finance granted by institutions which implement public policy objectives or otherwise are not acting independently from the state. Indeed, in previous trade defence investigations, the Commission highlighted the strong position of state-owned banks which grant access to finance based on the State’s economic and social policy and not based on market considerations. Moreover, as a general rule, banks are connected to the Chinese state via personal relations, the top executives being ultimately appointed by the CCP ³⁴.

• (91) In conclusion, the complainant argued that significant distortions pursuant to Article 2(6a) of the basic Regulation are present in the biodiesel sector.

• (92) The Commission examined whether it was appropriate or not to use domestic prices and costs in China, due to the existence of significant distortions within the meaning of point (b) of Article 2(6a) of the basic Regulation. The Commission did so on the basis of the evidence available on the file. The evidence on the file included the evidence contained in the Report as well as in its updated version (‘updated Report’) ³⁵, which relies on publicly available sources.

• (93) That analysis covered the examination of the substantial government interventions in China’s economy in general, but also the specific market situation in the relevant sector including the product concerned. The Commission further supplemented these evidentiary elements with its own research on the various criteria relevant to confirm the existence of significant distortions in China.

3.2.1.1.   Significant distortions affecting the domestic prices and costs in China

• (94) The Chinese economic system is based on the concept of a “socialist market economy”. That concept is enshrined in the Chinese Constitution and determines the economic governance of China. The core principle is the “socialist public ownership of the means of production, namely, ownership by the whole people and collective ownership by the working people” ³⁶.

• (95) The state-owned economy is the “leading force in the national economy” and the state has the mandate to ensure its “consolidation and growth” ³⁷. Consequently, the overall setup of the Chinese economy not only allows for substantial government interventions into the economy, but such interventions are expressly mandated. The notion of supremacy of public ownership over the private one permeates the entire legal system and is emphasized as a general principle in all central pieces of legislation.

• (96) The Chinese property law is a prime example: it refers to the primary stage of socialism and entrusts the state with upholding the basic economic system under which the public ownership plays a dominant role. Other forms of ownership are tolerated, with the law permitting them to develop side by side with the state ownership ³⁸.

• (97) In addition, under Chinese law, the socialist market economy is developed under the leadership of the CCP. The structures of the Chinese state and of the CCP are intertwined at every level (legal, institutional, personal), forming a superstructure in which the roles of CCP and the state are indistinguishable.

• (98) Following an amendment of the Chinese Constitution in March 2018, the leading role of the CCP was given an even greater prominence by being reaffirmed in the text of Article 1 of the Constitution.

• (99) Following the already existing first sentence of the provision: “[t]he socialist system is the basic system of the People’s Republic of China” a new second sentence was inserted which reads: “[t]he defining feature of socialism with Chinese characteristics is the leadership of the Communist Party of China.” ³⁹ This illustrates the unquestioned and evergrowing control of the CCP over the economic system of China.

• (100) This leadership and control are inherent to the Chinese system and goes well beyond the situation customary in other countries where the governments exercise general macroeconomic control within the boundaries of which free market forces are at play.

• (101) The Chinese state engages in an interventionist economic policy in pursuance of goals, which coincide with the political agenda set by the CCP rather than reflecting the prevailing economic conditions in a free market ⁴⁰. The interventionist economic tools deployed by the Chinese authorities are manifold, including the system of industrial planning, the financial system, as well as the level of the regulatory environment.

• (102) First, on the level of overall administrative control, the direction of the Chinese economy is governed by a complex system of industrial planning which affects all economic activities within the country. The totality of these plans covers a comprehensive and complex matrix of sectors and crosscutting policies and is present on all levels of government.

• (103) Plans at provincial level are detailed while national plans set broader targets. Plans also specify the means in order to support the relevant industries/sectors as well as the timeframes in which the objectives need to be achieved. Some plans still contain explicit output targets.

• (104) Under the plans, individual industrial sectors and/or projects are being singled out as (positive or negative) priorities in line with the government priorities and specific development goals are attributed to them (industrial upgrade, international expansion etc.).

• (105) The economic operators, private and state-owned alike, must effectively adjust their business activities according to the realities imposed by the planning system. This is not only because of the binding nature of the plans, but also because the relevant Chinese authorities at all levels of government adhere to the system of plans and use their vested powers accordingly, thereby inducing the economic operators to comply with the priorities set out in the plans ⁴¹.

• (106) Second, on the level of allocation of financial resources, the financial system of China is dominated by the state-owned commercial and policy banks. Those banks, when setting up and implementing their lending policy need to align themselves with the government’s industrial policy objectives rather than primarily assessing the economic merits of a given project ⁴².

• (107) The same applies to the other components of the Chinese financial system, such as the stock markets, bond markets, private equity markets etc. Also, these parts of the financial sector are institutionally and operationally set up in a manner not geared towards maximizing the efficient functioning of the financial markets but towards ensuring control and allowing intervention by the state and the CCP ⁴³.

• (108) Third, on the level of regulatory environment, the interventions by the state into the economy take a number of forms. For instance, the public procurement rules are regularly used in pursuit of policy goals other than economic efficiency, thereby undermining market-based principles in the area. The applicable legislation specifically provides that public procurement shall be conducted in order to facilitate the achievement of goals designed by state policies. However, the nature of these goals remains undefined, thereby leaving broad margin of appreciation to the decision-making bodies ⁴⁴.

• (109) Similarly, in the area of investment, the GOC maintains significant control and influence over destination and magnitude of both state and private investment. Investment screening as well as various incentives, restrictions, and prohibitions related to investment are used by authorities as an important tool for supporting industrial policy goals, such as maintaining state control over key sectors or bolstering domestic industry ⁴⁵.

• (110) In sum, the Chinese economic model is based on certain basic axioms, which provide for and encourage manifold government interventions. Such substantial government interventions are at odds with the free play of market forces, resulting in distorting the effective allocation of resources in line with market principles ⁴⁶.

3.2.1.2.   Significant distortions according to Article 2(6a)(b), first indent of the basic Regulation: the market in question being served to a significant extent by enterprises which operate under the ownership, control or policy supervision or guidance of the authorities of the exporting country.

• (111) In China, enterprises operating under the ownership, control and/or policy supervision or guidance by the state represent an essential part of the economy.

• (112) The GOC and the CCP maintain structures that ensure their continued influence over enterprises, and in particular State-owned enterprises (‘SOEs’). The state (and in many aspects also the CCP) not only actively formulates and oversees the implementation of general economic policies by individual SOEs, but it also claims its rights to participate in operational decision making in SOEs. This is typically done through the rotation of cadres between government authorities and SOEs, through the presence of party members on SOEs executive bodies and of party cells in companies, as well as through the shaping of the corporate structure of the SOE sector. In exchange, SOEs enjoy a particular status within the Chinese economy, which entails a number of economic benefits, in particular shielding from competition and preferential access to relevant inputs, including finance ⁴⁷.

• (113) However, CCP interventions into operational decision making have become the norm not only in SOEs, but also in private companies ⁴⁸, with CCP claiming leadership over virtually every aspect of the country’s economy. Indeed, the state’s influence by means of CCP structures within companies effectively results in economic operators being under the government’s control and policy supervision, given how far the state and Party structures have grown together in China.

• (114) The sector of the product concerned is served both by SOEs and private companies. For instance, China Petrochemical Corp (‘Sinopec’) is wholly state-owned ⁴⁹, while Zhuoyue ⁵⁰ and Zhejiang Jiaao Enprotech Stock Co., Ltd. (‘Jiaao’) ⁵¹ are private. Not only, one of the main producers of the product concerned, Beijing Haixin Energy Technology, formerly known as Beijing Sanju Environmental Protection and New Materials (‘Haixin’) ⁵², shows a significant degree of public ownership, namely 35,22% ⁵³.

• (115) The GOC exerts guidance on enterprises also by setting specific objectives for the sector. For instance, NEA issued in 2023 a Notice on organizing and carrying out pilot demonstrations for the promotion and application of biodiesel (‘the Notice’) ⁵⁴, which directly addresses the sector of the product concerned, by aiming to “[e]xpand the application scenarios of domestic biodiesel, explore and establish a replicable and expandable policy system and development path, gradually form a demonstration effect and scale effect, and accumulate experience for the continued expansion of the promotion and application of green liquid fuels such as biodiesel” ⁵⁵. The Notice further indicates how the above-mentioned objectives should be achieved: “[b] ased on the current development status of the biodiesel industry as well as on the production and consumption, governments at all levels, enterprises and other entities applying for pilot demonstrations can choose one or more of the following methods to carry out pilot demonstrations for the promotion and application of biodiesel taking local conditions into account. At the same time, local governments are also encouraged to creatively carry out pilot demonstrations in other ways. […] (I) Organization and reporting. The Development and Reform Commissions and Energy Bureaus of relevant provinces (autonomous regions and municipalities directly under the Central Government), the Development and Reform Commissions and Energy Bureaus of independently planned cities, the Beijing Municipal Urban Management Commission, and relevant energy companies should attach importance to the promotion and application of biodiesel, and actively organize the cities, counties (districts) and relevant companies in the administrative region to carry out the application for pilot demonstrations for the promotion and application of biodiesel. […] (III) Guidance for creation. Our bureau will provide overall guidance for the creation of pilot demonstration areas and projects related to the promotion and application of biodiesel. The provincial leading competent department should work with relevant departments of the local government to strengthen the guidance and support for the pilot demonstration creation work of the promotion and application of biodiesel in its jurisdiction, and coordinate to solve related problems. […] (V) Policy support. Our bureau will give priority to supporting eligible pilot demonstration projects in the medium- and long-term loan projects for the manufacturing industry, and actively promote the establishment of biodiesel carbon emission reduction methodology, promote the inclusion of biodiesel in the national certified voluntary emission reduction (CCER) mechanism, and accelerate the green value development of biodiesel” ⁵⁶.

• (116) Similarly, in 2023 the National Development and Reform Commission (‘NDRC’) issued the Guiding Opinion on promoting green innovation and high-quality development of the refining industry, which actively promotes the “[development of] biomass liquid fuels such as biodiesel and biojet fuel using waste grease as the main raw material” ⁵⁷.

• (117) Government control and policy supervision can be also observed at the level of the relevant industry associations ⁵⁸.

• (118) For instance, China Petroleum and Chemical Industry Federation (‘CPCIF’) ⁵⁹ states in Art. 3 of its Articles of Association that the organisation “establishes an organization of the Communist Party of China, carries out Party activities, and provides the necessary conditions for the activities of the Party organization” and “accepts the professional guidance, supervision and management by the entities in charge of registration and management, by entities in charge of Party building, as well as by the relevant administrative departments in charge of industry management” ⁶⁰.

• (119) CPCIF has established a Biochemistry Industry and Biomass Energy Committee, whose goal is to:

• “(1) Study the overall development strategy and planning of the biochemical and biomass energy industry, and provide support and suggestions for the government to formulate industrial policies and development plans;

• (2) Coordinate and integrate industry resources, assist relevant governmental departments in promoting the implementation of major technical projects of biochemical and biomass energy, and promote the transformation of scientific and technological achievements” ⁶¹.

• (120) Sinopec is among the members of CPCIF ⁶².

• (121) The Biomass Energy Industry Branch (‘BEIB’) ⁶³ of the China Association for the Promotion of Industry Development, according to Art. 4 of its Management Measures, pursues the objective of “organize the biomass energy industry to implement the national new energy and biomass energy development strategies, plans and policies in accordance with the national energy, environmental protection and modern agricultural development requirements, strengthen the self-management of the biomass energy industry, improve the level of industry development” ⁶⁴.

• (122) Consequently, privately owned producers in the sector of the product concerned are prevented from operating under market conditions. Indeed, both public and privately owned enterprises in the sector are subject to policy supervision and guidance.

3.2.1.3.   Significant distortions according to Article 2(6a)(b), second indent of the basic Regulation: state presence in firms allowing the state to interfere with respect to prices or costs

• (123) The GOC is in position to interfere with prices and costs through state presence in firms. Indeed, CCP cells in enterprises, state-owned and private alike, represent an important channel through which the state can interfere with business decisions.

• (124) According to China’s company law, a CCP organisation is to be established in every company (with at least three CCP members as specified in the CCP Constitution ⁶⁵) and the company shall provide the necessary conditions for the activities of the Party organisation.

• (125) In the past, this requirement appeared not to have always been followed or strictly enforced. However, since at least 2016 the CCP has been reinforcing its claims to control business decisions in companies as a matter of political principle ⁶⁶, including exercising pressure on private companies to put “patriotism” first and to follow Party discipline ⁶⁷.

• (126) Already in 2017, it was reported that party cells existed in 70% of some 1.86 million privately owned companies, with growing pressure for the CCP organisations to have a final say over the business decisions within their respective companies ⁶⁸. These rules are of general application throughout the Chinese economy, across all sectors, including to the producers of the product concerned and the suppliers of their inputs.

• (127) In addition, on 15 September 2020 a document titled General Office of CCP Central Committee’s Guidelines on stepping up the United Front work in the private sector for the new era (‘the Guidelines’) ⁶⁹ was released, which further expanded the role of the Party committees in private enterprises.

• (128) Section II.4 of the Guidelines states: “[w]e must raise the Party’s overall capacity to lead private-sector United Front work and effectively step up the work in this area”; and section III.6 states: “[w]e must further step up Party building in private enterprises and enable the Party cells to play their role effectively as a fortress and enable Party members to play their parts as vanguards and pioneers”. The Guidelines thus emphasise and seek to increase the role of the CCP in companies and other private sector entities ⁷⁰.

• (129) The investigation confirmed that overlaps between managerial positions and CCP membership/Party functions exist also in the biodiesel sector. To provide an example, several directors of Haixin, as well as the general manager and the executive deputy general manager are members of the CCP ⁷¹.

• (130) Similarly, the current director and Deputy General Manager of Jiaao is a Representative at the 14^th People’s Congress of Jiaxing City, Zhejiang Province ⁷². Moreover, information from 2023 shows how the company’s Party branch was directly interfering with the operational decision-making: “[t]he branch representatives attended 100 % of the company’s shareholders’ meetings, board of directors, and board of supervisors in 2023, and participated in 100 % of major decision-making. The branch provided guarantees for the scientific decision-making of the company's management” ⁷³.

• (131) Moreover, numerous senior managers of Sinopec are CCP members, including several directors and the Chairman of the company. For instance, Sinopec’s Chairman is also the Secretary of the Party Organization. ⁷⁴. Party structures within the group are involved in numerous aspects of day-to-day business operations , for instance when it comes to strengthening corporate governance: “[a]ll proposals submitted to the board of directors for review, such as the transformation and upgrading of refining and chemical enterprises and the carbon peak action plan, have been passed and implemented in an orderly and effective manner, realizing the unity of the Party group's leadership role and the board of directors and management team's performance of their duties in accordance with the law and the charter” ⁷⁵.